How thousands of affordable homes in Philly are threatened by expiring government subsidies

Tenants in 69 units at the University City Townhomes are being forced to relocate after the building owner ended its federal contract to provide affordable housing on site. The company, IBID Associates, plans to sell the land.

The two-year fight to save the Townhomes has now landed in federal court, after the owners sued the city and City Councilmember Jamie Gauthier for allegedly violating their rights to sell the property. A protest encampment was disbanded this week.

The collapse of this long-standing affordable housing complex was dramatic and headline-grabbing, but the underlying story of expiring government subsidies is not unusual — and it could happen again.

» READ MORE: Why the University City Townhomes are really vanishing — and why it could happen again

This kind of time-limited public private partnership is how most affordable housing in America is provided. In traditional public housing, government entities own the property and provide generous enough subsidies to house even the poorest residents. But this New Deal-era program never received adequate funding for maintenance from Congress, and political support further waned as the tenant population in most cities became majority Black.

In the 1960s, policymakers began experimenting with providing affordable housing through public-private partnerships with expiring subsidies.

“Traditional public housing in the United States was never adequately funded, so it fell into disrepair and quickly became very politically unpopular,” said Emily Dowdall, policy director for the Reinvestment Fund’s policy solutions group. “Affordability that’s not permanent is appealing because you don’t have to put so much money into a capital budget.”

By the 1980s, the overwhelming majority of new units were created through programs such as project-based Section 8 and the Low Income Housing Tax Credit (LIHTC). In cities like Philadelphia, these partnerships tended to work well because housing markets were weak. In most parts of the city, private-sector real estate activity was negligible throughout the late 20th century as industries shuttered and large swaths of the population fled the city.

Affordability could be elongated by tapping government programs to repair the buildings. For the owners of properties like the University City Townhomes, it made sense to extend the subsidies on such properties because owners couldn’t make more money in the private sector.

» READ MORE: At University City Townhomes, officers dismantle encampment as residents protest

“It wasn’t expected that neighborhoods that were home to a lot of affordable housing would ever be neighborhoods that were going to be very expensive to live in,” said Dowdall. “People didn’t anticipate the life cycles of neighborhood change and real estate pressure.”

A Department of Housing and Urban Development study from 2015 found that only 4% of project-based Section 8 properties opted out of the program when their subsidies expired. A 2012 study similarly found that only a distinct minority of LIHTC properties shed their affordability when legally allowed to do so.

In short, times change. There’s more incentive to sell when real estate markets heat up, as they have in University City and many other neighborhoods.

In 2016, the Philadelphia Federal Reserve found that 23% of the city’s subsidized affordable housing would soon lose its protections — the University City Townhomes among them — and that almost 1,100 of them were in neighborhoods that are seeing a lot of development.

» READ MORE: Opinion | I’m being evicted from University City Townhomes

While the Philadelphia Federal Reserve has not updated its research since 2016, thousands more units will soon have their affordability provisions expire. Last year, WHYY News reported that 1,700 units could see their restrictions end in the next five years, and over 3,400 over the next decade.

Hundreds of them will be in neighborhoods where the incentives to cash in are strong. The booming pandemic-era real estate market could mean that it will have an impact beyond communities like Fishtown or Spruce Hill, which were seeing strong reinvestment before 2020.

That means the tenants of the University City Townhomes are not likely the last Philadelphians who lose their homes because federal policymakers once decided against investing in permanent affordable housing.

“There are projects that are coming up for expiration all the time,” said Dowdall. “A lot of them still get renewed, but increasingly in Philadelphia and other cities they are located in areas that have really changed a lot in 30 years. There are more [closures] to come.”

The Philadelphia Inquirer is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice. See all of our reporting at brokeinphilly.org.