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Testimony: The Chamber urges thoughtful analysis of Mixed Income Housing legislation

Posted Monday, November 27th, 2017

Public Policy, Advocacy, Action Teams, Roadmap for Growth, Roadmap, Testimony & Correspondence

Monday, November 27, 2017
City Hall, 1401 John F. Kennedy Blvd., Philadelphia, PA 19107

Testimony by: Rob Wonderling, President and CEO, The Chamber of Commerce for Greater Philadelphia

Good afternoon, Chairman Greenlee, Councilwoman Maria D. Quiñones Sanchez and members of the Committee on Rules. I am Rob Wonderling, President and CEO at the Chamber of Commerce for Greater Philadelphia. Thank you for offering the opportunity to testify on Bill No. 170678.

Much like members of this body, the Chamber shares concerns over housing affordability across the city. The Chamber thanks City Council for its concern and willingness to take action to develop a program tasked with creating more affordable housing units.

However, we remain concerned about the proposed Mixed Income Housing legislation due to a number of reasons. According to a recent study published by Econsult, Philadelphia still has a great deal of affordable housing stock and is ranked as the second most affordable city to rent or buy a home in the U.S, with a majority of these options located in the Lower Northeast, North and West Philadelphia. As this proposal is currently written, there is potential to halt development of residential properties and the creation of affordable housing units given the high costs of construction. While we applaud Councilwoman Sanchez’ efforts to create a program that will include residents at 50% of the area median income, poverty will make it tougher to define affordability for Philadelphians in this income threshold. A vast majority of Philadelphians live in units that are affordable, but can be considered below average in terms of quality. Additional resources can be leveraged to improve quality and keep existing units affordable.

The Chamber’s mission is to attract, retain and grow jobs for the city and region. We follow principles of economic competitiveness to guide our public policy. We believe that government at all levels must operate in an efficient way to maximize the services that it provides, and the Chamber will work with other organizations to advance an agenda leading to economic growth and prosperity. The Chamber leads this work through its Roadmap for Growth Action Team, which engages government as well as neighborhood and civic associations on a shared job creation and economic growth agenda, prioritizing education, neighborhood economic development, and vulnerable populations.

As it relates to the proposed bill, we support the intent but have several concerns expressed from our members:

  • This proposal could have the adverse effect of decreased development within the city, especially as it relates to the creation of affordable units and mixed use retail opportunities for future projects due to increased building costs. Further, there is potential within this to drive up the costs of all housing around the city, thus negating the original intent of the bill.
  • Impact fees paid to the Housing Trust Fund are excessive and target developers building within specific zoning classifications outlined in this bill. Further this doesn’t encourage developers to build projects or units over a certain size due to the calculation of fees.
  • Developers may not be able to market, lease or sell affordable and market-rate units at the same time. Developers must prove there is a market for banks to finance the completion of the project in order to achieve market rate stabilization. For example, a 50 unit condo being built in Center City must dedicate 5 units of affordable housing for low to moderate income tenants. This will potentially bring pricing differences for each unit, and therefore could leave a given project’s financing needs unmet. There is potential that a project may cost more than what the expected income from rental or mortgaged units will be.

The Chamber urges thoughtful and deliberate analysis when considering broad business regulations and we appreciate there is a working group established to discuss the merits of this bill. We are happy to continue serving as partners in guiding legislation so as to best effectuate a policy’s intent. As it relates to developing more affordable housing across Philadelphia, we recommend the following:

  • Dedicate additional funding in the FY19 budget for the Philadelphia Housing Trust Fund in order to create more affordable units, while allocating funding for rehabbing existing units in need of repair. This funding should be equitable and not solely financed by impact fees levied on the development community.
  • Encourage developers and housing advocates in emerging neighborhoods to create more affordable and workforce housing by utilizing the City’s existing program.
  • Add a provision within this bill that allows affordability of units created to match the terms of the financing for any given projects. Cities with similar programs keep units affordable for up to 15-30 years.

Thank you for the opportunity to testify on Bill No. 170678.

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