City Council has passed an ordinance today granting the Department of Housing (DOH) the authority to administratively cede up to $150 million in volume cap to the Illinois Housing Development Authority (IHDA) over a period of three years. This move aims to promote the creation and preservation of affordable multi-family housing in partnership with other funding agencies.

Volume cap refers to the allocation of resources based on population. In the case of the City of Chicago, volume cap is occasionally ceded to governmental agencies like IHDA and CHA to support affordable housing projects. While DOH has not be able to leverage all the volume cap provided to it due to insufficient subordinate resources, ceding a portion of the cap to IHDA enables DOH to maximize affordable housing creation in collaboration with other agencies.

DOH recently ceded $100 million in volume cap to the Chicago Housing Authority (CHA) for the preservation of 350 units of affordable senior housing. In doing so, DOH reduced the fees charged to the project, a cost-saving measure that not only benefited the project's budget, but also helped avoid potential funding gaps that might have required additional DOH subsidies.

IHDA, as a state allocating agency, also utilizes bonds to finance multi-family projects in Chicago. In the past five years (2018 to2022), IHDA utilized its own volume cap to support over $1.55 billion worth of developments in the city. Recognizing the excess of unused volume cap in 2020, the city had previously ceded volume cap to IHDA to further facilitate affordable development in Chicago.

Historically, the City receives an average of $270 million in bond cap annually. However, DOH has only utilized $20 to $30 million for housing deals each year, resulting in approximately $200 million of unused volume cap that expired annually. While recent changes in federal regulations and the inclusion of a Preservation Tract in DOH’s funding rounds have allowed for a more significant utilization of volume cap, the City still expects nearly $50 million of cap to go unused and expire each year.

Granting administrative authority to Marisa Novara, Commissioner of DOH, to cede a portion of the city's volume cap to IHDA on an as-needed basis over the next three years will enable the construction of more affordable multi-family housing projects. This arrangement will require no additional cash or staff resources from the City while maximizing the potential impact of the volume cap allocation.

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