UC Townhomes site will have affordable housing after all, with deal between Philly and landowner

The City of Philadelphia officially reached an accord with the owner of the University City Townhomes site, ending the lawsuit at the center of a years-long saga over the University City affordable housing complex on the 3900 block of Market Street.

As previously reported by The Inquirer, the deal centers on the transfer of about one-fifth of the 2.7-acre site from the owner, IBID Associates, to the City of Philadelphia for the development of 70 new units of affordable housing.

IBID will also provide $3.5 million to the city for the tenants’ relocation and housing costs, or about $50,000 per household, to be administered by the United Way of Greater Philadelphia and Southern New Jersey.

A separate, much smaller fund in the hundreds of thousands of dollars will be provided by a coalition of anchor institutions — including the University of Pennsylvania, Drexel University, and Children’s Hospital — for support services such as financial counseling and legal aid. A spokesperson for Penn declined to divulge how much it would be offering.

“It’s historic,” said Councilmember Jamie Gauthier, who represents the area. “I’ve not seen a case of an expiring subsidy property where people got this type of outcome — a substantial payment for tenants, over and above relocation costs — and the city gets a valuable piece of land to build deeply affordable housing forever.”

The new affordable housing on the city-owned land will include a right-to-return for previous tenants of the University City Townhomes, Gauthier said, and the city will attempt to match the previous levels of affordability at the site.

A request for proposals will be released in the coming months for the construction of a multifamily building of 40% one-bedroom units, 40% two bedrooms, and 20% three bedrooms.

The activist group Save UC Townhomes responded to the news with a statement that condemned the affordability limits outlined in the settlement agreement, with spokesperson Sheldon Davids arguing that they “failed” the previous tenants.

The settlement agreement outlines affordability limits targeted at those with incomes of 60% to 80% of area median income — which would make it open to tenants with higher incomes than those who previously lived at the site. Sixty percent of area median income for a family of four is about $63,000, or monthly rent of $1,834.

But a city spokesperson confirmed that the administration is committed to securing the same level of affordability in the new building as the original University City Townhomes, as Gauthier stated.

The 60% to 80% guideline in the settlement is meant to echo the language in the federal Low Income Housing Tax Credit program that the city hopes to tap to build the new homes, a city spokesperson said. Those funds would be paired with another affordability program to ensure the units will be accessible for low-income residents.

“That isn’t written into the settlement agreement because it’s funding dependent and up to the city to make that work,” said Ava Schwemler, spokesperson for the Law Department. “The city plans to apply to Low Income Housing Tax Credits for the construction subsidy and [from the Philadelphia Housing Authority] operating subsidies. Those combined would add up to commensurate affordability.”

The University City Townhomes were a low-rise housing complex that was supported by a federal affordability program but was operated by a private landlord — IBID — that held a contract that expired in 2022.

When IBID Associates began managing the property in the 1980s, there hadn’t been new private-sector development in University City, or any part of West Philadelphia, for decades.

But as the 40-year contract came to an end, University City was in the midst of a development boom, with markets flourishing for life sciences and multifamily housing.

In this environment, IBID decided to not renew the University City Townhomes contract and wanted to sell the land for demolition and redevelopment. Tenants and activists protested the action, occupied the site, and pressured city policymakers to stop the deal.

Although IBID and Gauthier at first tried to negotiate, talks broke down, and Gauthier introduced a bill that effectively hampered the demolition of the existing property. In response, the landowner sued the city for infringing on its property rights.

The settlement agreement announced Wednesday, first reported by The Inquirer in March, is a result of negotiations overseen by U.S. District Judge Scott W. Reid. The agreement is signed by Gauthier, Philadelphia’s managing director Tumar Alexander, and Brett Altman, the principal behind IBID Associates.

“We are pleased to reach an agreement that at last provides the chance to achieve what we have sought from the beginning,” said Kevin Feeley, spokesperson for IBID. “[We wanted] to successfully redevelop 3900 Market St. while also respecting the residents of University City Townhomes and accommodating the legitimate need for affordable housing at the site.”

As part of the settlement, Gauthier will have to introduce legislation exempting IBID’s site from the legislation she passed last year to hamper the demolition and redevelopment plans. The land will also be largely exempted from the inclusionary zoning overlay legislation she wrote that requires new multifamily buildings in the area to provide affordable units on-site. IBID or any developer who buys the land will be able to build up to 396 units of market-rate housing without having to include affordable units in the project.

The University City Townhomes are the most visible example of a much larger problem. Since the traditional public housing program lost political support in the 1970s, most affordable housing in the United States is backed by public-private partnerships of this kind.

In cases in which the properties are operated by nonprofits, or the land is in less high demand areas, affordability contracts are usually renewed. But in neighborhoods that are seeing a lot of redevelopment and market interest, such as University City, owners will be tempted to sell.

A 2016 study from the Philadelphia Federal Reserve found that a quarter of the city’s subsidized units would face expiring affordability provisions in the coming years.

City Council is working on providing a master list of affordable housing complexes in the city so tenants and advocates will be more prepared in future, Gauthier said.

“Of course the city is growing, of course West Philly is growing, but you will not treat people like they are disposable here,” she said. “It is not OK to throw people away because they don’t have a lot of money. We can’t allow our city to grow along those lines.”

Residents of the University City Townhomes have an event planned Friday at 40th and Market to demand a written agreement that confirms a right-to-return provision for former tenants and levels of affordability that match what existed in the old contract.

“We must have a written commitment from the city that guarantees a ‘right to return’ with a housing subsidy for current and former residents and a commitment to work with the residents on the redevelopment of the preserved site,” said Rasheda Alexander, a resident of UC Townhomes, in a written statement to the media.