Philadelphia, Oct. 7, 2014 – Two Philadelphia housing agencies have issued Requests for Proposals (RFP) related to City Council’s 2,000 Affordable Housing Units Initiative, announced last March. The RFPs from the City of Philadelphia’s Office of Housing and Community Development (OHCD) and the Philadelphia Housing Authority (PHA) were issued separately in order to comply with U.S. Department of Housing and Urban Development (HUD) regulations. The two agencies will work collaboratively on select projects toward the creation of new affordable rental housing units.
The OHCD and PHA are requesting proposals to finance the development of new affordable rental units using funding from the Philadelphia Housing Trust Fund (HTF), federal HOME and Community Development Block Grant funds, and Public Housing Operating Subsidies (ACCs) to supplement rental projects that will seek Low Income Housing Tax Credits (LIHTC) from the Pennsylvania Housing Finance Agency (PHFA).
City Council’s proposal to create 1,000 new affordable rental units and 1,000 new affordable ownership units rests on a unified strategy to identify gap financing in order to make utilization of the undersubscribed 4 percent federal LIHTC tax credits more feasible for developers.
Both the 4 percent and 9 percent PHFA LIHTC tax credits are available to developers who partner with the City of Philadelphia in the creation of new affordable housing units. Only projects that expect to apply for the 4 percent or 9 percent PHFA LIHTC tax credits – not those that have already secured the credits – are eligible for financing under these RFPs.
The RFPs mark the first time the City of Philadelphia has aggregated all local funding as part of a comprehensive affordable rental housing strategy.
“Since PHA was returned to local control there has been unprecedented cooperation between PHA and City agencies such as OHCD,” said Mayor Michael A. Nutter. “Success stories such as this coordinated RFP process and the $30 million Choice Neighborhoods grant from HUD are evidence that this partnership is bringing quality affordable housing to communities across Philadelphia.”
“I commend the PHA and OCHD for working so hard toward the creation of a system that will spur development of new affordable housing, which is sorely needed in neighborhoods across the City of Philadelphia,” Council President Darrell L. Clarke said. “This comprehensive funding strategywith all stakeholders on board will not only allow the City of Philadelphia to prevent a full-blown affordable housing crisis that other cities are experiencing, but will expedite the revitalization of neighborhoods across our City. Strong yet balanced housing growth in neighborhoods is good for working families, for communities and for the regional economy.”
“The issuance of coordinated RFPs by OHCD and PHA is a refreshing step in the right direction for efficiently utilizing our scarce resources to maximize the production of affordable rental housing in Philadelphia,” said Rick Sauer, executive director of the Philadelphia Association of Community Development Corporations (PACDC). “Kudos to OHCD and PHA for making this a reality.”
“The Building Industry Association of Philadelphia [BIA] applauds OHCD and PHA for this unprecedented act combining all of the affordable rental housing resources available to develop these projects under a unified funding system for the first time in our City’s history,” said BIA President Anne Fadullon.
On March 17, 2014, the City Council of Philadelphia announced an ambitious plan to create new rental and ownership housing units affordable to those earning between 80 percent and 120 percent median incomes – also known as Workforce Housing. Due to enthusiastic response from developers, community organizations and the building trades, City Council has increased its goal from 1,500 new Workforce Housing units to 2,000 new Workforce Housing units (1,000 rental, 1,000 ownership).
Construction of the new housing units will generate $851.8 million in economic activity related to construction, support 5,307 jobs, and add $647.5 million to Philadelphia’s GDP. An estimated $179 million in value will be added to the City’s property tax base. The leveraging of vacant properties toward the creation of new housing will reduce blight and increase property values in neighborhoods across the City.
Rather than borrowing $100 million to capitalize a rent subsidy fund, as originally proposed in March, City Council will instead provide $15 million in rental subsidies per year out of current revenues. This new strategy will save the City of Philadelphia an estimated $3 million annually in interests costs related to borrowing.
More developments in City Council’s 2,000 New Affordable Housing Units Initiative are expected in the coming months.