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Mayor, council, strike compromise on affordable housing proposal

The construction tax bill has been replaced with a plan to bring $70 million in for affordable housing.

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Mayor Jim Kenney and City Council members reached a last-minute compromise in an affordable housing issue Thursday, with plans bring $70 million into the Housing Trust Fund over the next five years.

The new compromise, which came out during City Council’s first session following their summer recess Thursday, replaces a controversial construction impact tax bill that’s been the subject of a lot of debate since it was first introduced in April. The bill would have levied a one percent tax on almost all new construction, with plans to give the revenue generated by that tax to the Housing Trust Fund (HTF) to fund affordable housing projects throughout the city. Council members voted to recall the construction tax bill Thursday.

The news marks the end of a long and heated debate over the construction tax bill, which council members narrowly passed in a 9-8 vote in June. Kenney was expected to sign or veto the bill ahead of Thursday’s council session, but as that date loomed, he still hadn’t made a decision

Finally, with less than 24 hours to go, Kenney proposed a solution Wednesday: Use the money generated by expiring 10-year tax abatements to fund affordable housing, rather than implement the construction tax. Council members, including president Darrell Clarke opposed the plan, and the groups went into negotiations Thursday morning.

The $70 million compromise is a combination of Kenney’s proposal and Council member Maria Quinones-Sanchez’s voluntary inclusionary housing bill, which was introduced last year. The bill offers zoning bonuses to developers—like allowing them to have higher buildings or more density—in exchange for developers paying more into the HTF in order to fund affordable housing. With the amended bill, developers will have to pay between $25 and $30 per square foot of construction in order to take advantage of the bonuses, according to Eric Bodzin, of Quinones-Sanchez’s office.

The money from that bill, as well as money promised by Kenney from the city’s general fund, should generate around $70 million for the HTF. Mike Dunn, spokesperson for Kenney’s office said that number is a best case scenario because it depends on how many developers take advantage of the bill.

He added that the floor of the plan are the numbers Kenney proposed in his solution Wednesday—between $52 and 56 million—and the ceiling would be $70 million.

A representative from Council President Darrell Clarke’s office did not immediately return a call for comment on the compromise Thursday, but it seems there’s still some disagreement over whether the $70 million is minimum or maximum amount the city expects to generate. Clarke took to Twitter to respond to the statement from Kenney’s office that the number is a best case scenario by simply stating “It’s a floor.”

Regardless of specifics, Kenney released a statement Thursday, saying that he was glad his administration was able to reach an agreement with council.

“I am pleased to have reached a resolution with all of our colleagues in City Council on a proposal that significantly increases funding for affordable housing without imposing a new tax on construction,” he said, adding, “All of us share the same goal -- ensuring that residents have access to housing options no matter what their financial situation. This new revenue will be a reliable way to achieve that goal.”

It’s not clear why Kenney decided not to sign or veto the construction tax bill ahead of Thursday’s council session, but it could be related to the controversy surrounding the piece of legislation.

Though the bill, which was introduced by Quinones-Sanchez, was backed by several council members and the Building Industry Association (BIA), it did have a fair number of opposers building trades unions opposed the measure, with John Dougherty, head of International Brotherhood Of Electrical Workers Local Union 98, penning an open letter to council in protest of the bill. In the letter, which was sent in June, Dougherty said the bill could dissuade important developers, like Amazon, from coming to Philly.

Others, like several affordable housing advocacy groups, took issue with how the money generated by the bill could be used—namely that it would go toward housing for anyone making up to $105,000 a year. Some argued that income does not constitute a need for affordable housing, and questioned why revenue from the bill wasn’t being set aside particularly for people in need.