On Wednesday Morning, October 11^th, ULI Philadelphia convened private and public sector real-estate practitioners to discuss housing affordability in the City of Philadelphia. Kevin Gillen, Senior Research Fellow at Drexel’s Lindy Institute for Urban Innovation, opened the discussion with an overview of the metrics he employs to describe real estate trends in the City’s housing market (his reports are published quarterly by the Lindy Institute). Gillen’s analysis focused on conventional measures of housing affordability: the proportion of market rate units that City residents at median income can afford without experiencing a financial burden (paying more than 30% of their budget on rent or mortgage payments). By this measure, according to Gillen, “73% of housing stock in Philadelphia is affordable.” Rather than exclusively affordability, Gillen posed a question of whether we have a housing quality challenge to address.

Anne Fadullon, Director of Planning and Development for the City of Philadelphia, followed Gillen’s analysis with an overview of the barriers to providing the affordable housing units to meet demand. The shortage of affordable options is compounded by Philadelphia’s high poverty rate and challenges relating to an aging population and an aging housing stock. Approximately 400,000 City residents have an income that falls below the federal poverty line and it’s becoming harder to provide affordable housing to these Philadelphians while federal support continues to dwindle. According to an article from Plan Philly, in 2001 “the City of Philadelphia received $71.7 million from the CDBG program, or $97.8 million in today’s dollars. Today the City…[receives] less than $39 million, an almost 60 percent decline since the beginning of George W. Bush’s presidency.” Fadullon discussed City tax programs and initiatives to address a diverse range of housing needs, which include preservation and accessibility efforts to keep residents in their homes and using city-owned land to leverage affordable and workforce development.

Stockton Williams, Executive Vice President of Content for the Urban Land Institute and Executive Director of the ULI Terwilliger Center for Housing, explained that ULI Global is interested in the question of inclusive prosperity and creating equity as urban center are revitalization. He provided examples of approaches that other cities are taking to housing challenges and gave us principles for a holistic housing strategy: encourage development, dedicate revenue, incentivize inclusion, preserve the existing housing stock, leverage land and target resources.

The tension between our City’s persistent poverty rate (twenty-six percent) and the high demand for subsidized housing echoed through several other presentations. Vidhi Anderson, Executive Director of Housing & Land Development, presented the wait lists for Presby’s Inspired Life affordable senior apartments. Many of their senior living communities have hundreds waiting for a spot. Timothy Henkel, Senior Vice President at Pennrose, attributed this mismatch between supply and demand in the market to the high pressure on Low Income Housing Tax Credits (LIHTC). Henkel noted that budget cuts to Community Development Block Grants (CDBG) and HUD have left LIHTC as the affordable housing sector’s “sole surviving resource”.  But even at full functionality and availability these funding streams typically do not provide affordable housing developers with enough subsidies to serve the families living in deep poverty, where there is often the greatest need.

The panelists provided an interesting perspective on how to grapple with this issue in Philadelphia. Andy Rachlin, Managing Director for Lending and Investment at the Reinvestment Fund, suggested that the public sector can leverage land to increase the stock of affordable housing. This is a tactic that Philadelphia’s Redevelopment Authority (PRA), in concert with developers and City officials, uses often. Greg Heller, PRA’s Executive Director, shared examples of recent projects where the agency sold land to developers for a nominal fee to support the development of workforce housing. These units are affordable to homeowners who earn less than 120% area median income. While this solution does not increase the number of affordable units available to low- or extremely low-income Philadelphians, leveraging City owned land is an effective way to maintain and even increase affordable units in hotter markets and better quality of life among lower-income households.

Over the course of the morning, three themes were at the forefront of the discussion:

• While the majority of Philadelphia housing stock is affordable by definition, our extremely low-income population and aging housing stock pose the greatest need
• Regional practitioners are working within existing (and dwindling) resources and getting creative to address area needs and solve problems
• These issues are not unique to Philadelphia and we can look to other cities for examples and best practices

ULI Philadelphia is committed to providing leadership in creating thriving communities and recently launched a Housing Product Council whose members will be working with public, private and regional leaders as they work to address the housing affordability question.