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Evanston aldermen will be asked tonight to take a gamble that making developers pay for subsidized housing units will actually work to make housing in Evanston more affordable.

The evidence that gamble will pay off is — at best — very sparse.

A recent report by the Zillow real estate website shows that housing affordability in markets across the country is closely tied to whether the production of new housing in a community matches the increase in population in that community.

As the chart shows, in the Chicago area, where nine new construction permits were issued for every 10 new residents, housing — while still expensive by some standards — is far more affordable than in communities like Los Angeles where only two new construction permits were issued for every 10 new residents.

To improve overall affordability, a inclusionary housing plan needs to both create subsidized units and not discourage construction of market-rate units — so that overall housing production keeps up with demand.

A 2008 report by the Furman Center at New York University noted that the revenue developers can gain by selling or renting a required affordable unit “is generally lower than the costs of developing that unit.”

In response, the study said, developers may choose to build elsewhere where fewer restrictions are in place, raise the price they charge for market-rate units, or lower the price they’re willing to pay for land.

“Under each scenario,” the study says, “the production of housing in the jurisdiction is likely to fall.”

The report goes on to assert that in examining inclusionary housing programs in San Francisco and in Boston-area suburbs it found no impact from the programs in the San Francisco area, but small decreases in productions and slight increases in prices in suburban Boston.

And a report Furman issued this year on inclusionary housing programs in New York said they’re unlikely to work in most of that city’s neighborhoods.

Highland Park is held up as the Chicago-area suburb with the most aggressive inclusionary housing program. In a report to aldermen, Evanston city staff say the 2001 Highland Park ordinance “has resulted or will result in the creation of 24 units” of affordable housing.

Despite that, the number of affordable units in Highland Park has dropped by over 100 since 2004 and only 6.7 percent of its housing stock is considered affordable under the state Affordable Housing Planning and Appeal Act, compared to 15.4 percent of Evanston’s housing.

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Bill Smith is the editor and publisher of Evanston Now.

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2 Comments

  1. Evanston already exceeds affordable housing requirements

    Evanston is in compliance with the state's Affordable Housing Planning and Appeal Act.  In fact we exceed the requirements by 5 percentage points.  We have more affordable housing as a proportion of our housing stock than our suburban neighbors, according to the Illinois Housing Development Authority.

    While we exceed the requirement, WIlmette, for instance, is out of compliance. 

    It is a colossal waste of time to even consider this and will depress development which seems unwise.

    We have plenty of problems in the city. The supply of affordable housing is not one of them.

    1. Before considering more fees

      The Council and others might want to read the article in the May 6, 2016 Wall Street Journal "Impact Fees Pinch Starter Homes."
      Though the title is about 'starter' it describes how towns use fees to make-up for loss of other revenue but as we see in Evanston fees are added for affordable housing, funding pet projects, slowing approval and development and "keeping out undesirables" like college students.

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