Agenda - Planning Commission - 06/07/2007

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Prong #3: Where Density is a Good Word-The Downtown Affordable Housing Zoning Bonus A fewyears agD, the city underwent a rewrite Df its antiquated zDning code. As part Df the project, it instituted a number Df density bonus provi- sions that apply tD the downtown district, which, under the new code, is an expansive area that reaches beyond the city's famed Loop district. Under these prDvisions developers can obtain additional density in retum for providing commu- nity amenities. Under the downtown affordable housing zDning bonus, developers can Dbtain additional floor area ratio (FAR) if they include affordable hDusing in their develDpment or if they pay a fee-in-lieu tD the city's Affordable Housing OpPDrtunities Fund. The program is slightly different for devel- opers Dbtaining additional density within an existing zoning designation versus those seeking a zoning change to a different designatiDn with a higher FAR density level. But, as a general rule, a develDper that wishes to access additional FAR must dedicate 25 percent of the bonus flDor area .achieved through the affordable hDusing zDning bonus to affDrdable units. For example, the developer wDuld receive four additional square feet for market-rate housing fDr every additional square footdedicated to affordable housing. This provides a significant benefit to the developer. If the developer choDses tD pay a fee in lieu of affordable units, the fee is calwlated on the basis of multiplying the additional FAR by the median price orland in the area of down- tDwn with the development. The fee is calcu- lated by multiplying 80 percent Dfthe additional FAR achieved through the affordable housing zoning bonus by the median cost of land per buildable square foot for that section of down. town. The city publishes a schedule of land val- ues fDr different parts of the downtown district. The effDrt is a classic example of a volun- tary inclusionary housing program. Developers can choose to build as of right underthe base- line zoning requirements. However, if they want additional density (either through a rezoning Dr a bonus within the existing zoning) they must include affordable units in their project or pay fDr the additiDnal density. Applying for the density bonus requires the developer tD sign an agreement with the city to produce the affordable units as part of the devel- Dpment Dr to pay the fee, 'and tD provide the city with cash, a bond, Dr other security in the amount of the fees that would be paid in lieu of building the affordable units. The builder of the affordable units must also sign an affordable housing agreement with the Chicago Department 204 of Housing and provide a detailed description of ,he project, including the affDrdaole units. The affordable units must be ready for Dcwpancy before or at the same time as market-rate units. The bond Dr cash is released after the building inspection and after confirmation by the zDning administrator of the construction Df the afford- able units. If the developer is paying the fee in lieu, the fees are collected when the city issues building permits fDrthe development. Chicago has received $24 million in "com- mitments" for the Affordable Housing Opportu- nities Fund to date, and 34 units are in the pipeline to be created as part of market-rate developments. ln 2007, the city anticipates that it will collect $13 million of these commitments. FDrty percent ($5.2 million) will go to the city's Low IncDme Housing Trust Fund to expand the highly successful rental support program and to subsidize rental units for extremely IDw-income households and 60 perceRt ($7.8 million) will help tD subsidize the rehabilitation or construc- tion of affordable housing. THE CHICAGO WAY In the classic ChicagD film, The Untouchables, about Eliot Ness and his efforts to bring down Al Capone, Jimmy MalDne (played by Sean CDnnery) explains to Ness (played by lCevin Costner) that if he wants to "get CapDne" he needs tD do it "the Chicago way." Untouchables fans will recall that the Chicago way accurately reflected the realities of life in the city at that time. Though less sensational than a gangster classic, the three-pronged approach described in this article reflects the ChicagD way. Indeed, when it comes to inclusionary housing, it reflec'"L5 the goals and philosophies of the Daley administration. First, the administration believes in voluntary approaches using incen- tives-not mandates-to harness private-market activity and create affordable housing. The administration is careful to not stifle Dr chill development, which is why the three policies are vDluntary. If you want city land at a discDunt, TIFfunds, aldermanic assistance, or a density bonus, you must include affDrdable housing or pay a fee. Forgoing such benefits means you need not produce affordable housing. Furthermore, the policies offer incentives to developers who agree to produce affDrdable housing. One cDuld argue that under CPAN the program (in certain wards) is neither voluntary nor laden with strong incentives forthe devel- opers, and that it really depends on the alder- man. HDwever, developers must go through the aldermen. whether the project is an affordable ZONINGPRACTICE 3.07 AMERICAN PLANNING ASSOCIATION I page 4