Mayor-elect Lori Lightfoot released a 100-plus page transition report today in the hopes of giving residents and other community stakeholders an idea of what’s to come with her new administration.
The report was not technically authored by the incoming mayor, but rather a transition team. Still the fact that it was released by Lightfoot today, as she kicks off her inaugural weekend, suggests that it aligns closely with her goals.
The report used a stirring phrase to open the section on business development: “We are the new coast.” So what does that mean? Ahead of her May 20 inauguration, we looked through the report to find the items that may impact the local real estate industry in Chicago.
Housing a clear priority
Affordability was a major theme in the six pages of the report that were dedicated to housing. Estimating that the demand for affordable rental housing outstrips supply by around 180,000 units, the transition team urged the mayor to look for “new and innovative ways to build and finance housing in the city.”
The report specifically championed the idea of expanding the number of Chicagoans who own property, too: “Homeownership is also a wealth-building and stabilizing tool that can close the racial wealth gap for both individuals and communities.”
The mayor may also incentivize the ownership of smaller rental properties in the hopes that this will stem the teardown tide. The report suggested offering “down-payment assistance or rehab grants to owner-occupants of two- to four-unit buildings” as well as “streamlining the process for preserving affordable housing, including expediting approvals and refinancing.”
If you’ve got clients interested in using or adding accessory dwelling units, there’s some good news in the report for them. The transition team suggested that the new administration introduce an ADU ordinance “which allows conversion of illegal basement and garden units to affordable housing. The city should also consider allowing tiny homes and coach houses in zoning changes.”
And for clients concerned about lead in the water, the transition report calls for the new administration to launch a lead pipe replacement program, though it’s light on the specifics.
As for solving some of the many problems that plague the development of new affordable housing, it’s clear from the report that the Affordable Requirements Ordinance, instituted in 2007 to get more developers to build affordable units into their plans, will be reexamined. “The Lightfoot administration should amend the ARO so that it is an effective and flexible incentive to create more housing that is affordable,” the report read, encouraging the administration to “convene a task force of developers, advocates, and Community Development Financial Institutions to determine most impactful changes to the ARO, including the feasibility of the affordable percentage increases, limiting the off-site rules, and implementing accessibility requirements” in its first 100 days.
The report also suggested consolidating the Department of Planning and Development, the Department of Buildings, and the Mayor’s Office for People with Disabilities. There are also indications that Lightfoot will continue with the recent efforts to bring the city’s building code up to date.
The use of tax-increment financing in new developments has certainly come under increased scrutiny over the past few years, seen in especially stark contrast in projects such as Lincoln Yards and The 78. Lightfoot’s report doesn’t call for an end to TIFs, though it’s clear she sees the way they’re currently being used as a problem: “Over the years, the process has been warped, causing division and trauma to the people and communities TIFs were designed to protect. The TIF process needs to be reframed as a two-way conversation between the government and affected communities, exchanging information throughout the process, collaboratively making decisions, and providing ongoing community oversight of established districts.”
In the first 100 days, Lightfoot pledged to convene an “advisory council of community-based stakeholders and experts for analyzing the state of TIFs and how TIF money is spent.” Later on, the report indicated her administration will revisit definitions of “blight” and “obsolescence” that help determine where funds are spend and put neighborhood-led TIF oversight councils into place.
The report also addressed other incentives for growth and investment, including tools that could “make capital flow more quickly and efficiently,” particularly in areas eligible for Neighborhood Opportunity Funds and in Opportunity Zones.
Although the report did not make mention of whether or not to raise property taxes, it pulled no punches when it suggested implementing a graduated real estate transfer tax. The transition team noted that some 80,000 people in Chicago experience homelessness every year, and that the new transfer tax “could reduce the number of people experiencing homelessness by 36,000 over the next 10 years.”
The timeline wouldn’t be immediate, as the report merely recommends passing a resolution to bring The tax changes to voters by 2020. As we reported before the election, both runoff candidates supported the idea of adding a real estate transfer tax, so it’s unsurprising to see it mentioned here. At the time, Brian Bernardoni, Chicago Association of Realtors’ senior director of government affairs and public policy noted that while the association opposes increasing the tax, they’re looking forward to working on other policies that might mitigate the ill effects of a higher transfer tax.
Opportunities to get involved
Nearly every section of the report noted some way the new mayor should involve the community in implementing any and all changes. In particular, they proposed a monthly “Mayor’s Business Forum hosted by Chicago businesses” that might address “the mayor’s vision, challenges, priorities, initiatives and progress.” While it’s not clear where real estate professionals should sign up to be involved, it’s only a few days before we’ll be able to actually call the mayor’s office and ask.