Sam Goldman

“I would say at a high level, our policymakers have been too focused on affordable housing, and not housing affordability. We’re not focused on sustainable, long-term economic development. We’re not focused on jobs.”

“Folks will point to the West Loop and say it’s evidence the policy works. I look at the West Loop and see evidence of the disease. The program doesn’t work in the neighborhoods, unless they have high in-place markets like the West Loop.”

“To build these projects we need a certain level of market rate rent to offset the cost of delivering these affordable units. That number is about $3.90 per square foot. The only neighborhood where we’re reliably seeing that market rate is in the West Loop.”

“When we underwrite these projects, we work with sharp young analysts who are agnostic to the politics. Either a project pencils or it doesn’t. And without enough market rate renters willing to pay enough money to make it profitable, we can’t get financing.”

“In the neighborhoods, there are plenty of folks who would want to move into an upgraded modern unit with air conditioning and a washer-dryer. But they can’t find them because the [Affordable Requirements Ordinance] makes these projects hard to finance and build.”

“A lot of people, even policymakers, think developers have all the money. But no. Some projects just aren’t financially viable. I can’t take on a construction loan where I don’t know if I can pay it off. They’ll take my house.”

“One of the big misconceptions that bugs me the most is this idea that we’re just waiting for more profit. Nobody is sitting on a project that will generate a 10% yield because they’re waiting for 20% or 30%. If I’m not building now, it’s because the project can’t sustain itself.”

“Also, the [ordinance] is not helping who it was meant to help. This is not for the ultra-poor.”

“There’s an income cap to qualify, but you also have to make at least two and a half times the rent. You need to have tax returns, pay stubs, three months of bank statements.”

“Usually, to qualify you’re making between $35,000 and $46,000. That’s such a narrow band, we have some neighborhood [Affordable Requirements Ordinance] units that are extremely hard to rent.”

“Our typical [Affordable Requirements Ordinance] tenants are servers with unreported cash tips. They’re not teachers. Teachers make well above the income limits. And they’re not students, because undergraduate and graduate students are precluded from this housing. Which I view as a penalty, punishing people for going to school.”

“I really don’t want to point the finger at Socialist ideals, but the truth is taking the capital appreciation out of housing is undermining Chicago. I’ve been in meetings with leadership where they just flat-out reject the idea of expanding the tax base as having any value.”

“If we can’t expand the tax base, we’re destined to have a lot more trouble than we do now in terms of satisfying the city’s obligations. If we do expand the tax base and focus on economic development, then we can channel the growth toward our social priorities.”

Sam Goldman
Arbor Investment Management
Chicago, Illinois