A milestone worth celebrating

July 27th | Logan Square / Avondale Happy Hour: Come on out to talk housing, schools and anything else. We’ll be at Ludlow Liquors starting at 5:30, and will be joined by Carlos Rivas (CPS School Board 3B member), Pete Gonzales (running for school board in 3A), and Daniel Tobon (running for Alder in the 35th Ward). Our events are always free, but it’s helpful if you register here to let us know you’re coming.

And as a reminder, the mailbag is open. Drop a question in the comments here, and we’ll answer it in an upcoming post.

In January 2024, Judith Crown over at Crain’s wrote a story observing that affordable housing in Chicago had gotten shockingly expensive to build. She interviewed a number of affordable housing developers, who pointed to a mix of challenges with Chicago’s Low Income Housing Tax Credit (LIHTC) program.

That got us thinking. Early the next year, we wrote our first piece on Chicago’s eyewatering LIHTC costs. As part of it, we pulled five years of City data, showing that costs had spiked 85% since the pandemic to almost $750,000 per unit in 2023. We also found that those costs had not spiked everywhere - in Houston, for example, per unit costs had only risen 30%.

A few months later, on the advice of some partners in the affordable housing space, we compared the City’s costs to those of the Illinois Housing Development Authority, which also allocates LIHTC dollars in Chicago.1 In 2023, DOH LIHTC projects cost almost twice as much as state-funded LIHTC projects in Chicago. We noted that some of the unique factors with the city’s process were likely driving those costs. Those included a second building code for affordable projects, no standardized scoring system to reward lower costs, and an adversarial relationship between the city and developers on change orders and project management.

That piece caught a fair bit of attention, and ended up getting picked up in Slow Boring and the New York Times. It was also read down at City Hall. A few weeks later Alderman Matt Martin, along with co-sponsors Bennet Lawson and Leni Manaa-Hoppenworth, introduced a bill that would have eliminated the second building code (the Architectural Technical Standards Manual). We were excited about the legislation - but it faced strong opposition from the Department of Housing and ended up getting bottled up in committee.

That’s where things stayed for over a year. We continued to push the issue in the newsletter and via Crain’s, as well as in a series of behind the scenes conversations. A few months ago, we noted that Chicago’s high costs had meant that we’d missed out on building more than 1,000 affordable homes in the last three years. A lot of other folks kept pushing as well, including the Illinois Housing Council and Abundant Housing Illinois.

A few weeks ago a revised ordinance emerged. It backed off the proposal to eliminate the ATSM, but requires DOH to start reporting on project costs and City approval timelines. It also eliminates a requirement that both DOH and the Buildings Department certify buildings for occupancy - and raises the threshold for developers to have to go back to DOH to get change orders approved. While it’s not as ambitious as the original bill, it addresses some clear pain points in the process today, and makes it easier to push for greater reforms in the future.

The revised ordinance cleared the Housing Committee last week, and on Wednesday it was approved unanimously by Chicago’s City Council.

To be clear, this is a down payment on the changes we need to see. There’s a lot of work still to do - we still need to dramatically scale back the ATSM, put together an actual scorecard to reward cost control, and repair the relationship DOH has with the affordable housing community. It’s also worth noting that credit goes to a wide range of people: including the affordable developers who spoke up, Judith Crown for picking up on an important story, and Alderman Martin for leading on an important issue.

We are pretty excited to have played a part in this story. It’s also a bit of a milestone for A City That Works. This is the first time we can draw a direct line from the work we’ve done to substantive policy change in Chicago. We do not intend for it to be the last.