Pritzker Proposes Statewide Zoning Overhaul for Housing

Gov. JB Pritzker made policies to increase housing supply a key focus of his annual budget address on Wednesday, marking a win for the Illinois Realtors trade association’s yearslong push for the policies in Springfield.

Illinois Realtors CEO Jeff Baker told The Real Deal the governor’s backing is a turning point for the group’s policy efforts.

“This is a major step forward for the real estate industry in Illinois,” Baker said. “We have seen supply and inventory put pressure on brokerages, on families, on city budgets. To have this get to this point is a major win.”

During his State of the State address on Wednesday, Pritzker endorsed legislation that would strip municipalities of the ability to ban certain types of multi-unit housing, allowing the construction of larger buildings in areas typically zoned for single-family homes. It also calls for allowing accessory dwelling units statewide.

“The problem is clear. Rent is too high, and homeownership is too far out of reach,” Pritzker said in the address. “The cause is clear, too. We are not building enough homes fast enough.”

The plan, called “Building Up Illinois Developments” and first reported by Capitol News Illinois, is aimed at addressing Illinois’ persistent housing shortage. The state ranked 48th out of the 50 states in 2024 for new housing construction per capita, according to an analysis from Construction Coverage. The proposal is similar to the bills that Illinois Realtors, the statewide group representing real estate agents, has supported in recent years.

The proposal would set a statewide standard that allows building multi-unit buildings on lots zoned for any residential use of 5,000 square feet or more. The allowed density will be on a sliding scale, with eight-unit buildings allowed on the largest lots without the need to seek zoning approval.

The plan would also allow accessory dwelling units to be built on any land zoned for residential use. Chicago officials passed an ordinance allowing accessory dwelling units in certain areas last year.

Many lawmakers in the Democratic-majority legislature have seen the need for these policies, Baker said. But opposition from local governments that don’t want to lose zoning authority have stunted their passage, he said.

“There’s a lot of other issues that can grab attention, and for this one to be on (Pritzker’s) short list … that’s a huge win for the real estate industry,” Baker said.

In addition to zoning reform, Pritzker’s plan aims to address the soft costs of development. The plan calls for a uniform standard for impact fees — charges levied by local governments on new development to pay for public services, Baker said.

Currently, municipalities often divert those fees into their general funds rather than infrastructure specific to the new housing, Baker said. The new law would standardize the formula and penalize towns that don’t use the money for its intended purpose.

Although the realtors’ lobbying group has made some headway in changing local policies, Baker said municipalities have largely resisted changing zoning and impact fee policies on their own.

“We have shown state leaders that NIMBYism is ingrained at that local level to the point that if we’re really going to make a difference here, it’s going to require statewide change,” Baker said.

Pritzker is proposing committing $250 million to fund the policy shifts. The funding includes $100 million for infrastructure grants to help prepare sites for denser housing, $100 million to assist developments with limited access to capital, and $50 million to boost the Illinois Housing Development Authority’s low-income housing programs, Baker said.

Illinois Realtors built up its lobbying team earlier this year to prepare for the legislative session, bringing on former local government staffers to work with Cook County and Chicago officials. The group added Melia Carter, formerly leading government affairs for the Midwest for Verizon, as vice president of governmental affairs.

The governor will hold a roundtable with industry leaders Wednesday on the proposal, Baker said. The group will be working with local government officials and state lawmakers over the next few months as the legislation is being considered, he said.