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Will ‘inclusion’ kill new housing development?

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Evanston city officials will be looking for answers at a workshop tonight on what impact a proposed inclusionary housing ordinance may have on the city.

Residents, developers, lenders, real estate professionals and housing activists have been invited to attend the meeting at 6:30 p.m. in the Parasol Room on the fourth floor of the Civic Center.

The notice promoting the meeting claims that the proposed ordinance “will result in additional affordable housing units to maintain an inclusive community for all residents.”

But that assertion depends on developers still finding it attractive to build here — even after the ordinance slashes their rate of return — in the city staff’s own estimates — by nearly 10 percent from what they could make on a similar project in another community.

The new ordinance would apply to rental developments. Adoption of the city’s existing inclusionary housing ordinance — which applies only to condomiums — was followed by a dry spell in condo construction which continues nearly a decade later.

The ordinance also would provide major density bonuses to developers in an effort to let them recoup some of the cost of a $100,000 inclusionary housing fee for every 10 units in a project.

That, city staff says, could mean a project that otherwise could have 75 housing units would end up with 114 — a more than 50 percent increase — a change that may prove unpalatable to residents concerned about height and density in new construction projects.

Share of U.S. households with housing cost burdens by region. (Harvard Joint Center for Housing Studies.) 

Evanston recently has seen a surge in construction of new rental housing, and a new report released last week by the Harvard Joint Center for Housing Studies says that’s happening elsewhere across the country as well.

The number of people seeking rental housing has grown — both from households forced out of the ownership market by the recent crash in home prices and from demographic trends like the increase in younger, single-person households.

And, the Harvard study says, construction of new multi-family housing units has increased from a low of just under 110,000 in 2009 to nearly 360,000 last year. The share of those units planned as rentals has risen from 60 to 90 percent.

But the lag between the increase in demand and the delivery of new rental units means shortages continue — which forced up rental prices 3.2 percent last year.

With pay scales still lagging for most Americans, that means just under half of all renters were considered cost burdened in the most recent American Community Survey. That figure rises to 67 percent in Evanston, according to the city’s 2015-2019 Consolidated Plan.

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