Will the Logan TODs Accelerate or Slow Displacement of Longtime Residents?

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The recent protest at the Twin Towers construction site. Photo: Aaron Cynic

[The Chicago Reader recently launched a new weekly transportation column written by Streetsblog Chicago editor John Greenfield. This partnership will allow Streetsblog to extend the reach of our livable streets advocacy. We’ll be syndicating a portion of the column on the day it comes out online; you can read the remainder on the Reader’s website or in print. The paper hits the streets on Thursdays.]

Transit-oriented development is a progressive approach to building new housing. Densely packed units are clustered close to rapid transit, with relatively few parking spaces, making it easy for lots of residents to get around without a car. That means less driving in the neighborhood. And, since garage parking costs tens of thousands of dollars per stall and takes up precious floor space, fewer spots for cars means developers can build more apartments in a given footprint and pass on the savings to tenants, potentially boosting affordability.

So why did about 20 left-leaning activists blockade the worksite for the Twin Towers TOD project at 2293 N. Milwaukee on Saturday, April 9? They formed a human chain across the street and locked to each other via PVC tubes and concrete-filled buckets, chanting “How high’s the rent? Too damn high.” Dozens more demonstrators cheered from the sidewalks, holding signs that read “Logan Square is not for sale.”

The protest, led by Somos (“We Are”) Logan Square and Lifted Voices, made the argument that the upscale ten- and 11-story rental towers, along with a high-end six-story transit-oriented apartment building down the street, will accelerate the already rapid pace of gentrification in the neighborhood. They say the transit-friendly aspects of the buildings, both located a few minutes walk from the Blue Line’s California station, are little more than greenwashing.

“The [transit-oriented development] concept is being perverted and used as justification to allow developers to run rampant with huge luxury buildings,” says Somos spokeswoman Justine Bayod Espoz. “These developments will ultimately push the families that most rely on public transportation further and further away from the transit hubs.”

But First Ward alderman Proco Joe Moreno and others argue that, in addition to being a smart strategy for reducing car dependency, these developments will actually help longtime residents stay in the neighborhood. Ten percent of the new apartments will be affordable. And by increasing Logan Square’s housing supply, they say, the buildings will actually take pressure off the local rental market.

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The “L” TOD project under construction. Photo: John Greenfield

In 2013, Moreno got the city’s first transit-oriented development ordinance passed, which cut the usual one-to-one apartment-to-parking-spot requirement in half for buildings within 600 feet of an el or Metra stop. Last September the City Council beefed up the legislation, doubling that distance and eliminating the parking minimums for TODs altogether.

Reducing the parking burden helped fuel Chicago’s current rental building boom. About 30 new TOD projects are planned, under construction, or already built. But virtually all of them are high-end projects in affluent or gentrifying neighborhoods.

Many of these parking-lite buildings feature small studio or one-bedroom apartments aimed at young professionals—particularly tech workers, according to real estate professionals I’ve talked to—less interested in car ownership than living in a hot neighborhood with easy train access to downtown jobs.

That’s developer Rob Buono’s strategy with the Twin Towers, which will contain 216 units but only 56 parking spots. Market-rate apartments will rent for $1,400 for a studio to $2,500 for a two-bedroom.

At the 120-unit tower at 2211 N. Milwaukee—dubbed “L” by Property Markets Group to emphasize its proximity to the train—market-rate units will cost between $1,575 and $3,900. There will be 12 affordable apartments and 60 parking spaces.

As a matter of policy, Alderman Moreno insists that 10 percent of units be affordable before he’ll grant a zoning change, rather than letting developers take the cheaper route of paying into the city’s affordable housing fund. Therefore the Twin Towers will include 22 affordable units that will run about $800 a month—a bargain for an upscale high-rise a block or two from the train in a trendy part of town.

Buono credited the TOD law with his decision to build the Twin Towers. “Absent that ordinance, it’s unlikely the building would have been constructed,” he says. (Property Markets Group declined to comment.)

Read the rest of the article on the Chicago Reader website.

  • G1991

    What will accelerate displacement is not building the housing at all, constraining the supply. Is more affordable housing needed? Yes. But protesting housing development, any kind of housing development, and asking that it not be built at all is incredibly counter-productive.

  • johnaustingreenfield

    The Somos Logan folks would counter that they’re not anti-development, but rather they want to see development that includes 30% units that are affordable to residents making 30 percent of the area median income. The question is, is this a demand that developers could realistically be expected to meet? If yes, than that might be a win for neighborhood. If no, then Somos’ position could be viewed as anti-development and, as Moreno argues, against the best interests of the neighborhood.

  • Jared Kachelmeyer

    Is it realistic to expect them to subsidize that many units? Does the money come out of the rent for the market unit apartments?

  • dr

    The linked Dan Immergluck paper is a mess. The base assumptions are already out of control, but at least adjust for inflation! I’m open to being convinced that localized induced demand is meaningful, but the dearth of any respectable literature demonstrating that effect doesn’t win confidence. Seriously, can anyone link to a sound piece of research backing up this claim?

  • JacobEPeters

    They should take Moreno’s promise to bring the net public housing units lost from the Lathrop development back to the northside, then protest that those units aren’t being incorporated into developments like the 2 towers project. That is a place where you can take something that an alderman has stated they want to do, and get some traction towards actually getting something done.

  • Richard

    Ultimately, every time you bump up the number of affordable units you build you make the math harder for the developer to make it work. Some projects will be in the black, but some won’t be able to hack it and won’t be built. Adding supply is the best way to drop prices, not trying to legislate affordability. It’s ugly, but it’s economics.

  • Roland Solinski

    Just a little nitpick, John – parking garages don’t count towards FAR (floor-area ratio), although they do count toward overall height limits. If they did count towards FAR, we would have seen TOD laws many years ago and developers would have been leading the charge.

    You don’t get to build more square footage by reducing parking, although you can design buildings that are more slender and more inexpensive to construct.

  • Roland Solinski

    I think most market-rate developers would balk at including CHA/Section 8 tenants in their rental projects. Affordable renters at least have to make rent, even if it is reduced, but Section 8 tenants can be 100% subsidized and pay nothing. Then you have to figure out how to attract and retain market-rate tenants if/when the Section 8 tenants start causing problems.

    Condos are slightly different, as you can sell units to the CHA and they handle the management.

  • johnaustingreenfield

    From P. 4 of CNT’s recent “Stalled Out” report:
    “Parking requires a lot of space. When the stall, turning radii, lanes, and ramps are factored in, each parking space requires about 350 square feet. That square footage adds up and competes with other uses within the building. For example, a ten unit building with 20 parking spaces would require 7,000 square feet for parking that could instead house five new units at 1,000 square feet apiece, twenty bicycle spaces at 12.5 square feet apiece, and three parking spaces dedicated to shared vehicles, with 700 square feet to spare.”

    A developer I talked to also said that multi-story garages can make it impossible to develop on small parcels of land because there’s no enough room for the ramps.

  • JacobEPeters

    Most is true, but we can look to the developers of projects in partnership with CHA to see that there are at least a few who would be willing to do so. Especially if that was the only way to get precious density bonuses & if it came with CHA financing.

  • Roland Solinski

    Of course. The landlord will usually raise rents on the remaining units to cover the shortfall. He/she will almost never accept a lower cash flow, since the cash flow has to pay back the construction cost of the building and can’t be reduced much.

    Also, developers compete for investors, who are often not even based in Chicago. The lower the returns to development in the Chicago market, the more investors will take a pass and put their money elsewhere.

  • johnaustingreenfield

    Some more links Somos Logan provided (their words):
    “There is evidence that owners of lower-cost units are more likely to convert them to upscale units in order to charge the same rental rates as luxury developments.” Bay Area study: http://cjjc.org/images/development-without-displacement.pdf

    “Property owners & investors quickly demolish or convert existing affordable units as luxury development picks up, which contributes to a spike in the value of land, which is further exacerbated as the supply of land decreases. This exerts intense pressure on all property owners in the surrounding areas to sell, especially as their property taxes increase. This analysis is echoed by Thomas Angotti, a professor of urban affairs and planning at Hunter College in this article”: http://www.citylab.com/housing/2015/06/the-big-money-behind-tall-buildings/395690/

    “It is relatively well established that surrounding real estate development increases property taxes, as is reflected in this Crain’s article”: http://www.chicagobusiness.com/realestate/20151124/CRED0701/151129945/property-tax-bills-will-jump-the-most-in-these-chicago-neighborhoods

  • Roland Solinski

    That’s completely true, and a big factor in space planning. Parking does take up volume and pushes buildings to be bulkier than they would otherwise be. Eliminating parking requirements (or allowing for automated/stack parking systems) enables development on smaller parcels.

    But on an individual parcel, Chicago zoning code does not count parking garages toward FAR. CNT implies you can substitute parking spaces for more residential units, which isn’t true (except in the case of “non-accessory” parking, i.e. guest or public parking spots).

    17-17-0305-B For the purpose of calculating floor area ratios, floor area devoted to required loading, accessory parking and the drive aisles and circulation area associated with such loading and parking are not to be counted as “floor area”.

  • dr

    Thanks for sharing. Much appreciated.

    Immergluck was the best of the bunch. Somos needs to significantly up their intellectual game if they want to build coalition. I can only speak for myself, but if they can’t convince someone who shares their goal of maintaining/growing significant affordable rental stock, then they stand little to no chance of making a difference on this issue, and undercut the capital they have to make a difference on other issues.

  • David P.

    These new below-market units will likely be beneficial in relieving upward price pressure on rental housing for single people who either accept or desire studios and small one-bedroom apartments, I don’t think they are going to do much for the upward pressure on prices for larger housing units – a lot of the people who are at risk of being priced out of the neighborhood are families, for whom studios are not an option.

  • Funny that there was an article in the NYT yesterday about a left leaning San Francisco group, run by a self admitted anarchist, that is advocating for maximum density, above all else, on all sites throughout the City. With it in mind that increase supply will ultimately reduce rents. http://mobile.nytimes.com/2016/04/17/business/economy/san-francisco-housing-tech-boom-sf-barf.html?referer=https://www.google.com/

  • JKM13

    Why 30%? Why not 50%? 100%? Or how about 10%

    Somos Logan Square types can throw out any number they like. It’s not their money and they haven’t any idea on what is needed to get financing on projects like this.

    All I know is there will now be 22 affordable units on a stretch of Milwaukee that previously had none, and a large number of new rental units that can meet the obvious demand that would have landed in the existing housing stock.

  • BlueFairlane

    I don’t see these things having any real effect on displacement at all for two reasons. One, the bulk of this displacement involves families who either rent units that aren’t in competition with these buildings and aren’t affected by the availability of studios in the neighborhood, or who own. Both groups are being forced from the neighborhood more by rising property taxes–or by rent increases driven by property tax increases. A bunch of high-end studios don’t affect that one way or the other.

    Two, the ship has already sailed. The deed is done.

    Full disclosure: I spent this weekend practicing self-displacement from Logan Square after 12 years in the same place. For me, though, it’s less a cost issue than a quality of life concern. The neighborhood’s gotten really annoying for people who aren’t 25.

  • planetshwoop

    The very very hard part about housing is that what is good for the neighborhood is often terrible for you if your neighbor does it. Build density! Great! As long as it isn’t next door so suddenly you’re in the shadow of a tower and *your* house price has declined. And that’s not NIMBY, it’s just that the trade-offs are hard because the rational decisions of individuals go against the bigger concept of the neighborhood in some cases.

    Second, everything about the city favors property owners over renters. If you want to fight for change, you need to move there, not quibble about 10%/30%/50% affordable housing. The alderman overly prefer the interests of homeowners, the zoning code does too, and the high number of convictions for bribery over zoning indicates that aldermen love taking developer money.

    Last point: the only way to keep housing more affordable is to build more of it, or have people move out so there is less demand. This directly contradicts much of the tax code (mortgage deductions increase prices of homes) and finance marketing that says “your home is your greatest asset” — if that’s the case, you want fewer houses because your value goes up.

  • Melvin

    Not sure about Somos but their demonstration partners are explicitly against development:

    https://liftedvoices.org/2016/04/09/blockading-gentrification-in-chicago/

    “The towers currently being constructed should not exist, but given that they soon will, community members demand that a greater number of units be designated as affordable housing…”

  • This is, I think, one of the biggest challenges of affordability. Too many owners of two and three flats converting into single-family homes. These new buildings are not displacing anyone, having been built on vacant land, but the conversions of multi-family to single family most definitely is a major symptom of the lack of affordability.

  • 4Marian Dart

    Reducing the parking burden helped fuel Chicago’s current rental building boom. About 30 new TOD projects are planned, under construction, or already built. But virtually all of them are high-end projects in affluent or gentrifying neighborhoods. http://goo.gl/eE9Xcb

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