Housing for Sensible Growth: An Update for 2007

This MPC Initiative works with municipal officials and developers to ensure the long-term availability of affordable housing by promoting and connecting innovative state, regional and local housing policies.

By Josh Ellis @MPCJosh
May 15, 2007

The gap betweenincomes and the cost of a home iswidening throughoutChicago region. Transportation,energy, and environmentalcosts are on the rise as well, driven upward by the flow ofmore and more people moving further andfurther away from urban centers in the search ofaffordable homes.Truly affordable homes - good homes close to good jobs, good schools, good transit, and good open space - are an increasingly rare commodity. In an effort to ease these trends, the Metropolitan Planning Council's Housing for Sensible Growth initiative works to create innovative solutions and build strongerpolicies that stimulate the creation and preservation of quality homes at affordable prices.

Through the Housing for Sensible Growth initiative, MPC focuses on supporting local, state and federal policymakers in their efforts to understand and address regional housing needs. MPC partners with municipal and state staff, elected officials, employers, developers, homebuilders and advocates to generate solutions that address the regional mismatch between the location of housing and jobs, as well as the mismatch between wages and housing costs. MPC works to expand the tools available to policymakers and housing providers, and to increase the constituency of housing supporters who recognize that quality, affordable housing is central to the social and economic stability of our neighborhoods and our region.

Supporting Local and Regional Initiatives

MPC has partnered with several regional organizations, local policymakers and advocates to expand policy tools that aid municipalities in meeting and fostering support for their housing goals. Many cities and towns have recognized that the lack of affordable housing directly affects the quality of our neighborhoods and economic vitality of our region and have begun to implement these policy tools to address their housing needs. Through its Housing for Sensible Growth initiative, MPC works directly with these towns to identify housing goals, implement appropriate policies, access resources and when appropriate, form regional partnerships.

Since2002, when the Metropolitan Mayors Caucus (MMC) createdits St. Charles created such a body , and charged it with implementing policies that will increase the supply of quality homes affordable to a variety of income levels and that meet the city'shousingendorsementcriteria. Thecommission isresponsible for advancing key housing policies that will preserve and improve the existing affordable housing stock, leverage the private market to create new affordable homes and, research and tap resources at the local, state and federal levels. Similar groups exist in Evanston , and Highland Park .

Highland Park's Inclusionary Zoning Ordinance - Inclusionary zoning (IZ)ordinances are used to ensure that some percentage of a community's new houses and apartments are affordable topeople with low to moderate incomes (these categories correspond to what percentage of the Area Median Income a person or household earns annually). In HighlandPark, a community on the shores of Lake Michigan north of Chicago, a t least 50% of all IZ-produced affordable housing must be sold to low-income households (those whose income does not exceed 80% AMI), and as many as 50% of available homes may be made available for moderate-income households (those whose income does not exceed 120% AMI.). Low-income units must be priced, on average, for a household who earns 65% AMI (this unit would be available to a household earning 80% AMI or less). Moderate-income units must be priced, on average, for a household who earns 100% AMI (similarly, this unit would be available to a household earning between 81% and 120% AMI). If a developer is producing only one affordable unit, it may be priced at the top of the income category rather than at the mandated average (i.e. 80% AMI rather than 65% AMI). Before closing, potential buyers must complete a first-time homebuyer education course. This class is offered by the Lake County Affordable Housing Corporation. The class focuses primarily on issues of money management, financial decision making, and the ins and outs of specific mortgages. Households who are not mortgage ready are also encouraged to take the class to become mortgage ready. As of May, 2007, Lake Forest and Evanston are the only other municipalities with policies of inclusionary zoning.

Similar to these IZ policies, Chicago's brand new (adopted May 14, 2007) Affordable Housing Requirements mandate that whenever a developer builds under conditions that include zoning changes allowing for higher density or in which a developer buys City land, the developer shall be required to establish ten percent (10%) of the units in the development as affordable. Additionally, whenever a developer receives financial assistance in connection with a development, the developer shall be required to provide twenty percent (20%) of the units in the development as affordable.

Lake Forest's Housing Trust Fund , established in 2005, is intended to provide financial resources for the promotion,preservation, and production of long-term affordable housing. The City Council is responsible for allocation of Trust Fund dollars, and it is at the Council's discreation how and in what form those dollars are used - for construction or preservation of homes, land assembly, homebuyer education, support for non-profit organizations working toward the City's affordable housing goals, etc. Revenue to support the Trust Fundcomes from the City's Demolition Tax ($10,000 for a single-family or two-family building, $5,000 per unit for larger maulti-family buildings) and payments in lieu of constructing some or all of the required affordable housing units mandated by the IZOrdinance. Highland Park has a Community Land Trust designed to achieve similar ends - the provision and preservation of permanently affordable housing.

In 2003, the Illinois General Assembly adoptedthe Lake Forest , Long Grove , and Lake Zurich are all examples of local responses to state policy.

Advancing State Housing Policy

In 2003, the Governor created the State's first Housing Policy, building on the recommendations of the Transition Team Housing he appointed in 2002 and formalized via the pivotal 2003 Executive Order He then appointed a Task Force to transform that policy into a multi-year plan to promote affordability and choice, create and preserve the state's supply of affordable and workforce housing, and engage local and state leaders in advancing housing solutions for all Illinois families. In 2005, the State ofIllinois released "Building for Success: Illinois' Comprehensive Housing Plan," the first housing plan of its kind. It has subsequently been updated twice – "On the Road to Success: Illinois' Comprehensive Housing Plan," and "Affordable Housing Dimensions: Illinois' 2007 Annual Comprehensive Plan." IHDA also publishes semi-annual progress reports.

Beyond the Plan, the State has passed numerous pieces of legislation that demonstrate the progress afoot:

2003 Housing Opportunity Tax Incentive Act - To encourage the owners of properties located in opportunity areas to rent their apartments to Housing Choice Voucher holders.
2003 Affordable Housing Planning and Appeals Act – To require that Illinois communities with insufficient supplies of affordable housing (less than 10% of its year-round housing, communities with fewer than 1,000 are exempt) to bridge that gap, starting with an affordable housing plan. A State Housing Appeal Board will be activated in January of 2009; the purpose of this board is to hear appeal from affordable housing developers whose proposals have been denied in communities with insufficient supplies of affordable housing. MPC has, and will continue to, work with communities to not only reach the 10% threshhold, but to move beyond it. To that end MPC has worked closely with communities such as Extension of IL Affordable Housing Tax Credit - Created in 2002 as a five-year initiative to provide tax relief to corporations investing in affordable housing, this tax credit exemplifies the kinds of innovative partnerships that leverage critical private sector dollars. A set-aside for those investing in employer-assisted housing has also been a key component of this legislation.
2005 Regional Planning Act - Led to the creation of the Chicago Metropolitan Agency for Planning , consolidating planning in northeastern Illinois, and explicitly addressing housing as part of land-use and transportation planning.
2005 Rental Housing Support Act- Created a new $10 county recordation to generate about $30 million annually for rent subsidies for extremely low-income families throughout Illinois.
2006 Business Location Efficiency Act - Provides incentives for employers to consider and invest in housing options for the local workforce. For more information on the many ways employer investments in housing are already leveraging private sector investment and leadership, visit www.reachillinois.org .
2007 (Pending) Good Housing Good Schools - This bill would create a school funding bonus for school districts in communities that approve multifamily housing developments to advance Live Near Work and Preservation goals of Illinois' Comprehensive Housing Plan. The annual amount of the school funding bonus for eligible developments would be $1,120 for each two-bedroom unit, with $560 awarded for each additional bedroom. Based on this formula, the state's annual estimated cost for the bonus is less than $5 million per year. The bill passed through the Senate on March 27, with a vote of 50 – 6 – 1, and through the House on May 25, with a vote of 113-2.

MPC's 2007 Policy Agenda also aims to explore opportunities for recrafting the criteria for "Live Near Work" points on the state's tax credit application. The current litmus test is primarily employer support - which is valuable but does not account for objective criteria such as the strength of job markets near new homes or a municipality's level of affordability. MPC is exploring a revised set of criteria that would award points based on the jobs-to-household ratio of the zip code receiving the new homes, on the current share of affordable homes in the receiving municipality, and on financial support from local employers. The goal of this exploration is to create homes for working families in close proximity to jobs, and in communities that currently lack available affordable homes.

Building Community Acceptance

MPC's Community Acceptance Strategy is a partnership with Housing Illinois (HI), and the Illinois Housing Council (IHC) to build the public and political will needed to secure new housing policies and approve proposals for new, well-built and well-managed affordable homes. The strategy coordinates the resources, policy tools and technical assistance each organization offers in an effort to maximize their effectiveness on the ground in communities throughout the region. When ahousing policy or development that promotes the availabilty of affordable homes and is in line with the MMC's Housing Endorsement Criteria meets resistance, the Community Acceptance Strategy partners can be mobilized to build support, voice positive sentiments about affordability, and overcome stereotypes.

Housing Illinois is a coalition of housing advocates, civic organizations and financial institutions using research, advertising, media outreach, and organizing to raise public awareness and encourage civic and political leadership on behalf of affordable housing in communities throughout the Chicago metropolitan region and the state of Illinois. Housing Illinois' slogan, "We need the people who need affordable housing," is familiar throughout the Chicago region.

The video Home Grown: Local Housing Strategies in Action , a compilation of case studies from around the region of local housing policies, programs and developments that address housing affordability, accessibility and quality.This is a "living" document that will be updated annually as newprograms and policies are estabilished in theChicago region.