The Chicago Association of REALTORS®, the “Voice for Real Estate” in Chicago since 1883, represents over 17,000 members from all real estate specialties including commercial sales, development, property management, appraisal, auctions and residential sales.
At the City Council meeting of March 24, 2021, a revision to the Affordable Requirements Ordinance (ARO) was introduced. The ordinance as drafted has the potential to slow development in Chicago. REALTORS® want development, as well as the best use of a property. The City of Chicago claims nearly 120,000 units are needed to solve the affordable housing crisis. However, if the city disincentivizes building, the housing supply never increases and amenities and anchor tenants will no longer see an opportunity to create new footprints. While there is nothing in the ARO that makes a developer build, there are plenty of reasons in the draft proposal that will incline developers not to build.
The ordinance will be heard in the Chicago City Council Committee on Housing and Real Estate. At this time, that meeting has yet to be scheduled. As of now, the ordinance is still being analyzed by our GADs and a response is still being contemplated. Be on the lookout for more information and a possible call for action.
The City Council also approved an ordinance related to the ARO. Units created by the ARO had a 30-year term of affordability. With the passing of this ordinance, anytime an ARO unit is sold, the 30-year affordability term renews.
Last, the City Council approved a demolition surcharge. In Pilsen and the 606 Bloomingdale Trail, in order to move forward with the demolition of a single-family home or two-flat, an extra fee of $15,000 will be assessed. Demolitions of three units or more will need to pay $5,000 per unit. The purpose of this ordinance is to discourage the destruction and replacement of buildings. Unfortunately, this proposal only increases the cost of housing.