Philly’s proposed mixed-income housing bill, explained [Update]

Update: This article was originally published on Tuesday, November 21 and has been updated throughout to reflect the most recent amendments made to the proposed mixed-income housing bill.

Next week, City Council will host a public hearing on a proposed mixed-income housing bill that has caused a spirited debate between housing advocates and developers over the past few months.

Bill No. 170678 was proposed in June, just before City Council dismissed for summer recess. It calls for a mandatory law that would require developers to include a certain amount of affordable housing units in any project that includes 10 or more units. As a perk, developers would be awarded certain bonuses to make their projects taller or bigger than the property’s current zoning allows.

The bill has its backers, but for the most part the building industry is largely against it, claiming that the inclusionary housing law would hinder development.

Amendments have been made to the bill ahead of the public hearing, and on Tuesday the Philadelphia City Planning Commission said the bill wasn’t ready for primetime and voted to put it on hold.

But the public hearing set for Monday, November 27 at 10 a.m. at City Hall is still on. Ahead of the hearing, here is a comprehensive guide to the bill.

The backstory

Philly already has a similar provision in its zoning code that resembles this proposed law. In 2012, the city added a voluntary inclusionary housing bonus to its zoning code. It states that if developers reserved a percentage of their projects to below-market units, they would be granted a height bonus.

There are a handful of projects that have made use of this, including the recently completed Bridge apartment building in Old City. But not all projects have been proven successful.

In 2014, PMC Property became the first developer to sign up for this bonus with their project One Water Street. But in 2017, just as the finishing touches were being put on the project, with five extra stories allowed on the building, PMC announced that they wouldn’t be including affordable housing units.

The proposed bill would make the inclusionary zoning provision mandatory instead of voluntary, thereby preventing future situations, what some called out as bait and switch deals, like that from happening again.

Who is behind the bill?

The mixed-income housing bill was put forth by Councilmember Maria Quiñones-Sánchez of District 7 and is also sponsored by Council President Darrell Clarke, Councilwoman Jannie Blackwell, and Councilman Kenyatta Johnson. All of these council members represent districts that have a mix of both gentrifying neighborhoods and impoverished residents.

When Quiñones-Sánchez first brought the bill to City Council, she said it was time to reconsider the city’s current zoning codes and work with the private sector to increase affordable housing at a time when Philly seems to be in the middle of a construction frenzy.

But one of the most vocal critics of the bill, the Philadelphia Building Industry Association (BIA), argues that while both rents and house prices have increased in recent years, Philly’s housing and rental markets remain pretty affordable compared to other major U.S. cities.

Furthermore, it makes the claim that the bill would actually hinder development because developers would lose money. A recent study conducted by Kevin Gillen, Ph.D., of Drexel University’s Lindy Institute said as much.

Passage of the bill would:

• Update Title 7 of the city’s housing code to include an amendment that would require private developers to build one unit of affordable housing for every nine market-rate housing units.

• Require that all affordable units include the same finishes and appliances as market-rate units, and be scattered throughout the development instead of one floor or area.
• Require that the units be marked as affordable for 50 years.
• Incentivize developers with floor-to-area (FAR) ratio bonuses—a factor of 1.3 to 1.8— as part of their agreement to include affordable housing.
• Allow developers the option to pay the Philadelphia Housing Trust Fund instead of adding affordable housing units, for $11,250 to $30,400 per unit. The HTF gives grants to non-profits that prevent homelessness, help with home repair, and support affordable housing.

Arguments for:

—Maria Quiñones-Sánchez

• Philly needs more affordable housing, as it lost 20 percent of its stock from 2010- to 2014.
• The majority of Philly renters are cost-burdened, spending more than 30 percent of their income on rent.
• People who have been priced out of Philly’s gentrifying areas would have the opportunity to stay in their respective neighborhoods.
• Developers would be incentivized to build bigger and taller buildings, thus offering more housing density for the city.

Arguments against:

—Philadelphia Real Estate Coalition

• Philadelphia doesn’t have an affordability problem, according to a study backed by the Building Industry Association. A separate, more recent Econsult Solutions study found that 46 percent of the city’s single-family housing stock is affordable to households making as little as $30,000 a year.
• Developers and builders will have to subsidize the affordable units up front and potentially make up the costs from the market-rate dwellings. This could have an opposite effect and stunt development in general in the city if developers decide it’s not worth the hassle.
• The bonus incentives offered to developers to build bigger and taller buildings may not go over well in certain neighborhoods that are already opposed to big developments.

Who supports it?

Councilmember Maria Quiñones-Sánchez, Council President Darrell Clarke, Councilwoman Jannie Blackwell, and Councilman Kenyatta Johnson; the Philadelphia Association of Community Development Corporations; Community Legal Services of Philadelphia;

Who opposes it?

The Philadelphia Real Estate Coalition, which includes the Building Industry Association of Philadelphia; Building Owners’ & Managers Association of Philadelphia; Development Workshop; Diversified Real Estate Investor Group; General Building Contractors Association; Greater Philadelphia Association of Realtors; Homeowners Association of Philadelphia; and Pennsylvania Apartment Association.

Read the full amended mixed-income housing bill