Strengthening Chicago’s Affordable Requirements Ordinance: Tailor-made incentives for affordable living - Metropolitan Planning Council

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Strengthening Chicago’s Affordable Requirements Ordinance: Tailor-made incentives for affordable living

Flickr user Justin Kern (cc)

When the City of Chicago’s Dept. of Planning and Development released its Five-Year Housing Plan in early 2014, it was encouraging to see a commitment to exploring how to strengthen the Affordable Requirements Ordinance. However, the Ordinance doesn’t always fulfill its goals. In this series, the Metropolitan Planning Council (MPC) will explore a variety of ways to strengthen this ordinance and equip it to deliver results that Chicago’s residents desperately need.

The policy debate over the Affordable Requirements Ordinance has me considering the many ways that we label neighborhoods and communities as part of crafting policy interventions. From strong markets to distressed communities to opportunity areas to transitional neighborhoods, there are a million ways to assess a community, its amenities and trajectory. The Affordable Requirements Ordinance could benefit from tailoring its program to make a distinction between different types of communities, like the Regional Housing Initiative did in 2011.

For the past three years I’ve managed the Regional Housing Initiative, a Metropolitan Planning Council-led project that pools housing authority resources to support privately developed affordable and mixed-income housing in “opportunity areas.” Labeling neighborhoods as “opportunity” or “traditional” has a long history rooted in court cases, such as Chicago’s Gautreaux case that pursued desegregation of public housing, and with programs to help low-income households access communities with lower levels of racial segregation and poverty. In 2011, the Regional Housing Initiative adopted a definition of “opportunity areas” to guide how the initiative distributes housing resources across the region, ultimately using the U.S. Dept. of Housing and Urban Development’s Fair Housing and Equity Assessment data on school performance, labor market engagement, job access, transit access, housing stability and poverty.

The housing stability index in the metric above models data on homeownership rates, percent of refinanced, low-cost loans, percent of low-cost loans for new purchases, percent vacant and percent overcrowded. The Affordable Requirements Ordinance could be more prescriptive when it comes to whether a developer is granted fee-in-lieu or mandated on-site units based on the characteristics of the local housing market. For example, New York City designated Geographic Exclusion Zones—those with profitable markets—which come with additional incentives to ensure that affordable units are provided on-site.

In New York’s Geographic Exclusion Zones, developments are eligible for a property tax exemption if 20 percent of the units are affordable. Property owners are exempt from paying increases in property tax resulting from development, and the exemptions phase out over a 20-year period. MPC encourages the City of Chicago’s Department of Planning and Development to work with Cook County’s Assessor’s office to explore additional property tax incentives. With such an incentive in place, we advocate that at least 50 percent of units must be built on site in certain high-value neighborhoods with profitable housing markets, such as the Near North, Old Town and other strong areas. We understand that given the state’s Constitution, such property tax incentives may require enabling legislation at the state level.

With overdue pension payments casting a pall over the City’s budget, we expect the question of whether the city and tax payers can afford to forgo new taxes. While a reasonable question and one that warrants a full vetting of the financial implications, we would note that the status quo has tremendous cost to the city and its residents as well. The fact that the majority of the city’s affordable housing is clustered on the south and west sides has a cost, and we all pay directly or indirectly through measures such as health, crime and educational outcomes. With all signs trending to ever-increasing concentrations of race and poverty, this opportunity to amend the Affordable Requirements Ordinance is a time for bold action.

Want to learn more? Take a look at the other posts in the series.

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