Here’s what you need to know about Chicago’s Affordable Requirements Ordinance (ARO), and our current opportunity to advance a more equitable policy
Image courtesy Amy Khare
Lincoln Common, a development that includes affordable housing units and luxury condos, is located in Chicago's Lincoln Park on the site of former Children's Memorial Hospital
- By Amy Khare, Research Director, National Initiative on Mixed-Income Communities
- October 9, 2020
Chicago’s Affordable Requirements Ordinance (ARO) is undergoing a revision that will test just how committed city officials, real estate developers, and others are to advancing racially equitable, inclusive policies. To date, most of the 1,046 affordable housing units created since 2007 actually are not so affordable to Black and Latinx households, whose incomes are lower due to structural barriers in the labor market. According to the latest census data, Black and Latinx median household income in Chicago is about 30% and 45% respectively, when compared with White household income. To date, Chicago’s ARO has produced just 28 units for households at this lower-income level.
To address this, the revised ARO must advance racial equity as one of its key goals. As a Technical Advisor to the Task Force, I witnessed how members held this commitment in mind during the many months of discussions. How Chicago’s commitment to racial equity translates into actual language in the ordinance will very much depend on City Council’s willingness to make “good trouble,” as Congressman John Lewis called on us all to do.
What is inclusionary housing?
Inclusionary housing programs tie the creation of affordable homes for low- and moderate-income households to the construction of market-rate housing or commercial development. In its simplest form, an inclusionary housing program might require developers of residential projects to sell or rent 10 to 20 percent of the new residential units to low-income residents at an affordable price.
Every year, Chicago’s real estate development industry creates market-rate housing designed for people whose income allows for the comfort of living in a newly constructed building, located in an amenity-rich neighborhood. As part of the city’s commitment to address the dual goals of affordable housing and racial desegregation, the ARO requires developers to create affordable housing units within these buildings or pay a fee that the city uses to generate affordable housing off-site. Since 2007, the ARO policy generated 1,046 units and $123 million in in-lieu fees. Without this policy, fewer families whose lives and labor are part of the fabric of our city would be able to afford to live in the high-cost and/or gentrifying areas that they so often help build.
Why does inclusionary housing matter?
Chicago’s unique position as one of the most racially and economically segregated cities requires us to take seriously the role of public policy to repair the harm that has been caused due to government policies and private sector actions. Chicago is a city still shaped by prior decades of economic and racial exclusion.
Racism is easier to perpetuate in cities with stark segregation. Inequitable policies, state-sanctioned violence, and uneven investments of the past also make it easier to maintain today’s racial injustice that continues to structurally deny Black, Latinx, Asian, and other Chicagoans of color access to opportunities. Thus, Chicago’s policies need to both create more diverse and inclusive neighborhoods and invest equitably across all of Chicago’s neighborhoods.
What is racial equity and why does it matter to Chicago?
Racial equity is defined as both an outcome and a process. Racial equity places priority on ensuring that people of color are afforded opportunities that they have historically been denied and from which they continue to be excluded. As I have written elsewhere, “Equity is not the same as equality… Equity requires that people receive a different share of resources, opportunities, social supports, and power, given their differential needs and circumstances based on different life experiences.”
Starting in 2016, the Cost of Segregation project, led by Metropolitan Planning Council, demanded the attention of elected officials and private institution leaders, leading to calls to rewrite the region’s racist narrative and redirect public and private resources. Following the election of Mayor Lori Lightfoot in April 2019, Chicago’s succeeding public officials created the Office of Equity and Racial Justice, advanced a set of public policies across departments, and began the process of shifting culture within city government.
Why are we talking about the ARO in Chicago right now?
Launched by Housing Commissioner Marisa Novara, the Department of Housing is currently pursuing revisions to the ordinance. DOH is accepting public comment on the draft Inclusionary Housing Task Force Staff Report through Thursday, October 29. The ARO revision seeks to modify the city’s inclusionary housing ordinance in order that it creates options for people to live in high-cost, segregated neighborhoods and that it allows people to stay in neighborhoods that are undergoing gentrification.
The ARO helps to address Chicago’s historical and contemporary realities of racist housing policies, discrimination by banks and lending institutions, and exclusion by many White Chicagoans whose preferences about living in a White segregated community lead them to fight against affordable housing in their own neighborhoods. The present-day racial concentration of White Chicagoans and of residents with affluence on the North side reinforces the systemic privileges in the realms of education, transportation, housing, recreation, and other essential public services.
Here’s how we can advance Racial Equity in the Affordable Requirements Ordinance:
- We need to choose income targets that match those of renter households of color, specifically more affordable units for households at or below 50% of Area Median Income (AMI). This income range includes grocery store cashiers, medical technicians, and child care providers, many of whom have fewer options for both career advancement and quality housing. Since the vast majority of Chicago’s ARO units were created for households at 50 to 60% of AMI, which is about $40,000 and $48,000, the program is less able to serve households of color.
- We must require the construction of units that match the household sizes of renter households of color. Chicago’s data reflects the national trend that families of color are especially underserved since they are more likely to live in multi-generational households than Whites. Currently, the ARO has generated mostly studio and one-bedroom units.
- We must set higher expectations for development in high-opportunity and gentrifying areas. The ARO is one of the few policy tools to ensure that affordable units are built in affluent, segregated high-opportunity areas and in gentrifying neighborhoods. I recommend Chicago consider raising the set-aside requirement of 10% and require on-site or near-by development in the geographic areas where market-rate development is ripe. If we don’t do this, we will further cement Chicago as a city that not only permits, but even encourages through housing policy, continued segregation.
What will it take to generate a shared commitment to racial equity in the ARO?
One of the most difficult challenges about the ARO revision is that it will inevitably face criticism from most every interested party. Market-rate developers are incredibly concerned about the feasibility and profitability of new projects in the current market context, and if financing will adjust to changes in the ARO. Advocates are immensely troubled by the realities of increasing housing costs, decreasing job security, uncertainty about the COVID-19 public health crisis, and polarizing social dynamics throughout the city.
When it comes down to it, the ARO revision must involve many compromises. It is not intended to solve the affordable housing crisis by itself or make full restitution for the “urban reservations” of concentrated poverty that have been created to segregate low-income Black Chicagoans by prior government administrations.
Today, Chicago stands out as a city willing to advance inclusion, equity and justice. It is a new day for development without displacement, for cultural rebirth within communities of color, and for transparent democratic processes. May City Council members and the many constituencies influencing the ARO discussions remember our racist past and forge a new equitable future as we move ahead making “good trouble” together.
Amy T. Khare, Ph.D., serves as the Research Director of the National Initiative on Mixed-Income Communities and a Research Assistant Professor at Case Western Reserve University. Khare is the co-editor of What Works to Promote Inclusive, Equitable Mixed-Income Communities which will be published by the Federal Reserve Bank of San Francisco in October 2020. Amy lives in the Lakeview neighborhood and serves as the Co-Chair of MPC’s Housing and Community Development Committee. She serves as a Technical Advisor to Chicago’s Inclusionary Housing Task Force.
 I capitalize the term White when referring to the racial identity of people with European or Caucasian origins. This actively draws attention to the socially-constructed racial category of White and Whiteness as a social privilege to be called out.
 Massey and Denton 1993, 74