by Todd Feurer, CBS Chicago web producerBy CBS 2 Chicago Staff

CHICAGO (CBS) — Aldermen on Monday advanced a plan to impose thousands of dollars of additional fees charged to anyone seeking to demolish single-family homes and apartment buildings in Pilsen and near the popular Bloomingdale Trail, in the latest attempt to curb gentrification in those areas.

The ordinance approved by a 20-11 vote of the City Council Finance Committee on Monday would add a $15,000 surcharge for permits to tear down single-family homes, townhouses, or two-flats in either area as part of a one-year pilot program. Demolition permits for larger apartment buildings would require a surcharge of $5,000 per unit.

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Revenue from the additional fees would go to the city’s Affordable Housing Opportunity Fund, which collects various fees from developers to help subsidize affordable housing initiatives in lower-income neighborhoods.

Mayor Lori Lightfoot introduced the plan to the City Council in February, one month after aldermen approved an anti-deconversion ordinance that would make it more difficult to turn existing multi-unit buildings into single-family homes in a large swath of the Pilsen neighborhood and near the Bloomingdale Trail, also known as The 606.

Ald. Daniel La Spata (1st), whose ward includes a portion of the Bloomingdale Trail, said despite the city’s best efforts since the trail was completed to increase the number of affordable units in the area, “we are losing the war on gentrification and segregation.”

La Spata said that developers who are contributing to gentrification near the 606 and in Pilsen should have to do more to pay for the loss of affordable housing.

“I would argue that our communities have been paying these costs for years through the loss of affordability, through the environmental impact of needless demolitions. We pay the costs right now. This is just making those who are contributing those costs – to our city, to our community – actually responsible for it,” he said. “If we are going to act effectively against segregation and against gentrification in our communities, this is an essential tool.”

Some aldermen questioned the legality of requiring a surcharge on demolition permits in only specific parts of the city, with Ald. Nicholas Sposato (38th) warning, “We are going to have a lawsuit.”

However, Lightfoot administration officials said they’re confident the surcharge will stand up to legal scrutiny.

Deputy Corporation Counsel Weston Hanscom said state law authorizes municipalities to tax demolition contractors. He also said the “uniformity clause” of the Constitution requires a reasonable justification for the lines that would be drawn in this kind of targeted fee.

“It’s our understanding that the problem being addressed here is definitely a problem in this particular area,” Hanscom said. “It can be a somewhat subjective call, so I don’t want to say I’m 100% sure what would happen, but in my judgement, after many years of doing this, and handling a lot of cases involving this issue, I believe it is lawful.”

Supporters of the ordinance also noted Evanston already charges an extra tax on demolition permits for residential structures.

While he was among the 20 council members who voted in favor of the surcharge, Ald. George Cardenas (12th) questioned whether it would truly reduce gentrification in the targeted areas, arguing wealthy developers would pay the extra fee “without hesitation.”

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“The guy that has the money, that’s not a problem,” he said. “They’ll gladly pay this tax, without question. If you’re building a million-dollar mansion, $10,000 ain’t going to make no difference.”

Cardenas also cautioned against unintended consequences, suggesting it would deter some families from trying to increase the size of existing homes.

“I don’t know what is going to happen six months from now, but what I do know is that this policy will add another cost to folks that may want to live together, but they may want to create living accommodations for their entire family,” he said. “That’s what this is going to be, a tax on them after being hit hard, after a pandemic, after they’ve gone through the harrowing experience of part of the family losing their home.”

Ald. Byron Sigcho-Lopez (25th), whose ward includes part of Pilsen, said if anything the demolition fees should be higher.

“Make no mistake, this is not going to hurt the small homeowner, this is going to help us regulate some of the free-for-all type of development that we have seen in our communities,” he said.

The ordinance provides exemptions to the demolition surcharge if at least half of the units being replaced will be set aside as affordable housing, or if demolition is necessary for health or safety reasons.

The ordinance now goes to the full City Council for consideration on Wednesday.

In other business, aldermen approved the use of $17.6 million in tax increment financing money to help pay for upgrades and repairs to 17 public parks across the city this year.

Also, after a one-month delay spurred by complaints about discriminatory lending practices by the banking industry, aldermen approved a list of 13 banks that will serve as the city’s municipal depositories in 2021.

The measure originally was up for a vote in February, but was put off for a month as aldermen sought to pressure the banks to start lending more to Black and Latino homeowners and businesses.

City Comptroller Reshma Soni said the Lightfoot administration is setting up meetings with aldermen, housing advocates, the City Treasurer’s office, and the Law Department to discuss a plan for starting the work on choosing the city’s 2022 municipal depositories earlier than usual this year, with the hope of getting banks to agree to better lending practices.

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Treasurer Melissa Conyears-Ervin also said she plans to create a “municipal depository task force” within the next month to recommend ways to improve the process of choosing municipal depositories, and to help get more neighborhood banks involved.

CBS 2 Chicago Staff