My name is King Harris. I am a Senior Executive with Chicago Metropolis 2020 and a former CEO of a large industrial company.
For the last two years we at Metropolis 2020 have been asking ourselves the same questions your Committee has been asking in the last few weeks at the hearings you have conducted in Chicago, Naperville and now in Springfield:
- How serious are Illinois’ current housing problems?
- How will future trends in population growth, economic development, transportation and housing impact Illinois housing markets?
- What can be done to address our housing problems, especially now when we are facing a substantial shortfall in state revenues?
As we all have come to realize, the human cost of an inadequate supply of affordable housing is very real. It is tragic if a family must balance the demands of next month’s rent against putting food on the table or providing proper resources for children.
We should also realize, though, that a shortage of affordable housing can and will have a serious impact on our region in terms of economic development and job creation. Businesses are increasingly avoiding or simply moving away from states and regions that ignore their housing problems. Northern California is a case in point here. To the extent that housing is not available near job centers, especially growing job centers, worker commutes get longer, employee stress grows, turnover rates increase and fewer people are available to fill job openings.The business community here in Illinois does not want to duplicate Northern California’s experience.
The monograph on Housing we published in June, which I believe all of you have seen, summarizes in detail the current crisis affecting housing markets in Northeastern Illinois where 80% of our state’s residents live. We have a huge shortage of affordable housing affecting low income families, a shortage that exceeds 150,000 units. We have a major overcrowding problem affecting 85,000 families. We have over 730,000 families (2,000,000 people) under serious financial strain because they are spending over 30% of their income to pay rent or mortgage payments. Those of us who employ people and depend on their talent and productivity to make our businesses succeed are very concerned because the housing crisis is of major concern to working class people – factory workers, clerical employees, hospital workers, and skilled trades people. These people, whose family incomes can range between $30,000 and $70,000, are having a harder and harder time finding an affordable place to live. Homes that they can afford, homes that sell from between $120,000 and $160,000, are not being built in areas where jobs are being created.
The affordable or, as we call it, the attainable housing crisis is getting worse, not better. Our projections indicate that our Northeastern Illinois region will have to increase its supply of affordable housing by 8,100 to 9,600 units per year over the next 20 years just to meet the needs of our expanding population. In fact, we are producing just a small fraction of that number each year. Tear downs, rental-to-condo conversions, home abandonments and escalating home prices are offsetting positive gains produced when new, affordable units are brought on the market.
What are we to do to address our serious housing problems?
We have had the luxury over the last two years to speak with over 40 suburban mayors and county officials one-on-one about the problem. We have also spoken at length with housing experts and housing advocates. We have also spoken with members of the General Assembly who have emphatically reminded us of the State’s current budget shortfall.
The good news is that something can be done now and done at a reasonable price.
First, we can urge our new governor to develop a well thought out housing strategy for Illinois. We at Metropolis 2020 were quite surprised to find out that Illinois has no well thought out housing strategy or action plan. No successful business in this state operates without one.
Second, our state needs leadership on the housing issue. Leadership means more focus in the governor’s office on the issue and the appointment of a high ranking person with the authority to create and implement a housing action plan. Leadership also means more focus in the General Assembly on the issue. A special Housing Committee may address this need.
Third, by using incentives we need to encourage communities in Illinois to preserve their current stock of affordable housing and to create new affordable housing if they are expanding. The recently passed Local Planning Technical Assistance Act (HB 4023) represents a start on accomplishing this aim. The Act calls for the creation of local plans to promote the creation and preservation of affordable housing in a given community based on local and regional needs and, more importantly, calls for the elimination of local barriers to affordable housing. We believe that the State can get more positive results from planning legislation by:
- Amending the Local Planning Technical Assistance Act so that it requires Illinois communities to establish housing development policies which eliminate local barriers to affordable housing and create a broad range of housing to meet the needs of current and future residents.
- Preparing a model planning ordinance for a community to follow as it strives to create a full range of housing choices for its citizens
- Providing specific guidance to communities regarding strategies to create more affordable housing
- Clearly giving preference in terms of infrastructure grant funding to communities whose plans meet the housing guidelines mentioned above and who are producing housing according to those plans.
We believe that our expanding communities should be modifying their zoning ordinances so that a reasonable amount of affordable housing can be built in the future. While we are not in favor of rigid mandates or inclusionary zoning rules, we do believe that healthy, growing communities need a range of housing choices, a range that includes a meaningful amount of housing for working families. As for our built out communities, they can be identifying strategies to preserve the workforce housing that they have. Preservation may include increased code enforcement and rehabilitation. It also may include some kind of land banking for the construction of affordable housing, especially housing for senior citizens. I would point to my own home town of Highland Park as an example of what a built-out community can do.
What more is needed? We need a modest amount of money to aid lower income families whose needs are urgent and critical:
- Creating a State-wide rental housing support program modeled after Chicago’s successful program makes sense and may, in the end, save money by defraying social service expenses created when families find themselves homeless
- Increasing funding to our Family Homelessness Prevention Program is also a must. As someone who spent over two years in his youth as a city anti-poverty program director, I know first hand what this kind of funding can do for a family in crisis
- Providing a modest State tax incentive to property owners in low poverty areas who rent to Housing Choice Voucher holders can help make our all-important voucher program more successful.
We can also get business more involved in the creation of affordable housing. We can tie our popular first-time homeowner assistance programs to private-sector-financed employer assisted housing programs by giving preference for such public assistance to applicants receiving matching funds from their employers.
We can take other non-financial steps to address our housing problems as well:
- We can crack down further on predatory lending
- We can pass legislation to address the credit reporting abuses identified by Beth Llewellyn in her Chicago testimony
All the important steps I have outlined above can be done for a modest amount of money. If we take these steps, we will definitely be moving in the right direction in terms of housing policy.
I have, however, made no mention yet about our critical need for additional multi-unit affordable rental housing for senior citizens and for families. During the affluent 1990s, the number of rental units in Chicago and Cook County actually declined despite an increase in population. In DuPage, Lake and Will Counties, rental housing growth badly lagged population growth. Very, very few affordable rental units are being built anywhere in Illinois despite the obvious need for them.
We all know that affordable rental housing requires significant public subsidies, subsidies which cannot be provided today by state government at a time of budget crisis. What we can do now is to fight to keep our existing federal housing support for affordable multi-unit housing construction and plan for a day, hopefully in the not-too-distant future, when more federal support for rental housing will be available. We can also consider allocating more of our State tax exempt bonds to affordable multi-unit housing construction and rehabilitation programs.
I want to close by making some comments about affordable housing and growth. As a recent report of the Illinois Growth Task Force notes, “Current decisions related to growth are greatly influenced by local desires to maximize property tax and sales tax revenue and to minimize service costs. This has led cities and counties to zone for lower density residential development and reject higher density development that is perceived as having a greater impact on local services including schools. Property owners wishing to build affordable single family or rental housing face density restrictions that make construction impossible in many communities. So, new affordable housing is built increasingly on the fringe of metropolitan areas, and new residents are traveling greater distances to get to work and have less access to public transit. The official transportation plan for Northeastern Illinois predicts that travel in congested conditions will increase 40% by 2020, even after completing all planned transportation projects.
“Frameworks and incentives are needed to encourage effective intergovernmental and regional land use and transportation planning and to make it easier for property owners, developers and businesses to invest in ways that most benefit a regional area. Policies should be tailored to recognize the different needs of metropolitan, rural and economically struggling areas.”
Thank you for this opportunity to testify. We at Metropolis 2020 are prepared to help on any new housing initiatives you create.