Housing commissioner says budget shortfall will make it tougher to solve affordable housing crisis

Marisa Novara says it’s “painful to me to be in the realities of our fiscal situation.”

SHARE Housing commissioner says budget shortfall will make it tougher to solve affordable housing crisis

A top mayoral aide Friday bemoaned the budget crisis that will make it tough for Mayor Lori Lightfoot to use an increased real estate transfer tax to reduce homelessness and bankroll affordable housing.

Housing Commissioner Marisa Novara helped draft Lightfoot’s housing platform while serving as a vice president of the Metropolitan Planning Council and overseeing a study on the $4.4 billion “cost of segregation” in Chicago.

It called for a graduated real estate transfer tax to “create a dedicated revenue stream” to reduce homelessness by 45 percent and begin to chip away at a 120,000-unit shortage of affordable units now driving Chicago’s population decline.

Lightfoot still plans to ask the Illinois General Assembly to empower Chicago to raise its real estate transfer tax but wants to use the projected $120 million a year in new revenue to close a $1 billion-plus budget shortfall.

That has Novara going back to the drawing board to find other ways to solve the gentrification/affordable housing crisis that was a driving force behind the election of six aldermen backed by the Democratic Socialists of America.

“I share the concerns of the folks pushing for this … This is an issue that I come to with a lot of history on and a lot of passion for. And it’s painful to me to be in the realities of our fiscal situation,” Novara told the Chicago Sun-Times.

“We’re really clear on our commitment to addressing homelessness, to providing more resources for affordable housing. But it’s really early for us to figure out exactly how. We’re still getting our arms around the fiscal challenge we’re in.”

Rachel Johnston, a senior staffer for the Chicago Rehab Network, has urged the city to dedicate “a portion” of its annual general obligation bond revenue to solve the affordable housing crisis.

Novara threw cold water on that idea. She argued the city already has “revenue bonds that go unused each year because they don’t generate enough money for affordable deals to work. They need more cash.”

She’s working on ways to lower those costs, perhaps by seeking legislative approval for a New York-style tax abatement for developers who build affordable units.

For years, the unwritten rule known as “aldermanic prerogative” has allowed Chicago aldermen to control local zoning to keep affordable housing out of their wards.

Lightfoot has issued an executive order that stripped aldermen of their unbridled control over licensing and permitting. She has promised to do the same for their control over zoning, but that will require a City Council vote that is certain to be contentious.

On Friday, Novara argued there is no turning back if Chicago ever hopes to eliminate its affordable housing crisis.

“Either we believe that every community needs to contribute to the city’s affordable housing needs or we believe it’s optional,” she said.

“If we believe it’s optional, then we are saying we’re fine with perpetuating the segregation that we’ve created. That’s not what this mayor ran on. It’s not what she won on decisively in all 50 wards. We need to chart a very different path.”

How will that be done?

“You set up a system in which people can’t say no to affordable housing for reasons that aren’t based on fact,” Novara said.

During her City Council confirmation hearing, aldermen urged Novara to do the little things that chip away at the affordable housing shortage. She’s working on it.

“This is what I like to call ‘small density.’ We’re making it easier, we’re making it legal — for people to actually use their coach houses for a rental unit or legalize their basement or their attic,” Novara said.

The so-called “tiny houses” suggested by former Mayor Rahm Emanuel could be part of the solution, too.

Novara said the city is looking for ways to “creatively address the need for units and ways to get at affordability that don’t involve waiting in line for low-income tax credits or waiting in line for housing choice vouchers, both of which are over-subscribed.”

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