OFFICE OF THE MAYOR
CITY OF CHICAGO
RAHM EMANUEL
MAYOR
October 11,2017
TO THE HONORABLE, THE CITY COUNCIL OF THE CITY OF CHICAGO
Ladies and Gentlemen:
At the request of the Commissioner of Planning and Development, together with Aldermen Burnett, Scott and Cardenas, I transmit herewith an ordinance authorizing the establishment of a City Lots for Working Families Program.
Your favorable consideration of this ordinance will be appreciated.
Mayor
Very truly yours,
ORDINANCE
WHEREAS, the City of Chicago ("City") is a home rule unit of government by virtue of the provisions of the Constitution of the State of Illinois of 1970, and as such, may exercise any power and perform any function pertaining to its government and affairs; and
WHEREAS, the City, in recognition of the shortage of decent housing affordable to working families within the City, encourages the use of vacant, unused parcels of land located within the various neighborhoods of the City for the development of new owner-occupied homes; and
WHEREAS, the City owns numerous parcels of vacant land; and
WHEREAS, many of these City-owned parcels of vacant land are suitable for the construction of new owner-occupied housing affordable to working families; and
WHEREAS, it is in the best interest of the City and its residents to assist with the construction of new owner-occupied housing affordable to working families; now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CHICAGO:
SECTION 1. The above recitals are expressly adopted herein as the legislative findings of the City Council and incorporated herein and made a part of this ordinance.
SECTION 2. Pursuant to the powers and authority granted under Article VII of the Constitution of the State of Illinois of 1970, and the home rule powers granted thereunder, the City hereby establishes the "City Lots for Working Families Program" (the "Program"), which shall be administered by the City's Department of Planning and Development, or any successor department thereto ("DPD").
SECTION 3. For purposes of this ordinance, in addition to the terms defined above, the following terms shall have the meanings set forth below:
"Affordable Price" means an amount less than or equal to the price at which monthly homeownership costs (including principal and interest on a 30-year fixed rate residential mortgage in the amount of ninety-five percent (95%) of the purchase price, taxes, insurance and, as applicable, private mortgage insurance and homeowners' association payments) for the Home would total not more than thirty percent (30%) of household income with a family size equal to the product of 1.5 multiplied by the number of bedrooms in the Home whose income is equal to one hundred twenty percent (120%) AMI. For purposes of this definition, interest shall be calculated as the higher of: (a) the current interest rate, as published in the Chicago Tribune or comparable newspaper and rounded up to the nearest quarter point; or (b) the 10-year average of interest rates, as calculated by the City based on data provided annually by the Federal National Mortgage Association or any successor organization thereto.
"Affordability Requirements" has the meaning set forth in Section 6(c) of this ordinance.
"Applications" has the meaning set forth in Section 7 of this ordinance.
"AMI" means the median household income for the Chicago Primary Metropolitan Statistical Area as calculated and adjusted for household size from time to time by the U.S. Department of Housing and Urban Development or any successor organization thereto.
"Appraised Value" means the value of a City Lot as determined by an independent appraisal ordered by the City no later than one (1) year prior to the date of introduction to City Council of the ordinance designating an applicant as a Developer under the Program.
"CCLT" means the Chicago Community Land Trust, an Illinois not-for-profit corporation established by ordinance adopted on January 11, 2006, and published in the Journal of the Proceedings of the City Council for such date at pages 67997 through 68004, as amended, and having as its primary mission the preservation of long-term affordability of housing, or any successor organization thereto.
"City Council" means the city council of the City.
"City Junior Mortgage" means a mortgage, security and recapture agreement in a form acceptable to DPD and the Corporation Counsel, executed by the Qualified Household.
"City Lot" means a City-owned zoning lot (as defined in Section 17-17-02197 of the Municipal Code) upon which a Home will be constructed.
"City Residency Hiring Reguirements" means the requirements set forth in Section 2-92-330 of the Municipal Code, as such requirements are customarily modified for land sales by DPD.
"Commissioner" means the commissioner of DPD, or his or her authorized designee. "Corporation Counsel" means the City's Department of Law. "Developer" has the meaning set forth in Section 7 of this ordinance. ¦Home" has the meaning set forth in Section 5 of this ordinance.
"Market Rate Home" means a Home that does not have to be sold at an Affordable Price to a Qualified Household (i.e., a Home that is sold for "market rate").
"MBE/WBE Reguirements" means the requirements of the Minority-Owned and Women-Owned Business Enterprise Procurement Program as set forth in Section 2-92-420 et seg. of the Municipal Code, as such requirements are customarily modified for lands sales by DPD, subject to the approval of the Corporation Counsel, and the Minority-and-Women-Owned Business Enterprise Construction Program as set forth in Section 2-92-650 et seq. of the Municipal Code, as such requirements are customarily modified for land sales by DPD.
"Municipal Code" means the Municipal Code of the City.
"Principal Residence" means an owner's primary or principal residence that the owner actually occupies on a regular basis (e.g., in the case of a Two-Flat, one of the units). A Principal Residence does not include any housing unit used as an investment property, as a recreational home or a'home in which fifteen percent (15%) or more of its total area is used for a trade or business.
"Project" has the meaning set forth in Section 7 of this ordinance.
"Purchase Date" means the date upon which a Qualified Household takes title to a
Home.
"Qualified Household" means a person or group of people whose household income does not exceed one hundred forty percent (140%) of AMI as calculated and adjusted for household size from time to time by the U.S. Department of Housing and Urban Development or any successor organization thereto.
"Redevelopment Agreement" has the meaning set forth in Section 9 of this ordinance.
"Rules and Regulations" has the meaning set forth in Section 4 of this ordinance.
"Single-Family Home" has the meaning set forth in Section 5 of this ordinance.
"Two-Flat" has the meaning set forth in Section 5 of this ordinance.
SECTION 4. Subject to the terms of this ordinance, the Program shall be administered by DPD under such additional rules, regulations and procedures as may be internally adopted by DPD ("Rules and Regulations"). All such Rules and Regulations shall be published and made available by DPD. Without limiting the generality of the foregoing, DPD may adapt the Program for use in connection with the CCLT. In adapting the Program for use with the CCLT, DPD may modify or eliminate the recapture provisions set forth in Section 9 below, consistent with the CCLT objectives, and make such other modifications as may be necessary and appropriate.
SECTION 5. The Program shall be designed and implemented in order to promote the construction and sale of high-quality, owner-occupied, single-family housing affordable to working families, whether constructed as a detached single-family home ("Single-Family Home(s)") or as a two-flat ("Two-Flat(s)"). For purposes of this ordinance, the term "Home(s)" shall include Single-Family Home(s) and Two-Flat(s).
SECTION 6. The development parameters of the Program shall include the following:
DPD shall approve the aggregate number of Homes to be constructed as part of each development proposal. All development proposals shall include no less than eight (8) but no more than twenty (20) Homes. Within a development proposal, DPD is hereby authorized to provide that up to twenty-five percent (25%) of the Homes may be sold as Market Rate Homes.
All Homes shall satisfy design requirements to be established in the Rules and Regulations, which design requirements may address, among other things, minimum square footage, energy efficiency, on-site parking, landscaping, security, the builder's warranty of habitability and fitness, the quality of materials, ADA accessibility, and architectural compatibility with surrounding properties.
With the exception of Market Rate Homes, the Homes shall be sold at Affordable Prices to Qualified Households for their Principal Residences ("Affordability Reguirements"). In the case of Two-Flats, the non-Principal Residence shall not be subject to household income or rent restrictions.
City Lots located within the Chicago Park Boulevard System Areas, as may be amended from time to time, and as generally depicted on the map attached hereto as Exhibit A, are not eligible for sale under the Program.
(e) City Lots that have an Appraised Value of greater than One Hundred Seventy-Five Thousand and No/100 Dollars ($175,000) are not eligible for sale under the Program.
SECTION 7. DPD is authorized to prepare Program applications ("Applications") designed to provide all the necessary information needed by the City to fairly and completely evaluate development proposals for participation in the Program. DPD shall charge applicants a nonrefundable application fee of up to One Thousand and No/100 Dollars ($1,000) that shall be payable to the City at the time an Application is submitted to DPD for review. DPD shall approve all Applications, and every development proposal is subject to City Council approval. Applicants approved by City Council for participation in the Program are hereafter referred to as "Developer(s)." Development proposals approved by City Council are hereafter referred to as "Proiect(s)."
SECTION 8. The City may provide assistance to Developers in one (1) or more of the following forms:
The City may sell City Lots with an Appraised Value of Fifty Thousand and No/100 Dollars ($50,000) or less for One Dollar ($1.00) per City Lot, subject to the recapture provisions set forth in Section 9 of this ordinance. The City may sell City Lots with an Appraised Value greater than Fifty Thousand and No/100 Dollars ($50,000) for One Dollar ($1.00) per City Lot, provided that the amount by which the Appraised Value of the City Lot exceeds Fifty Thousand and No/100 Dollars ($50,000) is subject to additional recapture provisions set forth in Section 9 of this ordinance. Deeds conveying City Lots to Developers shall contain a clause permitting the City to re-enter and take possession of such City Lots if construction is not commenced within six (6) months from the date of conveyance, unless DPD consents otherwise in writing.
If all City Lots within a Project have an Appraised Value equal to or less than One Hundred Twenty-Five Thousand and No/100 Dollars ($125,000), the Project shall be exempt from MBE/WBE Requirements and City Residency Hiring Requirements. If any City Lot within a Project has an Appraised Value greater than One Hundred Twenty-Five Thousand and No/100 Dollars ($125,000), the Project shall be subject to MBE/WBE Requirements and City Residency Hiring Requirements.
The City may waive certain City fees. A description of City fees for which Developers may request a waiver for Projects is provided on Exhibit B attached hereto and made a part hereof.
SECTION 9. Prior to the conveyance of any City Lot(s), the Developer shall be required to execute a redevelopment agreement in a form acceptable to DPD and the Corporation Counsel encumbering such City Lot(s) ("Redevelopment Agreement"). Such Redevelopment Agreement shall, among other things, impose the Affordability Requirements upon the City Lot(s) as covenants running with the land and shall secure the recapture amounts hereafter described. At the time a Developer conveys a City Lot improved with a Home to a Qualified Household at an Affordable Price for its Principal Residence, the Qualified Household shall be required to execute and deliver to the City a City Junior Mortgage, which the City may assign to the CCLT. The City Junior Mortgage shall require, in part, that the Qualified Household shall pay to the City a sum equal to the Appraised Value of the former City Lot, provided that this amount shall decline by twenty percent (20%) on each anniversary of the
Purchase Date, and after the fifth (5th) anniversary date, shall be zero (0). Notwithstanding the foregoing, if the former City Lot had an Appraised Value of greater than Fifty Thousand and No/100 Dollars ($50,000), such amount above Fifty Thousand and No/100 Dollars ($50,000) shall bear simple interest at up to three percent (3%) per annum and such amount above Fifty Thousand and No/100 Dollars ($50,000) shall be subject to repayment if the Home is sold prior to the thirtieth (30th) anniversary of the Purchase Date, unless such sale is to a Qualified Household that purchases the Home for an Affordable Price as its Principal Residence. Notwithstanding the foregoing, former City Lots improved with Market Rate Homes shall not be subject to the mortgage and recapture provisions described above.
SECTION 10. DPD is authorized to charge Qualified Households for any recording and other third-party costs associated with the preparation, closing and recording of the City Junior Mortgage, including outside counsel fees incurred by the City (collectively, "Fees"). Such Fees shall be reasonable and shall be clearly set forth in the Rules and Regulations.
SECTION 11. In the event a Qualified Household defaults under a senior mortgage or a City Junior Mortgage executed in conjunction with the Program, the Commissioner shall have the discretion, subject to the approval of the Corporation Counsel, and dependent upon market conditions, interests rates and any other attendant facts and circumstances, to settle any claims with respect to such City Junior Mortgage, including, without limitation, accepting payment of an amount less than the full amount due and payable under such City Junior Mortgage, if equitable and necessary and appropriate.
SECTION 12. Any Project built under the Program shall be deemed to qualify as "Affordable Housing" for purposes of Chapter 16-18 of the Municipal Code. Section 2-45-115 of the Municipal Code shall not apply to any Project built under the Program.
SECTION 13. In the event a Developer's construction of a Project falls short of Developer's completion obligations under the Redevelopment Agreement, DPD, in its sole and absolute discretion, may release all City Lot(s) not yet conveyed to the Developer from the Redevelopment Agreement so that such City Lot(s) may be made available to the City for alternative redevelopment plans.
SECTION 14. Other than the assistance to Developers set forth in Section 8 above, no other City assistance, including but not limited to financing assistance derived from Tax Increment Financing, the Affordable Housing Opportunity Fund, the HOME Investment Partnerships Program and the Community Development Block Grant Program, shall be provided to Developers under the Program.
SECTION 15. If any provision of this ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such provision shall not affect any of the other provisions of this ordinance.
SECTION 16. All. ordinances, resolutions, motions or orders in conflict with this ordinance are hereby repealed to the extent of such conflict.
SECTION 17. This ordinance shall be in full force and effect immediately upon its passage and approval.
EXHIBIT B FEE WAIVERS
Department of Buildings
Plan review fees, permit fees and field inspection fees are to be paid in full for the first Home of each Home type (i.e., Single-Family Home or Two-Flat). The fees paid for each successive Home type would be reduced by fifty percent (50%). This fee reduction is not applicable to electrical permits.
Department of Planning and Development.
Open Space Impact fees are not waived. For the City Lots for Working Families Program, an Open Space Impact fee of One Hundred Dollars ($100) per Home shall be assessed to the Developer to be paid to the City as a condition of issuance of a building permit.
Zoning approval is required as part of the building permit process and is covered under the building permit fee schedule. However, any private legal work, such as giving notice to nearby property owners if a zoning change is requested, is not waived.
Department of Water Management.
Connection fees are waived. Inspection fees are waived. Tap fees are waived. Demolition fees for existing water tap are waived. Water liens against City Lots are waived. (B-boxes, meters and remote readouts are not waived and need to be purchased.)