I just wrapped up adding new overhead 100 amp service for my parent's garage outside Chicago. My Mom is a retired ceramics teacher and wanted a 30A two phase kiln and/or welder in there and the original install was terribly inadequate, with buried #10 a long distance from the house, but the building is right near the power pole. So I put in a new POCO approved meter can, ground rod, panel, etc. I used #4 copper for the main service conductors, according to NEC 310.15(B)(7). But according to other charts I need bigger wire. It's only about 12' from the weatherhead through the meter to the panel. One thing nagging me about understanding the NEC is: is a residential garage / outbuilding allowed the same derating as a 'Dwelling?' The inspector isn't likely to be too strict based on neighbor's experience, but thought it was an interesting code question.
310.15(B)(7) relates to a weird exception in how wiring is done.
The jurisdiction of NEC normally ends at a specific demarcation point, e.g. the meter. Beyond that, the installation is under power company Codes -- I believe IEEE's National Electric Safety Code (NESC). That Code is built around different assumptions applicable to power companies:
- The wires will be outdoors or underground
- Given the outdoor-scale distances, cost of wire matters a lot
- The wires will be out of contact of humans or structures, so they can run hotter
- Whole neighborhoods don't peak at once, so wires can be significantly oversubscribed
- System monitoring equipment will warn when those assumptions are wrong
As such, they are allowed to use thinner wire. However sometimes situations arise where outdoor wiring looks, walks and quacks like power company wiring that would be subject to NESC, but has landed in NEC jurisdiction because of a technicality. An example is rural Texas where the PoCo slaps a meter at the edge of your property and leaves it to you to provide your own service drop/lateral. It would be prohibitive to make, say, a 500' run using wire out of the usual 310.15(B)(16) (formerly known as 310.16) table. So NEC 310.15(B)(7) and accompanying Code allows you to use wire sizes more like what NESC would recommend in that instance.
According to NEC Article 110.28 The code definition of a "Dwelling Unit is "A single unit, providing complete and independent living facilities for one or more persons, including permanent provisions for living, sleeping, cooking, and sanitation." So unless your stand alone garage meets all of these requirements, it cannot be classified as a Dwelling Unit. That does not mean you couldn't classify it a something else, for example the NEC does have a definition for just a "Building" which actually describes your situation better. And no NEC 310.15 (B)(7) does not allow derating for anything else other than dwelling units. You could reduce the service size per 230.79 (D) to an 80A service or minimum 60A.
I would suggest a separate meter and service, but I am not familiar with Chicago's requirements. In this state you can have that, but it must meet certain zoning and code requirements (probably what your neighbor went through). This could be relatively easy or a logistical nightmare. I would suggest you look at @Tyson's comments on where to start.
This garage is residential per the NEC, code is Basicly broken down into residential, industrial and commercial. I am not sure where your table is from because the ampacities haven't changed. For residential ampacities under 100 amp are required to use the 60 deg collum not the 90 deg that I believe you used. I did check current 2017 310.15.B.16 and the 2 prior (14 & 11) just to make sure and all 3 have the same ampacitys. As a detached garage your AHJ may allow a 70 amp main or possibly 80 amp with the wire you have as a residential service can be 83% of the service disconnect. But for single family the code minimum is 100A (I would expect them to allow a smaller service for a garage) The best way to find out would be to call your inspector (I live on the west coast and haven't worked in your area since the 80' S) in my state the wire would need to be #2 copper for your 2 hot legs and neutral with #6 to a driven ground rod or #4 to a concrete encased ground (this is 240v single phase not 2 phase).