CHICAGO — The Chicago City Council has passed an ordinance intended to compel developers of new apartment buildings and other residential housing to set aside a greater percentage of "affordable housing" within certain zones in or near the city's downtown.

The so-called pilot programs are designed to remove the so-called "in-lieu fees" developers formerly were able to pay in place of the affordable housing set-asides in these desirable neighborhoods, said Donna J. Pugh, an attorney at the Chicago law firm of Foley & Lardner.

Chicago Mayor Rahm Emanuel
Chicago Mayor Rahm Emanuel | Time Magazine

The Affordable Requirements Ordinance (ARO) would cover three near-downtown areas, identified as the North Zone, Near West Zone and the Milwaukee Corridor, Pugh said.

The North Zone would extend from Riverside Street to Racine Street and requires affordable housing units to make up 20 percent of a development, with 10 percent on-site or within two miles in the same pilot zone, and an added 10 percent built anywhere in the same pilot zone.

The Near West Zone, which extends from Ashland to Kildare Streets, requires affordable housing units to include 15 percent of a development, on-site or within two miles, plus an additional 5 percent anywhere in the same pilot zone.

The Milwaukee Corridor, which runs from the Kennedy Expressway to Springfield Avenue, requires 15 percent on-site or 20 percent off-site, but they all have to be within the same pilot zone.

According to information posted by the City of Chicago, affordable housing must be affordable to "households earning up to 60 percent" of the city's annual median income, which would be $37,920 for a two-person household

The pilot zones program requires a 20 percent affordable housing ratio if a project receives Tax Increment Financing through the city. Under such TIF programs, the city provides funding for infrastructure improvements and other incentives through a fund that includes a certain share of property taxes paid.   

The zoning plan impacts new residential developments that have 10 or more units and require a zoning change, involve a sale of land or receive development funding from the city.

Pugh said the city wants affordable housing to be part of new city developments.

“This initiative from the city came in response to how many new units were coming on the market in these areas and to ensure affordable units were being built in these growing communities,” she said.

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