New affordable housing rules proposed for Pilsen, Little Village

A new plan backed by Mayor Rahm Emanuel would require new housing developments in Pilsen and Little Village to include 20 percent affordable units, double the 10 percent requirement currently on the books in Chicago.

Emanuel and several key Hispanic aldermen announced the plan, set to be formally introduced Wednesday, saying it would help preserve the character of the city’s two biggest Mexican neighborhoods.

The proposal expands on the city’s Affordable Requirements Ordinance, which was updated in 2017 to require developers in three gentrifying areas on the North and West sides to include up to 20 percent affordable units in residential buildings. Developments falling outside those three zones — the Wicker Park/Logan Square zone, the Near North zone and a Near West zone — must include 10 percent affordable units in new residential developments.

In addition to requiring 20 percent affordable units in Pilsen and Little Village, 10 percent of the units must be built on site, and the fees developers pay to opt out of including affordable units will increase by $50,000 per unit, the mayor’s office said.

Developers in Pilsen already have to contend with affordable housing rules that go beyond what the city typically requires. Alderman Danny Solis (25th) long has held to an unwritten mandate that new projects in his ward, which includes Pilsen, set aside 21 percent of units as affordable housing, all of them on-site.

That’s led to conflicts with some developers, most notably New York-based Property Markets Group, which has proposed 465-apartment project on an 8-acre stretch of Pilsen. Property Markets Group said it would meet Solis’ mandate of 21 percent affordable units, but not all would be built on-site

Unsatisfied, Solis had the property downzoned in 2016, a move that caused the developer to sue the city. To help find a solution, the city flew in seven out-of-town development experts to weigh in on the project, and among their proposed solutions was for the city to give Property Markets Group enough financial incentives to afford to comply with Solis’ rule.

Solis is one of the City Council members backing the new proposal for Pilsen and Little Village, along with Aldermen Ricardo Munoz (22nd) and George Cardenas (12th), the mayor’s office said.

“These neighborhoods are what they are today because of the hard work and dedication of its residents and we must work to keep these communities affordable for its families,” Munoz said in a statement. Solis was not immediately available to comment.

Developers have largely bristled at the affordable housing requirements, saying they can stifle development in some areas. A review by The Real Deal of building applications in the city’s three affordable zones over the last two years showed both the proposed number of units and the number of affordable units dropped after the city’s more stringent rules went into effect.

The proposal to be introduced Wednesday would be the latest in a series of measures that the Emanuel administration has put forth this year, all touted as ways to promote affordable housing.

At least two of those previous measures found their way into the Pilsen/Little Village proposal: financial assistance for homeowners who want to upgrade their properties and cheap financing for developers who agree to keep their projects affordable — the latter to be funded with money paid by Pilsen/Little Village developers to opt out of some of the affordable requirements.

The proposal also calls for new landmark district designations for some parts of Pilsen, which would require proposed developments in the areas to gain an additional approval from the Landmarks Commission.