Chicago makes it too hard to build dwelling units

Other cities unleashed small-scale housing. Chicago buried it in red tape. Now it’s hurting renters, seniors and working families.

When Chicago leaders approved a policy in 2020 to allow homeowners to build backyard apartments, basement units and coach houses, they promised it would help provide diverse and cheap housing in the face of the city’s worsening housing crisis.

But a report from the Illinois Policy Institute shows nearly five years later, the number of these additional dwelling units has barely budged. Chicago has only permitted 262 of these dwellings in the past four years.

For a city of Chicago’s size, that number is absurdly low. Los Angeles has permitted more than 27,000 additional dwelling units since 2016 when the city loosened restrictions. After Seattle enacted reforms in 2019, they permitted nearly 3,200 additional dwelling units in four years.

Additional dwelling units are one of the easiest and cheapest ways to grow a city’s housing supply without changing the look or feel of neighborhoods. They allow a homeowner to convert a basement into an apartment, build a small cottage in the backyard, or create a garage apartment for an aging parent, adult child or tenant. They’re also popular, with 71% of Chicagoans supporting them.

So why has Chicago seen so little development of the units?

In short, the city buried the program with unnecessary red tape. Rather than allowing additional dwelling units city-wide, they have been restricted to five small pilot areas. The same fees and permitting processes that slow down housing development across the city do not spare these smaller developments. Compared to other cities that have seen success with these units, Chicago’s approach remains rigid and outdated, denying residents access to housing options that could ease the city’s affordability crisis.

Chicago’s housing crisis won’t be solved without increasing supply. Additional dwelling units are a proven, low-cost way to do that without large-scale developments or public subsidies. But change is possible, and other cities have shown how.

When Los Angeles reformed its accessory dwelling unit rules in 2016, it removed barriers such as owner-occupancy requirements and permit caps. Seattle’s 2019 changes involved eliminating owner-occupancy requirements, allowing more flexibility for unit and lot sizes, and streamlining their permitting process. The result in both cities was an explosion in new, small-scale housing.

If Chicago wants to see similar results, it should:

• Legalize accessory dwelling units citywide, ending the restrictive pilot program.
• Eliminate additional restrictions, such as owner-occupancy requirements and permit caps, that only impact the South and West sides of the city.
• Reduce the permit fees for new unit construction.
• Allow property owners who want to build a coach house to ask the zoning administrator to waive the parking requirements for the principal building.

If LA and Seattle can benefit from additional dwelling units, Chicago can, too. These changes will get the city closer to the results its peers have seen.