Chicago Tribune: Tougher affordable housing proposal heads to City Council

By Mary Ellen Podmolik, Housing Reporter

Mayor Rahm Emanuel’s administration made a few last-minute changes to a proposed affordable housing ordinance Tuesday night, seeking to garner more developer support for the proposal.

It didn’t work but it didn’t matter. Despite warnings that the measure will stifle development and jobs, a joint City Council committee approved the measure Wednesday.

The amendment to the city’s Affordable Requirements Ordinance next moves to the full City Council, although it is uncertain whether it will be considered before the mayoral election Feb. 24.

The proposal would require some for-profit developers to build affordable housing. If it passes along its current lines, developers will see their costs increase along with, presumably, the supply of affordable apartments and condominiums in Chicago.

Opposition to the city’s effort, which also includes much higher opt-out fees in hot city neighborhoods, came from developers, architects and the real estate community while housing advocates favored the measure. More than 20 people addressed aldermen, with many more submitting letters.

As proposed, the city would be split into three zones, one for downtown, one for high-income census areas and one for low- to moderate-income areas. Residential developers with projects involving 10 or more units that need a zoning change, city land or receive city financing would be required to make 10 to 20 percent of their on-site units affordable, build some of those units off-site or pay in-lieu fees ranging from $50,000 per required unit in low-income areas to as much as $175,000 for downtown apartments or $225,000 for downtown condominiums.

Andrew Mooney, commissioner of the city’s Department of Planning and Development, said the revisions, particularly regarding the on-site development requirement, have “some teeth” to them.

Currently, developers can opt out of the ordinance by paying $100,000 per required unit.

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

“The status quo is not achieving the city’s goal,” said Ald. Brendan Reilly, 42nd, adding later, “Looking at the downtown market, I do think there’s room to increase these fees.”

Several of those who opposed the measure said it would have the unintended consequence of quashing the supply of affordable housing because companies would limit their projects that would fall under the ordinance. Repeatedly, the committee was asked to defer the measure to allow for more discussion between interested parties and to get outside opinions about its true effect.

“It is rushed. it’s not thought out,” said Randy Fifield, vice chairman of Fifield Cos., which built more than 2,400 apartments in its West Loop K Station development. One consequence, she said, would be increased developer costs that are passed along to renters, in effect decreasing affordability throughout the market.

Adam Gross, director of the affordable housing program at Business and Professional People for the Public Interest, told alderman that there are more than 500 similar laws across the country, some more aggressive than Chicago’s proposal. “We just haven’t found the evidence that these ordinances cause a problem,” Gross said. “The market will adjust.”

Among the last-minute changes before the committee hearing: Companies could develop affordable sites within 2 miles of their original project, the city would look into potential property tax incentives for developers (although that would require the county’s input), and the city may tinker with the boundaries of the three zones.

Emanuel, speaking Wednesday at a new factory in the Pullman neighborhood, cited the proposal during a campaign speech touting his economic development efforts.

“We will also leverage the strength of our downtown to help provide more affordable housing in neighborhoods across Chicago,” he said. “We are on the cusp today of passing a reform ordinance that will generate nearly $100 million in affordable housing funds over the next four years from development in the downtown area, so we can see that affordable housing throughout the city of Chicago.

“These funds will be invested in creating affordable housing for families in fast-growing areas of Chicago to ensure that they are not priced out of the city. We will also use these funds to invest in quality housing in neighborhoods, just like Pullman that have suffered from years of underinvestment and the mortgage crisis.”

Tribune reporter Hal Dardick contributed.