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Sweeping amendments to the City’s inclusionary housing ordinance were held by City Council on Nov. 9. The hold came at the request of Alderman Don Wilson, 4th Ward, seconded by Alderman Brian Miller, 9th Ward. Under Council rules, a matter is automatically held until the next regular council meeting if the motion to hold is properly moved and seconded.

As a result, the ordinance will come up for debate and vote at the Nov. 23 meeting.

The proposed changes constitute a major shift in the way the City creates incentives for developers and at the same time penalizes developers for failure to comply – called the “carrot-and-stick” approach by aldermen and advocates as the process unfolded over the past several months. Further, the new ordinance adds a focus on transit-oriented developments, or TODs, close to commuter train stations.

The current inclusionary housing ordinance applies to developments of housing units for sale only and does not apply to rental developments. Recently, new developments have shifted away from condominium projects. Major developments like E2 on Emerson Street, AMLI on Chicago Avenue, the Focus property on Ridge Avenue, the theater property on Central Street and others have all consisted of primarily rental properties.

The new ordinance, if passed, would change that focus and apply to both units for rent and for sale.

A new emphasis on TODs would also change the focus in two ways. First, the threshold project size would be different. In TODs, all developments of five or more units would be required to include 10% affordable housing units. Outside TODs, developments of 10 or more units would be required to comply.

As for the stick, the new ordinance makes it weightier. The current ordinance requires payment of $40,000 per unit for failure to comply. The new increases that number to $100,000 per unit in TODs and $75,000 per unit outside TODs. All such payments go into the City’s Affordable Housing fund.

As for the carrot, developers who comply with the ordinance will receive density bonuses, allowing for more units per square foot of development space. They will also receive a relaxation of parking requirements.

When in measure came up for debate, Ald. Wilson said, “This is difficult for me, because I’m going to disappoint people with my comments. …  I’m very troubled by significant aspects of what’s on the table.” The focus on developers and residents of new developments is the source of the trouble, he said.

“With what’s on the table, I won’t pay a cent of it,” said Ald. Wilson. Homeowners and other residents across Evanston will not contribute in any meaningful way to the City’s affordable housing efforts, he said.

As a result, “this proposal is a targeted tax. It’s a middle-income rental tax,” said Ald. Wilson. In a TOD, if 20% of the units are required to be affordable, the other 80% of units in the development have to make up the difference. Lower rent collected by ownership on some units forces the owner to charge higher rent for the other units. “That’s a terrible thing to do,” he said.

“If this is a first step,” Ald. Wilson said, “this is the worst first step” the City could take.

“I don’t want to table it. I want to keep it in the forefront,” Ald. Wilson continued. Right now, though, “we’re doing it wrong. We’re hurting the people we’re trying to help.” He characterized people who would be awarded affordable leases as “lottery winners. … A few win, the rest in the building are losers. … I don’t want to table it. I want a better product.”

Ald. Miller said “Some information came out this afternoon that I have not had a chance to review. I’m okay with holding it” until the next meeting.

Citing the Harley Clarke debate as an example, Alderman Mark Tendam, 6th Ward, said, “I don’t have a lot of faith that we can accomplish [a significant overhaul] in two weeks.” He encouraged “those who have not been engaged in this process to attend the housing and homelessness committee on Nov. 20.”

Alderperson Jane Grover, 7th Ward, said she was aware of “questions circulating about implementation of the ordinance” regarding “income-eligibility and the disposition of units once a family graduates from eligibility” – for example, when a family in an affordable rental unit makes more money and is no longer qualified as a “middle income family” under the ordinance.

The City’s Housing and Grants administrator, Sarah Flax, said the City purposely left some elements out of the ordinance in order to retain “flexibility.” The City planned to set policies and procedures to cover implementation, she added.

One such policy would be how the City spends its affordable housing fund. Developers have made contributions to the fund under the existing ordinance and as a public benefit in planned rental developments in recent years. On the agenda earlier in the evening was a $6,000 payment from the Affordable Housing Fund to the Alliance to End Homelessness for an “HMIS Grant Payment.”

“Tonight we’re spending $6,000 that provides not one unit of affordable housing,” said Alderman Ann Rainey, 8th Ward.

Alderman Delores Holmes, 5th Ward, said the payment is a requirement of U.S. Housing and Urban Development (HUD).

“I don’t care,” said Ald. Rainey. The Affordable Housing Fund should be very narrowly targeted such that spending actually provides Evanston residents with affordable housing, she said.

The matter returns for debate Nov. 23.