Developers who get tax-increment-financing subsidies to build residential projects in Chicago would be required to build affordable housing units on site, under a crackdown proposed by a pair of aldermen.
Aldermen Proco Joe Moreno (1st) and Ameya Pawar (47th) argue that it makes no sense to allow for-profit developers to accept city money with one hand and give it back to the city with the other — by getting out of a requirement to build affordable units on site by making contributions to an affordable housing fund.
At Wednesday’s City Council meeting, Moreno and Pawar plan to introduce an amendment to the revised Affordable Housing Ordinance championed by Mayor Rahm Emanuel and approved last year.
It states, “Notwithstanding anything to the contrary in . . . the TIF guidelines, a for-profit developer receiving TIF funds can only satisfy its obligations . . . by providing affordable housing units on site.”
No longer could hefty contributions to a fund used to build affordable housing units on sites elsewhere in the city suffice.
Pawar said he and Moreno raised the issue during last year’s debate on the new Affordable Housing Ordinance, only to be ignored.
The issued surfaced again recently when Emanuel asked Pawar why he voted against plans to develop a luxury apartment building at the corner of Clarendon and Montrose with help from a $15.8 million TIF subsidy.
The project has stirred controversy for the sizeable city subsidy and for the comparatively small number of affordable housing units being offered on the prime lakefront site.
The plan calls for construction of 381 residential units. Only 20 units would be affordable.
“If you’re getting a city incentive to build housing, then you shouldn’t be using city incentive money to opt out and pay into a fund that will be used to build units somewhere else. That’s really bad public policy. It’s too easy to opt out,” Pawar said Tuesday.
“A lot of us voted no on that project in Ald. Cappleman’s ward because they were receiving TIF, but also buying out of the affordable housing requirement. If you are getting TIF money to build a residential development, you should build the affordable housing units on site. The only time we ever really spend TIF money on residential development is on large high-rise projects, which also happen to be in areas near mass transit that need affordable housing.”
The mayor’s office said it is reviewing the proposal by Pawar and Moreno.
In an emailed statement, spokesman Grant Klinzman noted that, in the five years since taking office, Emanuel has “fought to preserve and expand” affordable housing in Chicago — to the tune of 38,465 units.
And Klinzman noted that the revised ordinance approved last year doubled — to $20 million — the amount of annual funding generated and more than tripled the number of units constructed annually to 135.
In 2014, the administration worked to pass a framework for preserving affordable single-room occupancy (SRO) buildings throughout the city. At least five SROs are currently being preserved and rehabbed as a result
Last year, the City Council approved a new Affordable Housing Ordinance that includes dramatically higher fees and construction mandates that, City Hall predicted, would create 1,200 new units of affordable housing and generate $90 million over five years that could be used to build affordable housing.
The old ordinance offered a choice to developers of projects with 10 or more new or rehabilitated units that involve zoning change, a planned development designation, city land or a city subsidy.
They could either make 10 percent of new residential units affordable or pay a fee of $100,000 for every unit they don’t build.
Emanuel’s new version carved the city up into three different zones and imposed a wide range of fees, depending on the location.
For downtown developers and those who build in higher-income census tracts, the fee was raised to $175,000 and $125,000 respectively for every unit they don’t build.
In neighborhoods dominated by low-to-moderate income residents, the fee dropped to $50,000 per unit.
The mayor’s ordinance also required at least 25 percent of a project’s affordability requirement to be filled with on-site units with two exceptions.
Downtown rental projects and rental or condo projects in higher-income areas had the option to build, buy or renovate the required units within 2 miles as long as it’s in the same zone.
And downtown condo projects could build, buy or rehabilitate the required units anywhere in the city.
The higher fees were phased in over a one-year period.