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The Interview: Would Craig Make a Good Landlord?

By Rachelle Bowden in Miscellaneous on Feb 20, 2006 4:23PM

In a May 2002 interview with the Wall Street Journal Online, Craig Newmark, founder of the Craigslist internet communities, discussed his business plan. “The major social dysfunction of my people, the nerds, is that we think life should be fair, and can’t understand why it’s not,” Newmark said. “Craigslist is my way of making life a little less unfair.”

Apparently the Chicago Lawyers’ Committee for Civil Rights Under Law isn’t sold on the company’s purity. Last week it filed suit against Craigslist for violating the federal Fair Housing Act. Between July 2005 and January 2006, the committee monitored the Chicago version of the site, finding over 100 classifieds they cite as discriminatory. Two such examples: “African Americans and Arabians tend to clash with me so that won’t work out” and “Requirements: Clean Godly Christian Male.”

2002_02_douglas_pensack.jpgMichael Pensack, the executive director of the Illinois Tenants Union, said Craigslist “begged for the lawsuit” by not carefully monitoring the classifieds. But, he allowed, “I’m sure they were not sitting there thinking, ‘How can we rent apartments in violation of the federal fair housing rights?’”

Regardless of your take on whether Craigslist has a responsibility to review every posting, the issue of fair and safe housing regularly hits home for most Chicagoans. Several area organizations provide advice and assistance to tenants facing tough times. The Illinois Tenants Union (ITU) is one of them, focusing their efforts on helping tenants avoid eviction, get security deposits back, break their leases early or demand repairs from unresponsive landlords.

Last week, Chicagoist visited the discreet headquarters of the ITU, not far from the Kimball Brown Line stop. We sat down with the non-profit’s associate director, Douglas Pensack (Michael’s brother), to talk about fair and affordable housing, bad landlords and his group’s sometimes controversial way of doing business.

Highlights after the jump --

Number one worst landlord story

DP: Jeez. That’s one of those that’s hard to answer because there’re so many bad landlords, and so many bad landlord stories. One example was that we had a case where a person was paying reduced rent and the landlord got so bent out of shape about it. The landlord went to the tenant’s apartment and took his back and front doors completely off the apartment so it was wide open to the public. And then he went right down to the police department and filed a police report to have the tenant arrested for stealing his own doors.

Fair housing confusion

DP: People misunderstand the word discrimination. They think discrimination means illegal discrimination or improper. The word discrimination, if you look at it generically, just means to discriminate, to determine and decide dependent on one thing or another, to separate from one side to the other. Landlords have the legal right to discriminate for all kinds of reasons and it’s totally legal and acceptable. And the most common and the most obvious is on the basis of income, and the basis of credit history, basis of job history. Those are three significant reasons why a landlord might rent or not rent an apartment to somebody, or charge a higher security deposit or require a co-signer et cetera. It’s totally legal.

For example, in the city ordinance, in Chicago it’s illegal to discriminate on the basis of sexual orientation. It’s not illegal under the state or the federal. Discrimination itself is not illegal. It’s the basis of discrimination that makes it legal or illegal.

Lack of affordable housing

DP: The bottom line is, a lot of people can’t afford to live in a decent place. What’s happening is, and it’s happening to Chicago, is that poor people are being driven out of the city. They’re forced to either leave the city or they’re forced to essentially overcrowd a space or share a space with someone where they would have been able to have space themselves if there was affordable housing. That’s one of the significant ways the city’s changing. Because they tore down all these CHA high rises but they haven’t replaced them unit-for-unit. They lied when they said they were going to. They never came close, and everybody knew they weren’t going to.

Section 8 voucher discrimination

DP: What good is a voucher if you can’t find a place to rent? It’s also illegal in Chicago under the Fair Housing Ordinance to discriminate on the basis of source of income. It’s not illegal under Illinois and federal law, but it’s illegal in Chicago. That means a landlord can’t refuse somebody just because they have a Section 8 voucher. And yet, do you think landlords don’t refuse people just because they have a Section 8 voucher all the time?

ITU’s discreet location

2002_02_douglas_michael_pensack.jpgDP: Actually it wasn’t a plan. It just happened organically. In the sense that initially Michael actually lived here and he just used one of the rooms in the back as his office when he was doing it more or less by himself. When I came to work for him, and we started growing and hiring more people, other people who lived here with him moved out, and we just basically took over the space.

Plus, also, there’s something to be gained by being low-key. We are the kind of organization that engenders a lot of anger and hostility, particularly from landlords. So if you have a public location with a big sign and a storefront, you’d probably have bricks through it every month.

The reason the address is not listed on the website is because we don’t want people just dropping by. We want to discourage walk-ins. Not because we don’t want to help people, but just because we’re not set up to deal with walk-ins. Essentially, the way we meet with people, and people do come by, is by appointment.

So to make sure we have the time to actually see the people who want our help, we can’t have walk-ins. We can’t be Baskin-Robbins where you take a number. It’s the same reason we don’t have a phone number you can just call in off the street and talk to someone at the Tenants Union. You call our main number, you get a machine. That’s 24 hours a day. We never answer that particular line. We used to, and we’ve learned from our experience in the past. That’s not tenable. Cause what you have is people calling you all day long talking about their dog next door barking and all kinds of crazy, crazy stuff.

Thousands of tenants “served” each year

DP: Well, it kinds of depends how you define the word “serve.” I don’t want to sound like President Clinton, but it depends what you mean by “serve.”

If by having some conversation with and giving some advice or information to – several thousand a year. If by serve you mean, help them with a lawsuit, last year I think we did about 600 evictions and we did about 300 break leases and we helped several dozen people pay reduced rent. And we helped several people file security deposit cases, although that’s going to pick up considerably in the near future.

The cost of their assistance

DP: A lot of people end up essentially getting only free advice over the phone. We charge fees for every one of the services we end up providing. Break lease for example, we charge half a month’s rent to break a lease. So that’s straight forward. It’s a sliding scale, but it’s straight forward.

Rent reduction, we charge fees that come out of the money that the person isn’t going to pay the landlord. So, in essence, even though the tenant’s paying us, it’s all coming out of the landlord’s pocket, and ultimately the tenant ends up paying us nothing out of their own pocket. Even though they’re paying us, they’re paying us with money that we’re helping them save. So, we’re getting paid, but ultimately the tenant is coming out ahead financially, so I consider that not really a charge, even though it is a charge.

Eviction cases, those cases are split or divided. Some people pay a fee that’s equal to one month’s rent and some people, because of their legal qualification, get free, but we end up getting paid by the attorney. Same for security deposit. They don’t pay us for the security deposit case, but we get paid out of the settlement of the case, by the attorney.

Self-financed for survival

DP: We have no other sources of income. It’s straight fee-for-service. And that’s pretty much on purpose.

Our understanding and our belief all along has been that an organization should be self financing because that’s the only way to survive. We’ve looked at the history of the tenants’ movement in the United States over the last 25 years and that’s exactly been the case. Organizations that rely primarily on outside funding, particularly from government sources, usually go out of business. Because eventually the government cuts them off and they have no other funds and they’re out of business. Our goal is to remain in business and help tenants and continue to help tenants, so we had to figure out a way to do it differently and that was by being self-financed, which has two advantages. One is, they can’t cut you off if they’re not funding you in the first place. And also, it means you don’t have to satisfy anyone but yourself and the tenants you help.

In other words, if you go after a landlord who’s a friend of the mayor or the alderman, so what? They can’t cut you off. As long as we obey the law and we assist the tenants in obeying the law, we can help anybody we want do whatever we want. We don’t care who the landlord is. But when you get public funding, particularly, you have to be aware of those kinds of political things. Not to mention that when somebody funds you with public or private money, they’re going to tell you how to spend it, which means essentially they run your organization and you don’t.

Facing past criticism

DP: The bottom line is, we’re unique. And a lot of people don’t know how to deal with unique. They don’t know how to deal with the hybrid that we are. Because we’re a social service, but we also operate on a market model. And that’s a hard thing for some people to understand. I’m not sure why, but it is hard for some people to understand. Makes them suspicious. And I think for good reason maybe. In the sense that anytime someone’s making money doing something you should ask questions. You know, are they legitimate? We try to deal with complaints. And I’m not saying we’ve never made mistakes or we’re perfect. But, hey – nobody who’s busy doing anything is perfect – certainly the city isn’t. And, as I said, we’ll match what we do against anybody who does similar things.

Thanks, Sam H.!