How to Raise Even More Affordable Housing Revenue from the New Mixed-Income Housing Bonus

When last year's affordable housing package passed City Council, the big news was the Kenney administration's commitment to dedicating a lot more general funding to the Housing Trust Fund from expiring tax abatements, but as we've been pointing out, the more interesting story may be the Mixed-Income Housing density bonus program. 

That program allows developers to claim a bonus to build taller and denser within certain zoning categories if they either include affordable housing units on-site, or make a payment into the City's Housing Trust Fund. This was always more interesting because it's a way to create genuinely new revenue for housing, rather than repurposing revenue we were already expecting to receive down the line.

And Jake Blumgart at PlanPhilly reports that early signs point to the program working better than expected, even though it was only just passed last fall. 

"Nine months after Councilwoman Maria Quiñones-Sánchez won support for an expansion of the city’s voluntary inclusionary zoning bonus program, 12 development projects are on track to use the incentive. The 12 projects will collectively generate more than eight units of affordable housing and deliver $3 million to the city’s Housing Trust Fund, said Paul Chrystie, a spokesman for the Kenney administration.

The expanded inclusionary zoning bonus, which Quiñones-Sánchez led into law last September, allows developers to build denser and taller residential projects if they include affordable units on site or contribute money to the Trust Fund — a kind of municipal bank that can provide subsidies for affordable projects.  

The voluntary bonus passed after real estate industry opposition killed a mandatory inclusionary bill and a proposed construction tax. 

Quiñones-Sánchez said that while she still would prefer a policy that mandated developers build affordable or pay into the housing fund, the voluntary bonus’s track record so far signifies a win [...]

[T]he city has “no way to predict” whether the bonus is on track to meet its $18 million goal," [according to spokesperson Paul Chrystie.]

Blumgart also raises an important point that we've raised on a few occasions here, which is that areas zoned exclusively or predominantly for single-family homes won't contribute any new affordable units or revenue for affordable housing under the program since the Mixed-Income Housing bonus only applies to multi-family and mixed commercial zoning categories. If your neighborhood doesn't have much land mapped for those categories, then it won't really apply there.

This matters because many of the areas that are Mixed-Income Housing bonus deserts are also the areas where we'd most want to see more mixed-income housing being produced. 

As this map by Aaron Bauman shows, places like Point Breeze, greater Passyunk Ave, Fishtown, Fairmount, and the Baltimore Ave corridor are largely off-limits for using the bonus. The eligible parcels are highlighted in purple, and the rest are ineligible.

This district breakdown shows how much land is eligible to use the Mixed-Income Housing bonus in each Council district.

Paul Chrystie, the City's spokesperson quoted in the article, says there's no way to predict whether the program will meet Council's $18 million goal over the next 5 years, but if elected officials really wanted to hit that total, it seems like it would be trivially easy to do it.

After all, the one sure-fire way not to hit the goal would be to functionally take all the really hot real estate markets out of the equation by suppressing multi-family projects that would surely get built if the zoning allowed them. 

There's certainly no shortage of zoning variance requests to build multi-family buildings in Fishtown and Point Breeze, and if the base zoning allowed them by-right, it seems likely that people would utilize that. And some portion of those projects would probably use the Mixed-Income Housing bonus to add to the allowable density. 

So if elected officials would like to have some more revenue for the Housing Trust Fund, even over and above the $18 million that they want the Mixed-Income Housing bonus to raise, the first step is to recognize that single-family zoning is a tax on the Housing Trust Fund, and rezone more land in these hot neighborhoods to promote more bonus-eligible projects.

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