Coach house
(Erwin Macatulad/Flickr)

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 (ADU) program has led to the construction of nearly 500 relatively affordable new homes since May 2021, mostly on the city’s North and Northwest sides — two of five “pilot zones” where the program has been rolled out. 

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. And Ramirez-Rosa, who is now Johnson’s City Council floor leader, says he wants to help the mayor follow through on his promise to widen the option to more property owners.

They now have new allies on the City Council.

Ald. Bennett Lawson (44th) filed legislation last month to legalize ADUs across the city. He said 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.

“I wouldn’t necessarily say I’m confident about the prospects of getting something done this year,” Ramirez-Rosa said. “We have to engage all 50 members of the City Council … we have to have a conversation to figure out what the path forward will look like.”

Has the ADU program been successful?

The city’s efforts to legalize new coach houses and basement units dates back to the tail end of Mayor Rahm Emanuel’s administration in 2019. The nonprofit Urban Land Institute convened dozens of city officials, real estate professionals and policy wonks who recommended a mix of regulatory relief, construction grants programs and education campaigns to maximize the number of new units.

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.

“The city needs to be creative and realistic about how and where we can increase affordable housing opportunities for renters while also helping property owners deal with the financial demands of their buildings,” Lightfoot said in her announcement of the effort in May 2020. “With this sustainable and cost-effective approach, we are providing residents with more equitable access to affordable housing options citywide.”

The City Council was less enthused. Multiple alderpeople complained that the legalization would let property owners bypass zoning changes, meaning landlords would no longer have to petition their local alderperson for permission before building.

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

More than two years into the pilot, housing officials are making clear which direction they’re leaning.

The Chicago Department of Housing “feels like it’s a successful program, and it’s worth looking at expanding,” Daniel Hertz, the department’s director of policy, said of the ADU initiative.

As of May 31, the housing department had fielded 659 applications across nearly three dozen neighborhoods for new Additional Dwelling Units, of which 462 were approved, according to housing department data. The overwhelming majority of the applications came from the city’s North and Northwest pilot zones, which combined for 384 new 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. So from that perspective, it’s definitely been a success.”

Hertz noted that many other property owners expressed interest in the program until they learned they 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.

“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].”

Building a new coach house comes with heavy costs, including hooking the new structure into plumbing and electrical lines. Less expensive proposals for 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.

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

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

Charting a path forward

Lawson introduced an ordinance to expand ADUs citywide at his first City Council meeting 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 for ADUs.

“We have to build housing,” Lawson said in an interview Friday. “We’re so low on the number of units we need to meet our current demand, plus grow — this is just one of the many tools to be using.”

The younger, more progressive composition of the City 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 he introduced “a way to start the conversation,” predicting it will go through multiple drafts.

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.”

Lawson said he’s committed to refining his proposal to get a wide City Council majority on board.

“We’ll have to make some tweaks with my colleagues, but there’s a lot of buzz there,” Lawson said. “I think it’s something we can get done this year, and then roll out citywide.”

Ramirez-Rosa was more circumspect, noting that multiple South Side and West Side alderpeople have aired worries that allowing additional units on existing properties could sap demand for new construction on vacant lots. He also said city policymakers will likely wait for the three-year pilot to finish next year before setting a path forward.

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

Editor’s Note: This story has been updated to clarify that the ADU ordinance was a change to the city’s housing rules.

Alex Nitkin is a solutions reporter conducting investigations on efforts to fix broken systems in Chicago, Cook County and Illinois government. Before joining Illinois Answers, he worked as a reporter and editor for The Daily Line covering Cook County and Chicago government. He previously worked at The Real Deal Chicago, where he covered local real estate news, and DNAinfo Chicago, where he worked as a breaking news reporter and then as a neighborhood reporter covering the city's Northwest Side. A New York City native who grew up in Connecticut, Alex graduated Northwestern University’s Medill School of Journalism with a bachelor’s degree.