St. Charles City Council approves ordinance requiring affordable homes in all new residential developments

City also adopts measure to create housing trust fund

February 13, 2008

(St. Charles) … The City of St. Charles, a western suburb of Chicago , adopted an inclusionary zoning ordinance on Feb. 4, joining a handful of local municipalities taking concrete steps to address the metropolitan region’s affordable housing crunch.

Inclusionary zoning requires residential developers to set aside a certain percentage of homes in a development to be priced as affordable. The City also approved legislation enabling the creation of a housing trust fund, a flexible, locally run pool that will support actions that preserve and create affordable homes in the community, including financing new affordable homes, assisting homebuyers, and upgrading existing properties.

The City of Chicago and two northern suburbs, Highland Park and Lake Forest, have similar laws on the books. However, St. Charles took a unique approach to the development of its inclusionary zoning ordinance.

“The St. Charles Housing Commission worked hard to develop an inclusionary zoning ordinance that makes sense within the local housing market,” said St. Charles Mayor Donald DeWitte. “The commission met with the school and park districts, local developers, and other real estate professionals to craft a policy that will create new homes and send a message to the development community that St. Charles wants housing for our workforce.”

While most communities with inclusionary zoning require a flat percentage for all qualified developments, St. Charles’ inclusionary zoning ordinance is ”tiered,” requiring developments of different sizes to set aside different percentages of affordable homes. Developers can opt to pay an in lieu fee of $140,000 per unit, rather than build all or some of the units, depending on the size of the development. Fees would be paid to the housing trust fund.

The housing commission tapped real estate consultant S.B. Friedman & Company to analyze how the proposed ordinance would affect developers’ costs and profits. The study concluded that most developers would choose to build the homes on site, rather than to pay the fee; and that cost offsets built into the ordinance (density bonus, fee waivers, etc.) would make the construction of affordable homes financially viable for most developers.

Mayor DeWitte, St. Charles Ald. Betsy Penny, and the St. Charles Housing Commission, chaired by St. Charles resident and affordable housing developer Cindy Holler, led the charge to make these two pieces of legislation a reality. Local leaders began working with the Metropolitan Planning Council (MPC) to develop a housing action plan in 2003. The city is eager to address the decreasing supply of housing for moderate-income workers, a negative consequence of St. Charles ’ strong local housing market and desirable location. Between 2000 and 2005, the median price of a home in St. Charles rose by 38 percent, while the median household income increased by only 9 percent.

While inclusionary zoning was under consideration by the City of St. Charles, the city already had some success with developers contributing funds for affordable housing. These funds provide the core of the housing trust fund to address future housing needs. In the First Street Redevelopment, the City’s downtown mixed-use project, the developer constructed 16 affordable apartments before the ordinance went into effect.

“St. Charles’ decision is monumental,” said MPC Vice President of Community Development Robin Snyderman. ”The city is one of a growing number of job-rich, affluent communities in metropolitan Chicago that understands the region needs to plan for a mix of housing options near jobs to continue to be an attractive place to live and do businesses.”

While monumental, these policies are still just part of the equation in St. Charles. The St. Charles Housing Commission plans to reach out to employers to ask them to invest in affordable housing for their workers; partner with Kane County around new housing programs; and review existing building codes to ensure they are not cost prohibitive to affordable housing construction.

For more information about the inclusionary zoning ordinance, housing trust fund, or housing action plan, please contact Bob Hupp, Director of Planning, City of St. Charles, 630.377.4443 or bhupp@ci.stcharles.il.us; or Mandy Burrell Booth, Asst. Communications Director, Metropolitan Planning Council, 312.863.6018, 773.640.1206 (cell) or mburrell@metroplanning.org .