Northwest Side Housing Preservation Ordinance: What You Need to Know

The Northwest Side Housing Preservation Ordinance took effect on Saturday, March 1, 2025, bringing major changes to multifamily sales across key areas of Chicago. Initially set to go live on October 9, 2024, the ordinance was delayed following its September 2024 passage in City Council under aldermanic prerogative—a practice allowing alderpersons to control zoning decisions within their wards. The ordinance passed with a 44-3 vote and was sponsored by Alds. Daniel La Spata (1st), Jessie Fuentes (26th), Ruth Cruz (30th), Felix Cardona (31st), Rossana Rodriguez-Sanchez (33rd), and Carlos Ramirez-Rosa (35th). 

For a deeper dive, check out:

• The Chicago Association of Realtors—A breakdown of timelines and updates.
• Attorney Bob Floss’ Analysis—A long-form interpretation of the ordinance.

Key Components of the Ordinance

The ordinance introduces two major policy changes that directly impact multifamily transactions:

1. Amendments to the Demolition Surcharge Ordinance (2021)

• Higher Fees: Demolition surcharge increases from $5,000 per unit / $15,000 per building to $20,000 per unit / $60,000 per building in Pilsen and the 606 Pilot Areas.
• Extended Sunset Date: Now in effect until December 31, 2029.
• Expanded Boundaries: The 606 Predominance of the Block District now includes Avondale, Hermosa, Humboldt Park, Logan Square, and West Town (see map).

2. Tenant Opportunity to Purchase (TOP) – Right of First Refusal (ROFR) Program

Perhaps the most significant and controversial aspect of the ordinance, this provision affects the sale of residential rental properties in the 606 Pilot Area, granting tenants the right of first refusal (ROFR) before a property can be sold.

How the Right of First Refusal Works for 5+ Unit Properties

If you own a 5+ unit multifamily property in the 606 District, you must now follow a four-step process when selling:

Step 1: Notice of Intent to Sell (60 Days)

Before listing, owners must notify both tenants and the Chicago Department of Housing (DOH) at least 60 days in advance using the required forms:

• Public Notice of Intent to Sell
• Notice of Intent to Sell

Step 2: Notice of Third-Party Purchase Offer

After the 60-day waiting period, the property can be listed. Once under contract with a third party, owners must provide tenants and DOH with:

• Executed third-party purchase agreement
• Rent roll, vacancy history, and income/expense reports
• Building code violations, litigation history, and architectural plans
• Official Notice of Third-Party Purchase Offer

Step 3: Right of First Refusal Period (90 Days)

• Tenants or an approved tenant association have 90 days to enact their ROFR and match the third-party offer (e.g. purchase price, escrow amounts).
• If 50% or more of tenants in occupied units choose to waive their ROFR, the sale may proceed with the original third-party
• If tenants choose to enact their ROFR,, the third-party contract is voided, and the owner must pursue the sale with the tenants .

Step 4: Closing Period (120 Days)

• Tenants have 120 days to secure financing and close on the transaction..
• If the tenant purchase fails, the sale can continue with the original third-party. However, should the third-party purchaser back out and a new party is contracted at a discount of greater than 10% of the original purchase price, the ROFR and Closing Period starts over. 

What This Means for Property Owners

For landlords and investors, this ordinance presents significant challenges when selling a property. Worst-case scenarios could push a standard sale timeline past 12 months, which is a major issue for those facing:

• Refinancing deadlines
• Property tax increases
• Rising insurance premiums
• Urgent financial or personal situations

Legal and Industry Response

The Neighborhood Building Owners Alliance (NBOA) and other industry groups are actively challenging the ordinance in court and lobbying in Springfield. However, the legal process could take years, and penalties for noncompliance range from $200 to $1,000 per unit, per day.

How I’m Helping Owners Navigate This Ordinance

As a broker specializing in the 606 District, I’m working with attorneys, investors, and fellow brokers to develop strategies that:

• Minimize transaction delays
• Ensure compliance with new requirements
• Help property owners close deals successfully

If you need guidance or want the latest market insights—let’s connect!