In Part I, we traced the path that led Northbrook to its current framework.
Northbrook’s earlier plans contained broad — but clearly ineffective — commitments to affordable housing. The 2020 framework was different. It created a detailed formula in the Village’s Zoning Code defining how “affordable” housing would be priced and administered in practice.
Housing in Illinois is considered affordable when a household spends no more than roughly thirty percent of its income on housing costs, measured against the regional Area Median Income (AMI). The U.S. Department of Housing and Urban Development calculates AMI regionally for a four-person household and then adjusts it up or down for different household sizes using a standardized scale. AMI is also broken into bands, generally labeled as:
• Extremely low income at roughly 30 percent of AMI • Very low income at 50 percent of AMI • Low income at 80 percent of AMI
In 2020, the Area Median Income for the Chicago metropolitan region was roughly $96,000 for a four-person household.
For qualifying new residential developments, Northbrook’s 2020 ordinance generally requires that 15 percent of the units be affordable. For rental projects, the Village implemented that requirement through a three-tier system: at least one-third of the affordable units must be priced for households below 50 percent of AMI, at least one-third for households between 50 and 80 percent of AMI, and no more than one-third for households between 80 and 100 percent of AMI.
The total cost incudes both rent and utilities. For example, under Northbrook’s schedule, a one-bedroom unit at 65 percent of AMI tops out at $1,611 per month, while a one-bedroom unit at 80 percent of AMI is capped at $1,983. A two-bedroom unit at 80 percent of AMI is capped at $2,230. For rentals, the math is at least relatively legible: the Village sets a capped price tied to income. That simplicity is one reason affordable rental housing is generally easier to produce than affordable ownership housing.
For ownership units — where the costs factored into the calculation include mortgage rates, an assumed five percent down payment, property taxes, insurance, HOA fees, and private mortgage insurance — the Village adopted a two-tier system. Tier 1 units were reserved for households with income below 80 percent of AMI, but priced to be attainable to a household at 65 percent of AMI. Tier 2 units were reserved for households with income between 80 and 120 percent of AMI, but priced to be attainable to a household at 100 percent of AMI.
For example, under Northbrook’s pricing schedule, a two-bedroom ownership unit attainable at 65 percent of AMI comes in at about $160,000, while a two-bedroom unit attainable at 100 percent of AMI comes in at about $300,000.
The difference between those prices and Northbrook’s median home value — in the mid-$600,000 range — is stark. If a developer wanted to build fifty two-bedroom units in Northbrook at $650,000 per unit, 85 percent of those units — forty-two of them — could be sold at market price. Four would need to be offered at roughly $160,000, and four at roughly $300,000.
That creates a revenue gap of almost $3.4 million, or about ten percent of total project revenue, compared with selling all units at market price. A developer then has three choices: spread that cost across the market-rate units, absorb it, or walk away.
None is especially attractive. And because land in Northbrook is expensive, the economics get harder, not easier. In a lower-cost market, the same requirement might be easier to absorb. In Northbrook, it is much harder to make the numbers work.
Under the state's framework, success does not have to mean that Northbrook becomes meaningfully more affordable in practice. It means that Northbrook has a plan that, on paper, could create housing opportunities for lower-income households. Whether that plan is actually likely to work here is largely beside the point. Put differently, if the 15 percent requirement renders a project financially unviable and the project never gets built, the affordable housing plan can still be treated as a success — even though no new housing is produced and the underlying supply problem is left exactly where it was. It becomes an exercise in holding out for the perfect solution, at the direct cost of progress in the meantime. Developers go elsewhere in search of viable projects, and Northbrook is left with empty lots.
The Village’s first affordable housing plan, adopted in 2005, was clear-eyed about Northbrook’s physical constraints. The Village was already largely built out, with limited room for significant residential expansion. In that context, simply placing a new affordability burden on developers — as the 2020 framework largely did — was unlikely to do much on its own.
The Board does deserve credit for taking the issue head on. For fifteen years, Northbrook’s earlier affordable housing plans had produced very little, and while the major developments of the 2010s may have made the Village relatively more affordable, they added nothing to the affordable housing stock as defined by state law. By the time the Village was reviewing plans for Northbrook Court, the Board had clearly decided it was time to try something different.
That said, there were clear holes in the framework. For all of the time the Board and Village staff spent on the issue, the public record reflects surprisingly little critical assessment of what might cause the policy to fail or why Northbrook’s earlier efforts since 2005 had produced so little actual affordable housing. There was acknowledgment that Northbrook’s existing affordable single-family housing was under pressure from tear-downs, but little sign in the public record that anyone plainly said expanding overall housing supply had to be priority number one, since 15 percent of zero is still zero. And although Highland Park was repeatedly presented as the model to follow, I could not find any real assessment of the conditions that made that approach work there, much less whether those conditions could actually be recreated in Northbrook.
The public record also reflects a strong focus on moral obligation and social goals, with far less visible debate — or counsel sought from developers — regarding the financial pro formas required to make 15 percent inclusionary zoning viable for private builders. Nor is there any sign in the public record that anyone grappled with the arithmetic that opened this piece: that Northbrook would either need to more than double its affordable housing stock if it built nothing else, or produce an enormous amount of total new housing if the 15 percent provision were strictly adhered to.
If those conversations happened, I could not find them in the public record. It is also worth noting that, while the Village made a real effort to engage the public, much of this process unfolded during the depths of COVID, when public attention may not have been fully tuned in to Village Hall.
As the Village turned toward its next chapter, more change was coming. The Village President who had spearheaded the initiative was not running for re-election, the Village Manager of twelve years was retiring, the Director of Development and Planning — who had played a central role in shaping the affordability plan — was taking a Village-offered early retirement, and the post-COVID macroeconomic shocks were looming.