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Amendments to the City’s affordable housing ordinance passed on Nov. 23, in a Council chambers packed with enthusiastic supporters who burst into loud, sustained applause when the City Clerk tallied the final vote. Sweeping changes include rental developments for the first time, and provide incentives as well as penalties for developers, the “carrot-and- stick” approach.
A focus on “transit oriented development” (TOD) zones also highlights the new ordinance. New developments located near TODs face requirements different from those located elsewhere, based on the belief that working class families need to be able to live close to public transit.
The ordinance, as passed, requires new developments and condominium conversions to provide affordable housing units. Failure to do so will result in a penalty, while providing affordable units will trigger developer incentives such as allowances for greater density, increased floor-area ratios, greater height, and fewer parking spaces.
The definition of “affordable” under the ordinance is tied to the “area median income” (AMI) statistic. The ordinance kicks in for developments of five or more units in TOD areas and 10 or more units outside TOD areas. A map included with the ordinance defines TOD areas, which, not surprisingly, are clustered around the Purple Line and Metra stations.
AMI requirements change in the new ordinance. Under the previous ordinance, enacted in 2007, new developments of for-sale housing, generally condominiums, were required to make 10% of the new units “affordable.” Of those, 75% had to be provided to families at 100% of AMI, and 25% to those at 80% of AMI.
Under the amended ordinance, TOD developments must provide 50% of affordable units to families at 100% of AMI, and 50% to those at 80% of AMI. Outside TODs, 50% must go to families at 120% of AMI, and 50% to those at 80%.
City staff estimates a total of 250 affordable units will be created if the City obtains full compliance, based on recent construction trends in the City. If a developer does not comply, the penalty will be $100,000 per unit in TODs and $75,000 per unit outside TODs. By way of example, if a new five-unit development near a transit station did not provide an affordable unit, the developer would be assessed a $100,000 penalty. If a new 50-unit development provided three rather than five affordable units, the developer would be assessed a $200,000 penalty for the two missing affordable units.
The incentives for meeting affordable unit goals include a 20% density bonus, 10% height bonus and 10% floor area ratio bonus in TODs. The numbers are 10%, 5% and 5% respectively outside TODs. Parking requirements are similarly reduced.
Council has wrestled with the ordinance for months. In general, aldermen recognize the amendments as a “first step,” and one that addresses only part of the problem facing the City. Alderman Melissa Wynne, 3rd Ward, summed up one of the challenges still ahead, saying, “Low-income housing is not addressed by this.”
According to census data and the website City-Data.com, family AMI in Evanston was $68,321 in 2013. Eighty percent of AMI came to $54,656.80. According to the same website, 40% of families in Evanston have incomes of less than $50,000, and 44.9% have incomes less than $60,000. Another 7.3% are in the $60,000 to $70,000 range. Given the data, almost half of Evanston families would not be able to afford even the affordable housing units created by the new ordinance.
“Low-income housing is something we haven’t even begun to tackle,” said Alderman Delores Holmes, 5th Ward. The new ordinance “does not have all the pieces. It’s not the complete puzzle,” she said.
Another concern raised was the possibility the ordinance simply would not work as intended. The current ordinance has been in place for more than eight years. “We’ve had an ordinance on the books for a long time,” said Alderman Ann Rainey, 8th Ward. “No housing has been created as a result of the ordinance.” Developers have paid penalties, and even some who were not required to comply have made contributions to the City’s affordable housing fund. But not a single unit of affordable housing has been created as a result, Ald. Rainey has repeated at prior meetings.
Alderman Brian Miller, 9thWard, attempted to address the issue by proposing a “sunset clause” amendment. “We have a responsibility as a Council to make sure this works,” he said. “Four years from now, in 2020,” Council must revisit the ordinance, he proposed. “If it’s not working, we need to do something about it.” If developers flee and stop building in Evanston, changes must be made. A sunset clause, he said, forces the City to keep the issue on the radar and monitor progress.
Alderman Jane Grover, 7th Ward, disagreed, saying developers need certainty. “Developers, what they’re looking for, is predictability,” she said. “There are other ways we can achieve accountability.” The amendment failed by a 6-3 vote, with First Ward Alderman Judy Fiske and Fourth Ward Alderman Don Wilson joining Ald. Miller in voting “yes.”
Voicing a continued concern, Ald. Wilson said, “I don’t feel this particular approach is a fair step. I am personally disappointed that this is all we could get done.” The ordinance will, necessarily, result in higher rent in the non-affordable units in a development to make up for the lower rent collected from affordable units, he said. As a result, the rest of the City does not contribute to affordable housing; the only contributors are the other renters or owners in developments with affordable units. The developers will pass the cost along.
“I challenge everyone to go home and think of ‘What I can do?’” said Ald. Wilson. “Think about what you really want to accomplish,” he added.
Ald. Fiske echoed Ald. Wilson’s sentiment. “I would love to feel good about a first step. I don’t feel good about this first step. ”
Ald. Rainey threw another wrinkle into the proceedings by suggesting a June 1 effective date rather than Jan.1. “We are not ready to implement this ordinance,” she said, citing an overworked and short staffed City housing staff. “If you’re going to be a role model for the world or the country, you need to do it right. We’re not ready to do this. ” She said without the June start date she would vote against the ordinance.
Her motion did not receive a second, and therefore failed.
Director of Community Development Mark Muenzer said developers are aware of the ordinance, and since many worked in Chicago, which has a similar affordable housing ordinance, they understand how it works. “They are aware of it. They are not thrilled, but” accustomed to complying with affordable unit requirements, he said.
Ald. Rainey said she was “shocked by the lack of outreach” from developers. They are either thinking, “See you later. There are plenty of other places to develop. Or maybe they’re happy with it,” she said.
The ordinance passed 6-3, with Aldermen Fiske, Wilson and Rainey voting “no.” With an expected 2,500 new housing units predicted in coming years, and an expected 250 of them “affordable,” Ald. Rainey’s analysis of developer sentiment will be proven one way or another.