By: Mark Glennon*
Though well-intentioned, It’s perhaps the most ridiculously unfair and legally weak element of Governor JB Pritzker’s emergency order for the pandemic.
It’s the ban on residential evictions – the portion of Pritzker’s order that has suspended landlords’ rights to evict tenants who don’t pay their rent, regardless of tenants’ ability to pay and regardless of whether the landlord is an individual or a big company.
Lawsuits challenging it read like a catalog of constitutional violations. Among those claims is violation of the state constitutional ban on impairing contracts. The state has now filed its answer, reported here by the Cook County Record.
One particular defense raised by the state is quite astonishing and directly relevant to the state’s pension crisis and its fiscal problems in general: The state is asserting the “police power” defense for impairing contracts – the very concept Pritzker has ridiculed as “fantasy” when it comes to pension reform.
First, the background.
In an effort to help struggling renters, Pritzker’s emergency order bans evictions by residential landlords. Landlords big and small have sued the state to invalidate the moratorium.
The problem is one that won’t surprise those of you who have had the pleasure of being a landlord. A significant portion of mankind will screw you however they can.
That’s just what is happening, say the landlords. Many tenants, regardless of ability to pay, are abusing the situation by simply not paying rent. Many never will pay. If you can’t evict them you have no true remedy.
A recent Journal-Courier article gives an example. An elderly Peoria woman leased out the only residence she owns to a tenant couple who has now torn it up and “laughs in the woman’s face” when she asks for rent. She threatened to cut off power and water, which were in her name, and the tenants threatened to retaliate by ripping apart the house even more. So she kept paying the utilities. She can’t get them out. “There’s nothing I can do,” she says.
Pritzker has personally defended his eviction by saying it’s the right thing to do – to help tenants during these tough times. “It’s important for us to stand up for people who are working class people who cannot otherwise afford to maintain their home. We do not want people to become homeless in this difficult crisis,” Pritzker says.
Some housing advocates agree. As reported by WTTW, tenant organizer Michael Robin, with the Albany Park based Autonomous Tenants Union, called the landlords’ lawsuit shameful. “It appears to be greedy and completely out of touch with the struggles of everyday Illinois residents,” Robin said.
That’s horribly unjust and untrue. It’s hardly fair to say all landlords are greedy and out of touch. Like me, you’ve probably known plenty of people of modest means, especially retirees, who rely on rental income from a property they own for their subsistence. The Illinois Property Owners Association says small mom-and-pop landlords make up the majority of its members and that the majority of rental housing in Illinois is provided by average working-class people.
What’s obviously happening is that property owners alone are being forced to bear the cost of a form of housing assistance. It may be perfectly appropriate for the state to help tenants during this recession, but if that’s its policy the state should pay for it rather than arbitrarily sticking it to a small number of citizens.
Property owners, understandably, have gone to court and thrown the book at the state. The introduction to one complaint puts it this way:
This case goes to the heart of our constitutional, tripartite form of government and the separation of powers. This case focuses on whether the Illinois Governor can rely on his own declared public-health emergency to assume authority the legislature never granted, to waive or amend provisions in private contracts, to override and amend explicit statutory provisions as he chooses in his sole discretion, and to usurp powers belonging to the legislative and judicial branches of this state.
Their case is based on many claims, but the most interesting is over what’s called the Contract Clause in the Illinois Constitution.
That clause bars the government from impairing contracts. (The United States Constitution contains an identical clause, but the lawsuits are based only on the Illinois clause.)
Leases are contracts. They obligate tenants to pay rent and grant landlords the right to pursue eviction if tenants don’t pay rent or violate the lease. Landlords therefore claim that the eviction ban violates Illinois’ Contract Clause.
It’s the state’s response to that claim that is so fascinating. Its memorandum in support, filed last week, relies on the police power defense to some of the constitutional claims, including the Contract Clause, and includes the following:
Plaintiffs are unlikely to prevail on their Contracts Clause claim because suspending residential evictions serves an important public purpose. “All contracts are subject to the police power of the State” and, “as a result, the state may infringe on a person’s contractual rights in order to safeguard the interests of its people.”
Yet it’s precisely that police power that Pritzker, public unions and other opponents of pension reform laugh off when it comes to pensions. Wirepoints and others have long argued that the state should adopt a constitutional amendment to allow for reform thereby overriding the state’s pension protection clause and Illinois court rulings thereon.
That won’t work, reform opponents say, because pension contracts still could not be impaired. But now they are saying contracts can be impaired based on the same reasoning we’ve used. The state even cites most of the same legal authority that we and they have been citing.
Pritzker has been particularly direct on that, saying its “fantasy” to think that pension contracts could be adjusted. In his most recent Budget Address, he said,
The fantasy of a constitutional amendment to cut retirees’ benefits is just that – a fantasy. The idea that all of this can be fixed with a single silver bullet ignores the protracted legal battle that will ultimately run headlong into the Contracts Clause of the U.S. Constitution. You will spend years in that protracted legal battle, and when you’re done, you will have simply kicked the can down the road, made another broken promise to taxpayers, and left them with higher tax bills.
And what was his reason for allowing a pay raise for state workers to go through on July 1, even while most other states are slashing their budgets? A contract is a contract. “That’s not something that we’re currently having discussions about,” he said, and he pointed out that the raises are part of state contracts negotiated with workers.
The sanctity of contracts shoe apparently fits depending on who is wearing it. It fits public workers but not those randomly forced to provide free housing.
In its memorandum, the state attempts to avoid this contradiction by characterizing its police power argument as one based on the medical aspects of the pandemic, as opposed to the need to help renters financially during the resulting recession.
But, come on. The true purpose of the eviction moratorium is to address financial hardship. Look at Pritzker’s own words: “It’s important for us to stand up for people who are working class people who cannot otherwise afford to maintain their home we do not want people to become homeless in this difficult crisis.”
The truth is that Illinois now clearly does face the kind of fiscal and economic emergency that meets well-established standards for modifying contracts, regardless of the Illinois Supreme Court’s earlier decisions declining to recognize the police power in a pension reform decision five years ago. To ensure success in courts, Illinois should be amending its constitutional impediments to pension reform, leaving only the federal Contract Clause as a theoretical obstacle. As explained in detail in the articles below, that’s no real obstacle.
The state could also be adjusting its other contracts, including employment contracts, to improve its financial position. The state might even have a plausible police power argument to defend the lawsuits it faces over the eviction moratorium. To make that case, however, would require much more than the few paragraphs the state has devoted to it in its court filings so far. And the state would still face the list of other grounds for voiding the moratorium. I hope and expect it will lose on those.
Very similar litigation over the Contract Clause is ongoing in New York, and I expect it may appear elsewhere.
But forget that legal stuff and get to what’s most important. Singling out landlords to pay for rent relief is obscenely unfair, especially if its for renters with ability to pay. A commenter on an earlier article on this suggested it would be more fair to make Hyatt Hotels, the source of Pritzker’s fortune, house those who can’t pay rent. That may well be true, since most hotels remain nearly empty.
The more appropriate alternative, however, should be obvious. If the state wants to provide rent relief then the state should pay for it, and help ought not go to those who don’t need it.
*Mark Glennon is founder of Wirepoints.
Big salute to Cook County Record for its excellent coverage of the lawsuits which has included links to the major court filings.
Some of our earlier articles on this topic:
- Governor Pritzker, pension reform is not fantasy. Other states prove it.
- ‘Contract’ is no excuse for upcoming pay raise for Illinois unionized state workers
- There’s No Legal Reason Not To Pursue A Constitutional Amendment For Pension Reform
- Rhode Island Supreme Court Shows Illinois The Way On Pension Reform
- Illinois Constitutional Pension Amendment Is Long Overdue
- Arizona Amends Its Constitutional Pension Protection Clause. World Doesn’t End.