“Gentrification is driving up housing costs in areas like Logan Square and Pilsen, as developers convert humble two-flats and bungalows into high-end homes of the type you expect to see in Chicago’s most exclusive enclaves.
“As moderately priced homes disappear from more neighborhoods, people of modest means have a harder time finding a place to live.
“ARO is only one tool for advancing that goal, and its effectiveness is limited to areas where developers already want to build. Beefing up ARO requirements might increase racial diversity in expensive parts of town—a clear goal of Lightfoot’s—but won’t have much impact on a major cause of Chicago’s affordability gap: disinvestment in outlying neighborhoods across the city.
“Acres of affordable housing have fallen into disrepair or disappeared altogether as capital flight and population loss decimated vast swaths of the South and West sides. Jacking up ARO levels might provide a few more tickets out of those areas, but won’t create large numbers of new affordable units, or serve Lightfoot’s broader aims of reducing inequality and reversing the overall population decline in Chicago.
“What’s needed are policies that reward developers for building outside the hottest neighborhoods. Tools such as low-income housing tax credits and low-cost home loans help spur rehabilitation of older homes and new construction in areas ripe for redevelopment. ARO alone, by contrast, largely leaves those neighborhoods to their fate.
“Investment in affordable housing would bring people back to places like Englewood and Lawndale, which account for most of Chicago’s recent population drop-off. Initiatives such as the Renew Woodlawn program show the potential for rebirth in areas long abandoned by traditional developers.
“Yes, many of those neighborhoods suffer from high crime, failing schools and poverty. But investment in housing is an important first step toward addressing those problems.
“Economics also favor construction of affordable homes in neglected areas, where builders can get real estate at prices that reduce development costs. Lower costs allow developers to build lots of homes and make a profit selling them at affordable prices. More affordable homes, faster—that’s the way to defuse a housing affordability crisis.” (Cahill, Crains, 1/21/20)
Read the full story at Crain’s Chicago Business