Taxing property owners whose rentals sit empty for most of the year and using the money to build housing on vacant land could be part of the solution to Chicago’s affordable housing crisis.
That’s what three University of Chicago undergraduate students argued during the inaugural Kreisman Initiative Housing Challenge Symposium. The team was chosen as the first winner of the symposium, which the university plans to continue as a thought exercise for housing-related issues.
While their proposal would only make a small dent in addressing the city’s affordable rental crisis, it would be a welcome change from the city’s status quo that’s preventing more housing from being built, the students said. And the team — who won the challenge last month — found other cities have implemented similar vacancy taxes.
The University of Chicago’s Mansueto Institute for Urban Innovation launched the Kreisman Initiative Housing Challenge Symposium this year to spur undergraduate and graduate students to come up with solutions that will help address the city’s housing issues
Emily Talen, professor in the division of the social sciences and director of the Urbanism Lab at the University of Chicago, said a new challenge will be presented each year.
This year’s topic was affordable rental housing — looking at how and where Chicago could create 126,125 affordable rental homes over the next five years. The figure is based on a 2024 report from Housing Action Illinois and the National Low Income Housing Coalition.
The report said Chicago has a shortage of 126,125 affordable homes for those with the lowest incomes and 32 affordable rental homes for every 100 extremely low-income renter household.
Students Adam Jensen, Kelli Lynch and Elayna Whiteman brought home the challenge’s $5,000 prize for their proposal, titled “Reclaiming Space: Using Public Land and Vacancy Taxes to Build and Revitalize Chicago’s Neighborhoods.”
The team proposed a vacancy tax that would be implemented through the city’s Department of Planning and Development. The tax revenue would be used to create infill housing.
The idea stemmed from each student’s experience seeing vacant buildings in Chicago.
Whiteman lives near the former John Fiske Elementary School, one of 50 schools closed in 2013 by then-Mayor Rahm Emanuel. She said seeing vacant buildings like Fiske made the team realize the potential such buildings have. Much of the housing crisis is because of a lack of supply, they said, and the vacant buildings could be reimagined into homes.
“It’s just something that we see around us, and we recognize [it] as both an opportunity for revenue raising … [and] reinvestment,” Jensen said. “That guiding focus on vacancy was something that we settled on pretty early on, and [what] we thought distinguished us from some of the other teams.”
The trio presented several ways in which a vacancy tax could work in Chicago. One would be charging owners who left an available housing unit vacant for about 180 days a flat fee of $500. The team’s research indicated the flat fee system could raise $30 million annually to support infill housing, Whiteman said.
But a model the team believes will better address the city’s needs is taxing owners the equivalent of one month’s rent for their vacant units, or between $2,000 and $3,000 per unit, Whiteman said.
“That’s kind of in line with Proposition M in San Francisco. Basically, saying that this unit was left vacant so we’re gonna tax you an additional month’s rent because this could have been somebody’s home for that month,” Whiteman said.
Money raised through the vacancy tax would then be used to develop “anchor zones,” according to the team. The anchor zones are currently vacant buildings that the team identified as sites ripe for small, mixed-use redevelopment, like Chicago’s vacant schools. The anchor zones would also be near transit to allow for more community-driven engagement, Jensen said.
“These would be mixed-used buildings where you could have commerce, you could have access to residencies — a lot of different things,” Lynch said. “Ultimately, the community would be able to decide where their priorities were.”
Depending on how funding is doled out, the team projects the vacancy tax could create 2,000 to 7,000 new units of affordable housing a year, Whiteman said. The tax could also help bring some housing costs down because owners will be motivated to fill their units.
The team said its solution would need to work with other city programs and incentives, and may take more than the five-year time frame the housing challenge proposed.
“We didn’t necessarily pick the most realistic option because we really wanted to see how we can think outside of existing interventions,” Lynch said. “It’s similar to the [city’s] missing middle initiative, but because we have taken this approach of vacancy and pairing it with the vacancy tax and the anchor zone model, ultimately we want to just encourage building strong communities and encourage policymakers to think about the different ways that could take form.”