Mayor Rahm Emanuel’s complex solution to Chicago’s affordable-housing crisis sailed through the City Council Wednesday, despite persistent concern about stifling development and pricing out middle-class consumers.
Assuming “positive market conditions,” City Hall has predicted that the dramatically higher fees and construction mandates will create 1,200 new units of affordable housing and generate $90 million over the next five years that can be used to build affordable housing.
If that rosy prediction turns out to be accurate, Ald. Ariel Reboyras (30th) said he’ll be thrilled. He acknowledged that Chicago desperately needs to create more affordable-housing units to avoid becoming a city of the very rich and the very poor.
But Reboyras said, “I do caution, however, that we monitor the pace of development closely and make adjustments accordingly should the need arise for requirements that will slow development of housing in our city. It is through increased housing developments that we add more affordable housing and grow our tax base, so that we lessen the burden on our homeowners. Chicago cannot afford to lose one project.”
Ald. Walter Burnett (27th), chief sponsor of the affordable-housing ordinance, said fears that the fees and mandates will stifle development have been proven wrong in other major cities and will be proven wrong in Chicago. In fact, Burnett believes the ordinance will help Emanuel counter criticism that his development efforts have been downtown-centric.
Emanuel has confronted the affordable-housing issue as part of a broader effort to shed the “Mayor 1 percent” label that his challenger, Jesus “Chuy” Garcia, has pinned on him. The mayor’s shift to the political left also includes raising Chicago’s minimum wage to $13 an hour by 2019.
“We came up with a great compromise to keep this thing moving forward. We got rid of the loopholes that developers had in the downtown area, where they were able to loophole their way out of any affordable housing. He got rid of that. He increased the fees and the amount of money that’s going to go to the trust fund — from 40 to 50 percent,” Burnett said. “This is going to help a lot of people throughout the city. Although a lot of the major development is happening in the downtown community, when that money is increased into that trust fund, it will help all of the wards throughout the city of Chicago.”
Burnett then pointed to the resistance he got from former Mayor Richard M. Daley on affordable-housing issues. “For me, this is like a night-and-day issue dealing with affordable housing with this administration,” he said.
Last month, two powerful aldermen concerned about stifling development and pricing out middle-class consumers temporarily derailed the plan to require downtown developers who fail to build their own units within reach for low- and moderate-income residents to pay dramatically higher fees.
Budget Committee Chairman Carrie Austin (34th) was concerned the higher fees could have a chilling effect on development.
Downtown Ald. Brendan Reilly (42nd) cited the concerns raised by the development and construction industries about the fee structure saddling them with millions in added costs that “could jeopardize financing for major projects.”
On Wednesday, Reilly said negotiations that literally continued up until just minutes before the Council vote had produced an acceptable compromise. “I was satisfied with the changes that resulted from Chairman Austin and me deferring it last month. It `improved with age,’ so to speak,” Reilly wrote in an email to the Chicago Sun-Times.
Chicago’s existing “affordable requirements ordinance” offers 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 can either make 10 percent of new residential units affordable or pay a fee of $100,000 for every unit they don’t build. Emanuel wants to carve the city up into three different zones and impose a wide range of fees, depending on the location.
For downtown developers and those who build in higher-income census tracts, the fee would rise 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 would drop to $50,000 per unit.
The mayor’s ordinance would also require 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 would have the option to build, buy or renovate the required units within two 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 compromise would be effective in 180 days with the higher fees phased in over a one-year period.