Chicago Mayor Richard M. Daley doesn’t support it. Not yet. But the proposal to force housing developers to set aside dwelling units for folks of limited means–or else pay into a special city fund–is gaining momentum.
Momentum? Backers of the affordable housing set-aside plan say 24 of the City Council’s 50 aldermen are already signed on. Then again, several of the signers likely figured they wouldn’t have to cross the mayor. Either they’ll get the wink to vote with the minority on a lost-but-noble cause, or better yet, they’ll vote with the majority after the plan is revised to the mayor’s specifications.
So far, neither side is budging. At a recent City Council hearing on the proposal, Daley’s housing officials circulated “talking points” against passage of the bill. We must “avoid unintended consequences,” their script argued, and “protect the market engine” by not imposing “mandates” that would bust the boom in residential real estate.
One suspects the prolific goose that is Chicago’s red-hot condo market would survive the set-aside mandates contained in Ald. Toni Preckwinkle’s (4th) proposal. Similar laws have not slowed the condo craze in Boston, Denver or San Francisco. But as written, Preckwinkle’s 16-page opus does appear to contain enough red tape and loose ends that even a golden egg might get lost in the tangle.
The core requirement is simple enough: Developers of more than 10 units, whether for rent or sale, must price 15 percent of the units so that they are affordable to limited-income families. How limited? For rentals, families with incomes that do not exceed 50 percent of the Chicago-area median, which is a little more than $50,000; for buyers, incomes must be less than 80 percent of median.
Developers who don’t want to build affordable units (think Donald Trump and his Chicago Trump Tower) can instead make a contribution of $100,000 for every required unit to the city’s Low Income Housing Trust Fund, the largest locally funded rent-subsidy program in the nation.
The city would use that money to subsidize even poorer families–those earning less than 30 percent of median. These are the families pinched hardest in Chicago, where a breadwinner needs to make 2.5 times the minimum wage just to afford a plain two-bedroom apartment.
Trouble is, Preckwinkle’s treatise is, well, a bit messy. The city’s Department of Housing would issue “certificates of qualification” to eligible families. Every developer covered by the ordinance would need to submit an “inclusionary housing plan.” In return for their troubles, developers would get “offsets” from the city that could include waivers for permit fees and zoning restrictions, though the latter appears at odds with the city’s new zoning ordinance, which lowers height and density limits in most neighborhoods. Should they decide to sell, owners of affordable units would not get the appreciated market price, but a price set by the city based on inflation rates and affordability indexes. And so on and so forth.
Little wonder the housing industry prefers something simpler. The Illinois Association of Realtors supports a bill before the General Assembly, authored by Rep. Julie Hamos (D-Evanston), that would impose a $10 fee on the legal recording of real estate documents in each of the state’s 102 counties. That’s enough to raise $34 million for affordable housing statewide.
“If that [Hamos] bill were enacted, we could double or triple what we’re doing in Chicago,” said Thomas McNulty, a Chicago lawyer in private practice who chairs the city’s housing trust fund. This year the fund will help pay the rent for some 2,000 moderate-income families living in privately owned apartment buildings. “We don’t tinker with market forces,” said McNulty, who has had Daley’s ear on housing issues ever since he worked for the mayor as an assistant state’s attorney.
Still, there are rumblings on the horizon that augur for passage of the Preckwinkle ordinance, or something like it. Earlier this week, the Bush administration let fly its budget proposal for fiscal year 2006, which would gut several programs Chicago uses to produce affordable housing. Bush proposes, for instance, to slash funding for Community Development Block Grants by a third, to rename and consolidate the program with 17 others, and to transfer what’s left from the U.S. Department of Housing and Urban Development to the U.S. Department of Commerce. CDBG had been a primary funding source of the city’s housing, employment and urban-planning programs. Implications are ominous.
Meanwhile, Daley, who gets along with President Bush, has set a five-year goal of creating 48,000 new units of affordable housing in Chicago. His lieutenants claim this can be achieved with existing programs. They point to the mayor’s own set-aside program. It requires developers to build, or pay for, affordable units whenever they directly benefit from a city subsidy, such as discounted real estate. The mayor also supports passage by the legislature of that $10 recorder’s fee.
But those efforts will come up short if a Republican Congress rubber stamps the president’s Draconian cuts in urban-housing programs. If that happens, and cities like Chicago are thrown back on their own resources, Daley will need to reconsider Preckwinkle’s set-aside ordinance. A simplified version, that is … one that doesn’t strangle the goose.
