The Village of Oak Park released a new financial feasibility study on multi-unit developments under the proposed single-family zoning changes that found the scenarios to be unlikely, have significant financial gaps, and predicted high prices for rent. However, this may reflect the Shape Oak Park’s expectation of “incremental change” and a need for additional affordability tools.
“The feasibility is important to acknowledge in that it’s a challenge, it’s going to be a challenge,” said Village Trustee James Taglia.
The study, conducted by SB Friedman, looked at multiple scenarios for converting existing single-family homes into multi-unit residences, standalone Accessory Dwelling Units and corridor multi-unit buildings.
The first scenario looks at demolishing an older, existing home “likely in need of substantial renovation” on an over 6,000 square foot lot and constructing a multi-unit building in its place.
The financial gap, the additional funds needed to make the scenario feasible, in this scenario for a duplex, four-plex and six-plex is as follows: $220,000, $170,000, and $110,000. The calculated rent per month needed to make up that financial gap for a duplex is $6,600 to $7,500, a four-plex is $4,400 to $5,100, and a six-plex is $3,800 to $4,400.
The study also looked at acquiring a single-family home and converting it to a multi-unit without demolition but found that scenario to be unlikely and did not offer financial estimates. The report states it is actually more likely for the opposite to occur with deconverting multi-units back into single-family homes.
A larger corridor multi-unit housing option with 35 units predicts that development costs would need to be reduced by almost $6 million to be feasible and reach the yield on cost goal of 6% with rent prices at about $3,500.
The most feasible option shown in the study is a standalone Accessory Dwelling Unit with a financial gap of $90,000 and an expected rental cost of $1,800.
All in all, the study concluded what has been echoed by Shape Oak Park planners, trustees, critics of the plan and supporters: zoning changes are just one piece to the affordability puzzle, and additional tactics are needed to achieve the outlined goals.
“While results for specific projects depend on the site, developer, and other characteristics, these challenges suggest that the proposed zoning changes are unlikely to result in substantial land use change in the near term. Achieving these development types will likely require incentives or a reduction in development costs,” states the report.
The report does explain that changing the zoning to allow the multi-unit developments “by-right” instead of through specific approvals, does streamline the process which directly relates to lower design, holding and other soft costs. A longer approval process under current zoning would increase the financial feasibility gap.
What remains unclear is the plan to bridge the financial gap to make these proposed scenarios for increased missing middle housing into reality.
The next phase of the Shape Oak Park project has started to progress with the creation of an ad hoc advisory task force for affordable housing and development, and a string of Plan Commission meetings set to begin on Oct. 8. Both of these efforts are meant to look at the existing proposals, discuss possible options and solutions, and make recommendations back to the village board.
A proposal for a more effective Inclusionary Housing Ordinance, which requires new developments of 25 or more units to reserve a portion of the units for affordable housing, has been mentioned throughout meetings in conjunction with the zoning conversation as well.
“The hard part is we’re taking something that’s infeasible and we’re trying to make it feasible,” said Taglia. “I think residents don’t understand, and it’s hard to communicate what the ‘plan’ is when it hasn’t yet been constructed.”
Joseph Beer, an Oak Park resident and possible candidate for the upcoming village board spring election, has been wary of proposed zoning changes feeling like its moving too fast, but is a supporter of finding affordable solutions and the next phase of the process.
“I like that they formed the ad hoc committee right to look into this more deeply, and I’m glad we now have this study,” said Beer. “There’s still a lot more homework to be done, and there’s a lot more things we can do to seek input from experts and community members to figure out how we create affordability, and eliminating single-family zoning doesn’t seem to be one of those mechanisms at this time.”
Josh VanderBerg offers an alternative perspective on how new “luxury” developments can create affordable housing in a piece published in July on the Yes Oak Park website. It explains a system where existing residents move into new developments, opening up older units at a more affordable price.
“The expensive building of today becomes the ordinary building of tomorrow,” wrote VanderBerg.
VanderBerg is an opinion columnist for Wednesday Journal.
The proposed zoning changes, financial feasibility study, and additional Shape Oak Park informational resources and tools can be viewed on the village website.