Unlocking Chicago's Community Development Grant Program: A Streamlined Financing Path

[Christopher S.]

The City of Chicago has recently streamlined its financial incentive programs for economic development within city limits. Historically, navigating the funding landscape was complex with differing program specific funding conditions and amounts, favoring only the most skilled large developers. However, the new Community Development Grant (CDG) program simplifies access to critical funds, offering three distinct grant categories:

1. -Small Grants (up to $250,000)
2. -Medium Grants ($300,001 to $5 million)
3. -Large Grants (over $5 million)

These grants can support a wide range of projects, including office, retail, cultural, industrial, and mixed-use developments of more than 10+ housing units with ground-floor retail. Grant funding can be up to 50% of total project costs of the proposed Development, depending on the need for assistance to create a viable development and adequate eligible project costs. (If your project is primarily housing or incorporates housing specific funding sources, you will need to apply through the Department of Housing rather than through this program.)

The funding sources that a project can receive include the Chicago Recovery Plan (CRP), Housing and Economic Development Bond (HED), Neighborhood Opportunity Fund (NOF), and Tax Increment Financing (TIF) which have all been combined into a single, streamlined grant program with unified rules and regulations. The Department of Planning and Development has created a handy program manual to assist developers who wish to apply for these funds.

Application Deadlines are updated on a rolling semi-annual process for each program, with the current upcoming deadlines as of this post shown below:

Small Deadline: 11:59 a.m. Friday, Nov. 8, 2024

Medium Deadline: 11:59 p.m. Friday, Feb. 14, 2025

Large Deadline: 11:59 p.m. Friday, Feb. 14, 2025

Caveats/Considerations before applying:

Time involved: These projects have long lead times between review, approval, and reimbursement. If your project has a tight deadline and is otherwise viable, this is likely not the program for that specific project to take advantage of.

Level of Review: Projects are required to submit a substantial amount of project specific information as part of both the application review, approval/legislative process and contract reimbursement process. Applicants should review the program manual for a detailed list of what the Department will expect in order to finance your project. (Note: These are non-negotiable requirements that must be provided)

MBE/WBE/Prevailing Wage: All projects that seek City assistance are required to have a certain percentage of Total Project Costs (TPC) that are being performed by certified Minority Business Enterprises (MBE) 26% and Women Business Enterprises (WBE) 6%, as well as have labor costs that pay prevailing wage as defined by the State of Illinois. (Note: These are non-negotiable requirements)

Other Incentive Programs

Small Business Improvement Fund: Best thought of as a storefront/small business rehabilitation program, this small grant program ($150,000 for commercial properties and $250,000 for industrial properties) is targeted for smaller renovation projects and can cover anywhere from 30-90% of the cost of remodeling a storefront facade, roof replacement, major systems replacements (HVAC, plumbing, electrical, etc.) or an individual interior space build-out within a larger building to get it tenant ready. These grants are a subset of the City's TIF program and applications are accepted for projects within specific TIF districts on a rolling basis.

Cook County Property Tax Incentives: Cook County has a tax incentive program that allows projects to receive a special property classification for a 12 year period that lowers annual property taxes by as much as 50% through the term of the incentive program. This incentive program is reviewed separately from the above grant programs and requires City support to be eligible for the Property class change.

The variety of economic development grants/programs and the process streamlining that has taken place to date in Chicago is meant to encourage access for smaller and newer developers and encourage the types of "missing middle" developments that have historically been to small or the process to burdensome to move forward. 

[Christopher S.]

@Jennie Berger, glad you found it helpful. I want to go through each program in more detail eventually. If you had one that you thought you could use for your project, happy to start with that explainer.