Affordable housing in Chicago stunted despite ordinance by fee loophole for developers

CHICAGO (WLS) -- For many it's a real struggle to find an affordable place to live in Chicago, despite an ordinance that's supposed to help create more homes people can afford.

Chicago's Affordable Requirements Ordinance, known as the ARO, was developed years ago as a tool to help create more affordable units, but a developer-friendly loophole in the law has resulted in very few units families can afford.

Joseph Moore, 27, spent his childhood living in West Side basement apartments. The cycle continues as an adult. Moore said he can't come close to affording rent in safer parts of town.

"I think about the North Side, think about rents here are $1,600 just for a studio apartment, that is absurd," he said. "What do you have to do or what kind of job do you have to have to live in a good quality apartment?"

In a neighborhood like Logan Square there are plenty of good quality, new apartments. The Milwaukee Avenue corridor is lined with new developments. Under the ARO, developers who seek zoning changes or financial assistance from the city for a new project are required to provide a certain percentage of on-site affordable units, usually 10 percent. Milwaukee Avenue is known as a pilot zone, so it's 20 percent. However, developers have another option.

"The requirement under the current law allows developers to pay money into a fund rather than build affordable housing," said Leah Levinger, Chicago Housing Initiative Coalition.

And many developers opt to pay that fee. The money goes into a city fund to be used for affordable housing.

Because of the fee option, the Chicago Housing Initiative says the ARO has only created 444 affordable units between 2007 and 2017. Most are studios or one bedroom apartments; only 22 were three bedrooms.

"If we are not creating affordable options for families, we'll continue to see this mass exodus," said 25th Ward Alderman Byron Sigcho Lopez.

Ald. Lopez, who represents Pilsen, is proposing a new ordinance dubbed the Development for All Ordinance. It would wipe out the fee option for developers and also increase on-site affordable housing to 30 percent in affluent areas. In addition, it would redefine what is considered affordable. Under the current formula, the city defines it as $900 for a studio apartment.

"The city's definition of 'affordable' is roughly double of what the average black family makes, and 40 percent of what the average Latinx family makes," Levinger said.

But developers said the ARO in its current form and proposals to replace are making the problem worse.

"Most of the major builders in our city are already looking to build in Nashville or other areas, places where there are opportunities to build but without so much restriction," said Pat Cardoni, Home Builder's Association of Greater Chicago.

Developers say restrictions - whether it's a mandated percentage of affordable units or a fee - have already cost the city a half billion dollars in lost tax and other revenues.

For Moore, unless government and developers can work something out, he doesn't see Chicago changing.

"I think excellent-quality housing are only for the few and chosen," he said.

To prevent Chicago from becoming another city where only wealthy people can live, the Lightfoot administration has put together a task force of housing advocates, activists and developers. The goal is to make the Affordable Requirements Ordinance work for all stakeholders.