- Mike Glasser, President, NBOA
April 3, 2020
As members of the Neighborhood Building Owners Alliance, an organization of Chicagoans who own or manage many of the city’s small and midsized neighborhood rental properties, we are acutely aware of the financial stress our building residents are experiencing due to the fallout from the coronavirus.
We encourage those who are struggling to pay rent to reach out to their housing provider to discuss options. The overwhelming majority of property owners and managers are responsible housing providers who are empathetic to the tremendous strain that this crisis places on many of our residents and their families. We are working diligently with our residents who have been substantially affected by the crisis to ensure they can continue to live in their homes.
Nevertheless, some housing advocates are calling for a citywide “rent strike,” urging all renters, regardless of their financial circumstances, to forego paying rent through the term of this crisis.
Historically, rent strikes have offered symbolic resistance to untenable and illegal housing conditions, or large increases in rent, with striking tenants often depositing the rent they would otherwise pay into an escrow account until the issues that led to the strike were resolved. The present day rent strike advocates, however, are seeking a suspension of all rent until the pandemic is over and are focusing their efforts on housing providers citywide.
Such an action will make a bad situation considerably worse.
First, this action will cripple property owners’ ability to defer or abate rent for those who are most in need. Like most small businesses, apartment owners operate on tight margins. The ability of property owners to help residents who are experiencing a job loss depends on those who remain employed to pay their rent on time.
Simply put, if those who can pay their rent choose not to, property owners will lack the financial resources to assist those who truly cannot pay.
Second, though some lenders may be willing to temporarily defer mortgage payments, debt service comprises only a small portion of a building’s operating costs. In Chicago, property taxes are the number one operating expense for most owners. The City, County and our schools depend primarily on property tax revenue to run their operations.
If building owners can’t pay their taxes due to a loss of rental income, our local governments will face even greater challenges providing health care and emergency services, as well as paying the salaries, health insurance and pension contributions for teachers, first responders and other frontline workers.
Rental revenue also covers the cost of maintaining, cleaning and keeping apartment buildings safe and habitable. Property owners use rent proceeds to pay for building-wide utilities, such as water and sewer fees, garbage and recycling collection, and gas and electricity for common areas.
Finally, rents pay for the wages of other workers like maintenance and housekeeping staff and local contractors, such as plumbers and electricians. If rent checks disappear, so too will the paychecks of thousands of hard-working Chicagoans who maintain, repair, build and manage rental properties.
Rather than treat each other as adversaries, building owners and housing advocates should unite to urge the federal government to continue to provide cash assistance to both renter and homeowner households and low-cost loans to support small and medium-sized businesses, including neighborhood building owners and managers. This is the kind of financial relief we need to see us through this crisis.
We are all in this together. Let’s all work together.