The Khamlins’ new home is one of three basement apartments that developer Gabe Horstick added to nine existing units in the 1930s brick building on Kedzie Boulevard after buying it in July 2021. Horstick’s firm, Base 3 Development, was able to add the three because of the city’s two-year-old ordinance allowing new additional dwelling units, or ADUs, including basement or attic apartments and detached coach houses, for the first time since they were banned in 1957.
The ordinance allowed Horstick to add three units if one met affordability requirements. He says it worked for him, “because I could turn a nine-unit building into a 12,” enhancing rental income.
And it worked for the Khamlins, who pay about $1,500 a month for the three-bedroom unit, a little more than half the monthly rent Horstick plans to charge for the other two ADUs.
In-demand Logan Square got a few new housing units, one of them within affordability guidelines, the landlord got to boost his profitability, and a struggling immigrant family found a comfortable spot.
Now, if that success can be replicated dozens or hundreds of times around the city, the ADU program will trigger a wave of new affordable housing in Chicago. So far, however, it’s more like a ripple confined to affluent North Side neighborhoods. Of 403 applications that have been approved, 84% are in the North and Northwest Side pilot zones, according to Department of Housing policy director Daniel Hertz.
The applications cover 454 units, 40 of them meeting the city’s affordability guidelines. The great majority are not yet built. As of late October, according to the Department of Housing, construction permits had been issued for 122 units, with permits pending for 78 more.
The ADU ordinance—approved in December 2020, with the first applications for permits available in May 2021—has not yet set off big changes in the city’s housing profile, although city officials and developers say some tweaks and expansions that are pending could speed it up. To be fair, it should be noted that the COVID-years supply-chain disruptions and increased construction costs contributed to the seemingly slow pace of new units getting built.
Even so, changes are needed. Two that are crucial, says city Housing Commissioner Marisa Novara, are adding a staffer to focus on getting ADU financing and expertise to property owners on the city’s South and West sides and opening the ADU ordinance to the entire city, not just the five pilot zones approved in 2020.
Novara told Crain’s in late December that she’s been authorized to add a staff position whose brief will include ADU assistance that may bring more such units to places like Grand Crossing and Washington Park.
Expanding beyond the pilot zones is not yet scheduled but is a goal, Novara said. Limiting ADUs to pilot zones initially was a compromise made to get City Council approval.
One developer of ADUs says it dramatically undercut the rollout. “At least half the inquiries I get are from people who are outside the pilot zones,” says David Wallach, a longtime Chicago builder who heads the ADU-focused firm Chicago Granny Flats. “There’s demand from all over the city, if we were allowed to build all over the city.”
Wallach’s firm is building its fourth new coach house-style ADU. One is in Evanston, which also approved ADUs in 2020, and two of the city projects are for homeowners who told Crain’s they’re adding the space for home offices, but with bathrooms and kitchens so they can be lived in by family members or become rental tenants later if the need arises. That is, they’re essentially expanding their own living space thanks to an ordinance intended to create new housing units.
While that may seem to evade the spirit of the ordinance, Wallach and the two city officials defended them as creating at least potential new living units. On top of that, Wallach says, building a coach house on a Chicago alley has the added benefit of putting eyes on that alley, potentially making it safer.
