A whole series of bills and proposals now pending in Springfield and Chicago take both approaches to the problem. There is general agreement that there is a problem. There’s not nearly enough affordable housing in this town or in the suburbs, and the situation has only become worse amid the COVID-19 pandemic. The question is, which approach ought to pass?
One proposal, from Mayor Lori Lightfoot, would make developers of high-end housing downtown and in wealthier neighborhoods pay a premium if they need something from the city, such as a zoning change, a grant, or approval of a land purchase. Under her new plan, developments covered by the ordinance would have to make at least 20 percent of units available at affordable, below-market rates, up from 10 percent now. And instead of buying their way out as they currently can by contributing to a development fund, builders would have to provide at least half of those affordable units on site, mixing up people of different economic backgrounds.
Not surprisingly, developers are squawking that the price is so high the market will die. On the other hand, as my colleague Alby Gallun pointed out, they also squawked about the original, 2015 affordable-housing law, which preceded a construction boom. Still, should there be a stiff price to get a routine zoning approval?
A different approach is being offered by state Sen. Sara Feigenholtz and Rep. Curtis Tarver, both Chicago Democrats. It would cut property taxes by as much as 35 percent on landlords who keep enough units available at a low enough rate, as low as 60 percent of regional median income.
To those who think that might be a little rich, consider the cost of operating conventional public housing. Or consider that the Feigenholtz/Tarver bill would merely revive and expand the old Class 9 affordable tax break that existed under former Cook County Assessor Jim Houlihan. But there is a problem: Experts say the measure would generate only about 15,000 more affordable units countywide, not nearly enough.
Another, similar carrot-style bill would provide rent subsidies by doubling the filing fee for recording a deed to $18 from $9 now. That’s certainly less than the direct tax on real estate sales Lightfoot once pushed (the real estate transfer tax) but still might not provide enough revenue.
Ergo, the Really Big Stick plan, offered by Rep. Will Guzzardi, D-Chicago, to lift the state’s ban on local rent control laws. Guzzardi insists locals ought to have the right to talk about doing something and wouldn’t necessarily repeat the mistakes of officials in New York City and San Francisco, where middle-class housing has all but disappeared. But his bill has picked up some momentum.
How much if any of this is going to pass remains uncertain. The two carrot bills seem to have the most backing at the moment, as does Lightfoot’s plan to stiffen requirements under the city’s affordable housing ordinance.
The irony is that whatever passes and whatever good is accomplished could effectively be undone by Cook County’s new reform-minded assessor, Fritz Kaegi.
Kaegi has begun reassessing the county one third at a time, and initial results are that his biggest proposed hikes are not on office buildings or factories or single-family homes but for-rent apartments, up a whopping 112 percent in northern Cook, far more than any other category except for property owned by not-for-profits. Kaegi’s office replies that he’s just doing his job and determining the true market value of property, which is true. But if taxes on apartment buildings go up a ton, guess what also rises: rents.
I suspect the next phase of this drama won’t be pretty.
via Crain’s Chicago Business
April 3, 2021 at 04:31PM