Task force members meet with community stakeholders in Chicago to discuss expanding accessibility to accessory dwelling units throughout the city. (ULI Chicago)

Editor’s note: ULI Chicago was one of four district councils (along with ULI Arizona, ULI Tampa Bay, and ULI Sacramento) selected through a competitive process to initiate efforts to identify land use and transportation barriers to healthier and more equitable places and provide recommendations for local policy shifts and reforms. Spearheaded by the Institute’s Building Healthy Places Initiative with support from the Robert Wood Johnson Foundation, the program presents opportunities for ULI district councils and members to leverage their leadership positions in communities to explore and document problematic land use policies and practices, and promote positive change.

A ULI Chicago task force has been working to expand housing options in the Chicagoland area by addressing regulatory barriers to the creation of accessory dwelling units (ADUs). The effort was part of an ongoing collaboration between ULI and the city of Chicago, including the departments of Housing, Buildings, and Planning and Development, prompting a set of zoning reform proposals that were approved by the Chicago City Council in December. The approved proposals were part of a package that had been under consideration by the city’s Joint Committee on Housing and Zoning to allow construction and rehabilitation of ADUs throughout the city.

ADUs are smaller, independent dwelling units with a full kitchen and bathroom, and can be attached or detached from a primary residential building. The units, sometimes referred to as “granny flats,” “mother-in-law units,” or “coach houses,” are emerging as a much-needed housing option in cities across the United States. They can be created as part of new construction or existing residential buildings by repurposing basement and attic spaces, or by building an extension or a separate unit.

Many types of ADUs, such as basement units, are likely to be more affordable than other types of housing in neighborhoods, thereby increasing rental housing options for lower- and middle-income households, including younger households seeking starter housing or seniors looking to downsize. ADUs can serve as a source of financial stability, wealth building, and revenue generation for property owners, especially those who are affected by rising housing costs and would benefit from an additional income stream.

Starting in August 2019, ULI Chicago convened a task force, chaired by leading ULI Chicago members Todd Berlinghof and Molly Ekerdt, that engaged nearly 100 community, industry, and public-sector stakeholders to develop a successful ADU policy for the city that could be replicated in communities across the region. As the task force continued its work during 2020, it became apparent that the need for safe, healthy, and affordable housing would likely increase as more households in the Chicago region face unemployment and rising economic uncertainty due to the COVID-19 pandemic. ADUs were identified by the group as an innovative way for Chicago to address this growing housing challenge.

According to Berlinghof, the district council chose the ADU initiative to help foster more inclusive, equitable, and healthier living environments by opening up more neighborhoods and their amenities to people in a broader range of incomes, encouraging engagement by a more diverse group of residents and ultimately cultivating more stakeholders committed to providing a better quality of life for all people in the community.

Two-flat residences in Chicago are well suited to serve as ADUs. (Eric Allix Rogers)

“This is about more than just creating affordable housing—this allows for a mix of housing stock and a mix of people,” said Berlinghof, partner at Hamilton Partners, a commercial development firm in Itasca, Illinois. “We felt it was important to address economic diversity. There is a need for ADUs up and down the economic sphere—low-income people, middle-income, people who need workforce housing—the whole gamut.”

He noted that the ADU proposal approved by the city council involves lifting restrictions on “illegal” units—those that are still occupied, but that cannot be repaired or upgraded to comply with the city’s building code under the current zoning ordinance. “Part of our [the task force’s] thought process was how to bring ADUs up to code to make sure the folks renting those places would have healthier living conditions,” Berlinghof said.

Older 2-4 flats make up a significant portion of Chicago’s residential building stock. (ULI Chicago)

“Housing is fundamental to health,” said Ekerdt, vice president at the Preservation of Affordable Housing organization in Chicago. “What we have seen as a result of the pandemic is that there are not enough housing units—we need every type of housing. People who are doubled up in homes are disproportionately exposed to COVID and other illnesses. Housing for everyone should be our priority—as a city and a society.”

The ADU initiative fits well with ULI’s efforts to create vibrant, equitable communities, because it involves enhancing land value through the addition of “gentle” (less intensive) density, and it enhances the existing urban fabric by retaining and improving housing, rather than demolishing it to build more expensive, less dense housing, Ekerdt noted. The initiative was aimed at creating ADUs in neighborhoods throughout the city, including underinvested neighborhoods as well as traditionally exclusionary neighborhoods, she said.

“All of them have homeowners who would like to leverage ADUs,” Ekerdt said.

The city’s most recent five-year housing plan, which focused on policy changes to encourage ADUs as a way to create affordable rental housing and increase homeownership opportunities, informed the task force’s work. The group conducted extensive stakeholder engagement as well as a comprehensive review of the city’s housing stock and development trends. It also explored best practices and research from other cities that support ADUs, such as Minneapolis, Boston, Los Angeles, and Washington, D.C. From this work, the group prepared a framework of recommendations for the city as it considers adopting new ADU-friendly zoning regulations. The recommendations, featured in a ULI Chicago report, Unlocking Accessory Dwelling Units in Chicago, include the following:

  • Ease regulatory restrictions. Less regulation means more ADUs. Easing restrictions that either prohibit the creation of ADUs or make it very difficult to site them on typical lots is the first step in unlocking the ADU opportunity in Chicago. Allow ADUs in all residential zones, including the current single-family-only, RS1–RS3 zones. Allow both attached and detached ADUs in existing buildings as well as in new-construction buildings. Consider ADUs in existing residential buildings on lots with commercial or other nonresidential zoning. Consider the possibly detrimental impacts of restrictions on short-term rentals of ADUs.
  • Raise awareness of the new ADU-friendly building code. Chicago has adopted a new building code that went into effect on August 1, 2020. Modeled on the International Building Code (IBC), Chicago’s new code includes many ADU-friendly regulations, including those for building materials, minimum space requirements for building size and ceiling heights, and exiting requirements. The city and partner organizations should continue robust outreach efforts to foster greater understanding of the new code requirements and how they might benefit homeowners and smaller property owners.
  • Make the application and review process simple, unambiguous, and expeditious. The city should coordinate interdepartmental review processes to provide a single point of contact for ADU applicants, and the city should adopt a solutions-based approach to building inspections that focuses on improving health and safety, rather than violations that do not pose a safety hazard.
  • Explore ways to lower the costs of ADU construction. Build ADUs using design guidelines developed for Chicago site and building conditions, or use a preapproved ADU design for backyard ADUs to help cut costs and facilitate a more streamlined permitting and building inspection process. The use of prefabricated dwelling units could also help bring down ADU construction costs. Other cost reduction recommendations include minimizing fees such as permit and inspection fees, fees for utility connections, and development impact fees.
  • Overcome financial barriers. Expand financing options for owner-occupants and smaller property owners, who are likely to face greater challenges in accessing financing. This is key to an equitable ADU program that can also both benefit moderate-income homeowners and increase ADU production across the city. As Chicago considers adopting more flexible regulations to encourage the creation of ADUs, work with community partners and financial institutions to expand options for financing ADUs and reducing reliance on personal income or savings for their construction.
  • Foster an equitable ADU policy. Encouraging equitable development, where a variety of ADUs are built in neighborhoods across the city by property owners from a range of income, racial, and ethnic backgrounds and at affordable price points, will require a deliberate effort including direct subsidies. Strategies that can help overcome the additional financial, technical, and cultural barriers faced by lower-income residents and communities of color should be an integral part of the city’s ADU policy. This should include efforts to minimize displacement of existing tenants and keep rents affordable, so that lower-income residents are not priced out.

The ordinance approved by the city council will allow construction of ADUs in five pilot zones in Chicago. It lifts some of the restrictions that have made existing units difficult to replace or reuse, and it eases requirements for off-street parking that have often made it difficult to accommodate ADUs. It also provides for the establishment of grants to help homeowners bring illegal units up to code, and funding from the city’s Low-Income Housing Trust Fund to help moderate-income homeowners fund new ADUs.

ULI Chicago’s involvement in ADUs helped greatly to broaden the city’s approach to the issue, said Bryan Esenberg, deputy commissioner of housing development at Chicago’s Department of Housing. “Initially, we [city officials] were looking at ADUs within the context of a minor zoning change to legalize and permit repair of existing coach houses,” he said. “Then ULI brought together real estate professionals, academics, and housing and community advocates to really understand and explore all the policy implications and challenges that go along with this [allowing creation of ADUs as a housing option]. What we first thought was just a nice parallel to ULI’s work turned into a great opportunity for us to dig in deeper with a larger group of people to address the issue in a much broader way.”

“We have seen a lot of interest [in ADUs], particularly in communities that recognize the units as a type of housing that already exists,” said Daniel Hertz, policy director for the city’s Department of Housing. “In many cases, people have family and friends who already live in basement units or coach houses, and the fact that these units have not been considered legal reflects an outdated idea about what housing in our neighborhoods ought to be. This [ordinance change] is a way to recognize the ways people are currently living and put some resources into making that better.”

Task force co-chairs Berlinghof and Ekerdt are hopeful that the new zoning ordinance change will ultimately lead to greater ADU availability throughout the Chicago metropolitan region and serve as a model for other metro areas throughout the nation. “This [ADUs as a housing solution] is where our cities need to go in terms of prioritizing housing,” Ekerdt said.

More from this series:

Hear more about innovative policies in houing at the 2021 ULI Housing Opportunity Conference.