Entitlement pathway election — Illinois

Home rule vs. non-home-rule: two different sources of zoning power

The Illinois Constitution draws this line directly. Article VII, Section 6(a) provides: "A County which has a chief executive officer elected by the electors of the county and any municipality which has a population of more than 25,000 are home rule units. Other municipalities may elect by referendum to become home rule units... a home rule unit may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt." A home rule unit can also elect by referendum to give up that status under Section 6(b), and the General Assembly retains narrow tools under Sections 6(g) and 6(h) to limit or preempt specific home-rule powers by supermajority vote.

The practical zoning consequence is real: a home rule municipality doesn't need a specific statutory delegation to zone, rezone, or grant a special use — that power flows directly from the Constitution, cabined only by an actual state preemption. A non-home-rule municipality or a county acting on unincorporated land, by contrast, is a Dillon's Rule jurisdiction that has to trace its zoning authority to the state's own enabling statutes: the Illinois Municipal Code's zoning division (65 ILCS 5/11-13-1 et seq.) for non-home-rule municipalities, and the Counties Code's zoning division (55 ILCS 5/5-12001 et seq.) for county zoning of unincorporated land. Cook County is currently the state's only home rule county — every other county's zoning authority for unincorporated land runs through the Counties Code.

Per the Illinois Municipal League's own current published list, 224 municipalities qualify as home rule units today, alongside Cook County. That count is not fixed: a municipality crosses the 25,000-population threshold (or falls back below it) as census figures update, and any municipality can adopt or abandon home rule by referendum under Article VII, Section 6(b) — so a Sponsor should reconfirm a target municipality's current status against IML's list rather than rely on an earlier one.

This distinction is exactly what makes the pathway an election rather than a formality. A home rule municipality's council can generally act on rezoning, a special use, or a PD/PUD on its own calendar, constrained mainly by its own ordinance's notice-and-hearing procedures rather than by having to demonstrate compliance with a specific state zoning-enabling statute's requirements for each individual tool it uses. A non-home-rule municipality's or county's process is bounded by whatever the Illinois Municipal Code or Counties Code actually authorizes for variances, special uses, and amendments — a real risk where a smaller non-home-rule community's zoning ordinance predates common tools like PD/PUD, or where its own procedures haven't kept pace with a proposed use.

IHDA's zoning threshold applies the same way regardless of who holds the power

IHDA's own Application checklist requires proof that a Site is zoned for the proposed use, or on a documented path to being zoned, in a timeframe compatible with the Project's two-year Placed-in-Service date — through one of the three tracks described in the site-control-and-due-diligence phase (already zoned, pending rezoning/variance/special use, or PD/PUD). That requirement is identical whether the underlying municipality is home rule or not, and identical whether the zoning action rests on constitutional police power or a specific statutory grant. IHDA reviews only the letter from the zoning administrator describing status and timeline — it does not itself verify that a non-home-rule municipality's variance, special use, or ordinance amendment actually complied with the Illinois Municipal Code's or Counties Code's own procedural requirements.

That gap is where the real election happens. Choosing to bank a deal on an as-of-right zoning read carries the least legal risk but the least flexibility; choosing to pursue a rezoning, variance, special use, or PD/PUD trades that safety for timeline risk that plays out very differently depending on whether the underlying body is a home rule unit acting under its own general power or a Dillon's Rule jurisdiction that has to point to an actual statutory grant for the specific tool being used. Confirming which kind of jurisdiction controls the Site — and whether its own code and procedures genuinely support the intended zoning action — is land-use counsel's job, not something IHDA's zoning-administrator letter requirement substitutes for.

The Affordable Housing Planning and Appeal Act: Illinois's zoning-appeal backstop

The Affordable Housing Planning and Appeal Act (AHPAA), codified at 310 ILCS 67/ and administered by IHDA, requires IHDA to calculate every Illinois local government's "Affordable Housing Share" from U.S. Census Bureau American Community Survey five-year estimates — the share of a jurisdiction's total year-round occupied housing that would be affordable to homebuyers at 80% of the applicable median household income and renters at 60% — and to republish that determination at least once every five years (the 2023 cycle used 2016 ACS five-year data). A local government with a population under 1,000, or with a share at or above 10%, is "Exempt." A local government with population of 1,000 or more and a share below 10% is a "Non-Exempt Local Government" (NELG") and becomes subject to the Act's planning and reporting requirements.

The 2023 determination cycle identified 44 Non-Exempt Local Governments statewide, concentrated almost entirely in the collar counties around Chicago — Cook, Lake, DuPage, Kane, McHenry, and Will — with affordability shares ranging from as low as 0.4% (Kildeer, Lake County) up to just under the 10% threshold (River Forest, Cook County, at 9.7%).

A first-time NELG has 18 months from notification to locally adopt and submit to IHDA an Affordable Housing Plan meeting Section 25's requirements (expanded from four to seven minimum content items by a 2023 amendment, Public Act 103-0487), with a mandatory local public hearing before adoption and an IHDA review turnaround of 30 days after submission.

The actual appeal mechanism runs through the State Housing Appeals Board (SHAB), a seven-member body the Governor appoints under Section 50: a chairperson who is a retired circuit or appellate judge, a current or retired administrative law judge, or a land-use attorney; four members drawn from county/municipal zoning-board, planning-board, or elected-official ranks (at least two of whom must come from a Non-Exempt local government); one affordable housing developer; and one affordable housing advocate — plus IHDA's own chairperson serving as a non-voting ex officio member.

Section 30 of the Act, as amended effective January 1, 2026, allows a developer, a person eligible to live in the proposed development, or a housing organization covering the area to appeal to SHAB against a Non-Exempt municipality "if the proposed affordable housing development was denied by the municipality, or approved with conditions that in the appellant's judgment render the provision of affordable housing infeasible." To even reach that point, the developer must already hold site control in the Non-Exempt jurisdiction and have proposed at least 20% of the units as long-term affordable — 15 years for owner-occupied housing, 30 years for rental. The appeal has to be filed within 45 days of the local government's decision, though no appeal may be filed against a first-time NELG until six months after its own Non-Exempt notification. The Board is directed to decide "whenever possible" within 120 days of filing, with the burden on the appellant to prove by a preponderance of the evidence that the denial was unfair or the conditions unreasonable.

Not every local objection survives review. The Act defines "Non-appealable local government requirements" as "all essential requirements that protect the public health and safety, including any local building, electrical, fire, or plumbing code requirements or those requirements that are critical to the protection or preservation of the environment" — and while zoning, density, and bulk restrictions can qualify for that shield, they only do so if SHAB itself finds they actually meet that statutory definition. An ordinary zoning denial is not automatically protected. If the appellant prevails, the Board can vacate a denial and direct the local government to issue permits, or strike or modify unreasonable conditions; its decision is binding, reviewable only in the Appellate Court for the district where the local government sits, under a "clearly erroneous" standard, with a further 35-day window to file that appeal.

This Act connects directly back to IHDA's own scoring, described in the site-sourcing-and-screening phase: a Site inside a municipality with an affordability share at or below 20% earns points under the Targeted Markets policy track's Communities Lacking Affordability category, using the same AHPAA determination that flags a jurisdiction's zoning-fight risk in the first place. Checking a target municipality's AHPAA status does double duty — it surfaces both a scoring opportunity and an entitlement-risk signal from the same lookup.

TEFRA hearings: the federal gate on bond-financed (4%) deals, run by IHDA itself

Section 147(f) of the Internal Revenue Code requires a public hearing before a governmental issuer can close on tax-exempt private activity bonds. IHDA — a body politic and corporate created under the Illinois Housing Development Act (20 ILCS 3805/1) — issues its own multifamily bonds directly, and runs its own TEFRA hearings for those bond issuances rather than delegating that function elsewhere. A recent IHDA TEFRA notice states plainly: "This public hearing is being held to comply with the requirements of Section 147(f) of the United States Internal Revenue Code of 1986, as amended, and the relevant regulations promulgated thereunder."

Procedurally, IHDA posts notice at least seven days before each hearing, conducts the hearing itself by video and telephone, allows time-limited oral comment alongside written comment submitted by a stated deadline, and must hold the hearing before its Board adopts the Bond Resolution. On approval, IHDA's own published guidance is direct: "The Governor acts as the 'applicable elected representative' for purposes of the public approval requirement of Section 147(f)(2)(E) of the Code." The Governor's office requires the hearing transcript and the adopted Bond Resolution before executing an approval letter, and IHDA tells Borrowers to expect a minimum turnaround of 14 business days for that approval alone — layered on top of, not instead of, IHDA's own PPA and Application review.

This research confirmed IHDA's own TEFRA process for bonds IHDA itself issues, but did not confirm what happens when a different governmental unit — a home-rule municipality's own conduit issuer, or another state bond-issuing authority — issues the private activity bonds behind an Illinois 4% deal instead. The QAP's own 42(m) Letter process only requires the Sponsor to obtain a separate preliminary determination (a "42(m)(2)(D) Letter") from whichever entity actually issued the bonds; it does not describe that other issuer's TEFRA procedure. A Sponsor working with a non-IHDA bond issuer needs to confirm that issuer's own hearing process rather than assume IHDA's timeline and Governor-approval chain apply.

None of this touches a 9% competitive award. Since no private activity bonds are issued on a 9% deal, TEFRA simply doesn't apply — one more way the entitlement-pathway election (equity structure, not just zoning) drags a different federal process into a bond-financed deal that a competitive 9% deal never has to clear.

Picking a pathway with three clocks running at once

None of the three clocks described in this phase are built to run together. IHDA's own zoning threshold is loosely bounded by the two-year Placed-in-Service date but prints no specific number of months. An AHPAA appeal to SHAB can't even be filed for six months after a first-time NELG's own notification, has a 45-day filing window once a denial does occur, and the Board then aims — only "whenever possible" — to decide within 120 days, all of which sits well outside a single annual 9% competitive round's own PPA-to-Application timeline. And a TEFRA hearing adds a seven-day minimum notice period plus a 14-business-day gubernatorial turnaround on top of everything else, solely on bond-financed deals. A Sponsor betting a site's viability on a zoning outcome that could slip into an AHPAA appeal should not expect that fight to resolve inside the same funding round the Site was screened for.