Aldermen used the city’s Department of Housing budget hearing to prod housing officials on how new initiatives, like the legalization of coach houses, and ongoing recovery efforts are helping grow affordable housing and ensure Chicago residents can stay in their homes.
The Department of Housing under Mayor Lori Lightfoot’s proposed budget would see its spending grow by nearly $33.9 million next year, bringing its budget to about $395.6 million. The funding increase is driven largely by a $46 million spike in federally sourced Community Development Block Grant money, evened out by a $6.2 million decrease in funding from the Affordable Housing Opportunity Fund and a drop in other grant funding.
Additionally, Lightfoot’s Chicago Recovery Plan sets aside two pots of money for supportive housing and for the acquisition of former hotels to be converted to single-room occupancy-style buildings.
Housing department Comm. Marisa Novara told aldermen that as of Wednesday, the city through its Emergency Rental Assistance Program had allocated 70 percent of the first $80 million tranche of federal rental assistance dollars it received — approving about $1 million in grants per day and having helped about 5,500 households.
Between the first $80 million and another $102 million tranche, the federal funding is “more dollars than we might have ever contemplated” to help with housing stability, Novara said.
But after the state’s moratorium on evictions lifted this week, and Ald. Byron Sigcho-Lopez (25th) asked what the city is doing to address a potentially large wave of evictions.
“We don’t know what we’re going to see when it comes to evictions,” Novara said, in part because the city’s Emergency Rental Assistance Program allowed rent payments to be accepted three months in advance. Coupled with eviction notification requirements, it could be six months from now “someone might receive an eviction notice that they’re not receiving now because of our assistance.”
Sigcho-Lopez asked the broader question of how the city creates enough affordable housing to “bridge the gap” between what it currently has and what is needed.
Novara has estimated the city’s affordable housing supply is about 120,000 units short of what is needed to keep Chicagoans stably housed.
“That’s basically why I get out of bed every morning is to answer that question,” Novara said Thursday, adding that “there’s no one thing” that gets the city to the number of affordable housing units it needs, but rather a combination of initiatives like rental assistance and funding from the Chicago Recovery Plan.
As an example, Novara pointed to the city’s work on an ordinance (O2020-2850) the City Council approved in December that legalizes new Additional Dwelling Units (ADUs) in basements, attics and coach houses in five pilot zones. The housing department backed the idea “not because we thought we could subsidize every unit that would come out of that,” Novara said.
“In fact part of the goal there was to say ‘what are the ways we can create more rental’” without having to subsidize the units,” she added.
The department’s Policy Director Daniel Hertz told aldermen that since the pilot took effect in May, the city has received more than 300 applications for additional units. Of the applications from the five pilot zones, two-thirds are for owner-occupied properties and 85 percent are single-family homes or two- to four-unit buildings.
Ald. Ariel Reboyras (30th) said his Northwest Side ward does not fall in one of the pilot zones, but that he is seeing interest in the program among his residents.
Ald. Michael Rodriguez (22nd) suggested city officials consider expanding the program citywide, as “more and more folks will see the value” in legalizing existing units that may otherwise be illegal. The new program could help seniors stay in their homes, he said.
None of the accessory dwelling units that have been applied for are built yet, but Ald. Patrick Daley Thompson (11th) asked about the affordability of ADUs that have been applied for.
Thompson vocally opposed the citywide ADU proposal that housing officials initially rolled out last year, saying it would challenge community control of new development.
Fourteen of the 300 applications for accessory dwelling units would be “legally restricted affordable,” which kicks in only when a property owner is requesting two or more new accessory units, Hertz said.
Still, “many, if not most” of the accessory units in attics, basements and coach houses “will be lower- to moderate-cost housing,” he added.
Thompson said he is concerned about housing costs going up in his ward and urged housing officials to take each community into account as far as the ADU program is concerned, as “one size doesn’t fit all.”
Responding to a question from Ald. Jeannette Taylor (20th) on the number of ADU applications from her ward, Hertz told her the department has received 11 applications for 13 units, including one that would be affordable.
Hotel acquisitions for SROs
Lightfoot’s Chicago Recovery Plan sets aside $35 million to add new units of “supportive housing” in rehabbed buildings and $30 million for a “non-congregate housing program” that would allow the city to expand its use of former hotels for “permanent supportive housing.” The initiative is designed to help Chicago residents who do not have permanent living situations.
When it comes to acquiring and developing the hotels or other lodging buildings, Novara told Ald. Carlos Ramirez-Rosa (35th) the city is considering mainly “SRO-type” developments.
If the Chicago Recovery Plan, funded with a combination of federal stimulus dollars and new debt, is approved, “we would want to move very quickly in acquiring at least one of [the hotel buildings],” Novara said, adding that it is something the city has not done before.
”I think that’s a good start,” Ramirez-Rosa said. “I think we definitely need more to support SROs….200 is good, but as you know, it’s not enough.
Novara also pointed to work the city’s Department of Family and Support Services could do with the approval of the Chicago Recovery Plan in helping the city’s homeless population.
Funding in the recovery plan for the housing initiatives would not come from federal American Rescue Plan dollars but rather from the issuance of new bonds, officials said.
Deputy Comm. Jim Horan told aldermen that housing is an eligible use for federal American Rescue Plan funds, but “it’s very restricting.”
Real Estate Transfer Tax
Housing coalitions held a press conference outside City Hall before Thursday’s housing department budget hearing and called for city officials to change the Real Estate Transfer Tax in order to create a long-term revenue stream for affordable housing.
Lightfoot included a plan in her 2020 budget proposal to lobby Springfield to allow the city to impose graduated tax rates on real estate sales. The proposal fizzled, and city finance officials have suggested this year that they have no appetite to retry.
Still, some aldermen called during Thursday’s hearing to renew the push to open up new revenue for city housing initiatives.
“We need to think about taxing real estate transactions progressively,” Rodriguez said. “Let’s go into areas that are growing, that are stable…that market is doing relatively well right now.”
Supporting people who are experiencing homelessness improves everyone’s quality of life, Rodriguez added.
Ald. Andre Vasquez (40th), Ald. Maria Hadden (49th) and Ald. Daniel La Spata (1st) also said they support a graduated real estate transfer tax. Money from a graduated tax would generate “revenue that we could be putting in place to ensure we’ve got more dedicated long-term sustainable funds,” Hadden said.
Housing advocates outside City Hall on Thursday morning and public commenters during Thursday’s hearing also urged City Council to pass the Just Cause of Eviction ordinance (O2020-3449), which would aim to clamp down on “no-cause, no-fault” evictions but has yet to reach a vote more than a year after it was introduced.
John Bartlett, executive director of Metropolitan Tenants Organization, said the average Chicago renter has $6,000 in wealth, compared to the more than $200,000 in wealth held by the average homeowner, “and who’s asked to move?”
Bartlett said the ordinance is about protecting tenants “who have done nothing wrong.”
The City Council Committee on Housing and Real Estate held a subject matter hearing on the proposal last month. City housing officials and housing committee chair Ald. Harry Osterman (48th) have committed to keeping a dialog open with activists on the ordinance, but they have not come out in support of any version of the proposal.
Housing officials have instead touted the Fair Notice Eviction ordinance (SO2020-2862), which passed the City Council last year and requires landlords to give their tenants between 30 and 90 days’ advance notice of their intention to not renew a lease. Novara said at the time that it was “the most balanced outcome we can achieve at this time” following months of talks with housing activists, real estate groups and aldermen.