PlanPhilly

Inclusionary zoning bill clears committee, but final vote delayed until 2018

Maria Quiñones-Sanchez’s controversial bill requiring developers to devote a percentage of new housing to low-income residents incrementally advanced on Tuesday, but don’t expect a City Council vote on it anytime soon.

The so-called inclusionary zoning bill, including sweeping recent amendments, successfully moved out of Council’s Rules Committee. But it did not receive a recommendation for passage or rules suspension. That means it cannot receive final passage until January 25, at the earliest, when the next session of City Council begins.

It is expected that new amendments will be hammered out in the interim to address concerns with the existing legislation.

“It just gives us time to go back and work with the Planning Commission on possible amendments they may have,” said Sanchez. “I don’t think we are going to convince people. We have to move forward, something has to happen, but we are open. These conservations don’t stop.”

Sanchez’s bill breezed past with little comment. All the testimony occurred at a marathon hearing last week, where developers, civic associations, and affordable housing advocates sparred over the proposal. Then Sanchez surprised observers by putting off the vote for a week until Tuesday’s hearing.

Since then, rumors have swirled around City Hall about the bill’s fate. Sanchez appeared determined to move forward a bill that she’d introduced last June, but amendments introduced just before the Thanksgiving holiday failed to bring new interest groups into the coalition supporting the bill.

From the beginning, affordable housing advocates backed Sanchez’s inclusionary zoning legislation, which would require developers building more than nine units to devote at least 10 percent of the project to affordable homes. The real estate industry fought back, arguing the bill could dampen development. Community groups were leery of zoning incentives provided to developers to offset costs from building affordable homes, allowing them to build taller and denser buildings.

The pre-Thanksgiving amendments applied only to the city’s most populated areas, meaning the bill would mostly only apply to Center City and University City. 

This narrowed scope did nothing to ease the real estate industry’s opposition to the bill, in part because the zoning bonuses for height and density were scrubbed from the amended legislation.  

But the zoning bonuses that remained still alienated community groups. Developers also warned they would simply move their focus out of Center City in reaction to the legislation, resulting in more gentrification.

Numerous stakeholders also pointed out that Sanchez’s desire to create mixed-income housing in high-end neighborhoods would likely not come to pass either. The amendments included a new provision allowing developers to buy out of the requirement to build units on site, giving them the option to instead pay into the city’s Housing Trust Fund.

After last week’s abortive hearing, and amid continuing concerns from interest groups, the Planning Commission, and fellow Councilmembers, it was rumored that both Sanchez’s office and City Council President Darrell Clarke’s office were working on fixes to the legislation.

But by Monday most Councilmembers, staffers, and lobbyists still professed confusion and dissatisfaction about the bill and its prospects. Fresh amendments, it turned out, were not forthcoming.

Although the inclusionary zoning bill will not pass this year, Sanchez did achieve her secondary goal of reigniting the affordable housing debate in Philadelphia.

The Building Industry Association (BIA), one of the bill’s primary opponents, initially attempted to dispute the notion that Philadelphia suffers from an affordability crisis. But they shifted their rhetoric at last week’s hearing. Philadelphia’s immense poverty problem, the association acknowledged, makes housing too expensive for close to a third of the population despite low housing costs in comparison with many other major cities.

“There is no denying that our city’s poverty rate is persistent and far too many cannot afford housing,” said Brian Emmons, president of the BIA, at last week’s hearing. “There is also no denying that the effects of the recession can still be felt in rising rents and home prices, and in lingering stagnant wages.”

Sources familiar with the debate in City Council say that there are possibilities a new bill could be in the works, possibly an impact fee that would charge developers a set rate to be paid into the city’s Housing Trust Fund.

But it is expected that an affordable housing bill of some kind, whether a rejiggered inclusionary zoning bill, an impact fee bill, or another increase in the real estate transfer tax will likely be passed next year. After all, the Kenney administration proved broadly supportive of Sanchez’s bill, as did City Council President Darrell Clarke, especially as the current federal government’s commitment to affordable housing grows ever more tenuous.

“A construction fee as it relates to neighborhood development, absolutely should always be on the table,” said Sanchez, when asked about the possibilities for a different kind of affordable housing bill. “Part of this is that someone needs to introduce a bill and someone needs to champion it.”

The city’s tax abatement—which exempts newly constructed, or improved, residential and commercial development from property taxes for 10 years—also came under unprecedented scrutiny during the consideration of Sanchez’s bill.

Originally created to spur development in a declining Philadelphia, it is believed in many circles that the abatement is no longer needed to spur development, especially in Center City and its halo of gentrifying neighborhoods. Outside observers have noted that the existence of a no-strings-attached property tax abatement actually undercuts the possibility of inclusionary zoning.

They say that such generosity should be given in exchange for, say, affordable housing units instead.  

“There is a special challenge for inclusionary anywhere where there are already tax abatements underwriting market-rate development,” said Rick Jacobus, a national expert on inclusionary zoning. “With inclusionary, you are taking back with one hand what you gave with the other. But I think in general it makes sense to expect something when you are providing subsidies to development like the tax abatement.”

Sanchez’s messaging around the bill often emphasized the ten-year abatement as an example of City Council subsidizing development, with inclusionary zoning framed as a way for the real estate industry to give back.

Last week that messaging was echoed by Darrell Clarke, the president of City Council.

“Some years ago, we crafted a ten-year tax abatement to stimulate housing, and at this point, I think you’d agree it’s been successful,” said Clarke at the hearing last week’s Rules Committee hearing. “Now it's our responsibility to craft something to stimulate affordable housing. Just like we created the 10-year-tax abatement—which I’m not going to talk about getting rid of today—its time to create some affordable housing in our city.”

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About the author

Jake Blumgart, Reporter

Jake Blumgart is PlanPhilly's planning, development, and housing reporter. He covers the city's built environment and the people who live and work there. He lives in Cedar Park and has also contrubuted to Slate, CityLab, Next City, The Philadelphia Inquirer, Philadelphia Magazine, and the American Planning Association's magazine. Follow him on Twitter @jblumgart and email him at jblumgart@whyy.org.

 


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