case study: chicago aro

Chicago's Affordable Requirements Ordinance (ARO) was initially passed in 2003, but the policy was expanded in May 2007 (effective August 2007) to broaden its reach. View the case study below to learn more about how the elements of an inclusionary zoning ordinance are applied in Chicago. Click on each of the inclusionary zoning ordinance elements to skip to a longer, general description of how it works.

Circumstances that trigger inclusionary requirements
  • Mandatory or voluntary? Chicago has a hybrid inclusionary zoning policy that is triggered only in specific circumstances (see details below).
  • Development size? Any rental or for-sale development with 10 or more units is subject to the terms of the ARO, if the project also involves:
    • Any purchase of land from the City (the previous ARO only included developments where City land was purchased at a below-market rate);
    • A zoning change resulting in increased project density or a change in land use that allows residential uses not previously permitted; or
    • Receipt of financial assistance from the City (including tax increment financing).
Most projects located within a planned development zone are also covered by the ARO.

Terms of the set-aside of affordable units
  • Share of units set aside? Developers receiving financial assistance from the City must set aside 20 percent of units as affordable; all other conditions require a 10 percent set-aside. However, the new ordinance allows developers to reduce the required affordable housing set-aside if they target for-sale units to households that earn at or below 80 percent AMI.
  • Target income level? Like the original ARO, the amended ordinance establishes target income levels at up to 60 percent AMI for rental housing and up to 100 percent AMI for for-sale housing.
Location of affordable units
  • In-lieu fees? Developers may opt to make in-lieu payments of $100,000 per affordable unit not produced as established by the 2003 ARO; however, the 2007 amendment links this in-lieu fee to inflation. The amount of the fee will be adjusted annually based on the Consumer Price Index. Payments are directed to the City's Affordable Housing Opportunity Fund.
Incentives and cost offsets
Any incentives and cost offsets are negotiated on a case-by-case basis between developers, aldermen, and the City's Department of Housing and Department of Planning and Development.

Visit the City's ARO website to learn more.

Continue learning about circumstances that trigger inclusionary zoning requirements.