Landmarks of the Chicago skyline like the Civic Opera building, Illinois Center, 175 W. Jackson, and 181 W Madison are in foreclosure or distress. This disruption of the old order is a generational opportunity for Chicago to address affordable housing by converting aging office stock into homes.
If 20% of Chicago’s central business district office stock was converted to apartments, it could produce up to 60,000 units of housing. This transformation would meet the needs of half the shortage of 120,000 units of affordable housing according to Marissa Novara, commissioner of Chicago’s Department of Housing.
Problem, meet solution—right? Wrong.
While many of these older buildings already serve as homes for tens of thousands of Chicago’s residents today, they were grandfathered in prior to zoning and building code changes. The cost to renovate decades-old buildings from when they were zoned and constructed to comply with present building and zoning code is often a multiple of what office buildings facing obsolescence are worth.
As a society we are choosing that affordable housing stock is good enough for our residents to live in, but only the latest and greatest improvements will do to create new housing for those in need. A way to reconcile this inconsistency is through a public-private partnership to fund the difference between what is already acceptable to live in versus what is now acceptable to build.
A budget is an economic expression of values which attempts to answer the timeless societal question, “Where should we invest our scarce resources?” A plethora of studies reveal that housing is an important social determinant for educational attainment, economic outcomes, health and well-being. Just under 0.2% of Chicago’s 2022 total budget was devoted to affordable housing. What does it cost Chicago to not provide affordable housing in terms of adverse health, economic drag, and bad outcomes?
Habitat for Humanity, a leader in the creation of affordable housing, guides us to the benefits: “Greater tax generation, creation of jobs, opportunities for economic development, increased job retention and productivity, and the ability to address inequality.”
While there are many needs facing Chicago, seizing the generational opportunity to address affordable housing is an chance too big to let pass.
William M. Bennett is a professor of Real Estate at Northwestern University’s Kellogg School of Management.
via Crain’s Chicago Business
April 26, 2022 at 06:00PM