What is the Northwest Side Housing Preservation Ordinance in Chicago?
The Northwest Side Housing Preservation Ordinance, effective October 9, 2024, aims to preserve and even expand areas of affordable housing and limit gentrification in areas surrounding the 606 Trail. It expands geographic coverage and introduces key regulations like increased demolition fees, tenant rights to purchase buildings, and restrictions on single-family home construction. It is very important that owners, agents, brokers, lenders and investors stay compliant as Chicago navigates these new rules and regulations on housing in its northwest side.
How Far From the 606 Trail is in the Zone?
The ordinance impacts areas primarily within a six-square-mile zone surrounding the 606 Trail, stretching from Division Street to Addison Street and from Western Avenue to Pulaski Road. If a property falls within these boundaries—including neighborhoods like Humboldt Park, Logan Square, Avondale, and Hermosa—it will be subject to the new regulations. Properties closer to this trail are more likely to experience the direct effects.
Key Provisions:
- Demolition Fees: What is an increased demolition fee? Fees now start at $60,000 or $20,000 per unit, discouraging teardown and redevelopment of multi-family properties. This surcharge helps fund affordable housing preservation within the affected area.
- Geographic Impact: The ordinance now covers a 6-square-mile area from Division to Addison Streets and Western to Pulaski Avenues. It affects Humboldt Park, Logan Square, Avondale, and part of Hermosa. However, if this ordinance is deemed to be “successful” by Chicago officials, it will likely be rolled out to the rest of the city and may even reach as far as the Cook County Suburbs.
- Tenant Right to Purchase: The anti-gentrification ordinance gives tenants new power over building sales. One of the most significant provisions is tenants' right to purchase their building before an external buyer. Owners of rental properties must notify tenants of an intent to sell, giving them a set period (ranging from 15 to 90 days depending on property size) to exercise their purchase rights. This provision extends the sales process significantly, potentially delaying sales by up to nine months.
- Restrictions on Construction: The ordinance limits the ability to build single-family homes on blocks where less than 50% of homes are already single-family units. This rule aims to maintain the area's housing density and prevent the displacement of low-income residents through luxury housing developments.
The ordinance introduces significant hurdles for property owners, particularly in selling their properties. The extended timelines, financial disclosures, and tenant involvement can complicate sales processes. Property owners are required to provide tenants with detailed financial reports, including rent rolls, vacancy reports, and a 12-month income and expense report. This can impact both the property’s transparency and its market value.
Exemptions and Concerns
There are a few exemptions to the ordinance, including family transfers, foreclosures, and properties that are tenant-free. However, these exemptions are limited, and many property owners express concern over the ordinance's potential impact on investment returns. The increased fees, longer sales timelines, and potential bureaucratic delays may deter future investment in the area.
Many property owners argue that the rapid passage of the ordinance, with minimal public input, has led to uncertainty and lack of clarity in its implementation. Smaller landlords, in particular, may struggle to remain compliant with the new rules, facing potential legal consequences and financial strain.
Local Relevance: Impact on Chicago Neighborhoods
The ordinance primarily affects neighborhoods like Humboldt Park, Logan Square, Avondale, and Hermosa, where affordable housing is a growing concern. Property owners in these areas, especially those near the 606 Trail, will face higher costs and stricter regulations when selling or redeveloping their properties. With demolition fees starting at $60,000 and tenant rights to purchase, owners in these neighborhoods must adapt to the new challenges imposed by the city’s efforts to curb gentrification.
What Should I Do Next?
If you own rental property in the city of Chicago or the Cook County Suburbs, it’s crucial to stay informed and understand the new regulations to avoid costly penalties and delays. Property owners should consult with legal experts and stay informed about potential legal challenges that may arise as a result of this ordinance. Compliance with the new tenant rights, financial disclosure requirements, and demolition fees is essential.
Our team at Landmark Property Management is available to discuss any questions you may have and provide guidance on how to navigate these new regulations. If you have any concerns or need further assistance with your property, please don’t hesitate to reach out!
FAQs:
What neighborhoods are affected by the ordinance?
As of now, the ordinance impacts properties near the 606 Trail, specifically in Humboldt Park, Logan Square, Avondale, and parts of Hermosa. However, if this ordinance is deemed to be “successful” by Chicago officials, it will likely be rolled out to the rest of the city and may even reach as far as the Cook County Suburbs.
How much are the new demolition fees?
Demolition fees start at $60,000 or $20,000 per unit, whichever is higher.
What is the "Tenant Opportunity to Purchase"?
Before selling, property owners must give tenants the right to purchase the building, adding up to nine months to the sale process.
How long is the tenant purchase process?
The process can take up to 270 days, as tenants have varying periods to respond based on the building size.
What are the boundaries of the affected area?
The ordinance covers a 6-square-mile area between Division and Addison Streets, and Western Avenue to Pulaski Road.
Can property owners still build single-family homes?
Yes, but only on blocks where 50% or more of the homes are already single-family units.
Are there any exemptions to the ordinance?
Yes, properties transferred to family members or trusts, and vacant properties are exempt from tenant purchase rights.
