Restaurants and bars bid to be along Chicago’s Riverwalk, so why a proven business with a lucrative offer was booted is a mystery wrapped up in a secretive city panel.

As housing prices continue to soar out of reach for more Americans, an impulse from policy makers across the country has been to attempt to mandate “affordable” prices through legislation. One common idea is rent control, which limits how much landlords can increase rents on residents. A related one is inclusionary zoning, which forces developers...