Accessory Dwelling Units (ADUs)

An ADU is a separate, compact living space within or attached to a single-family or multifamily property. These smaller, independent units can be located within an existing building, such as in a basement, attic, or the conversion of unused space in a mixed-use building, or be detached, like a coach house.

ADUs already exist in many communities in the Chicago area, and in recent years, Chicago and several neighboring municipalities have expanded opportunities to build new and legalize existing ADUs. Thoughtful ADU policies can help preserve existing buildings and stabilize property owners and tenants. ADUs may also discourage the deconversion of 2-4 unit buildings into single family homes.

However, barriers remain. Restrictive zoning, supply-chain issues, construction costs, access to financing, and other issues have limited adoption. Additional resources are needed to unlock the full potential of ADUs as a tool for preserving our existing stock of affordable rental housing.

Highlight: Basement Units in 1-4 Unit Properties

Many 1-4 unit buildings and multifamily buildings harbor untapped potential for adding or improving more rental units, many of which would be naturally affordable.

Encouraging more basement units could add to the naturally occurring stock, help to stabilize owner-occupants, and help to discourage 2-flats being deconverted into single-family homes.

Policy Considerations

Thoughtful, equity-focused basement unit policies should be structured so that:

Existing tenants are not displaced.
New and rehabbed basement units are high quality and flood-resistant.
Owner-occupants can access affordable financing and other financial assistance to ensure safe and healthy units.

Collaborative Policy Making and Technical Assistance

In 2019, the Urban Land Institute (ULI) launched an initiative to develop a policy to enable ADU development in the City of Chicago in an equitable way. The ULI Chicago’s Accessory Dwelling Units Initiative convened a diverse set of stakeholders and as a part of this initiative, Stacie Young, the Compact’s Director from 2012-2022, co-chaired the policy committee.

As a final result of this initiative. ULI released a report based on the collaborative efforts of the group with a set of recommendations in May of 2020, Unlocking Accessory Dwelling Units in Chicago and in December of 2020, the City of Chicago approved the Additional Dwelling Units (ADU) Ordinance which created the ADU pilot program.

The City’s 3-year pilot program launched in May 2021 and allows for ADUs to be constructed in residential districts in 5 pilot areas across the city.

Many recommendations from ULI Chicago’s ADU Initiative’s Report were included in the City’s ADU Pilot program, including:

Relaxed parking regulations – no additional parking is required for new ADUs
ADUs have “as-of-right” status for pilot areas – this provides a path for illegal basement units to convert to legal units, although units will need to comply with building code.

Another key provision of the pilot program was the inclusion of affordability requirements for properties with two or more conversion units – every other unit must be affordable at 60% AMI for 30 years.