Client: Village of Wilmette
The Village of Wilmette engaged GG+A to evaluate the effects of affordable housing requirements on the financial feasibility of multi-family development in the Village Center of Wilmette. GG+A prepared development prototypes for a one acre “test site” ranging in scale from a four-story building with 74 multi-family rental units to a six-story building with 110 units.
The real estate economics and implications for affordable housing policy were evaluated for a total of nine different housing scenarios, including a “market rate” scenario in which each development alternative is modeled as a 100 percent market rate multi-family project with no affordable housing requirements; an “on-site affordable housing” scenario where 15 percent of all units are reserved for and rented at below market rents affordable to households earning 60 percent of Area Median Income (“AMI”) or less; and an “in-lieu fee” scenario where each prototypical development makes an affordable housing fee contribution equal to $100,000 per affordable unit (in-lieu of providing 15 percent of units on site). This per unit amount was consistent with the affordable housing contribution associated with the approved Optima apartment project at the site of the former Chicago Bank Building on Central Avenue.
GG+A simulated the potential investment results of each alternative from the viewpoint of a developer-investor. GG+A estimated the amount of money an investor-developer could afford to pay for land, given the net cash flow anticipated to result from the development, absorption, operation, and eventual sale of each prototypical building – including targeted return-on-investment (profit margin) thresholds. The results of the analysis identified scenarios are feasible to undertake with- and without- affordable housing requirements (either by providing units on site, or fee payments in lieu of creating affordable units on site).
GG+A prepared a comprehensive report that included policy recommendations for encouraging the production of affordable housing based on the real estate economic analysis of the development scenarios. GG+A held a workshop with the senior staff of the Village to review the findings and recommendations which were accepted.