Beware the Sigcho-Lopez DFA Ordinance
- Details
- Category: Latest News
Inclusionary zoning has gotten a lot of attention in Chicago over this past year! A related article in this Newsletter looks at the recently released Inclusionary Housing Task Force Staff Report, issued by the City’s Department of Housing in September. The Staff Report contains a range of recommendations, some of which our industry will likely support, and others that range from intriguing to downright scary.
Not surprisingly, some of the most strident voices on the far left of the political spectrum are responsible for the most over-the-top recommendations that made their way into the Staff Report. This faction has a standard-bearer. His name is Byron Sigcho-Lopez, Alderman of the 25th Ward, representing Pilsen and nearby areas. Alderman Sigcho-Lopez was one of the Aldermanic Co-Sponsors of the Task Force along with Harry Osterman (48th Ward) and Walter Burnett (27th Ward).
Alderman Sigcho-Lopez has been a leading voice among the six members of the Democratic Socialists in the City Council since his election in 2019. Although still relatively small in numbers, the Socialist Caucus is increasingly influential within Chicago government and exercises out-sized influence in setting City policy.
Alderman Sigcho-Lopez has been a leading voice among the six members of the Democratic Socialists in the City Council since his election in 2019.
If there was any doubt about where the Democratic Socialists stand and what they want regarding inclusionary zoning, the recent introduction by Alderman Sigcho-Lopez of the Development for All (DFA) Ordinance certainly spells it out. It is fair to say that this is a vision that few in our industry will share or want to support.
The DFA proposal got some exposure at a public meeting last December held by Alderman Osterman to kick off the Task Force initiative. This meeting brought together a diverse group of community activists, City officials, neighborhood residents and real estate industry professionals to discuss the current ARO and proposals for its reimagining and eventual revamping. (For more on this meeting, take a look at the Winter 2019 Newsletter article about inclusionary zoning.)
If there was any doubt about where the Democratic Socialists stand and what they want regarding inclusionary zoning, the recent introduction by Alderman Sigcho-Lopez of the Development for All (DFA) Ordinance certainly spells it out.
If anything, the DFA Ordinance introduced by Alderman Sigcho-Lopez in October is even worse than the proposed Ordinance as laid out at the Osterman meeting last December.
Sigcho-Lopez’s 22-page Ordinance consists of a daunting set of “whereas’s,” definitions, rules and penalties that are so confusing, you almost need an advanced degree in mathematics to follow its logic. It’s anyone’s guess whether it has been deliberately written to confuse the reader, or is simply badly written. Either way, reading it is like entering a labyrinth – easy to get in but nearly impossible to get back out!
If this Ordinance, or anything like it, ever becomes law, you can expect development of apartments in Chicago to come to a grinding halt.
Taken in their entirety, the requirements (once you begin to figure them out) can best be described as excessive, ruinously expensive, punitive and thoroughly unrealistic. If this Ordinance, or anything like it, ever becomes law, you can expect development of apartments in Chicago to come to a grinding halt. And not just downtown high-rises – the DFA applies to residential buildings with as few as three units. If this is Alderman Sigcho-Lopez’s answer to the Task Force effort to revamp the ARO, Chicago is in serious trouble.
There really are way too many rules and requirements to describe in this long and confusing Ordinance. But just a few of the highlights (or lowlights) are as follows:
- The DFA would apply to a “Covered Development,” defined as any new construction, substantial rehabilitation or “conversion to residential” building with as few as three units in cases where the City approves a rezoning, or as few as ten units for “as-of-right” buildings that require no rezoning or any other City assistance.
- Between 10% and 40% of units in Covered Developments would have to be affordable, depending on a complex set of “zones” that factor in such considerations as an area’s affluence, gentrification pressures and how “vulnerable to displacement” local residents may be.
- Affordable unit rents must be set at an amount that households earning between 15% and 50% of area median income (AMI) can afford, using no more than 30% of their annual household income. Half of the total number of affordable units in a Covered Development must be affordable to households earning no more than 30% of AMI, and a quarter must be affordable to households earning no more than 15% or 20% of AMI (depending on whether the City is providing TIF financing).
- The DFA requires the Department of Housing to maintain detailed information by census tract of “Affordability Zones,” “Housing Cost Zones,” “Displacement Indicators,” and “Rising Cost Indicators.” This data must be updated annually.
- Each of these categories seem to have several subcategories. Different rules apply to different subcategories regarding affordable set-asides with different rules about “on-site” and “off-site” unit requirements, etc.
- Under the DFA, at least 50% of units must be included within the Covered Development. Off-site units must be built within a half-mile to two-mile radius of the Covered Development. The ability to pay in-lieu fees, currently permitted in the ARO, appears to have been entirely removed from the DFA.
- The DFA would require 60% of the affordable units at a Covered Development to include two or more bedrooms. Of this total, at least half must include three or more bedrooms.
- It should surprise no one that the DFA contemplates numerous penalties to developers who fail to adhere to all of these rules. Among other punitive measures, penalties can include fines of $500 per unit per day for noncompliance.
The good news is that, as soon as the DFA was introduced, it was assigned to the Rules Committee, generally a euphemism for “going nowhere fast.”
There’s lots more, but time and mental health considerations preclude me from providing more specifics. If you want to trigger your own migraine, you can read the entire Ordinance in this link.
The good news is that, as soon as the DFA was introduced, it was assigned to the Rules Committee, generally a euphemism for “going nowhere fast.” But don’t think that this is the last we will see of the DFA or the coalition of tenant groups, activists and politicians who want to pass it into law.
The battle-lines are drawn. For the Democratic Socialists, nothing short of a complete ARO overhaul will do. The DFA is their draconian and punitive solution. The cost of this measure would fall almost entirely on the backs of developers and the private housing industry more generally.
Sigcho-Lopez’s DFA represents an extreme response to these recommendations. Reasonable people should opposed the DFA, and the extremists who promote it.
Let’s be blunt – the DFA is a misguided and dangerous proposal. If we lose this battle and the DFA becomes law, there is no doubt that it will have a chilling effect on development in Chicago and negatively impact the entire housing market and larger regional economy.
The Inclusionary Zoning Task Force Staff Report brings together a range of policy options from all sides of the debate. Sigcho-Lopez’s DFA represents an extreme response to these recommendations. Reasonable people should opposed the DFA, and the extremists who promote it. The city will face dire consequences if Sigcho-Lopez and his allies prevail.
