Evanston’s inclusionary housing ordinance can’t solve its affordable housing problem. Here’s why.
Analysis
The government estimates that housing costs stress a household when its members have to spend more than 30 percent of their income on housing.
The latest Census Bureau figures from the American Community Survey indicate 43 percent of Evanston households are spending more than that threshold.
Or, in other words, at least 12,188 Evanston households are considered to be housing-cost burdened.
The inclusionary housing ordinance requires developers to contribute $100,000 to the affordable housing fund for every 10 new units built.
The typical cost of building an affordable housing unit is $250,000.
Therefore to generate the funds required to create new affordable units for 12,188 cost-burdened households from this source, the city would need to approve construction of 304,700 new market-rate units.
The city already has 29,263 occupied housing units. So the new construction would bring the total to 346,151 units.
Multiply that by the average household size of 2.34 people, and Evanston’s population would become roughly 810,000 people — making Evanston by far the second largest city in Illinois and about 30 percent as big as the City of Chicago.
It would also give Evanston a population density of more than 100,000 people per square mile — a density about 50 percent greater than that of the Borough of Manhattan in New York City.
An aerial view of Manhattan from Google Maps.
And that growth would likely not be enough. Across Cook County the percentage of households considered housing-cost burdened is 42 percent — just a shade under the current level in Evanston.
So a large percentage of the new residents who would move the new market-rate housing units, and the existing housing vacated by the people who got the subsidized units, would likely also be housing-cost burdened.
In any case, the market demand for new housing is Evanston comes nowhere close to what would be required to achieve that level of growth.
The City Council has approved planned developments downtown totalling 405 units during the past 24 months. Neither of those two projects has yet broken ground.
Developers have proposed five additional projects with a total of 1,127 units in recent months. Even if all of those are approved, some would likely not actually be completed until three years from now.
Bottom line — even in an unusually hot market for new construction in Evanston, the demand for new housing here is nowhere near sufficient to propel the kind of growth that would make it possible to substantially address the affordable housing issue through the inclusionary housing ordinance.
It may have a modest role to play in addressing the problem of housing affordability. But an array of other solutions will be needed to have a big impact.
Question on affordable housing
Hi Bill: Thank you for this interesting analysis. I wonder if you, or anyone else, can provide an answer to the following question. To what extent do additional affordable housing units actually benifit current Evanston residents?
Suppose, for instance, that 10 additional affortable housing units suddenly appear on the market in Evanston. Do we assume that all 10 units will be rented to current Evanston residents? The reason I ask is because Evanston is a small part of a larger metropolatian area of serveral million people, many of whom are looking for housing. I seems to me that these units could just as easily be rented out to non-Evanstonians and therefore do nothing to releave the pressure on current residents. So are there any statistics on what percent of new affortable housing units will end up being rented to current residents? Can we legally require new affordable housing units be rented to current residents?
It depends …
Hi Dan,
Different programs from different funding sources have different rules about whether priority can be given to local residents.
I’ve heard city staff say that, with its own money from the affordable housing fund, the city would be able to create its own waiting list that would give priorty to current Evanston residents.
Some other programs require use of regional wait lists and may be unlikely to lead to having many slots filled by Evanston residents.
You may have noticed in our story this week about the new affordable housing advocacy group, Joining Forces for Affordable Housing, that they believe access to new affordable units should NOT be limited to Evanston residents — because affordable housing is a regional problem.
— Bill
Evanston is not an island or a club
The idea that an affordable housing program should only benefit Evanston residents is strange, and seems impractical. Being and “Evanston Resident” is something anyone who can get a lease can do. The moment a residential lease becomes effective, the lessee can validly claim to be an Evanston Resident. If the city created some number of affordable/subsidized apartments which were then filled by Evanston residents then those people would have vacated their previous apartments. Those apartments would open up more available housing units in Evanston, which would get filled bringing in new people from outside Evanston. I would expect the large percentage of the new residents moving in to also be overburdened by their rent. After all we have ~40% of households in the region are. In other words, the main result of building affordable housing units is to increase the supply of housing, which will make room for more households. It will not significantly decrease the percentage of residents who are housing cost stressed even if it is done on a large scale because Evanston is too small relative to the metro region. I am not saying that affordable housing is a bad idea, but we should have realistic expectations. What it will do is increase the proportion of the population that is middle to low income especially in areas with good access to public transit.
Another view
You asked what it would take to provide housing for 12,188 households who are overextended. What if we run the analysis the other way to see what the new ordinance would accomplish?
Assume all approved and proposed projects are completed (despite political opposition and economic headwinds) and generate 1,532 new units. That would provide about $15,000,000 for the affordable housing fund. If each affordable housing unit costs $250,000 to build, sixty units could be built. That would assist about one-half of one percent of the overextended households. Not much of a dent.
Maybe some attention should be paid to the high cost of living here, or to the definition of affordability.
Who pays ?
Given the cost to the developer [units or dollars], people may wonder why contractors would build in Evanston given the Affordable Housing penalty.
You have to assume the builders figure they can make a profit. But they don’t end up with that cost. They pass it on to buyers/renters in higher mortgage/sales cost or monthly rent—did you think they ‘bought the cost out of the goodness of their heart. Of course if they think the added cost will mean buyers/renters would not pay, they won’t build.
A recent EvanstonNow article “City might get more county housing aid” referenced government help. Where do people think the money comes from—it is not ‘free money’ from the money tree. It comes from current or future taxes—i.e. the taxpayer. Unless the idea is “we want to get the pork before some else does” [of course other towns think the same] YOU the taxpayer pays for it.
If the Council really though Affordable Housing was an important goal, they might stop making favorable leases to arts groups, stop putting up theaters everywhere, sell the ‘Mansion’ off, stop gifts to merchants for fences and awning and on and on. Of course they won’t because the ‘artsy’ things appeal more to their upper crust tastes—and ‘words’ about housing and jobs are cheap. Some will say the subsides or zoning changes to allow business and apartment buildings in, are ‘gifts.’ If so that should be stopped. If experts find these will increase tax revenue [over what is given up] then they might be valid—but does the Council really evaluate that ?.