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A weeklong series from the WGLT newsroom about the housing shortage in McLean County. New stories published daily starting Jan. 27, 2025.

How Bloomington and Normal leaders are working on the housing shortage

The proposed Carden Springs development in north Normal would include 29 garden-style and townhouse buildings.
Courtesy
Municipal officials would be happy to see a lot more housing development proposals like Carden Springs in northeast Normal. The first units are expected to be completed this fall.

People have been talking about a national housing shortage for about four years and about a local affordable housing shortage for at least that long. The lack of the affordable housing segment of the market has been a decades-long issue in the Twin Cities.

This week’s series on the housing shortage is not even the first time WGLT has looked at the broader issue.

The Bloomington-Normal Economic Development Council [EDC] began sounding the alarm bell in 2022, saying the community has substantially missed out on the spinoff restaurant and retail economic benefit from new manufacturing job creation in the community.

That has substantially gone to other communities because workers can’t find housing they could afford in the Twin Cities.

“That growth that has happened, they are living elsewhere and taking those dollars back to those communities,” said EDC director Patrick Hoban.

Before the pandemic, about 38% of the McLean County workforce lived a 45-minute drive away from their jobs. It’s now 45%. And Hoban said housing will remain a choke point for economic growth unless and until the community puts its thumb on the scale to encourage more development.

The community got serious about thinking of ways to address the shortage last year. Since then, it has taken time for policymakers to look for ways to stimulate housing construction despite the marketplace headwinds of high interest rates, skittish banks, workforce shortages, rising construction costs, and ballooning Twin City property assessments.

The discussion continues.

Housing recovery plan

McLean County Regional Planning Commission Director Ray Lai said there has been progress in implementing the Regional Housing Recovery Plan put out last year. The commission is still holding education sessions. Mid Central Community Action has continued its housing navigator program to help lower income people secure housing. The McLean County Center for Human Services now houses continuum of care efforts on the homeless front.

Lai said he also sees progress by the City of Bloomington, Town of Normal, and McLean County government.

McLean County Regional Planning Commission director Ray Lai, right, with Bloomington-Normal Economic Development Council president and CEO Patrick Hoban.
Staff
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WGLT
McLean County Regional Planning Commission director Ray Lai, right, with Bloomington-Normal Economic Development Council president and CEO Patrick Hoban.

“They have updated websites with information more readily available for people interested in developing and building in our community. On the homelessness front there is a coalition, in a way, to see how that can be addressed and help folks in need,” said Lai.

One of the high priorities of the plan was to create a housing coordinator position to help implement the regional plan. Lai said they have a state grant application in to fund that position for two years.

“We should be hearing from them any day now,” he said.

The commission also hopes for federal Housing and Urban Development [HUD] money in a variety of programs to help developers and homeowners, though a new administration makes that prospect problematic.

Another element of the plan is to convene a regional body to address housing. That’s not yet ripe.

“There are some internal discussions on how the implementation committee should be set up and just kind of looking at different angles,” said Lai.

Research on best practices continues. A few things in the plan have yet to be worked on.

“There’s a lot going on, but also we need a more concerted coordinated effort, so we are not duplicating efforts,” said Lai.

Both the City of Bloomington and Town of Normal have revised zoning codes that will affect the housing shortage, though Normal has done some things Bloomington has not yet considered and vice versa.

Town of Normal 

Last year, the Town of Normal approved a comprehensive revision of its zoning code. The old code had outdated terminology and land uses — things that were missing and uses that didn’t exist the last time planners shook out the moths. A lot does not apply to the current housing crisis. Some does.

“We’ve also made some, I’m going to say, relatively minor changes and tweaks to our zoning code to promote development,” said City Manager Pam Reece.

The town now allows more density in places zoned R3 [multifamily units]. Previously, R3 land that is next to R1 [single-family homes] had greater setback distances for homes on a lot than was true for other R3 spaces. The word "adjacent" could mean even across a major street. The town narrowed that setback.

There used to be a requirement that there be 2,500 square feet of lot space per housing unit. Town officials said that didn’t make sense because there are already requirements for greenspace, height, and parking. If you have all those things, why have a total lot size requirement? Dropping the lot size criterion may encourage density. It allows for smaller units if they meet parking and green space requirements.

The town also lifted some height limitations. In R3A [lower density multifamily] you can now have a three-story building instead of two. The town was already doing that in newly annexed subdivisions in recent years, but the revision puts the rule in place for existing sections of town.

Reece said the town will look at "meatier" changes this year.

Chris Koos and Pam Reece
Emily Bollinger
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WGLT file
Normal Mayor Chris Koos and City Manager Pam Reece at a Normal Town Council in 2023.

“Things that might modify our parking requirements, maybe consider accessory dwelling units and whether or not that is of interest to the community. We want to talk to council and gauge their interest on modifying our limitations on unrelated people living in a particular zoning district in one unit,” said Reece.

The city of Champaign significantly reduced its parking requirement a decade ago for the student-centric housing area closest to the campus. Normal plans to look at Champaign’s example, though distinguishing factors include a more robust public transit system in that city — and perhaps more on-street parking than in Normal.

Normal’s nature as a college town can complicate adoption of those policies.

“Some areas closer to the Illinois State University campus might have stronger opinions on the impact of parking changes and maybe the number of unrelated people who can live together. That’s why it’s going to be very important to gather public input," said Reece.

Another way to increase density is through allowing tiny houses and accessory dwelling units on the same lot, attached to current homes, or even above garages. Normal has not reached that issue yet. It could be fraught, again because college towns historically have norms and customs about where student housing should stop, and residential housing begin.

There might even be a concern accessory units would allow a revival of the rooming house concept the town tried hard to end in the 1970s. Code doesn’t allow discrimination based on graduation status, so the town addressed the problem of such party houses as the infamous "Abyss" on West Lincoln Street with a limit on unrelated occupants in a dwelling.

Increasing density often generates opposition. This happens even with minor increases such as push back from residents over the Trails at Sunset Lake.

Vetting of those ideas will begin in May, said Reece, with work session and public input in early summer. And when the council initiates zoning text amendments, they flow through the planning commission for 30 to 45 days, during which the public gets its say.

City of Bloomington

Bloomington faces some of the same questions Normal has, though it already has made changes to allow accessory dwelling units. The city is working through zoning codes to make sure there are not barriers to creating workforce housing, which Normal did last year.

Bloomington Deputy City Manager Billy Tyus.
Emily Bollinger
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WGLT
Bloomington Deputy City Manager Billy Tyus.

“They’re also looking at areas that might be right for this type of development that will produce a map that shows you might want to look here or there,” said Senior Deputy City Manager Billy Tyus.

Bloomington has historically had a reputation for taking a longer time to review plans and approve them. To developers, time is money.

“We’ve been looking at our processes as well to try and streamline those as best we can. We really would like to get our number down to 10 days in terms of a plan coming in and being reviewed. There’s a lot of factors that go into whether we can do that,” said Tyus.

Incentives

Some years ago, the county and cities agreed on a community-wide incentive package to encourage new business development. That reduces the likelihood of a bidding war among the two cities. The Economic Development Council hopes to do something similar to stimulate housing construction.

“We’re trying to figure out how we can standardize, or just create a policy that everybody knows and agrees upon what you’re going to get for what investment because there’s a delay in the negotiating time between the boards,” said Hoban.

The city and town councils may differ slightly on this idea.

Bloomington City Council members have expressed a desire for a package of incentives. Last month, staff presented several possible packages — from 50% to 100% fee waivers that could save developers hundreds of thousands of dollars or even above $1 million for a hypothetical $11 million project.

The city and the Bloomington-Normal Water Reclamation District would eat some of the development costs. Staff hope the council will nail that down sometime in the spring. Bloomington council members have not yet signaled how much of an appetite they have for a given level of waivers and abatements.

The Normal Town Council is less uniform on the concept of creating a package. Here’s Kathleen Lorenz from an October council meeting: “I for one would like for us to take a more proactive approach and come up with a menu that could be selected from based on the needs of the unique nature of various projects,” she said.

Mayor Chris Koos said at that meeting that it’s difficult to develop such a list because each project is so different it requires case-by-case assessment to find the right mechanisms to bend the cost curve and get a project across the finish line. Lorenz expressed concern whether a developer who doesn’t know all the questions to ask might be less successful.

Koos said it’s the function of community and economic development staff to consult with people who have widely varying potential projects.

"It’s going to get worse before it gets better … the dynamics of it all, the issues of financing, the issues of the labor force to build the housing."
Normal Mayor Chris Koos

“Staff is talking with developers that are doing different projects that are exploring our market, but again to do a project say using LIHTC [Low-Income Housing Tax Credits] and New Market tax credits is a different timeline to get government approval and funding on that,” said Koos.

Meanwhile, Bloomington just restructured its development divisions to enhance that same consultative guidance Normal has for developers and to focus more on housing development. Both communities are pantingly anxious to entertain such proposals.

Other potential incentives may come on the scene. Tyus says thanks to the Economic Development Council Enterprise Zone incentives could help housing projects.

"In the past, we haven't provided a building materials sales tax exemption for residential. ... We can now do that, because the EDC has petitioned the state to see if it was possible, and they have said yes," he said.

And Reece said the state also allows Tax Increment Financing [TIF] district incentives to be used in residential developments.

"We would have to adopt a TIF that would do that. We currently don’t have a TIF planned for a future development. But we would look at that. That would be on our list of one possible tool,” she said.

The city and town may find other ways to target specific areas for development. Hoban credits former Bloomington Council member Jamie Mathy of stepped incentives with larger benefits toward the city core. That would prioritize residential infill.

“And the further out it would go, it would actually turn into a disincentive, and starting to increase fees if you try to develop out in the middle of the corn field. There should be a cost-benefit analysis associated with these, possibly even a decision tree,” said Hoban.

To sum up, government efforts to address the Bloomington-Normal housing shortage are a work in progress. And while every little effort to make it more attractive to develop helps, most agree the underlying national economic factors are bigger influences on decisions whether to build.

Normal mayor Koos said a Harvard economist who specializes in the economics of housing recently made a pessimistic presentation to the U.S. Conference of Mayors.

“It’s going to get worse before it gets better … the dynamics of it all, the issues of financing, the issues of the labor force to build the housing,” said Koos.

It’s not all doom and gloom, but there is no easy solution around the corner.

In the short term Koos said fires in California may put upward pressure on the price of housing materials. And with inflation signals popping up and the Federal Reserve slowing its path to lower interest rates, this year could be a lot like last year — the slowest for home sales in three decades.

WGLT Senior Reporter Charlie Schlenker has spent more than three award-winning decades in radio. He lives in Normal with his family.