The City Council’s Zoning Committee has scheduled a May 17 hearing on the Mayor’s proposal to simplify and update the city’s downtown floor area bonus formula for the first time since 2004.

The plan Mayor Rahm Emanuel introduced this week would completely overhaul the process currently used to manage square footage to buildings in the city’s downtown area, and links fees collected for those increases to investments in some of the city’s most economically underserved neighborhoods. The proposed changes are threefold:

1. Simplify and update the downtown floor area bonus system;

2. Provide new funding sources to encourage commercial development in neighborhoods lacking private development; and

3. Accommodate ongoing central area growth through an expanded downtown zoning district

#1 Simplifying the Bonus System

First, the plan throws out the current list of mostly design-based bonuses that developers can choose from, such as winter gardens and front setbacks, in exchange for a greater Floor Area Ratio (FAR). A building’s FAR is the total square footage of a project divided by the area of the lot. Under the current zoning code, there are 20 different bonuses to choose from, each with its own funding formula.

Under the revised plan, a developer doesn’t pick a type of bonus, they simply decide if they want to take advantage of the bonus, making a single payment to the city. As the code is currently written, a developer can pick more than one bonus and pay a fee for each. For example, a developer can commit to adopting a local landmark and add a public plaza in exchange for more density.

Under the proposed changes, any new construction project seeking to increase its FAR would have to go through the Planned Development process, which means more paperwork, department scrutiny, and approval by the Plan Commission, before it reaches the City Council for approval. Currently, a developer can take advantage of an FAR bonus through a simple map amendment application subject only to department and Council review.

This could lead to longer wait times.  A planned development review takes an average of about 6 months, while a map amendment application takes 2 to 3 months. Lately, there has been a surge in the number of planned development applications, resulting in a slight backlog. But that was due mostly to a rush of applications filed before the beefed up affordable housing requirements took effect last October, and DPD is nearly done reviewing those applications, a DPD staff member told Aldertrack.

The calculation for the new bonus: Cost of 1 square foot of floor area over the the base FAR = 80% x median cost of land per buildable square foot.

According to an example provided by DPD, if one square foot costs $43 and the proposed building is 36,000 square feet, then the total bonus payment is $1,238,400.

The city would base the cost of land on sale prices in the last five years, and DPD would be in charge of updating those numbers at least once every five years.

If a developer has a pending zoning application that takes advantage of an FAR bonus under the current system, they won’t be impacted by this ordinance, unless they plan to amend their application. And any existing development in a DC-16 or DX-16 zoning district could apply for additional density, up to a 10% increase in FAR, if this ordinance is approved in its current form by the City Council.

#2 Where the Money Goes

Like the current bonus system and the affordable housing requirements, a developer would make that payment prior to receiving a building permit. If the project is to be constructed in phases, payment is due at the start of each phase. The city would disperse the money among three funds, with the largest chunk, 80%, put into a Neighborhood Opportunity Fund, which would help support commercial development projects in the city’s poorest neighborhoods. This includes parts of Austin, West Garfield Park, North and South Lawndale, Englewood, West Englewood, Chatham, Pullman, South Deering, and Hegewisch, among others. (The full map).

According to DPD, the city used 40 years worth of census data (1970-2010) and relied on a recent neighborhood analysis by E.C. Delmell to determine eligible neighborhoods. Specific criteria the department looked at includes: percent of single women, percent of dropout rates, percent of food stamps, and percent of unemployment. Other variables pulled from the Delmell study: median home value, owner-occupancy rates, and age (over 59 and under 19).

As for the types of community amenities that could be supported through this new fund, the city gives the example of grocery stores, restaurants, and cultural facilities. The money could also offset site preparation costs, like acquiring or rehabilitating existing buildings, as well as providing job training programs.  

The goal is to create an anchor development that will lead to further investments, similar to the new Whole Foods currently being built near Kennedy King College in Englewood. In fact, the draft ordinance explicitly states these new investments must “complement and revitalize the areas in which they are located.”

Priority will be given to projects that have the potential to leverage private, state and federal dollars; show a clear path to financial closing and construction start; provide goods and services where they are lacking; commit to hiring from the local neighborhood; among other criteria.

Chicago Neighborhoods Now, a city-run initiative created within the last year, would be in charge of determining project eligibility and the community review process. Housing and Economic Development Deputy Commissioner Brad McConnell oversees the program and their website already has several neighborhood opportunity plans detailing potential investment needs. The site will be regularly updated, and DPD is drafting a form that businesses, entrepreneurs, and developers can use to apply for the funds.

City Council approval would be required for any project with a price tag that is more than $250,000. And the DPD Commissioner would have the discretion to set additional parameters and enter into third party grant agreements to disperse the funds.

To make sure that downtown residents aren’t left out of the equation, since they have to live with the new bigger and taller buildings, DPD will split the remaining 20-percent of the money collected into two separate funds: a City-wide Adopt-A-Landmark Fund and a Local Impact Fund.

The former would support the restoration of official city designated landmarks, ofwhich there are 334. The Commission on Chicago Landmarks would have the authority of approving the scope of work and budget for restoration projects. But there are caveats: “[DPD] may direct the applicant to make payments directly to landmark property owners for authorized uses”; and the improvements must go towards renovation work that is publicly visible (so, mostly facade work).

The Local Impact Fund would support local improvements within 2,640 feet of the new development. (This fund was excluded in the original draft, and was only added following concern from one downtown alderman, a City Hall source told Aldertrack.) This fund would pay for all the sidewalk and local improvement that are currently available under the existing bonus system, e.g. off-site parking and open space (public plazas), pedestrian and streetscape improvements (like wider sidewalks, trees and lights), and transit infrastructure (CTA improvements).

Money from the local impact fund could also go towards the local public school. “Upon the recommendation of the Commissioner of Planning and Development, after consultation with the Chicago Board of Education and the alderman of the ward in which the planned development site is located, the planned development ordinance may allocate all or a portion of the 10% local impact component” to the Public Schools Capital Improvement Program, the ordinance states. That program supports construction of new schools, school expansions, and related improvements. Ironically, there is currently a “Chicago Public Schools Capital Improvements Fund” listed among the 20 bonuses developers can currently take advantage of, but according to DPD, no one has taken advantage of this bonus within the last four years.

Developers would have the opportunity to opt out of the Local Impact Fund and instead invest in a project of their choosing as long as they receive approval from the local alderman and DPD.

#3 Expanding the Downtown District

As the zoning code exists today, a developer can only take advantage of an FAR bonus if they plan to build within the designated downtown district. This ordinance would expand those boundaries to make more land available for the bonus, netting more money for the overall plan. This doesn’t mean that the ordinance would automatically rezone the surrounding neighborhoods into a D-zoning district, but rather, through the planned development process, developers would be allowed to apply for an upzone to a D-district.

Preliminary Maps: (West Expansion / Northwest Expansion / North Expansion / South Expansion )

Downtown Districts provide for the greatest density and it is intended to promote a “high-intensity office and employment growth within the downtown core,” by accommodating a “broad mix” of office, commercial, public, recreation, and entertainment uses.

This expansion, according to Marisa Novara with the Metropolitan Planning Council, could help Chicago with its declining population. “We have talked a lot about the need to grow population more aggressively, where there is demand...we should grow,” Novara told Aldertrack, explaining that the city’s biggest areas of population growth were in the downtown Loop area.

Asked if this could potentially lead to lead to a long, drawn out neighborhood review process, since density tends to get a lot of local homeowners up in arms about lost sunlight and views, clogged sidewalks, and snarled traffic, Edward Kus, a zoning attorney with Taft Stettinius & Hollister, said these areas already have their fair share of density. “It's not like you are going into the bungalow belt,” he explained.

New Design Requirements

The ordinance also updates on-site building and surrounding landscaping requirements for new developments. Some highlights:

• Transportation: It adds one provision: “When new streets are required for large-scale, multi-building developments, the new streets should reconnect the existing street grid.”

• Parking in “D” Districts: A parking overhang, or “porte cocheres”, is “strongly” discouraged. Under the current code, these structures are “generally” discouraged. The draft ordinance also emphasizes the city’s disdain for above ground parking in downtown buildings, which seems to be the norm of late. “Underground parking is strongly encouraged for superior building design that eliminates blank walls at street level for an improved pedestrian experience,” the ordinance reads (the italicized section was added to the ordinance).

• Building Features: Primary pedestrian entrances should be “obvious to pedestrians”, and “active uses such as retail or residential, as appropriate” should be included to screen parking garages from view. (Again, DPD does not like these massive parking garages at the base of buildings). Developers are strongly encouraged to make sure building facades at pedestrian level are “appropriately scaled within the context of the existing streetscape.”

• Building Design: New developments should respect the “existing context of a site” in its design. “This includes the existing general size, shape and scale, site plan and materials of surrounding properties.” And buildings to be located at intersections should have “prominent design and lighting programs, due to their visibility.”

• Adds Definition For What Constitutes A “High-Rise” Building: Any new construction over 80 feet in height. Under the new plan, these buildings would be required to use upper-story setbacks of at least 10 feet (under the current code they are only “encouraged” and no space requirement is listed). There are exemptions to this rule: Setbacks are not permitted on LaSalle Street between Madison Street and Jackson Boulevard, “unless the upper-level setbacks occur at a height above 175 feet.”  Upper-level setbacks are not required and may not be used on State Street or Wabash Avenue, between the Chicago River and Congress Parkway, “unless the upper-level setbacks occur at a height above 55 feet.”