Philadelphia, June 15, 2015 – The City of Philadelphia and the Philadelphia Redevelopment Authority (PRA) on Monday announced the arrival of the groundbreaking phase of a plan to create 1,000 new units of “workforce housing,” or housing affordable to middle-income individuals and families.
Construction is scheduled to begin on publicly owned vacant land that has been given to builders for a nominal fee in order to incentivize the creation of moderate-income housing in rapidly appreciating neighborhoods. City officials announced progress made in the Workforce Housing Initiative on a vacant publicly owned lot in the fast-growing neighborhood of Francisville.
“Philadelphia’s Workforce Housing Initiative will give those with moderate incomes the opportunity to live near good jobs, transportation options, and other amenities, which will help their families and communities to thrive,” said Brian Hudson, Sr., Executive Director of the Pennsylvania Housing Finance Agency. “This is an innovative strategy that other states and municipalities will be watching as they also grapple with diminishing housing affordability.”
“It is imperative for Philadelphia and other major cities across this country to strengthen middle class families,” said Alan Greenberger, Deputy Mayor for Economic Development and Director of Commerce for the City of Philadelphia. “Workforce housing gives middle class families the chance to live and invest in quality affordable housing. We are strategically placing the homes in communities where private funds have been invested to develop neighborhoods, and these families will support and further the growth and sustainability of these areas.”
“Vacant lots like the one we stand on today are a liability to our tax base and to neighborhood quality. Philadelphia’s Workforce Housing Initiative will turn this liability into an asset,” City Council President Darrell L. Clarke (5th District) said. “We are leveraging vacant, publicly owned lots to create new energy-efficient housing in neighborhoods that are increasingly attractive to Philadelphians and to those looking to move into Philadelphia. By stepping out of our silos and working together, City Hall along with housing agencies and private developers are blazing a trail toward smart, equitable growth that benefits our entire city.”
The Affordable and Workforce Housing Initiative, announced by City Council in spring 2014, is on track to create a total of 2,000 new units of housing for rent or ownership affordable to moderate and middle-income people in neighborhoods in need of reinvestment and in rapidly appreciating neighborhoods. In a test of the initiative, the PRA issued five requests for proposals (RFPs) to build units affordable to families with incomes between 80% and 120% of the area median income (AMI).
Developers were selected by the PRA to develop workforce housing properties on 77 publicly owned parcels in Point Breeze, Grays Ferry, East Poplar and Francisville. Construction on three of the projects is under way, City Council has approved property conveyance on a fourth, and a developer for a fifth project has been selected.
Following this successful pilot demonstration of the program, the PRA will release a new batch of RFPs representing approximately 100 publicly owned parcels located in multiple Housing Opportunity Zones, which were created through ordinance by City Council. The PRA will continue to issue RFPs as land is identified that meets the program requirements with the goal of building at least 1,000 units.
“Workforce Housing is part of PRA and the City’s focus to revitalize neighborhoods that have been in distress, and help maintain stable neighborhoods,” said Brian Abernathy, Executive Director of PRA. “Even in areas of the City where rapid development is taking place, PRA and the City are determined to create opportunities to ensure that working families in Philadelphia can have access to quality and affordable housing.”
“Everyone — regardless of income, status, or race – deserves to live in a neighborhood with quality housing, proximity to good jobs and transportation options, and a healthy environment that includes clean parks and play areas for children,” Councilman Kenyatta Johnson (2nd District) said. “City Council’s Workforce Housing Initiative is a unique collaboration between the private and public sectors to encourage equitable growth throughout Philadelphia.”
“City Council welcomes development and growth, but many of our residents are concerned about being able to continue to live in their homes,” Councilwoman Jannie Blackwell (3rd District) said. “Using vacant lots that aren’t wanted by the private market to create high-quality workforce housing allows us to preserve the diversity that famously characterizes our City of Neighborhoods.”
The goals of the Workforce Housing Initiative are as follows:
- Ensure equitable growth in rapidly developing neighborhoods
- Reverse the trend of middle-income families leaving Philadelphia
- Accelerate development and return to tax rolls of vacant, publicly owned land
- Increase opportunities for moderate-income Philadelphians to live near public transportation, good public schools, and growing or robust commercial corridors
Under the Workforce Housing Initiative, publicly owned land in neighborhoods where home values are rapidly increasing will be available to produce housing to be sold at lower price points that must be maintained for 10 years, regardless of re-sale, through restrictive covenants. The 10-year affordability period will renew with any re-sale of a unit built under this initiative during the affordability period.
As an example, the workforce housing being built in Point Breeze by Innova, which was selected to develop properties by the PRA, will be sold from $180,000, which is affordable for families earning between 55 percent and 100 percent of AMI, or $81,100 for a family of four. PHFA Executive Director Hudson announced that 3%, 30-year fixed rate loans will be made available to qualified buyers.
“We are excited to partner with the City of Philadelphia in building quality, energy-efficient homes in neighborhoods like Point Breeze,” said Jeffrey Allegretti, President of Innova Services Corp. “Not only are we creating job and economic opportunities, but we are making sure that the most popular neighborhoods in our city are also among the most inclusive and diverse.”
Developers that propose projects consisting entirely of workforce housing or a mix of market-rate and workforce housing are eligible to participate in the initiative. The PRA will further evaluate RFP responses to assess developers’ financial capacity to see projects through completion, concept design quality, and development experience, including relationships with businesses owned or operated by minorities, women and people with disabilities.
Projects also must be completed within 24 months of settlement.
“Cities across the country are grappling with affordable housing shortages spurred in part by stagnant wages that have not kept pace with rising costs,” Council President Clarke added. “When working people are forced to pour too large a share of their income into housing, the entire economy suffers. I believe cities across the country will be looking to Philadelphia as a model for how targeted deployment of public resources to meet housing shortages can help transform neighborhoods and municipal economies.”