Navigating the New Affordable Requirements Ordinance (ARO)

The Home Builders Association of Greater Chicago (HBAGC) presented “Navigating the New ARO” on May 28th to a packed room at the Dream20 Showroom in the Merchandise Mart. Paul Colgan, Governmental Affairs Director for the HBAGC, gave a quick overview of the ordinance followed by a panel discussion on strategies and next steps featuring Alan Lev, Belgravia Group, Alan Schachtman, Fifield Cos., and Benjamin VanHorne, Greenline Development. The 2015 ARO passed Council on March 18th, 2015 and was published April 15th, 2015. The ordinance goes into effect 180 days after publication, which means effective October 12, 2015, the first fee increase will begin impacting developments. Key Takeaways:

• ARO Unit Requirement
  • Rezoning/Planned Development – 10%
  • City Land Sale – 10%
  • City Financial Assistance (TIF, etc.) – 20%
• Projects impacted: any new, or redeveloped project, with 10 or more new residential units (for sale or rental), which is:
  • Rezoned
  • Planned Development in “D” District
  • Adds 10 or more new units to existing property
  • Uses City land or receives City financial assistance
  • Under Common Ownership/Control (multiple contiguous properties
• Any re-zoning ordinances filed on or after effective date are subject to new ordinance
• Existing Buildings
  • Only additional residential units permitted by rezoning are subject to affordable requirement
  • However, if project receives city financial assistance, entire building subject to affordable requirement
• New Fees
  • Low to moderate (effective 10/12/15) $50,000
  • Higher income (effective 10/12/15) $125,000
  • “D” Districts (effective 10/12/15)
    • Rental: $140,000
    • Condo buyout: $160,000
• Inclusionary Requirement: If 10% required, 25% of requirement (or 2.5% of total units must be built
  • Low-to Mod Zone: on-site, no off-site
  • Higher Income Zone: on- or off-site (2 mile radius)
  • Rental “D” Districts: on- or off-site (2 mile radius)
  • Condominiums “D” Zoning Districts: on- or off-site anywhere in city, but can “buy out” 100% units at higher fee.
  • Requirement doubles to 50% (or 5% of total) on-site for projects which take advantage of Transit Served Location premiums

To read the full ordinance, click HERE. Next Steps:

• Monitor Zone Map and Rules & Regs (draft expected to be released 5/28/15)
• Monitor Aldermanic Handling of Projects
• Seek Changes in Ordinance

Not missed in the presentation was the critical role the Chicago Association of REALTORS® has had in the ARO debate as Colgan acknowledged Brian Bernardoni’s efforts and pointed out the value of this critical partnership. Colgan wrapped up the program reiterating that no one in the room is against affordable housing.  “We believe the City has created an ordinance to increase affordable housing that will decrease affordable housing.” The HBAGC and the Chicago Association of REALTORS® share the industry’s goal of an effective ordinance.