CHICAGO (CBS) — The City Council on Wednesday approved an ordinance to charge an extra fee 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 measure, approved on a 37-12 vote, 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.

“This is an extremely reasonable policy to protect naturally-occurring affordable housing in our Chicago neighborhoods that are seeing record-high displacement in this moment,” said Ald. Carlos Ramirez-Rosa (35th), who co-sponsored the ordinance.

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.

Some aldermen questioned the legality of requiring a surcharge on demolition permits in only specific parts of the city, and warned the city would be hit with lawsuits challenging the ordinance.

Ald. Raymond Lopez (15th) argued the plan robs homeowners of the equity they have invested in their homes should they choose to use their property to create generational wealth for their families.

“What we are doing is not just impacting developers, we are impacting and quite literally stealing the equity from those families that stayed in these communities that were part of Logan Square when it was not a hip place to be, that were in Pilsen when there were more gang-bangers on the corner than there were tours and tour buses,” he said.

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However, Ald. Daniel La Spata (1st) said supporters have worked to make sure the ordinance will “pass legal muster” and be effective in ensuring when two-flats and three-flats are sold, they remain “relatively affordable housing in our community.”

Ald. Roberto Maldonado (26th), who voted in support of the plan, disputed the notion that homeowners would lose out on benefiting from increasing property values in the two areas covered by the ordinance.

“The selling owner, they’re not going to suffer, because they’re not going to lose the ability to sell at market rate. That’s not going to happen,” he said

Maldonado said he actually believes the fees should be much higher.

The Lightfoot administration also has said city attorneys are confident the ordinance can hold up in court. Deputy Corporation Counsel Weston Hanscom told aldermen earlier this week that 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.

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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.

CBS 2 Chicago Staff