Last September, Chicago's City Council enacted the so-called “Northwest Side Preservation Ordinance,” an ill-conceived law that will reduce housing affordability in several northwest side wards and hurt the small and mid-sized housing providers represented by my organization, the Neighborhood Building Owners Alliance (NBOA).

The ordinance, which imposes draconian restrictions on the sale of rental property in Logan Square, Hermosa, Humboldt Park, and Avondale just went into effect on March 1.

This ill-conceived ordinance has many harmful provisions, but the most harmful to housing affordability gives tenants of a rental building a “right of first refusal.” This gives the tenants an “opportunity to purchase” the building if they can match the selling price, and imposes a chain of complicated and time-consuming requirements before the transaction can close with the tenants or with another buyer.

Before marketing their property for sale, owners must give their tenants advance notice of their intent—60 days for a building with five or more units, and less for smaller buildings like two-flats.

Once an owner receives an offer, they must wait up to 90 additional days for the tenants to decide whether they wish to purchase the property. If the tenants decide to exercise this right, the building owner must wait up to another 120 days to see if the tenants can get financing.

In short, building sales in the affected area may take as much as 270 days (nine months) longer to close than other areas of the city, including neighborhoods literally next door. Big real estate conglomerates can afford to wait that long, but not the mom-and-pop owners that my organization represents—folks for whom their two-flat or apartment building represents their retirement savings.

Those hard-working small building owners who want to sell their building and use the proceeds to buy a different building elsewhere in the city will be unable to buy in these neighborhoods. Most building owners who do this can defer tax on that capital gain by investing the proceeds in a new building, under a provision of the tax code known as the 1031 exchange. But the IRS only allows that exchange to take place within 180 days, which means that housing providers in the area governed by this new ordinance will not able to take advantage of this tax break—and will simply buy elsewhere. This further discourages investment in the city.

These new restrictions on the sale of property will send potential buyers looking elsewhere. And who can blame them? Who wants to buy an apartment building where you are required to jump through hoops and delay a potential sale for upwards of nearly a year? And will lenders and title companies be willing to support deals in this zone, especially small real estate transactions?

What is the inevitable result? Property values will fall, and rents will go up and maintenance of buildings will be deferred.

This ordinance is a shortsighted measure that threatens the vibrancy of once-thriving neighborhoods.

The City Council must act swiftly to repeal this ordinance before it inflicts irreparable damage to the northwest side's housing stock. Failure to do so will only exacerbate Chicago's affordable housing crisis.

Michael Glasser is the President of the Neighborhood Building Owners Alliance (NBOA).