How affordable housing can boost Philadelphia's economy

While discussions over this year’s state budget have centered on ways to find additional revenues and cut spending to solve the projected $1.2 billion shortfall, a recently introduced piece of legislation has the potential to immediately boost the economy and grow the tax base in future years without raising taxes.

Last Thursday a bipartisan group of senators introduced Senate Bill 1380, which would expand the availability of low-income housing assistance funds without imposing any new fees or raising taxes. State Senator Shirley Kitchen, a Democrat based in North Philadelphia, is one of the measure’s prime co-sponsors.

We know firsthand how this type of investment will impact Philadelphia: by revitalizing struggling neighborhoods, creating new affordable homes for vulnerable residents, and driving important momentum and economic activity in a new set of local communities.

This approach builds on success. Since 2012, the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund (PHARE) –known as the State Housing Trust Fund – has been available to help 37 counties invest a total of $17 million in improving their communities through much needed financial support for new low-income housing development projects, repairs and rehabilitations to existing homes, blight demolition and removal efforts, and rental assistance to keep people in their homes.

Unfortunately, Philadelphia and dozens of other counties are not directly benefitting from this investment. The fund’s revenue currently comes from the Marcellus Shale impact fee, meaning only counties with natural gas development are eligible to receive PHARE assistance. SB1380 would expand the program to all Pennsylvania communities.

The proposed legislation would direct a portion of future increases in collections of the state’s 1% realty transfer tax, up to $25 million, to PHARE and make the funds available statewide. Not only will this investment help at-risk communities rebuild, but it also has the potential to produce a $400 million economic impact - adding up to 3,000 jobs and an additional $20 million in state tax revenues.

By basing the new revenue stream on the projected recovery in the housing market, communities that stand to benefit significantly from PHARE, like so many here in Philadelphia, can do so without a difficult conversation over which part of the budget to cut from or which taxes to increase.

As heads of organizations committed to revitalizing neighborhoods like Germantown, Kensington, Port Richmond, and many more through low-income housing development and rental assistance programs, we are intimately aware of the potential impact this legislation can have not just on these areas, but our entire city. There are countless examples of potential success stories.

The Women’s Community Revitalization Project has recently proposed a construction project titled the Grace Townhomes that would build 36 new rental properties for families in need on a currently vacant block in Port Richmond. After 15 years, these renters would have the option to purchase their homes, increasing their potential for stability and upward mobility. If it is expanded statewide, assistance from PHARE would help fill funding gaps and accelerate the availability of this housing.

The New Kensington CDC has been working to redevelop the former Orinoka Mills textile factory into a 51-apartment complex for low to moderate income residents -a possible game changer for the neighborhood. This currently vacant parcel would breathe new life into a community that has been distressed for years and could use funding from PHARE to jumpstart that process.

We cannot afford to neglect these communities or residents. Each day we fail to act, more at-risk families and veterans become homeless and turn to emergency shelters, hospitals and prisons for refuge. The high cost of these facilities on our state budget far exceeds the $25 million investment to provide the necessary housing assistance.

The time has come for state government to address blight and homelessness by expanding and funding PHARE.

Nora Lichtash is the Executive Director of Women’s Community Revitalization Project – an organization that develops affordable housing and provides support for low-income women and families in Philadelphia.

Roy Diamond is the Principal of Diamond & Associates – a consultancy and development operation with a focus on affordable housing, tax credits and economic development.

Source: Philadelphia Business Journal