Three new housing guidelines from state and city officials aim to maintain and increase the amount of housing residents can afford.
Included in Pennsylvania’s budget is $125 million for home repairs and weathering to preserve the state’s aging housing stock. The legislation, which Gov. Tom Wolf signed into law on Monday, gives local governments the ability to offer property tax breaks to developers whose projects include below-market units.
And Philadelphia officials Tuesday announced improvements to the city’s Restore, Repair, Renew loan program to help more homeowners with more expensive repair projects.
» READ MORE: Philadelphia’s affordable housing strategy depends on repairing existing homes
Here’s an overview of the policies and how they might affect Philadelphians.
Philadelphia and other municipalities across Pennsylvania are now allowed to give tax breaks in exchange for building houses below market price, thanks to a law Wolf signed into law Monday.
The legislation, sponsored by State Assemblyman Jared Solomon (D., Philadelphia), provides up to 10-year tax breaks in certain areas with dilapidated properties if at least 30% of the homes built are affordable for households that account for 60% of area median incomes, or $56,940 for a household of three in Philadelphia. Municipalities can also introduce a two-year tax break for new homes or home improvements, as long as 30% of local homes meet this definition of affordability.
The legislation also allows places like Philadelphia to freeze property taxes for low-income residents, an option the city could add to the list of measures to help homeowners whose taxes have skyrocketed due to new tax returns released in May .
» READ MORE: Philly’s budget deal expands property tax breaks and cuts business taxes. But most homeowners will still have tax increases.
The legislation “will really help a lot of people in need and hopefully reset the affordable housing landscape for years to come,” Solomon said.
It is now up to the City Council to pass legislation for these changes to take effect. During the debate on the future of the tax reduction, the council considered similar tax reduction measures, but the city was unable to act without Harrisburg legislation.
“By pushing that policy through local control, we were able to say to people, ‘Look, that’s an option,'” Solomon said. Offering choices and emphasizing that the lack of affordable housing isn’t just a problem in Philadelphia got his co-legislators to support his bill, he said.
» READ MORE: How Philadelphia finally changed the beloved and loathed 10-year tax break
Organizations supporting tax breaks and property tax freezes include tenant attorneys; the Housing Alliance of Pennsylvania, a coalition dedicated to increasing the supply of affordable housing for low-income households; Hapco Philadelphia, the largest rental property association in the city; and Habitat for Humanity Philadelphia.
Corinne O’Connell, the nonprofit’s chief executive officer, said that particularly given the high cost of construction, “anything that incentivizes developers and helps bring down those costs of building affordable housing and/or helps drive the cost down lowering or lowering that hurdle to owning a home, that’s wiser housing policy.”
“This legislation gives local governments more tools in their toolbox to incentivize affordable housing,” she said. “So that’s a win.”
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The Building Industry Association of Philadelphia endorsed the legislation, which makes large-scale construction of affordable housing for the private sector “economically advantageous,” said Mo Rushdy, the association’s vice president.
With private sector involvement, a drive to sell public land for affordable housing, and the City Council’s neighborhood preservation initiative, “there’s no reason we can’t produce thousands of affordable homes every year without state or federal subsidies,” he said.
Housing and energy efficiency advocates, home repair programs, and average Pennsylvanians trying to fix their homes told lawmakers about the gaps they found in existing services: lack of funding, lack of coordination between programs, and lack of a skilled workforce to address complete repairs.
Thanks to the American Rescue Plan Act and a budget surplus, Pennsylvania’s budget includes funding for the Whole-Home Repairs Program, which provides grants of up to $50,000 for repairs and energy efficiency upgrades, assigns staff to help people deal with red tape to help and pays for training to strengthen the workforce needed to improve homes.
The program is designed for homeowners who make less than 80% of the area’s median annual income, or $75,900 for a Philadelphia household of three, and for landlords who own fewer than 15 rental units.
» READ MORE: Pa. lawmakers agree to increase education funding and spend billions of remaining stimulus money as part of budget
Pennsylvania’s housing stock is aging, and many owners are struggling to afford repairs. State Senator Nikil Saval (D., Philadelphia), who introduced the legislation, said this program is the first of its kind in the country and could become a model for how to preserve aging housing stock while creating jobs.
Across Pennsylvania, rot is a well-known problem, he said, and “many people saw it as an early intervention in a cycle that leads to home decay, abandonment, and displacement.” The program, he said, is an investment in growth “through the stabilization of communities across the Commonwealth.”
The idea behind the bill was to address several issues at once, including a lack of housing that people can afford, unsafe homes driving residents away, the growing threat of damage to homes due to climate change, and inefficient buildings consuming energy wasting and wandering increase residents’ utility bills.
» READ MORE: Fight rot with whole-home repairs | editorial staff
At rallies across Pennsylvania, residents and pro-housing advocates spoke out about people who are applying for existing forms of assistance and are unable to receive assistance. Sometimes homeowners looking to weather their homes are turned away because their homes need other repairs. When small landlords cannot afford repairs, tenants suffer or are evicted from their homes.
Habitat’s O’Connell said Philadelphia can’t pull itself out of the lack of affordable housing. It must also preserve what it has, she said.
Repairing existing homes is an important part of Philadelphia’s affordable housing strategy. As such, the city recently changed its home improvement restore, repair, and remodel loan program to remove obstacles that were keeping some homeowners from doing so.
As part of the program launched in 2019 by Philadelphia Housing Development Corp. launched, lenders are offering 3% fixed rate loans to Income Residents with credit scores above 580 who need repairs to their primary residence. Borrowers have 10 years to repay the loan.
“I don’t think you’re going to find anything better, folks,” PHDC chief executive officer David Thomas said at a Tuesday news conference.
» READ MORE: Studies show it’s harder to get a home improvement loan in Philly if you’re on a low income or belong to a minority group
The program supports people who make a little too much money to qualify for grant programs but do not qualify or can afford traditional loans.
Residents who qualify for a loan under the program can now borrow up to $50,000, up from the previous limit of $24,999. Homeowners have 12 months to dispute contractors and get the job done, up from three months previously. And the credit approval process is streamlined.
Borrowers can also pay contractors up to a 50% down payment instead of 30%, expanding the pool of interested contractors.
Jon King, a homeowner from East Mount Airy, took out a loan under the program to renovate his kitchen last year – after spending a year without a kitchen when his contractor stopped work because of the pandemic. He heard about the program from a neighbor who attended, he said, and now, “I’m telling everyone.”
In this latest iteration of the program, Republic Bank joins Univest Bank to offer loans to participants. Philadelphia-based nonprofit financial advisory Clarifi helps homeowners through the loan and repair process.
Jill Roberts, Clarifi’s director of advocacy, said she and others realized the program wasn’t reaching as many people as it should have because it wasn’t accessible enough.
“The changes to Restore, Repair, Renew that we announced today bring our vision of a healthy home city a little bit closer,” said Roberts. “We have significantly lowered the barriers to entry for this program, which means more homeowners will have the capital they need to protect their most valuable asset for themselves, for their children and for the wider community.” Together we are building a better, fairer Philadelphia, one repair at a time.”
Philadelphians can call Clarifi at 215-866-5200 or email email@example.com.
The Philadelphia Inquirer is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on poverty alleviation solutions and the city’s pursuit of economic justice. All of our reports can be found at breakinphilly.org.