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:

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S and P 500
3 months ago

There are so many people who are “homeless” that Pritzker is hardly making a dent in the problem by extending the eviction ban. I was friends with somebody at work who was living out of his car for a while. Some of the most watched you-tube vids are people who explain how to live in your van or your car. Many tech workers in San Francisco are living in their vans because they don’t want to spend all of their big paychecks on rent. In his recent autobiography even John Tesh said he was homeless for a while before he… Read more »

Richard Poo Millersky
3 months ago

What happened to debtsor?

Governor of Alderaan
3 months ago

I was wondering the same thing

Richard Poo Millersky
3 months ago

I hope he’s ok. ⊙﹏⊙

Fed up neighbor
3 months ago

Like wise

Governor of Alderaan
3 months ago

“They argued the evictions ban “has played a crucial role” in fighting COVID-19, because it has allowed tenants to remain in their homes throughout the emergency period, and has minimized their need for “in-person interactions” that would follow an eviction and search for new housing. “And beyond limiting the spread of COVID-19, the suspension of residential evictions protects vulnerable individuals whose access to housing and other critical resources have been threatened by the widespread economic losses resulting from the pandemic,” Pritzker’s lawyers wrote.” The Dictator is claiming the evictions ban is “crucial” to fighting COVID. Since the Dictator claims his… Read more »

Illinois Entrepreneur
3 months ago

Their argument is in effect, the same arguments used for communism.

From each according to his ability, to each according to his needs”.


Andrew Szakmary
3 months ago

There is an important distinction you do not mention. In the landlord vs. tenant dispute, the state is arguing for police power to impair a contract that it is not part of. In other words, the state does not benefit at the expense of the landlord who’s contract is being temporarily suspended. In the pensioner vs. the state dispute, the state IS one of the contracting parties and would directly benefit at the expense of the pensioner if it could cut benefits. While I disagree with the moratorium on evictions, and hope the landlords win in court – just as… Read more »

Susan
3 months ago

Excellent point. But what do you make of local counterparties (taxing bodies such as school districts) bound by State mandates to provide “Taking” as defined by the State? Home owners are unwilling, disenfranchised counterparties to that contract between unreasonably compensated pensioners and State. What do you think about applying the Takings Clause requirements of equitable compensation to local taxing body victims as a function of constructive, or regulatory taking, if the government restricts property owner’s rights so much that the governmental action becomes the functional equivalent of a physical seizure? (To put “restriction of rights” into perspective: my collar county… Read more »

Mike
3 months ago

Pritzker sucks.

Brady Sluder
3 months ago

If I get corona, I get corona.

Mick the Tick
3 months ago
Reply to  Brady Sluder

My feeling exactly. I often say, “Let’s just get it over with.”

Lyn P
3 months ago

Very on-point. In all these matters, and in the grand political tug-o-war nationally, look at the BIG picture — know the end game and you see the journey. We have commie leadership heading the city and state and the transfer of private property to the State is essential. Unless these landlords win big we are looking at increased State ownership of all types of property. Then we get zoning changes and central planning by the unelected officials. If you know what this is called you’re hip to the scheme.

Freddy
3 months ago

Good article today at http://www.naturalnews.com entitled Chicago seeking help in identifying persons of interest connected to arson fires during cities engineered riots. You have to scroll down to find article or just search Chicago seeking help in his search. Comments are way down. Also check out “insane chaos” in italics in the same article.

NB-Chicago
3 months ago

Mark- very suspicious, as you point out, if the state was so concerned about tenants not being able to pay the rent why isn’t state simply offering rental assistance directly or thru municipalities instead of prop owners having to carry the burden? Wouldn’t all that rental assistance $ be a legitimate covid related expense for state or municipalities to be reimbursed for under the $billion+$ of CARES Act illinois got? Double suspicious now that IML is accusing state of limiting the $ that were supposed to go to municiplalities for local assistance form CARES Act…what is the state hoarding all… Read more »

NB-Chicago
3 months ago

Fantastic writing once again Mark!! Hypocritically/ ironic that major factor rents are so high and hence so many sipposedly can’t make the rent is because prop tax are thu the roof to pay for local “contract clause” protected pensions. But non of that hypocrisy would ever fit into the phoney narative of woke/blm…just anybody that owns anything outside the public sec promises to our hero’s is guilty and undeserving of ‘contract clause’ protection of there asset’s…..unless you got your $billions$ socked away in offshore tax shelter family trusts.

Poor Taxpayer
3 months ago

If you do not like it move.
Simple, run for your economic life.
They are doing you a favor, the straw that broke the camels back.
It has always been bad, but not it is much worse than ever.
Illinois “Land of Slavery”

Illinois Entrepreneur
3 months ago

No society thrives when property rights are threatened. Capital flees, producers flee, and a wasteland results.

It can happen anywhere, and if you talk to anyone from a former Soviet bloc country, they will tell you that they see many shocking similarities in what’s going on now to what happened to their countries, causing them to flee.

Many of these people fear that when the US goes, where will they go?

Susan
3 months ago

Another “shareholder class” for litigation should be TIF bondholders and those taxpayers forced to guarantee TIF public debt:
Unconstitutional impairment of TIF property owners’ abilities to pay property taxes, and resultant devaluation of TIF improvements (impairing incremental values) are threats to TIF bond asset value.
When TIF bonds default they are often guaranteed by taxpayers within the TIF municipal taxing district.
While taxpayers are not allowed to form a “class” for litigation against tax malfeasance, they may all sign up individually with an attorney willing to file a tax objection lawsuit.

Mick the Tick
3 months ago

Deciding to be a landlord in Illinois has to be one of the more risky business moves anyone could make. If you know anyone who does this, you have good reason to question their judgement.

Illinois Entrepreneur
3 months ago
Reply to  Mick the Tick

Not only that, but owning any property in Illinois is a risky business move.

There is a huge game of musical chairs being played here. When the music stops–if it hasn’t already, it will–everyone holding property here is going to see a major contraction in the values of what they hold. We are already seeing this in luxury homes, and large suburban office complexes. There may be a rebound of these as people flee the City, but then the City will see those same catastrophic property value declines.

This isn’t temporary, either.

Lyn P
3 months ago

I do wonder how many homeowners and commercial property owners are taking the pro-active stance per your view and are about the hit the kill switch on ownership. The cascade could be severe.

nixit
3 months ago

You know what else would “serve an important public purpose” this year? Suspending 3% compounded COLA for all pensions. Will it happen?

Flash413
3 months ago
Reply to  nixit

Never gonna happen. “The Greediest Generation” and their unions would ensure that any politician remotely responsible would never hold office again.