Expansion of affordable housing requirements is proposed for West Philadelphia

Another slice of West Philadelphia is being added to a controversial zoning overlay that requires developers to include affordable units in their new housing projects.

The bill, introduced at City Council’s first meeting of 2023, would add Market Street, from 54th to 63rd Streets, and surrounding blocks to the so-called Mixed Income Neighborhoods Overlay District. This law requires that new housing developments of more than 10 units devote 20% of their homes to residents who make about $30,000 for an individual or $42,000 for a family of four. It also allows developers to build more densely than they would otherwise be able to and reduces the amount of parking the builder is required to provide.

The legislation was introduced by Councilmembers Jamie Gauthier, one of the original authors of the Mixed Income Neighborhoods (MIN) law, and Curtis Jones. The section of Market Street included in the bill is a dividing line between both their districts, so support from both Council members was needed.

Jones said he signed on to Gauthier’s effort because he saw the threat of displacement growing.

“I used to think gentrification … would never be a problem in my district, but with [apartment buildings] being gobbled up by investors, I see that affordable housing is [my] issue, as well,” Jones said. “To preserve the nurse who works at Penn, we need to have a place where they can afford to live.”

The Building Industry Association (BIA), a trade group for residential developers, has long opposed Gauthier’s law and other attempts at inclusionary zoning that would require developers to include below-market-rate units in their buildings.

The bill introduced at Thursday’s session would also designate the 56th, 60th, and 63rd Street Market-Frankford Line elevated train stations as nodes of transit-oriented development, which would offer incentives to encourage developers to build multifamily housing within a 500 feet of station entrances.

Gauthier said the bonus to density and height and the reductions to parking requirements near the stations could counterbalance some of the costs developers could experience from complying with the affordability requirements.

“I understand this might not be developers’ favorite thing because it cutting into their profits,” Gauthier said. “But I contend West Philadelphia will still be a favorable place to develop, especially with the growth of the life sciences. We can’t leave whether we are going to have affordable housing to the whim of developers.”

Gauthier has already applied the mixed income regulations to the neighborhoods surrounding the University of Pennsylvania and Drexel University, where many new housing towers and life sciences buildings have been proposed in recent years.

The wave of new development in University City hasn’t yet moved to the area of West Philadelphia covered in the bill. It is meant to prepare for the future.

“From a development perspective, if we’re going to protect equity, we need to be thinking 10 years down the line,” Gauthier said. “Otherwise neighborhoods will change, and we won’t have guardrails in place to protect vulnerable people.”

Developers have argued stridently against Gauthier’s MIN overlay and argued that it has chilled development in the parts of West Philadelphia where it already applies. She wrote the original law in tandem with Maria Quiñones-Sánchez, who is now a mayoral candidate and who has since expressed reservations about the legislation because she fears it had depressive effects on development in her district.

The BIA said that to make apartment development work under MIN restrictions, developers would need to charge more for the rest of the units in the building, pushing rents beyond what most are willing or able to pay in up-and-coming neighborhoods. As a result, many developers simply won’t build in neighborhoods affected by the regulations.

“This bill will end up resulting in a few dozen units, at best, with other projects not getting built because of it,” said Mo Rushdy, vice president of the BIA. “The low interest rate environment and the full 10-year tax abatement were the factors that allowed projects in transitional neighborhoods. Both are no longer there. Adding [MIN] requirements will just widen the gap.”