Chicago incentive package spurs affordable housing downtown
Five new apartment towers have begun construction since the bill signed
Some of Chicago’s biggest developers are lauding a new property tax incentive meant to encourage affordable housing, and one may use it to move forward construction on the site of one of the city’s most notorious failed real estate projects.
As Related Midwest is finishing up Chicago’s first residential tower development with on-site units backed by the Affordable Illinois incentive package signed into state law in 2021, the firm hinted the rule may come in handy for starting work at the former Chicago Spire site at 400 North Lake Shore Drive, the Chicago Tribune reported.
“We foresee the majority of our projects in the city of Chicago will have 20 percent affordable,” Related Midwest President Curt Bailey told the outlet.
The new law requires developers in high-income neighborhoods such as Fulton Market to keep 20 percent of residential units in new developments affordable for at least 30 years. The requirement stipulates that affordable housing must be built on-site, closing an option that allowed developers to pay fees that contribute to affordable housing construction elsewhere, often outside the vicinity of the neighborhoods targeted for market rate housing.
It has also eased the impact on developers of an update to the city’s affordable housing laws that upped the amount of affordable housing units that needed to be built in new projects to 20 percent of units in most cases, from 10 percent previously.
Related Midwest is wrapping up construction on the first major project to be built under the new incentive program. The Row Fulton Market, a 300-unit rental tower at 164 North Peoria Street, will have 60 affordable units. In 2014, the firm took over the Chicago Spire site, where a 2,000-foot tall, 150-story project had been planned in the mid-2000s before it was abandoned by previous developers. Then in 2020, Related Midwest revealed a two-tower proposal for the site with buildings stretching 875 and 765 feet tall, though work has yet to begin.
“We are in conversation with many developers contemplating taking the state tax abatement in exchange for placing all of their affordable units on-site,” Department of Housing Commissioner Marisa Novara told the outlet in an email. “In a city with profound racial and economic segregation, we are encouraged by this trend.”
Since Governor J.B. Pritzker signed the legislation, five new apartment towers backed by the program have begun construction and are set to bring 1,612 units to the city, according to Shapack Partners, which is working on a 28-story residential tower at 1353 West Fulton Street. In addition, Sterling Bay is working on a $155 million, 350-unit tower at 225 North Elizabeth Street.
“It’s great for Chicago, it’s going to build a significant amount of affordable housing for Chicago, and Affordable Illinois is the tool that allowed us to do this,” Jeff Shapack, CEO of his eponymous development firm, told the outlet.
— Victoria Pruitt