WCA panel sees complicated affordable housing hurdles
July 6, 2018

 

By Patrick Butler

Affordable housing is not impossible, but the hurdles in assuring its construction are more complicated than ever, a panel of developers and at least one lawyer agreed during a May 17 West Central Association luncheon at Carnivale Restaurant, 702 W. Fulton St.

Unfortunately, many people both in and out of the business do not understand how to comply with the current laws, said land use attorney Rolando Acosta.

For openers, developers have several ways to satisfy the City’s 2015 Residential Development Ordinance while still making a profit on market rate housing, said Acosta, who had been introduced by WCA executive director and luncheon moderator Roderick Birch.

Acosta has a “creative approach to understanding the ordinance and trying to reach solutions,” Birch said.

The law now requires anyone building ten or more units to set aside ten percent of those units for affordable housing, and the developer “can pay $75,000 per affordable unit if you’re not building downtown or $125,000 per unit if you’re building downtown,” Acosta said.

The law allows developers to, in effect, buy their way out of having to build a certain number of units of affordable housing in the project they are building. The City then puts the money in a fund for affordable housing in other developments.

Or in some cases, developers can provide the same number of affordable units off site, provided those units would be within two miles of the development.

Same amenities

“But you can’t switch income level areas, and the off-site units must have the same amenities the on-site units would have, and you must spend the same amount of money building the off-site unit you’d spend on site,” Acosta added. Developers also must complete both jobs at the same time, he said.

Even more requirements apply if developers want to buy property from the City or obtain City financial assistance, Acosta said.

If developers do not seek rezoning to allow them to build bigger units, they usually do not have to worry about the ordinance, said Dan Haughtey of LG Development, described by Birch as another expert in affordable housing and transit oriented developments.

Regulations “almost incentivize developers to keep their units small,” Haughtey. “The way the laws are written, we would have to build the same size, same amount of smaller units off-site even though an alderman in a neighborhood west of here might want larger, family-style housing.”

While developers know how to build affordable housing, subsidies are decreasing, so it is harder than before to keep affordable units affordable, said Tim Swanson of Skender Construction, a WCA board member and member of the Uptown Development Committee.

It might help to have the people moving into new units select the interiors, Swanson said, adding that, while today’s manufacturing process increases quality, it also increases the time and costs involved.

“Making affordable housing affordable can be a very onerous process,” Swanson said. “We’re not the only ones dealing with this kind of problem. New Zealand is one example, Saudi Arabia is another” of countries with affordable housing problems.

Workers’ housing

The goal should be to make the “affordable” homes developers build within the reach of even the workers who do the building, said Francis Freeman of ARO Alternatives, which Birch said helps developers navigate through the financing and land acquisition issues.

“Our object is to try to get the units in the hands of people who know how to take it from there,” he said. “I think we’d like to get one three-flat done, show it to the City, and if this works, we can go on either with individual lots or several lots together.”

“If you’re building a 500-unit building in the West Loop, three-flats aren’t going to solve your problem,” said Rich Sciortino, a Brinshore Development executive who used to work for the City Department of Planning and Development.

“Just about any affordable buildings you put up are going to have to be subsidized in some way,” he added, agreeing that, despite the best efforts of many, “we’ve seen a lot of places like Chicago that are having an affordable housing crisis.”

Sciortino said the City is going to have to work smarter if it ever hopes to solve the affordable housing crisis.

Affordable housing “has to be subsidized in some way,” Sciortino said. “We’re spending more money on affordable housing than market rate.”

According to a study by the MacArthur Foundation, housing affordability is even more of a problem in the Chicago area than nationally, with 73% of those surveyed in the City believing the problem to be serious, compared to 60% nationally.

“Housing is more than shelter; research shows that stable, affordable housing is a lifeline to educational success, health and well-being, and economic security,” said MacArthur president Julia Stasch. “More needs to be done to preserve and increase the supply of affordable housing and to address the loss of income that contributes to increased demand.”

The MacArthur study showed that 48% of Chicago adults reported that they spend more than 30% of their income on housing, and are concerned that “the worst is yet to come.”

The West Central Association represents local businesses in the area. See www.wcachicago.org. For LG Development, see lgdevelopmentgroup.com. See www.skender.com for more about Skender Construction. For ARO Alternatives, see www.aroalternatives.com. See brinshore.com for more about Brinshore Development. For the MacArthur Foundation, see www.macfound.org.