Far west suburban city becomes the next in a string of Chicagoland communities to incorporate inclusionary zoning as a strategy to tap residential market activity, leverage public-private partnerships, and promote the local development of mixed-income housing.
Joining Highland Park, Lake Forest and Chicago, Feb. 4, 2008, St. Charles,
Ill., adopted its inclusionary zoning ordinance and housing trust fund enabling
legislation. "Its monumental," says MPC Vice President of Community
Development Robin Snyderman. "There are a number of job-rich and
affluent communities in our region working to ensure a diverse mix of
housing options. They understand the jobs-housing mismatch is both a
local and regional issue that negatively impacts our economic competitiveness."
Inclusionary zoning is a tool that
requires residential developers to set aside a certain percentage of the homes in the development
to be priced as affordable. A housing trust fund is a flexible, locally run pool
to support a community’s affordable housing activities, including helping to finance a new
affordable development, assisting homebuyers, and upgrading existing properties.
While not alone, the City
of St. Charles did take a unique approach to the
development of its inclusionary zoning ordinance. It was very careful to ensure the ordinance made sense with
the local housing market. First, the ordinance is “tiered,” requiring
developments of different sizes to set aside different percentages of
affordable homes. Most communities require a flat percentage for all
qualified developments in
their inclusionary
zoning
policies. (Highland Park’s ordinance, for example, applies to developments
of five
or more
homes and requires 20 percent of the homes in each qualified development
to be affordable.)
After drafting its ordinance,
St. Charles worked with S.B. Friedman & Company, a real estate advisory
consultant, to analyze how the proposed ordinance would affect the
bottom-line costs and profits for developers. The study concluded that most
would choose to build the homes on site, and the cost offsets built into
the ordinance (density bonus, fee waivers, etc.) would make the construction of
affordable homes financially viable for most developers. The St. Charles Housing
Commission then met with a variety of stakeholders, including the school
and park districts, local developers, and other real estate professionals to
discuss the merits of the policies and solicit feedback.
These two pieces of legislation are the result of
several years of hard work by St. Charles to address the decreasing
supply of housing for moderate- income workers, a negative consequence of the
city's strong local housing market and desirable location. In 2003,
responding in part to the workforce housing challenges surfaced through the
region’s first employer-assisted housing program with local manufacturer
System Sensor, MPC began working with St. Charles to develop a housing action plan . This plan was designed to promote
more housing options consistent with the Housing
Endorsement Criteria
created by the Metropolitan
Mayors Caucus and adopted by the St. Charles City Council. The plan provides
a series of recommended steps to create new mixed-income developments, preserve
and upgrade the existing affordable housing stock, and leverage county, state,
federal, and other resources to support local workforce housing developments
and programs. St. Charles Mayor Donald DeWitte, Ald. Betsy Penny, and the
St. Charles Housing Commission, chaired by St. Charles resident and affordable
housing developer Cindy Holler, have led the charge to make these
recommendations a reality.
The St. Charles Inclusionary Zoning ordinance applies to both rental
and for-sale developments, as follows:
Development Size (# of homes)
|
% required affordable
|
In-lieu fee provision*
|
1-10
|
5%
|
Optional for all
|
11-50
|
10%
|
Optional for 50%
|
50+
|
15%
|
Only optional for 50% if demonstrates
"hardship"
|
*The current calculated in-lieu fee is $140,000 per unit required by the
Inclusionary Zoning Ordinance, but not built on site. For the portion of the
requirement that allowed to be satisfied by the payment of a fee in-lieu, any
fraction will be used in calculating the total fee in lieu to be paid by the
Developer. For example, for a development of five units, the affordable
requirement is five percent (see above). Five percent of five units is ¼ or .25.
So, the amount the developer would pay in-lieu of building the affordable home
on site would be $35,000 or ($140,000 x .25).
For rental developments, the
inclusionary homes must be affordable to households earning between 50 and 60
percent of the Chicago Area Median Income. In 2007, the income for a family four
that would qualify for these apartments would be between $37,700 to 45,240
annually. The rental prices will be based on each qualified family’s ability to
pay up to 30 percent of its income on housing costs.
Affordable rental apartments
created under the St. Charles Inclusionary Zoning policy will be affordable in
perpetuity.
In for-sale developments, the
inclusionary homes must be affordable to households earning 80 percent of the
Chicago Area Median Income. In 2007, the income for a family of four that would
qualify to purchase an affordable home would be at or below $59,600 annually.
The for-sale price would also be based on a family’s ability to pay up to 30
percent of its income on housing costs.
These new homes will provide opportunities for working families to live
and work in
St.
Charles
.
For-sale opportunities created
under the Ordinance will be price restricted for the first seven years. After
seven years, then the owner shares a percentage of the equity earned on the
property with the City of
St.
Charles
upon the sale at the regular market price. Both
the percentage of equity paid by a seller and the in-lieu fee initially paid by
the developer will go into the city’s newly established Housing Trust
Fund.
While monumental, these
policies are still just part of the equation
in St.
Charles. Moving forward, the St. Charles’
Housing Commission will look to reach out to employers to solicit their
investment in affordable housing for the local workforce, work with Kane County
to look at developing additional resources, explore local tools such as tax
increment financing (TIF) and local bond authority to generate new revenue
sources for affordable housing, and review exiting building codes to ensure that
they aren’t cost prohibitive to affordable housing construction.
MPC is
pleased to congratulate
St.
Charles
on its perseverance and
leadership!