City Council on Thursday passed a bill that would suspend demolition of a subsidized housing complex in University City and drive future development there away from commercial use and toward residential. It’s a case that highlights the fragile position of subsidized housing as property values in the city climb, and federal housing contracts continuously come up for renewal.

The legislation, sponsored by Councilmember Jamie Gauthier, would restrict to the ground floor future nonresidential uses at the site and a neighboring housing complex with the goal of keeping and adding affordable housing there. The townhouses are within an area where City Council will require certain percentages of below market-rate housing units in new residential developments of 10 or more units. That ordinance takes effect in July.

Gauthier envisions her legislation as a framework for zoning mixed-use developments in high-density and amenity-rich places “to encourage sustainable residential development” in areas throughout the city, according to the text of the bill.

» READ MORE: Owner of West Philly subsidized townhouses plans to sell, displacing dozens of families. It’s an example of the vulnerability of affordable housing.

IBID Associates, the family partnership that owns the University City Townhomes rental community at 3900 Market St., plans to sell the property, which sits at a valuable location next to the University of Pennsylvania campus and within a research and medical corridor. In a statement Thursday, IBID called Gauthier’s bill an “illegal and unenforceable” attempt to prevent it from “exercising its constitutional right” to sell its property and take advantage of current zoning for high-density commercial and mixed uses. It said it plans to sue.

Last year, IBID gave the required one-year notice to the U.S. Department of Housing and Urban Development that it would not renew its subsidized housing contract, which expires in July. Residents of the 70-unit complex were told they have to move out by then, but they have not yet received the federal housing vouchers they need to relocate. Households with low incomes often have difficulty finding new homes that are affordable, and the city lacks enough available rental units that accept housing vouchers, which pay a portion of tenants’ rent, to meet the demand.

The Council legislation does not prevent the expiration of the property’s subsidized housing contract or keep residents in their homes. IBID and HUD said they are helping residents move. In a written statement, Gauthier said she is advocating for tenants to be given more time “as they attempt to navigate the toughest rental housing market that Philadelphia has seen to date.”

“My expectation,” Gauthier said, “is that incentivizing the development of dense residential housing on this site will ensure that there will be housing units at below-market-rate prices that will allow Townhomes residents and other families like them to return to the site should new construction be proposed there.”

IBID said it is working with a developer that has agreed to replace the existing homes with new units that would first be offered to current University City Townhomes residents who want to return to a “transformational redevelopment.” The owner also said it is working to transfer its funding for subsidized housing at the site to support about 100 additional affordable units in the surrounding West Philadelphia community.

» READ MORE: Affordable housing must be included in new developments in some Philly neighborhoods, Council says

The city’s affordable housing ordinance that takes effect in certain neighborhoods this summer allows developers to fulfill some low-income housing requirements with off-site units.

If Mayor Jim Kenney signs it, Gauthier’s bill would prevent demolition of any building within the boundaries of Market Street, 39th Street, Ludlow Street, and 40th Street — the block that contains the University City Townhomes — for 12 months, barring any dangerous conditions. Gauthier said the pause is meant to ensure thoughtful planning for the future of the site. A Kenney spokesperson said Thursday that the administration is reviewing the legislation.

City Council passed the bill, 15-1. Councilmember Allan Domb was the lone dissenting vote, a rare defiance of the tradition known as councilmanic prerogative, in which land-use decisions are led by the member whose district includes the area in question and all other members fall in line.

Domb said he opposed the bill because it violated the owners’ “property rights” by targeting one plot. This type of legislation could discourage future affordable housing development, he said, because other property owners may be reluctant to enter into 30- or 40-year affordability agreements if they come to believe that Council could punish them for transitioning to market-rate uses when the agreement expires.

“This is spot zoning, and it targets and impacts one parcel and one property owner,” Domb said. “If they know that City Council can take away their rights, their property rights, then I think it’s going to lead to less affordable housing.”

» READ MORE: Penn students and staff rally to help preserve affordable housing for West Philadelphia residents

Domb said that he wasn’t concerned with defying prerogative and that, as an at-large Council member, he had a responsibility to think about legislation from a citywide perspective.

Prerogative is an unwritten rule that has generated immense scrutiny, with critics saying it opens the door to corruption and leads to a divided city with each district having different zoning rules and approaches to housing.

Gauthier campaigned in part on opposing prerogative in her surprise victory over former Councilmember Jannie Blackwell in 2019, and she has broken with the practice in the past, voting to uphold a veto of a preservation district in Councilmember Mark Squilla’s district.

Since taking office, however, Gauthier has acknowledged that prerogative also gives her opportunities to enact progressive policies in her district that might not be able to win a majority on Council if they were applied citywide.

The future of the University City Townhomes property has been the subject of discussions between Gauthier’s office and owner IBID for more than a year, but IBID said Thursday that the passage of Gauthier’s legislation effectively ends those negotiations.

During Thursday’s Council meeting, activists and townhome residents continued calling for the preservation of the University City Townhomes at a rally outside City Hall.

The Philadelphia Inquirer is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice. See all of our reporting at brokeinphilly.org.