Agenda - Planning Commission - 06/07/2007

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Case Studies in Inclusionary Housing By Nicholas Brunick The City of Chicago has long been known as "the city that works." Recent articles in The Economist and else- where have trumpeted Chicago's relative social and fiscal health compared to other Rust Belt cities such as Detroit, Cleveland, and St. Louis. Even though vacant land and disin- vestment remain huge challenges in many of Chicago's neighborhoods, the city's relative health is envied by other cities. However, Chicago's heralded "come- back" has given birth to a new and daunting challenge: a high-cost housing market that threatens to rob the city ofworldng and mid- dle-class families. Without them the city lacks the tax base, social capital, and workforce it needs to stay competitive and livable. To be viable and attractive for living, working, and playing, U.S. cities must find more ways to create and preserve affordable housing for every rung on the economic ladder. One way to do this is through inclusionary housing policies that zone for affordability, which is the focus of this issue of Zoning Practice. Cities can use zoning codes and devel- opment approval processes to require, encourage, or negotiate a specified percent- age of affordable units in certain types of developments. Often, a developer can pay money or donate land in lieu of including affordable housing in a development. Unlike other large cities-notably San Diego, San Francisco, and Denver-Chicago l1as chosen notto pass a citywide inclusionary housing ordinance, but rather implement a package of inclusionary housing policies that use zoning authority selectively in different parts of the city. The city has a policy for developers who receive city assistance (the affordable requirements ordinance (ARO)); a policy for the neighborhoods (the CPAN pro- gram); and a policy for downtown develop- ment (the downtown density bonus program). Do these policies represent a sawy approach by the city that recognizes the diversity of its neighborhoods and housing markets and the impossibility of crafting a one-size-fits-all approach, or do these poli- 202 ciescreate un predictability and unfairness in the housing market and leave the city without the necessary policies and resources to adequately address its housing crisis? Is this good planning and smart poli- tics or inadequate policy and cleverly dis- guised injustice? This article will attempt to answer these questions using national examples for comparison and featuring the lessons common to all communities strug- gling with the need for affordable housing. Duringthe last decade, many cities and local governments around the country saw unprecedented development activity with his- toric increases in housing and land prices. Consequently, the need for affordable housing has grown, impacting a broader and growing segment ofthe population: poor residents, working-class households, and even the mid- dle class; employers who are unable to recruit employees nearby; everyday citizens choking on polluted air and stuck in traffic jams caused in part by workers traveling ever~longer dis- tances for work; and, of course, elected offi- cialswho feel the heat from all of these con- stituencies and thus feel the need to respond. Solutions to the crisis remain elusive when land and housing co5"L5 are so high, when fed- eral funding for housing is at a 30-year low, when state funding for housing has failed to make up the difference, and when local funds are limited. In this environment, zoning for affordability quickly becomes a popular and immediate option. Local govemments in California, Colorado, Florida, Illinois, Massachusetts, New Jersey, New Mexico, New York, North Carolina, Vermont, Wisconsin, and even Wyoming have employed inclusionary .housing strategies. Many elected officials, like New York City Mayor Michael Bloomberg (a recent convert to inclusionary zoning), have become bullish on inclusionary zoning. Chicago is no different. Due to a growing housing crisis and the organizing work of smart, sophisticated advocacy groups, Mayor Richard M. Daley and the city council have an inclusion- ary housing strategy. However, instead of pass- ing an across-the-board policy (e.g., a 15 per- cent inclusionary housing requirement in all developments of 10 or more units), the city has chosen a three-pronged approach: Prong #1: Quid Pro Quo~ The Affordable Requirements Ordinance In 2003, the Chicago city council passed the affordable housing requirements ordinance, which applies to developments of 10 Dr more units, and requires that: 1) If a development receives a write-down on city-owned land it must include 10 percent affordable housing and 2) If a development receives financial assis- tance from the city (which usually means tax All photos.courtesy of Nicholes Brunick increment financing em) dollars) it must include 20 percent affordable housing. Under this program affordable housing is defined for an ownership project as housing where a household earning 100 percent ofthe area median income (AMI) (adjusted for house- hold size) will not have to spend more than 30 percent of its household income on a mortgage. In a rental project affordable housing is defined as an apartment where a household eaming 60 percent of the AMI (adjusted for household size) will not have to spend more than 30 percent of its household income on rent. Under this pro- gram, a developer can satisfy the obligation to include affordable housing by paying $100,000 ZONING PRACTICE 3.07 AMERICAN PLANNING ASSOCIATION I page 2