Multifamily N Illinois

Are deconversions doomed? New legislation looks to heighten the barrier to entry

Are deconversions doomed? New legislation looks to heighten the barrier,ph1
River City, site of Chicago’s largest ever deconversion that turned 449 condos into rental units in the South Loop.

Chicago’s condo deconversion trend seems to have slowed a bit compared to years past, but there are still deals happening and interest in all quarters of the city. A new ordinance, however, may bring the whole process to a screeching halt.

Currently, at least 75 percent of residents must vote for a deconversion in order for the deal to go through. A bill introduced by 42nd Ward Alderman Brendan Reilly seeking to raise that ceiling to 85 percent has passedtThe City Council’s housing committee. The bill will now go to the full City Council for a September 18 vote.

“Many people, especially our senior citizens, when they purchased 30 to 40 years ago they expected these would be the homes they’d retire in,” Ald. Reilly said at Wednesday's housing committee meeting.

There have been previous attempts to raise the voting threshold above 75 percent at both the state and local level. The concern among brokers and investors is that there would be a chilling effect on the trend to deconvert condos to rental units. Hitting a higher mark is difficult enough that some may not even attempt to try.

“I think if you change it to 85 percent, fewer buildings will even begin the process,”Andy Friedman, a broker at Kiser Group, said earlier this year. “If that law ever changes, I think that we would only primarily get into deconversions where they have major deferred maintenance.”