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HB 821 would create an exception from condominium/townhouse leasing restrictions for not-for-profit owners.

Under current law, condominium and townhouse associations can ban property owners from renting their units, thus restricting not-for-profit owners- who own and lease rental housing at affordable rates- from leasing their units.

Many not-for-profit affordable housing developers, incorporated as 501(c)(3)’s, own and lease rental units at below market rates in order to create affordable rental housing for low-income families in Illinois.

Without a change in the law, these not-for-profit owners can be prohibited from leasing and will be forced to sell these affordable units.

For example, Community Housing Association of Du Page (CHAD) has been forced to sell townhouses which it has been renting to qualified tenants on three occasions and is now being told to sell two more. This is due to the associations at these locations voting to have only owner occupied housing after allowing rentals for several years.

CHAD now owns 50 townhouses in 30 different associations. This trend threatens to cause a continued decline in the rental housing market for households of four or more. These tenants need housing with at least 3 bedrooms. Townhouses are less expensive than single-family homes, and provide an important affordable housing resource.

This bill does not prohibit an association from banning rentals—it simply allows not-for-profit owners that have a 501(c)(3) designation and are leasing their units at the time of a ban, to continue to lease their units until they voluntarily choose to sell their property.

Organizations exempted under 26 USC § 501(c)(3), must meet an extremely high threshold to obtain this designation from the IRS. They must have a not-for-profit mission and meet strict yearly reporting and disclosure requirements.

This bill also states that there should be no special fines or other charges assesses against the unit owner who leases their unit(s).

House Bill 821 strikes a good balance between the rights of associations and the goals of not-for-profit owners and this change in the law will preserve the affordable housing stock in Illinois.

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