City staff presented a white paper detailing the affordable housing crisis in Evanston, complete with suggested strategies designed to address the crisis, at a special City Council meeting on Oct. 30. Council heard the report, then voted to take several immediate steps toward implementing aspects of the recommendations, including an Evanston rental subsidy program, overhauling the Inclusionary Housing Ordinance (IHO) to better reflect facts on the ground, studying possible zoning law tweaks, creating more paths to home ownership, and other proposals.
The IHO requires developers of residential developments to include a certain percentage of affordable housing units in the development or to make a payment in lieu of providing on-site affordable units to the City’s Affordable Housing Fund (AHF).
The meeting came following an election campaign earlier this year during which nearly every candidate for City office talked about affordable housing as an important City goal. Since the election, several events have pushed the conversation further, and stoked community interest and, at times, outrage.
A controversial Housing Opportunities for Women project on Dempster Street, which if built would provide 16 units for low-income families, faced a buzzsaw of protest from neighbors. Developers sought but did not receive $500,000 from the City’s AHF. A proposed development at Chicago and Howard proposed an additional four units of affordable housing on site, and asked for $1 million from the AHF. Council also denied that request.
The two proposals highlighted the fact developers knew of the AHF, and knew the City had no real plan on how to use the funds. Further, developers of a project at 831 Emerson St. decided to comply with the City’s IHO by paying $2.4 million into the AHF, rather than including on-site affordable units in their development. Payment is scheduled to be made near project conclusion. Developers of a project at 824 Noyes, now under construction, decided to comply with the IHO by providing on-site affordable units.
Currently, three major apartment projects are in the pipeline, including the Albion project at 1531 Sherman. The developers propose to include 15 affordable units on-site. A citizen group has protested, claiming, among other things, the on-site units are not sufficient, too small, and are likely to drive up rent elsewhere. Council introduced the project at its last meeting and is slated to vote on final approval at its next meeting.
All this provides context for Council as they digested staff’s white paper and responded to suggested strategies.
Amending the Inclusionary Housing Ordinance
One suggestion is to encourage the construction of affordable housing units in market-rate new developments by amending the IHO. Staff proposed an increase to the fee in lieu option, from $100,000 in projects near transit (TODs) and $75,000 in non-TOD areas, to $150,000 and $100,000 respectively.
Alderman Melissa Wynne, 3rd Ward, said the Albion project “shows how quickly the market has moved on since the IHO passed” in December 2015. Construction costs for each unit in the project average $330,000, according to the developer, making paying the fee in lieu, at $100,000, the obvious economic choice under current rules. A fee in lieu would be about $2.7 million, but 15 units will cost nearly $5 million. Even with lesser finishes, the construction costs of 15 units will exceed the fee in lieu for 27 units. Ald. Wynne agreed with a proposal by Alderman Ann Rainey, 8th Ward, to form a subcommittee to study and revamp the IHO.
“As many will remember, I voted no” on the IHO, said Alderman Don Wilson, 4th Ward. “I was afraid it wasn’t going to work and we weren’t going to have any results,” and it would operate as a “targeted tax” which attacks the affordability of other units in the building, he said. The result, he said, was “not a lot going on in neighborhoods, and really big buildings – huge” ones downtown.
“One problem is we’re not tying this to removing anything,” he added. If a developer takes away existing affordable units, he said, the IHO should address that by requiring replacement units. “So much of [the affordable housing problem] comes down to a lack of supply,” he said. He warned if the City “doubled down” on the existing ordinance by increasing the fee in lieu, then “this is not going to work. It’s going to be the opposite.” Even bigger buildings will be proposed, leading to even more citizen protest.
After citizen comment at the special Oct. 30 Council meeting, which, in an unusual move, came after Council discussion, Ald. Wilson motioned the formation of a subcommittee to study the IHO. Alds. Wilson and Rainey, Alderman Judy Fiske, 1st Ward, and Alderman Eleanor Revelle, 7th Ward, who sits on the Housing and Homelessness Commission and attended the meeting by video but texted in comments and questions, asked to be on the subcommittee.
Ald. Rainey asked that “a representative from the development community, the real estate community, and perhaps the planning community” be included, but also that the committee be kept small. “Keep it to six or seven people so we can work,” she said.
City Manager Wally Bobkiewicz said the committee could be formed by the Nov. 13 Council meeting – and then get to work. One proposal would change the time when a developer would pay a fee in lieu from all at the end of the project to half up front, half at the end. A funded AHF would be used, possibly, to fund the next proposed idea.
Evanston Rental Assistance Program
The white paper proposed strategies for expanding programs to “overcome barriers to rental for low-income households,” then set forth options, such as a landlord mitigation fund to incentivize landlords to accept low-income or subsidized-tenants, a rehab program assisting landlords in preparing units for renters with bad credit or criminal records, tenant education programs, and the continuation of existing supportive services and programs.
Ald. Rainey stepped forward with a more radical proposal – the creation of an Evanston Rental Program providing direct rent subsidies to 30 Evanston families, using the AHF to cover costs. She provided Council with a three-page summary, including a spreadsheet estimating the cost of the program over the first three years. “I’m looking for a big bang here,” she said.
“This program would be really unique,” explained Ald. Rainey. “My program would include a $5,000 move-in support” payment to assist with paying a security deposit, hooking up utilities, establishing a checking account if needed, and cover additional moving expenses. Ten families each in three categories of household income – very low-income (30% of Area Median Income, which is now $16,590 for a single person, $23,700 for a family of four), low-income (50% AMI, which is now $27,650 to $39,500) and 60% AMI (which is about $55,000 for a family of four) – would be given assistance at a time under the proposal.
Initially, the program would be funded by amounts currently in the AHF, to be increased by contributions from the 831 Emerson project, but going forward “there would be ongoing money,” she said, either from additional developer contributions to the fund following the IHO revision, or the dedication of real estate transfer stamp fees to the fund. As an example of other possible funding for the proposal, Mather LifeWays agreed to contribute $125,000 per year to the fund when its Davis Street facility was approved.
“The only way to help these families is to give them money,” said Ald. Rainey. “They can get assurance of money to pay rent for three years.” The program would “require the landlord to sign a three-year lease.” The Evanston voucher could be used for any available rental property in the City. The family would pay 25% of their income in rent and the voucher would cover any excess. Federal regulations require a much-cited 30% number, but that includes utilities, said Ald. Rainey.
The only real requirement for eligibility, said Ald. Rainey: “You’ve got to have a job. This is a program for a certain population – you’ve got to have a job.” No onerous federal requirements would be included, but a paycheck would be a must. The expectation would be families would rotate off after three years, either finding another affordable unit or by earning a higher income so they can afford market rent.
Council voted to refer the proposal to the Administration and Public Works Committee to develop and create the necessary ordinance or ordinances.
The discussion about possible zoning changes began with 1) accessory dwelling units (ADU) – coach houses or garage apartments – which under current law can be rented to only family members of the primary building or caretakers, and 2) Evanston’s law prohibiting more than three unrelated individuals from sharing a dwelling unit. Both laws are on the books but enforcement is at best spotty.
“I think this is a good idea,” said Ald. Wilson of a proposed change in the ADU law. “I’m also interested in repealing the three unrelated” ordinance currently “on the books… it doesn’t feel good to me… I like this [ADU change]. I think this is a great thing to do. I’d like to push it a couple of steps further.”
Ald. Fiske showed the surprise many share when learning rental of coach houses is technically illegal. There are numerous “coach houses in the First and Third Wards that have been rented out for years,” she said. Many of the new homes at the former Kendall College site have coach houses. “I don’t know how many are rented out to family members,” she said. She expressed concern about alley access and tenant monitoring.
Alderman Robin Rue Simmons, 5th Ward, said she supported changes to ADU rules. “This gives a pretty immediate opportunity to our residents to impact affordable housing” issues while increasing their income.
As for the law limiting occupancy of a unit to three unrelated persons, Ald. Fiske said, “As much as I would like to support Ald. Wilson, this is a non-starter for me.” She described developers buying single family homes near Northwestern’s campus and converting them into housing for “nine to twelve” college students. A resident at citizen comment described a former single-family neighboring home as housing the entire Northwestern baseball team after the family of one of the players purchased the $800,000 home.
Alderman Cicely Fleming, 9th Ward, said the Open Communities home-sharing program, placing people in need of affordable housing with seniors, could be impacted.
The three-unrelated law “presupposes a problem,” said Ald. Rainey. The real issue, she said, is available square footage. “Why can’t we simply discard the three-unrelated rule and maintain a square footage limit? Only ‘so many’ people in a unit based on the square footage and number of bedrooms.” In the 1st Ward, she said, landlords “stuff those kids in, and there’s nothing affordable” about it. “The theory does not hold water over there.”
Ald. Wilson referred the matter to the Planning and Development Committee, which will study changes to both the ADU code and the three-unrelated law in coming months.
Paths to Home Ownership
Several years ago, the City had a down-payment assistance program. According to Sarah Flax, the City’s Housing and Grants Administrator, the program lost feasibility after the 2008 housing crisis because “Federal HOME and CDBG funds are… restricted to households with incomes at 80% of AMI.” Families at that income level simply cannot qualify for a loan in today’s marketplace, she told the RoundTable.
Ald. Rue Simmons called a proposal to re-start homebuyer programs “a great idea” that would help address “the great wealth divide” perpetuated by access to borrowing and the equity built up as a result.
Ms. Flax said the City was exploring a new program with First Bank and Trust, a member of the Federal Home Loan Bank.
Land Trusts are the most effective way to make sure homes stay affordable from one family to the next, said Ms. Flax. At citizen comment, Jill Graham, a former economics professor, told Council, “My home is going into a land trust when I move into senior housing.” She said a land trustee could hold title to the property, and sell only the building, while retaining title to the land. She said buyers of the building could resell the building, but because it does not appreciate in value as much as the underlying land, the home would stay more affordable from generation to generation.
Ald. Rue Simmons asked staff to report on steps to home ownership, including efforts to educate potential buyers on available mortgage products, especially a HUD program providing a rehabilitation loan as a part of the purchase mortgage. The program allows buyers to acquire homes in need of serious work at a modest price and use rehab funds to improve the property. “It seems like there are dozens” of possible project properties “in our [fifth] ward,” she said. She asked staff to work on a program matching homebuyers with possible rehab properties.
Non-Cash City Resources
Staff proposed the possible investment of “non-cash City resources for affordable housing development. RFPs could be issued to attract new developers and to reduce costs.” Specifically, staff offered up “City-owned land such as underused parking lots” and “parcels being acquired though the Cook County No Cash Bid program and tax deeds for properties with City liens.”
Ald. Fleming said the City should look to develop “parking lot No.1” at “the dead end of Hinman” into South Boulevard. “It is way underutilized,” she said, suggesting the City issue an RFP to develop affordable housing on the site. It is already next door to housing units owned by the Housing Authority of Cook County, she added.
“The City has discussed this lot many times,” said Ald. Wynne, whose ward includes the lot. She confirmed “there is Cook County housing right there and I’ve never had a single call” complaining about it. She said conversations were ongoing about ways to increase use of the lot. “We are always looking for ways to improve the City of Evanston... this is one of the ideas,” she said. But she did not commit to an RFP for affordable housing units.
Other Suggestions and Next Steps
The white paper, which is available on the City’s website, includes additional suggestions on each of the topics discussed above, as well as suggestions as to how to leverage resources for special needs residents, but Council did not address those on Oct. 30. Rather, they planned to address the overall affordable housing topic at least quarterly in further special meetings. Ald. Wilson asked the City Manager to schedule the next such meeting roughly three months out.
“We will come back in January,” said Mr. Bobkiewicz. He also said staff would return with a “work plan document based on the referrals [made at the Oct. 30 meeting] shortly.” The work plan, which will form the beginnings of a comprehensive affordable housing plan for the City of Evanston, has been long in the works.