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Policy and governance » Inclusionary zoning

Inclusionary Housing Ordinance

Evanston, Cook County

Goal

Increase the number of affordable units in market rate developments by amending Evanston’s existing Inclusionary Housing Ordinance (IHO) and creating incentives to build units in areas near transit.

Target

Developers and low- and moderate-income families

Financing

Evanston’s new IHO provides incentives when affordable units are included on-site including permit fee waivers and deferrals; density, height and FAR bonuses; and parking reductions to offset the cost of compliance. Developers who choose to pay the fee in lieu of on-site units do not qualify for these bonuses.

Success

Since implemented on January 1, 2016, there have been 2 developments impacted by the ordinance: A 44-unit mixed use project that includes four affordable units, two each at 50% and 60% of the area median income (AMI) and a second development who chose the fee which results in $2.4 million to the City’s Affordable Housing Fund.

Lessons learned

  • To obtain buy-in and understanding, cities must invest time with developers to help them understand the benefits of a policy.
  • Flexibility is critical. The ordinance allows developers to propose an alternative of addressing affordable housing without compromising the core principles of the ordinance.

Policy background

In January 2016, the City of Evanston began implementing an amended version of its IHO, a policy that was initially approved in 2007 to generate new units of affordable housing. Under the original version of the ordinance, projects had to be for-sale, planned developments with 25 units or more. The amended IHO was adopted to broaden the types of projects that would be covered under the ordinance, and is responsive to different development climates in the City’s transit oriented development (TOD) areas and non-TOD areas.

How it works

TOD areas were defined by the City as part of this ordinance. Most of the TOD areas comprise a ¼ to ½ mile radius of CTA and Metra rail stations. In designated TOD areas, any project with 5 or more units would be covered under the revised ordinance. Any project with 10 or more units in non-TOD areas would need to comply with the ordinance. Examples of projects that are covered by the IHO include:

  • New construction
  • Renovation or reconstruction of existing multifamily housing that increases the number of residential units in the building
  • Conversions of buildings from rental to owner or owner to rental
  • Mixed-use and adaptive reuse projects

For developments that are privately funded, 10 percent of the total number of dwelling units in a qualifying development need to be affordable. 20 percent of the total number of dwelling units in a qualifying development need to be made affordable if a project receives public funds.

Developers can opt to pay $100,000 /unit in a TOD area or $75,000/unit in a non-TOD area in lieu of providing affordable units required under the IHO. The in lieu fees are deposited into the affordable housing fund which helps to build and preserve affordable units and provide other services related to affordable housing. Under the guidelines of the IHO, developers also have the opportunity to submit an alternative equivalent proposal to meet the requirements of the ordinance. This may include the construction of the affordable units on another site or including fewer on-site affordable units than required at greater levels of affordability (e.g. units available to households at 30 percent AMI). All alternative proposals must be reviewed and approved by the City Council.

For owner-occupied units in TOD areas created through the IHO, 50 percent of units must be sold to households earning up to 100 percent AMI and 50 percent must be sold to households earning up to 80 percent AMI. For renter-occupied units, 50 percent of units must be leased to households earning up to 60 percent AMI and 50 percent must be leased to households earning up to 50 percent AMI. For owner-occupied units in non-TOD areas created through the IHO, 50 percent of units must be sold to households earning up to 120 percent AMI and 50 percent must be sold to households earning up to 80 percent AMI. For renter-occupied units, 50 percent of units must be leased to households earning up to 80 percent AMI and 50 percent must be leased to households earning up to 60 percent AMI.

Public involvement

It took the City about a year and a half to draft, approve and begin implementation of the revised IHO. Input from stakeholders was sought throughout the process, including through a large community meeting attended by City residents, businesses, developers and community organizations in order to share plans for the revision of the IHO and solicit feedback on how to make the policy more effective. The City is continuing to look into other policy measures including impact fees on developments not covered by the IHO, zoning changes to allow accessory dwelling units and changes to occupancy standards to further address Evanston’s affordable housing goals.

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