Inclusionary Housing FAQ

 

Q: What is Inclusionary Housing?

A: Inclusionary Housing (IH) (sometimes called Inclusionary Zoning (IZ)) is a tool used to make sure that as our city continues to grow, we have affordable home choices for people of all incomes. IH policies either mandate or incentivize developers to provide a certain percentage of housing units in new buildings to income restricted tenants or buyers.  Mandatory programs have been much more effective at creating new affordable homes than voluntary programs. 

Developers have some flexibility and may elect to either provide the affordable units on site, fulfill their obligations by building units in another location, or make payments into the Philadelphia Housing Trust Fund   

 

Q: What is the Philadelphia Housing Trust Fund?

A: The Philadelphia Housing Trust Fund (HTF) was established in 2005 to provide local resources to address Philadelphia’s affordable housing needs. The HTF takes a holistic approach by making responsible, effective grants to non-profits that create new affordable homes, repair or preserve existing affordable homes, and prevent homelessness. By paying into the HTF developers can ensure they are helping address ongoing affordable housing challenges across the city. You can see exactly where those funds went by checking out their annual reports at http://www.phila.gov/dhcd/publications/housing-trust-fund/   And check out our fact sheet on how the HTF creates jobs, increases tax revenue, and leverages investment for our neighborhoods: http://www.pacdc.org/campaign-double-philadelphia-housing-trust-fund

 

Q: Why is it necessary? Why now?

A: We all want to see Philadelphia thrive and our neighborhoods improve, but we also need to ensure that it remains a place where we can afford to live, work, and raise a family. But Philadelphia’s current development boom is leading to surging rents and home prices that most Philadelphians can’t afford.  This boom also places pressure on surrounding neighborhoods, resulting in rising property taxes and rents.  Inclusionary Housing will create more affordable homes so that the Philadelphia we leave our children isn’t less diverse or vibrant than the city we’ve come to love.

 

Q:  Philadelphia isn’t like other places with IH like DC, New York, Boston, or San Francisco where rents and home prices are double, triple, or more what they are in Philadelphia.  Is this policy premature?

A: Actually, we should have put Inclusionary Housing policies in place 5 years ago in Philadelphia! The goal of the policy is to ensure that as the market heats up, we’re building in affordability at the start to counteract economic segregation and prevent displacement.  Cities like DC, NY, Boston and San Fran are trying to correct for the negative consequences of their red-hot housing markets and the inequality and unaffordability that resulted. If Philadelphia strives to be a model city for inclusion, equity, and diversity, we need to act way sooner than those other cities did.  We want a future Philadelphia where people of all incomes can live affordably.  

 

Q: Has this been done before?

A: Yes! There are over 500 big cities, small towns, rural, and suburban communities (some entire states!) across the country that have adopted Inclusionary Housing – and more than 80% of them are mandatory.   The rules are different for each location.  Check back here soon and we’ll link to resources that explain how other cities have crafted their IH policies. 

 

Q:  Will IH solve our housing affordability concerns?

A:  No single tool will solve our housing affordability problems, but IH should be part of the toolbox. There simply aren’t enough local, state, or federal subsidies to serve the estimated 100,000 Philadelphians who need help finding a safe, affordable home. IH enlists private developers to do their part in exchange for other benefits they receive from the public.  But it’s absolutely critical that we generate more public subsidies to bolster other affordable home policies and programs that have been underfunded for decades, and which are threatened by deep federal budget cuts or elimination.

 

Q:  Who will benefit?

A:  It’s important to adopt an IH policy that provides benefit for people earning 30% to 50% Area Median Income (AMI), which is $24,300 – $40,150 for a family of four.  While developers may push to target the policy toward higher income households so they can collect higher rents, City Council needs to be reminded how critical it is we serve those for whom finding a safe, affordable home could be transformative for their health, education, and economic opportunity.  We support giving developers reasonable off-sets, such as density bonuses, easing of parking requirements, or other supports to make serving lower income populations viable.   

 

Q:  Why should private developers be responsible for affordable housing? 

A: While development is good for our city, it does have some unintended consequences in the form of higher rents and home prices that low- and moderate-income Philadelphians can’t afford.  IH policies help compensate for those negative effects of development.

Also, Philadelphians have been generous to the development community through the 10-Year Property Tax Abatement, reductions and exemptions in business taxes, provision of low-cost public land, and other benefits.  Low- and moderate-income Philadelphians that have paid more in property, wage, and other taxes to compensate for subsidies to private developers should get something in return. IH is one way to deliver modest return on the investments made by taxpayers in Philadelphia so that we all benefit from the city’s revitalization and growth.   

 

Q:  How much need is there for affordability in Philadelphia

A:  Unfortunately, we have an overwhelming number of Philadelphians that need safe, affordable housing and aren’t getting it.

More than 70,000 extremely low-income Philadelphia households pay an overwhelming percentage of their monthly income on rent, placing them one emergency away from homelessness.  Our housing stock in low-price neighborhoods is also in bad shape, so tenants and homeowners live with unsafe or unhealthy conditions.  People are turned away from shelter every day, and families stay there longer than they should because they can’t find an affordable place to go.  The number of homeless individuals is also growing.  And we lost more than 23,000 affordable units between 2000 – 2014, according to one study.