Chapter 34 Affordable Housing

Chapter 34 Affordable Housing

The Affordable Housing Planning and Appeal Act became effective January 1, 2004. This Act requires that all local governmental bodies having zoning authority provide that at least 10 percent of their year-round housing units constitute affordable housing. Affordable housing under the Act means moderate or low-income housing. If a municipality fails to meet this standard, then it must submit a plan to the Illinois Housing Development Authority showing how it will come into compliance. In addition, if a developer of low- or moderate-income housing believes that he or she was "unfairly denied or unreasonable conditions were placed upon the tentative approval of a development," that developer may appeal the decision of the local governmental body to a newly created State Housing Appeals Board challenging the decision. This newly created board would then have the power to "affirm, reverse, or modify the conditions of, or add conditions to, a decision made by the approving authority." In short, this board would take over from local government zoning authority as it relates to low- and moderate-income housing. This affirmative action plan to mandate low- and moderate-income housing in every jurisdiction is extremely far-reaching.

A. Historical Perspective

This issue has a history dating back to Metropolitan Housing Development Corporation v. Village of Arlington Heights.¹ In this case, the district court found that the Village's motivation in denying the application for rezoning for low-income housing was based on its concern for property values and the integrity of its zoning plan and that there was no act of invidious discrimination that would require the showing of a compelling state interest to uphold the zoning. The Seventh Circuit Court of Appeals reversed.² In doing so, the court sought to assess the village's decision in light of its historical context and ultimate affect. The court found that Arlington Heights had exploited a long history of segregated housing patterns in the metropolitan area by failing to integrate its community and was attempting to avoid its responsibility by rejecting "the only present hope of making even a small contribution toward eliminating the pervasive problem of segregated housing." This decision of the Seventh Circuit Court of Appeals held that Arlington Heights had an affirmative duty to alleviate the problem of segregated housing. The United States Supreme Court, in reversing the seventh circuit, stated:

Our decision last term in Washington v. Davis, 426 U.S. 229 (1976) made it clear that official action will not be held unconstitutional solely because it results in a racially disproportionate impact. "Disproportionate impact is not irrelevant, but it is not the sole touchstone of an invidious racial discrimination."³ Proof of racially discriminatory intent or purpose is required to show a violation of the equal protection clause.⁴

There was no evidence that required a finding that Arlington Heights had administered its zoning policy in a discriminatory manner. Therefore, there was no constitutional requirement of providing for low- and moderate-income housing even where the effect of not providing for that housing perpetuated racially segregated housing.

In New Jersey, the New Jersey Supreme Court tried a different tack and held that, under that state's constitution, the Township of Mount Laurel had an obligation to act affirmatively to alleviate segregated housing patterns and to set aside certain amounts of land for the encouragement of low- and moderate-income housing.⁵ Indeed, the New Jersey Supreme Court, in a remarkable display of judicial activism, decided that the entire region had an obligation to provide for low- and moderate-income housing. Interestingly, this decision had little effect on encouraging municipalities to fall into line with the policies of the court. Instead, it became necessary in the case of Mount Laurel II⁶ for the New Jersey Supreme Court to take further action. In a 248-page opinion, the Chief Justice reaffirmed the court's earlier Mount Laurel holding and then set about to judicially legislate what the court believed to be the necessary affirmative measures to realistically provide for low-income housing. In that case, the court established panels of trial judges to oversee housing needs for particular municipalities as well as special masters (fact-finders to serve the court) to assist in this operation.⁷

Here in Illinois, it is a majority of the state legislature that has taken up the reasoning of the New Jersey Supreme Court and the views of the plaintiffs in the Metropolitan Housing case and has mandated municipalities to engage in affirmative action toward integration. The Affordable Housing Planning and Appeal Act is an affirmative action housing plan to achieve the same ends denied by the federal courts. The new Act reflects this same theme of seeking to obtain low- and moderate-income housing scattered throughout suburban areas by requiring that such housing be built throughout the state, with each suburb taking on its fair share of such housing. Under this new Act, there is obviously no need to prove that segregated housing is a result of intent to discriminate. Instead, the legislature is simply putting the burden on each municipality to take action to promote integration and, if it fails to do so, upon a complaint by a developer to have a super zoning board of appeals created by the state, order that such integration take place.

B. Home Rule

The Act does not specifically preempt home rule.⁸ Although there are arguments being made by the Illinois Housing Development Authority that the Act was intended to preempt home rule, the Act does not contain the preemption language. Under the Illinois Constitution,⁹ the General Assembly may pass a law that preempts home rule municipalities. However, the cases hold that the General Assembly must include an explicit statement restricting the power of home rule municipalities.¹⁰ The Act does not contain any such specific language. Therefore, as the Act is presently constituted, it does not apply to home rule units. The General Assembly would have to preempt home rule authority. Therefore, home rule municipalities are not required to comply with the Act.¹¹

C. What Must a Nonexempt Municipality Do?

1. Prepare a Survey

First, the municipality must prepare a survey of all housing units within its borders and then determine which of those units qualifies as affordable housing. Under the Act, affordable housing means "housing that has a sales price or rental amount that is within the means of a household that may occupy moderate-income or low-income housing."¹²

Moderate-income housing is defined as "housing that is affordable, according to the Federal Department of Housing and Urban Development for either home ownership or rental, that is occupied, reserved, or marketed for occupancy by households with a gross household income that is greater than 50% but does not exceed 80% of the median gross household income for households of the same size within the county in which the housing is located.¹³

Low-income housing is defined as "housing that is affordable, according to the Federal Department of Housing and Urban Development for either home ownership or rental, that is occupied, reserved, or marketed for occupancy by households with a gross household income that does not exceed 50% of the median gross household income for households of the same size within the county in which the housing is located.¹⁴

At the initial stage, the municipality is required to determine the total number of affordable housing units necessary to exempt it from the Act. It is up to the municipality to conduct this survey and to, apparently, assign personnel within the municipality to carry out the mandate of the Act. Beginning October 1, 2004, the Illinois Housing Development Authority is required to determine which "local governments are exempt . . . from the operation of . . . the Act . . ."

2. Make Up a Plan

In addition to doing the survey, and, perhaps more difficult, is the requirement of identifying properties within "the jurisdiction that is most appropriate for the construction of affordable housing and of existing structures most appropriate for conversion to or rehabilitation for, affordable housing.¹⁵ This, of course, requires a process very similar to the process a municipality follows when it prepares a comprehensive plan. Many communities are already completely built so that there is very little vacant land available. Some of the vacant land may be extremely valuable industrial or commercial sites. In regard to property that may be converted or would be suitable for rehabilitation, this most clearly envisions rundown or dilapidated properties or even vacant properties. It is unlikely that the owner of an existing apartment complex within the community who has units fully rented at market rates would be prepared to convert that building into affordable housing units. Much depends on the housing stock of the particular community.

It is clear, however, that the State is requiring considerable time and effort and, undoubtedly, the services of a planner and persons within the real estate community to assist in the process. In a community where single-family homes are selling at say, a minimum of $300,000 per home and the only remaining vacant land is either for commercial, industrial, or single-family residential use, it is not likely that the municipality will be able to readily identify any of that property for affordable housing. It would require not only identification but also those properties into another zoning district classification, which would allow for highly intense multiple-family residential housing. This is a costly process, and it is unlikely that municipalities have planned their budgets in such a way as to allow for this expenditure. The process requires diverting funds...