Acknowledgments A special thanks to Eleanor Sharpe who guided us through this experience. Thank you to all of the agencies and organizations that took the time to meet with us and share their professional expertise: Philadelphia Redevelopment Authority (PRA) Office of Housing and Community Development (OHCD) Philadelphia Housing Authority (PHA) The Philadelphia Land Bank City of Philadelphia Revenue Department City of Philadelphia Commerce Department Applied Urban Solutions Asociacion Puertorriquenos en Marcha (APM) The Reinvestment Fund (TRF) Local Initiatives Support Corporation (LISC) Building Industry Association (BIA)
We also want to thank Kate Daniel for her hard work and patience in coordinating all the second year planning studios.
Table of Contents Executive Summary
i
The Income Problem
10
Investing in the Economy and Workforce
26
Investing in the Economy
Investing in the Workforce
34
Investing in Housing Quality
38
44
Quality for Low-Income Renters
50
56
Quality for Seniors Conclusion
63
References
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Executive Summary After a half century of decline, Philadelphia’s population is growing, companies are expanding and adding jobs, developers are building, and home values are increasing. While the crime rate remains high, it is coming down, and while Philadelphia schools continue to struggle, test scores and graduation rates have improved. At last, economic, social, and other forces are working in Philadelphia’s favor. Still, too many Philadelphians have not yet benefitted. Poverty is high, educational attainment and workforce participation are low, and many Philadelphians cannot afford a quality place to live. The high housing burden borne by many Philadelphians is not the result of expensive housing. Renting or owning a home in Philadelphia is less expensive than in many of Philadelphia’s peer cities. Rather, Philadelphians struggle to afford housing because their incomes are so low. Only by addressing Philadelphia’s low income problem can the City ever hope to make housing affordable. We came to this conclusion reluctantly. As Masters of City Planning students at the University of Pennsylvania, we have studied housing and community development, and we expected to recommend ways for Philadelphia to build more and better affordable housing and to make other physical improvements to its neighborhoods. But those recommendations would do little to address the reality that too many Philadelphians do not have the incomes to afford their most basic needs. After consulting with policymakers at City agencies and stakeholders in neighborhood organizations, analyzing data from national and local sources, and evaluating existing programs and policies, we came to the conclusion that the City’s current efforts are not sufficient to address the most critical issues facing Philadelphia today. Many actors continue to work tirelessly to make housing more affordable for low-income Philadelphians and to improve their neighborhoods. Among them are the City’s departments and agencies, its Community Development Corporations (CDCs), and their non-profit and other privatesector partners. Many Philadelphians have benefitted from these efforts.
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But the Federal resources the City relies on for its most successful programs are rapidly declining, and the City lacks a comprehensive plan for how all of its stakeholders can work together to make substantial progress toward addressing the root of Philadelphia’s affordable housing problem. Discouraged by this situation, many Philadelphians question whether their government is capable of making a real difference. Other Philadelphians are too burdened with just trying to get by to even dare to hope for a better future. Philadelphia must fundamentally change the way it addresses these issues. For decades the City has spent more money on housing development than on economic development, yet still nearly one million of Philadelphia’s 1.5 million residents cannot afford to meet their basic needs. Because Philadelphia’s affordable housing problem is not the result of expensive housing, the City cannot solve this problem by making housing less expensive. The City must reorder its budget priorities to reflect this reality.
Recommendations In order to attract employers that will create more and higher-paying jobs for Philadelphians, Philadelphia must invest in its economy to become a more desirable place to do business. One area of particular concern is Philadelphia’s current tax structure, which has limited its ability to compete with its peer cities and nearby suburbs. Philadelphia must reduce the tax burden on its workers and businesses. In particular, the City’s business net income tax is a large obstacle to Philadelphia’s job growth. The Nutter Administration has already proposed to gradually lower this tax rate, but more substantial reductions are necessary to make Philadelphia truly competitive with its peer cities and suburbs and to generate significant job growth. Simply eliminating the business net income tax is not possible without severely impacting the City’s budget, so Philadelphia should sell publicly-owned assets, including the Philadelphia Gas Works (PGW), to help make up the shortfall. While a previous plan to sell PGW proposed putting the proceeds from the sale into the City’s underfunded municipal pension fund, these proceeds would be better used to allow a meaningful reduction in the business net income tax. Reducing this tax will make Philadelphia a more attractive place to do business and will increase economic growth in the City, thereby broadening the tax base, increasing tax revenue, and enabling the City to fully fund its pension liability as well as provide other services to residents.
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Philadelphia must also make a greater investment in its workforce, ensuring its residents have the education and training they need to be qualified for these new jobs. The City can do this by increasing support for organizations like Philadelphia Works and the Community College of Philadelphia. Philadelphia Works, the City’s workforce development agency, serves a wide range of job seekers and employers through its “one-stop” Integrated Centers. Its goal is to strengthen collaboration between Philadelphia’s workforce development and economic development efforts and to prioritize the City’s hardest-to-serve populations. In order for Philadelphia Works to achieve these priorities, the City must make targeted investments in the organization’s efforts to assist job seekers with significant barriers to employment. These are primarily adults without basic literacy or job readiness skills, Philadelphia Housing Authority (PHA) residents, and Philadelphians with criminal records. The Community College of Philadelphia (CCP) serves as an important bridge between high school and college through its dual enrollment program and between community college and four-year college through its dual admissions program. CCP also partners with local industries to assist its students in finding gainful employment. The City should shift its resources from its current affordable housing development and preservation priorities to support these efforts. Only then will Philadelphians be able to get good jobs, earn steady incomes, afford quality housing in safe, desirable neighborhoods, and be able to pass these benefits on to their children. While Philadelphia should focus its limited resources on economic development, some Federal and local funds are specifically reserved for housing initiatives. These funds should leverage the private market to improve housing quality and to enable Philadelphia’s two most vulnerable populations, renters and seniors, to remain in their homes. The City must stretch its resources to help as many people as possible by leveraging private market strength. It can do this by matching private market loans with public subsidy in the form of grants for landlords with lowincome tenants to improve housing quality. Participation in this program would be encouraged by housing code enforcement by the Department of Licenses and Inspections (L&I) and targeted in areas where rents are
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high enough to support minimal debt. A deed restriction would be placed on properties benefitting from this public subsidy which would limit rent increases to ensure long-term affordability for low-income tenants. In neighborhoods experiencing reinvestment, this program would be a powerful tool to prevent displacement. A similar program for senior homeowners would build on existing community-based housing counseling services to leverage new-found home equity for housing quality improvements. The City should work closely with Community Development Corporations (CDCs), healthcare workers, and faith-based organizations that already have expertise in housing finance and existing relationships with their neighbors in order to encourage homeowner participation. These programs will ensure that both renters and senior homeowners have at least a minimal level of housing quality, enabling them to remain in their homes. For the first time in decades, Philadelphia is growing. Now is the time to nurture this positive trend to benefit all Philadelphians. To do this, the City must fundamentally shift its priority from housing development to economic development. Only by investing in its economy and workforce can Philadelphia make substantial progress toward housing affordability and quality for all.
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Long-Term Affordability
Incentivizing Participation
The City should not provide public funds to landlords with no strings attached. As a condition of the grants, a deed restriction should be placed on the property limiting rent increases to ensure long-term affordability. These deed restrictions would prevent landlords from using the increased quality of their properties to raise their rents above what their low-income tenants can afford. In neighborhoods seeing reinvestment, this program would be a powerful tool to prevent displacement of lowincome renters while ensuring they benefit from positive neighborhood change.
In order to incentivize landlords to participate in this program, the Department of Licenses and Inspections (L&I) should give warnings to rental properties that do not meet basic health and safety standards. These warnings would include information about the loan and grant program and allow landlords 30 days to bring their properties up to code or apply for the program. Landlords who ignore the warnings would begin to accumulate fines after 30 days and would eventually risk losing their properties through Sheriff’s sale or the Land Bank. This additional, more proactive code enforcement is resource-intensive, and L&I is already stretched to the brink simply responding to complaints. Therefore, without additional funding and staffing, L&I should target this code enforcement in specific neighborhoods rather than the entire City. These neighborhoods should be the ones in the middle and bottom right of Figure 3.11 where the private market is stronger, and rents are more likely to support at least some debt. This will increase the likelihood that the landlords of targeted properties either can remedy the violations on their own or can participate in the program with less public subsidy.
Difficult Decisions Prioritizing Philadelphia’s most needy residents requires making difficult decisions. The Basic Systems Repair Program (BSRP), Weatherization Assistance Program (WAP), and Adaptive Modifications Program (AMP) are highly popular and currently underfunded.11 Yet because they are targeted primarily at homeowners, who generally have higher incomes than renters, these programs do not serve Philadelphia’s most needy residents. They also do not currently leverage private markets. In order for Philadelphia to shift its limited resources from housing to economic development, the few resources remaining for housing must be used as wisely as possible. BSRP, WAP, and AMP should be amended to maximize their impact for Philadelphia’s low-income renters and seniors or ended and replaced with new programs that reach those residents. Likewise, the Homestead Property Tax Exemption, which allows homeowners to deduct $30,000 from the appraised value of their homes for the purposes of calculating property tax liability, serves its function as a way to reduce property taxes for low-income homeowners. But it does the same for high-income homeowners, and it does nothing for renters who generally struggle much more than homeowners.
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Housing Cost & Quality
Figure 3.12 Renter Model
Housing Cost & Quality
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After half a century of decline, Philadelphia’s population is growing, companies are expanding and adding jobs, developers are building, and home values are increasing. While the crime rate remains high, it is coming down, and while Philadelphia schools continue to struggle, test scores and graduation rates have improved. At last, economic, social, and other forces are working in Philadelphia’s favor. Still, too many Philadelphians have not yet benefitted. Poverty is high, educational attainment and workforce participation are low, and many Philadelphians cannot afford a quality place to live. While many actors, both public and private, have worked tirelessly to make housing more affordable for low-income Philadelphians and to improve their neighborhoods, Philadelphia’s affordable housing problem is not the result of expensive housing. Rather, Philadelphians struggle to afford housing because their incomes are so low. Only by addressing Philadelphia’s low-income problem can the City ever hope to make quality housing affordable.
While Philadelphia should focus its limited resources on economic development, some Federal and local funds are reserved for housing initiatives. These funds should be used to improve housing quality for Philadelphia’s most vulnerable populations, low-income renters and seniors. The City should stretch these resources to help as many people as possible by encouraging landlords and homeowners to participate in programs that match public subsidy with private financing to improve housing quality. For the first time in decades, Philadelphia is growing. Now is the time to nurture this positive trend to benefit all Philadelphians. To do this, the City must fundamentally shift its priority from housing development to economic development. Only by investing in its economy and its workforce can Philadelphia make substantial progress toward housing affordability and quality for all.
Therefore, Philadelphia must invest in its economy by making itself a more desirable place to do business. Taxes on businesses must be lowered to attract employers that will create more and higher-paying jobs. Philadelphia must also make a greater investment in its workforce through organizations like Philadelphia Works and the Community College of Philadelphia. Only then will Philadelphians will be able to get good jobs, earn steady incomes, afford quality housing in safe, desirable neighborhoods, and be able to pass these benefits on to their children.
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References Photographs taken by David Flanagan and Audrey von Ahrens 2009-2013 American Community Survey 5-Year Estimates S0101, S0103, S0180 2012 – 2016 Philadelphia Corporation for Aging Area Plan 2013 American Housing Survey for the Philadelphia Metropolitan Area) C-06-OO-M, C-06-RO-M, C-15-OO-M City of Philadelphia Department of Public Health Design Advocacy Group. “Healthy Row House Project.” http:// healthyrowhouse.org/ Jobs for the Future. “Green Jobs Readiness Partnership.” 2014. http:// www.jff.org/initiatives/greenways/green-jobs-readiness-partnership “Just How Many People with Disabilities Live in Colorado Springs?” The Independence Center, accessed March 29, 2015 http://www. theindependencecenter.org/blogs/independence times/2012/8/22/el-paso-county-stats Loeb, Vernon. City Housing-rehab Program Hailed As A Model For U.S. Philly.com. October 8, 1988. http://articles.philly.com/1988-10- 08/news/26269462_1_rental-housing-housing-director-federal- housing-subsidies Looking Ahead: Philadelphia’s Aging Population in 2015. PCA. Jan 2006 Nan Feyler, The Impact of Housing Quality on Children’s Health in Philadelphia (Feb 2015). Office of Housing and Community Development Year 41 Consolidated Plan OMG Center for Collaborative Learning. “Pathways to Postsecondary Completion.” 2011. http://www.omgcenter.org/sites/default/files/ PtC_Final_Report.pdf Pager, Devah, Bruce Western, and Bart Bonikowski. “Discrimination in a low-wage labor market a field experiment.” American Sociological Review 74, no. 5 (2009): 777-799. Pennsylvania Health Care Cost Containment Council Pennsylvania Intergovernmental Cooperation Authority (PICA) Philadelphia Department of Licenses and Inspections 64
Philadelphia Housing Authority. “Agency Overview.” 2013. http://www. pha.phila.gov/media/89488/pha_fact_sheet_2_26_13.pdf Philadelphia Office of Housing and Community Development Philadelphia Police Department Philadelphia Works. “A Tale of Two Cities.” 2007. http://www.philaworks. org/sites/philaworks.org/files/pdf/TaleofTwoCities.pdf Philadelphia Works. “Federation of Neighborhood Centers Green Job Readiness Partnership Analysis of Literacy Gains. 2014. http://www.philaworks.org/sites/philaworks.org/files/pdf/ FNC_TABE_Analysis_092712_FINAL.pdf School District of Philadelphia State of The Agency Report 2014 PCA *PCA includes those who are 60 and above in their data. The Center for Women’s Welfare at the University of Washington. 2015. http://www.selfsufficiencystandard.org/ The Community College of Philadelphia. FY2016 Budget Hearing Testimony. 2015 The Community College of Philadelphia. “The Reentry Support Project.” 2015. http://www.reentrysupportproject.com/ U.S. Census Bureau Annual New Privately Owned Residential Building Permits U.S. Bureau of Economic Analysis U.S. Census Bureau County Business Patterns U.S. Census Bureau Decennial Censuses for 1900 through 2010 U.S. Bureau of Labor Statistics Local Area Unemployment Statistics United States Department of Housing and Urban Development’s Healthy Homes for Healthy Kids Campaign Wolf-Powers, Laura, and Nichola Lowe. “Sharing the Biopharmaceutical Wealth: Growth and Equity Benefits of a “Working Regions” Approach.”Regions Magazine 297, no. 1 (2015): 14-16.
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