Over 2,700 vacant properties owned by Chicago not for sale because of ‘environmental review’ regulations

Over 2,700 vacant properties owned by Chicago not for sale because of ‘environmental review’ regulations

Thousands of vacant properties sit undeveloped in Chicago thanks to environmental review.

Chicago has a shortage of affordable housing. An estimate by DePaul University pins the city’s affordable housing shortfall at 120,000 units.

At the same time, the city owns nearly 7,500 units of land zoned for residential purposes, most of which are vacant. Despite the high demand for additional housing, nothing is being done to develop these properties.

Could this be because Chicago’s onerous regulations prevent much of this land from leaving governmental possession? Over 2,700 of those parcels were unavailable in the 2022-23 development season despite buyer interest indicated by the city’s records. That was because those properties, despite being slated for sale, required “further environmental review” from the government.

Only 1,832 parcels were offered during the winter 2022-23 development season on ChiBlockBuilder, the city’s application portal. Less than 30 parcels with residential zoning are currently open for applications.

The city government, due to its requirement for “further environmental review” of its properties, likely gave up hundreds, if not thousands, of potential sales to local developers.

That translates to lost affordable housing, lost property tax revenue, and lots of potential economic gains unrealized. Of course, protecting the environment and keeping Chicago clean is important. But leaving these properties unsold fails to satisfy that aim since many of these properties sit idly awaiting cleanup.

And it’s difficult to imagine what the city standards preventing their sale are meant to accomplish, since there are already environmental regulations at both the state and federal levels setting standards for appropriate air and water conditions as well as other pollution provisions. The city, in its micromanagement of properties for such potential pollution, is merely repeating what state and federal laws already cover, imposing a redundant and unnecessary barrier.

Chicago’s “environmental review” policy is unnecessarily burdensome for two reasons. First, City Hall must sort through its thousands of acquired parcels and determine potential sources of contamination. The Department of Fleet and Facility Management assumes that all past uses of city-acquired land, with few exceptions, present a “potential environmental concern” and “could have resulted in the contamination of the property.” Given this, it’s no surprise that a significant number of those properties requires further environmental review before being sold to developers.

Second, even for available land, the city forces prospective buyers to pay twice: once for the property and then again for the environmental assessment. Ignoring the basic principle that people have incentives to take care of their own private property, the government denies buyers the option of cleaning up their own land. Instead, they require Phase 1 and Phase 2 Environmental Site Assessments as well as expensive enrollment in the state’s Site Remediation Program.

These regulations stand in the way of affordable housing development because Chicago relies solely on applications for dispossessing land. Cities like New York and L.A. regularly offer land to private bidders through public auctions, a far more efficient process.

For reasons that seem designed for self-sabotage, the only way for Chicago’s government to liquidate its vacant land is by forcing applicants to endure onerous requirements. It’s no surprise, therefore, that some residentially zoned parcels have been in city hands for over 50 years.

Mayor Brandon Johnson’s proposed “Cut The Tape” initiative contains some promising elements, including the removal of the superfluous Phase 1 and Phase 2 Environmental Site Assessments and broadly streamlining the development process. Now it’s up to Mayor Johnson to see these reforms through and to eliminate such pointless and unnecessary barriers.

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