October 2003

Zoning News

Copyright by American Planning Association

Affluent Community Sets Precedent with Inclusionary Zoning Ordinance

By Lynn M. Ross

The City of Highland Park, Illinois, recently approved a precedent-setting inclusionary zoning ordinance. Although nearby communities, including Evanston, Chicago, and Oak Park, have considered inclusionary housing, Highland Park will be first in the state to implement such regulations.

As is the case in many Chicago suburbs, this affluent North Shore community of 32,000 has experienced a rapid decline in affordable housing. Existing rental properties were either converted to condominiums or demolished. Newly constructed single-family homes regularly sell at or around $1 million, and existing homes have skyrocketed to a median sales price of over $400,000. The median household income for Highland Park residents is $157,861. However, 80 percent of the locally employed work in the retail and service sectors and have an average annual salary of less than $35,000.

Maintaining an economically diverse citizenry and encouraging the production of affordable housing have long been priorities of Highland Park city officials. In fact, the Housing Commission of Highland Park was created in 1973 specifically to address those priorities. In both the 1976 comprehensive plan and in the 1997 update, community goals for the provision of affordable housing are explicitly stated. In 1998, the city council directed the Housing Commission to prepare an affordable housing element, which resulted in the 2001 adoption of the Affordable Housing Needs and Implementation Plan. One of the key action steps recommended in the plan was the development of an inclusionary housing program within the relatively short timeframe of two years.

The new regulations for the program apply to all residential developments—new construction, renovations, conversions — that result in five or more units. Developments covered under the ordinance are required to set-aside 20 percent for affordable units. For example, in a 15-unit development the builder would set aside three units for the program. While the city prefers that affordable units be constructed on-site, developers of smaller single-family projects may opt out by making a cash payment of $100,000 per affordable unit to a housing trust fund. The payment represents the cost to the developer of making a market-rate unit affordable. Single-family units and condominiums that are on the market must retain permanent affordability. Rental units are required to retain affordability for 25 years.

The ordinance states that adequate dispersal of affordable units throughout covered developments is required. In addition, the exteriors of the affordable units are required to be similar to those of the market-rate units in the same development. It also states that “. . .external building materials and finishes shall be substantially the same in type and quality.” Builders are given some leeway on the interior of the affordable units, but they must have the same bedroom mix and energy efficiency improvements as market-rate units. Affordable units are also required to meet minimum size requirements based on the number of bedrooms and unit type (attached or detached).

Builders of covered developments are required to submit an inclusionary housing plan during the permit process in order to illustrate that the project meets program requirements. Developers also must submit a phasing plan to ensure that affordable units are built in a timely manner. In exchange for participating in the program, developers become eligible for a variety of incentives, including fee waivers. Developers can also take advantage of a density bonus granting one additional market-rate unit per affordable unit provided.

One of the more interesting features of the Highland Park program is its target population. In keeping with traditional inclusionary zoning programs, the ordinance is intended to assist low- and moderate-income individuals and families. What is unique about this program is that once the income eligibility requirement is met, priority will be given to families currently residing in the city and to families where the head of household, spouse, or domestic partner works for the Highland Park government. Priority then will be given to families where the head of household, spouse, or domestic partner works for any other employer located within the city. The adoption of both a resident and worker preference within an inclusionary program is precedent setting.

The ordinance, approved by a unanimous city council vote on August 25, amends the 1997 Highland Park Zoning Code. A related resolution was also approved to allow for the cash-in-lieu payments. The new regulations take effect October 1, 2003.