Philadelphia officials, housing advocates, and tenant organizers are working to preserve 925 affordable homes across West Philadelphia as federal housing subsidies near expiration and the owner prepares to sell the properties.
The homes belong to developer Neighborhood Restorations. Houses on a block of Chester Avenue in West Philadelphia belong to the company’s portfolio of subsidized properties. Owner Jim Levin has indicated he wants to sell the units to the City of Philadelphia and has delayed listing them on the open market while discussions continue.
The situation surfaced during Philadelphia City Council budget hearings when Councilmember Jamie Gauthier pressed city officials about preserving the homes. Gauthier represents neighborhoods where many of the units are located and urged city leaders to move quickly and help finance a purchase.
Gauthier said losing the homes would create a difficult challenge because building enough affordable housing to replace them would be extremely difficult.
Officials within Mayor Cherelle L. Parker’s administration did not commit funding during the hearing. Parker’s chief of staff, Tiffany W. Thurman, said the administration would not make that commitment during the meeting but said officials were exploring possible responses.
The discussion unfolded during a continuing housing problem involving expiring federal subsidies. Research from the University of Pennsylvania estimates that more than 7,500 federally backed low-income homes in Philadelphia could lose affordability protections during the next decade.
Many federal affordable housing programs operate through public-private partnerships that keep rents affordable for a limited time. After subsidy agreements expire, owners can leave those programs. Rising property values in certain neighborhoods have encouraged owners to leave low-income housing subsidy programs once agreements end.
Gauthier previously passed legislation requiring owners of affordable housing to provide tenants and policymakers with one year of advance notice before selling their properties. That law established the timeline surrounding the Neighborhood Restorations portfolio.
In late June, letters were sent to tenants explaining that Neighborhood Restorations planned to sell its government-backed properties. The same attorney-written notice went to the city, community organizations, housing attorneys and Gauthier’s office. After the notice is issued, the city has about one year to assemble a priority bid before the homes can be marketed publicly.
Tenant organizers began informing residents about the deadline. Eric Braxton, project director with OnePA West/Southwest Rising, said many tenants remain confused about what is happening.
The 925 units are located across more than a dozen neighborhoods, including several areas experiencing gentrification. Housing advocates say a sale on the open market could convert many of the homes into market-rate housing. Organizers say that outcome could displace about 3,000 tenants.
Those properties represent about 12% of subsidized housing in Philadelphia that could lose affordability restrictions during the next decade. Many of the homes were constructed or rehabilitated in the early 1990s and early 2000s using Low-Income Housing Tax Credit financing. Those affordability restrictions will expire in phases beginning this year.
Efforts to find a preservation strategy are already underway. Gauthier’s office convened several meetings to explore acquisition options. The effort is now coordinated by the Local Initiatives Support Corporation Philadelphia.
Executive Director Andrew Frishkoff said the organization agreed to assemble a project management team and a small group of city and state representatives to develop acquisition and preservation strategies for the Neighborhood Restorations homes during the coming months. Members of the Parker administration are expected to participate in those discussions.
The size of the portfolio presents financial challenges for the city. Two people familiar with the sales proposal said the company is seeking $115 million for the homes, although the final price could depend on the physical condition of the properties.
Neighborhood Restorations says the homes require cosmetic repairs. A physical-needs assessment by the city has not yet been completed.
Many of the properties are already nearing the end of affordability restrictions. Of the 925 homes, 224 have reached the end of regulatory limits. The remaining 701 units will exit the program during the next 11 years. The homes are currently 94% occupied.
Philadelphia’s Housing Opportunities Made Easy plan, known as the H.O.M.E. plan, provides $800 million for housing programs. Affordable housing preservation represents one of the largest categories within the initiative. The first year of the plan allocates $46.2 million to preservation efforts.
Jessie Lawrence, the city’s director of planning and development, said the scale of the portfolio requires substantial resources. She said the city is pursuing a comprehensive strategy across Philadelphia and cannot devote its entire preservation budget to a single portfolio.
During the hearing, Thurman said the administration would continue working with Gauthier and her office and said city officials understand the potential consequences for residents.
While city leaders consider possible action, housing organizations are also working toward a long-term solution to expiring affordability restrictions. The United Way of Greater Philadelphia and Southern New Jersey is raising funds for a $100 million revolving preservation fund designed to purchase housing properties when affordability protections are about to expire.
United Way’s board approved an initial contribution of $2.5 million to the fund. The organization’s chief executive, the Rev. Bill Golderer, said United Way has approached three anchor institutional investors in the region and identified more than 130 individual investors. He expects responses from institutional investors by June 30.
Housing consultant Greg Heller is assisting with development of the preservation fund. Heller previously led the Philadelphia Redevelopment Authority during the administration of Mayor Jim Kenney, when preservation fund proposals were also discussed.
The proposed fund would purchase affordable housing properties when owners decide to sell them. An investment committee would review each property and determine whether the fund should acquire it.
If approved, a limited liability corporation would be created for the property involving the preservation fund and a potential buyer if one exists. The LLC would hold the building for three to seven years.
During that period, the fund would manage repairs and operations while collecting rent. The arrangement would give nonprofit organizations or other buyers time to assemble financing needed to acquire the property permanently. Applications for Low-Income Housing Tax Credits frequently require at least one year before funding becomes available.
Once financing is secured, the buyer would purchase the property from the LLC. Investors would receive a modest return from rent collected during the holding period and could reinvest their funds or withdraw them.
Preparations for the preservation fund are already in place. Ballard Spahr established the legal entity. Asset manager Forsyth Street is ready to administer the fund, and HOW Property Group would manage buildings temporarily.
Whether the fund will be ready in time to intervene in the Neighborhood Restorations sale remains unclear.
While city officials consider options for the 925 homes, a community housing initiative in the Mantua neighborhood is exploring another approach to affordability.
The program is called Second Story Collective. The initiative pairs college students with older homeowners through an intergenerational home-sharing arrangement. The program grew from Writers Room, a Drexel University literary arts, academic and community-based program.
One participant is Ms. Julia, a retired certified nursing assistant and mental health worker who has lived in Mantua for more than 50 years. She volunteers, watches movies and stays active in her community. She now shares her home with Jackson Tignor, a 22-year-old architecture student at Drexel University.
Ms. Julia first heard about the program from a friend and hesitated before deciding to participate. The collective later matched her with Tignor.
Tignor lived on Drexel’s campus during his first two years in college and wanted a different housing arrangement. The program directs rent payments toward neighborhood residents and the surrounding community.
Second Story Collective has hosted three home sharers so far. Two housing agreements are active and two additional agreements are planned later in the year.
The collective currently focuses on Mantua, a neighborhood with a long history of African American residents. Research conducted by Writers Room, Drexel’s Youth Education Lab and the Mantua Civic Association examined housing and demographic trends in the area.
The research found Mantua’s white population increased by 73% during the past decade. Rental rates increased by more than 44%. The number of residents paying more than 30% of their income toward rent increased by 74%. The number paying 50% of their income toward rent increased by 454%.
Mantua was included in the West Philadelphia Promise Zone initiative. President Barack Obama designated several West Philadelphia neighborhoods, including Mantua, as one of 22 national Promise Zones in 2014. The West Philadelphia Promise Zone received millions of dollars in federal resources intended to increase economic activity, create jobs and reduce violent crime. The initiative lasted ten years.
Second Story Collective works with Rebuilding Together Philadelphia to repair homes participating in the program. Diana Nicholas, an associate professor of architecture, design and urbanism at Drexel University, evaluates each home before students move in.
Nicholas tours the property with Rebuilding Together Philadelphia and prepares a report describing accessibility needs and potential repairs. The nonprofit then develops a construction budget and completes the work.
In Ms. Julia’s home, renovations converted the third floor into a private living area for the student. Brandon Alcorn, director of operations for Rebuilding Together Philadelphia, said one bedroom on the third floor was already ready for occupancy. Workers converted another bedroom into a full bathroom and kitchenette, creating a small independent apartment.
Ms. Julia said the renovation required schedule changes because workers frequently entered and left the home, though the repairs improved the property.
Tignor said the space includes a bedroom, kitchenette and full bathroom. His room overlooks the Philadelphia Museum of Art.
Students who participate in the program pay reduced rent and assist homeowners with household tasks. Victoria Huggins Peurifoy, the collective’s community engagement liaison, said those tasks can include trash removal, snow clearing, grocery shopping or shared activities. Tignor said he has helped with chores in the home, including shoveling snow from the roof.
Community leaders are planning additional housing developments involving intergenerational living. De’Wayne Drummond, president of the Mantua Civic Association, described a project planned at 36 Haverford Avenue called The Village Square on Haverford.
The development will include homeownership opportunities, health and well-being services, a medical center, a market, a radio station and space for WURD. The site will include 18 homes with cooperative living arrangements. The Village Square project will also contain 18 units dedicated to intergenerational co-housing.
Writers Room continues identifying residents interested in the housing program and plans to prioritize long-term neighborhood residents for future housing opportunities.
