BY Jon Geeting
Sep. 20, 2023
How should city government stack its priorities when it comes to affordable housing spending in Philadelphia?
Disagreements over the right answer to this question have driven a lot of the action behind various City Council housing debates over the years, and last week activists with the Philadelphia Coalition for Affordable Communities opened a new front in the debate by calling for half of public-sector housing spending to be targeted toward city residents making $25,000 or less.
Michaelle Bond reports:
This year, the coalition’s latest housing campaign asks Council for legislation that would require Philadelphia to spend half of the federal, state, and city funding it uses for housing programs on households making $25,000 or less. In 2021, 27% of Philadelphia households made less than $25,000, according to the most recently available year’s American Community Survey […]
To support potential Council legislation for the latest campaign, the coalition plans to release a report in 2024 analyzing how the city allocates its housing dollars by income group. But coalition members said they are frustrated watching the city direct funds toward Philadelphians with middle incomes while calling their homes affordable housing […]
People with more pro-housing political views should welcome a conversation about this issue in part because it raises the question of what the city’s middle-income housing policy really is, and how it should change if we shift spending away from middle housing.
A key piece of political context behind this campaign is that back in 2018, City Council created a new sub-fund within the Housing Trust Fund — the flexible fund that supports most city housing spending — devoted to “workforce housing.” Workforce housing is typically defined as targeting people making between 80 to 120 percent of the area median income (AMI) — about $61,000 — which is more middle class than the poorest of the poor.
There were a few reasons why members wanted this change. In addition to the objective need for more middle-income housing, it’s also the case that an “affordable” housing unit costs as much to build as an unsubsidized housing unit, but requires more ongoing subsidy for lower income residents. Consequently, city government can’t fund as many units of housing in that lower-income band as they could at a higher-income one.
That makes some sense on a practical level, but on a moral level, it strikes a lot of people as distasteful to direct these limited resources toward somewhat better-off middle-class people who aren’t suffering as badly as people in the poorest cohort.
Notably, as 9th District Councilmember, Cherelle Parker was one of the supporters of funding workforce housing. It’s unclear how presumptive Mayor Parker’s views may have shifted since then, if at all, but it’s an interesting point for foreshadowing the politics around this in 2024.
As a mayoral candidate, Parker’s pitch to voters was focused on the needs of “middle neighborhoods,” which are seeing neither strong real estate appreciation, nor disinvestment and decline, but something in the middle. She’s been very interested in increasing access to homeownership, and was said to be interested in the workforce housing sub-fund issue in 2018 in part because it would result in more new housing in middle neighborhoods.
A good question to ask about all this is why the private housing market hasn’t been able to deliver enough housing for people in that 80-100 percent AMI range without public subsidies. For reference, this would mean a maximum home price of around $280,000.
Interest rate hikes and inflation in the cost of construction materials have made this a more difficult proposition in the last couple of years, but even when money and materials were cheaper, the reigning view in City Council has been that the scope for public subsidy should encompass those middle-class earners.
That’s in part because elected officials in Philly more often give in to the NIMBY concerns of their constituents and make it harder to develop starter homes and lower-cost housing types in their districts. In the new term, there could be an opportunity to align the coalition’s hoped-for spending shift with an agenda that allows more abundant middle-income housing from private developers.
Without direct public subsidies, what is the lowest-cost housing that the private market could produce on its own? The answer to this question matters a great deal for a few reasons.
For the pro-housing political camp, all the complaints about City zoning regulations really boil down to the fact that City Council has suppressed infill housing or restricted multi-family uses, which has served to push average housing costs higher than they would be otherwise.
Policies like single-family-only zoning that allow just one home per lot instead of duplexes and triplexes, parking mandates, setback rules, and so forth end up reducing the supply of starter homes and moderately-priced rental housing, and driving up the prices of the homes in this category that remain. The number of Council remapping bills and overlay districts that fit this theme has grown steadily over the last two terms.
The new campaign to direct more of the housing subsidies back toward lower-income people makes a good point that aligns well with the preceding critique, but the agenda is also incomplete without a parallel push to re-legalize more of the middle housing types too.
The big problem with many elected officials’ thinking about this topic has to do with the perception that middle housing is something that always needs to be funded or actively facilitated by the city, rather than something we could simply let happen more by easing up on some of the many misguided zoning rules currently prohibiting private developers from building more homes.
Some people may be skeptical about the private housing market’s ability to provide enough middle-income housing, but the reality is that it’s gone mostly untried. In fact, in the few places where City Councilmembers have allowed 2- to 4-unit buildings without parking, you do see people building duplexes and triplexes. The code still mostly bans people from adding accessory dwellings to their own property if they want to (e.g. turning attics or garages into dwellings, or building a second smaller dwelling in their backyard), so we don’t know what effect that might have on increasing the available housing.
Allowing a middle-income homeowner to live in one unit of a building while collecting rental income from the other units could let them afford a larger mortgage while building investment income. But this also remains under-explored as a way to address middle housing needs. Instead, Councilmembers have tended to respond to the complaints about this kind of housing, which often boil down to parking, trash storage, and skepticism about who might move into the neighborhood.
Zoning reform wouldn’t resolve the entire middle housing shortage, but it would take more than a few people off of the waitlist for middle-income housing and would help advance the goals of the coalition by freeing up funds to help the poorest Philadelphians.
This isn’t to say the City should abandon all government-led efforts to facilitate more middle housing. Some of the recent efforts in this area have been more successful than anticipated. For example, builders have shown a lot of interest in building on city land through the Land Bank’s Turn the Key program and the “51/49” program for mixed-income housing. Turn the Key is the recent effort championed by Council President Darrell Clarke to support affordable homeownership opportunities for city workers using City-owned land. The “51/49” program allows builders to submit non-competitive bids to build housing on City land if 51 percent of the units are below market rate.
The system isn’t perfect, but it’s the closest to functional the Land Bank has ever been, and the main problems that arise have to do with the inability of city government to get out of its own way in approving land dispositions.
A lot of the recent dysfunction at the Land Bank has revolved around some board members’ unrealistic expectations about how affordable developers can build houses without direct subsidies, even when free City land is part of the deal. (A recent paper from the Vision Philadelphia project by Andy Rachlin and Ernst Valery provides a sobering look at the economics.)
One particularly disappointing example of the problem happened last week when a handful of Land Bank board members representing the board’s more idealistic wing — Rick Sauer, Andrew Goodman, Maria Gonzalez and Michael Johns — were able to block a vote on dispersing City land for a 77-home scattered-site development proposal in Norris Square under Council President Clarke’s Turn the Key program. That proposal from developer Mo Rushdy would have included homes at a variety of price points, with some priced in the middle income 60 percent AMI range — a first for the Land Bank.
The idealist bloc on the board has on a few occasions voted down projects for not meeting the group’s high expectations for affordability. While the sentiment comes from a well-meaning place, it’s also become a problem for getting land out the door for mixed-income housing.
As just one illustration of how much the deck is stacked against middle housing at every possible decision point, an unfortunate quirk of the Land Bank bylaws requires land disposition votes to win a majority of the full 11-member board regardless of how many board members are actually in attendance, which allows opponents of a particular project to sink it by simply ducking the meeting rather than showing up and voting no. That is what happened last week when members of the idealist bloc all logged off one-by-one before the vote on the aforementioned Turn the Key project, denying the board a quorum to be able to vote on it.
As Department of Planning and Development director Anne Fadullon often reminds the Land Bank board members, the question before them on Turn the Key and 51/49 projects is not whether they personally approve of the proposal, but whether the proposal complies with the law and the applicant has the credentials to deliver on their plan. What’s more, projects that show up on the Land Bank docket already need to have gained City Council approval to appear on the agenda.
That last point is important because since the agency’s creation, City Council — using district members’ councilmanic prerogative — has been the primary obstacle to moving land for housing, and that may still be true overall. But now even projects with City Council support are running into trouble winning Land Bank board approval. The new administration and the new City Council will have the opportunity to change who sits on the board next year, and maximizing the number of successful Turn the Key projects should be a serious consideration when thinking about the personal politics of those appointees.
If the various city government actors with a hand in housing issues could manage to align, there could be a promising strategy of relying more heavily on “Missing Middle” zoning reforms and streamlining public land disposition to address Philadelphia’s middle class housing needs, while shifting more of the direct public spending toward programs and spending benefitting the lowest-income residents. With a new administration and many new members of City Council, the time is ripe for some fresh eyes on the problem and hopefully some clearer thinking too.
Jon Geeting is the director of engagement at Philadelphia 3.0, a political action committee that supports efforts to reform and modernize City Hall. This is part of a series of articles running on both The Citizen and 3.0’s blog.
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