“Development for All” Ordinance to be Introduced in City Council
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The Fall 2020 Newsletter provided an overview of the Development For All Ordinance, 25th Ward Alderman Byron Sigcho-Lopez’s road map to “fixing” the current Affordable Requirements Ordinance (ARO).
Now co-sponsored by Aldermen LaSpata (1st), Rodriguez (22nd), Maldonado (26th), Martin (47th), and Alderwomen Rodriguez Sanchez (33rd) and our own Maria Hadden (49th), this group of Democratic Socialist and Progressive Caucus City Council-members are preparing to introduce this legislation to the full City Council for debate and consideration.
The DFA’s greatly expanded affordable requirements would severely impact the financial feasibility of every future development in Chicago of any size or significance.
The fall article made clear why this ordinance is so intensely opposed by the housing industry. Without repeating what has already been written, the DFA’s greatly expanded affordable requirements would severely impact the financial feasibility of every future development in Chicago of any size or significance. The result will be an unavoidable and severe contraction in new housing construction, further aggravating the housing shortage in Chicago and accelerating the rent increases for the existing supply of rental units.
Suffice it to say that the DFA Ordinance is, at best, misguided and will only exacerbate the housing problems in Chicago.
As much as a more integrated city – racially, economically, and socially – is a desirable outcome, the DFA will accomplish just the opposite.
These sponsors have convinced themselves that they can mandate the creation of thousands of new, “family-sized” units at extremely low rents in high-demand neighborhoods across the city that will integrate large numbers of low and moderate-income people with middle and higher-income people paying market rent in the same buildings.
As laudable as this outcome would be, and as much as a more integrated city – racially, economically, and socially – is a desirable outcome, the DFA will accomplish just the opposite result. Its ruinous requirements will simply bring new construction to a virtual halt, further limiting the construction of new housing, and further increasing the demand for the units already in existence.
The predictable result will be even faster increases in rents and home prices, and magnified suffering of low and moderate income people who are always the least able to compete for this limited resource.
Let’s take a step back and consider what the Democratic Socialists and Progressives on the City Council want to accomplish. They correctly recognize the history of segregation and income stratification in Chicago that has only increased in recent years as the South and West Sides continue to lose jobs and population, even while the Central Area and North Sides grow wealthier and more prosperous.
The Democratic Socialists and Progressives are true believers in the ability of government to bend the free market to their will.
These inequities are as jarring as they are unjust. Many of us – housing providers included – believe that something must be done to address these inequities and right the wrongs of the deep segregation that has defined Chicago from the city’s earliest days.
The disagreement is not so much what the problem is. It is how to solve it. And mostly, it is how to pay for it and who should foot the bill.
The Democratic Socialists and Progressives, who are increasingly in the ascendant in Chicago and its environs, are true believers in the ability of government to bend the free market to their will, legislating equity and inclusion through draconian subsidies that become the exclusive duty of our industry to provide. These politicians seem to believe that there are huge sums of money to be made with every real estate development and that they are well within their rights to insist on transferring some of this wealth and profit into housing that will benefit low and moderate-income people.
This might even be a discussion worth having if the premise were remotely true. But it is not. Yes, real estate development can be profitable. But it is a risky endeavor in the best of circumstances, and those pots of gold are never guaranteed.
The Democratic Socialists and Progressive Caucuses are about to gamble the very future and viability of this city on their personal conviction that “wealthy developers” can afford much deeper contributions to affordable housing set-asides in the buildings they build.
At a time when people are fleeing the city and the state in increasing numbers, at a time when the state is unable to pay its bills or even begin to solve is budget problems, and at a time when we are in the middle of a health crisis of epic proportions that has had devastating economic consequences, I question the sanity of any person who believes they can build housing profitably in the city of Chicago (or Cook County, or Illinois for that matter).
That they could do so, while also setting aside 30% of their largest units at deep discounts to people earning as little as 20% of area median income is nothing less than magical thinking, if you can dignify it with the word “thinking” at all.
What is even more depressing is that there are so many economically feasible ways to achieve the goals of creating more affordable units in new buildings in economically healthy neighborhoods that might actually have a chance of success. We know this because other American cities have devised ways of making this happen without putting the entire cost and burden of this goal on the shoulders of the housing providers.
In another article that appeared in the Fall Newsletter, we looked at the recommendations of the Department of Housing that came out of a nearly year-long Inclusionary Housing Task Force review. The Task Force identified numerous programs that other cities have put into practice that rely on market forces to give housing providers the necessary incentives they need to build units that include an affordable set-aside.
The idea that Chicago can make punishing affordability requirements work, when stronger cities with less onerous legislation are barely surviving the multiple crises of the moment, would be laughable if it were not being seriously proposed and about to be put to the test.
The DFA Ordinance almost entirely ignores these findings and recommendations, falling back on Progressive orthodoxy that there is plenty of money in every development to provide for the kind of deep housing subsidies they are seeking.
The Democratic Socialists and Progressive Caucuses are about to gamble the very future and viability of this city on their personal conviction that “wealthy developers” can afford much deeper contributions to affordable housing set-asides in the buildings they build.
I have two questions for these true believers. Why is it fair for just one small subset of society to bear the full burden of affordable housing for everyone else? Isn’t this like asking farmers to share their food with anyone who is hungry?
And secondly, do you not understand that “wealthy developers” have lots of places to invest their money besides Chicago? Do you not see the continued flight of people from the city and the state? You may think you can change the laws of economics by passing a law. You might as well pass an Ordinance that bans snow in winter, or heatwaves in summer. The result will be the same.
The idea that Chicago, with one of the weakest urban economies in the country, can make punishing affordability requirements work, when stronger cities with less onerous legislation are barely surviving the multiple crises of the moment, would be laughable if it were not being seriously proposed and about to be put to the test.
Magical thinking may feel good. But, unless you really do have hidden super-powers, it won’t make your wishes come true, no matter how laudable your goals or pure your intentions. Ignore that reality at your own peril because it will not be the “wealthy developers” who you so demean and dismiss who will be hurt. They will simply take their money to Dallas or Atlanta where profit can still be made. It is the low and moderate-income people you claim to champion who will suffer the most. And the blame will fall squarely on your shoulders.
