CBA housing ordinance introduced in City Council, but long road awaits before passage

Ald. Taylor (20th) explains how CBA agreement she supports will keep area residents from being forced out of their homes as a result of increased taxes and higher rents. (Photo by Owen M. Lawson)

Staff writer

Alds. Leslie Hairston (5th) and Jeanette Taylor (20th) introduced a long-awaited community benefits agreement (CBA) ordinance covering housing near the planned site of the Obama Presidential Center (OPC) in City Council on Wednesday.

A smattering of applause sounded from the audience when it was announced.

Hairston said she and Taylor had solicited 38 co-sponsors and that she had invited South Side Alds. Pat Dowell (3rd), Sophia King (4th) and Howard Brookins, Jr., (21st) and North Side Alds. Maria E. Hadden (49th) and Harry Osterman (48th), who chairs the Committee on Housing and Real Estate where the CBA is headed, to a meeting planned to refine it further.

Speaking to reporters before the meeting, Hairston pointed out the pattern of gentrification in other neighborhoods: “They invest in and move the people out. We’re trying to put a plan together ahead of time to make sure that we do this responsibly, so that we do this responsibly, so that the people who have lived there, like myself, can continue to stay there.”

Mayor Lori Lightfoot, who campaigned as a CBA supporter, said at her post-meeting press conference that she had not read the in ordinance but would review it closely.

“I know that this is an issue that remains at the heart of the community’s concerns — that’s why we’re going into the community starting this week to sit down and listen to folks,” she said. “I’m going to do whatever I can to bring folks together, but I need to look at the particulars in the ordinance before I can comment further.”

Before the meeting, Taylor said she was hopeful Lightfoot would support the ordinance, noting her support for a CBA during the mayoral campaign. “Now it’s us opening up that conversation and actually working on it to ensure that this happens,” she said. “I can’t control what she does and does not do.”

The CBA includes an affordable housing ordinance applying to areas in the 5th and 20th wards within two miles of the OPC site in Jackson Park — an area that includes much of Hyde Park — and creates a community trust fund. It also includes provisions to encourage the sale of rental property to organizations that provide affordable housing or to current tenants, as well as exemptions from the Chicago real estate property transfer tax.

It defines “affordable” as a mortgage payment or rent less than or equal to 30% of a family’s monthly household income. “Affordable housing” is defined as being affordable to renting households earning up to 50% of the area median income and affordable to owner-occupied households earning up to 80% of the area median income. “Deeply affordable housing” is defined as housing affordable to renting households earning up to 30% of the area median income, with the same 80% standard for owner-occupied housing.

The median household income in Woodlawn is $25,122 and $52,627 in Hyde Park.

The CBA ordinance would apply wherever the city rezones property for development of a residential project with three or more new units, sells property to a developer that is subsequently developed into housing, provides financial assistance with the development of any housing project of three or more units or approves rehabilitation of any residential property with six or more units.

Ald. Leslie Hairston (5th) explains that CBA agreement she supports has significance for all wards in the city to make sure that local residents are not excluded from the benefits of new development projects. (Photo by Owen M. Lawson)

The option to pay a fee in lieu of building affordable units is eliminated. The CBA ordinance would not, however, apply to sales or transfers in the “City Lots for Working Families” program or CBA area residents who receive city-owned land for their own personal residential development. For rental units that do not receive city financial aid, rental units must be affordable for households earning up to 50% of the area median income, and 33% of the units must be deeply affordable.

The Department of Housing would create a standing committee to study housing and displacement through a racial equity lens, specifically monitoring the effects of the OPC on housing conditions in the CBA area, provide anti-displacement recommendations, support homeownership and present findings at least quarterly.

The affordable housing ordinance component of the CBA would expire on Dec. 31, 2029.

The ordinance would require a property owner to provide the Department of Housing and residents with 180 days’ notice of a proposed sale; the Commissioner of Housing then would be required to share that notice with a list of qualified purchasers of nonprofit organizations, for-profit companies, community land trusts and land banks that have demonstrated a commitment to affordable housing.

If an owner receives an offer with a commitment to maintain at least 30% of units affordable to households earning up to 60% of the area median income, he or she would be required to engage in good-faith negotiations regarding that offer for the remainder of the 180-day period, during which time the owner cannot list the building for sale publicly or negotiate other offers that do not include an affordable housing commitment.

Alternatively, the owner could sell the building to any current tenant or tenants or remit to the city a fee worth $20,000 multiplied by the number of units that are in the property. The CBA Coalition promised a “right of first offer” to tenants whose building was being sold, though Hairston raised questions about its legality. Following a sale to a tenant, other tenants’ leases would remain in effect, with tenants who had lived there longer than a year allowed to “extend an existing lease under substantially similar terms” for another year after that.

The community trust would be organized to create and preserve affordable housing for households earning less than 50% of the area median income and to support homeownership for those earning less than 120% of the area median income, as well as employment access and small business opportunities.

Its board could subsidize low- and moderate-income residents’ rents or those “residents with barriers to traditional financing in order to promote homeownership.” The trust could pay for property tax increases or home repairs of 10-year-or-longer residents, fund affordable housing projects or issue loans or grants to affordable housing developers. Small businesses could receive loans, grants and other financing, and the fund could issue economic development grants and fund workforce development initiatives, business development and job centers.

The fund would create its own financial criteria, but it would have no power to pledge the full faith and credit of the city. It would require full disclosure from investors, grantors and lenders, oversee preparation and auditing of its financial statements and conduct open meetings, with open records subject to FOIA requests. 

The section on revenue was marked “reserved” in advance copies of the ordinance given to the press; previously, the U. of C. and the Obama Foundation had been named as its primary funders. At a Tuesday press conference held immediately before her ward meeting, Hairston said the city may pay into the community trust fund, perhaps through bonding. “We would obviously look to the Foundation for some support, and we would look for other philanthropic organizations to do so.”

The Department of Planning and Development would be authorized to hire a consultant to study the potential use of a commercial linkage fee within the CBA area “to directly mitigate the effects of increased commercial activity, particularly larger developments, that might contribute to rising cost of living and displacement.” It would not apply to small businesses, developments or nonprofits, and it would “fund affordable housing, homeownership and supporting local jobs for residents.”

Many transfers are exempt from the Chicago Real Estate Property Transfer Tax, including those made prior to Jan. 1, 1974; those involving property acquired by charitable, religious or educational institutions; those with a transfer price less than $500; those made pursuant to reorganization under Chapter 11 bankruptcy; or those in which the transferee is 65 or older and will occupy the property as a principal dwelling place for at least a year, with a transfer price at or below $250,000.

Asked why the CBA ordinance focuses on housing — the CBA Coalition had in 2018 proposed an agreement including education, employment, sustainability and transportation provisions — Hairston said Tuesday that “you eat an elephant one bite at a time.”

“We look at the history of the South Side, the disinvestment, the promises that have been made to the South Side that have not been kept — and we want to make sure that we don’t end up like other neighborhoods,” said Hairston, who said she has met with Lightfoot and the Chicago Law Department about the CBA.

Taylor also attended the press conference. “We’ve still got a lot of work to be done, but we cannot act like the OPC being built is not displacing folks today,” she said. “I get phone calls all the time from folks who say they have to move, they’re being priced out.” She said the CBA ordinance could be a model for the rest of the city, noting displacement threatened by or occurring because of the Lincoln Yards and 78 developments.

The CBA ordinance has a long way to go. Its consideration by the Housing Committee has not been set, and Hairston made no estimate regarding when it would go before the full City Council, which will not meet in August. Nevertheless, Hairston said there was “no question” that the ordinance would pass, and supporters are hopeful about its prospects.