Illinois Municipal League floats alternative to Pritzker's BUILD plan

Bloomberg News

Months after Gov. JB Pritzker released his Building Up Illinois Developments (BUILD) proposal to lower housing costs, the Illinois Municipal League, a statewide organization that lobbies on behalf of municipalities, rolled out its Reducing Expenses and Advancing Local (REAL) Housing Act.

The REAL Housing Act is an affordability and property tax relief bill that would preserve local control of housing decisions. 

The BUILD plan proposes a legislative package to expand the housing supply, including HB 5626, filed by state Rep. Kam Buckner, D-Chicago. There's also a $250 million capital investment package, administered by the Department of Commerce and Economic Opportunity and the Illinois Housing Development Authority.

In an emailed statement, a spokesperson for the governor said, "A coordinated, statewide approach is necessary to solve the housing affordability crisis. The current status quo has only deepened the housing shortage, so the time for action is now." 

In an April 30 statement, IML CEO Brad Cole said, "Rather than imposing broad preemptions on municipal zoning authority, the REAL Housing Act removes barriers that delay development and increase costs, allowing communities to expand housing opportunities in ways that directly benefit residents and reflect local needs."

The IML's proposal would have no impact on housing bonds and would provide property tax relief through the local government distributive fund (LGDF), Cole told The Bond Buyer Tuesday.

"Right now [LGDF) is being maintained by the state, so those funds are not coming [directly] to us," he said. "We are supposed to be getting 10%, but we are only getting 6.47%." 

The REAL Housing Act proposes to fund the full 10% that should go to municipalities, with any LGDF funds above 8% going "right back to taxpayers," he said. "If they (state lawmakers) do fund the full 10%, then anything above 8% would be dollar-for-dollar property tax relief."

Cole said municipalities were not offered a seat at the table during the development of the BUILD plan. 

"We saw it once it was released to the public and we opposed the preemptions of local authority that it contains. So we thought instead of just opposing it, we should offer a couple dozen of our own solutions," he said.

IML offered two dozen proposals, which should offer something for everyone, Cole said. . "We didn't know that the BUILD initiative is the only one that can be discussed."

In a side-by-side comparison, the IML touts its proposal as a "voluntary, incentive-based framework" that does not preempt local zoning ordinances but prioritizes access to state capital funding for municipalities that choose to allow mid-level housing, like duplexes.

Its plan would also cap real estate commissions at 3%, which has drawn the ire of Illinois Realtors, a trade association for real estate professionals. 

In a May 1 statement, Jeff Baker, the group's CEO, slammed the REAL Housing Act as "dangerous" and said, "It raises serious legal questions, proposes outright price fixing, and undermines the very goal of making housing more accessible." 

Cole replied, "We obviously don't agree with that." He pointed to a line that accuses the IML of "opening the door to forced, higher-density development with little regard for existing communities."

Cole said, "That's exactly what the BUILD initiative does, it forces density with no local input. So I'm not sure if they're reading their own bills or not."

Illinois Realtors did not respond to a request for comment.

"BUILD doesn't eliminate local control — it establishes minimum expectations and sets the floor in a coordinated way to meet every locality's housing needs, all while ensuring the enhancement and preservation of each town's character," the governor's spokesperson said in a statement.

"Governor Pritzker's BUILD plan comprehensively addresses Illinois' housing affordability crisis by removing unnecessary barriers to development and creating clear pathways for the construction of accessible, affordable homes," the spokesperson continued.

Still, HB 5626 has raised eyebrows among some local governments and others.

"HB 5626 includes the largest preemption and restriction of local zoning and land use regulatory authority considered since the establishment of home rule authority in Illinois in the 1970 Constitution," Elrod Friedman LLP Partner Stewart Weiss wrote in a February client alert. 

"If you talk about changing zoning, that doesn't automatically save you any money," IML's Cole said. "We're talking about actually quantifiably saving money for people … and if the realtors don't like it, well, sorry that we came up with ideas? I didn't know it was all or none."

Cole said "we'd be open to" some sort of hybrid proposal that blended elements of the BUILD plan with some of IML's ideas.

"But we've asked and asked," he said. "We haven't been invited to any roundtables, we haven't been invited to any working group meetings."