Neighborhood Opportunity Fund (NOF)
City of Chicago’s Neighborhood Opportunity fund provides large (>$250k) or small projects in areas of the city that lack private investment by redistributing revenue generated from downtown development.
What is the Neighborhood Opportunity Fund?
The Neighborhood Opportunity Fund is a program administered by the City that provides grants to finance the construction or rehabilitation of commercial and cultural projects in neighborhoods that lack private investment, using funds generated from downtown development. NOF is funded by the Downtown Density Bonus established by the City in 2016 and allows developers in the downtown area to make a bonus payment in order to exceed the allowable density requirements. The revenue generated through that fee is placed into a fund that can be used to finance eligible projects and spur development throughout the city beyond the downtown core.
How does it work?
The NOF is funded through payments from the development of large downtown construction projects. If the developers of a project within downtown Chicago want to exceed the allowed density for their project, they can make a payment of a percentage of their building’s worth into the Neighborhood Opportunity Fund. The NOF receives 80 percent of this one-time bonus payment while the remaining funds are divided among two other unrelated programs.
The City oversees disbursement of NOF funds to communities and projects along commercial corridors outside the downtown core. NOF proceeds are regularly awarded as grants to projects that have a ‘catalytic impact on the neighborhood’ and lead to the construction or rehabilitation of new and existing, publicly accessible, commercial spaces (e.g. grocery stores, retail establishments, or restaurants). NOF does not award grants for the construction or rehabilitation of residential uses, manufacturing uses, industrial uses, or places of worship that do not identify commercial as the primary use of a project. The NOF is structured as a funding partnership in which the City funds a percentage of the total project costs, and grant applicants provide the remaining funds.
Where can NOF funds be used?
Where and how can it be used?
The Department and Planning and Development uses existing community plans and input from elected officials to determine which projects meet community needs and are desired by the residents. Eligible projects include the construction or rehabilitation of commercial or cultural facilities that support opportunities and add to the vibrancy of the community. This may include grocery stores, restaurants, museums, and small music and performing arts venues.
Projects must be located in areas designated as Qualified Investment Areas (QIA), commercial corridors in underserved areas, priority investments corridors, and other eligible corridors. Applications are prioritized based on their catalytic impact, project readiness, project financial feasibility, and construction implementation. Through the program, new construction projects are eligible to receive up to 30 percent of the total project cost while rehabilitation projects are eligible for grants of up to 50 percent. Recent changes in the program also allow for grants of up to 100 percent of project costs if both the owner and staff are local residents.
What are its intended outcomes?
NOF is structured as a redistributive incentive. The goal of NOF is to ensure that the growth of the downtown district also drives and directly funds equitable development in the South, Southwest, and West sides of the city, specifically along designated commercial corridors.
Where NOF investments have gone.
Total NOF investments 2016-2021.