Plan could help Chicago’s housing affordability problem by cutting red tape

Mayor Brandon Johnson has moved on from his failed tax hike and found a good answer to Chicago’s housing affordability issue. His “Cut the Tape” proposal would streamline the housing and commercial development process, increasing the supply and affordability.

Less than three weeks after voters rejected a tax hike because it was a flawed way to solve Chicago’s affordable housing problem, Mayor Brandon Johnson has hit on a solid plan.

His “Cut the Tape” report contains promising proposals that would benefit Chicagoans and property developers to actually make Chicago real estate more affordable. The plan correctly states the way to fix the problem is to increase supply by making it easier to build.

Housing affordability is a big problem in Chicago, where almost 90% of low-income households are burdened by housing costs of at least 30% of their income. Two-thirds are severely burdened – paying over 50% of their income for housing, according to data from the U.S. Census Bureau.

The plan comes fewer than three weeks after Chicago voters rejected Johnson’s “Bring Chicago Home” proposal – a $100-million real estate tax hike that would have fallen almost entirely on commercial real estate and apartment buildings. It would have aggravated the problem by discouraging development and making housing even less affordable.

The report published April 5 contains more than 100 proposals for the city to streamline the administrative process governing housing and commercial development. Johnson highlights “10 Big Bets” to most drastically improve the process, including:

Consolidation and process improvements

• Create a new director of process improvement in the mayor’s office.
• Convene a working group to evaluate the feasibility of streamlining the Community Development Commission and Chicago Plan Commission.
• Create online “city wallet” accounts to improve options for customer billing, online payments and debt checks.

These proposals would help to reduce duplicative and arcane government processes for developers, while also introducing more transparency for Chicagoans doing business with the city. The new director of process improvement’s primary purpose would be to implement the changes laid out in the report, while investigating additional opportunities to reduce bureaucratic hurdles. Streamlining – and possibly combining – the two commissions would help expedite the city’s review process and reduce the time and resources the city and developers spend on multiple, sometimes duplicative meetings. Lastly, creating an online portal and single transaction point for those engaging with the city would bring more transparency and efficiency to the current process, which often requires customers to engage with “several different departments directly, inputting redundant information, and waiting on slow procedures in order to transfer and receive funds.”

Cutting red tape

• Design a process to initiate expedited reviews of affordable housing development projects.
• Launch a working group to update and streamline the Department of Housing’s Architectural and Technical Standards Manual.
• Reduce the number of Department of Planning and Development’s internal design review meetings from three to one and reassess the role of the Committee on Design.
• Eliminate Phase 1 and 2 environmental reviews as a requirement to sell environmentally cleared, city-owned parcels.
• Launch a working group to determine how to reduce the administrative burden of the city’s economic disclosure statement, working toward expanding expiration dates, allowing exemptions for low-income housing tax credit projects and more.

These improvements would reduce the burdens on developers while expediting the development process, allowing for faster, more affordable development. Chicago has a housing shortage that drives up prices and disproportionately affects low-income Chicagoans. Expediting the review process for affordable housing would help to meet some of this demand. It should also be expanded to include all development, which would further ease housing costs including for low-income Chicagoans. Updating the architectural manual, reducing the number of required design review meetings, and waiving Phase 1 and 2 environmental reviews for certain parcels – which is already done in select cases – would ensure high building standards that protect health and safety are still met while reducing arbitrary regulations and requirements that add time and costs to projects. Finally, a working group investigating ways to improve the city’s economic disclosure statement, specifically moving the system online, could offer ways to improve one of the most cumbersome aspects of the city’s development process while maintaining due diligence.

Encourage more development

• Advance legislation to adopt transformational changes to the city’s zoning code, including eliminating minimum parking requirements, streamlining special use and more.
• Expand the pilot program for cash advance payment options.

Chicago’s housing affordability crisis is exacerbated because there’s not enough housing being built to satisfy demand. Zoning and land-use regulations are a major impediment to housing development. Recently, Minneapolis overhauled its zoning and land-use codes, adopting many of these proposals. As a result, housing supply is growing far faster while rents are growing far slower than in Chicago, increasing affordability. In addition to letting builders construct more housing, Johnson is also proposing to restructure how the city handles some public projects. Currently, the city uses a reimbursement model that requires builders and contractors to front the money for their projects, with the city reimbursing them as project milestones are met. Instead, the plan calls for expanding a pilot program that awards public funds to developers ahead of time for “high-impact” projects in an effort to entice more development. It would be important for the city to closely monitor this program, so taxpayer funds are not squandered if project requirements are not met. If successful, the initiative could foster more development in the city – a plus.

“Cut The Tape” represents a stark departure from the “Bring Chicago Home” initiative in attempting to solve the city’s affordable housing crisis. Most importantly for Chicagoans, the plan does not call for tax hikes but instead seeks to make Chicago a friendlier environment for developers to build housing and commercial properties.

“Cut The Tape” presents real, actionable solutions from the mayor’s office and presents a timeline for implementing these changes – with a few exceptions – during the next 12 months, signifying a serious commitment. There is risk involved with any bold initiative: the city will need to ensure the proposals don’t discourage market-rate housing or commercial development because many items are directed towards “affordable housing” developments.

Overall, this is a good start to tackling Chicago’s housing affordability crisis and a marked change in tone from Johnson. Now it is time for the mayor to deliver and work with other city leaders to see these pro-growth policies through.