HB4389 104TH GENERAL ASSEMBLY

LRB104 16675 RTM 30079 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB4389

Introduced 1/14/2026, by Rep. Jed Davis

SYNOPSIS AS INTRODUCED:

New Act

Creates the Starter Home Incentive Zone Act. Provides that a municipality may establish a Starter Home Incentive Zone within a designated area if the municipality adopts any 3 of the following reforms within a designated zone: (1) reduced minimum lot sizes applicable to detached single-family homes; (2) reduced minimum dwelling size requirements permitting homes of 1,600 square feet or less; (3) fast-track permitting with a decision issued within 10 to 20 business days; (4) reduction, waiver, or cap of impact fees for detached single-family homes; or (5) reduced setback requirements. Provides that municipalities containing a Starter Home Incentive Zone shall receive specified benefits from the Department of Commerce and Economic Opportunity. Provides that municipalities containing a Starter Home Incentive Zone may receive specified benefits from the Department of Transportation. Provides that, on or before January 31 of each year, a SHIZ-certified municipality shall submit a report, not to exceed 2 pages, containing specified information for each Starter Home Incentive Zone within the municipality. Requires the Department to adopt rules necessary to implement the Act in accordance with the Illinois Administrative Procedure Act. Provides that the Department may not require any municipality to submit reports, data, analyses, or documentation beyond the annual compliance report, unless expressly authorized by the Act. Limits home rule powers. Effective immediately.

A BILL FOR

AN ACT concerning local government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Starter Home Incentive Zone Act.

Section 3. Legislative purpose. The purpose of this Act is to expand homeownership opportunities for Illinois families by encouraging municipalities to voluntarily adopt zoning reforms allowing construction of entry-level, detached single-family homes. Participation in this program is strictly voluntary, must preserve full local zoning authority, and must not authorize or require any municipality to allow multifamily housing. This Act promotes freedom, local control, and market-driven development without mandates.

Section 5. Applicability.

(a) This Act applies only to detached single-family homes.

(b) Nothing in this Act shall be construed to authorize, require, encourage, or permit any municipality to approve:

(1) multifamily housing;

(2) duplexes, triplexes, or fourplexes;

(3) townhomes or rowhomes;

(4) condominiums or cooperative housing; or

(5) any residential structure containing more than one dwelling unit.

Section 10. Definitions. As used in this Act:

"Department" means the Department of Commerce and Economic Opportunity.

"Designated zone" means the geographic area within a municipality where qualifying reforms apply.

"Qualifying reforms" means the reforms described in Section 15.

"Starter home" means a detached, single-family residence containing no more than 1,600 square feet of heated living space.

"Starter Home Incentive Zone" or "SHIZ" means an area certified by the Department under this Act.

"SHIZ-certified municipality" means a municipality containing at least one SHIZ certified by the Department.

Section 15. Qualifying reforms.

(a) A municipality may establish a Starter Home Incentive Zone within a designated area if the municipality adopts any 3 of the following reforms within a designated zone:

(1) reduced minimum lot sizes applicable to detached single-family homes;

(2) reduced minimum dwelling size requirements permitting homes of 1,600 square feet or less;

(3) fast-track permitting with a decision issued within 10 to 20 business days;

(4) reduction, waiver, or cap of impact fees for detached single-family homes; or

(5) reduced setback requirements.

(b) A municipality may, but is not required to, adopt more than 3 of the reforms listed in subsection (a).

Section 20. Incentives for municipalities.

(a) A SHIZ-certified municipality shall receive the following priority access benefits from the Department:

(1) The Department shall review grant applications submitted by SHIZ-certified municipalities before reviewing applications submitted by other municipalities.

(2) SHIZ-certified municipalities shall receive not less than a 10% scoring preference during competitive grant evaluations administered by the Department.

(3) If there is a scoring tie between applicants during competitive grant evaluations administered by the Department, then a SHIZ-certified municipality shall be awarded the higher ranking.

(b) The priority access provisions in subsection (a) apply to the following programs administered by the Department of Commerce and Economic Opportunity, including successor or substantially similar programs:

(1) the Local Public Infrastructure Grants Program;

(2) any Community Development Block Grant local improvement programs;

(3) the Rebuild Illinois Economic Development Program;

(4) the Broadband Expansion Grant Program;

(5) the Water and Sewer Infrastructure Grants Program;

(6) any Public Infrastructure and Capital Development Programs; and

(7) any successor program that provides grants for local infrastructure, economic development, community improvement, water, sewer, broadband, or capital improvements.

(c) SHIZ-certified municipalities shall receive a 25% reduction in required local match contributions for programs listed in subsection (b), where consistent with the authorizing statutes and federal program requirements.

(d) The Department shall provide SHIZ-certified municipalities with a State-issued program emblem and shall include all certified municipalities on the Department's publicly available statewide list of Starter Home Incentive Zones.

(e) The Illinois Department of Transportation may give favorable consideration to SHIZ-certified municipalities when evaluating applications for:

(1) local highway safety improvement grants;

(2) local capacity improvement or congestion mitigation projects;

(3) traffic signal modernization or roadway enhancement grants; and

(4) any successor local transportation improvement program.

This subsection does not impose a mandate on the Department of Transportation.

Section 25. Certification process.

(a) A municipality seeking to establish a Starter Home Incentive Zone shall:

(1) adopt a municipal ordinance establishing a designated zone;

(2) identify which qualifying reforms under Section 15 have been implemented within the designated zone; and

(3) submit a compliance statement and a map of the designated zone to the Department in a form prescribed by the Department.

(b) Upon determining that the municipality has satisfied the requirements of subsection (a), the Department shall issue written certification and include the SHIZ on the statewide list of Starter Home Incentive Zones.

Section 30. Annual reporting.

(a) On or before January 31 of each year, a SHIZ-certified municipality shall submit a report, not to exceed 2 pages, for each Starter Home Incentive Zone within the municipality. The report shall:

(1) confirm that the qualifying reforms the municipality adopted to establish the Starter Home Incentive Zone remain active and in effect;

(2) confirm that the qualifying reforms the municipality adopted to establish the Starter Home Incentive Zone are enforced within the designated zone; and

(3) inform the Department of any updates to the boundaries of the designated zone.

(b) Failure to submit the annual report may result in suspension of program benefits until the municipality returns to compliance.

Section 35. Rulemaking. The Department shall adopt rules necessary to implement this Act in accordance with the Illinois Administrative Procedure Act.

Section 40. State zoning limitation. Nothing in this Act shall be construed to authorize the State, the Department, or any other State agency to impose zoning requirements, land-use mandates, density requirements, or zoning modifications on any municipality. All zoning authority remains fully and exclusively local.

Section 45. Limitation on reporting requirements. The Department may not require any municipality to submit reports, data, analyses, or documentation beyond the annual compliance report described in Section 30, unless expressly authorized by this Act.

Section 50. Protection of builder freedom. Nothing in this Act shall be construed to require any builder, developer, contractor, or private party to construct a starter home or to participate in a Starter Home Incentive Zone. Participation in this program is voluntary for both municipalities and private parties.

Section 55. Home rule. A home rule unit may not regulate starter homes in a manner inconsistent with the regulation by the State of starter homes under this Act. This Section is a limitation under subsection (i) of Section 6 of Article VII of the Illinois Constitution on the concurrent exercise by home rule units of powers and functions exercised by the State.

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 99. Effective date. This Act takes effect upon becoming law.