Dive Brief:
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The Home Builders Association of Greater Chicago joined a local multifamily builder last week in a lawsuit against the city over its affordable housing requirements.
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The lawsuit claims a 12-year-old city ordinance that forces multifamily developers to designate 10% of their units for sale or rent at below-market rates is unconstitutional because it amounts to seizing private property. The rule allows developers who don’t want to comply the chance to pay a fine of $100,000 per required unit, and applies only to buildings on lots that have been rezoned to allow greater density and developments of 10 or more units.
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The complaint involves Hoyne Development, which has plans to build two, six-unit condominium complexes and one mixed-use project that includes two apartments.
Dive Insight:
Other large cities, like New York and Los Angeles, also require developers to set aside affordable-housing units in market-rate buildings under certain circumstances.
In fact, the California Supreme Court in June ruled that cities and counties in that state may force developers who apply for building permits to offer some of their homes at below-market rates.
In response to the Chicago lawsuit, the city said Hoyne’s complaint has no merit and that it will “defend the ordinance vigorously,” The Chicago Tribune reported. In October, the city will begin to enforce a more stringent version of the rule, which will affect developers citywide.
But forcing builders to comply is the wrong way to go about adding affordable housing, Steven P. Blonder, the attorney for the builder and the association said. “Chicago needs more affordable housing, and residential developers are ready to help build it,” he said in a statement. “The issue at hand here is that the City is in direct violation of the constitution... The Fifth Amendment prohibits the taking of private property for public use without just compensation.”