Chicago Passes Ordinance Increasing Surcharges For Demolition And Expanding Areas Affected By The Ordinance

CHICAGO PASSES ORDINANCE INCREASING SURCHARGES FOR DEMOLITION AND EXPANDING AREAS AFFECTED BY THE ORDINANCE

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In 2021, the City of Chicago passed an ordinance (“2021 Ordinance”) requiring a demolition permit and payment of a “surcharge” to demolish property in certain areas[i] of Chicago which were identified as having “naturally occurring affordable housing.” The Council concluded that a shortage of affordable housing was “harmful to the health, prosperity, economic stability, and general welfare of the City” so the Council imposed surcharges via the 2021 Ordinance to discourage gentrification and preserve affordable housing for “low- and moderate-income households” which the City identified as “vulnerable.”

Although the 2021 Ordinance was scheduled to expire in April 2022, the City Council ostensibly deemed the ordinance a success and recently passed a similar ordinance, the 2024 Ordinance, which increased the demolition surcharges, expanded the affected areas and lengthened the effective period of the ordinance to December 2029. The 2024 Ordinance is more than double the length of the 2021 Ordinance and contains many details and requirements which are beyond the scope of this article. Here are some highlights:

  • The demolition surcharge increased from $5,000 per unit and $15,000 per building to $20,000 per unit and $60,000 per building for the Pilsen and 606 Pilot Areas.
  • Before a demolition permit is issued, a surcharge form must be submitted and the surcharge paid.
  • The vulnerable areas identified by the ordinance are expanded to include “the block in Avondale, Hermosa, Humboldt Park, Lower West Side, West Town, and Logan Square.”
  • The ordinance allows tenants in the “Block (606) District” the right of first refusal meaning they must be given the opportunity to purchase residential rental properties as an alternative to demolition. Unlike most of the provisions in the 2024 Ordinance which are already in effect, the right of first refusal will go into effect in March 2025.

[i] The affected areas in the original ordinance were Pilsen and 606 Pilot.