Northwest Side Preservation Ordinance: How it can impact you

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As a real estate agent in Chicago, we know how important it is for our clients that we stay on top of the latest ordinances, policies, and regulations. One piece of legislation that's gained attention recently is the Northwest Side Preservation Ordinance, which focuses on maintaining the character of neighborhoods on the city's Northwest Side. Those who should take note of this new regulation are people with a rental property within the new boundaries (link below), and those who are looking to buy and/or build in the same area. 

What are the most important parts of the ordinance to note?

  • The cost to build in the area is increasing from $5,000 per unit to $20,000 per unit and $15,000 per building to $60,000 per building (whichever is greater) for the 606 Pilot Areas and Pilsen

  • Amends the affected neighborhood boundaries click here to see a map of all impacted neighborhoods

  • If you own an income-producing property within the new boundaries, your tenant will have first right of refusal per the new Tenant Opportunity to Purchase (606) Block Pilot Program. This will be a very specific and time-consuming process that must be followed

How will the new ordinance impact buyers and sellers in this area?

For buyers: 

  • Patience! Because renovations to specific properties may now be required to meet specific guidelines, buyers looking to renovate or remodel should be prepared for a longer approval process. Also the seller will need to provide the tenant first right of refusal, which will also take time. 

  • 1031 Exchange: A tenant-occupied property within the boundaries of the ordinance will likely not meet the stringent timing requirements of a 1031 Exchange. 

  • New costs: There are new costs involved for rehab and development in the area that may make it cost prohibitive to buy. 

  • Design restrictions: You may also not be able to complete renovations exactly to your preferred specifications since the ordinance aims to maintain visual consistency. We strongly recommend that buyers consult with city officials as early on as possible in the process to help understand timing and what is possible. 

For sellers:

  • Patience! Because renovations to specific properties may now be required to meet specific guidelines, buyers looking to renovate or remodel should be prepared for a longer approval process. Also the seller will need to provide the tenant first right of refusal, which will also take time. 

  • Hardship: Sometimes sellers need to sell urgently for one reason or another – every sale must pass through the process regardless of circumstance/hardship.

  • Liability: If you do not follow the new process, you will be held liable by the city particularly when it comes to tenant first right of refusal. 

  • Value: While it is too early to tell which way it will impact value, the ordinance will impact home values in some way. 

How to Best Work Within the New Framework? 

Working with local experts will also make the whole process easier, faster and more streamlined. Busby Group is here and ready to help you navigate this difficult process, plus we recommend attorney Bob Floss, who is also very knowledgeable on the ordinance and the constant changes. 

If you’re considering buying or investing in a property within the boundaries of the Northwest Side Preservation Ordinance, upfront research of whether or not a property is impacted by this ordinance will save valuable time and money. Visit the City’s Landmark Division website to start your investigation. 

Please contact us anytime if you are considering buying or selling in the impacted areas, we are here to help!