Chicago’s granny flat policies halt affordable housing, discriminate against South, West sides

January 23, 2025

The Illinois Policy Institute found only 6.5% of permits for new additional dwelling units have been granted in the West, South and Southeast zones since 2020

PRESS RELEASE from the
ILLINOIS POLICY INSTITUTE

CONTACT: Micky Horstman (312) 607-4977

Chicago’s granny flat policies halt affordable housing, discriminate against South, West sides 
The Illinois Policy Institute found only 6.5% of permits for new additional dwelling units have been granted in the West, South and Southeast zones since 2020

CHICAGO (Jan. 23, 2025) – Since Chicago introduced a pilot program to allow additional dwelling units such as granny flats, coach houses and basement units to be constructed in the city, many more have been built in majority-white neighborhoods on the North and Northwest sides than anywhere else.

A new report from the Illinois Policy Institute’s Center for Poverty Solutions found this is because the program imposes unequal policies that stifle construction of the units in low-income and minority areas. Only 6.5% of permits for additional dwelling units were granted in the West, South and Southeast zones from 2020 to August 2024, despite those areas having 60.6% of eligible properties, research found.

“Chicago’s ability to add more affordable housing units is being suppressed by policies that make them difficult to add,” said LyLena Estabine, policy researcher for the Illinois Policy Institute. “The uneven language and rules of Chicago’s additional dwelling unit pilot program leaves those in greatest need of affordable housing in a lurch and creates even more disparity in the city.”

In Chicago, the estimated cost to construct one of the units is about $150,000, making it a convenient and affordable housing option. At that price, the units cost about half the price of buying a single-family house in the city, which is about $300,000.

The research report offered 12 potential reforms to expand Chicago’s housing policy and make it more fair. It comes as Ordinance SO2024 – 0008918, which would expand access and opportunities to develop the units throughout Chicago, is stalled in a City Council committee.

Key reforms to make additional dwelling unit development more equitable in Chicago:

  • Remove unfair permitting caps on new developments. The program currently caps the West, South and Southwest areas to only two permits per block per year, while putting no cap on the North and Northwest development areas.
  • Remove vacancy requirements. The South and West sides, which account for 80% of the city’s 8,800 vacant lots, can only develop the units after a primary residence has been built. This should be brought in line with rules on the North side, which can have the units constructed ahead of any other residence, even though they only account for 1% of vacant lots.
  • Reduce additional government red tape that spikes costs. Bureaucracy, such as permit wait times and fees, slow the building process in areas that could most benefit from new development. A $302 minimum permit fee is just the start of the regulatory gantlet. Builders may see as much as $16,000 in additional permit and fee costs.

The city also has room to enact simpler reforms such as eliminating owner-occupancy requirements for the building and increasing the number of additional dwelling units allowed per lot.

“Instead of advocating for harmful policies such as rent-control and ‘marked-affordable’ units, Mayor Brandon Johnson and the City Council should focus on ordinances that expand the additional dwelling unit pilot program citywide and treat all areas equally,” Estabine said. “This is a good first step for increasing building rates in the city and creating more affordable housing options.”

To read more about Chicago’s additional dwelling units, visit illin.is/ChicagoADU 

For interviews or interviews, contact media@illinoispolicy.org or (312) 607-4977.