Evanston’s Planning and Development Committee Monday night declined to advance a proposal from Ald. Clare Kelly (1st) to require developers to show proof of financing to build a project before getting zoning approval.
Ald. Jonathan Nieuwsma (4th) said he didn’t want to create “any impediments to new development” in the city.
And Ald. Bobby Burns (5th) said the new rule would further burden affordable housing development, which already is a difficult market.
Typically developers don’t lock up financing for a project until after they receive zoning approvals, because bankers aren’t willing to commit to fund a project that a municipality could still reject.
Kelly suggested the rule would avoid having the city’s landscape marred by half-completed buildings.
But the only example of a project left half-finished that came up in the committee’s discussion was the four-building Sienna condominium development on Oak Avenue that stalled out — with just two buildings completed — in the midst of the housing market collapse in 2008.
Condo developments, popular before the crash but uncommon in Evanston ever since, rely on presales of a portion of the units to individual buyers for the builder to secure bank financing for construction.
As a result, developers have had no way to prove to a municipality that they had financing in place before they received zoning approvals detailing what they could actually build.
Rental developments may be closer to having construction financing nailed down when they seek zoning approvals, but don’t get final commitments from bankers until after they get the zoning OK.
While the city has seen only one major project left half-finished over the past quarter century, it has seen several projects win zoning approval and then never begin construction for lack of financing.
The city routinely sets a time limit on planned development approvals and has repeatedly revoked the approvals for projects that fail to begin construction within the required time period — with the most prominent example the rejection of extra time for the 708 Church St. tower in 2013.