New Approaches to Affordable Housing
With only 37 units per 100 families, Philadelphia is trying to ramp up the amount of affordable housing it offers. The goal is redeveloping more than 1,500 vacant properties and generating $27M in new tax revenues
Philadelphia is using tax incentives and bond proceeds to redevelop 1,500 vacant public properties into affordable housing within the next three years. The program will be funded by $100 million in bonds and $200 million in state and federal tax subsidies.
Philadelphia has been nurturing residential and commercial building projects in more affluent neighborhoods, and has now set its sights on ramping up public housing to support lower-income residents. The housing units will be available to households with incomes between 80-120 percent of the city’s median income, the New York Times reported.
In Philadelphia, 26.9 percent of its 1.5 million residents are at or below the federal poverty line. Unfortunately, for everyone 100 extremely poor households, only 37 affordable rental units are available. Currently 110,000 families are on the waiting list for public housing, the New York Times reported.
Luckily, Philadelphia has 9,000 vacant public properties at its disposal to increase access to affordable housing. The city plans to convert one thousand units into rental properties and the remainder will be put up for sale. In creating more affordable housing options, Philadelphia officials expect economic activity to increase by $681 million and generate $26.9 million in city tax revenues.
Philadelphia is choosing to use bonds as well as state and federal tax subsidies to fund the program. Most affordable housing projects will leverage those resources as well as philanthropic assistance to support projects. Private companies cannot build new affordable housing units without federal subsidies to pay for the work. As a result, many cities nationwide are struggling to maintain enough affordable housing units to meet growing demand.
Lexington Surplus Strategy
The Urban County Council in Lexington, Kentucky, voted to allocate $3.5 million of the city’s $10 million in budgetary toward affordable housing and homeless initiatives. The money will be used to create an affordable housing trust fund which will support programs to counter rising housing costs and reduce the homeless rate.
According to a city report, 28,000 affordable publicly-owned apartments were lost over the past 20 years, while Lexington continues to bleed 400 rental units annually to increasing rent costs.
In response, Lexington plans to funnel $3 million for affordable housing projects, and $500,000 for homeless initiatives. The city was able to accumulate a $10 million surplus from $5 million in savings and an additional $5 million in revenue streams. The remainder of the budget surplus will be used to fund repairs and replacements for police and fire equipment, vehicles and infrastructure.
Before the surplus funds can be used, the city council must approve a plan for how the money will be distributed in the short and long term. Because the council is planning to spend the surplus on one-time projects, the city will likely have to devise a strategy to support the affordable housing trust fund each consecutive year, such as by increasing tax on insurance premiums.
Countering Housing Costs