Changing Skyline: Affordable housing for young teachers

It's easy to imagine the sprawling 19th-century brick mill on South Kensington's Howard Street as just another high-end apartment complex for twentysomething professionals, the newest outpost on Philadelphia's ever-advancing frontier of gentrification.

Situated a few blocks north of Fishtown's hipster bars and BYOB food shrines, Oxford Mills preserves the kind of authentic architectural details that make young, and not-so-young, renters swoon: high ceilings, huge windows, thick wooden beams. The amenities hail straight from the wired generation's handbook. Plans call for an office incubator that rents desk space by the day and a public cafe that spills onto a sliver park furnished with outdoor tables and a fire pit. You know, for those cool, late summer nights when you want to linger with friends.

But Oxford Mills, which will hold a ceremonial groundbreaking Wednesday, ventures down an uncharted path. It is being built by a private company, D3 Real Estate, which intends to market the units as affordable housing to teachers, especially novices working in programs like Teach for America, and others who fall into the growing category known as "the working poor."

Newly minted professionals with college degrees are not generally seen as the target demographic for low-income housing, a term that still brings to mind no-frills residential complexes built for the chronically poor, elderly, or disabled.

But the profile of those seeking subsidized rentals is changing fast. As Philadelphia's inner rowhouse neighborhoods have gentrified, housing prices have shot into the stratosphere. Yet wages for entry-level jobs here, as in much of the country, remain stubbornly low.

So, although Oxford Mills looks like any number of other rehabs in the trendy corners of Northern Liberties or East Passyunk, it represents a leap into a new residential category called "workforce housing." Usually built with the help of government tax credits, these projects are meant to help people in low-wage jobs, such as teachers, firefighters, and service workers, by offering below-market rents.

The thinking behind the concept is that "these are essential workers who need housing in the communities where they work," says Lynn Ross, who runs the Urban Land Institute's Terwilliger Center for Housing in Washington. If wages continue to stagnate, she predicts, "we're going to see a lot more of this type of housing."

When Oxford Mills opens next year, 90 of its 114 units will be offered at prices squarely within the federal government's range for affordable housing, says D3's Greg Hill. That means a single person earning $39,000 a year could rent a one-bedroom for $975 a month, instead of the neighborhood average of $1,300. D3 promises to reserve roughly 68 of the affordable units for teachers, 22 for other low-wage earners.

Though there are many variations of affordable housing in Philadelphia, housing expert Herbert Wetzel believes there is probably nothing quite like Oxford Mills here.

Beyond a break on rent, D3 hopes to create a community where young teachers can find support. The developers are partnering with Teach for America, which will move its regional headquarters into office space at Oxford Mills. Hill envisions brown-bag lectures for teachers in the common room. The developers have even carved out space on each residential floor for copy machines, so teachers don't have to run out late at night to copy lessons.

Philadelphia's D3 is an unlikely outfit to undertake this experiment. Its founders, Hill and Gabe Canuso, were formerly with the high-end developer Brown/Hill, and spent most of their career turning out beautifully designed luxury buildings, like the Ayer condominiums on Washington Square and a proposed tower in Old City, 205 Race.

But after struggling to keep their business afloat during the recession, they had an epiphany and decided to focus exclusively on socially conscious projects. The switch didn't come out of left field; they had always volunteered to help nonprofits with building projects. Their goal now, Hill says, is to do it full-time.

"The condos - that's my past life," Hill told me. "It's a lot more satisfying on a personal level to work on projects that are mission-driven."

It took Hill and Canuso more than a year to find the right building for their first social project. They first tried to buy the Buck Hosiery building, which last year was the site of a devastating blaze that killed two firefighters, but Hill said they were unable to make a deal with the owners.

Ultimately, they were able to acquire the mill, originally the old Quaker City Dye works, which sits hard by the Market-Frankford El, midway between the Girard and Berks stations. In the interim, they were introduced to Seawall Development, a Baltimore company that converted several historic factories into teacher housing. They decided the mill was a perfect place to replicate the concept in Philadelphia.

Because D3 and Seawall are for-profit companies, they had to cobble together subsidies, mostly federal tax credits, to be able to offer reduced-price rents. Because the mill dates from 1875 and is in a "distressed" neighborhood, it qualified for both historic and New Markets tax credits. Together, those programs cut the cost of the $36 million project by roughly 40 percent. They are not actually obligated by those programs to charge reduced rents, but Hill and Canuso say they are committed to subsidizing rents for the long term, even if the neighborhood gentrifies.

Oxford Mills is being built with a sizable office component that could help Frankford Avenue. Because the mill is composed of several distinct buildings, D3 was able to set aside 40,000 square feet in the space alongside the El. In keeping with the developers' mission, the offices will be rented to nonprofits and small start-ups.

In the collaborative way it has been financed and planned, Oxford Mills also promises to be a model for maintaining pockets of affordability in Philadelphia's increasingly affluent core.

"Everyone is really excited," said Sandy Salzman, who runs the New Kensington Community Development Corp. "So many buildings in this neighborhood have gone up in flames, and this seems like a good use."

Just because Hill and Canuso are now doing affordable housing doesn't mean they've abandoned their commitment to good design. The architectural work at Oxford Mills, which is being overseen by Barton Partners, already appears to be at the same high level as D3's earlier projects with Brown/Hill. The full name of their company reflects that other mission: D3 stands for "Design Driven Development."