This week more details have emerged regarding Mayor Rahm Emanuel’s ambitious plan to expand the high-density “downtown” zoning designation to approximately 1000 additional acres outside the city’s central core to help fund improvements in underserved neighborhoods.
Under the scheme, the city will charge developers for the privilege of increased height and density permitted under the expansion. Each payment will be calculated by multiplying amount of additional space sought by 80 percent of the median price per square foot. In other words, if a builder wants to build an additional 5,000 square feet beyond what’s allowed under old zoning in an area where the median price is $30 per foot, the city will net an extra $120,000 for neighborhood reinvestment…
This week’s announcement also sheds some light on how the mayor plans to spend the extra cash. As reported by Greg Hinz of Crain’s, the administration plans to spend 80 percent of the money to help incentivize the construction of new grocery stores and cultural facilities in otherwise deprived neighborhoods. The remainder of the fund is earmarked for historic preservation efforts and streetscape and transit improvements.
The creation of this new value-capture mechanism is also aimed to supplement — if not help replace — Chicago’s reliance on its controversial TIF districts.
It sounds like Emanuel hears the criticism that poorer neighborhoods in Chicago need more resources and capital. However, is this the best way to do that or is it a deal with the devil? The idea seems to be that developers want new spaces to create downtown-like buildings and some of the revenue from this can be sent to help poor neighborhoods. The Neighborhoods Opportunity Fund – a description starts on page 2 of the proposed ordinance – can provide a unique pot of money to provide basic services, cultural and recreational opportunities, and help launch small businesses.
The city says the plan will pull in about $50 million over the next several years. Eighty percent of the money would go to develop grocery stores, restaurants and cultural facilities in underserved neighborhood commercial corridors. The remaining 20 percent would be split among preserving landmark buildings, neighborhood streetscapes and public transit facilities.
I’ll leave it to others to consider how this money balances out with the goodies developers and others will get from the expanded downtown zoning…