Chicago Tribune: Sides to face off on Chicago’s affordable housing proposal

By Mary Ellen Podmolik, Housing Reporter

Some of Chicago’s most active residential developers are headed to City Hall on Wednesday to warn council members what will happen to the city’s housing renaissance if a proposal to boost affordable housing sails through unchanged.

Development won’t grind to a halt, they say. In fact, there will be a rush of activity as companies try to push projects through the city’s approval process before the new rules would take effect. After that, though, market-rate multifamily developers will look at other cities and residential building will slow. And those won’t be the only changes, they caution.

“If this passes, I believe the city will get less affordable housing, less development, less jobs and less growth,” said Greg Mutz, chairman and CEO of Amli Residential.

But that’s not how affordable-housing advocates see the city’s proposed revisions to the affordable requirements ordinance, which has allowed developers to pay fees in lieu of developing affordable housing. After months of closed-door meetings with builders and housing advocates, the city is pushing forward amendments to the law that have garnered the support of agencies serving Chicago’s neediest populations.

“This is going to help the people in our city that struggle the most,” said Eithne McMenamin, associate director of policy at the Chicago Coalition for the Homeless.

Last year, a separate ordinance helped regulate the development of single-room-occupancy hotels into market-rate housing. Now, the city is tackling the high rents and home prices putting buildings out of reach for some.

Under the proposal, the city would be split into three zones — downtown, high-income census tracts and low- to moderate-income census tracts. Multifamily housing developers that seek zoning changes, city-owned land or city financial assistance would face different rules and fees based on the project’s address and whether it was a rental or condominium building.

Currently, developers citywide can either reserve a portion of their units for low- to middle-income families or pay a flat fee of $100,000 per required unit. But under the proposed changes, developers no longer would necessarily be able to meet their obligation by writing a check. Some would have to develop affordable housing, either on-site or off.

A group of developers supports a smaller increase in fees but wants them phased in and wants the ordinance to take effect six months after it passes, rather than the proposed 90 days.

“We’ve given them a lot to chew on,” said Steve Fifield, chairman and chief executive of Fifield Cos., whose Chicago projects include K2 and Alta at K Station in the West Loop. “Why the big rush? Why not let us weigh in a little further? We’ve only begun the meaningful discussion with them in the last 60 days.”

As of Tuesday afternoon the measure remains largely the same as it was when it was introduced last month. It will be discussed at a council committee meeting Wednesday.

Other cities also are grappling with the issue of affordable, inclusionary housing. Seattle, for instance, is working on a proposed ordinance that, like Chicago, would charge different fees depending on location.

Barring a housing market downturn, Chicago estimates its proposal would create 1,200 affordable units, half of those within or near market-rate housing, and more than $95 million in in-lieu fees by 2020.

Deals that proceed, opponents say, largely will be limited to those that don’t require a zoning change, thus limiting the fees that the city receives to support affordable housing.

Alan Lev, president and CEO of Belgravia Group, said the company’s planned 50-unit condo project in River North would proceed as planned because paperwork for the zoning change already has been submitted. Future projects, though, would be affected. “If there’s any kind of zoning that I can remotely live with, I’ll live with it.”