Philadelphia takes another step toward providing affordable housing

Joining other large cities that are trying to preserve economic diversity amid rapid gentrification, City Council's Rules Committee voted unanimously Tuesday to advance a bill that would require private developers to include subsidized units for low-income tenants in new, high-density projects.

The measure, which is to be presented Jan. 25 to the full Council, still needs to clear several hurdles before it can be turned into law. As I've written in several columns, there has been of strong opposition from developers and neighborhood groups. Many expect there will be intense lobbying over the next month to modify the requirements.

The wording of the bill has already been substantially watered down from the original version introduced last summer by Councilwoman Maria Quiñones-Sánchez. Instead of covering the entire city, the affordable housing set-asides would be limited largely to the high-density, mixed-use zones of Center City and University City. Assuming the construction boom continues at its current level, the bill could produce about 200 units of subsidized housing a year.

Quiñones-Sánchez acknowledged that the amended bill wasn't perfect but said it would provide "one more tool in the tool kit" to increase housing options for low-income residents. Her district, which roughly follows the northern end of the Market-Frankford line, has experienced some of the sharpest price increases in the city as new development and gentrification has crept up from Northern Liberties to Kensington and Port Richmond.

The vote was applauded by the Philadelphia Association of Community Development Corporations, a group of nonprofits that raises money to build affordable housing. Although it had objected to the amendments restricting the bill's reach, the group issued a statement calling the measure "a first step" that would lead to more "equitable development policies."

Even though there was strong support for the philosophy behind the bill, known as inclusionary zoning, the measure nearly failed. Facing intense opposition from a variety of interest groups, Quiñones-Sánchez was forced to delay the vote after last week's Rules Committee meeting.

Most of the criticism came from developers, but neighborhood groups are also unhappy. The Crosstown Coalition, a collection of civic associations, warned that the generous density bonuses would undermine the zoning code and allow overscaled buildings to go up in rowhouse neighborhoods. Anne Fadullon, the city's director of planning and development, also urged Quiñones-Sánchez to delay the bill until her department could complete a new housing strategy.

Ultimately, Quiñones-Sánchez was able to work out a compromise. After agreeing to put off the final Council vote until late January, the committee unanimously agreed in a voice vote to move the measure to the next stage.

Even in its watered-down version, the bill remains intensely controversial. Members of the Building Industry Association, which represents developers, say the group is considering introducing a separate bill that would allow them to pay fixed impact fees, as an alternative to requiring their members to incorporate affordable units into new buildings.

"What's going to happen is that a cabal of players is going to be involved in a lot of horse-trading, and ordinary citizens won't be involved," complained Stephen Huntington, a member of the Crosstown Coalition.

Some critics of the bill argue that inclusionary zoning isn't the best solution to Philadelphia's housing problems. Despite all the talk about gentrification, Philadelphia has some of the lowest housing prices of any big city. A typical two-bedroom apartment here rents for $1,160, about a third of what it would go for in San Francisco or New York. Because the bill limits the set-asides to the most expensive parts of the city, some fear that the cost will now make construction unaffordable.

But for those holding down minimum-wage jobs, the bill promises to create new housing options in the most transit-accessible parts of the city. Although the bill itself is flawed, Quiñones-Sánchez has made a good case that Philadelphia needs to produce more housing for low-wage workers.

If the full Council approves the bill, the affordable housing set-aside would go into effect in July. Any new project built in a high-density zoning district would have to offer 10 percent of its units to people earning between 50 and 80 percent of the area's median income, roughly $41,000 to $66,000 a year. In exchange for providing the subsidized housing, developers would be allowed to construct significantly larger buildings — as much as 50 percent bigger than the zoning code allows. The bill allows developers to opt out of the requirement by paying a sizable penalty to the city's Housing Trust Fund.

This is the third time that Philadelphia has tried to implement the affordable housing set-aside. A 2007 version of the measure was abandoned after developers complained the added costs would cut deeply into their profits. In 2012, a voluntary version of inclusionary zoning was included in the zoning code. But in the five years since its existence, only two developers agreed to participate in the program. And one of them, PMC, later won permission to pay a penalty instead creating the promised subsidized housing.