CAA Comments on Affordable Requirements Ordinance Proposed Rules

Advocacy News ,

CAA submitted the following comments on the ARO proposed rules and map to the Department of Planning and Development by the June 26 deadline.

AFFORDABLE REQUIREMENTS ORDINANCE
COMMENTS ON PROPOSED RULES 
JUNE 26, 2015

OVERALL

CAA is concerned the proposed rules do not provide specific deadlines for approvals of the various requirements proposed in the rules, including but not limited to: 1) Affordable Housing Profile Form, 2) In Lieu Fee Adjustments, 3) Authorized Agencies and 4) off-site units.  CAA fears the Department of Planning and Development’s (DPD’s) lack of certainty with regard to these deadlines will further discourage residential developers from building in Chicago.  Developers require certainty and will build elsewhere if it does not permeate this process.  As we testified during hearings, passage of the ARO amendments will serve as a significant deterrent to residential development in Chicago.  CAA wants to ensure that lack of certainty in the rules does not further compound this problem.

Additionally, we are concerned with how the ARO approval process with intersect with the building permit approval process.   CAA members already face significant challenges to securing a building permit in a timely manner and certainly do not want to see the ARO further add to these delays.  The proposed rules should make it clear that the permit hold that is put in place as a result of the ARO approval process does not stop the Building Department’s review of the project for code compliance and public safety.  Such a hold should only pertain to the issuance of the final building permit.  Further, in these times where we must all do more with less, it seems inefficient to have DPD’s construction staff reviewing projects for ARO compliance, when those same projects are undergoing a full review by the Building Department.  CAA would urge DPD to eliminate this extraneous review.

SPECIFIC RECOMMENDATIONS

5.3.2 Annual Increase to the In Lieu Fee Based on Consumer Price Index (CPI)
As proposed, this rule seems to suggest that DPD will base the annual indexing of the in lieu fees on the CPI in October of each year.  Traditionally, annual adjustments to CPI look at a 12-month average, not just one month.  This is true in CPI adjustments the City makes to the living wage, gross revenue limits, personal net worth limits and other similar annual indexes within the Municipal Code.  Adjusting the in lieu fees based on the CPI for just one month does not provide an accurate picture of what is happening with the economy year over year, which is the point of an annual adjustment.

CAA is also extremely concerned that the proposed rules provide no definitive date by which DPD must publish the annual adjustment of the in lieu fees.  The ordinance stipulates that this adjustment must take place beginning on January 1 of the year following the second anniversary of the effective date.  In order for developers to have a clear understanding of their obligations, it is imperative that this adjustment be published on DPD’s website and in a newspaper of general circulation no later than 45 days before the new rates take effect on January 1 each year.  As such, CAA would suggest a September to September average of the CPI each year to give DPD ample time to produce the new in lieu fees within 45 days of January 1.  In recent years, CAA has experienced significant delays in the issuance of the Security Deposit Summary as required by the RLTO.  This has left property owners in Chicago at risk for lawsuits as a result of this lack of timely publication.  Delays in the issuance of in lieu fees could certainly cause some residential developers to choose locations other than Chicago because this information is critical to project financing.

7.2 Sign a long-term lease with or sell units to the Chicago Housing Authority (CHA) or other Authorized Agency
A portion of this proposed rule states that CHA or Authorized Agency must meet the ordinance definition to the satisfaction of the ARO PM.  CAA is concerned that leaving such a determination to the ARO PM’s could result in varying determinations that may in fact conflict depending on the ARO PM.  Instead, the DPD Commissioner should publish a list (perhaps at the same time he publishes the in lieu fee adjustment) of approved “Authorized Agencies” so that again, developers have certainty in the residential development process.  This list should be update annually, dated each time it is updated and be available on DPD’s website as well as be published annually in a newspaper of general circulation.

Article 14 Marketing ARO Units: Rental Units
This entire article appears to go beyond the scope of the ARO ordinance approved by the City Council.  The ordinance called on developers to submit an annual report, including the name, address and income of each household occupying an affordable unit and identifying the monthly rent of each affordable unit.  The ordinance did not set forth requirements for marketing units and certainly did not specify that no marketing of a unit (market rate or affordable) could take place before marketing intake meeting happens.  CAA members are quite adept at marketing their units and annually complete fair housing courses as licensed real estate professionals in Illinois.  If DPD wishes to share information with developers about additional marketing options, particularly to reach income qualified residents, CAA is certain its members would welcome that information.  But to delay the marketing of any rental unit for any purpose other than non-compliance with the ARO ordinance is extremely problematic, as marketing can begin before a shovel ever hits the ground.

ARO ZONE MAP
CAA believes that Zone Map Option 3 creates increased opportunities for off-site development in Chicago.  More areas of the City will be open to development, particularly for off-site units. This map also provides larger land areas and increases the likelihood of affordable housing development.  As an added benefit, the City will realize additional revenues to fund its affordable housing efforts from higher in lieu fees.