Chicago allows coach houses after 64-year ban, but with restrictions

Chicago allows coach houses after 64-year ban, but with restrictions

Chicago issued permits for about 160 coach houses and granny flats after banning the alternative housing for decades. But restrictions may damage the experiment, especially in areas that most need affordable housing.

Coach houses, granny flats, basement apartments and other alternative housing was banned in Chicago in 1957, but the city is allowing some of the affordable alternatives with a set of rules that are likely too restrictive for the experiment to work well.

For the next three years, city leaders will test the program’s ability to increase housing for low- and middle-income households, to support multigenerational families and to let owners rent space to supplement their incomes. Limits on the program could be a problem.

First, the trial restricts which Chicagoans can be issued permits for alternative housing. The city established five zones eligible for permits on the north, northwest, south, southeast, and west sides of the city. Neighborhoods outside those zones, especially on the east and southwest sides, are left out.

The program imposes heavier regulations on the south, southeast and west zones than it does in the north and northwest zones. Northern zones can apply to build coach homes on their vacant lots, but not in the south, southeast and west zones if the lot is vacant or if the owners do not live in a building on the site. Northern zones also are not restricted on the number of permits, but two per block per year are all that will be available in the southern and west zones.

The impact of different treatment of different areas of the city can already be seen. So far, 124 of the 167 permits issued went to the north and northwest zones.

The program also forbids owners from leasing their additional apartments on Airbnb or other rental websites, limiting potential income from the extra units. Structures must be at least 20 years old before basement or attic apartments are allowed.

Other regulations will limit the number of additional units that can be built. If a property has four units or less, then the city prohibits the property owner from building more than one additional unit on that property. Owners of three-flats lose out on savings from adding multiple units at once, limiting how often adding units makes economic sense.

Size and height restrictions dictate coach houses must be shorter than 22 feet above grade and fewer than 700 square feet. Designs need approval from an Illinois-licensed architect or engineer – a questionable need for a unit that is typically a converted garage in a property’s backyard.

The city imposed affordability requirements, too, mandating properties with two or more units restrict every second unit for 30 years to a rate affordable to residents making 60% of the area’s median income. That government intrusion in the market is unnecessary because units often naturally rent at reasonable rates, said Christina Stacy, an Urban Instituteresearcher who has designed alternative housing policies.

If Chicago wants more affordable housing and to help owners make enough to become landlords, Chicago city leaders should rethink the restriction and treating the northern zones more favorably than the southern and west zones.

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