Chicago Ponders the Problem of Seducing Developers To Support Affordable Housing

plants and paving stone pathway on the roof of Chicago City Hall
Green roof at Chicago City Hall. Did the move to get more affordable housing through the development process sprout here?

What to do when coercion does not convince developers to participate in affordable housing projects, with the result that they wriggle off the hook by paying an ‘in-lieu-of-participating’ fee instead?

Such is the dilemma currently facing Chicago, which indeed wants to coerce developers to include affordable homes in new housing projects. So far, unfortunately, the city is more often collecting payments from developers who would rather opt out.

Who are the experts best qualified to do cost-benefit analysis of participating in an affordable housing project on one hand, or coughing up a significant cash contribution to an affordable housing fund on the other?

In fact, the expertise lies in the very industry the city is trying to coerce! And that industry is offering the city its conclusions through action — opting to contribute to an affordable housing fund rather than the larger amount that would be spent to include affordable homes within a housing project.

As far as we can see at, Chicago’s most sensible move is to act on the cost-benefit analysis that developers are telegraphing every time they opt out of affordable housing development. A better deal to opt out? Then the city needs to jack up the penalty contribution. And perhaps jack it up again. And again.

When roughly half of all proposed projects required to include affordable housing receive grudging developer participation, the city will know it’s charging the right amount for ‘opting out’ — a sum of money that will more likely cover the cost of affordable housing the city aims to build with their affordable housing fund.

And indeed, increasing the ‘opt out’ payment is one of the options that Chicago has in mind as it considers how to make its affordable housing program more successful. Read more in Bisnow: City Wants To Change Controversial Affordable Housing Ordinance, But Agreement Is Hard To Find



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