Access to housing is a fundamental need, but low-income families often find themselves struggling to manage the costs.
In 2021, two-thirds of low-income families spent over half of their income on rent. Across the country there’s been a push to provide for more housing that’s affordable and accessible to those living in poverty.
About 75% of that inventory falls into a category labeled as “naturally occurring affordable housing.” It describes dwellings that are reasonably priced for moderate- to low-income families without a need to rely upon government assistance or incentives. In Chicago, it describes 70% of the affordable housing available.
If Chicago leaders really want to foster more of this housing, they need to support the developers and small landlords who make it possible. The best way to do that is by reducing the onerous regulations that drive up costs and needlessly complicate efforts. Too often policy makers enact their intentions without a proper regard for the consequences for those who must live with those policies.
A recent policy passed by Chicago leaders aims to preserve the “naturally occurring” affordable housing in an area but, on closer inspection, it threatens to do the opposite.
Chicago’s new Northwest Side Preservation Ordinance actually punishes landlords who keep rents low. In practice, the ordinance will increase the previous $5,000 per unit demolition fees by four-fold and mandate new tenant privileges. These changes could make it harder to sell properties by extending the selling process by up to nine months while also making it far more expensive for buyers to develop these properties once acquired.
While it’s intended to preserve access to affordable housing, organizations such as the Neighborhood Building Owners Alliance have decried this policy, warning it will discourage people from buying in the neighborhoods. It may also encourage pre-emptive rent increases in anticipation of a potentially drawn-out sale process. Either way, renters lose.
Illinois lawmakers also tried to make housing less affordable by advancing Senate Bill 1728. This bill would have made it a violation to discriminate against applicants with a poor credit score and history, including “insufficient credit history” when entering into a landlord-tenant agreement. This would backfire on the low-income, young residents the bill is intended to help. Landlords would likely implement more subjective evaluations or raise rents to deter risky applicants.
This bill, if passed, would have made it even harder for developers and landlords to build new housing in Chicago – which the city desperately needs and should work to encourage.
New supply is the only proven way to reduce housing costs. When Chicago politicians have tried to subsidize building, they’ve ended up spending hundreds of thousands of dollars more than necessary. For example, the CARE Manor development Mayor Brandon Johnson’s administration is developing in West Garfield Park costs nearly $700,000 per unit – $200,000 more than the cost of a downtown unit and 5.5-times the market rate for units in that neighborhood. Increased city spending is not only wasteful and inefficient, it also ultimately increases the costs residents face through tax hikes. When those tax hikes hit property owners, they typically trickle down to renters in the form of higher rents.
Government leaders should view small property owners and housing developers as partners in their effort to provide ample housing rather than as adversaries who need to be controlled, coerced or subdued. The state would have more affordable housing, not less, if lawmakers reduced the excessive barriers and regulations that restrict the builders and suppliers who make more affordable housing options possible.
The city should start by reducing onerous zoning regulations. These drive up rents by forcing a large, single-family home onto a plot of land that could otherwise be used to build a quadplex or townhomes. Additionally, reforming the permitting process and slashing wait times and extensive fees would reduce the financial burden that developers often pass on to tenants.
Most importantly, the city must remove the Affordable Requirements Ordinance that requires buildings over 10 units to keep a certain percentage of units rent capped. This ordinance was framed with good intentions, but in practice it has actively discouraged development, driven-up building costs and raised the rents on market-rate units.
If Chicago wants more housing, city leaders need to respect the people who build it instead of coming up with more rules that limit their options, drive up their costs and discourage them from building. Conventional approaches designed to guarantee more affordable housing may look good in a press release, but they’ve only resulted in fewer units and higher costs for residents.
