A new property tax incentive that has been designed to promote affordable housing is gaining praise by Chicago’s largest developers. One major Chicago-based developer is considering this vehicle to develop the city’s most infamous failed real estate ventures.
Related Midwest have hinted they may use the incentive package to start construction at former Chicago Spire. The site at 400 North Lake Shore Drive.
As it completes Chicago’s first residential tower development with on-site units. President, Curt Bailey confirmed that the majority of their Chicago projects will feature a 20 percent affordable housing component.
The new regulation instructs developers that they must maintain 20 percent of residential units at affordable prices. for at least 30 years in new construction in high-income zones like Fulton Market.
The rule specifies that affordable housing must be constructed on-site, closing a current loophole. Taking away the permission for developers to build cheap housing elsewhere. Developers were using this loophole to buid this affordable housing outside the proximity of the districts designated for market-rate housing.
This incentive package signed into state law in 2021 has lessened the effects on developers of revising the city’s affordable housing legislation.
This law has increased the proportion of affordable housing units that must be built in all new projects. Increasing the number now typically to 20 percent of all units as opposed to the current 10 percent.
Expected development projects
The first significant project to be built under the new incentive program is being completed by Related Midwest. 60 affordable units will be available in The Row Fulton Market, a 300-unit rental tower at 164 North Peoria Street. Related Midwest had taken over the Chicago Spire site in 2014.
In the midst of the 2000s, developers had planned for the site to provide a 150-story, 2,000-foot tall skyscraper; the developers eventually abandoned the Project. In 2020, Related Midwest unveiled a two-tower plan for the site, promising structures rising to 875 and 765 feet tall; construction has not commenced
According to Shapack Partners, they are building a 28-story residential tower at 1353 West Fulton Street. Five new apartment complexes supported by the program have started construction since Governor J.B. Pritzker signed the legislation. Subsequently, the developer firm are expected to add a total of 1,612 apartments to the city. The real estate development project based at 225 North Elizabeth Street, Sterling Bay is also developing a $155 million, 350-unit tower.
Developer, Jeff Shapack, he believes that the Affordable Illinois incentive package will become a major driver in the production of a significant number of affordable homes.