Two years after Chicago legalized the construction of backyard coach houses and basement units on a limited scale, backers of the initiative cite one major problem with the program: it isn’t big enough.

The Additional Dwelling Unit program has led to the construction of nearly 500 relatively affordable homes since May 2021, mostly on the city’s North and Northwest sides in two of five “pilot zones.”

But advocates say that only represents a sliver of its potential, arguing city leaders need to put more money behind the program.

Ald. Carlos Ramirez-Rosa (35th), the new chair of the City Council Zoning Committee, said the ADU program has been popular in his ward.

“But many have not been able to take advantage of it because of the many barriers in cost,” he said.

Mayor Brandon Johnson vowed during his campaign to expand the ADU program, calling it a key tool to deepen the city’s inventory of unsubsidized affordable housing, dampen racial segregation and help boost the city’s flagging population. Officials in the Department of Housing say the program has yielded results and is ripe for expansion. 

They now have new allies on the City Council.

Ald. Bennett Lawson (44th) filed legislation last month to legalize ADUs across the city, saying he’s optimistic the Council can pass a version of the proposal by the end of the year.

But Ramirez-Rosa urged caution, saying some of his colleagues are still skeptical of the program. He also noted city leaders have not identified a funding source for a needed grant program to help property owners pay for the upgrades.

Has the ADU program been successful?

The effort to legalize coach houses and basement units dates back to 2019. The nonprofit Urban Land Institute convened city officials, real estate professionals and policy wonks who recommended a mix of regulatory relief, construction grants and education campaigns.

Citing successful efforts to legalize the extra units in West Coast cities, Lightfoot in 2020 put her weight behind a legislative effort to fold Additional Dwelling Units into Chicago’s housing rules.

But multiple alderpersons complained the legalization would let property owners bypass zoning changes, meaning landlords would no longer have to petition their alderperson for permission before building.

In December 2020, the Council approved a limited compromise to allow the additional units in five pilot zones. The pilot would begin May 1, 2021, and last three years, after which city housing officials would assess whether it should be continued, expanded or eliminated.

More than two years into the pilot, the Chicago Department of Housing “feels like it’s a successful program, and it’s worth looking at expanding,” said Daniel Hertz, the department’s director of policy.

As of May 31, the housing department had fielded 659 applications from nearly three dozen neighborhoods, of which 462 were approved, according to Housing Department data. The overwhelming majority of the applications came from the city’s North and Northwest side pilot zones, which combined for 384 ADU permits.

“Hundreds of homeowners have used this program to do all the things … we hoped this program would achieve, including having space for extended family, to age in place, to earn a little bit of extra income,” Hertz said. “And for renters, it’s created more housing options for people.”

Hertz noted that many property owners expressed interest in the program but lived outside a pilot zone or ran into restrictions placed on construction in the South, West and Southeast zones. Many more were warded off by the high cost of construction and difficulty getting projects financed.

City permit data showsa median cost of $75,000 to build a new basement unit and $150,000 to build a coach house, according to the real estate database Chicago Cityscape.

“This is a new typology — you haven’t been able to build new coach houses in Chicago for like 70 years,” Hertz said. “You go to your local bank, and they’re not necessarily going to know what to do with [a loan application].”

Costs include hooking new coach houses into plumbing and electrical lines. New basement or attic units, which made up the majority of ADU applications, also face barriers. Landlords must hire contractors to conduct evaluations of each potential new unit, and they may need to add an exit or excavate the floor to bring it to code.

The ordinance that passed the Council dedicated about $1.1 million in federally sourced Community Development Block Grants to help fund construction. That fund is now virtually depleted, Hertz said.

Charting a path forward

Lawson introduced an ordinance to expand ADUs citywide last month. He called it a tool to encourage “gentle density and affordability” in high-cost wards like his, which lies partially inside the North pilot zone.

“We have to build housing,” Lawson said in a recent interview. “We’re so low on the number of units we need to meet our current demand, plus grow.”

The younger, more progressive composition of the Council gives Lawson hope that the legislative effort won’t face as much political opposition as the 2021 push, he said. He called the single-page ordinance “a way to start the conversation” and said he’s committed to refining his proposal. 

Lawson has already faced pushback from some colleagues, including Southwest Side Ald. Marty Quinn (13th), who said he would vote “no” on the ordinance in its current form.

“I believe ADUs would compromise the fabric of the 13th Ward, which is 90% single-family dwellings,” Quinn said in an interview Tuesday. “It would have an adverse impact on quality-of-life issues like parking, noise and garbage.”

Ramirez-Rosa noted that multiple South Side and West side alderpersons have worried that ADUs could sap demand for new construction on vacant lots. 

“There is a lot of support in Council to expand the program. However, there are a lot of alderpeople with concerns,” he said. “The mayor’s commitment, and my commitment, is to work collaboratively with all stakeholders to find the best path forward.”