Proposal in Point Breeze Shows the Challenges of Affordable Housing Today

Affordable housing is on everyone’s mind at the moment, with City Council currently debating a bill that will require developers to provide affordable units in certain medium and large sized projects. The thing is, affordable housing is a really difficult nut to crack, and as the fight continues over the aforementioned inclusionary zoning bill, it’s clear that different people and groups have different needs, wants, and desires in this arena. A Point Breeze community meeting earlier this week drove this point home in illuminating fashion.

Lot at 2002-04 Annin St.

A representative from Innova made a presentation to develop 2002-2004 Annin St., a property that’s been sitting vacant for as long as we can remember. If you live nearby, you already know that it wasn’t long ago that this was consistent with the rest of the block. But as we’ve detailed before, this block has experienced a nearly complete rebirth and now 2002-2004 Annin St. is one of the few vacant lots that remain.

Looking west on the 2000 block of Annin

You might think that it would make sense to build a couple of townhomes on this property, which would fit in pretty well with the rest of the block. Instead, Innova is proposing a double-wide triplex, and the units will be listed for sale as condos. The reason for this move isn’t out of a desire for a higher rate of return, but instead because the developer bought the property from the City, along with several others, in response to an RFP to build workforce housing. The goal of the RFP was to create as many units as possible that could be affordable for purchase for residents earning 80-120% AMI. While Innova could feasibly build homes here, the resulting additional construction cost combined with the reduced unit count would create an economically unfeasible outcome.

The project had refusals for use, since the parcel is zoned for a single family home, and also for open space and rear yard size. But the variances weren’t really the subject of discussion at the meeting. Instead, members of the community were interested in learning the expected sale price of the units. The moderator of the meeting tried to dismiss these questions, as they don’t pertain to zoning, until eventually a representative from Councilman Johnson’s office stood up to talk about affordability. He didn’t, however, state the sale price for these units, which we believe will be somewhere in the neighborhood of $250K per unit. On its face, that’s a fine price for a 3 bedroom, 1.5 bathroom condo units at 20th & Annin. But we heard several people in the crowd stating that truly affordable units would sell for a price around $150K.

And they have a point! A $250K property, even with a 5% down payment, would require about $25K up front, and would result in a monthly mortgage payment of roughly $1,300, at current interest rates. That’s almost $16K/year in housing costs, which doesn’t account for repairs and maintenance. For that to be 30% of someone’s annual income, they would need to earn roughly $70K/year. We admit, we don’t know the exact sale prices for these units, but assuming we’re in range, should the City be giving away land to subsidize construction of units at this price point?

Persistent dumping site on the NW corner

Innova also presented plans for two duplexes, a little to the north on 20th Street. As was the case with the triplex, several members of the community were not thrilled with the desired variance, because they weren’t convinced that the units were truly affordable.

Duplex proposed up the street
Another duplex proposed at 20th & Ellsworth

We have a feeling that the ZBA will approve the proposals whether or not they get support from the community, as they’re ostensibly being built with the goal of creating affordability in the neighborhood. That being said, the need for affordable housing persists in Point Breeze and in just about every other neighborhood in town. We don’t believe that the inclusionary zoning bill will get the job done either, unfortunately. Do you have any ideas about how to increase affordable housing options in Philadelphia?

  • ambiguator

    Do you have any ideas about how to increase affordable housing options in Philadelphia?


  • Ben – Bella Vista

    The total costs of a 250,000 dollar house would be closer to 1800 a month, realistically only affordable on one income

    • FrancisvilleMgmt

      $1800 covers a 300k condo @ 4% with a 5% down payment, tax abatement and a $200 a month condo fee. $1600 is a pretty good estimate for a 250k condo.

      • Ben – Bella Vista

        i didn’t consider the tax abatement, guess that makes sense.

  • Circa79

    there is plenty of affordable housing so the question is wrong. The question is how to maintain some sort of income diversity in gentrifying areas near the core of the city. The problem with much of the affordable housing now is that it’s in poor condition, in neighborhoods with little to no retail, very little fresh food, higher crime rates, longer commutes to the CBD, worse schools,etc.

  • Patrick Star

    Higher density = less margins albeit on more units, which can offset the reduced selling price of said units. I think. I mean, look at Brooklyn or Queens. Each of those boroughs has as many people in it as all of Philly. But of course, the local folks in their xenophobia and loss-of-parking phobia would never go for this.

    Also, this is a VERY good read:

  • chris

    Philadelphia does not need affordable housing, it is already affordable. It needs jobs and opportunities to lower our disgraceful poverty rate. The residents need to vote out these loons and get real leaders in office.

    • Circa79

      overly simplistic and useless suggestion. People dont just migrate out of poverty when you change politicians or get more companies to move in. You can add 100k jobs and 98% of them would be out of reach to those at the bottom of the income scale. If people in poverty had medical or engineering degrees or knew how to code they would already have high paying jobs- they don’t have those skills so they work in hotels and in retail.

  • FrancisvilleMgmt

    If affordable housing is the goal, the city would be much better off selling some of its properties at market value and using the proceeds to build affordable housing on the remaining lots.

    • ambiguator

      City- or PHA-built housing is not the answer.
      Just upzone the existing low-density neighborhoods, and the market will do the rest.

      • Circa79

        why would the market have any interest in affordable housing? New product is by default the most expensive housing to create regardless of zoning.

        • ambiguator

          Housing prices are on the rise in Philadelphia because supply hasn’t kept up with demand.
          More housing = more stock = prices go down.

          Furthermore City- and PHA-builds “affordable”, low-density housing at the cost of luxury buildings – on order of $450K per unit for the proposal in Sharswood. Then it has to be subsidized with our tax dollars.
          (Not to mention it’s always fuuuugly suburban garbage.)

          Better to let private developers build up density, then give the subsidies directly to those who need it.

  • Circa79

    there is no magic number- all of these things are based on calculations related to the income in a city or metro area and what % of income should be dedicated to housing costs without it becoming too burdensome. What is considered affordable is largely going to be dictated by the median income for the region.

  • SouthJersey1

    The concept of creating and/or integrating affordable housing with higher densities associated with Transit Oriented Development (TOD) would mitigate the financial burden associated with vehicle ownership, allowing the reallocation of personal income to other demands, such as rent or mortgage payments. Paseo Verde (near Temple U. SEPTA Regional Rail station) is a local example of mixed income residential TOD.

    Philadelphia has yet to seriously embrace additional density adjacent to fixed guideway transit facilities (of which Philadelphia has too few), despite Janie Blackwell’s recent proposal for the Provident building at 46th & Market. Other U.S. cities (mainly in the west) have actively engaged in TOD with the specific outcome of generating affordable housing; meanwhile Philadelphia dawdles with it’s meager TOD zoning overlay and no economic incentivization.

    • ambiguator

      Great points here, for sure.
      Building small units and eliminating parking requirements would be amazing market-based, zero-cost measures to increase affordability.

      fixed guideway transit facilities (of which Philadelphia has too few)

      You’re discounting regional rail entirely.

      It’s not that Philly has too little fixed transit routes, it’s that SEPTA doesn’t know how to run it (at least in part).

  • ambiguator

    We’re in agreement, That Guy.
    You can’t spread development without upzoning.
    Development is densely concentrated in center city is because it’s the only place in the city with the zoning that supports dense development!

    Private developers are interested in margins, and the only way they’re getting margins is by building multi-unit projects.

    Single-family homes will never “spread wealth” or fill the demand gap for affordable housing, nor do they provide margins for developers.