Philly council votes to require affordable housing in certain neighborhoods

The city council on Thursday approved a bill that would require affordable housing to be part of major new residential developments in parts of West, North and Northeast Philadelphia, where council members said that residents are particularly vulnerable to pricing outside their neighborhoods.

The mandate or demand that developers set aside a certain percentage of housing units for low- and middle-income residents is called inclusionary zoning. Cities across the country, including New York and Chicago, have inclusive zoning programs. Some are voluntary, others mandatory. They have different guidelines and definitions of what affordable means.

Marcia Fudge, secretary of the US Department of Housing and Urban Development, called inclusive zoning practices “fair housing policies” and said the department would seek to advance these local policies. Housing advocates, community organizers and residents have expressed support for Philadelphia’s legislation.

READ MORE: West Philly subsidized townhouse owner plans to sell, displacing dozens of families. This is an example of the vulnerability of affordable housing.

Mo Rushdy, treasurer of the Building Industry Association of Philadelphia and managing partner of the Riverwards Group, called the inclusionary zoning well-intentioned but said it could stifle development if it doesn’t include incentives for developers who make up for lost revenue from affordable units. Members of the building industry also oppose different requirements for different parts of the city.

The sections of the Council’s Third and Seventh Districts that the bill covers are areas where residents are likely to be displaced due to increased market pressures, Council members said. Council approved unanimously The legislation. Mayor Jim Kenney’s office is reviewing it, a spokesperson said Thursday.

If the mayor signs the council bill, the city would require projects with 10 or more homes to offer 20% of them at reduced prices, with some exceptions. Total monthly costs of below-market rental housing — including utilities — could not exceed 30% of monthly household income representing up to 40% of the Philadelphia area median income. That’s about $850 per month for a two-bedroom apartment for three-person households earning $34,040.

According to HUD, households are considered cost-bearing if they spend more than 30% of their income on housing.

Under the legislation, affordable homes for purchase would have total monthly costs – including mortgage, insurance and property taxes – of no more than 30% of monthly income for households accounting for up to 60% of the median income in the Philadelphia area. That’s about $1,280 for a two-bedroom home.

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Council member Jamie Gauthier, co-sponsor of the mixed-income neighborhoods bill with council members Maria Quiñones-Sánchez and Kenyatta Johnson, said at a hearing last month that the legislation aims to ensure “that Philadelphians of all income levels can continue to access neighborhoods.”

“This legislation is intended to preserve affordability in some of Philadelphia’s most gentrified neighborhoods,” Gauthier said during the hearing.

The bill allows developers to apply for a waiver through the city’s Department of Planning and Development, which would allow them to meet a portion of affordable housing needs through off-site units at less than half a mile or through higher contributions to the Housing Trust Fund. The bill also allows additional development rights for landowners, including higher building heights and relaxed parking minimums.

READ MORE: Why building more homes won’t solve the affordable housing problem

Gauthier said the city’s current mixed-income housing bonus, an optional incentive that allows developers to build taller structures in exchange for including affordable housing or contributing to the Trust Fund for city ​​housing, was a start. “But given the blistering pace of development and the pace of movement in many Philadelphia neighborhoods, now is the time to see where it can go even further,” she said last month.

The current bonus does not require affordable units to be built in the same neighborhood as new developments. The bonus also helped to accelerate the pace of demolitions in the city, as developers opted to demolish existing properties to build higher.

READ MORE: Low incomes make Philadelphia homes less affordable, Pew study finds

The Building Industry Association of Philadelphia has advocated for more Council members to transfer vacant public land in their districts to the Philadelphia Land Bank, which can make the land available to individuals, nonprofits and private developers. to build affordable homes. The city council passed a law in 2019 that streamlines the process for projects in which 51% of units are reserved for residents who meet certain income guidelines.

For developers to create affordable housing, they need a public subsidy, which includes cheap land, tax breaks and direct funding, said Lauren Gilchrist, co-chair of the government affairs committee and former chapter president. of greater Philadelphia from the NAIOP commercial real estate. development association. At a council hearing last month, she said mixed-income neighborhood legislation could limit the creation of affordable housing and lead to fewer jobs and lost economic growth.

She cited the city’s high poverty rate, high construction costs and relatively low rents compared to other cities as challenges facing the real estate sector.

READ MORE: Can Philly fix its slow and complex process of selling vacant lots? A reform bill is moving forward in the city council. (From 2019)

“With the combination of these factors, government policy alone will not correct Philadelphia’s affordable housing shortage,” she said last month.

She said members recognize that affordable housing is an important issue that the public and businesses need to address with comprehensive and holistic solutions. She said targeted zoning in certain areas of the city is not that.

“The zoning is intended to provide a thoughtful and balanced guide to the path of development and growth while taking into account the city’s social policy objectives, which are extremely important,” she said. “A holistic zoning policy can absolutely achieve the political goals of growth as well as equity.”

The bill passed by Council on Thursday would take effect six months after it was signed by Kenney and would not apply to projects for which zoning permit applications were filed before that date.