Council President Darrell Clarke proposes incentive to build affordable housing in one corner of North Philly

City Council President Darrell Clarke on Thursday proposed using a limited property tax abatement to encourage affordable housing development along North Broad Street.

“This program will essentially establish zones across the city of Philadelphia to incentivize genuine affordability by utilizing an abatement for affordable housing,” Clarke said at a news conference.

The bill would grant a 10-year property tax abatement to developers who set aside 30% of their units for those at 60% of area median income or less ($50,000 a year for a two-person household). The rent could not be more than 30% of a household’s income.

Clarke introduced the bill at the last Council session before winter break, but it can be taken up in the new year.

The bill builds off of a state law sponsored by Rep. Jared Solomon (D., Philadelphia), called the “Affordable Housing Unit Tax Exemption Act.” That law allows municipalities to give tax abatements in exchange for the construction of below-market-rate homes.

But if localities want to take advantage of the state law, they have to pass their own enabling legislation. That’s what Clarke is doing, although, in a twist, he is targeting it only to the blocks around North Broad Street in his district and Councilmember Cindy Bass’ district.

Why not encourage affordable housing across the whole city?

“Maybe other Council people aren’t that interested in the program,” speculated Gary Jastrzab, the retired head of Philadelphia’s planning commission. “If, in fact, the goal is to encourage the development of low-income housing, why not do it citywide?”

But Clarke has said he thinks giving the idea a test drive in a slice of his district is the way to go. If it goes well and other Council members wish to emulate it, then they will have evidence of how it could work.

“Anything different in the city of Philadelphia, you have to take baby steps,” Clarke said Thursday. “As we move forward, we will be looking at different zones in the city. I anticipate in the Oxford Circle area [which Solomon represents] there will shortly be one put in place. But it made sense to start here, on Broad Street.”

This stretch of land around North Broad Street was the target of a previous Clarke initiative that would have required developers building more than 10 housing units to ensure 20% of them charged below-market rate rents. Unlike other such laws in the city, Clarke’s version did not include an incentive to encourage density. The Council president has long been skeptical of multifamily development.

But Clarke pulled that bill from consideration by the Rules Committee last week.

“We don’t want to pass something where nothing gets built,” Clarke said. “That’s a possibility [with inclusionary zoning] based on costs associated with materials and other things we are hearing from the industry.”

The city residential development trade group, the Building Industry Association (BIA), endorsed Clarke’s new bill but emphasized that it is very different in content from the inclusionary zoning effort, which it opposes.

The BIA attended Clarke’s morning news conference along with affordable housing representatives from groups like Habitat For Humanity and the Philadelphia Association of Community Development Corporations.

“We think it helps close part of the gap to make affordable housing work,” said Mo Rushdy, vice president of the BIA. “This is a bill that will work well for Philadelphia, if implemented citywide, along with other steps that could be taken to create affordable housing.”

Clarke’s legislation continues a tendency toward piecemeal legislating in City Council, which has increasingly passed zoning and other regulatory changes that affect only a single district or, as in this case, a corner of one. District Council members are essentially given control of land use and streets policy in their geographic areas, potentially creating 10 different sets of rules across the city instead of one uniform standard.

Critics have argued that this approach to policy makes doing business in the city needlessly complicated, as a set of regulations may apply on one block but not across the street. This approach can discourage development, which in some cases appears to be the purpose of the bills.

“Having different regulations in different parts of Philadelphia makes it much more difficult for [the bureaucracy to review plans] and makes it difficult for developers,” said Jastrzab.

For his part, State Rep. Solomon said he wants to see the affordability incentive eventually made accessible to developers and tenants throughout the city.

“The Council president wants to do it as a pilot to see how many units this program produces, and then expand from there,” Solomon said before the news conference. “We’ll see how stakeholders respond, if the tool needs to be tweaked. My hope is that it expands throughout the whole city.”