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Inga Saffron
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Philadelphia bill mandating affordable housing put on hold

Councilwoman Maria Quiñones-Sánchez agreed to a one-week delay to broker a compromise in her effort to create more affordable residences in the city.

The Bridge is the only project in Philadelphia to comply with the city's voluntary inclusionary housing program. Fifteen units are set aside for low and moderate income tenants.
The Bridge is the only project in Philadelphia to comply with the city's voluntary inclusionary housing program. Fifteen units are set aside for low and moderate income tenants.Read moreInga Saffron

City Councilwoman Maria Quiñones-Sánchez agreed Monday to hold a bill mandating set-asides for affordable housing in Philadelphia after a contentious, day-long hearing revealed deep divisions among developers, housing advocates and neighborhood groups over the best way to create low-cost units for the city's poor and moderate-income residents.

"People said the bill needs more time, and I heard that," Quiñones-Sánchez said. But she added that she was still confident she could get a version  passed by the end of the year.  To do that, she'll have to spend the rest of the week negotiating with differing sides, and present a revised bill for a vote on Dec. 5.

The bill has already been substantially changed since Quiñones-Sánchez introduced the measure in the spring. That draft applied to the entire city and would have allowed developers to build bigger structures in exchange for setting aside 10 percent of their living spaces at reduced prices for residents earning less than the median household income, about $41,000 in Philadelphia.

But after some neighborhood groups voiced concerns about the bill's impact on traditionally low-rise rowhouse neighborhoods, the bill's effect was scaled back to Center City's already existing high-density zones. That didn't sit well with the Building Industry Association, which represents developers. The group complained that the added cost of providing subsidized units would make most construction unprofitable. "The problem with the present bill is that it is a heavy burden of a small segment of the development community, basically Center City developers," developer Carl Dranoff testified.

Last week, the Planning Commission had warned the bill's sponsors, who include Quiñones-Sánchez, Darrell Clarke, Jannie Blackwell and Kenyatta Johnson, that the bill was in no shape for passage. During Monday's testimony, Anne Fadullon, the city's director of planning and development, said the bill needs work before "it makes economic sense."

Despite objections to the current bill, there is actually wide support in Philadelphia for creating affordable housing. During the city's decade-long building boom, once-affordable neighborhoods like Fishtown and Point Breeze have seen house prices double and triple.  Increasingly, renters and people on fixed incomes are being displaced. Even though Philadelphia still boasts some of the most affordable rents of any big city,  it can be extremely difficult for low-wage workers to remain in gentrifying neighborhoods. "I'm tired of hearing people say, 'That's the neighborhood I used to be from,'" Councilman Curtis Jones remarked during the hearing.

The type of housing set-aside proposed in the bill is known as "inclusionary zoning" and has been used in dozens of other cities to help create affordable housing in overheated markets, like San Francisco, Boston and New York. The challenge for Philadelphia is that the city's boom has been relatively limited geographically, and the city still has vast areas where house prices are still low by national standards. Because so much of Philadelphia's housing stock is old and needs repair, some housing advocates said the city would be better off creating an impact fee, rather than mandate inclusionary zoning. That fee would go into the city's Housing Trust Fund, and would help support grants and loans for repairs. "The most affordable house is the one that people are already living in," Fadullon said.

The current bill would allow developers to contribute to the Housing Trust Fund, instead of incorporating the subsidized units into their buildings. But the proposed "in lieu" fees are high. Because impact fees would apply to both residential and commercial construction, and would be applied citywide, the costs would be significantly less for individual developers. Many of the conversations over the next week are expected to revolve around how big those fees should be.