Two Extremes of Residential Segregation (Part 3 of 3)
In the third part of this three-part blog series, we identify ways more affluent areas can be more inclusive. (You can read our more lengthy paper for Harvard’s Joint Center for Housing Policy’s April symposium in its full glory here.)
When it comes to improving integration in strong markets, we have found no shortage of ideas. These range from improved Housing Choice Voucher portability to innovative structures for hard units in opportunity areas, such as Chicago’s own Regional Housing Initiative. HUD’s recent emphasis on Affirmatively Furthering Fair Housing has furthered this trend. And, many state housing authorities—including Illinois’—adjusted their criteria for the allocation of Low Income Housing Tax Credits to provide incentives to develop affordable units in strong markets.
However, strong markets have their own set of unique challenges. Efforts to induce the inclusion of affordable housing are sometimes met with resistance and even lawsuits. Just this year, a Cook County suburb paid out $2.45 million in a settlement to a non-profit development company to stop them from building 47 units of affordable rental housing.
In another example, residents of the north side Chicago neighborhood of Jefferson Park have galvanized opposition against a new housing development that consists of both market-rate and affordable units, including those set-aside for people with disabilities and veterans. It is worth noting that, according to the Chicago Rehab Network, nearly half of this community area’s current residents earn at or below the income threshold set for the “affordable” units. What are the prospects for inclusion in the Chicago region when so many still reject the idea of lower-income people living near them, even when they already do?
Learning from Massachusetts
We are intrigued by efforts in other states to regulate their way to higher integration. Housing policymakers often cite Massachusetts’ 40B, the Comprehensive Permit Act, which allows developers to override local zoning in areas where less than 10 percent of housing stock is affordable. Since it was enacted in 1969, studies show that 40B has accounted for 60 percent of all new affordable units in the state. 
This sounds like an ideal model, except for the political realities in Illinois. Our own attempt at a similar statewide law, the Affordable Housing Planning and Appeals Act (AHPAA) of 2004, was so gutted in negotiations for passage that it has no enforcement mechanism. In 2015, 68 Illinois municipalities fell short of meeting the ten percent affordable housing goal, yet 40 of those municipalities or nearly 60 percent begged off the need to reach at least 10 percent affordability because of their home rule status.
In 2015, 68 Illinois municipalities fell short of meeting the ten percent affordable housing goal.
As an alternative for communities chafing against 40B, more recently the state enacted two measures with incentives to provide affordable housing rather than regulations. We are interested in 40R, one of these more recent measures which provides financial incentives to communities that establish a smart growth zoning district (SGZD) requiring dense residential development and at least 20 percent of any housing developed as affordable to those earning 80 percent of the area median income.
From a political standpoint, while the State of Illinois is mired in budget gridlock, incentive payments created out of real estate transaction fees has some chance of passage, particularly if it were initially enacted in a smaller, more progressive geography than the state as a whole. Perhaps Cook County could be a test case.
Our experience with the City of Chicago’s Affordable Requirements Ordinance (ARO) and Transit Oriented Development Ordinances has been that incremental change is possible and perhaps even preferable when it comes to changing hearts and minds of developers and community members alike.  If local control is king, incremental but steady change may be our best hope.
In other times in history, we have seen massive shifts in political will and policy due to catastrophic national and worldwide events: the Great Depression, the Civil Rights Movement and social unrest of the 1960s, the Great Recession. Perhaps for Chicago, this time the impetus is much more local, and the time is ripe for boldness to address Chicago’s inequality and segregation.
MPC Research Assistant Andres Villatoro contributed to this research. Read Part 1 and Part 2 of this series.
 Heudorfer, Bonnie, Chase Billingham, Barry Bluestone, and Lauren Nicoll. “The Greater Boston Housing Report Card 2006-2007: An Assessment of Progress on Housing in the Greater Boston Area.” Boston. MA: The Center for Urban and Regional Policy, 2007.
 Originally created in 2003, the City’s Affordable Requirements Ordinance (ARO) was revised in 2015 to require that any residential development seeking city land, city financial assistance or a zoning change provide 10 percent of its units as affordable to tenants making 60 percent of the Area Median Income. 25 percent of the required units must be built on site, and developers have the option to pay a “fee in lieu” for the remaining units. Some Aldermen with strong markets require a minimum of the full 10 percent affordable units to be built on site, with one Alderman requiring as high as 21 percent. While much of the for-profit development community protested this change and one group even sued the City (the suit was dismissed), the City’s Deptartment of Planning and Development reports that development applications increased 36 percent in the year after the new rules went into effect as compared to the year before.
Originally passed in 2013, the City of Chicago increased incentives for quality development near transit stations through a revised Transit Oriented Development Ordinance in 2015. The revised ordinance increased allowable parking reductions, density, and affordability, as well as expanding the applicable radius for these changes. To date, developers have largely taken advantage of this ordinance in strong markets. The Metropolitan Planning Council is working to raise awareness of the benefits of dense development near transit in weak markets as well, and has created an online calculator to assist the public with quantifying the benefits of increased tax base, local spending, transit riders and affordability.