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Policy and governance » Inclusionary zoning

Inclusionary Zoning Ordinance

Highland Park, Lake County

The Highland Park Inclusionary Zoning ordinance has allowed Highland Park to pursue affordable housing development that would have otherwise been extremely difficult to create.

Goal

To address affordable housing needs in Highland Park.

Target

Homeowners earning at or below 120 percent of area median income (AMI), with a focus on families earning below 80 percent AMI; renters earning at or below 120 percent of AMI, with a focus on households earning both 80 percent and 50 percent of AMI.

Financing

The ordinance provides for fee waivers and a density bonus to offset the cost of compliance with the ordinance. There is no direct funding attached to the policy.

Success

As of September 2014, the ordinance has led to the creation of four affordable units within the city in two separate developments, with development agreements for another 20 units.

Lessons learned

While an inclusionary housing policy does provide predictability for the City and development community, there was an initial adjustment period during which developers and City staff learned how to make the program work.

Policy background

The first of its kind in the Chicago region, the Highland Park Inclusionary Housing ordinance requires developments over five units to include affordably priced homes. Stemming from the City’s Master Plan process and a key component of its Affordable Housing Plan, the Inclusionary Housing ordinance was approved by the City Council in August 2003.

How it works

The policy requires that developers of buildings with five residential units or more provide 20 percent of the total units for sale or rent at affordable rates to income-qualified households. Examples of buildings covered by the ordinance include:

  • New construction;
  • Renovation or reconstruction of existing multifamily housing that increases the number of residential units in the building;
  • A change in the use of an existing building from non-residential to residential; and
  • Conversion of a rental property to a condominium.

The developer may make a cash payment in lieu of constructing some or all of the affordable homes only if the covered development is a single-family, detached development that has no more than 19 units. The per-unit in-lieu fee amount is determined by the City Council, set forth in the City’s annual fee resolution and assessed only once to the developer. All revenue from the in-lieu fee is transferred to the City’s Affordable Housing Trust Fund.

The inclusionary zoning ordinance provides for fee waivers on a case-by-case basis and a density bonus to offset the cost of developer compliance with the ordinance. Waived fees are applicable only to the affordable homes and include fees for applications, building permits, plan reviews, inspections, sewer and water tap-ons, demolition permits, the demolition tax and other development fees and costs that may be imposed by the City. To the extent there are impact fees attributable to the affordable homes, those are paid from funds in the Affordable Housing Trust Fund.

The affordable homes are made available to families or individuals making up to 120 percent of area median income (AMI), which was $86,880 for a family of four in 2014. In for-sale developments, at least one and no less than 50 percent of the affordable units must go to families or individuals making no more than 80 percent of AMI, which was $57,900 for a family of four in 2014. All other affordable for-sale homes are available to anyone earning up to 120 percent of AMI. Within each income tier, pricing requirements are imposed to ensure a range of affordability. In rental properties, at least one-third of the affordable homes must go to those with incomes less than 50 percent of AMI, which was $36,200 for a family of four in 2014; one-third to those at 51 to 80 percent AMI; and no more than one-third to those making 80 to 120 percent AMI. For-sale homes are kept affordable by attaching deed restrictions in perpetuity or for as long as legally allowed. The deed restrictions include a resale formula designed to ensure a fair-market return on the investment to the owner and a requirement that the homes be resold at an affordable rate to an income-qualified buyer. Apartments are kept affordable for 25 years.

Affordable homes must be dispersed throughout the development, visually compatible and built concurrently with market-rate units. External building materials must be the same as market-rate units. Internal fixtures and finishes do not need to be the same, except for energy-efficiency improvements.

Public involvement

To establish the Highland Park Inclusionary Housing Ordinance, the Plan Commission held public hearings at its regular meetings in February, March and April 2003, to gather public input regarding the ordinance. The Plan Commission approved the necessary amendment to the zoning code to establish the Inclusionary Zoning Ordinance at its April 2003 meeting. In addition to the Plan Commission meetings, the City held several meetings with key stakeholders and developers.

Most of the concerns raised at these meetings came from the development and realtor communities. Developers did not know how the policy would be implemented and feared that inclusionary zoning would raise their costs of working in Highland Park. Discussions with the development community provided valuable input into how the City could best craft the policy. The Illinois Association of Realtors was unclear about the general goals of the policy and was concerned the cost would be borne solely by the development community. Highland Park officials met with them to clear up any misconceptions and provide them with accurate information. Several members of the public testified in favor of the inclusionary zoning ordinance during the public approval process.

This ordinance has allowed the City to pursue affordable housing development that would have otherwise been extremely difficult to create. As of September 2014, there have been four units completed in two developments, with development agreements for another 20 units.

Contact

Department of Community Development, City of Highland Park
847-432-0867, www.cityhpil.com

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