Chicago’s Missing Middle Housing Plan Targets Surplus Public Land

Chicago city planners are trying to solve a national problem that officials in many cities talk about but rarely tackle at scale – turning idle public land into “missing middle” housing in neighborhoods that have seen decades of disinvestment.

For a third round, planners and city officials have initiative selling tracts of surplus property for small-scale residential infill, rather than marketing these parcels for parking, speculation or short-term budget plug-ins.

In a small but growing group of cities, planners have committed to repurposing surplus public land for housing to increase supply and improve affordability. Seattle, San Francisco, Los Angeles and Atlanta are among those launching efforts, but focus mostly on extremely affordable or supportive housing, usually rentals.

The Chicago initiative supports owner-occupied homes for buyers earning up to 140% of the area median income, or $134,400 a year for a two-person household, otherwise known in residential real estate as “missing middle” or “workforce households.”

Windy City officials kicked off the program in late 2024, when the Planning and Development Department committed $75 million for the Missing Middle Infill Housing initiative. That funding is part of a $1.25 billion bond issue for economic development and housing.

“These developments will put vacant City lots into productive use, bring attractive and much-needed infill housing to local blocks while creating home-ownership opportunities that build community wealth,” Planning and Development Commissioner Ciere Boatright said in a statement.

Chicago’s infill experiment

The first round in January 2025 included three developers, 35 vacant lots, and 40 buildings. From those parcels, developers built a total of 115 market-rate, for-sale units. Last August, a second selection process led to the naming of developers for a total of 93 market-rate, for-sale homes spread across 31 buildings and 30 vacant city lots.

In the latest phase, Chicago officials approved 35 small multi-unit buildings that will add 99 new ownership units on vacant parcels. They will replace 24 city-owned lots. The total project value is about $35.5 million, a sizable investment in long-overlooked blocks.

Each site is in South and West Side neighborhoods where disinvestment and vacant land have long been conspicuous parts of the everyday landscape.

City leaders offer the land itself for $1 to bring down development costs for selected builders. The city also makes about $150,000 per unit available in construction and site-prep subsidies.

The discounts are meant to make for-sale, multi-unit homes pencil out in places where private builder-developers struggle to make projects work.

The housing, mostly small walk-up buildings and two- to six-flats, targets the “missing middle” of the market in these areas, replicating the neighborhood scale that dots many Chicago neighborhoods.

Selected developers include Citizens Building a Better Community, Westside Community Group, Garfield Together Partnership, TRUDelta and Urbanism LLC, each responsible for clusters of two-flats, three-flats and four-flats on city-owned residential lots.

In the McKinley Park neighborhood, Urbanism LLC plans five new two-flats buildings. The other four teams are building on sites in the East and West Garfield Park neighborhoods.

A tool more cities could use

For years, policy researchers have urged local governments to use public property more strategically as a housing affordability tool. They call this one of the most direct ways to expand housing supply without raising new taxes or fees on residents.

Yet the practice remains patchy, with many cities sitting on portfolios of scattered vacant or underused parcels in multiple departments. A Lincoln Institute of Land Policy analysis shows 276,000 buildable government-owned acres nationwide in transit-oriented urban areas. Depending on density, that would be enough to build 2 million to 7 million homes, George McCarthy, the Institute’s president, wrote in November.

Those parcels are often sold piecemeal to the highest bidder or left in limbo for years because of bureaucratic hurdles. Studies of public land programs point to a litany broken-record obstacles, including fragmented ownership across agencies and lengthy disposition processes.

Officials also face pressure to maximize quick-hit, one-time sale proceeds rather than prioritizing long-term community benefits such as affordable homes. Even when land is earmarked for housing, mismatches with subsidy programs and lengthy permitting delays can slow or stall projects, often for long enough to make them non-viable.

Those complications undercut the promise that free or cheap land will translate quickly into new homes for residents.

Other big cities steer surplus land toward housing

In Washington, D.C., the Disposition of District Land for Affordable Housing Act requires 20% to 30% of units on surplus sites be affordable, and the city sets higher affordability targets near major transit.

In the Northwest, Seattle city planners direct departments to prioritize surplus and underused city land for affordable housing and dedicates major sale proceeds to housing funds.

The California Surplus Land Act became law in 1968 and was updated in 2023 to make it easier to fast-track extra public land for affordable housing, with stronger long-term rent limits.

San Francisco city officials target large, underperforming public sites, including the 17-acre Balboa Reservoir, for mixed-income housing. Los Angeles uses surplus land tied to transit projects and other holdings for income-restricted housing.

In the Southeast, Atlanta planning leaders provide publicly owned land for affordable housing and run programs that speed development on those sites. A big focus is rapid housing — quickly built modular units and repurposed shipping containers — for people with a short history of homelessness.

New York City mandates have led to the conversion of surplus public sites into thousands of affordable homes through long-term land leases or outright sales. However, critics say the process is slow and cumbersome.

Why Chicago stands out

Against that backdrop, Chicago planners’ approach is notable for its focus on infill, homeownership and neighborhood repair over isolated, headline-grabbing projects. By clustering projects in targeted areas, the city is a living laboratory for whether public property can help rebuild a small-scale housing fabric.

That housing fabric historically sustained many working- and middle-class neighborhoods before decades of disinvestment and demolition. Advocates view this program as a template in which planning stakeholders map a city’s portfolio and identify lots that make sense for housing.

“This is one innovative way to activate small developers,” Ian Tudor, founder of Charlotte land development firm Decatur Investments, wrote on LinkedIn. “Give them land at cost, reasonable subsidies, and clear rules.”