Chicago Tribune: Aldermen OK stricter affordable housing law

By Mary Ellen Podmolik

Chicago aldermen still want residential developers to boost the supply of affordable housing within the city but are temporarily scaling back the stiff fees that will be charged to companies who’d rather pay than play.

Downtown apartment and condominium developers, who warned the city that the current hot streak of development would grind to a halt if onerous fees were imposed, caught a break. While they will pay more than they have to satisfy the city’s Affordable Requirements Ordinance, the law will not take effect for 180 days and after that, the steep fees won’t kick in for one year.

The ordinance passed by the Chicago City Council on Wednesday splits the city into three zones and will treat residential developers in each differently. The rules, designed to make 10 to 20 percent of the units in market-rate developments more affordable, only will apply to developers who seek a zoning change, city financial assistance or city-owned land. They were the subject of intense negotiation even after the council meeting began Wednesday.

More changes may be coming. Last-minute negotiations between the city, housing advocates and developers led to the substitute ordinance that was passed, but Ald. Ray Suarez, 31st, said there may be more amendments to it in May or June.

For years, most for-profit developers have written checks of $100,000 for every affordable unit they were supposed to include in their buildings, rather than actually adding them to the city’s housing stock.

Downtown apartment developers will now have to meet that 10 percent affordability requirement by creating 25 percent of those required units either on-site or off-site, within two miles of the building but still in a downtown or higher-income area. A developer could satisfy the rest of its requirement by paying smaller fees of $115,000 to $140,000 in the first year of the ordinance and $150,000 to $175,000 thereafter.

Downtown condo developers may satisfy the law by building units on-site, off-site or they can pay into the fund a sum that will increase after the first year to between $150,000 and $225,000 per required unit.

Developers in higher-income neighborhoods outside of downtown have no such phase-in period. They must provide 25 percent of the required units either on-site or off-site, within 2 miles and in either a similar or higher-income area. The remaining portion of the requirement can be met through a fee of $100,000 to $125,000.

In low- and moderate-income areas, developers must provide at least one-quarter of the required affordable units on-site. They could choose to pay $50,000 for each additional unit required.

“It’s a great start,” Suarez said. “It took a lot of hard negotiating.”

No aldermen opposed the measure, but several expressed concerns that they hoped the law would not slow development and that companies would look to create affordable for-sale homes in the city as well. “We still need to find the catalyst for for-sale units,” said Ald. Jason Ervin, 28th.

The original ordinance, passed in 2003 and updated in 2007, resulted in the creation of 189 on-site affordable rentals in market-rate developments and $53 million in in-lieu fees. The fees were used, in the form of rent subsidies, to help underwrite 2,500 apartment units, according to the city.