Charges to slow gentrification in Pilsen and along Bloomingdale’s 606 Trail may continue after council vote

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CITY HALL – Alderman voted on Monday to give another two years to a controversial set of demolition fees designed to slow movement in two of the city’s most gentrified areas, signaling that opposition to the measure has since cooled its entry into force a year ago.

The extension of the demolition fee was one of the few initiatives approved by the city council’s finance committee, sending it to the full council for a final stamp on Wednesday. The committee also approved $625,000 in police accident-related legal settlements and more than $22 million in tax increment funding payments, including a loan of approximately $2.5 million to fund infrastructure works around the refurbishment of the Morton Salt Theater on the North West side.

The March 2021 City Council adopted a one-year pilot program (O2021-746) charging a fee of $15,000 per building — or $5,000 per unit, whichever is greater — on any residential demolition permit in Pilsen or an area nearly 2 square miles surrounding 606 Bloomingdale Trail in Bucktown, Humboldt Park and Logan Square.

Making demolitions more expensive has been a priority for the Logan Square Neighborhood Association since at least 2015,when teenage organizers staged a rally demand city-backed demolition fees as a tool to slow the destruction and replacement of naturally affordable housing stock in their neighborhood.Aldus. Daniel La Spata(1),Aldus. Carlos Ramirez-Rosa(35) andAldus. Byron Sigcho-Lopez(25) picked up the torch for the cause and worked with the Chicago Department of Housing put the policy into practice – first by legislating a temporary freeze on demolitions in areas, then codifying the fee.

Related: Demolition along 606 halted for 6 months as city considers impact of gentrification

“We are resolving the loss of two to four units in many of our communities in Chicago,”Housing DepartmentCom. Marisa Novare told the committee on Monday. “They are a major source of what we call natural affordable housing. Above all, we see that in neighborhoods undergoing gentrification, we lose many more buildings with two to four units. They are either completely demolished and redone or converted from multiple units into a single family home.

The demolition charges were designed to straddle a pair of ordinances (O2020-6206 ,O2020-6207 ) enacted months earlier that set a floor on zoning density within the same limits in an effort to slow the trend of deconversions that were replacing naturally affordable two- and three-bedroom apartments with lavish single-family homes.

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But unlike the anti-deconversion orders, which were written as permanent changes to the rules, the demolition charges were designed as a one-year pilot program. They entered into force last April and are due to expire on April 1.

Nearly a dozen aldermen voted against the demolition fee pilot in March 2021, as many predicted the rules would be challenged in court on the grounds that they represent a “grab” of private property. A developer sued to remove the ordinance, but the suit was dismissed without prejudice last fall.

And Novara said on Monday that “it looks like the surcharge is doing what we hoped” as demolitions fell more than 20% in Pilsen and more than 80% in the 606 area compared to a similar period before the COVID-19. the pandemic hit. And the fees raised more than $120,000 for the Chicago Community Land Trust, a city-supported affordable homeownership program.

“If the purpose of the surcharge was to deter some demolitions and, where we can’t deter them, to raise money for affordable housing, then it seems to be doing both,” Novara said.

Related:A year on, supporters of controversial anti-gentrification measures take victory lap as teardowns and gut jobs plummet

Still, the policy’s staunchest critics renewed their opposition on Monday. Aldus. Raymond Lopez (15), a frequent ally of Chicago’s real estate industry, said the decline in demolitions “is having a real impact on the generational wealth of the owners of these properties who have been there.”

“When you have individuals who have been living in communities for 20, 30, 40, 50 years and decide to try to leverage their capital… charges like this steal that capital from beneath them,” Lopez said.

Paul Colgana lobbyist for the Homebuilders Association of Greater Chicago, urged aldermen to rein in the pilot, saying during the meeting’s public comment period that “we don’t know the full impact of this ordinance” on home sales and property values.

Housing officials say they’ve barely seen a lull in real estate values ​​or sales in gentrifying neighborhoods.

“It’s not accurate to say that it necessarily hinders the equity a long-term homeowner would have if they attempted to sell their property,” Novara said. “The surcharge only comes into play in the event of demolition. So if they only sell their property, it will be normal.

A map of the Pilsen area where the anti-deconversion and demolition surcharge orders apply [Chicago Cityscape]

But the policy has led to changes in development patterns as more builders have chosen to rehabilitate existing homes rather than demolish them, La Spata said.

“Does it shape market conditions? Of course it is – that is the intention,” the alderman said. “But I would tell you all that it shapes him for the better.”

Lopez was the only alderman to vote against advancing the measure out of committee on Monday.

Morton Salt Shed Infrastructure Funding

The finance committee also on Monday approved $2.54 million in tax increment financing (TIF) to provide a loan for which developers R2 Companies and Blue Star Properties, who are working to convert the Morton Salt shed at 1357 N Elston Ave. in the 27th Ward in a 4,000-seat, 97,400-square-foot concert hall and restaurant.

The loan will allow developers to rebuild Blackhawk Street, resurface Magnolia Avenue, add a traffic light at the intersection of streets with Elston Avenue and ‘add pedestrian improvements’ at the intersection of Elston and Division Avenue, Department of Planning and Development Com. Deputy Tim Jeffries noted.

Together, the infrastructure works are designed to “reduce the impact of development, ease congestion and improve pedestrian safety,” Jeffries said.

Aldus. Walter Burnett (27) touted the deal, noting that the development is expected to generate an additional $6 million in property tax revenue for the Kinzie Industrial Corridor TIF district over the next decade, and that the developer is set to repay the infrastructure loan with interest.

“We’re going to make money with our money by lending them our TIF,” which is most often given out as grants, Burnett said. “And we’re going to put in free infrastructure…for lights and concrete and stuff in that area.”

The plan to redo the site of the four-acre salt shed while keeping the iconic outdoor structure intact won a series of city approvals last year, including being granted landmark status. historical landmark so that the “Morton Salt” logo and umbrella artwork remain to welcome spectators. . The developers also earned historic Class L tax credits from the city worth $7 million in tax savings.

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The theater renovation project is expected to be completed by the end of the year, officials said.

The Finance Committee also approved all other items listed in The daily linepreviewof the reunion, including a payment of $450,000 to settle a lawsuit brought by the family of Jack Burriswas killed after being hitby an unmarked Chicago police car engaged in a pursuit in 2017.

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