Chicago’s Proposed Qualified Allocation Plan To Address Wide Swath of Housing Needs

Chicago’s Proposed Qualified Allocation Plan To Address Wide Swath of Housing Needs

Housing Report

By Kate Yoshida

Making good on a campaign policy promise to address the shortage of affordable housing in the city, Mayor Lightfoot has released new rules for allocating federal low-income housing tax credits. A change in federal law now allows residential projects to use an average of the incomes of the households rather than peg all the set-asides to one income segment.

The City of Chicago's Affordable Requirements Ordinance requires residential developments that receive city financial assistance or involve city-owned land to provide a percentage of units at affordable prices. The ordinance applies to residential developments of 10 or more units and requires that developers provide 10% of their units at affordable prices. Income averaging under the new federal rules makes it possible for some units to be set aside for residents with incomes both lower and higher than 60% of the median average income, as long as the overall average income meets federal criteria.

The City of Chicago's Department of Housing directs federal affordable housing funds where they are needed most by means of the Qualified Allocation Plan (QAP). QAP sets the rules by which the City offers funding for affordable housing development in the form of federal Low Income Housing Tax Credits, commonly referred to as LIHTC. QAP describes the selection criteria and application requirements for receiving these federal tax credits and tax-exempt bonds. 

LIHTC is the most significant resource for creating affordable housing in the U.S. It is a public-private partnership in which investors provide equity for low income rental properties in exchange for a federal tax credit over several decades. Without this equity, affordable rental housing projects do not generate sufficient funds to work financially. The City of Chicago receives a limited number of LIHTC housing tax credits to allocate each year based on its population.

Chicago’s 2019 Qualified Allocation Plan lays out three Priority Tract categories for “preferred” proposals, which are all ranked via a scoring system. Some of the preferred criteria prioritize projects that:

  • Include ground floor retail or commercial space

  • Are located in Transition Areas (those undergoing rapid economic and demographic changes) 

  • Are located in Difficult Development Areas (areas with high acquisition costs) or Opportunity Areas (higher income areas)

  • Include very low income units

  • Preserve existing housing stock

The final QAP is now available for review. A LIHTC funding round is now open, and applications are due Friday, Oct. 11, 2019 by 4 pm. For the next round, proposals will no longer require a letter of support from the local alderman.  

New Chicago Department of Housing commissioner Marissa Novara has openly acknowledged that Chicago’s allotment of $60 million is insufficient to address the estimated shortage of 120,000 affordable housing units in the Chicago.  The city is hoping to fund up to 12 projects in the 2020-2021 allocation period.


Kate Yoshida is one of the LWV Chicago members who are working on a Chicago in Focus program on housing, scheduled for early next year. 

League to which this content belongs: