CHICAGO — City officials are on the cusp of approving $1.6 billion in city subsidies to fuel two massive developments that will transform Chicago’s landscape with 16,000 new apartments and condominiums — but barely put a dent in Chicago’s affordable housing shortfall or reduce the economic or racial segregation plaguing the city.
The two mega-projects — Lincoln Yards and The 78 — are required to set aside 3,200 units for low- and moderate-income Chicagoans. But just 800 of those units would be included in the planned new neighborhoods.
The remaining 75 percent — totaling 2,400 new housing units — would be built in other parts of the city, according to plans endorsed by city planners and set for City Council approval in March.
Eight aldermen now have said they plan to vote against Lincoln Yards for a host of reasons, including the lack of units set aside for low- and moderate-income Chicagoans as part of the new neighborhoods.
“It doesn’t make sense for developers to be allowed to pay us back with our own money,” said 47th Ward Ald. Ameya Pawar, who is running for treasurer. “I call bulls—.”
In addition to Pawar, Ald. Scott Waguespack (32nd); Ald. Michele Smith (43rd); Ald. Carlos Ramirez-Rosa (35th) and Ald. Harry Osterman (48th) vowed to vote against the development.
On Tuesday night, Ald. Deb Mell (33rd) also said she opposed the proposed Lincoln Yards development.
On Wednesday night, Ald. Joe Moreno (1st) said he is “presently against” the development and will not vote in favor of the project.
On Thursday, Ald. John Arena (45th) said he was opposed to the project.
Pawar said the city is missing a “dramatic” opportunity to partner with the Chicago Housing Authority and make Lincoln Yards a “massive mixed use development” by requiring 30 to 40 percent of the units to be affordable.
The city’s Affordable Requirements Ordinance law requires developments of 10 or more units that need special approval by city officials, are on city-owned land or are subsidized by taxpayer funds to rent or sell 10 percent of their units at below-market rates.
Developers can opt to meet a portion of that requirement by paying into the Low-Income Housing Trust Fund, which city officials use to build affordable housing units elsewhere in the city.
Developments that get funding from tax-increment financing districts have to set aside 20 percent of their units — but only a quarter of those units must be built on-site as part of the new project. The requirement for the remaining units can be met by paying into the Low-Income Housing Trust Fund or building within two miles of the project, according to city law.
In his weekly newsletter, Osterman said it was “reprehensible” that all of the affordable units required to be built under the Affordable Requirements Ordinance would not be built on site, as he requires in his North Side ward.
Projects that need TIF funding — or a zoning change — must get the approval of the ward’s alderman. Under the city’s unwritten code of aldermanic prerogative, the alderman has the ability to block the development, unless the development meets their standards.
Ald. Brian Hopkins, whose 2nd Ward includes Lincoln Yards, said he was satisfied with the affordable housing component of the Lincoln Yards development.
The mega-project along the North Branch of the Chicago River relies on $900 million from the proposed 168-acre Cortland and Chicago River Redevelopment Area (F2018-72). That TIF designation will be considered by the Community Development Commission next month.
Hopkins flexed his aldermanic muscle late last year by preventing it from moving forward until Sterling Bay dropped plans for a soccer stadium and a large entertainment venue. He is unopposed in next month’s election, assuring him of a second term on the City Council.
Of the 6,000 apartments, condominiums and townhomes planned for Lincoln Yards, 1,200 must be set aside for low- and moderate-income Chicagoans.
Sterling Bay plans to include only 300 of those units as part of the development itself, the minimum required by city rules.
“Who are they building these new neighborhoods for?” asked Kevin Jackson, the executive director of the Chicago Rehab Network, which has urged city officials to dedicate more of Chicago’s general fund to building affordable housing. “It doesn’t feel like it represents proportionally who lives in Chicago.”
Chicago is short 118,000 affordable homes, according to a study by the Institute of Housing Studies at DePaul University. In addition, 50 percent of all Chicagoans pay more than they can afford in rent, according to the study.
However, the Chicago Rehab Network, which is a coalition of nonprofit organizations, supports allowing developers to pay into the Low-Income Housing Trust Fund, which allows the city to build units and set them aside for very low-income residents.
The Chicago Rehab Network has urged city officials to take “bold action” and spend “millions” more to subsidize and finance affordable housing in Chicago to combat rising inequality and instability.
“The fund is smart public policy,” Jackson said. “All 77 community areas need affordable housing.”
Sterling Bay also plans to pay $39 million into the city’s housing trust fund in lieu of building another 300 units as part of Lincoln Yards.
Department of Planning and Development Commissioner David Reifman said during the Plan Commission hearing it was appropriate for Sterling Bay to be allowed to pay into the housing trust fund to finance affordable housing developments across the city.
The remaining 600 units would be allowed to be built outside the development, but within three miles, according to the plan. Sterling Bay would also have the option to pay into the trust fund instead of building some of those remaining units, or including them as part of Lincoln Yards.
John McDermott, a consultant to LakeView Lutheran Church on issues like affordable housing and equity, said there was a “broad consensus” among affordable housing advocates that all of the required affordable units should be built on site as part of Lincoln Yards.
“They are not building an inclusive neighborhood,” McDermott said. “It is very frustrating that this is not more of a priority for our elected officials.”
Pawar introduced an ordinance in 2016 that would have blocked developments getting TIF funds from being allowed to pay into the Low-Income Housing Trust Fund, but that measure never got a hearing.
Related Midwest’s plans for a new neighborhood between the South Loop and Chinatown dubbed “The 78” have a similar affordable housing component to the Lincoln Yard plan. The proposal features 10,000 apartments and condominiums and was approved unanimously by the City Council in November.
If the 141-acre Roosevelt/Clark Tax Increment Financing Redevelopment Area (F2018-71) is approved, it would generate $700 million to build the infrastructure necessary for The 78, and require Related Midwest to set aside 2,000 units for low- and-moderate income Chicagoans.
As part of a negotiated agreement backed by planning officials and Ald. Danny Solis (25th), Related Midwest agreed to set aside 500 units on site as affordable, and pay a $91.3 million fee to the city’s Affordable Housing Opportunity Fund in lieu of adding another 500 on-site units.
City officials will allow the remaining 1,000 units to be built off-site, including 500 in Pilsen or Little Village, according to the agreement. The other 500 must be built within two miles of the project, officials said.
The fate of that agreement — and the TIF designed to fuel The 78 — is unclear, after the Sun-Times reported that Solis wore a wire as part of the investigation into Ald. Ed Burke (14th) and was expected to resign. As of Monday evening, Solis had not stepped down.
Burke, who has been charged with attempted extortion, maintains his innocence. Solis has not been charged with wrongdoing.
Both new TIF districts must be approved by the city’s Community Development Commission, the Chicago Plan Commission and the Chicago City Council.
TIF districts capture all growth in the property tax base in a designated area for a set period of time, usually 20 years or more, and divert it into a special fund for projects designed to spur redevelopment and eradicate blight.
During the Plan Commission’s consideration of The 78 last week, Ald. Walter Burnett Jr. (27th) said he objected to allowing a TIF-funded project to fulfill its affordable housing obligations by paying a fee.
“It sounds like we are giving them money and then they are giving us money back,” Burnett said, prompting a tense exchange with Reifman. “I don’t understand this. It sounds like money that should be used for affordable housing is being used for infrastructure.”
But when the Plan Commission considered Lincoln Yards last week, Burnett did not have similar concerns, and said he would be happy to have Sterling Bay fulfill its obligations to build affordable units in his ward.
“Affordable housing is for everyone,” Burnett said. “People have this misconception. It is not just black people.”