Methodology

Overview

This calculator estimates the effects of potential development on parcels throughout the city of Chicago.

These estimates were developed in consultation with industry experts, city officials and others. While we are confident they are reasonable, they are estimates and must be treated as such. The following other sources may be helpful in providing accurate information about parcels throughout the city:

To confirm what kind of construction is allowed on any specific parcel in the city of Chicago, please speak directly with the Chicago Dept. of Planning and Development.

Inputs

The calculator makes estimates based on information users provide about a specific development site and automatically retrieved information about that site’s location. The main calculator page (with the large map on it) allows users to select most parcels in the city, to input an address or to “start from scratch” by selecting a Chicago community area.

For each parcel, the calculator queries Chicago Cityscape via its API (or application program interface). This API takes the latitude and longitude of the parcel selected and refers the following information to the calculator:

The land area of each parcel is provided automatically from the City’s parcel data.

Based on the above information, as well as information about the City’s 2013 TOD ordinance, the calculator determines whether the parcel qualifies for reduced parking requirements or density boosts over the baseline zoning.

Outputs: Building characteristics

Using the zoning of each parcel, the calculator determines what types of uses are allowed on a site. A parcel zoned RT-4, for example, only allows residential space, whereas one zoned B3-3 allows commercial and residential space on the same parcel.

The calculator estimates how much total built space is possible on a specific parcel by multiplying the floor area ratio (FAR) allowed under zoning by the square footage of the parcel. This is the maximum built space (on multiple floors) allowed on a parcel. For example, if a 10,000-square foot parcel has an FAR of 3, a building on that parcel could theoretically have a total of 30,000 built square feet. For parcels that qualify for the 2013 TOD ordinance or the 2015 ARO law, this FAR figure is increased as necessary.

For parcels whose zoning allows commercial and retail space, the calculator’s baseline retail and commercial space (the initial setting of the scroll bars) is determined by dividing the assumed ground-floor space for a new building into halves. The ground-floor space is assumed to be the parcel’s size, minus the setbacks required by the zoning code. For parcels where commercial space is allowed but retail space is not, all of the ground-floor space is allocated to commercial space. For parcels where only residential space is allowed, no commercial or retail space is allowed.

For parcels whose zoning allows residential units, the calculator first determines the maximum allowed units. This is determined by dividing the parcel square footage by the minimum lot area (MLA), which is based on the parcel’s zoning. For example, if a 10,000-square foot parcel has an MLA of 500, the parcel would be allowed up to 20 residential units. For parcels with a mix of uses allowed under zoning, the initial setting of the residential unit scroll bar is determined based on picking the smaller of either the above number or subtracting the ground-floor retail or commercial space from the total allowed built space and then dividing that figure by 700 square feet (assumed to be an average small unit size in a new building).

Maximum allowed commercial, retail and residential space (the right side of the scroll bars) is based on a potential reworking of the TOD ordinance that would allow an increase of up to 2 over the existing FAR for parcels zoned Business (B), Commercial (C), Downtown (D) or Manufacturing (M) located within 1,200 feet of all CTA ‘L’ and Metra rail station entrances, as well as a reduction of the MLA by 100 for all such parcels.

Parking requirements under the zoning code are based on the parcel’s zoning classification and use. They are altered as required based on whether the building as proposed by the user (using the scroll bars) has retail, commercial or residential space. For parcels that qualify for the 2013 TOD ordinance, this parking figure is reduced as necessary.

The vehicles expected to be used by commercial users are determined based on the expected commuting choices of people working on site based on the location of the parcel. Using data compiled from the Regional Transportation Authority’s (RTA) analysis of mode share of commuters in 2000, each parcel is classified by its location in the city and then the number of jobs estimated to be located on site (this calculation is explained in the following section) is multiplied by the share of workers in that area either driving along or carpooling to work. For workers in areas located in the mid-north lakefront neighborhoods, for example, 54 percent of commuters drove alone and 11 percent carpooled to work. For a development more than half a mile from a rail station in this area with 200 estimated jobs on site, the calculator would estimate that 108 people would drive alone to work and 22 would carpool. Assuming an average of two people per carpooled vehicle, this would produce a total of 119 total vehicles estimated to be used by commercial space users.

Because the RTA data does not delve more deeply into differences between areas in communities close and far from transit, the calculator assumes that parking demand for commercial users would be roughly halved for areas within a half-mile of a rail station entrance. Though this is an estimate, national research indicates that adjacency to transit significantly influences commuting share by transit. For example, a 2011 study by University of California professor Robert Cervero and Erick Guerra found that jobs within a quarter-mile of a transit station produced twice as many transit rides as jobs three-quarter-miles away.

The calculator also estimates the number of vehicles expected to be used by residents. This calculation is based on Census 2010 data. Each Chicago community area was divided into areas within a half-mile of rail stations and areas further from that. For each community area, vehicle ownership for the average household near and far from transit was determined. Each parcel’s community area and adjacency to transit is determined by the calculator, and then residential demand is estimated based on the Census data. The average 1-person household near transit in Armour Square, for example, has 0.09 vehicles, while the average similar household far from transit has 0.62 vehicles. The calculator would estimate that a development with 100 1-bedroom units near transit in Armour Square would generate 9 vehicles, whereas one further from transit would generate 62. These figures are altered based on user input of unit size of projects.

Outputs: Community effects

The goal of the calculator is to offer estimates of the potential community effects of new development in Chicago. The calculator uses the parcel selected by the user and the user inputs on the proposed development, such as retail space or residential units, to estimate effects on the surrounding neighborhood. Most of the estimates are based on either Census data analyzed by MPC or national research. Read below to learn more about how each of the effects is calculated.

On-site jobs

The user does not input specific types of retail, commercial, office or industrial space into the calculator. This makes estimating expected employees using the space difficult, as the building area per employee varies tremendously by business type, as the U.S. Green Building Council has documented.

However, in order to determine a reasonable estimate, the calculator used data from Norm Miller of the University of San Diego to project an average of 350 square feet per worker for any type of retail or commercial space. For example, if a user inputs a development with 17,500 square feet of commercial space, the calculator would estimate 50 jobs located on site.

It is essential to note that the calculator is not indicating that the jobs are being generated by the project. Rather, it is simply assuming that if the commercial or retail space on-site is filled, the estimated number of jobs would also be on site.

Residents

Because the Census does not provide information on household size by unit size (i.e., by number of bedrooms), the calculator takes an average of two estimation techniques to project the number of people expected to be living in the units completed as part of the property.

One approach is to use mean household occupancy by tenure. This takes the average household size for renters and owners (depending on user input) for each community area (based on Census data) and multiplies the number of units in the development by this number. For example, the average household size for renter households in Edgewater is 1.75, so a 100-unit project could have 175 residents.

The other approach is to use national research on estimates of population size for new housing by unit size in Illinois, as estimated by Robert Buchell et. al of Rutgers University in 2006. This estimate suggests that a multi-family building with 1-bedroom rental units averages 1.2 people per unit, of which 0.1 are people under 18. This would imply the building mentioned above would have 120 residents.

The calculator takes the middle ground, taking the average of the two estimates and projecting 148 total residents for the aforementioned building. It also estimates 10 of those residents would be children, as indicated by the second calculation.

Transit rides

To estimate transit ridership of employees working on site, the calculator uses a similar approach as used to determine vehicle demand of workers, described above, using the data provided by the RTA based on the 2000 Census. For a parcel located along the South Lakefront, for example, transit has a 16.4 percent share of commutes. The calculator assumes that each worker using transit takes an average of 520 trips per year (10 trips per week for 52 weeks a year), so a project more than half a mile from a station with 100 employees is estimated to produce a total of 8,528 annual transit trips to and from the development. For places closer to transit, the calculator doubles the estimated annual transit trips for the aforementioned reason.

To estimate transit ridership of residents living on site, the calculator determines how close the parcel is to CTA ‘L’ and Metra station entrances. It then uses data analyzed from Census 2010, by community area, to estimate ridership. In Greater Grand Crossing, for example, workers living a quarter mile from the ‘L’ have a 41.3 percent transit share. On the other hand, workers more than half a mile from a rail station only have a 33.4 percent transit share. This means that a development with 1,000 workers in this neighborhood would have 816 transit rides (two ways) on a typical weekday, while one further from transit would have 668.

In order to make an estimate of transit rides over the course of the year, and in order to adjust for youth and other non-worker populations, as well as non-work trips, the calculator uses a multiplier of 730, which is estimated based on a national comparison of transit mode share (such as the 41.3 percent above) and actual ridership on buses and trains. This would mean that a 1,000-person project (using the resident population estimates made above) near transit in Greater Grand Crossing is estimated to produce a total of 301,490 transit rides annually.

Local retail sales

The calculator estimates retail sales made annually by both workers in the proposed development and people living in the project. Using 2012 estimates produced by the International Council of Shopping Centers, the calculator estimates that the mean workers spends $115.60 per week in the area around their office, of which 23 percent is spent on food and 77 percent is spent on goods and services. For a project with 100 workers, the calculator projects that workers would thus spend a total of $601,120 over the course of the year at local stores and restaurants.

The calculator uses a slightly different approach to estimate local spending by residents living in the proposed development. It first determines the mean household income of residents in the development, based on Census 2010 data divided by community area. For example, the mean household income in Beverly is $106,675. It then uses U.S. Bureau of Labor Statistics (BLS) data on consumer expenditure by income level to estimate the share of income spent on retail and restaurant needs. For example, the BLS estimates that households with incomes between $100,000 and $119,999 spend a total of 26 percent of their incomes on food, alcohol, household needs, housekeeping supplies, apparel, entertainment and personal care products.

MPC estimates than 50 percent of food and alcohol expenditures are made locally and 10 percent of the other expenditures are local. In total, this means that 5.7 percent of spending by households in this income range is estimated to be made locally. For Beverly, a 100-unit project (counting each unit as a household) is thus estimated to produce $608,408 in total local retail sales annually.

Tax revenues

  1. Property taxes: Annual property taxes are estimated by the calculator using average values from the Cook County Assessor’s Office. Each parcel is identified to be in a township and neighborhood; an example of this is a parcel that is in the 140th neighborhood of the Jefferson township. Using the average of assessments in each neighborhood for properties classified as 2-12 (mixed-use apartments), the calculator estimates how much a development would be taxed. In Jefferson-140, for example, 2-12 classed land is assessed at $1.20 per square foot and buildings are assessed at $8.67 per built square foot. A 40,000-square-foot building on a 10,000-square-foot parcel, then, would be assessed at a total of $385,981. The calculator then multiplies this by the State Equalizer rate (2.6621) and then by the local tax rate for Chicago ({{propertyTax}}). For this property, the total property taxes paid would be estimated at $65,270. This includes payments to the City of Chicago, Cook County, Chicago Park District, Chicago Public Schools, the Metropolitan Water Reclamation District and other local entities that receive property taxes. For for-sale properties, the ownership exemption ($7,000 per assessment per year) is enforced for each unit.
  2. Sales taxes: Annual sales taxes are estimated based on on-site workers and residents for local expenditures. For workers, annual taxes are determined by multiplying 52 by $26.29 (weekly local food sales) by the restaurant rate (which is 9.55 percent or more, depending on whether the area is in the MPEA zone) and adding 52 by $89.31 (weekly retail and other sales) by the other sales tax rate (9.3 percent). For residents, their personal expenditures (as described above in the retail sales estimates) are classified into categories based on type (such as alcohol, groceries or apparel) and taxed accordingly ({{alcoholTax}} percent, {{groceryTax}} percent and {{salesTax}} percent, respectively).
  3. Transfer taxes: Transfer taxes are calculated over 10 years because properties, particularly new mixed-use projects, are frequently sold after they are completed, and just including one year would inappropriately skew the results. For the first year for residential space, the taxes are determined by multiplying the number of units by the average sales price by community area and then by 0.011 (the rate). For years after year 1 (years 2-10), this figure is multiplied by the sales rate of homes by community area, as analyzed by the Institute for Housing Studies. For non-residential uses, transfer taxes are determined annually by multiplying non-residential square feet by average office tax per square foot (based on neighborhood) and then by 0.24 (the rate).

Affordable housing units

The calculator makes estimates of effect based on the assumption that the property being developed is market-rate, in other words, that it does not receive government subsidies to reduce costs for renters or owners to make housing more affordable.

City of Chicago regulations under the ARO, however, require some affordable housing and/or “in lieu” payments for certain projects that require a zoning change or receive City support. Under the 2015 revisions to the ARO, which are the baseline for the calculator, projects that are required to include affordable housing (but which do not receive City support—not included in the calculator) must dedicate 2.5 percent of their housing units on site to affordability. Another 7.5 percent of units must either be provided on site or the developer must pay a compensating in-lieu fee to the City.

The in-lieu fee is set at different levels depending on the neighborhood, ranging from $50,000 in low-moderate income areas to $125,000 in higher-income areas to $175,000 downtown. A 100-unit building built in a higher-income area that is required to provide affordable housing, then, is estimated to require 3 affordable units on site and $875,000 in in-lieu fees up to 10 affordable units on site.

To determine whether a proposal is required to provide affordable housing, the proposal inputted by the user is compared to what is allowed under zoning. If the project is larger than allowed by zoning, the ARO requirements are enforced (this applies to projects that qualify under the 2013 TOD ordinance).