Submitted By
Jonathan Burch, Assistant Village Manager/Neighborhood Services Director
Agenda Item Title
Title
A Presentation and Discussion on Changes to the Inclusionary Housing Ordinance
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Overview
Overview
This presentation will provide the Village Board options for potential modification of the Inclusionary Housing Ordinance (IHO) based on public input and the recently adopted Strategic Vision for Housing.
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Anticipated Actions/Commitments
Recommendation
The Village Board should discuss the options and direct staff to return with a draft ordinance reflecting the preferred option of the Board.
Report
The Village Board adopted the Village’s first IHO in 2019. The IHO establishes requirements for affordable housing development associated with larger market-rate housing developments containing 25 units. The IHO is geographically specific and applies only to rental units and townhomes. The current requirement is that 10% of the total number of dwelling units in a development are affordable. Should it be preferred, a developer can provide a fee-in-lieu at $100,000 per required affordable dwelling unit. Since March 2019, all applicable developers have selected the fee-in-lieu option.
The Strategic Vision for Housing (adopted by the Board on April 11, 2024) outlines three core changes in an updated IHO:
• Expanded geographical area
• Updated “fee-in-lieu” amount
• Encouraging affordability through a tiered approach
These recommendations align with the Village Board Goals for Vibrant, Diverse, and Connected Neighborhoods, goal D.
• Review the Inclusionary Zoning Ordinance and recommend options for revisions:
Analyze the possibility of adjusting the Village ordinance to require the inclusion of affordable units instead of developers providing financial contributions “in lieu of” units.
Consider increasing the Village’s current $100,000 per space “in lieu of” contribution, as established in 2019, or indexing the contribution to inflation.
Conduct research on other successful Inclusionary Zoning Ordinances for additional insights.
Explore zoning changes to accommodate at-scale housing.
The presentation that accompanies this agenda item covers potential changes that align with the Strategic Vision for Housing and the Village Board Goals. The presentation includes three options for consideration by the Board. While all align with aforementioned goals, they focus on different priorities. Option 1 focuses on encouraging developers to provide units on-site. Option 2 focuses on generating additional fee-in-lieu emphasis. Option 3 is focused on minimizing change for the development community. All options increase the amount of the community and the types of development covered by the IHO.
DEI Impact
All options presented by staff expand the IHO and increase requirements for developers, thereby ensuring more new housing development to help the Village achieve its housing goals. All options presented by staff increase the fee-in-lieu amount and would potentially increase funds for housing programs in the Village. All options presented by staff increase the benefits to a developer in providing affordable units on-site, increasing the potential for mixed-income development. Only Option 1 requires on-site affordable units, thereby increasing the likelihood that new development furthers economic inclusion.
Alternatives
Alternative #1 - Direct staff to prepare an ordinance reflecting Option 1: On-Site Emphasis.
a. Advantages
• Balances fee increases in the IHO with market strength in different parts of the community
• Requires on-site affordable units in the strongest market areas of the community
• Expands area covered by the IHO community-wide
• Increased bonuses for affordable units provided on-site
• Increased potential funds for the Housing Trust Fund that can be used to advance an array of Board housing goals
b. Disadvantages
• Requires on-site affordable units, which can be a disincentive to some development in a challenging development market
• Includes IHO requirements in the Village’s weakest market areas
Alternative #2 - Direct staff to prepare an ordinance reflecting Option 2: Fee-in-Lieu Emphasis.
a. Advantages
• Balances fee-in-lieu increases in the IHO with market strength in different parts of the community
• Increased potential funds for the Housing Trust Fund that can be used to advance an array of Board housing goals
• Expands area covered by the IHO community-wide
• Increased bonuses for affordable units provided on-site
b. Disadvantages
• Does not require units to be included on-site
• Includes IHO requirements in the Village’s weakest market areas
Alternative #3 - Direct staff to prepare an ordinance reflecting Option 3: Market Conservative.
a. Advantages
• Expands area covered by the IHO
• Includes IHO requirements in only stronger market areas
• Increased bonuses for affordable units provided on-site
• Recognizes the overall challenging development market
• Minimizes change for developers
• Increased potential funds for the Housing Trust Fund that can be used to advance an array of Board housing goals
b. Disadvantages
• Does not require units to be created on-site
• Does not increase the fee-in-lieu in Area B
• Does not apply the IHO in Area C
Alternative #4 - Direct staff to prepare an ordinance reflecting a combination of the options presented based on the Board’s discussion.
a. Advantages
• Allows customization based on Board discussion
b. Disadvantages
• NA
Alternative #5 - Direct staff to study additional alternatives and return for further discussion.
a. Advantages
• More options available for Board consideration
• Additional time for community feedback
b. Disadvantages
• The current ordinance will continue to be in effect