Chicago is 120,000 units short on affordable housing. Here’s how the city and developers hope to fix that gap

It may seem like the search for affordable housing is as elusive as a COVID-19 vaccination appointment — a long, arduous process that often includes a waitlist.

For Jeanette Freeman, 24, moving from her family’s South Side dwelling to live on her own in a one-bedroom apartment took her all of a year — from launching the search to submitting her name for a Chicago Housing Authority unit in Oso Apartments in Albany Park on the North Side.

“I was searching online for affordable housing, applying anywhere and everywhere,” she said. “And I said let me try CHA. I applied online to CHA’s site-based projects. Oso was just one of the apartments that pulled me in. I got in, after a week of applying. It was a blessing. I’m still in disbelief.”

Since then Freeman, a student and security guard, said her friends are applying to all the sites and links she sends them, in hopes they can find a residence in the same way and with the same speed.

Chicago has about 120,000 fewer units of affordable housing than what it needs, according to Marisa Novara, commissioner of the city’s Department of Housing. Recognizing this, the agency last month announced a reworked Affordable Requirements Ordinance in an attempt to close the affordable housing gap.

The city has a number of new initiatives to create and/or preserve affordable housing in gentrifying areas of the city, including the anti-deconversion ordinance, legislation designed to make it harder for developers to buy buildings with multiple apartments and convert them into expensive single-family homes. Developers, meanwhile, are undertaking projects using the existing policies.

The shortage of affordable units is something developer and property manager The Habitat Co., whose affordable housing arm manages more than 13,000 affordable units, is trying to address. Its latest endeavor is 43 Green — a $100 million mixed-use development of three buildings next to the 43rd Street Green Line stop in the Grand Boulevard community area. The first building will contain 99 apartments, half with market-rate rents and half for residents earning no more than 60% of area median income, which is $55,920 for a family of four. The ground floor will contain retail space. Construction is expected to start later this year.

The development is part of Mayor Lori Lightfoot’s Invest South/West initiative to boost investment on the city’s South and West sides. It coincides with a draft of the city’s first plan for Equitable Transit-Oriented Development, also known as eTOD, which the city defines as “development that enables all people, regardless of income, race, ethnicity, age, gender, immigration status or ability, to experience the benefits of dense, mixed-use, pedestrian-oriented development near transit hubs.”

“Affordable housing cannot be cured without financial support, ultimately financial support of all levels of government,” said Matthew Fiascone, Habitat’s president. “Between the Great Recession and the pandemic, if you look where transit-oriented development occurred, it was primarily in areas that were high cost, or they quickly became high cost because they had transit. It became exactly the opposite of affordable.

“Part of eTOD is put it in neighborhoods and manage it, so the transit-oriented aspect doesn’t end up pricing people out.”

Another boost to the supply of affordable housing is the development of accessory dwelling units. Late last year, the City Council made the building of coach houses, basement and attic apartments permissible for the first time since 1957. The ordinance takes effect May 1, and some of the units will be required to be affordable.

Eligible property owners in five pilot areas can apply at chicago.gov/adu to create one or more units. The city is offering online training about the program in May. The ordinance has a three-year evaluation period, after which the city will decide whether to make a permanent citywide policy.

Jon Morgan, co-founder and managing principal of Interra Realty, a brokerage of middle-market apartment buildings in the Chicago area, said he thinks vintage buildings will benefit from the ordinance.

“We have clients that ask us to go out hunting for buildings that have the capability of putting additional units in the ground floor, “ he said. “The fact that they can add more units is good on the real estate side. And on the humanitarian side, I think it will definitely help introduce affordable options in other areas that previously didn’t really have to do that.”

Novara has said affordable housing efforts like the Affordable Requirements Ordinance, accessory dwelling units, and Equitable Transit-Oriented Development are tools the city is using to address the issue of affordable housing.

Structured Development is fulfilling its Affordable Requirements Ordinance obligation tied to from the planned Shops at Big Deahl, a mixed-use complex in Lincoln Park, by building the Harrison Row Townhomes in East Garfield Park. To fulfill requirements of the ordinance, 50 townhomes will be built and required to remain affordable for at least 30 years. The first seven townhomes were completed in winter 2020.

Michael Drew, founding principal of Structured Development, said the townhomes were built with low-income and working-class families in mind — fewer studios and one-bedroom units and more three- and four-bedrooms. The need for bigger, more affordable homes for families has been a point of contention for Chicago residents. Drew calls the three-bedroom, 2½-bath townhomes priced from $229,000 “workforce housing.”

“It doesn’t matter if you’re earning $30,000 a year or $70,000 a year, if you can’t find affordable housing options that’s a problem and that’s a burden,” Drew said. “In the past, most units built under the ARO were smaller studio and one-bedroom plans that were almost exclusively rentals, so this is truly filling a need in the market. Harrison Row Townhomes not only provide the square footage many households need but also make it possible for them to experience the sense of pride and stability that come with homeownership.”

Another tool in the affordable housing toolbox is low-income housing tax credits.

The developer of Oso Apartments, Evergreen Real Estate Group, which develops, acquires and manages affordable and market-rate apartments, collaborated with Structured Development to build Schiller Place. The three-building, 48-unit mixed-income rental community on the Near North Side broke ground in February. Forty of the units will be for households earning between 30% and 60% of the area median income.

The development was backed by the recently recalculated federal 4% low-income housing tax credit. Developers can claim the tax credit if they work with a governmental agency to fund their project partially with a tax-exempt bond. The change had the effect of essentially boosting the value of the noncompetitive tax credit, said David Block, director of development for Evergreen. The tax credit increases developers’ ability to build and rehab affordable housing units.

“That one step has been a huge boost to affordable housing finance all over the country,” Block said.

This article is written by Darcel Rockett from Chicago Tribune and was legally licensed via the Tribune Content Agency through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.