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To Chicago with love: Emanuel is a housing policy pioneer - Opinion - Crain's Chicago Business

Recently Mayor Rahm Emanuel announced plans to extend Chicago's landmark "transit-oriented development" ordinance to boost housing supply (and transit ridership) along frequently traveled bus routes, not just CTA train stops. Already a leader in providing market-rate housing to the middle class among big cities, Chicago would, with this effort, elevate its position among the most forward-looking land-use regulators in the country.

Chicago is America's last remaining affordable skyscraper city, and that's important. The secret recipe is to build new housing faster than the metro area adds new jobs. There are exceptions. Housing markets in college towns, resort communities and retirement hubs are by definition driven by students, vacationers and retirees rather than workers. But you get the point: It's simple arithmetic. If there are more jobs, more workers have to live somewhere.

If there are not more units available for additional workers to live in, they will bid up rents and home prices until they're high enough to convince some existing households to leave, some new workers not to come and other formerly separate households to squeeze in together as adult roommates.

In theory, rising prices will trigger a wave of construction that builds as many more units as needed, the new supply outpacing demand until vacancy rates rise and prices fall back down below the break-even cost of building an additional unit.

But in practice, every major American city except Houston restricts the number of units that can be built with an endless list of regulations. These include limits on how many square feet you can build per square foot of land, what shape and height that fixed square footage is allowed to fit into and what you can do in the building once you've built it. (And even Houston has strict "free" parking requirements that drive up construction costs to subsidize driving).

The transit part of Chicago's law is important, too. New housing far from frequent transit produces lots of car trips, which means roads must be built (or enlarged) and parking will get more congested, absent congestion pricing. That's the path Houston has followed, where cheap new housing is built around new highway spurs and the widening of existing elevated highways, like the 26-lane monster that is I-10.

Viewed from the hyper-regulated urban East Coast, Emanuel's proposal is almost radical. Neither Boston nor Cambridge are even considering Chicago's original innovation in relaxing housing and parking regulations near rail stations—let alone expanding the idea to heavily used bus stops. New York dropped excessive parking requirements for subsidized housing near the subway, but left them in place for market-rate homes.

Emanuel is not exactly throwing out the zoning rule book, though. Building housing in Chicago is still not as free and easy as it is in cheap, rapidly expanding cities like Houston, Dallas or Phoenix. Dropping parking requirements is a big help, but the density bonuses are fairly small and limited to lots that are already zoned for multifamily use. Still, every step the mayor takes to get out of the way of abundant housing is a step toward keeping Chicago affordable in the long run and reducing regional displacement of the working class.

Again, Chicago is America's last affordable skyscraper city, and that's important because it still has the chance to avoid the fate of Boston, San Francisco, Washington and New York—but without the car pollution of new highway-oriented housing in the Sun Belt. Chicago can be a better, more vertical Houston: a refuge for America's increasingly squeezed middle class and a beacon of good jobs and economic opportunity built around the CTA and Metra, not around climate-killing 26-lane monuments to asthma. Kudos to Emanuel for advancing that vision for working people.

Alex Armlovich is an adjunct fellow at Manhattan Institute and graduate student at Harvard Kennedy School.

More:

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Shortage of affordable rentals grows in city

Emanuel's remarkable deed for Chicago

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