Inclusionary Housing Ordinance

The revised ordinance, adopted in February 2025 and effective April 1, 2025, establishes a 15% affordable housing requirement for developments with seven or more units. This marks an increase from the previous 10% requirement, which in practice often resulted in only 7–10% of units being affordable due to technical language. The new 15% threshold aligns with the county’s affordable housing special assessment program, which offers property tax relief to developments that meet or exceed this level. As in previous versions of Evanston’s IHO, developments receiving public funding—such as tax credits or TIF support—must provide double the standard inclusionary housing requirement (i.e., 30% rather than 15%).

The ordinance applies to developments of seven or more units of various types, including:

• New residential or mixed-use development.
• Redevelopment that changes the tenure from rental to for-sale or for-sale to rental.
• Redevelopment that changes the number of bedrooms or size of dwelling units.
• Redevelopment that changes the use to residential.
• New residential component to existing development.

To comply, developers may build affordable units on-site, pay an in-lieu fee to the City’s affordable housing fund, or submit an alternative compliance proposal for City Council approval, showing affordability goals are met to an equal or greater extent. The ordinance strongly encourages on-site production – reflecting the City Council’s goal for the ordinance – through a revised fee in lieu amount and continued use of incentives:

• Waived and deferred building permit fees.
• Zoning bonuses and reduced parking requirements.
• A managed, centralized waitlist of potential tenants.

During the update process, some developers noted that the prior in-lieu fee amount was too low if the City’s goal was to encourage affordable unit production rather than fee collection. To recalibrate the fee amount, staff analyzed 20 residential developments in Evanston constructed from 1995-2024, calculated the 30-year difference in rental income between affordable and market-rate units, and set new fees to reflect these long-term trade-offs. The revised fee structure is tiered by unit size, with lower fees for studios and higher fees for larger units. This methodology ensured fees reflected the actual financial difference between including an affordable unit and not.

The policy evaluation process revealed that the previous IHO was most successful at producing smaller apartments within high-rise buildings affordable to smaller households earning 50-60% of the area median income (AMI). To encourage production of housing that meets the needs of other households, the updated ordinance includes pre-approved compliance options allowing slightly lower affordable unit percentages if developers provide deeper affordability or larger family-sized units. Previously, developers had to request special approval from the City Council to propose these alternatives, adding complexity and delays to the process. The update also introduced a stepped approach for smaller multifamily buildings with 7–14 units, requiring a slightly lower share of affordable housing, recognizing that these projects are more likely to be developed by smaller-scale builders operating with tighter margins.

Evanston’s process and updated ordinance were based on the belief that every housing market is different, and every municipality needs a tailored ordinance. While reviewing other cities’ approaches is useful, tailoring the ordinance—its thresholds, incentives, and fee structures—to Evanston’s specific housing market and goals was essential. Recognizing that markets evolve, the new ordinance includes an annual reporting requirement to promote transparency, accountability, and continuous refinement.