Since 2003, BPI has been deeply engaged in an effort to pass an inclusionary housing ordinance in Chicago. Since then, we have worked in close collaboration with a number of local groups advocating for inclusionary housing. They include the Chicago Rehab Network, which helped initiate the effort to create an inclusionary housing program, and the Balanced Development Coalition, a diverse coalition of community organizations, which has led the organizing effort in support of the ordinance.
At a time of great economic growth in Chicago and revitalization in many neighborhoods, inclusionary housing is an especially appropriate tool. As more affluent households choose to live in the city, land values and housing costs have multiplied in many of Chicago’s once-middle-class neighborhoods. Long-time residents are being displaced and the city’s neighborhoods are becoming increasingly stratified by income. Inclusionary housing helps to ensure that families across a broader range of the income spectrum can take advantage of Chicago’s growing strength. It will allow young couples to remain in the city; seniors will be able to stay in their communities; and people won’t have to travel such long distances to work. Inclusionary housing means that more of those who work in Chicago will be able to live in Chicago.
To develop a policy for Chicago, BPI conducted extensive research on many of the more than 200 inclusionary housing programs across the country, and drafted a report on why and how such a policy could work in the city. We then drafted an inclusionary housing ordinance <provide link to ordinance> that was introduced in 2004. The ordinance would require all new developments of ten or more units to make 15 percent of the units affordable to low- and moderate-income households. In return for providing affordable units, developers would granted a variety of cost offsets, which could include, among other things, density bonuses and fee waivers. We estimate that the proposal would produce an average of more than 1,300 new affordable housing units every year, which would make it the city’s most productive affordable housing policy tool. We have worked closely with community organizations, advocacy groups and city officials to build support for inclusionary housing generally and to build consensus around certain key principles.
For several years, the City of Chicago opposed inclusionary housing, raising concerns that such a program would stifle development and harm the tax base. But in November 2006, the Mayor introduced an inclusionary housing ordinance which incorporates many of the elements we have argued are most critical to a program’s success. This is an enormous step forward, though we believe the City’s proposal does not go far enough. For example, the City’s proposal would provide housing units for households earning up to 100 percent of the area median income ($75,400 for a family of four in 2007). Because the area median income is calculated using data from Chicago as well as many affluent suburbs, it is much higher than the City of Chicago median. That means that many working people in Chicago would not be able to afford the units produced under the City’s proposal. In addition, the City’s proposal applies only to some categories of development, and requires that only 10 percent of the units in those developments to be affordable. We believe, based on successful models from around the country, that the set-aside can be higher – at least 15 percent in most cases. The national experience shows that is a viable approach, and at a time when the supply of affordable housing is falling quickly, it would provide roughly 50 percent more affordable housing units than the City’s proposal.
We are now working with advocates and City officials to strengthen the Mayor’s proposed inclusionary housing ordinance and to forge a reasonable compromise.
Click here for the City's Fact Sheet on the new Affordable Requirements Ordinance.
According to some estimates, roughly 200,000 affordable rental units are at risk of loss in Cook County. While efforts to expand the supply of affordable housing in Chicago and throughout the region are beginning to bear fruit, this crisis threatens to overwhelm whatever progress might be made in developing new affordable housing. BPI is now expanding its work to include an emphasis on affordable housing preservation.
We believe such a focus is desirable for many reasons, notably:
- Preservation is an efficient use of scarce public and private resources. Some analyses suggest that it costs 50-75% less to preserve existing affordable housing than it cost to build anew. So for every new affordable housing unit that is built, two could be preserved.
- Preservation can help to maintain affordable housing options in relatively affluent communities. In some expensive markets, affordable new development is almost impossible because of high land costs. What’s more, in these communities, preservation may face lower political hurdles than construction of new affordable housing. <provide link to Housing Illinois report, finding that people prefer affordable housing preservation to new construction by a margin of more than two to one; two-thirds worry that low- and moderate-income housing will be poorly maintained and half believe that property values will fall in areas with affordable housing.> Thus, efforts to preserve and beautify existing affordable housing developments may help to turn around negative perceptions of such housing and ultimately broaden public support for expanding affordable housing opportunities.
- Preservation is well-targeted to serve priority populations, including those that earn below 30% of Area Median Income (AMI). Nationwide, the greatest affordability problem is among poor renters. Yet many affordable housing programs target higher-income potential homebuyers. Without enormous subsidies, new construction rental housing cannot serve extremely low income households. It would be far more cost effective to preserve the affordable housing in which poor renters live and to ensure that it remains affordable for years to come, than to provide new housing.
BPI serves on Mayor Richard Daley’s Task Force on Condominium Conversion. The Task Force, chaired by Alderman Ray Suarez, is exploring a wide variety of ways to address the loss of affordable rental housing to condominium conversion. BPI has taken a lead role in developing policy alternatives for the Task Force to explore.
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