After about two hours of debate and public testimony, the City Council’s Zoning Committee approved an amended version of Mayor Rahm Emanuel’s plan to overhaul a development tool that lets developers add square footage to buildings in the city’s downtown area, by linking fees collected for those increases to investments in some of the city’s most economically underserved neighborhoods.

The so-called “Neighborhood Opportunity Bonus” advanced out of committee with only two aldermen voting against. Both raised concerns the initiative lacks transparency. Downtown Ald. Brendan Reilly (42) and freshman South Side Ald. David Moore (17) said they didn’t understand the sense of urgency to get the plan approved ahead of today’s vote by the full City Council.

Aldermen Present: Chairman Danny Solis (25), Vice Chairman James Cappleman (46), Joe Moreno (1), Pat Dowell (3), Rod Sawyer (6), Michelle Harris (8), Patrick Daley Thompson (11), George Cardenas (12), Ed Burke (14), Raymond Lopez (15), Toni Foulkes (16), David Moore (17), Matt O’Shea (19), Howard Brookins, Jr (21), Jason Ervin (28), Milly Santiago (31), Carrie Austin (34), Marge Laurino (38), Brendan Reilly (42), Michele Smith (43), Tom Tunney (44), John Arena (45), Ameya Pawar (47)

Describing it as one of the “more creative and innovative concepts to develop new resources for both downtown and neighborhoods that need investment”, Department of Planning and Development Commissioner David Reifman said the overhaul would eliminate the current list of mostly design-based bonuses (like winter gardens and fountains) that developers can choose from to add extra density on projects in the city’s downtown area.

Download DPD Fact Sheet

That menu of more than 20 different bonuses would be replaced with a single formula to determine a developer’s financial contribution to increase the Floor Area Ratio (FAR) of their proposed development. Similar to the current bonus system and the affordable housing requirements, a developer would make that payment after the review process and prior to receiving a building permit.

The city would disperse the money among three funds, with the largest chunk, 80%, put into a Neighborhood Opportunity Fund. The fund would help support commercial development projects in the city’s poorest neighborhoods. In his testimony, Commissioner Reifman used existing projects as examples for the type of development the fund would help support: the new Whole Foods at the corner of 63rd Street and Halsted, the “arts block” on Garfield Avenue, “the commercial component of shops and lofts” at 47th Street and Cottage Grove, and Pete’s Market on Madison and Western Avenue.

The remaining 20% would be divided between a Local Opportunity Fund and a citywide Adopt-a-Landmark fund. The former would help fund projects within a mile of the development, the latter would support mostly facade improvements for city landmarks chosen by the city’s Landmarks Commission.

The ordinance would also expand the boundaries of what areas can get Downtown-designated zoning to make more land available for the bonus. This doesn’t mean that the ordinance would automatically rezone the surrounding neighborhoods into a D-zoning district, but rather, through the planned development process, developers seeking to build in the new areas would be allowed to apply for an upzone to a D-district. (Expansion maps are included in the DPD fact sheet linked above).

At yesterday’s meeting, Ald. Reilly said he didn’t have an issue with the overall goal of the plan. Instead, he had a problem with a provision in the ordinance that states aldermanic approval of the disbursement of the neighborhood funds is triggered only for projects with a price tag of more than $250,000.

According to Commissioner Reifman, DPD will create a form for businesses, entrepreneurs, and developers to apply for funds, along with rules and regulations for the funds’ administration. Grant awards of over $250,000 will require City Council approval and a redevelopment agreement, while grant awards of less that $250,000 will be administered directly by the department, similar to how funds are dispersed through the city’s Small Business Improvement Fund program.

“I think there are some real glaring gaps in accountability, transparency, and process when it comes to this fund. And some of my colleagues have called it a slush fund. Based on what you’ve described here to me, with the lack of structure, clarity and independence, I think that’s really what it is. If it walks like a duck, and talks like a duck,” Ald. Reilly said to Commissioner Reifman, who helped draft the ordinance.

“It’s a shame that I have to have this negative testimony on what I think is otherwise a really good idea,” Ald. Reilly added. “And what’s most frustrating, is that I’m being told by the Administration this ordinance must be approved tomorrow. I’m not sure what crisis this is going to solve tomorrow.”

In responding to Ald. Reilly’s concerns, Reifman said aldermen will have the ability to control parts of where the money will be allocated. Funding allotments for grants less than $250,000 will still require City Council approval in chunks, similar to how SBIF funding works. He added that the department will come to City Council to obtain authorization for the first $500,000 in funding, grant that out, and return to seek additional allocations. To make sure the department is held accountable, Reifman said, DPD will publicly post information on all projects for which funds have been expended, including posting all successful applications from the fund.

Ald. Reilly, who at several points talked over Reifman during the meeting, took issue with the commissioner’s example that the fund was similar to the small business loan program, explaining that fund has a third party operator to oversee disbursements.

But the downtown alderman was in the minority at yesterday’s meeting. Several South and West Side aldermen who would benefit from the new fund were present and urged passage of the plan, saying they don’t want to wait any longer for much-needed development in their underserved wards.

“I as the 34th Ward [Alderman] have been waiting, and waiting, and waiting forever for programs like this to come about so that we can get some synergy as well, and not everything go to the downtown area,” said Ald. Carrie Austin, Chairman of the council’s Budget Committee, who didn’t take kindly to Ald. Reilly’s call for the plan to be tabled for further review.

“As I say during Budget [meetings], everything that is passed in here is a living document. Now we can work on things, we can make things happen […] everything comes to downtown and nothing gets to the far South Side, to the West Side or anywhere else,” she added.

At the request of Ald. Reilly, Chairman Solis called for a roll call vote on the plan. It passed 12-2.

Yes votes: Joe Moreno (1), Michelle Harris (8), George Cardenas (12), Raymond Lopez (15), Toni Foulkes (16), Howard Brookins (21), Walter Burnett (27), Deb Mell (33), Carrie Austin (34), Marge Laurino (38), James Cappleman (46), Ameya Pawar (47)

No votes: David Moore (17), Brendan Reilly (42)

The substitute ordinance also made some minor revisions to reflect feedback the department received after it introduced the plan this Spring. The changes, according to Reifman’s testimony include:

  • The ordinance specifies an effective date of June 1st, 2016, and provides that all applications for bonus floor area and all rezoning applications in the downtown expansion area submitted on or after the effective date, not the introduction date, are subject to the new zoning regulations.

  • Carves out three exceptions to the effective date rule, allowing developers to choose the old bonus system if they (1) submitted a development application after the effective date only if the City Council has passed an ordinance approving the sale of a city land for a fair market value prior to the effective date, (2) an ordinance or authorizing planned development that includes specific bonuses has been already introduced into city council, or (3) a bonus worksheet and fully dimensioned drawing for the project site have been submitted in complete form and has been stamped for approval.

  • It increases and decreases the maximum floor area bonuses for certain D-districts, and clarified that there is no maximum in the DX-16 and DC-16 (as is currently the case).

  • Further reduces minimum lot area standards for projects that take the bonus from 15% to 30% to clarify that bonus FAR can be spread amongst more units in the building. This would make clear that the city doesn’t want to just give FAR to require larger units, it wants to allow smaller units as well.  

  • Clarifies that projects that receive floor area increases for development in transit served locations are not also eligible for the downtown zoning.

  • Increases the distance limitation for improvements funded with the local impact funds from a half a mile to one mile from the planned development site

  • Clarifies that the Local Impact Funds may be used for public infrastructure projects as well as streetscape and other aesthetic improvements to public facilities.  

  • Clarifies about contributing buildings and Chicago landmarks

  • Provides that upper-story setbacks on high-rise buildings should, rather than must, be used to reduce the apparent mass and bulk of tall buildings, and that high-rise buildings should respect the context and scale of surrounding buildings with setbacks at appropriate heights

  • Clarifies that planning documents that have been adopted by the Plan Commission and City Council are guidelines subject to the specific planned developments.