COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON HOUSING, NEIGHBORHOOD DEVELOPMENT AND THE HOMELESS Remote location using Microsoft® Teams Monday, November 27, 2023 10:00 a.m. PRESENT: COUNCILWOMAN JAMIE GAUTHIER, CHAIR COUNCILMAN CURTIS JONES, JR., VICE-CHAIR COUNCILWOMAN CINDY BASS COUNCILWOMAN KENDRA BROOKS COUNCILMAN MICHAEL DRISCOLL COUNCILWOMAN KATHERINE GILMORE RICHARDSON
Good morning, everyone. I understand that state law requires that the following announcement be made at the beginning of every remote public hearing as follows: Due to the current health threat, City Council Committees are currently meeting remotely to make these remote hearings possible. Instructions for how the public may view and offer public testimony at public hearings of Council Committees are included in the public hearing notices that are published in the Daily News, Inquirer and Legal Intelligencer prior to the hearings and can also be found on PHLCouncil.com. I now note that the hour has come. Andrew Goodman, will you please call the roll to take attendance. Members that are in attendance will please indicate that they are present when your name is called. Also, please say a few brief words when responding so that your image will be displayed when you speak.
Madam Chair. Sorry, technical difficulties. I am present. Good morning.
Thank you. I was worried there for a second. Good morning.
Good morning, Madam Chair. Good morning, colleagues. I am present.
Good morning, Madam Chair and colleagues. I'm present.
Good morning, Madam Chair and colleagues. I'm present.
Morning. Thank you. A quorum of the Committee has been established and this hearing is now called to order. This is the public hearing on the Committee of Housing, Neighborhood Development and the Homeless regarding 230776. Mr. Goodman, will you please read the title of the bill.
Bill No. 230776, amending 77 -- Section 7, excuse me, -202 of Title 7, entitled "Housing Code" of The Philadelphia Code to modify the definition of "affordable housing property," under certain terms and conditions.
Before we begin to hear testimony from the witnesses we have for today, everyone who has been invited to the meeting to testify should be aware that this public hearing is being recorded. Because the hearing is public, participants and viewers have no 17 reasonable expectation of privacy. By continuing to be in the meeting, you are consenting to being recorded. Additionally, prior to recognizing Members for the questions or comments they have for witnesses, I will note for the record at this time that we will use the chat feature available in Microsoft Teams to allow Members to signify that they wish to be recognized. In order to comply with the Sunshine Act, the chat feature must only be used for this purpose. Before we begin, I'd like to recognize Councilmember Lozada, the sponsor of this legislation, for any opening remarks.
Good morning and thank you, Madam Chair. Good morning, members of the Housing Committee and concerned citizens. Thank you for the opportunity this morning to address the affordable housing in our City and discuss the bill that I recently introduced, Bill 18 No. 230776. The proposed amendment of the Housing Code seeks to enhance the City's definition of affordable housing property by incorporating a small commonsense modification which will make the federal government's New Markets Tax Credit Program more accessible and available to those looking to build affordable housing in our City. The proposed change specifically focuses on broadening the scope of the definition of affordable housing and included properties developed with funding from the New Markets Tax Credit Program. This strategic adjustment adds to align our City's policies with the evolving landscape of housing development and financing. The New Markets Tax Credit Program is a federal program that incentivizes community development and economic growth through the use of federal tax credits and attracts private investment to distressed communities. By extending the definition of affordable housing project to encompass projects supported by the New Markets Tax Credit, we create an easier pathway for private developers to build the affordable housing units, which also makes it so that CDEs can also participate and take advantage of the opportunity to create the affordable and low-income housing that our City needs. This legislation will allow them to use the tax credit in addition to others which are offered by the City and which they already may be taking advantage of, thus easing the cost to build each unit. This amendment aligns the City's definition of affordable housing and the federal government's. It will facilitate the construction of much-needed affordable housing units in the community that need the most. The amendment will strengthen those communities and put our public land to use. By facilitating the integration of the New Markets Tax Credit-supported developments into our affordable housing framework, we empower builders, both private and community-based, by making the cost of their tax more attainable through utilizing more affordable resources to address our City's housing challenges. I look forward to a favorable recommendation from this Committee and I also want to thank Councilmember Gauthier and former Councilmember Quinones-Sanchez for their original work on the original legislation. Thank you so much.
Thank you, Councilmember. This is a great change to the legislation.
Are there any members from this Committee who would like to be recognized for remarks before we begin hearing testimony? (No response.)
Okay. Mr. Goodman, will you please call the first panel or witness we have to testify this morning.
Yes. Our panelists for today are Michael Cameron, Kimberly Washington and Maria Sourbeer.
Okay. Michael Cameron, are you there and connected?
Yes. Please state your name for the record and proceed with your testimony.
My name is Michael Cameron and I'm the Legislative Director for Councilwoman Quetcy Lozada for the 7th Councilmanic District, and I'll be reading Paula Brumbelow Burns' testimony from the Philadelphia City Planning Commission. Good morning, members of the Housing, Neighborhood Development and the Homeless Committee. I am Paula Brumbelow Burns, Director of Legislation for the Philadelphia City Planning Commission. I am providing written testimony on Bill No. 230776 introduced into Council on November 2, 2003 -- sorry, 2023 by Councilmember Lozada. Bill No. 230776 amends Section 9 7-202 of the Housing Code of The Philadelphia Code to modify the definition of affordable housing property. This bill will apply citywide. For the purpose of Section 14 7-202, Preservation of Affordable Housing, this bill will expand the definition of affordable housing development to include low-income housing units that are funded through the federal New Markets Tax Credit Program. Such units will be subject to the requirements for modification and right of first refusal outlined in the section of the Housing Code. Properties wherein at least 50 percent of units meet the definition of affordable housing development are exempted from the requirements of that section. These exceptions ease administrative and financial burdens that would otherwise cause barriers to development of projects for a majority (inaudible) that are set aside for low or very low-income households. While new markets tax credits are rarely used to develop affordable housing, the inclusion within this expanded definition provides relief for developers seeking to draw from the source of federal subsidy. In particular, this modification will enable the development of a much-needed, mixed-use and mixed-income project near the Frankford Transportation Center. While Bill No. 230776 was not reviewed by the City Planning Commission, agency staff support its approval. Thank you.
Thank you so much. Ms. Kimberly Washington, are you there and -- oh, wait. Before we do that, I'd like to recognize the presence of Councilmember Bass. Good morning, Councilmember. Kimberly Washington, are you there and connected?
Good morning. Please state your name for the record and proceed with your testimony.
Good morning, Chairwoman Gauthier and Vice-Chairman Jones. I'm Kim Washington. I'm Executive Director for the Frankford Community Development Corporation, and I'm joined by my co-development team Mosaic Development Partners, who's represented by Maria Sourbeer. Thank you for your time in allowing us to testify this morning. I'll give a brief overview of our neighborhood demographics just to give some background and color to the project that we are trying to accomplish and the proposed programming for the site, and then I'll turn it over to Maria to dig into the specifics about the financial challenges with implementing this type of project in an area like Frankford with a TOD/MIN overlay as it stands now. Councilwoman Gauthier, let me first thank you and our former Councilperson Maria Sanchez for your work around the TOD/MIN overlay legislation. As you know like West Philly, SEPTA's mass transit line runs through the heart of Frankford and can and will serve as the largest catalyst for economic redevelopment in our area. As the City seeks to redefine itself and neighborhoods change over for the better, population growth has centered around mass transit. However, on the flip side neighborhoods like Frankford that are primarily made up with Black and Brown residents have suffered from long-term disinvestment and neglect, thereby driving our property values down and making our neighborhood ripe for gentrification. We also lack the presence of any large institutional power to -- with the power to drive positive economic redevelopment. So I say all that to say I applaud you and our former Councilperson for your commitment to preserving these areas for a longstanding low-income Philadelphians by co-sponsoring this bill. As I previously mentioned, Frankford is a neighborhood whereabouts 85 percent of our population consist of Black and Brown residents. More than a third of our population lives in poverty. Our unemployment rate in Frankford is around percent, which is higher than the citywide unemployment rate of 9 percent. And we have one of the fastest growing poverty rates in the City of Philadelphia. We live in what is currently considered a food desert and a primary care desert. And with the exception of a 142-unit senior housing project that was completed this year, our neighborhood hasn't seen a large scale affordable housing project for over 30 years. So as the neighborhoods to the south of us start to turn over, some of Philadelphia's most vulnerable populations have been forced to move north to Frankford. In 2015, our organization started leading the charge to redevelop the area around the Frankford Transportation Center, which is the second busiest station in the City of Philadelphia, only second to City Hall. This site provides a unique opportunity to leverage the foot traffic generated by the station to bring much-needed housing, retail and jobs to this area. We started on this project in search for a developer who could help us attract a fresh food market in 2016. After years of dealing with historic designation and negotiations with big entities like SEPTA, Rite Aid and Wells Fargo in 2019, our advocacy was extended to the conversation with the City's Health Department about the plans in the 2035 Lower Northeast District Plan to add a health center to this area to address the dire need for access to primary care services. We knew a mixed-use project of this scale would require combining both LIHTC funding and New Markets Tax Credit funding which would require some help from an experienced developer with like-minded goals of providing quality housing and economic opportunity for underserved areas, which is what led us to a partnership with Mosaic Development Partners.
This project is proposing to add a 20,000-foot grocery store, a 40,0000-foot City health center and 134 units of mixed-income housing that will help stabilize the Frankford area, the Frankford Avenue Commercial Corridor and increase foot traffic to help sustain current businesses and attract new quality retail businesses. The construction itself is expected to create over 100 jobs. The new supermarket itself will support permanent new jobs, 19 and a new health center could create 20 over 50 jobs depending on the size. 21 Further, the project will 22 ensure that over 70,000 Frankford 23 residents as well as over 40,000 24 daily transit customers have access 25 to affordable fresh healthy food, affordable health care and affordable housing. Finally, the development of the new supermarket and health center will stir additional investment in development in the area bringing Frankford Avenue back to the strong commercial corridor that the residents deserve. I will turn it over to Maria Sourbeer and she will kind of jump into the specifics about a pro forma, what our market rate is and how these funding sources play into the project we're trying to pull off.
Thank you. It sounds like a great project and a great achievement for your organization. Maria Sourbeer, are you there and connected?
Yes. Please state your name for the record and proceed with your testimony.
Maria Sourbeer. I am Senior Vice-president with Mosaic Development and we're proud to be partnered with Kim Washington and her team on the Frankford project. I just wanted to talk about a little bit about the New Markets Tax Credit Program. This program is targeted at severely low-income census tracts. And so, the funding is only available in census tracts that qualify. The funding is specifically targeted at job creation and looks at businesses for manufacturing to food. It does include housing of course, health, technology offices, retail, energy, et cetera, and has been successful since the year 2000. I have had the privilege of working on five different New Markets Tax Credit Programs over the last eight years, and these all included low-income housing. There's a requirement -- the funding comes through CDEs. It's a competitive process through the CDFI Fund where CDEs are financial intermediaries between private investors and quality jobs. And so, the competitive process they apply for, then is funneled through to projects like ours and it comes in looking like equity. In a project like this, we have a myriad of public subsidies and grants involved and still are unable to meet the capital stack that is required to be successful. The comparables in neighborhoods like this don't provide for an appraisal that allows for the lending that's required. The rents that we can garner in neighborhoods like this aren't high enough to cover the maintenance that's required. And so, building a creative capital stack is necessary and we turn over every rock available to us through public subsidy and private investment and try to combine public and private together to make projects like this a success. And New Markets Tax Credit is an important tool that will allow for job creation as well as affordable housing. As Kim mentioned, we're creating approximately 80 jobs through this process and we are excited to meet the requirements for the affordable housing -- for the affordable housing benchmark of 50 percent by using the New Markets Tax Credit together with other funding sources. In this case, we're combining low-income housing tax credits and new markets tax credits so that we're not just providing affordable housing but also the commercial aspect and the jobs. It makes a holistic project that we're very proud of.
Thank you so much for your testimony and also for your work. Are there any questions or comments from members of the Committee for the panel? (No response.)
Mr. Goodman, are there any other panelists here to testify today?
Great. This concludes panel testimony for this bill. Mr. Goodman, do we have anyone registered to provide public comment today?
Please read the name of the first person registered for -- the only person registered for public comment.
Great. Queen Judith Robinson, are you there and connected? (No response.)
Is she not on? COUNCIL TECH SUPPORT: It's connecting her now, I believe.
Good morning. Please state your name for the record and proceed with your testimony.
Good morning. My name is Judith Robinson. I'm here to testify today regarding affordability as it relates to housing. I think the terminology should be more so income-based housing. We just had long lines of our citizens waiting for turkeys, waiting for food. So there is an issue of poverty that's not being addressed as it relates shelter, shelter for our citizens. Affordability is so, so relative. And I understand how it's complicated, but I think we miss so much in those calculations as we wheel and deal in the area that I love, real estate. Real estate as much as it is all this tax credits and putting all these subsidies together just to make ends meet for average citizens to be able to afford shelter, I think we talk so much in real estate about these deals, which I love to close the deal with the best, but it's somehow missing the point about what housing is really all about. It's about shelter. So I want to focus on PHA, Philadelphia Housing Authority, our income-based housing agency here in Philadelphia that's not being managed well as it relates to housing. And out of those 81,000 tenants, just a major, major part of the puzzle. That's not being addressed as it relates to housing, citizens of Philadelphia. Based on the income, the income, so the less the income -- and I think these are the folks that are being shuffled around and we're not addressing these issues -- so that leaves us with a major gap, major gap because then we're trying to negotiate through this ever-increasing homeless budget, which you need to address really as you do about affordability. Because those are dollars that really could help channel people and shelter people for real, not this visual cycle that we have with affordable housing as it relates to homelessness. So that's an area that I would say needs to also be addressed along with PHA. They're really pushing us to mismanagement of a whole housing system. We know that the most affordable housing is that which is already built, that's already occupied, and we need to focus in on making sure those occupants are able to remain in their houses with all of the programs that can help these older homes be maintained. In addition, we need to make sure that those mostly seniors and homeowners are not taxed out of their homes as we talked about affordability, because along with energy and all of those things, we have to be clear that taxing citizens out of their homes for gentrification and then acting like you really don't understand is a major problem. So I got a couple of letters from a couple of Councilpeople regarding this $500 one-time deal for the increase in taxes. First, you got to increase my taxes by a certain amount. Then you send me this letter like I'm getting a great deal, one time as you increase people's mortgages with this increase in taxes, because those letters go directly to mortgage companies. So as we talk about affordability we have to look at this thing globally, citywide and how things that you do down there at City Council are impacting the citizens uptown, all around town. So as a real estate professional, as much as the more money -- the higher the prices of real estate, the more money we get as commission, et cetera. So it would seem kind of productive for a real estate professional to talk about the value of real estate and how it increases beyond (inaudible). But I'm going to go there because everybody should have shelter, you know. We know that is the most important thing for humans. So if you're going to price a rowhome, you all got the Turn the Key program, 283,000 and then calling it affordable housing, not. Okay. Affordable for who is the question that we all should put in front Of us. So as you all are pushing that program with all them 99 subsidies (inaudible) and like I said, I closed the deal with the best, but that's a lot. And then one bloop, one small thing happens and then it's not affordable anymore.
The payment is over $1,000, just bills and bills and bills. So as we talk about affordable, I want us to really open it up and really be clear on what we're talking about here, you know, because really what's happening is the sheriff's sales, the homelessness budget, PHA is being used to gentrify Philadelphia, and to watch it in realtime is really fascinating, really fascinating. I'm going to know that we're going to continue this conversation. Okay. I know that we need to broaden the conversation. So with that, I'm going to put a pin in it except to say in closing that you all need to be careful of what you're doing as you talk about preserving our housing, quality of life I'm going to call it, income-based should be the calculation based not on Area Median Income which includes a whole region of higher income of people, we're not being realistic you all. And I know that's what you're proposed to want to do is to be clarifying, et cetera. Let's go there. Let's really do it. We've got some things to do before our new 100th Mayor comes in. And I want to make sure we do the right thing, really give the best information to our incoming Administration. I really want to do that and I don't think we can if we keep moving the ball down the road. So let's focus on PHA. We have until December 4th to have input in PHA. I think that's a good place to start right there. Every PHA project we got to be clear about the fact that it's reducing the amount of affordable income-based housing. Each one of those projects are reducing the amount and then we're shuffling Black families mostly into shelters, Woodstock shelter, that shelter, that shelter, all kinds of transitional situations when we got vacant houses all over Philadelphia owned by the Philadelphia Housing Authority. I think we need to start right there, Philadelphia, dealing with that. Thank you all so much for your attention. To be continued. Have a great day.
Thank you so much for your insightful comments and your compassion. I know that we're willing to keep talking with you and all of our community members about this very important issue. There being no other witnesses listed, I will ask if there is anyone else present in this hearing whose name we have failed to call and who wishes to offer testimony on the bill 25 being considered this morning? (No response.)
There being none, I want to thank all the panels of witnesses for their participation today. I now invite all panels of witnesses to please disconnect before we go into our public meeting. We will now pause the proceedings briefly as multiple participants leave the hearing. Andrew, are we good to proceed?
Let me see here. Maria, can you just disconnect from the hearing? Okay. We should be good, Madam Chair.
This concludes the public hearing of the Committee. We will now go into a public meeting to consider the action to be taken on the bill before this Committee today. Mr. Goodman, will you please call the roll to take attendance.
Good morning, Madam Chair. Good morning, colleagues. I am present.
Good morning, Madam Chair and colleagues. I'm present.
Present. Thank you. We will now go into our public meeting. The Chair recognizes Councilmember Jones for a motion on Bill No. 230776.
Thank you, Madam Chair. I move that Bill No. 230776 be reported from this Committee with a favorable recommendation and further move that the rules of Council be suspended to permit first reading at our next session of Council.
The Chair notes for the record that Councilmember Bass seconded the motion. It has been moved and properly seconded. All those in favor of the motion will signify by saying aye. (Aye.)
The ayes have it and the motion carries. This concludes the business before the Committee on Housing, Neighborhood Development and the Homeless for today. Thank you all very much for your attention. And congrats, Councilmember Lozada.
Thank you. (Hearing concluded at 10:31 a.m.) C E R T I F I C A T I O N I, hereby certify that the proceedings and evidence noted are contained fully and accurately in the stenographic notes taken by me in the foregoing matter, and that this is a correct transcript of the same. __________________________________ TANEHA CARROLL