Lightfoot proposes massive rewrite of affordable housing ordinance

Mayor Lori Lightfoot is finally delivering on her campaign promise to raise the bar for developers required to build affordable housing — but her effort doesn’t go far enough to satisfy some progressive aldermen.

Shortly after taking office, Lightfoot appointed a 20-member task force charged with revising an “Affordable Requirements Ordinance” that applies to developers receiving city subsidies, city land or a zoning change whose projects include ten or more housing units.

At Wednesday’s City Council meeting, the mayor finally introduced the product of their work: a massive rewrite tailor-made to create family units, generate more money to build affordable housing and chip away at a 116,000-unit shortage of affordable units driving the decline in school enrollment and the city’s overall population.

The existing ordinance requires developers to make 10% to 20% of units they build or renovate affordable or pay hefty fees “in lieu of” building on-site units.

The new ordinance raises the minimum to 20%, but only downtown or in neighborhoods facing displacement of low-income residents or that have low levels of affordable housing.

Developers would still be able to pay their way out of building affordable units, but those so-called “in lieu of” fees could only cover 50% of the units, instead of 75%.

The ordinance also:

• Includes mandates and incentives to encourage developers to create more “deeply affordable” units and units big enough to accommodate Chicago families. All affordable units built off-site would have to include at least two bedrooms.

• States that if the project is in a transit-oriented development zone, affordable units built off-site also must be located close to mass transit. Developers who add affordable units or reduce parking spaces in projects near mass transit stations would qualify for a “density bonus” allowing them to build bigger projects.

• Continues to let developers satisfy affordable housing requirements by building units off-site. But instead of requiring those units be built within two miles of the project, the new units could be built downtown or in any Chicago neighborhood with a shortage of affordable housing or where low-income residents are being displaced. A minimum of one-third of affordable units in those areas must be earmarked for renters earning less than 50% of the median income in that area. The goal is “more choices” for families in desperate need of affordable housing, officials said.

• Gives developers the flexibility to build fewer affordable units by reducing rents or increasing units that accommodate families. Downtown, for example, the affordable housing set aside could be cut from 20% to 10% if units are made available to those who earn less than 30% of the area median income.

Ald. Harry Osterman (48th), chairman of the City Council’s Housing Committee, said the overhaul “strikes an important balance,” adding that “20% affordable in a building is a significant step forward. It doubles the amount that’s required.”

Why not raise the affordable housing set-aside to 30% and ban both off-site units and “in lieu of” fees?

“Many of us would love to have it be much more. But I’ve seen situations where developers will build smaller buildings with no affordable [units] — zero — instead of building buildings that they can that would have affordable units,” Osterman said.

“If we can’t get them to build — if they’re gonna choose to build in Evanston or Oak Park or in Texas, then they’re not gonna be building units in the city of Chicago.”

Ald. Byron Sigcho-Lopez (25th) served on the task force but was deeply disappointed by the final product. He’s among those pushing an alternative rewrite with lower income levels, bigger units and a set-aside requirement up to 30% in gentrifying and affluent areas.

“We are not creating nearly enough family-size units. … Unfortunately, we continue to see one-bedrooms and studios that are not enough to address the issue of affordability we have citywide. The changes have to be in line with what’s needed to create stable communities — not what is convenient for developers to meet their profit margins.”

North Side Ald. Maria Hadden (49th) was equally disappointed.

“Chicago has been doing thousands a year while other cities have been doing tens of thousands,” Hadden said.

“The other piece of that is really understanding the role that segregation has had in our landscape for housing. When we look at that 30% [set-aside requirement], those are what we should be in the highest-income areas to really help achieve that goal” of affordability.

Kevin Jackson of the Chicago Rehab Network argued it “makes good sense” to continue to let developers to buy their way out of the affordable housing requirement and establish a 20% set-aside, but there could be exceptions.

“When we were looking at the creation of Lincoln Yards and other mega-development sites that were fresh and new, that should have had a higher level than what was required from TIF. That would have been a smart place to increase the level,” he said.