Chicago neighborhoods see unequal housing restrictions

The current Chicago ordinance on separate residences on the same lot puts extra limits on the Southeast, South and West sides that hinder development. Those are areas with some of the greatest need.

Chicago did not allow the construction of additional dwelling units until 2020, but the change was limited to certain areas and fails to encourage their development in the areas where they may be most needed.

The 2020 Additional Dwelling Units Ordinance was passed allowing granny flats or in-law suites in select pilot areas, but perpetuates inequality by imposing stricter regulations on the South, Southeast and West pilot areas. That has stifled growth of housing that could provide new income sources for homeowners and increase housing availability for lower-income Chicagoans.

Additional dwelling units are small independent living areas typically added to the same lot where a primary residence exists. They can be a conversion unit within the house – in a basement or attic – attached to the building or separate, such as a coach house.

The ordinance established five small pilot areas where the dwellings are allowed to be built: North, Northwest, West, South and Southeast. Cityscape analysis has estimated the number of properties that meet eligibility criteria in each pilot area. In total, 92,322 properties might qualify for this type of housing development, with most located in the South pilot area. However, these proportions aren’t reflected in the number of permits granted in each area.

Extra restrictions on the Southeast, South and West sides make it harder to get a permit for one of the dwellings. Those limits include:

• In the North and Northwest zones, vacant lots can have coach houses constructed before a principal residence, but this is not permitted elsewhere.
• In the West, South and Southeast zones, buildings with one to three units must be owner-occupied to add a conversion unit.
• In the West, South and Southeast zones, buildings must be owner-occupied to add a coach house.
• In the West, South and Southeast zones, only two additional dwelling unit permits will be issued per block per year.

Neither the city ordinance nor the city’s additional dwelling unit website provide any rationale for treating these regions differently.

While in the West, South and Southeast zones, buildings must be owner-occupied to add a conversion unit or a coach house, city data shows 61% of all pre-approved applications in the North and Northwest areas are not owner-occupied. That gives a sense of how much more housing development the West, South and Southeast pilot areas might see without these restrictions.

Other restrictions are harder to evaluate regarding the exact impact, but still limit development. There is no reason why two households on the same block can’t build an additional dwelling unit on the West and South sides of Chicago but can do so in the North. Additionally, with over 80% of the city’s vacant lots falling in predominantly Black communities on the South and West sides, a naturally affordable solution to the housing and vacancy problems is being wasted by only allowing coach houses to be developed in vacant lots before primary residences on the North and Northwest sides of town.

Nearly five years ago, the U.S. Department of Housing and Urban Development launched an investigation into the city of Chicago’s use of aldermanic prerogative to prevent housing development. These additional dwelling unit restrictions have a similar effect, making housing development harder, particularly in these historically disadvantaged communities.

During the past four years, applications for the dwellings from the Southeast, South, and West zones have been pre-approved at a lower rate than in the North and Northwest zones. The same patterns are reflected in the number of permits attained by those pre-approved.

While pre-approval is a self-reported online form, permitting requires additional inspections and financing, sometimes taking over 100 days and up to $2,000. Regional restrictions, on top of these costs, make dwelling development unaffordable in the communities that need it most.

City leaders should expand the original Additional Dwelling Unit Ordinance to cover the entire city. Removing these restrictions would be fair to all parts of the city.