Affordable housing issue not resolved by set-asides
Crain's Chicago Business Editorial
There's no question that the city is in dire need of affordable housing. But the solution is not what housing activists suggest requiring that developers set aside 30% of new residential units.
The city's proposed new zoning ordinance is already pushing developers hard to protect the character of residential neighborhoods for example, by imposing height restrictions and limiting the size of a building's footprint to ensure green space.
Perhaps it's a bargaining ploy, but developers already are warning that such restrictions will slice margins so thin that many projects will be economically unfeasible. But new restrictions, in combination with the 30% set-aside, could very well push new projects into the red. And the last thing the city wants to do is slow development of the new housing that has sparked the renaissance of many Chicago neighborhoods.
Before mandating set-asides, there are other initiatives to try. For example, the city says it can expedite approvals to put affordable housing initiatives on a fast track. It has suggested permitting more residential construction in transitional commercial districts where the demand for retail space isn't growing.
More sweeping measures could be tried, such as requiring developers to contribute to a citywide fund that would subsidize affordable housing.
This is not to say that set-asides will never have merit. But they should be tested first. Chicago could try a pilot program with smaller set-asides, in the range of 10%. Experts say these more modest requirements have benefited other cities.
As the city puts the finishing touches on the zoning code update this fall, it must devise an ordinance with teeth, one that will expand affordable housing initiatives without destroying the economics of new projects. If it doesn't, the city's housing stock will lack the middle ground between extremes of wealth and poverty.