Inclusionary Housing Ordinance

Highland Park

Lake County

Highland Park’s Inclusionary Housing Ordinance requires most new residential developments to set aside 20% of units as affordable housing or pay an in-lieu fee, ensuring long-term affordability for low- and moderate-income households.

Background

The first of its kind in the Chicago region, the Highland Park Inclusionary Housing Ordinance requires residential developments with over five housing units to include affordably priced homes. Stemming from the City’s Master Plan process and a key component of its Affordable Housing Plan, the Inclusionary Housing ordinance was approved by the City Council in August 2003.

How It Works

The Inclusionary Housing Ordinance requires that developers of buildings with five residential units or more provide 20% of the total units for sale or rent at affordable rates to income-qualified households. Examples of buildings covered by the ordinance include:

  • New construction;
  • Renovation or reconstruction of existing multifamily housing that increases the number of residential units in the building;
  • A change in the use of an existing building from non-residential to residential; and
  • Conversion of a rental property to a condominium.

The developer may make a cash payment in lieu of constructing some or all of the affordable homes only if the covered development is a single-family, detached development that has no more than 19 units. The per-unit in-lieu fee amount is determined by the City Council, set forth in the City’s annual fee resolution and assessed only once to the developer. All revenue from the in-lieu fee is transferred to the City’s Affordable Housing Trust Fund.

The Inclusionary Housing Ordinance provides for fee waivers on a case-by-case basis and a density bonus to offset the cost of developer compliance with the ordinance. Waived fees are applicable only to the affordable homes and include fees for applications, building permits, plan reviews, inspections, sewer and water tap-ons, demolition permits, the demolition tax and other development fees and costs that may be imposed by the City. To the extent there are impact fees attributable to the affordable homes, those are paid from funds in the Affordable Housing Trust Fund. Additionally, the affordable units must be dispersed throughout the development and must be visually compatible and built concurrently with market-rate units. External building materials must be the same as market-rate units, though internal fixtures and finishes do not need to be the same, except for energy-efficiency improvements.

Affordable units created as a result of the inclusionary ordinance are made available to households within various income ranges, with maximum household incomes not exceeding 120% of the area median income (AMI), which was $143,880 for a family of four in 2025. The ordinance applies to both rental and for-sale housing developments, but the requirements differ slightly. In for-sale developments, at least one and no less than 50% of affordable units created must be sold to households with incomes up to 80% AMI, which was $95,900 for a family of four in 2025; and all other affordable for-sale units are available to households with incomes up to 120% AMI. In rental properties, at least one-third of affordable units created must be rented to households with incomes up to 50% AMI; one-third rented to households with incomes between 51% and 80% AMI; and no more than one-third rented to households with incomes between 80% and 120% AMI.

Rental units created by the Ordinance are kept affordable for 25 years, and for-sale homes are kept affordable in perpetuity by attaching deed restrictions to the units. The deed restrictions include a resale formula designed to ensure a fair-market return on the investment to the owner and a requirement that the homes be resold at an affordable rate to an income-qualified buyer.

Goal

To address affordable housing needs in Highland Park.

Target

Homeowners earning at or below 120% of the area median income (AMI), with a focus on families earning below 80% AMI; and renters earning at or below 120% AMI, with a focus on households earning both 80% and 50% AMI.

Financing

The ordinance provides for fee waivers and a density bonus to offset the cost of compliance with the ordinance. There is no direct funding attached to the policy.

Success

The Inclusionary Housing Ordinance has allowed Highland Park to ensure the creation of affordable housing that would otherwise have not been included in private development.

Since 2014, the City has created 54 inclusionary units as a result of the ordinance, and there is currently a commitment of an additional 47 units from recently approved development applications.

Lessons Learned

While the Inclusionary Housing Ordinance does provide predictability for the City and development community, there was an initial adjustment period after the ordinance’s passing during which developers and City staff learned how to make the program work. After this initial adjustment period, the Inclusionary Housing Ordinance has not impeded development in Highland Park.

Public Involvement

To establish the Highland Park Inclusionary Housing Ordinance, the Plan Commission held public hearings at its regular meetings in February, March and April 2003 to gather public input regarding the ordinance. The Plan Commission approved the necessary amendment to the zoning code to establish the Inclusionary Housing Ordinance at its April 2003 meeting. In addition to the Plan Commission meetings, the City held several meetings with key stakeholders and developers.

Most of the concerns raised at these meetings came from the development and realtor communities. Developers did not know how the policy would be implemented and feared that inclusionary zoning would raise the costs of development in Highland Park. Discussions with the development community provided valuable input into how the City could best craft the policy. The Illinois Association of Realtors was unclear about the general goals of the policy and was concerned the cost would be borne solely by the development community. Highland Park officials met with them to clear up any misconceptions and provide them with accurate information. Several members of the public testified in favor of the Inclusionary Housing Ordinance during the public approval process.

Contact Information

City of Highland Park Community Development Department, www.cityhpil.com

This case study was last updated in February 2026. 

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