COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON HOUSING, NEIGHBORHOOD DEVELOPMENT AND THE HOMELESS - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, November 28, 2007 11:35 a.m. - - - PRESENT: COUNCILWOMAN JANNIE BLACKWELL, CHAIR COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN WILLIAM GREENLEE COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILWOMAN DONNA REED MILLER COUNCILMAN JUAN RAMOS COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 071005 - An ordinance amending Title 7 of The Philadelphia Code, entitled "Housing Code," by adding a new Chapter establishing inclusionary affordable housing requirements... - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning, everyone. May we have your attention. May we have your attention. We would like to begin the hearing. This is a hearing on Housing, Neighborhood Development and the Homeless. May we have your attention. Thank you very much. This is a hearing on Housing, Neighborhood Development and the Homeless. This hearing is with regard to Bill No. 071005, commonly called inclusionary zoning. We will ask the Clerk to read the title of the bill.
Bill 071005, an ordinance amending Title 7 of The Philadelphia Code, entitled "Housing Code," by adding a new Chapter 21 establishing inclusionary affordable housing requirements, by requiring that certain developments, consisting of a certain number of dwelling units, provide a certain percentage of those units for 3 11/28/07 - HOUSING - BILL 071005 affordable housing or provide other options for affordable housing, all under certain terms and conditions.
Thank you very much. We note that we have a quorum present. To my right is Councilman Ramos. Standing to his right are Councilman DiCicco and certainly we have Councilman Clarke here. We have Councilman Greenlee here. Councilwoman Reynolds Brown is likewise here. And so we will take advantage of the opportunity to ask those who are here -- and Councilman W. Wilson Goode is here. So we're going to ask people who are here if they will agree to -- we thank them for sitting in and we do have a quorum from members of this Committee. Thank you very much. We'll ask the sponsor of the bill if he would like to make a statement.
Thank you, Madam Chair. 4 11/28/07 - HOUSING - BILL 071005 Good morning. Good morning, everyone. Madam Chair, I'd just like to say that it's been a pleasure and it's been extremely challenging trying to craft a program that everyone agrees with and everybody says should happen, but the difficulties come -- and, as they say, the devil is in the details -- of how to construct a program that everybody can be supportive of when you have a broad spectrum that includes individuals and groups and categories and entities on all sides of the equation. Today I think we're prepared to offer a proposal after several amendments that addresses, to a degree, each aspect of all of those various categories. Will all of those proposals be a hundred percent what people want? Probably not. Will all of those proposals be on a timeline that everybody wants? Probably not. It has been my thought that 5 11/28/07 - HOUSING - BILL 071005 given the level of discussion that we have had over the last almost year now on this issue, that we will be prepared to come to a consensus that allows the process to move, and it is my hope that we take an action today that will further that process, understanding that there still needs to be work done. I want to say something, and this comes from years in government 12 and 30 years in neighborhood issues and 13 as a lifelong citizen of the City of 14 Philadelphia. The City of Philadelphia 15 is a wonderful place and I have had the 16 pleasure of living here all my life, and 17 I hope to stay here all my life, unless 18 you all run me out of here today, but 19 it's my dream to continue to live in this 20 wonderful city. But the one thing about 21 the City of Philadelphia, that it has 22 always been difficult to get change, and 23 I mean change in a meaningful way. I've 24 seen people talk about the fact that 25 they're not happy about the status quo 6 11/28/07 - HOUSING - BILL 071005 and they're not happy about this and they're not happy about that. When it comes time to come together and effect change, people get -- they kind of individualize themselves. Well, I effect change, but it can't affect me. And the reality is, if there's going to be significant change in this very important issue, then every individual, not only in this room but citizen of the City of Philadelphia, has to participate in the discussion, has to participate in the solution, and I think that what we're attempting to do and proposing is something that requires that everybody participate and everybody share a little bit of some of the difficulties and the challenges associated with what we're trying to do. We will hear significant testimony today, and the testimony will fall, I believe, from -- and I don't like to use the term "extreme" because it characterizes people, but from one end of 7 11/28/07 - HOUSING - BILL 071005 the spectrum to the other end of the spectrum. And as I said, we've attempted to address all aspects of that discussion, because we have genuinely heard everybody. We had a task force in place, and that task force has had members from all categories of the interested parties. So, Madam Chair, I would be very happy for you to chair this hearing and hear the testimony, and then we will offer some amendments, amendments that we think that, to a large extent, addresses all of the concerns that we will hear during the next several hours. Thank you.
Thank you very much. We will, as is customary, call on Kevin Hanna from the Office of Housing and Neighborhood Preservation. As soon as he testifies, we promised Mr. Dranoff that he could speak. He has to leave. And we will go down our witness list. 8 11/28/07 - HOUSING - BILL 071005 Let me say that we have talked to unions who have been in touch with me. We have a representative of 332 who is here. We heard from them yesterday. These are people who oppose the bill in its form. They're not opposed to the concept. But from the electricians, Local 332, AFL-CIO, the building trades and SEIU are all against this in its form, and all these union members or union leadership have been in touch with me with regard to that. So I put that on the record so we're clear as to where labor is in this town, and I'm happy to repeat that if I've left everyone out. District Council Local 332, building trades, AFL-CIO, SEIU and the electricians all are opposed to this bill in its current form. Let me also say before we call on Mr. Hanna that I have a list of panels. We will allow each panel ten minutes. You can talk as long as you want and have as many people as you want, 9 11/28/07 - HOUSING - BILL 071005 but after ten minutes, we'll call on the next panel. So that will be your prerogative to decide among you how you do that, but we will allow ten minutes for each panel. I think that's kind of where we are. I hope that is acceptable to everyone, but we've got to get through this and try to give everybody an opportunity. Are there any comments from members of the Committee or Councilmembers in the room? (No response.)
Thank you very much. The Chair recognizes Secretary Kevin Hanna.
Do I get my full allotment of ten minutes or is it just a third, given it's one person of --
Good morning, 10 11/28/07 - HOUSING - BILL 071005 Councilwoman Blackwell, other members of the Committee on Housing, Neighborhood Development and the Homeless and members of City Council. Again, my name is Kevin Hanna. I serve as Secretary of Housing for the City of Philadelphia. I am here today to testify on behalf of the Administration on Bill No. 071005, which establishes inclusionary housing requirements in The Philadelphia Code. Last spring, Councilman Darrell Clarke introduced Bill No. 060732, which proposed to amend the Zoning Code to create an inclusionary housing program in the City. The current bill, 071005, is the result of a working group established by the Mayor in response to testimony received on Bill 060732. The Administration supports Bill 071005 with an amendment to dedicate "in lieu of" payments to the existing Housing Trust Fund. Councilman Clarke and I co-chaired the working group, which met 11 11/28/07 - HOUSING - BILL 071005 several times this summer and fall to consider the terms and conditions under which an inclusionary housing program might be created in the City. Bill 6 071005 is the result of those discussions. Members of the working group included representatives from the private sector, including market-rate housing developers currently working in the City, community development corporations and others currently producing affordable housing, advocates for affordable housing, labor and City staff. I think it's fair to say that our discussions were spirited and thorough. While it may be impossible for any group with interests as diverse as these groups to reach a total consensus, Bill 071005 represents our best effort to craft a bill that remains true to Councilman Clarke's original intent, responds at least in part to testimony received on Bill 060732 and also is 12 11/28/07 - HOUSING - BILL 071005 practical and relatively realistic. The purpose of Bill 071005 is to help ensure that there is a full range of housing choices available for households of all income levels throughout the City. At the present time, federally funded housing programs administered by OHCD are generally available to households making up to 80 percent of the area median income, with some rental programs available only to households up to 60 percent of AMI. Since creation of the Housing Trust Fund, households up to 115 percent of AMI can be served, though the Housing Trust Fund legislation mandates -- and this is very important -- Housing Trust Fund legislation mandates that 50 percent of the total Housing Trust Fund earnings be used to benefit households with incomes of less than 30 percent of AMI. The intent of Councilman Clarke's original bill, still met in the present legislation before you today, was 13 11/28/07 - HOUSING - BILL 071005 to be able to assist households who earn too much to benefit from existing programs, but not enough to purchase or rent market-rate housing recently produced without government assistance. For example, two income households of, say, a police officer and a social worker are more or less shut out of the new units which are being built in many neighborhoods. Bill 071005 mandates that new developments of or more dwelling units 14 built for sale or for rent make ten 15 percent of those units affordable to 16 households at various income levels. 17 What is proposed is that half of these 18 units must be affordable to households of 19 up to 60 percent of the area median 20 income and the other half of these units be affordable to households with incomes of from 60 to 125 percent of AMI. As an alternative to producing the required affordable housing units on site, the developer can opt to pay a fee 14 11/28/07 - HOUSING - BILL 071005 to the City. This fee is designed to capture the difference in value between the affordable housing unit not built as part of the development and the cost to otherwise provide an affordable rental or homeownership unit.
Under the bill as drafted, this fee would go to OHCD. An appropriation authority would be created in each annual operating budget. The Administration supports the concept of an "in lieu of" payment as described in the bill, but requests that these fees be dedicated to the existing Housing Trust Fund as opposed to given directly to OHCD. It is my understanding that Councilman Clarke also supports dedicating these funds to the Housing Trust Fund and that he has prepared an amendment to that effect. The Administration supports the Councilman's amendment. The bill also mandates that affordable units created be comparable in size, bedroom mix and overall 15 11/28/07 - HOUSING - BILL 071005 construction quality to other units in the development. This provision is not intended to mandate that affordable units be identical in every respect, for example, in bathroom or kitchen finishes or similar amenities. However, the Administration would support allowing developers of high and mid-rise buildings to place the affordable units on the lower floors rather than on the typically more expensive upper floors of a given development. As part of the discussions of the working group, there was strong sentiment from the private development community that the City needed to offer offsets or incentives to reduce the financial impact of this bill on the cost of private housing development. The Administration acknowledges that the City should in fact share part of the burden of generating additional funds for affordable housing with market-rate developers. This bill states Council's 16 11/28/07 - HOUSING - BILL 071005 intent to develop programs to address these concerns, which might include elements such as modification to the current building code, the provision of land for development and the provision of credits against the business privilege tax. I anticipate that such programs will be introduced into Council by the effective date of the ordinance, which is in this legislation proposed to be May 31st -- I'm sorry; March 31st of 2008. In addition, the Administration recommends that Council also consider the following incentives as well: One, allowing developers to build the required affordable units elsewhere, yet within the City, with certain provisions; two, that we expedite permitting by allowing developers who choose to build on or off site the same flexibility provided to affordable developers with regard to the City's water and watershed permitting requirements; and, thirdly, flexibility on parking requirements. 17 11/28/07 - HOUSING - BILL 071005 This concludes my testimony. I'm happy to answer any questions that you or other members of Council may have at this time. Thank you for allowing me to testify on behalf of this bill this morning.
Thank you, Mr. Hanna. Are there questions for Mr. Hanna? (No response.)
Thank you very much. The Chair calls Mr. Carl Dranoff, then Mr. John Westrum.
Madam Chair, members of the Committee, thank you for allowing me to testify promptly, and I want to commend Councilman Clarke for his bill. It's a step in the right direction. It required a lot of work, a lot of collaboration and a lot of patience and perseverance. Unfortunately, it's a very flawed bill. 18 11/28/07 - HOUSING - BILL 071005 The bill as presently written would discourage or illuminate -- I'll use the word "moratorium" would be the result of the bill, because what the bill 6 does is impose a tax, in effect, on multi-family developers. It's not a revenue-neutral bill. It's a very costly bill, and right now the housing industry in Philadelphia and elsewhere in the country is on life support. You can read the Wall Street Journal, the Philadelphia Inquirer, any newspaper any day for the last six months and know that there's been a tremendous correction in the marketplace. Condominiums certainly aren't selling. Rental housing is very, very difficult to make work. I've been a developer in the City for 30 years. I've developed maybe 30 or 40 apartment buildings in the City, both rehab and new construction, and we've gone through some pretty bad periods in this City, and I'd hate to see us return to those bad periods when a 19 11/28/07 - HOUSING - BILL 071005 major construction project was when someone painted their front porch. We don't want to return to that. And this legislation, if it does cause a moratorium, would hurt the very people that it's intended to benefit, because ten percent of nothing is nothing. I believe that this is a goal that everyone wants to reach, builders, developers and others. We are committed to the concept of inclusionary housing, but as was stated earlier, the devil is in the details, and this bill is nothing but a punitive tax on developers, which would undermine the projects and make them unfinancable. I think we've got to work with Councilman Clarke and the rest of the Committee to make sure that the provisions that were talked about by Kevin Hanna are included in the bill so that if a bill comes out of Committee or gets voted into law, it has the right provisions in it. Otherwise, you will 20 11/28/07 - HOUSING - BILL 071005 basically freeze the construction industry, because you wouldn't be able to go in for financing or start a project not knowing what the fix for the legislation was going to be. And, again, a hundred percent of nothing is nothing, and ten percent of nothing is nothing. We don't want to cause that kind of a setback to the housing industry in the Philadelphia region. I thank you for your time.
Thank you very much. The Chair notes that Councilwoman Miller is here. Mr. Dranoff, would you remain for a moment.
And thank you for your participation in this issue. I just want to make sure that I heard you correctly. Is it your belief that if the recommendations on the incentive side of the, I'd like to say, Phase II, because I do believe this is a two-phase program, Phase II/incentive side of the proposal, the recommendations that Kevin Hanna made, if implemented, would allow this program to be implemented in a meaningful way that would not adversely affect the housing market?
Councilman, that is correct. If the provisions to make this bill a revenue-neutral bill so that developers didn't face additional costs in a marketplace where it's very, very problematic to get any project started because of market conditions, if the provisions were in the bill, I, for one, would be very comfortable with it, but the way the bill is written right now, 22 11/28/07 - HOUSING - BILL 071005 there are no offsets. There's just a lot of conversation and talk about potential. And I think that a lot of work has to be done to the bill to make it workable so that when it does become legislation, it's a workable bill, not just a work in progress that has to be fixed.
When you say -- because I didn't interpret Mr. Hanna's testimony as saying it was revenue neutral. You mean revenue neutral to whom?
To the developer, because when you're going to secure financing on a project, in effect, if you're imposing a tax on that project, the financing would disappear. You wouldn't be able to get it. You know, we went through periods like this in the past in this City where it became -- because of the high cost of development in this City, the high cost of land, it's very problematic to get new projects started. 23 11/28/07 - HOUSING - BILL 071005 I remember in 1997 when some people lobbied for tax abatement to try to jump-start our economy and that program was implemented and it worked, that it was a huge spark to our economy, and I thank Councilman DiCicco for introducing that legislation. Four years later it was amended to include new construction, and we've seen a boom in new construction in this City. I think that we're taking a step backwards right now. We're shooting ourselves in the foot. And, again, I believe in the goal. I just believe that if the legislation were revenue neutral so that it did not impose a tax on the project, then it would be a fine bill.
All right. I hate to belabor the point. When you say it should be revenue neutral to the developer --
To the project. The developer and the project are one and the same. The project has a certain 24 11/28/07 - HOUSING - BILL 071005 amount of income and a certain amount of expenses. If you take revenue away from the equation, the project then becomes unfinancable. A bank looking at the bottom line, the net operating income, when it's reduced, the loan goes down. When the loan goes down, the project could go off the chart and not be built.
So what would be the developer's contribution to the program?
Well, I don't think the developer should make a contribution. I think the developer should do what they do best, which is build buildings, and when the legislation is revenue neutral, they will continue to build buildings and there would be a ten percent set-aside for inclusionary housing.
So the fact that the developers get a ten-year tax abatement, as you said, was a significant incentive to building in the City of 25 11/28/07 - HOUSING - BILL 071005 Philadelphia and created a boom, you're saying that the development community should not contribute at all to inclusionary housing?
I think if you go back to 1997, you will see that the market conditions were very poor. We had many vacant buildings in the City. The economy was not particularly good and incentives were needed. They still are. If you take any project in the City where you have people moving in from the suburbs into Center City and you have a tax abatement program that, in part, offsets the additional cost of living in the City, it's been an immensely successful program for bringing new tax revenues into the City, and all the transfer taxes -- I believe the number was something like $70 million over the last year of transfer taxes that were brought into the City stimulated by these new construction projects. If these new construction 11/28/07 - HOUSING - BILL 071005 projects stop being built, you're going to lose a huge amount of revenue stream, not just from transfer taxes, but the other permit fees that are paid, the taxes that are paid during construction, the gross receipts and business privilege taxes, and then you have the new people that are moving into the City that didn't pay taxes in the City. I think it would be a horrible mistake to enact legislation that discouraged that type of development.
The Chair recognizes point of information, Councilman Goode.
Thank you, Madam Chair. Mr. Dranoff, we use the term "revenue neutral" quite often in government and I generally view it as a government term. I'm not sure it can be applied to the private sector. Revenue 27 11/28/07 - HOUSING - BILL 071005 neutral in the private sector essentially means that you will be receiving no 4 profit. I'm assuming that's not what you mean.
No. Revenue neutral means, in my definition, that the inclusionary -- that the cost of the ten percent set-aside, which is a loss of revenues, be offset by some reduced cost to the City. As an example, it could be permit fees, it could be transfer taxes, it could be something similar to maybe increasing the tax abatement period from ten to 15 years. And, by the way, another flaw in this legislation is that the ten percent set-aside period is for 15 years and the tax abatement period is only ten years. So there's a mismatch there, but things could be --
My question is, what does revenue neutral mean. It does not mean --
Revenue neutral 28 11/28/07 - HOUSING - BILL 071005 means that if you impose a cost on a developer, then you should offset that cost. Otherwise, it's nothing more than a tax. Why not go out and tax shopping centers or tax office buildings?
So if a decision this Council decides to make is that we want to move forward with an inclusionary zoning bill, maybe not this bill, and that we see the tax abatement program as also needing to be revised and we see your profit as being somewhat reduced on the tax abatement program by doing inclusionary zoning legislation, it's still not revenue neutral. You're still making profit.
Councilman, if there's not a profit on a market-rate project, then you can't build a project. You'd never get the financing for it. 29 11/28/07 - HOUSING - BILL 071005 All I'm saying is keep things revenue neutral with new legislation.
It's not revenue neutral. We can work through this over the next couple of minutes. I don't want to take too much time with this, but the term "revenue neutral" doesn't make any sense in this context.
Well, let me say it one more time, because maybe I wasn't clear. If you impose a tax on a developer that's specific to multi-family construction, you should offset that tax with some incentives.
Certainly. Let's say that when I developed the Left Bank in University City, that we had a ten percent set-aside, and because the rents were subsidized and we didn't collect -- we collected 80 percent of median income rents based on the subsidy, that we lost $300,000. Let's say that there's 282 30 11/28/07 - HOUSING - BILL 071005 apartments in that development. Twenty-eight of those apartments would pay lower rents, and there would be a loss of income to the project. That $300,000 would probably reduce the loan amount for that project by somewhere between $4 million to $5 million. It's easy to see that I wouldn't be able to build the project, because I would have less funding to build the project. Now, one thing I could do is, I could reduce the quality, I could try to build a lower-grade project. I'm not sure even that would work. So when you have a lower loan amount and you can't build a project, what good is a ten percent set-aside if the project never gets built?
You're making an assumption that the project can't be financed.
Well, I've been in the business for 30 years. I was the first person to develop a large building 31 11/28/07 - HOUSING - BILL 071005 in Old City in 1981, the Rubin's Furniture Store at 3rd and Race. I've developed 50 buildings in the City over that period of time, maybe more. I have a lot of experience in high rise, in mid rise in Manayunk, in West Philadelphia, in Old City, in South Philadelphia. I've developed in every region of the City.
And you were successful before we did the ten-year tax abatement?
We stopped developing at the end of the '80s because it wasn't profitable to develop in the City. It was only after the tax abatement program that we started up again, and that was in 1998. There was almost a ten-year hiatus in development in the City. And I wasn't the only person that was not able to develop. It was a bad period of time, and I don't think we want to go back to that.
So your experiences have been varied over that 32 11/28/07 - HOUSING - BILL 071005 period of time?
My experience has been that we developed a lot of buildings in the 1980s and starting in 1997, and there was a period in between that was very problematic.
But you've benefited greatly after 1997 in the ten-year tax abatement?
Well, I think the City benefited greatly. We built market-rate housing.
I agree, but you benefited greatly after the ten-year tax abatement.
Well, I'm in business to be a developer. I don't have to do it in Philadelphia. We could do it in other cities. I happen to have lived in this City and been born in this City and been here all my life, and I choose to develop in the City. I'm a proponent of economic development.
You choose 33 11/28/07 - HOUSING - BILL 071005 to develop in the City because you make money in the City.
Well, if you weren't allowed to make money, you wouldn't have business people in the City.
But you don't do business here because you love Philadelphia; you do business because you make money here.
Sir, I was in born in the City, raised in the City and I've been here all my life. I want to continue developing in the City. We're here to talk about this legislation. I'm offering my experience, and I'm saying that this legislation is flawed because it will discourage development and multi housing and, therefore, the ten percent set-aside. I think we should fix the 34 11/28/07 - HOUSING - BILL 071005 legislation and make everybody happy. Then we'll continue the development, the pie will get bigger, and there will be more inclusionary housing.
My question originally was around the issue of revenue neutral, and to be perfectly honest, there is no issue of the project being revenue neutral or there's no 11 project. If the project can't get financing, then it's not an issue of whether it's revenue neutral or not. If a project can move forward with financing, then the project is never going to be revenue neutral. You're going to make profit off of it or you're not. If you're not going to make profit off of it, you're not going to get it financed. So at no point in time were we ever talking about making it revenue neutral. What you're saying is that you don't want to reinvest in an inclusionary zoning program. That's what you're 35 11/28/07 - HOUSING - BILL 071005 saying.
I said that the legislation should be revenue neutral. I didn't say that the project should be revenue neutral. If the projects were unprofitable, we wouldn't even be having a hearing today.
So what you're saying is that as a developer, you do not want to reinvest in an inclusionary zoning program.
No. I never said that, sir. Not at all. I am saying that -- remember, I started my testimony --
Excuse me. I have the floor. I'd like to finish what I'm starting, sir.
But, 36 11/28/07 - HOUSING - BILL 071005 actually, I have the floor.
The question is, what does revenue neutral mean. If in fact --
-- you're trying to make money from a project, which we like, and there will be no 16 project unless you can get financing and unless there is going to be a profit from a project, so if there is financing for a project, that means there's going to be profit. So what does revenue neutral mean? It means you don't want to reinvest in an inclusionary zoning program. That's what it means to you and that's what you said.
I never said 37 11/28/07 - HOUSING - BILL 071005 that. Did anyone hear me say that I would never -- I said that I think that the legislation --
What do you want to invest in an inclusionary zoning program?
This is the question, though: What do you want to invest in an inclusionary zoning program?
Obviously you don't. But you can talk as long as you want if you answer that question. What do you want to invest in an inclusionary zoning program?
We would absolutely invest in housing that had 38 11/28/07 - HOUSING - BILL 071005 inclusionary components. I started off my testimony, Councilman Clarke, with complimenting you on all the work that you've done and the patience and perseverance all of the people that participated. I stated that I think it's a worthy goal. I stated that I think that this legislation should be passed in modified form. I'm here to say that the current legislation is flawed.
It will discourage new development and it will hurt the very people that it's intended to help.
And you still have not answered my question. What do you want to invest in an inclusionary zoning program?
I am fine with this legislation if the legislation in some part offers an incentive to a 39 11/28/07 - HOUSING - BILL 071005 developer to offset the costs of the legislation. Then the legislation would be what I call revenue neutral, which means that there's no additional cost saddled on a developer because of the legislation.
So the answer to the question is, you want to invest zero in an inclusionary zoning program?
Every one of my buildings that is in the pipeline can be included in the inclusionary program as long as the legislation doesn't cause an additional cost.
Right now the profits are minimal in the industry. It's a barely functioning business right now for all the reasons I stated before.
But it was not over the last ten years. It just became that way. 40 11/28/07 - HOUSING - BILL 071005
We're not here to talk about the last ten years. We're here to talk about this legislation. I'm offering my testimony and saying that I'm all for a corrected piece of legislation.
I see the legislation in the context of the ten-year tax abatement, so that's what we're talking about.
Well, you can eliminate tax abatement too and then we can all go back to the good old days when nothing developed in the City and stagnated. It's your choice.
You get to do -- I'm here to offer my advice and my testimony as a practicing developer who is committed to the City, has been 41 11/28/07 - HOUSING - BILL 071005 committed to the City, has probably built more multi-family projects in the City than everyone else combined in the last 30 years and wants to continue. I'm here to say that I think that the legislation's goal is good. A lot of work has been done, but more work needs to be done. It's flawed. It will have the opposite effect that was intended. It needs to be fixed. And when it's fixed, I can support it.
And it will be fixed when it gets down to zero investment by you.
You said revenue neutral. You used the term "revenue neutral."
I think it's very clear, unless the members of the Committee want me to repeat it. What I said now three or four times is that the 42 11/28/07 - HOUSING - BILL 071005 legislation should not pose a punitive tax on the developer. If it's going to cost money, there should be an offsetting incentive, and that's what I call revenue neutral.
All right. Maybe we can continue, if that is okay. That was a point of order. Councilman Clarke, you were speaking, and then we have Councilman DiCicco.
I think Councilman Goode pretty much took up the time on the line of questioning that I was prepared to ask, so I'm okay.
Thank you. Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam Chair. I just don't know where to begin, but let me, without trying to belabor the record, I think there is -- and I don't think we have the time to do 43 11/28/07 - HOUSING - BILL 071005 it with this hearing. There is a misunderstanding, if you will, on the part of most of the folks in the general public when it comes to development. I think most people are of the opinion that developers are people who have untold amounts of personal resources, that they go and select a site that they want to build a project and put all their money into it and it gets done and then they make a profit. I think the piece that is missing -- and, again, we may not be able to clarify that. It's somewhat complex -- is that most development, if not all development, requires people, developers, to have to go to a bank and make a loan, in the simplest of terms. And that loan is dependent on being approved based on what the predictions of profits on the project would be and how those profits would offset or contribute to paying down that loan, and whatever is left hopefully, if the project is on schedule and building materials and other 44 11/28/07 - HOUSING - BILL 071005 issues with building trades and all are met, there would be a profit, because otherwise most projects wouldn't happen anyway. And if I hear you correctly, your concern is that when you go to the bank to borrow that money, when they look at the bottom line, which is the profit, that would be generated, assuming the project met all its timelines and the sales were at what you anticipate them to be, they base their loan on those figures, and anything that is taken away from that profit margin reduces the potential to get the loan or obviously certainly reduces the profit that would be realized when the project was completed. Is that fair?
You're exactly correct. COUNCILMAN DiCICCO: But I think most people think that developers are just folks who just walk in, dump $50 million down of their money, make a profit and walk away. They don't 45 11/28/07 - HOUSING - BILL 071005 understand the other issues that get a project from the vision and the inception to ultimately being built. And I'm much more familiar with it today than I was 6 years ago based on the number of projects 7 that were built in my district and 8 understanding that there were many 9 projects that were proposed and were 10 never built for some of those reasons, 11 the downturn in the market, interest 12 rates going up and what-have-you.
And the risk factors of going into new neighborhoods. When we did the Left Bank, as an example, there was no market-rate housing in West Philadelphia. It was a very risky project. You know, when banks look at the bottom line, they look at the profit levels and the amount of risk that's being taken. There's no guarantees. COUNCILMAN DiCICCO: And I think the other misunderstanding -- and I've been dealing with this since 1997, '98 when we did the first ten-year 46 11/28/07 - HOUSING - BILL 071005 abatement -- is that people believe that the abatement is to the benefit of the developer. The benefit, if there is -- the only benefit that I know of to the developer is the developer uses the abatement as a marketing tool, because ultimately when the condominium or the house is sold, it's the buyer who is entitled to the ten-year abatement, not the developer.
That's correct. COUNCILMAN DiCICCO: So it becomes a marketing tool, and I think that most people don't understand that. And I'm not going to go into what I believe the benefits are as a result of the abatement.
Councilman, 47 11/28/07 - HOUSING - BILL 071005 that depends on how the buyer is financing the project, and it probably varies from project to project. COUNCILMAN DiCICCO: The purchaser of the unit --
It depends on how the developer is involved in the financing in terms of the buyer.
That might not be totally true to the extent the developer is involved in the financing for the buyer. COUNCILMAN DiCICCO: It could be, but the buyer is the ultimate beneficiary of the abatement.
Depending upon whether the developer is involved in the financing for the buyer, the developer can also still benefit. COUNCILMAN DiCICCO: If the developer is holding the title, is that what you're referring to? 48 11/28/07 - HOUSING - BILL 071005
Yes. COUNCILMAN DiCICCO: But the tax abatement -- well, it could be. It could be. I assume it could be. I'm not familiar with that happening, but it may be. But, generally speaking, in the majority of the sales that I am familiar with, it is the buyer who benefits by the ten-year abatement.
I know of no -- COUNCILMAN DiCICCO: The seller benefits because he or she uses it as a marketing tool to sell the product.
I'm not sure we know to what extent the developer is also involved in financing for the buyers. COUNCILMAN DiCICCO: Well --
There's zero involvement at Symphony House. We just completed a condominium building, and the buyers received the tax abatement, not the developer. COUNCILMAN DiCICCO: Again, you 49 11/28/07 - HOUSING - BILL 071005 might be right, Councilman, but I would think that's probably a very minimal number of the units that have been built where the developer is, but it could be. I'm not going to argue with you.
I don't think we know. COUNCILMAN DiCICCO: Well, I don't think that would be hard to find out if we needed to, but I think it's a very insignificant number in relationship to the number of units that have been built and sold as a result of the abatement. And I just want that for the record, so that maybe some folks in this hearing today or who are listening to it are always -- many of them are critical of the ten-year abatement because they think it's some sort of a mechanism that developers are not only getting the profit on developing and selling it, but they're also taking the ten-year abatement with them. They're not. It's for the homeowner, it's for the 50 11/28/07 - HOUSING - BILL 071005 condominium owner, whoever is the buyer. In most of those cases, most of those buyers have been people from outside the City moving in. So we benefit. And I'm not going to go down that road, because we could be here for an hour. So I just wanted to note that. Look, I'm for inclusionary, and we've had some discussions about this and maybe there's some tweaking of the ten-year abatement, I don't know, going forward. But I understand full well what the role of the developer is and why the developers are asking for some incentives that would offset the cost, because it may be that if we don't have those incentives, it very well likely, based on my experience again, having overseen a lot of development, that the financing would be killed. They may not even get the financing to build in the first place. And if they don't, if you don't build, then there's no money to go into inclusionary housing. We got to find 51 11/28/07 - HOUSING - BILL 071005 that middle ground somehow that keeps the housing going and also which will ultimately result in monies going into the inclusionary housing fund.
Thank you very much. Any further questions? Councilman Clarke.
And it's not necessarily directed at Mr. Dranoff. I just want to make one statement. There are a couple of reasons why we made this proposal. One was we're probably the last large municipality in the United States that does not have an inclusionary housing program. So we're way beyond our time. We probably should have done this earlier, and it would have probably been a lot easier to get done, from the developers' perspective, if we had done it during the, quote/unquote, 52 11/28/07 - HOUSING - BILL 071005 the boom. And I can only speak about my district in this aspect, and fortunately and sometimes unfortunately my district pretty much covers every part of the City, because I go from the Northeast to Center City, North Philly, Spring Garden. So I've had to deal with all types of developers and development. And when there's a market-rate development proposed in a neighborhood that traditionally has been an affordable or moderate-income neighborhood, one of the first things that comes up in the discussion in the community meeting is, Why should we support that? We can't afford to get one of those houses. And the other part of the discussion that I've heard is, when a new development -- a single individual buys a lot, builds a new home in a regular -- and somebody referenced Fishtown earlier in the discussion. Somebody builds a four, five, six, seven hundred thousand dollar house in the little row home 53 11/28/07 - HOUSING - BILL 071005 community. The person works at the factory around the corner. They're struggling to pay their bills. And this person builds this house and they get a ten-year tax abatement, and they essentially have this relief over the period of ten years, where the person eventually starts seeing their property values escalate because the community is being developed and subsequently their taxes are going to go up, and they're upset because this guy is building this house getting this abatement, I'm having to pay more taxes. There's a certain level of unfairness in their mind. So I hear this on a consistent basis. Then there's the other thing. When the developer comes in to meet me and I have to sit down and negotiate an agreement with the community group or whomever ends up coming to the meeting, then I have to ask the developers to sign a community benefits agreement, because the developer either says they can't or 54 11/28/07 - HOUSING - BILL 071005 unwilling or whatever to deal with some of those other components. I'm not giving up my tax abatement. I can't build affordable housing because it just don't work. So what do I have to do? And they end up creating a fund for the local community group or they end up contributing a number of things to kind of get the consensus of the community. I believe that if there were market-rate developments in neighborhoods that had a serious affordable housing component in those new developments, most of this other discussion would go away, because people wouldn't feel that they're left out of the equation because they can't buy the new units. People would have some level of sensitivity, because somebody in that neighborhood might actually be able to buy one of those new units. And, frankly speaking, I'd rather not have to have that kind of discussion with the developers all the time, I have to have this back and forth about what 55 11/28/07 - HOUSING - BILL 071005 can you give to that group. I really don't want to be involved in that, to be honest with you. So that's why we said we need to do something, those particular issues. So that's why we're here today. And I understand and I've said earlier I agree that there should be appropriate incentives put in place, because no one category or individual should bear the full brunt of the burden of doing affordable housing, inclusionary housing. But I don't agree with the fact that the development community should not have to have any contribution. I just don't agree with that.
I've seen an instance where -- in a couple instances where developers have actually built market-rate housing and with minimal support from the government, they actually included affordable units in their development, and this was market-rate development. So we've seen it happen and I know it can be done. 56 11/28/07 - HOUSING - BILL 071005
If it were happening on a large scale, you wouldn't need this legislation. The legislation is needed because the economics really are not supportive of that kind of development. There's not enough of it. And I think if you single out multi-family developers, why not tax shopping centers and office buildings too? Why single out multi-family developers, the very people who are producing the housing?
But you're picking a specific group of people to tax. It's nothing more than a tax. And I'm saying that those people don't need to be taxed if the cost of the program is offset, which Kevin Hanna testified on, which you have also stated was going to be put into place, offsets to the costs. All I'm saying --
We have a 57 11/28/07 - HOUSING - BILL 071005 fundamental disagreement in that the development community should not have to contribute to inclusionary housing. I just fundamentally disagree with you. And I will never support a program, if it's mine or anybody else's, where the development community has to contribute zero. It's just not right, because at the end of the day what you're talking about is basically government provides all of the subsidy to the unit. So if that's the case, then why do we need a program. If government had the ability to fund all of the units that are affordable, then why do we need a program? The reality is, government doesn't have enough money to fund the necessary affordable housing because there's a shortage, obviously. And that's not your fault, but we're trying to come up with a strategy that enhances our ability to provide affordable housing, and we're asking everybody to share in the program. But if the 58 11/28/07 - HOUSING - BILL 071005 development community said they're not going to share --
If you push the project into the red and the project never gets built, what have you really accomplished? That's my whole point.
I don't believe that that's the case. I mean, I've seen it happen. And I think with the necessary incentives, I think that it can work.
If you pass bad legislation and we're here six months from now and nine months from now to correct a problem because construction has stopped and new projects aren't happening, that would be a horrible outcome.
I agree with you, but I don't think that's going to happen.
We will now call John Westrum, Westrum Development Company, and Bill Reddish, BIA. Thank you for your patience. Please identify yourself for the record and begin your testimony. Thank you.
I'm sorry. It's good afternoon. Good afternoon, Madam Chairwoman and members of the Committee of Housing, Neighborhood Development and the Homeless. I want to first of all commend Councilman Clarke and the Committee for their efforts on this bill 20 and want to state our opinion. My name is John Westrum and I currently reside on South 19th Street in Philadelphia, PA. I am Chief Executive Officer of Westrum Development Company. Our main office is located in Fort 60 11/28/07 - HOUSING - BILL 071005 Washington, but we have current Philadelphia offices in South Philadelphia at 3200 Davinci Drive. We have offices in Brewerytown at 3101 West Thompson Street, East Falls at 3701 Falls Circle, in Northeast Philadelphia, 2669 Southampton Road, and we hope to have more in the future. Today I'm here to testify on Bill No. 071005. As CEO of one of the largest residential real estate developers working in the City of Philadelphia, I feel an obligation to share my comments and recommendations on the inclusionary affordable housing bills currently being considered by City Council. First and foremost, we support and actively participated in the workforce inclusionary housing effort initiative by Councilman Clarke and mandated by Mayor John Street. This is evidenced by both our participation in the inclusionary housing working group and the affordable working housing 61 11/28/07 - HOUSING - BILL 071005 programs currently existing in Brewerytown and East Falls, as well as previous completed communities in Upper Roxborough and the Fox Chase sections of the City of Philadelphia. Our company has focused our efforts and targeted our products towards the teachers, the firemen, the police officers and other City employees that want to purchase a new home, but do not have the ability based on the high cost of new housing. We recognize that creating housing policies that take all Philadelphians into consideration is very challenging. However, we hope to demonstrate to you that this bill as written will not, and I repeat, will not significantly increase workforce housing. Instead, by placing a heavy additional tax on the industry that already faces significant hurdles, from excessive high labor costs, high tax environment in the City of Philadelphia, this legislation if passed will result in a dramatic 62 11/28/07 - HOUSING - BILL 071005 long-lasting negative impact on the local residential development industry. We ask that you oppose the passage of this bill as written and propose solutions that more clearly identifies the specific revenue streams to subsidize the development of inclusionary housing while not placing the entire burden of the many on the shoulders of a few; namely, those investing in the City of Philadelphia. If not, the unintended consequences of this, quote, "unfunded mandate" on developers will once again put a, quote, "closed for business" sign on the large-scale residential construction of Philadelphia, effects for which this great City will never recover, and in the end, all the benefits that result in terms of investment, city revenues and jobs will all be gone. So I beg you, please do not kill the goose that laid the proverbial golden egg. For your reference, I have 63 11/28/07 - HOUSING - BILL 071005 included a copy of the recommendations made by Bill Reddish and me to the working group on this subject prior to the introduction of the bills. However, those recommendations and other sources of revenue were not included in the proposed legislation. The November 9th letter containing those recommendations is marked as Exhibit 1. After decades of disinvestment and inactivity, market-rate real estate development has returned to the City of Philadelphia with the creation of the ten-year tax abatement. Mayor Street's Neighborhood Transformation Initiative produced additional benefits that have helped to expand Center City development into citywide neighborhoods.
From 1999 to 2005, housing starts increased from just over a hundred units, of which we were many in 1999, to 2,300 units in 2005, an increase of over 2,000 percent. However, what needs to be recognized is that these numbers still lagged any other 64 11/28/07 - HOUSING - BILL 071005 county in the Philadelphia metropolitan area. So this boom was not isolated just to Philadelphia. It was all over the country, but Philadelphia still lagged. Since 2000, even during a period that those in Philadelphia considered a, quote, "building boom," the number of new construction units built in Philadelphia County is less than every one of the 28 county extended service areas in the Philadelphia MSA. These statistics demonstrate that while policy initiatives such as the ten-year tax abatement and NTI have spurred some development, residential development in Philadelphia still remains extraordinarily challenging. D. " And this is the big quote. "We are in a city with Baltimore houses, St. " It is very clear that the current state of the large-scale residential development industry in Philadelphia is extremely fragile. Passage of this bill would totally eliminate new construction and development of market-rate properties. The following example -- and I think this is really clear and may address Councilman Goode's answers or questions -- demonstrates the effect on current policy on large-scale development in Philadelphia and will give you a clear 66 11/28/07 - HOUSING - BILL 071005 indication of why this bill cannot proceed as drafted. In my testimony I provided an Exhibit 2, which is a spreadsheet on the proposed affordable housing bill. On a 20-unit development in Philadelphia at three different housing price points, a $300,000 price point, $500,000 price point and a $700,000 price point -- if the Committee has that spreadsheet, I ask you to refer to it -- it shows a development pre-tax profit margin in all cases of eight percent, a margin that I can attest to in Philadelphia rarely exists and this time in the economic environment rarely exists anywhere in the entire country based upon the home building industry. Historical profit margins by large publicly traded companies are listed over a one- and five-year period in Exhibit to give you additional context. percent. percent. Exhibit 2 depicts the current tax burden of developing in Philadelphia versus any surrounding county or city. From a larger transfer tax, from the business privilege tax and the gross receipts tax, those taxes alone total approximately percent of the pre-tax profit on any development that would be built in the City of Philadelphia. If the new legislation is passed, it would add an additional 30 to 80 percent additional tax on any potential profits that may be available to anybody building in the City of Philadelphia. In the higher price units, a developer would pay over a hundred percent tax burden based upon the development as proposed in this legislation and would actually lose money on a pro forma going in. Clearly, no 22 investor would make any of these type decisions or take the risk knowing this information. More importantly, this is not 68 11/28/07 - HOUSING - BILL 071005 an income tax, but an obligation tax. It is irrespective of any profits that may be lost during a falling market condition, cost overruns or any other error. Based on these mathematical numbers, which have been undisputed, no 8 one will invest in real estate development and the entire City residential real estate market for new homes will shut down, which we believe is not the intent of this legislation. As members of this Committee, I do not think you want to support legislation that shuts down the investment in the City and causes a tremendous amount of jobs to be lost.
The letter attached in Exhibit 1 also suggests a number of alternatives that we have proposed in the working -- or the housing force working group that we had that was defining the need, demand and funding necessary to fund these sorts of funding gaps that we could have prior to enacting this policy. If those were 69 11/28/07 - HOUSING - BILL 071005 done, we would support the legislation. We feel that we should target the 80 to 150 AMI population, with additional credit for units targeted to the population below the 80 percent AMI. We also propose flexible options for the workforce and inclusionary housing versus hard percentage of units being built, because we thought that was more fair. We also said the sharing of the cost must be put in there versus having it lay all on the residential development community. It must be shared between the stakeholders of the residential development community, the City agency, housing advocacy groups versus just an additional tax or disincentive to the real estate community. Some of the proposals were that -- and these are tough decisions by everybody -- portions of the transfer tax, business privilege tax, gross receipts tax in the market-rate portions of mixed-income developments. They were 70 11/28/07 - HOUSING - BILL 071005 also allocation of a part of the revenue stream that will be coming online since the beginning of the existing ten-year tax abatements are concluded are being burned off. Also allocating a portion of any budget surplus that has been fueled in part by the revenues produced by the real estate industry and the boom that we've experienced previously. And also, as Mr. Dranoff said, an additional fee on all new building permits to be provided to the Workforce Housing Trust Fund, not just from the residential development district. We also support the City and City Council's support of efforts to reduce high costs of construction, including, but not limited to, the adoption of the PA statewide building code, code revisions to support lower labor costs, greater efficiencies in building materials; for example, PVC versus ductal iron pipe. Greater participation and the inclusion of 71 11/28/07 - HOUSING - BILL 071005 minority, women and disabled workers and contractors and subcontractors who live in the City who are developing residential housing. We also want to ensure that the resale inclusionary housing units remain affordable for a period of time, and we also want to identify and determine existing areas where units that could apply to the targeted market versus proposed construction of new units that expend precious City resources. There are many other sources that if challenged can be looked at. However, this bill does not do that. It puts the entire burden on the real estate development community and the investor community. In closing, we support a massive undertaking required by the Mayor's Executive Order forming the inclusionary housing working group and the concepts embraced by Councilman Clarke's initial inclusionary housing 72 11/28/07 - HOUSING - BILL 071005 bill proposal. " However, this bill as written is not the answer. Passage of this bill 11 will only compound the shortage of quality housing in Philadelphia by squelching the new residential construction industry, creating a loss of jobs, a loss of tax revenue and loss of investment in the City. We cannot allow that to occur. Thank you for the opportunity to testify this afternoon. I'll be glad to answer any questions.
Thank you. Are there questions for Mr. Westrum? Councilman Clarke. 73 11/28/07 - HOUSING - BILL 071005
Good afternoon. Mr. Westrum, I just wanted to make sure I heard you. Do you believe that the development community should make a contribution to an inclusionary housing program?
I think that the development community by building additional units is the investment within the City, that their proportion share of this affordable housing component and inclusionary housing component should be -- and I'm going to change what Mr. Dranoff said -- should be cost neutral. The cost of us is, we are investing significant monies in the City. By us investing the money in the City and by being available to build new market-rate homes, we will be able to have those additional units be built. 74 11/28/07 - HOUSING - BILL 071005 The fact of taxing us additional over and above will make Philadelphia uncompetitive, and builders like myself and others will go to different cities and build elsewhere. We won't build in the City, because there will be no 8 profit. We won't be able to finance it and raise equity.
I asked a real succinct question. Do you believe that the development community should make a financial contribution to inclusionary housing?
I think that from a dollars and cents financial contribution, if there is one, it should be very minimal. I think that what the contribution should be should be the fact that we are investing in the City, with all the regulations and the hardships in the market that we need to do to be able to sell houses in a very, very difficult marketplace and a very, very difficult regulatory area. 75 11/28/07 - HOUSING - BILL 071005 I have said to spread the wealth. We're willing to pay a portion, but right now the current bill has the entire amount burdened on the development community.
I just want to make sure, because Mr. Dranoff said that you should not pay a dime. And with the understanding we've had -- you and I have been talking a lot. You're a member of the task force, and you know the spreadsheet that you've given is not based on what the bill will ultimately look like, so those numbers are not what they should be, because some of the projections on the levels of the sales of the houses aren't consistent with what our eventual proposal will be. And I've indicated to you --
Based on what the 76 11/28/07 - HOUSING - BILL 071005 current bill is, it is.
I understand that, but you do know -- we have had these conversations as recent as yesterday and actually this morning -- that those won't be the final version. You do understand that there is going to be an amendment today that will push the effective date back, because I do understand that as currently proposed, the bill does not work, period, does not work without the Phase II of the bill, which will be the appropriate incentives, and I agree with pretty much all of the recommendations of Mr. Hanna that should be put in place before this proceeds. But I do believe that the development community should make some financial contribution to this proposal. All of the burden shouldn't be borne by the City of Philadelphia or the labor community. I think there should be some sharing in all of this.
As long as we 77 11/28/07 - HOUSING - BILL 071005 quantify what that contribution could be, we could discuss it. Right now it's a hundred percent on us.
Please identify yourself for the record, Mr. Reddish.
Bill Reddish, President of the Philadelphia Building Industry Association. Currently, the building industry has made a great contribution to this effort. Through deed recording fees, there have been almost $12 million put into the Housing Trust Fund. As a result, a residential development taking place in the City of Philadelphia. With the transfer tax fees that are generated through the sale of real estate, over a hundred million dollars has been put back into the City coffers to help balance and 78 11/28/07 - HOUSING - BILL 071005 create a surplus for the City's budget. So for the question to be what contribution are we going to make I think is an unfair question. I think the question should be what additional contribution are we going to make --
Okay. What additional contributions are you going to make?
-- to the middle-class housing, and what I've been asking this -- what I'm asking this Committee to understand is that we would like to have a position where this legislation is as cost neutral as possible, meaning the builders and developers don't incur any additional substantial cost to their projects as a result of having to meet the sale price that is given by the percentages based on this bill. Now, the builders have the same problems as the CDCs and other non-profits that are trying to build 79 11/28/07 - HOUSING - BILL 071005 units in the City of Philadelphia: the cost of land, the cost of materials, the cost of labor and the decrease in sale prices on units here in the City. So we're all dealing with the same problems. What we're saying is that because this is such a volatile market at this point in time, we cannot accept this legislation as it is written because we don't quite understand what the exact cost or benefit will or will not be to the developer if they get involved in this particular program as it is currently written. So we have already made contributions. What we want to make certain is that we don't have to incur additional costs that could drastically affect the budgets of various developments that are earmarked to be built in the City, thus affecting financing obligations and thus causing the developers to leave town and not build.
Just one quick follow-up on that is, our intention is to make Philadelphia a better city. We want to invest in the City of Philadelphia. I think any developer here who is sitting here wants to invest in the City of Philadelphia. I went through the Econsult information. The problem is, you've heard people pricing people out of something? Well, Philadelphia is costing itself out of investment. The costs are just basically simply too high. It's too high to -- construction costs are too high. Taxes are too high. Everything is too high, and the price that we can charge is too low and that -- because of all sorts of other things that the Council recognizes, the Administration recognizes. But to add another burden of taxing on the development community will shut the development community down, because we can't raise prices. You can't say, Well, add $10,000 a unit to everything, because you can't do it. I 81 11/28/07 - HOUSING - BILL 071005 mean, prices --
That's because of the downturn in the market. You can't lay all that on Philadelphia. I mean, the reality is, you guys --
With all due respect, you all have said that -- and I know that during the boom -- and it's not all attributed to the ten-year tax abatement, because I genuinely believe that the sales prices dramatically increased because people were being offered a ten-year tax abatement -- that things -- there was a significant number of units built in the City of Philadelphia in an unprecedented way. It was because of a strong housing market and we in fact had a ten-year tax abatement. So now the market has declined on the national level. So the difficulties associated with the City of Philadelphia -- and I acknowledge we do 82 11/28/07 - HOUSING - BILL 071005 have some challenges in terms of helping people build housing -- they weren't as much of an impediment when the good times were rolling. So we're prepared to address those concerns, because we understand that there are challenges, and I've indicated that we're prepared to address them in a Phase II bill, because we should do it anyway, because it's the right thing to do, but what we're simply asking is that the development community understand that if we're willing to change some additional things above and beyond the ten-year tax abatement, we're looking for some support on an inclusionary housing program from the development community also other than giving us the luxury of having you come into the City and building houses.
Councilman, speaking from experience, I developed in the suburban areas, I developed in other areas of the country. The City of 83 11/28/07 - HOUSING - BILL 071005 Philadelphia is the most costly city in the country to develop with the least profitability that exists currently. And the reason why there is no NVR, there is no Ryan, there is no Beazer, there's no 7 Hovnavian, why they all left the City of Philadelphia is because it costs too much to build in the City of Philadelphia. They refused to work with the trade unions. They refused to work because of how difficult everything is in the City. So this is just another burden. The developers have choices where to invest and the people who buy homes have a choice of where to buy homes. We just don't want to see Philadelphia, the passage of some bill, adding additional costs. There are other streams of revenue because of the investment and the boom that can occur that could make this cost neutral and allow for everybody to -- as they say, all boats rise in rising tides. Well, we don't want to see all boats go down and 84 11/28/07 - HOUSING - BILL 071005 sink because of lowering tides.
Thank you, Madam Chair. Good afternoon, gentlemen. As a follow-up, you say in the bill -- you say right now in the bill as it's written. Well, written in the bill on the last page, as you know, is Section 13 7-112, Development Assistance Programs. It talks about working with the development community foregoing to -- that will not cause the developer foregoing income, that kind of thing. You know what I'm talking about. And to steal Councilman Clarke's term, this is obviously Phase I. I think what the bill 21 is, when you get past all these seven pages, is saying that we want to try to include some people -- and there's going to be speakers saying we're not including enough, but we're going to try to include 85 11/28/07 - HOUSING - BILL 071005 some regular people, regular Philadelphians, in these developments. And I know a lot of developments -- and I think Brewerytown was included -- it did that, right? So I guess given that this bill 8 is not going to take effect right away, given that that section is in there, why are you still -- and this could go to either one of you, and I know we had this discussion ahead of time -- why are you still coming out just in total opposition?
That section has no quantifiable amounts in it versus what the quantifiable amounts are from the affordable housing component are based upon, five percent at 60 percent AMI, five percent at 100 percent AMI. Those numbers are very quantifiable. If you refer to my spreadsheet, on a $300,000 house, those numbers on a 20-unit community, those numbers would total $226,000 of lost profit basically or 86 11/28/07 - HOUSING - BILL 071005 additional costs. If you go to a $700,000 house, that expense is over a million dollars. The items that are listed and even discussed from Mr. Hanna in his testimony pale in comparison. They make things unfinancable. I could not go to a bank and say, Well, here's a bill that says they're going to do something by July 31st. The financial institution is going to say, You know what, when you get to July 31st and you find out what the numbers are, then we'll talk to you. What we're saying is, we support this legislation, we support the concept of this legislation, but we have to have all that information quantified and show where it's going to be as close to cost neutral to a level that we can agree upon. We can't go to the bank and say on a whim and a prayer, Oh, we think it's going to be cost neutral. They'd laugh us out of town, and then nothing gets built. 87 11/28/07 - HOUSING - BILL 071005
But the fact that the ordinance would not take effect until later, as you say, when you're going to the bank, the bill would not be in effect at that time, correct?
The bill takes effect irrespective if any of those things are not put in place. If nothing is put in place, the entire burden falls on the development community.
Well, I think you've gotten enough assurances from -- and you know how Council works, both of you. The sponsor of the bill and I think the sponsors have said that they would not ask for the implementation of this bill until all this is worked out. Am I saying that right, Councilman Clarke?
It doesn't work in its current iteration, but the 88 11/28/07 - HOUSING - BILL 071005 reality is, given the history of the City of Philadelphia, unless people are given timelines and deadlines, nothing happens.
We stand ready, willing and able to work with everybody to come up with an agreeable number and revenue streams that have to be. Because there are going to be tough decisions. No one wants to touch the transfer tax. No one wants to touch this. No one wants to touch that. Well, if we want to put this in place, it has to all be touched. We're willing to sit down and do all that, but we can't have a gun against our head to say if we don't touch all those other revenue streams, then it's all going to go a burden on you, which is basically what this legislation says.
I mean, again, you know how this works. If the sponsor doesn't want the bill to go forward, he doesn't -- or if the sponsor wants to push back the effective date, I think that's the way it's always worked here, it gets pushed back.
Pushing back the effective date makes it even more problematic for anybody to get any lending, because it just provides more uncertainty of what's going to happen in the future. So as we said, we stand ready, willing and able to talk. Bill and I provided a significant amount of potential revenue sources other than expedited building process, which never occurs, other than a couple other things that were talked about by Mr. Hanna, who, in all honesty, don't make a dent in what we're talking about with expenses here. 90 11/28/07 - HOUSING - BILL 071005 If we can come to something that is very close to cost neutral that we can provide that will allow for financability of future projects, we are willing to sign onto this bill, but until that information is done, until that date is there, it's impossible for us to agree to something on a whim and a prayer.
I don't know if it's a whim and a prayer, and we're going to go back and forth, so I won't belabor the record, but in a sense, you're saying that you don't really believe that this could get worked out and this bill might get passed anyway. I think a lot of us are saying if we don't push this issue, it will never get done. So I guess, in a sense, there's a lack of trust both ways.
Add the word "cost neutral to the developer" and we'll sign onto the bill.
Well, then we get into what does that mean. 91 11/28/07 - HOUSING - BILL 071005 All right.
We have a question or a comment from Councilman Goode.
Thank you, Madam Chair. Mr. Westrum, you might be surprised to find out that we actually are in agreement. I am not of the opinion, while I support inclusionary zoning, that this has to happen within the next 15 days. So my question to you is whether your testimony would be vastly different in a different Administration that was more aggressive about business tax reform and regulatory reform.
No. Our testimony -- again, I can attest to the following: Number one, in Brewerytown I built houses, and collectively Bill and I 92 11/28/07 - HOUSING - BILL 071005 are building affordable homes in that community next to market-rate homes. I have our East Falls site, Hilltop at Falls Ridge, side by side with PHA affordable housing. I am a firm proponent -- I'm working with PHA right now to try to integrate affordable housing units within our community. We stand -- we are not someone that says that we should have affordable housing in one area and market-rate housing somewhere else. We're willing and want to incorporate and integrate all of that. It just can't occur the way it's being proposed right now. So a long-winded answer to question, I will not change my position in the next Administration.
No, no, no. 22 My question is not about this piece of legislation under the next Administration. My question was about testimony regarding inclusionary zoning 93 11/28/07 - HOUSING - BILL 071005 if it's put in the context of comprehensive business tax reform and regulatory reform and if you're talking about cost and we're not talking about having to do this within the next 7 days, under another Administration, if 8 the new Mayor and new City Council looks 9 to lower business costs in terms of 10 business taxes and regulatory reform, 11 would that vastly change your testimony 12 with regard to inclusionary housing? 13
I'm not sure I 15 fully understand the question, so I want to answer that with reservations. I do not believe it would change my testimony.
If I could answer your question, the only issue that will change our testimony today is to have 94 11/28/07 - HOUSING - BILL 071005 included in this bill all of the provisions we need to make this bill a neutral cost bill.
This bill 6 dies if it's not passed within 15 days, which means we would be talking about a new bill anyway. And we'd be talking about a new bill after a new Mayor is sworn in, gives as inaugural speech, lays out a vision for the City that very well may include a new vision for a building business that includes tax reform and regulatory reform. So we're not talking about this bill if we're talking about the next Administration. We're talking about a new bill in a new context. So what is your position on inclusionary housing if it's put in the context of business tax reform and regulatory reform?
As long as those reforms create a bill that is cost neutral. Simple as that. We cannot sign onto a bill that we don't know what the 95 11/28/07 - HOUSING - BILL 071005 costs are going to be.
Once again, we can change the discussion from revenue neutral to cost neutral. The truth of the matter is, who knows what's going to happen in terms of business and regulatory reform, how aggressive it will or will not be. And when you use the term "cost neutral," the inclusionary zoning bill may be cost neutral, but the business tax and regulatory reforms we make may actually be of substantial benefit to you to the point where the business you're doing in the City is still more profitable.
And that could be, and if that's the case, that should be one of those provisions in 7-112 that's quantified.
That would not necessarily go into the inclusionary zoning bill.
But, however, it should be in the arguments of the -- are 96 11/28/07 - HOUSING - BILL 071005 you the proposer?
Are you the proposer? Whoever proposes the new bill, that should be a part of the offset, should be included in that.
I'm not here to talk about a new bill. I'm here to talk about this bill, this Administration, this Council. If somehow in the next Administration there's a discussion, you not only have to talk about the incentive side, you have to talk about the first part of the bill 18 that's currently on the table, the numbers associated with the percentages of eligibility, which I think you'll hear some of the other individuals in this room have some different types of discussion about median incomes and things of that nature. Right now we're talking about a bill that's not on the 97 11/28/07 - HOUSING - BILL 071005 table, which is the incentive side, but what I'd like to do is talk about the proposal as it relates to what's being proposed in terms of percentages, what's being determined of whatever revenue is generated, where it goes and things of that nature. And understand, I'm willing to talk about the other things. I don't want to get the subject matter off of this bill that we're talking about today. And if somehow there's a new bill in the next Administration or a new proposal by the next Administration, so be it.
Councilman, what I'm suggesting is, even if we were discussing this bill, those factors would not be included within this bill, but those factors are very real for those of us who support business tax reform and regulatory reform, and so we don't 98 11/28/07 - HOUSING - BILL 071005 totally buy into the cost argument as being presented today.
I agree. I agree. But my point is that -- and this is the discussion that I've had with my friends -- that that is a very detailed process. You guys, I know you sent me something November, whatever the date was.
It is unrealistic to think that we can craft the necessary legislation to be a companion bill with this bill, a bill 16 that we've been talking about since earlier this year, pretty much the beginning of the year, and get it in place to be a companion bill with this. That's what I was trying to tell you, that I can't do that. Nor can I commit to the next Administration. As Councilman Goode says, they may have new ideas and new issues as it relates to tax reform, incentives and things of that 99 11/28/07 - HOUSING - BILL 071005 nature, which is also why we said we wanted to put an effective date far out enough so it gives the new Administration an opportunity working with a new Council to put the necessary things in place that make this work. If by July 1, the date that we currently have, we're not where we need to be -- you actually have the three sponsors of the bill here. Not to speak for them, but to speak for myself, I think it makes sense that we would change the effective date, because the last thing we want to do is create a program that doesn't work, because that does nobody any good. It doesn't do the advocacy community any good, it doesn't do you guys any good, and it clearly doesn't do the elected officials any good. I mean, that's the worst thing that could possibly happen.
Councilman, as you stated very simply is is that you want to work on this bill. This bill 100 11/28/07 - HOUSING - BILL 071005 states in Section 2, "This ordinance 3 shall take effect March 31, 2008 and shall apply to any development for which the application for a zoning permit is filed on or after such date." So we're working with what we have here, and I understand that you said you got amendments --
I told you that this morning. I told you that yesterday. I told you that the day before. We have amendments to reflect that.
And it may be there needs to be additional time to get this in place. I mean, it would be different, John, if you didn't know me --
-- and I was a guy that you had not interacted with before, or if you did and I told you 101 11/28/07 - HOUSING - BILL 071005 I was going to do something and I didn't do it, then I would understand your position. But that has not been my understanding of our interaction. But whatever.
Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam Chair. One brief question for Mr. Westrum. A number of people, Mr. Dranoff, before you and I believe you talk about the cost of doing business in the City of Philadelphia. On average what is the cost per square foot to build a residential facility in the City of Philadelphia?
For our purposes, on a four-story attached multi-family unit, we cannot build in the City of Philadelphia for less than $125 a foot. Some are even more than that. Whereas, the suburban models, with a non-union construction, we can build for -- 102 11/28/07 - HOUSING - BILL 071005 COUNCILMAN DiCICCO: With a?
With a non-union construction, we can build for 75 or less dollars per square foot. So it costs us to build in the City of Philadelphia approximately $50 per square foot more. COUNCILMAN DiCICCO: If a job in the suburbs was done by a union, it would be the same as it's costing us here? My understanding it's less.
It's less. There is a suburban rate and then there is a City rate. COUNCILMAN DiCICCO: I've heard about that and I've talked about it, but I just wanted to get that on the record, that there are two different rates by the same building trades folks.
There's a lot of different rates for a lot of different things. 103 11/28/07 - HOUSING - BILL 071005 COUNCILMAN DiCICCO: Thank you. No further questions.
Thank you, gentlemen. We'll now call on Project H.O.M.E. We got several people listed for Project H.O.M.E. Laura Weinbaum, Director of Public Policy. We have Hyacinth King, Advocacy Committee member, and as is Connie Naylor, and we also have Danielle White listed. So we invite you all. We give you ten minutes, and thank you for your patience and welcome you. Please identify yourself for the record and begin your testimony. Thank you very much.
Good afternoon again, Councilwoman Blackwell, members of Council. Thank you for this opportunity to testify. My name is Laura Weinbaum 104 11/28/07 - HOUSING - BILL 071005 and I am the Director of Public Policy for Project H.O.M.E. We are coming before you today to offer testimony concerning Bill No. 071005, and I guess we want to start by thanking Councilman Clarke and others on this Council for believing with us that inclusionary zoning is an important tool for ensuring that there are homes for all Philadelphians. To Councilman Clarke, we say thank you for inviting us to participate as members of the working group on inclusionary housing and for your valiant efforts to make sure that all groups were happy or at least satisfied with the resulting proposed legislation. It's been a long road. While we support the goal of trying to create a healthier city by attracting and keeping households in the middle of the income spectrum, we know that the need is enormous for those at the bottom of the income spectrum, the 105 11/28/07 - HOUSING - BILL 071005 approximately 60 percent of Philadelphians who earn less than the $43,000, which is the minimum on Councilman Clarke's current bill. Considering that someone with an annual income of $43,000 could still qualify for a mortgage of a, let's say, about $140,000 home, it's easy to see that this legislation does not include those Philadelphians who are not middle or upper middle class. As members of the working group, Project H.O.M.E. and others who work with some of Philadelphia's most vulnerable people and families -- COUNCILMAN DiCICCO: Excuse me for interrupting. Would you slow your testimony down a little bit. Thank you.
I know. I'm bad like that. Okay. Three years ago the University of Pennsylvania estimated that there is a need for 60,000 more units of affordable housing for households earning $20,000 or 106 11/28/07 - HOUSING - BILL 071005 below, and that's about a third of Philadelphia households. The Philadelphia Housing Authority currently has a waiting list of about 20,000 families if you combine conventional public housing and Section 8, despite long-term closure of the Section 8 list. The City's own Consolidated Plan indicates that there is a need -- that there are over 150,000 Philadelphia households earning about $20,000 or less, which is 30 percent of area median income or half of the median income that's at the bottom of this bill. We believe that PHA serves approximately 30,000 households. So there's likely somewhere around 100,000 households in Philadelphia facing a severe housing struggle. Because we know that developing housing is expensive, we're pleased to support developer offsets that make lower income targeting feasible. Further, as currently written, the bill applies to community development corporations and 107 11/28/07 - HOUSING - BILL 071005 other developers of low-income housing. For an organization like Project H.O.M.E., that's simply not feasible for us to sell $130,000 homes in the neighborhood where we do our work. So we're asking for some sort of an exemption or some consideration given to low-income developers. As you also know during the past year, we've had the privilege of working with the Philadelphia Campaign for Housing Justice to bring the issue of inclusionary housing to the attention of elected officials, and we're enormously gratified to have succeeded in that and to have this opportunity to evaluate the specific provisions of legislation with you. But we also know that housing all Philadelphians is a problem that has existed for a long, long time, and so we're looking forward to continuing our work with you to get it right until the legislation comes much closer to 108 11/28/07 - HOUSING - BILL 071005 satisfying all stakeholders or at least most. I thank you for the opportunity to submit this testimony and hope that we can use inclusionary housing to make Philadelphia a city for everyone.
My name is Hyacinth King and I'm here today to testify on Bill No. 071005 that would establish inclusionary affordable housing in Philadelphia. I am representing the Project H.O.M.E. Advocacy Committee, a group of Project H.O.M.E. residents and staff that advocate for more affordable housing in our City. Before I became stable and employed, my income was only $640 a month on disability. The federal government says no one should pay more than 30 percent of their income on housing, but it is so difficult to find affordable and acceptable housing on that income. 109 11/28/07 - HOUSING - BILL 071005 While Project H.O.M.E. has helped me meet my housing needs, I am testifying today because this current bill excludes the 150,000 people who make below $20,000 a year. I urge you to make sure that an inclusionary housing bill 8 includes the people in our City who need housing the most. Please vote against moving Bill No. 071005 out of the Housing Committee so that we can make sure that a new bill includes real solutions for low-wage earners, seniors and the disabled and people like myself. (Applause.)
My name is Connie Naylor. I live in East Parkside in your district, Ms. Blackwell.
I'm also disabled. It appears that I have a nice healthy body, but inside it doesn't work very well. So I'm here for Vote for Homes 110 11/28/07 - HOUSING - BILL 071005 Coalition, which I am a volunteer on the Coalition. I go out yearly, seasonally, any time to help to try and get homeless people, formerly homeless people, people living with disabilities, ex-offenders to register to vote, because I believe that that is one of the best ways a person can express themselves, especially in this time. (Applause.)
Today I'm here for myself as a disabled person and other disabled citizens in this City who need decent, affordable rental housing. One of the things about Mr. Clarke's bill is that will this help families who are losing their homes and moving into shelters, where taxpayers spent $31 million on shelter and services last year to homeless people trying to just live their life in the City, three times what is spent to create permanent affordable rental housing in the City. So if we keep getting people 111 11/28/07 - HOUSING - BILL 071005 left and put into shelters and not trying to keep them into affordable rental properties, that doesn't make dollar sense to me. But it also doesn't uplift your City anymore either, because the City is spiraling whichever way anybody wants it to go, and evidently the next Mayor for the City, Mayor-elect Michael Nutter, says he wants us to be the next great city, and I have no reason why this can't be the next great city, with a good model of inclusionary housing to promote -- to help people get out of homelessness, to help people get out of poverty, at least to give them a decent place to live. This city is far better than what we are getting now. I live in subsidized housing now, but if the organization I'm with doesn't get government funding from the federal government, where do I live at that point? I do not make enough money. I make $650.40 a month, on which I have to 112 11/28/07 - HOUSING - BILL 071005 take care of myself by myself. Nobody is out there helping me. Oh, excuse me. I do get $40 in food stamps to help supplement my diet so that I don't have to eat terrible and bad foods, which are really going to end up killing me anyway. But this is what I'm here for today to testify. There are a lot of people out there that need help. We're not asking to give me something. We're willing to work with you and help you come up with a better plan than what we're offering now. Not that I disagree with you. I believe in inclusionary housing, but I believe inclusionary housing should be inclusionary to the citizens of Philadelphia, not just a select few. (Applause.)
Mr. Clarke -- excuse me; Councilman Clarke, your legislation will not help disabled people from moving unnecessarily into nursing homes when we can't have a place to live 113 11/28/07 - HOUSING - BILL 071005 decently and affordable, which would cost us way too much money per person per year to stay in a nursing facility. It would only cost a certain amount of money at $44,000 a year to keep me in a nursing home because I am minimal, minimal, I mean minimal amount of income to live on to try to be a decent citizen where I live, to try to work within my community to help other people get things. I don't ask for money. All I want is a decent place to live that doesn't require me having to pay the majority of my income to live there. I can't afford that. (Applause.)
The one thing I would also like you to know that in the city of disabled people, there are approximately 65,000 who are in need of housing, and approximately 2,138 units are there. That somehow doesn't equal out very good. And it's kind of hard for me to believe that the City, the great City of Philadelphia, is not able to 114 11/28/07 - HOUSING - BILL 071005 afford to put up with combination of corporate money, any other money that might be refunded from -- that you could receive from the government, the state government, that there aren't enough dwellings or units for disabled people to live in this City in a decent, affordable renting housing unit. We're not asking for a house to be rehabbed. Most of us can't use a house anyway. I can't climb stairs very good. By the time I got to the second floor, I'd be dead. I'd have to go collapse to try just to go to the bathroom. That's not worth it. But I need something in this City to prove that somebody in the City cares about all of their citizens, not just some, not just some that can afford to get this inclusionary housing bill that you have, that can afford to make a move into that, that can afford -- I know they pay taxes, but you want to delete the tax, at least their property tax, for ten years. Can I take some of that money that you get from 115 11/28/07 - HOUSING - BILL 071005 one person, that property tax, and give it to me so I can live a little bit better life, too? Is that a possibility?
I know it's not about the tax rebate, but it's a lot about you want to move in, quote, middle-income people. I'm nowhere near middle income. I don't earn $43,000 to $90,000 a year. All I earn is $7,800 a year. And by the middle of the month, I'm working off of $40 to try to balance my life for the rest of the month.
People like to say, Oh, you all get cable, you all do this. I have no cable. I have lousy reception on my TV, because I can't even afford a good antenna. (Applause.)
Thank you very much. Our time is winding up, Ms. Naylor. Thank you. 116 11/28/07 - HOUSING - BILL 071005
I really would like to get some of the services that other people are available to get in the City. That's all. All of us in here basically are all asking for the same thing. We are citizens of this city. I no longer pay taxes, thank God, but when I worked like a crazy person, because I was a workaholic, I did pay taxes. I paid taxes to everybody.
I worked outside the City of Philadelphia and yet paid City wage tax. So I'm just asking that you rethink this bill or this legislation you are proposing and for all the members of the Housing Committee to also rethink it so that maybe we could be included with a larger percentage in this inclusionary housing idea.
Thank you very much. 117 11/28/07 - HOUSING - BILL 071005
Thank you very much. Thank you very much. Thank you. Unfortunately, we're going to have to move on. In fact, they have a Public Property hearing that's supposed to be going on now, but we still have many people here to testify.
We have heard you. We have heard you during the course of the debate on this issue. As indicated earlier, we have some amendments that we hope will reflect the concerns raised by members of this body and members of the affordable housing advocate community. Unfortunately, I don't think there's any one bill that we can pass with best intentions that's 118 11/28/07 - HOUSING - BILL 071005 going to solve all of the problems, because it's just not realistic.
I understand that. That's usually an impossibility in a lot of senses for anybody.
But I do thank you for the honor. I do thank you for the time to testify here today, and if there is anything in any way that I can help you getting forward with this bill or any other bill, whether it be the City Council or the next Mayor, I am always ready, willing and able to help you.
Thank you very much. We're going to ask APM, Mark Kershner, to come forward. While he's coming forward, I will make an amendment 119 11/28/07 - HOUSING - BILL 071005 to my -- APM, Mark Kershner. Are you here? APM left their testimony. When Mr. Hanna gives it to us, we will make it part of this record. Next we will call forward SEIU. SEIU, are you here? SEIU, Natalia Salgado and Blanca Rivera. And let me say that we have been told that Local 98 makes no 12 position. They still do not agree with the specifics of the bill, but they are not taking a position on this legislation. Please come forward -- we are really running late -- so you can begin your testimony, please. Introduce yourself to our record and begin. Thank you.
Good 120 11/28/07 - HOUSING - BILL 071005 afternoon.
My name is Natalia Salgado. I am the Political Director for SEIU Local 32 BJ in Philadelphia. Local 32 BJ represents over 85,000 building service workers in six states and Washington, DC, including 5,000 members here in Philadelphia. On behalf of the Philadelphia Campaign for Housing Justice and on behalf of Local 32 BJ's leadership, I want to thank City Council for your efforts to address the serious problem of affordable housing in the City. We are grateful that the political will to address this problem seems to be coming together. We want to work with you to make this bill something that we can all be proud of. I want to talk to you a little bit about our membership. Our typical member makes about 28,000 a year, about 39 percent AMI. Our members live in all parts of 121 11/28/07 - HOUSING - BILL 071005 Philadelphia, Frankford, Juniata, Grays Ferry, West Philly. Our typical members can pay their bills and get by on their union salary of $12 or $14 an hour, but despite putting in long hours at their jobs, most of our members live one paycheck away from complete financial ruin. A slight change in their life-style can send a stable working family into a real financial tailspin, and finding decent affordable housing in the neighborhoods where our members live is becoming difficult, if not impossible. As high-end development occurs in lower North Philly, Fishtown and Northern Liberties, University City and parts of Grays Ferry, costs on the edge of these neighborhoods are rapidly rising. Our members are hard-working people that contribute to the overall economic stability of our City. They deserve to be able to find affordable homes. Our members have two major 122 11/28/07 - HOUSING - BILL 071005 concerns with this bill, that it creates housing that -- the bill should create housing that benefits a broad range of families in the City, a city that's made up of working families, that the point of views of the groups representing these families be heard and that their concerns be taken into account. We ask for members that there be more discussion -- we ask on behalf of our members that there be more discussion on the details of the bill rather than trying to rush it through without the due diligence that it deserves; that it creates more opportunity for development and not less. Our union has a long history of working with real estate owners and contractors to create win-win situations for our City's economy and for working families. We need to make sure that the developers have the incentives they need to keep building. We understand that development plays a vital role in our City's economy. 123 11/28/07 - HOUSING - BILL 071005 I again thank you for your time, and on behalf of Philadelphia Campaign for Housing Justice and the leadership of SEIU Local 32 BJ, I urge you to create an inclusionary affordable housing law that works for all of us. Thank you. (Applause.)
My name is Blanca Rivera and I am a member of Local 32 BJ. I work for ABM as a cleaner in an office building in Center City. I am here to tell you that union members like myself need affordable housing and that Bill 21 071005 won't help me or thousands of other SEIU members in Philadelphia. In 1994, I bought a house in Frankford, rent to own, on a 30-year mortgage for $400 a month. I raised 124 11/28/07 - HOUSING - BILL 071005 three kids in that house. I managed to get by. A few years ago, my mother got sick and I took her in to care for her. This was very difficult for me financially. My mom needed full-time care. I lived on her SSI check. I eventually became unable to pay my mortgage. I got foreclosure notices. I applied for welfare, but only got $204 a month. I was forced to sell my house right after my mom passed away, just about two years ago. In 11 years, that value of my house in Frankford went up dramatically. I was able to pay off my debts and walk away with a significant amount of money. However, I could no longer afford a house in my own neighborhood, Frankford. I was only able to afford to buy a much smaller place in another neighborhood. While I like my small house and some of my neighbors are nice, the neighborhood is dangerous. There are 125 11/28/07 - HOUSING - BILL 071005 abandoned houses in the neighborhood. There are bars all around. It's very dark at night. I work until 11:45 every night, and by the time I get home, it's well past midnight. I don't feel safe. The only positive thing is my church. The brothers and sisters of my church helped me and my mom in our times of need. I am anxiously awaiting the day I can move, but I don't know if I'll be able to afford to move to a better neighborhood, like the Northeast, where houses up there are going for a hundred thousand dollars or more. Where I live, there is much unemployment and poverty. Wages are too low. Too many people lack benefits. There is not enough safe and affordable housing. Those of us who make $15,000 to $30,000 a year work hard and play by the rules. We struggle to get by to take care of our families. I believe that companies that get tax breaks to build expensive houses 126 11/28/07 - HOUSING - BILL 071005 and apartments need to give something back to the community. As a union member, I want to make sure that we have laws in this City that ensures that working people like myself have decent housing we can afford in safe neighborhoods. The proposed bill would only apply to those who make $43,000 a year or more. What about me and my fellow SEIU members? Why are we being left out? That's why I ask the members of this Committee to please reject this exclusionary bill and to pass a truly inclusionary housing bill next session. Thank you for your time. (Applause.)
Thank you, Ms. Rivera. Are there any questions? Councilman DiCicco. COUNCILMAN DiCICCO: Thank you. Just one moment, and I don't mean to -- I'm not going to create a 127 11/28/07 - HOUSING - BILL 071005 debate. I keep hearing about the tax abatement, people who are not paying taxes. Understand that a property owner who is the beneficiary of a ten-year tax abatement does pay a tax. They pay a tax on the ground, the land value. What they don't pay for ten years is on the value of the improvement, meaning the structure. And in many, many instances, the ground on which the property was built, especially out in the neighborhoods outside of Center City, the City, if we were lucky to collect a tax at all, in many cases we weren't collecting a tax, but by doing the improvement, by building a structure on it, we increased the value of the land in which it was built. So they're not getting away without paying zero taxes. They just don't pay on the full value of the improvement for ten years. They do pay on the ground. And I'm not looking for a debate. I just want to try to set the 128 11/28/07 - HOUSING - BILL 071005 record straight. They also pay for the transfer tax on the value of the property, the entire property, including the structure. So if it's a $500,000 sale, they're paying the full value of the transfer tax on the $500,000, which is more revenue, and it was mentioned earlier, in last year alone over $72 million in transfer taxes of the full value of the transfer tax was collected is attributed to those properties that received a ten-year tax abatement. So they are contributing to the tax base. I just wanted to make the record clear. Thank you.
Thank you very much. Rick Sauer, you testified at the last bill. I thought you did this time. Philadelphia Association of CDCs. After Mr. Sauer, we will hear CLS. 129 11/28/07 - HOUSING - BILL 071005 Thank you for your patience, Mr. Sauer.
Thanks for the opportunity to testify. I believe you have copies of my testimony up there or are being passed out. As mentioned, I'm the Director of the Philadelphia Association of CDCs and we have a citywide membership of over 80 organizations that have been working on housing issues for a number of years, has a lot of expertise and experience, ranging from housing development to home repair to housing counseling, among other activities, and I think as we're all well aware, while there's been some cooling off in the real estate market here in the last year or so, the market in Philadelphia today is much stronger than it was several years ago and we know that citywide home values have doubled in about the last six years. And while this has benefited the City in a number of ways, there's more investment going into 130 11/28/07 - HOUSING - BILL 071005 neighborhoods, there's more development happening, there's more tax revenues accruing to the City, clearly also existing homeowners have been benefited from building wealth in their homes. We also know, at the same time, there are a number of Philadelphia residents that do not have access to a decent, safe, affordable home or they don't have the money to maintain their home or they're at risk of homeless. So for those without such assets, this rapid rise in housing cost, in essence, is a dream deferred. They can no longer count on access to a decent, affordable home that they can afford to buy or rent, and clearly our City continues to face probably a growing housing crisis. So we do think it's imperative that the City advance policies and strategies to create sustainable mixed-income communities that have a range of income folks, folks at different 131 11/28/07 - HOUSING - BILL 071005 income levels, while preserving affordability and enabling lower-income households to remain in their improving neighborhoods. We want diverse mixed-income neighborhoods, not just gated communities, which is what some of the new market-rate development looks like. The City Council did take a significant step to address this issue back in 2005 with the approval of the Philadelphia Housing Trust Fund, and we certainly appreciate your support for putting that in place. We recently released a report that documented the impact the Trust Fund over its first two years with over 2,200 families being served. But we know we need to utilize the strength in the real estate market to do more to leverage resources from the private sector to address the housing needs of the City's workforce, including low-wage earners. So we strongly support 132 11/28/07 - HOUSING - BILL 071005 strategies such as the creation of an inclusionary housing policy to leverage that market-rate development and promote economically diverse communities. A year ago, as I think we all remember, as a lot of folks here in this room testified on the initial bill that Councilman Clarke introduced around inclusionary housing and raised a number of concerns, I was a participant on the working group that was created as a result of that process to try to come up with some recommendations for what an improved policy would be, and while those discussions were certainly challenging at times and I don't think there was a unanimous agreement coming out of that process, I think that the recommendations that did come out of the process represent an improved set of parameters for an inclusionary housing policy for the City. And so I want to recognize Councilman Clarke's leadership on this critical issue, and we believe that this 133 11/28/07 - HOUSING - BILL 071005 new bill is certainly a significant improvement over the previous version that was introduced.
However, based on a review of this new bill and research of inclusionary housing policies from around the country, we believe that there are five issues that still need to be addressed through amendments to the bill 10 to create a policy, an inclusionary housing policy, that is both fair and effective for Philadelphia. I think most of these issues and amendments that we're proposing are consistent with the discussions and recommendations that came out of the working group. The first has already been brought up earlier by Kevin Hanna, and, that is, the "in lieu of" fee payment should be paid in the Philadelphia Housing Trust Fund, and it's my understanding that there has been an amendment drafted up that would do that. So we're certainly supportive of that amendment. 134 11/28/07 - HOUSING - BILL 071005 Secondly -- I think this was alluded to earlier as well -- right now the way the bill is written, it's not just market-rate development that would be affected by this legislation, but any housing development of or more units. 8 So if you have a low-income rental 9 housing development that was targeting 10 the homeless, special needs populations 11 or other low-income workers, they would 12 be required to do ten percent of the 13 units between 60 and 125 percent of 14 median income. That's a real problem in 15 particular for projects that access a 16 funding source called the low-income 17 housing tax credit where you can't use 18 those funds to support units over 60 19 percent of median. And obviously if 20 you're doing a special needs development for the homeless or another population, they're not going to have folks probably over 60 percent of median. So we're seeking an exemption from this law that would not require affordable units that 135 11/28/07 - HOUSING - BILL 071005 have grant funding from the governments or an allocation of low-income housing tax credits, which aren't actually grant funding, to be exempt from this bill. The third issue and related amendment is around the range of affordability. We think it's critical that the bill support a broader range of affordability for Philadelphia households. Right now, as mentioned, the way the bill is written, it requires ten percent of the units to be affordable to folks between 60 and 125 percent of area median income, which serves an important market that's not being fully addressed now. It's our understanding, though, that the income targeting would be implemented by requiring developers to price half the units affordable to someone at 60 percent of median income, five percent of the units total, half the inclusionary units, and the other five percent at households earning 100 percent of median income, and that makes sense to 136 11/28/07 - HOUSING - BILL 071005 me, but there's no requirement in here that actually ensures that households below 125 percent of median income would actually get access to those units. So you could end up having folks, the top end of that tier, occupying most or all those units. The working group had actually recommended more of a tiered approach, which I think was the intent of the bill 12 but didn't quite make it in there, where you would have affordable units tiered at a couple different levels, and that would certainly be an improvement over this. My concern again is even with the couple tiered levels, most of the units are going to be occupied by folks at the top of that tier. So if you have one tier that's affordable to folks at 60 to 100 percent of median income and the other affordable to folks at 100 to 125 percent of median income, you could well end up with a situation where most of the people occupying the homes are at 100 percent of 137 11/28/07 - HOUSING - BILL 071005 median and 125 percent of median. So what we would recommend is amending the bill to ensure that affordability covers more of that range, and there's several ways you could do that.
You could require sort of the average inclusionary home to be sold or rented household at more the mid point of that income range. You could add a separate tier for folks at 60 to 80 percent of median or you can provide some type of additional incentives for developers actually to target some of the units to households at the lower end of those ranges. In addition, as mentioned earlier, with the "in lieu of" fee payment being paid into the Housing Trust Fund, the Trust Fund actually benefits a wider range of households. So I think matching those two up you can ensure that there will be households also below 30 percent of median income and 30 to 60 percent also benefiting from this policy. 138 11/28/07 - HOUSING - BILL 071005 The fourth issue is around affordability periods. We know that historically in Philadelphia we didn't really have home values going up, and so this was not as much of an issue, but that's changed recently. And especially when you're doing a market-rate development, if you say the homeownership unit has to be affordable for ten years, when you hit year 11, that homeownership unit, if it's sold, is going to go to the market-rate price. It's going to jump considerably in a very short period of time. Same thing with a rental unit once the rental restrictions and the rent that will be charged for that unit likely will go up considerably, because it's part of a larger market-rate development. It's just not all affordable development in a lower-income neighborhood. So as good public policy, I think it would be critical to ensure that the funds that are being put in to create those affordable units actually benefit 139 11/28/07 - HOUSING - BILL 071005 the intended populations for a longer period of time. We would recommend that the affordability period on homeownership units be extended to at least years, 6 which is consistent with the City's 7 policy right now for affordable 8 homeownership units, and that also what's 9 called a shared appreciation model be put 10 in place. So you still allow the 11 homeowner to build wealth on their unit, 12 but you also sort of share the profit on 13 that home back to the City or back to the 14 Housing Trust Fund to be reinvested in 15 the future for affordable housing opportunities. And on the rental side, what the state does with the funding for their rental developments is while it is a 15-year affordability restriction required, they provide incentives to actually do a longer period, typically more like 45 years, and I think that makes a lot of sense here as well. The final issue, which I think 140 11/28/07 - HOUSING - BILL 071005 has already been discussed at length, is the whole issue of financial incentives to offset the cost of meeting the affordable housing requirements. We do think that it's important to provide adequate incentives to help developers meet the affordable housing requirements in the law. I agree that can be a shared responsibility. I don't think it has to be a cost neutral responsibility, but it has to be something that's going to work for the market here in Philadelphia. And I think along that lines, it would be critical to put some language in this bill also to make sure that we're revisiting what those incentives are, say, every two years, because the market conditions are going to change. So what might be necessary or appropriate for this year as the market picks up may no 22 longer be necessary or appropriate. So, in essence, once again, congratulate Councilman Clarke for his leadership on this issue. We believe 141 11/28/07 - HOUSING - BILL 071005 these are five critical issues that need to be addressed. And I know some amendments have been drafted to at least address some of these. Once those amendments are incorporated in the bill 7 and these issues are addressed, we fully support releasing the bill from Committee. Thank you.
Thank you very much. Any questions? (No response.)
Thank you. CLS, you're next. George Gould, Managing Attorney; Steve Buvel, if that is how you pronounce your name. Councilman Clarke.
Thank you, Madam Chair. I just wanted to make a formal announcement. The o'clock Public Property hearing has been recessed until 142 11/28/07 - HOUSING - BILL 071005 the conclusion of this particular hearing, and unfortunately, I cannot give you a time, but it will be sometime this afternoon. So please stay tuned. Thank you.
Thank you. We thank you, Mr. Chairman, for that. And we also note the presence of Councilman Jim Kenney. Thank you. Thank you. Please state your name.
My name is George Gould. Thank you, Madam Chair. First, let me commend Councilman Clarke for bringing this issue forward. I think it's very unfortunate that we have to be here today in opposition to the current bill the way it is drafted, but we think this is an extremely important issue. Thank you for giving me the opportunity to testify today on an extremely important subject, the requirement for inclusionary affordable 143 11/28/07 - HOUSING - BILL 071005 housing in new and rehabilitated developments in the City of Philadelphia. My name is George Gould. I am the Managing Attorney of the Housing and Energy Units at Community Legal Services. I have worked in the area of housing for over 37 years and I have continually seen the tremendous need for affordable low- and moderate-income housing increase in this City. I also represent numerous community organizations in the City who are actively involved in housing issues. The bill before the Committee today is similar to a bill introduced last year on inclusionary housing, Bill 17 No. 060732. We testified last year before the Committee on Rules pointing out numerous problems with that bill. Unfortunately, those problems were not corrected and we, therefore, must oppose this new bill. The idea of creating an inclusionary affordable housing requirement for new and rehabilitated 144 11/28/07 - HOUSING - BILL 071005 housing construction is an idea whose time has come. In fact, it's something that probably should have been done three to four years ago. With all due respect, however, the bill pending before this Committee fails to meet the objective of providing inclusionary affordable housing. By its very term, the bill 10 excludes well over 50 percent of the City's population, those in greatest need, from even participating in the program. " Unfortunately, the bill as written fails to achieve this policy. I'd like to go over a couple points in the bill. Income targets: Under the bill, the targeted income population is 145 11/28/07 - HOUSING - BILL 071005 families earning between approximately $43,000 and $90,000 a year. That is based on the bill being targeted to families earning between 60 and 125 percent of area median income. The area median income includes the surrounding suburban counties. The Philadelphia City median for a family of four is $33,229 compared to the area median income for a family of four which is $72,000. As previously noted, well over 50 percent of the City's population is not eligible for this affordable housing. This must change. To be inclusionary, people who are most affected by the housing crisis must be included in the bill. We believe the extent and scope of the housing crisis in this City is clear and does not need to be repeated in great detail for City Council. From the lack of federal housing dollars to the reduction of public housing units and the lengthy waiting list for subsidized housing, this crisis will only continue 146 11/28/07 - HOUSING - BILL 071005 to grow. While the Housing Trust Fund has been able to help, the housing demands of this City far exceed the Trust Fund's ability to produce. We must pick our priorities carefully, as our housing resources are extremely limited. We cannot ignore those in greatest need. Under the bill, once a proposed development meets the applicability requirements, or more units, half of 12 the required units must be priced to be 13 affordable to persons making 60 percent 14 of area median income. The other half 15 must be priced to be affordable to 16 persons making 100 percent of the area 17 median income. It is important to 18 note -- and this was pointed out by the 19 previous person who was testifying -- 20 that the bill only requires that the units be priced at these levels. It does not mandate the income level of the persons who would actually be able to purchase or rent the properties.
Under the current bill as written, persons 147 11/28/07 - HOUSING - BILL 071005 making $90,000 would be able to purchase or rent all of the required affordable housing units. The trigger for affordable housing: The bill has a trigger of or 7 more units to come under the reach of the 8 proposed ordinance. This is too high and 9 needs to be reduced so more affordable 10 units can be produced. 11 Duration of affordable housing 12 units: Under the bill, homeownership 13 units are required to remain affordable 14 for ten years and rental units for a 15 period of 15 years. This also needs to 16 be changed. The affordable units created 17 should be permanent. Otherwise, we are 18 simply creating another crisis when the 19 time periods expire and the program will 20 lose its effectiveness. Alternatives to on-site housing: The bill as written does not permit a developer the option of providing off-site affordable units. We believe that within certain restrictions 148 11/28/07 - HOUSING - BILL 071005 a developer should be able to meet the affordable housing requirements by providing off-site units. Payment of an affordable housing fee: In lieu of building on-site units, the developer can pay an affordable housing fee. While we strongly support the idea of allowing a developer in lieu of providing affordable units to contribute to a housing fund, the bill's current language is much too vague as to the use of these monies received from the housing fee. It appears as written the monies will go to OHCD. However, there are no requirements as to how the money will be spent or as to the income levels of the person who would benefit by the spending of such monies. Payments to this fund could amount to a sizable amount of money, and the bill should provide how such monies should be spent and whom should benefit. These funds can be especially helpful in 149 11/28/07 - HOUSING - BILL 071005 providing housing to very low-income persons, as it can provide the deep subsidy necessary to produce those units. It can also provide much-needed dollars for programs such as Basic System Home Repair Grants and other important services to provide and keep familiar people in housing. Visitable and accessibility requirements: There are no requirements in the bill that the units must be visitable and accessible. This should be changed to provide that all units must be visitable and ten percent accessible to persons with disabilities. Modifications or waivers: There is nothing in the bill which allows a development to receive a modification or a possible waiver of some of the requirements of the bill because of proven financial hardships. Such a provision is probably necessary in order for the bill to meet constitutional muster. 150 11/28/07 - HOUSING - BILL 071005 Incentives to developers: The bill provides no real incentive to developers in return for providing affordable units. Section 7-112 provides that it is the intent of Council that certain programs be developed to minimize the burden, financial, on developers. The bill lists certain incentives such as modification of building code requirements, provision of land at below-market rates and credit against business privilege tax, and states that it is the intent of Council that such bills will be introduced before the effective date. Such language does not create real incentives. They must be included in the bill itself. Incentives such as the density bonus and a predictable approval process should be made part of the bill. The time has come for Philadelphia to enact an inclusionary housing requirement that meets the needs of the families of this City who are 151 11/28/07 - HOUSING - BILL 071005 struggling to find housing. The bill 3 before this Committee does not meet that need. Council should pass an inclusionary housing bill that clearly seeks to achieve such an objective. Thank you. )
Good afternoon, Madam Chairwoman and Councilmembers. Thank you for allowing me this opportunity to testify today on this important bill, Bill No. 071005. My name is Stephen Buvel and I am a Senior Staff Attorney at Community Legal Services. I've worked in the area of economic development for over ten years, representing CDCs, community organizations and housing advocate groups and, through this work, have come to understand the great need for an increase in affordable housing units for moderate- 152 11/28/07 - HOUSING - BILL 071005 and low-income individuals. Community Legal Services represents the Philadelphia Campaign for Housing Justice, or PCHJ. E. and the Women's Community Revitalization Project, social service and advocacy groups for low-income families, seniors and persons with disabilities such as Liberty Resources, the Disabilities Rights Network, Philadelphia Senior Center, Action Alliance for Senior Citizens and ACORN, to name just a few. Beyond our representation of PCHJ, CLS is also invested in Philadelphia adopting an inclusionary affordable housing bill, because as the City's biggest legal service provider to low-income persons in the City; for instance, we had more than 19,000 cases last year, many of our clients 153 11/28/07 - HOUSING - BILL 071005 continually struggle to find affordable housing. Concerning PCHJ, it came into being approximately one and a half years ago because of its constituents. Low-wage workers, the elderly, the disabled and low-income families were adversely affected by the lack of affordable housing in Philadelphia. This concern was not just based on the individual stories of their constituents, but was supported by hard data. A widely accepted University of Pennsylvania study indicated that the City had a severe shortage of more than 60,000 affordable units. Other studies have put this number closer to a hundred thousand. From the start, PCHJ became aware of successful inclusionary housing programs in other cities across the country and decided that it would undertake a campaign to develop a solid, impactful and fair bill, both to City residents and the development community 154 11/28/07 - HOUSING - BILL 071005 in Philadelphia. In its endeavor, we researched the inclusionary housing programs of other cities and municipalities across the country. Additionally, PCHJ hired researchers from the Pratt Center for Community Development, some of the best policy experts in the field, to conduct a financial feasibility analysis regarding the parameters of a program that would work for Philadelphia. In conducting the study, more than a dozen local developers were interviewed and a thoughtful analysis was conducted of the City's housing market, prices and production costs. PCHJ also spoke with experts from the University of Pennsylvania, met with the BIA, engaged local law firms and spoke with many other interested parties. In short, the Coalition did its homework to learn what type of inclusionary housing program would work in Philadelphia. With this in mind, I can state 155 11/28/07 - HOUSING - BILL 071005 that the current bill as written falls short of meeting the affordable housing needs of Philadelphia and is flawed in some significant areas. For these reasons, we must oppose the current bill. Based on our research, we believe a fair, solid and impactful bill 9 would be one that has the following parameters. Income target: We believe that the population that should benefit from inclusionary housing should be for families earning 50 percent or less of AMI, or approximately $36,000 a year or less. This makes sense because one-third of Philadelphia households earn less than $20,000 a year and the Philadelphia median income, not the area median income, is only $33,229 a year.
This difference highlights the danger of constantly talking about the area median income, which is roughly $73,000 a year, because it loses sight of the fact that Philadelphia's median income, again, at $33,229 a year is less than half of the 156 11/28/07 - HOUSING - BILL 071005 area median income. The current bill is targeted towards families earning 60 to 125 percent of AMI, or $43,200 to $90,000 a year. But if you were to convert these numbers to the Philadelphia median income, it actually targets families earning between 130 to 271 percent of Philadelphia median income, and as a result, it leaves out a huge segment of the Philadelphia population and the ones that are most desperate for affordable housing. Payment of an affordable housing fee: We strongly support the concept of allowing developers to contribute to an affordable housing fund in lieu of building affordable units either on site or off site. We also strongly believe that any legislation should direct that all "in lieu" dollars, whether funneled to the Philadelphia Housing Trust Fund or another affordable housing fund, should directly support 157 11/28/07 - HOUSING - BILL 071005 programs and projects that benefit people at or below 50 percent of AMI, with a portion of that money targeted towards people making less than 30 percent of AMI. In this sense, these funds could act as the sizable subsidy necessary to build units for very low-income families and our constituents. Furthermore, we believe an inclusionary housing bill should contain guidelines directing how the funds are used. For example, redevelopment of existing homes Basic Systems Home Repair Grants to keep people in their homes and as rental subsidies, to name just a few. The current bill as written contains no provisions to direct that "in lieu" dollars raised as a result of an inclusionary housing program will specifically target families making below 50 percent and 30 percent of AMI, nor does it contain any other guidelines. We also have significant problems with the formula used in this 158 11/28/07 - HOUSING - BILL 071005 current bill to calculate the "in lieu" fee. Based on our feasibility study and research, we found that a fair amount would be 20,000 per condominium or rental unit and 5,000 per townhouse, row house or single-family home. This would allow for a rather simple and straightforward calculation and one that we believe is fair to developers. The trigger for requirement of affordable housing: Again, based on our research, the trigger for inclusionary housing requirements to apply to developments should be eight or, at a minimum, ten units or more, not as 17 proposed in the current bill. We 18 recognize that eight or ten may seem low, 19 but with the proper cost offsets and 20 incentives, it would be feasible and would allow more development projects to be captured by the program, thus helping develop more affordable units. Visitable and accessibility requirements: Again, we believe that a 159 11/28/07 - HOUSING - BILL 071005 strong inclusionary housing bill should require that all units be visitable, that ten percent should be accessible to persons with mobility disabilities and that four percent should be accessible to persons with sensory disabilities. Modification or waivers: Experts and research have informed us that in order for an inclusionary housing bill to be constitutional, it must include a process that allows for modifications and waivers, particularly in cases of real hardship, including economic hardship. We also recognize that there are many outside forces that can impact development, whether through the forces of the real estate market, business market or regulatory climate, necessitating the need for developers to have an out. With that in mind, we also feel that any such waiver or modification process should be transparent and approved by an oversight board.
This 160 11/28/07 - HOUSING - BILL 071005 bill does not allow, again, as written for modifications or waivers and, as such, doesn't lay out the factors and process that a waiver or modification can be granted or denied. Cost offsets or incentives for developers: PCHJ does not want to impede or in any way negatively impact development in Philadelphia. In fact, an inclusionary housing program can only result in more affordable units if there is development. It is in our best interest to foster development. Therefore, we think it is imperative that any inclusionary housing legislation should include in the bill itself specific cost offsets that work for developers. In speaking with more than a dozen developers and the BIA, we have learned that such incentives would include a density bonus, reduction in parking requirements and an expedited permitting process. But, again, these 161 11/28/07 - HOUSING - BILL 071005 should be included in the bill. Inclusionary housing is a very important tool that cities of bigger and smaller than Philadelphia across the country have used to help leverage private dollars to address the need for affordable housing for low-wage earners while also providing important incentives to developers. Therefore, Philadelphia needs to get it right. This means taking the time to include as many interested parties in the analysis of what will and will not work. It also means not rushing things ahead of their time. We all want to see inclusionary housing requirements in Philadelphia, but we want to make sure it is the right program. This bill as written does not support the right program, and we would ask the members of the Committee to not vote in favor of it. Thank you. )
Thank 162 11/28/07 - HOUSING - BILL 071005 you very much. Any questions? (No response.)
Thank you very much. Phil Lord, Tenant Union Representative Network. Thank you very much. Next will be Women's Community Revitalization Project, Nora Lichtash and company, after Phil Lord. Thank you very much for your patience.
My name is Phil Lord. I'm the Executive Director of TURN, the Tenant Union Representative Network, here in Philadelphia. We see thousands of tenants every year, and in that capacity, we observe what their problems are. We provide tenants' rights workshops, housing counseling, rental 163 11/28/07 - HOUSING - BILL 071005 assistance, and we see firsthand every day the human suffering and destruction of homes and families which force the evictions and homelessness can cause. People are being forced to move, and longstanding communities are being dismembered because of rising housing prices, record foreclosures and condominium conversions. It's not enough to force poor and working-class people out of their homes and then blatantly offer them a grossly inadequate number of houses in return. We are in full support of any government action that would increase the availability of affordable housing in the City. Unfortunately, the proposed legislation doesn't do that. This bill is defective in a number of respects. It provides for a range of incomes to qualify, but there's no incentive for developers to provide housing for anyone except those at the highest levels in that range. Given 164 11/28/07 - HOUSING - BILL 071005 market forces, not just half, but all of the housing created in this bill will probably go to people making 90,000 a year. The bottom level of eligibility is irrelevant since people making 125 percent of AMI are eligible even for the properties targeted to the families making a lot less. Instead of providing affordable housing, this bill provides housing that is unaffordable by most residents of the City. Instead of reducing the impact of the recent housing boom and already overtaxed City services, this bill would redirect developer resources towards those who are already capable of finding housing that they can afford. Instead of offering long-term solutions, typically 30-year restrictions, to the current problems, this bill would only require ten percent of so-called affordability. There are a variety of ways to address problems of an unregulated housing boom in favor of more balanced 165 11/28/07 - HOUSING - BILL 071005 development: rent control, tax freezes, moratoriums on conversions to allow for careful planning of some of the more effective measures. By contrast, this bill does nothing to stop the displacement of citizens and result in destruction of longstanding communities. There is a well documented need for affordable housing in Philadelphia, and the City's efforts to meet these needs have been inadequate so far. We now stand on the brink of squandering another precious opportunity to reduce the numbers of poor living in substandard housing and increasing the numbers of homeless going into our shelters. Some will argue that there are federal programs for the poor, but no 20 real assistance for middle class who are suffering as well. However, it is true that the biggest housing program of the federal government is the Home Mortgage Interest Deduction available to middle-class homeowners. That program, 166 11/28/07 - HOUSING - BILL 071005 along with federal deductions for real estate taxes, has been estimated nationally to be nearly three times the size of the entire HUD budget. We ask that you don't take this well-meaning label of inclusionary housing and attach it to an ordinance 9 that excludes those most in need. Don't be tempted to improve the City's tax base by literally casting out to the cold our current residents, including the disabled, the elderly and those that have fallen on hard times. We ask that you don't ignore the voices of the many who are asking to do what is right instead of listening to the powerful few who want you to do what is merely expedient. Thank you. (Applause.)
Thank you very much. Are there any questions? (No response.)
Thank 167 11/28/07 - HOUSING - BILL 071005 you very much. Now we have Women's Community Revitalization Project, Nora Lichtash and company. Welcome. Thank you very much. Feel free to identify yourself to the record and begin your testimony.
My name is Kenneth Alston and I am a disabled veteran and life-long resident of North Philadelphia. I live on the 1600 block of North 6th Street in the Fifth District represented by Councilman Clarke. I am a member of the Women's Community Revitalization Project and the Philadelphia Campaign for Housing Justice. I am here because we believe 168 11/28/07 - HOUSING - BILL 071005 that it is vital to create and preserve affordable housing in the City of Philadelphia. Coming out of the military it was always my goal to be a homeowner and to have something that is mine that I can pass down to my children. But it has been a struggle for me just to meet my basic housing needs. Even when I was working as a cook, it was a challenge to make ends meet. Despite a decent and consistent paycheck, I was forced to move my family from place to place because it was impossible to find housing that I could afford. All this moving was hard for my family, who had to adjust to new schools, friends and neighbors. Now that I am unable to work, things have gotten even harder and it is impossible to get ahead. My landlord has decided to sell the house that I am living in again. I am in danger of being priced out of another neighborhood. If things continue like this, I will never be able to save 169 11/28/07 - HOUSING - BILL 071005 enough to accomplish my dreams. This City needs more affordable housing so that families can live stable lives and hard-working people can save money and accomplish their goals. The University of Pennsylvania study estimates that the City needs 60,000 more units of real affordable housing to meet the demand of low-income working people. Any real inclusionary housing bill passed by City Council needs to work to address this crisis. Over the next ten years, the inclusionary housing bill 15 proposed by the Philadelphia Campaign for Housing Justice would generate 2,000 to 2,500 new housing units and help preserve over 5,000 homes. This is the kind of legislation City Council needs to and should endorse. With all due respect to my Councilman, Mr. Clarke's inclusionary housing bill does nothing to address the affordable housing crisis. His bill is designed to build housing for people who 170 11/28/07 - HOUSING - BILL 071005 make 90,000 a year in a city with an average area median income of 33,229. A third of the residents in this City earn less than $20,000 a year, and like me, they cannot afford the rising rents in this City. For this reason, I ask you, City Councilmembers on the Housing Committee, to vote against moving Councilman Clarke's bill out of the Housing Committee.
Good afternoon, Mr. Clarke, Ms. Blackwell and other City Council and my fellow advocate committees and all other viewers and supporters. Many of you have heard this testimony, because around this time last year I was here to testify, only to leave feeling like I was not heard. My name is Felicia Bond and I live on the 2800 block of North 8th Street, the Seventh Council District. I am a mother of six beautiful, bright children and I am a survivor of domestic violence. I'm a member of the Women's Community 171 11/28/07 - HOUSING - BILL 071005 Revitalization Project and the Philadelphia Campaign for Housing Justice. I am here today to let you know what it's like for a woman to recover from mental and physical abuse, raise six children in a shelter alone and try not to fall to pieces while trying to find affordable housing in the City of Philadelphia. City Councilmembers, I want you to know that I have been both mentally and physically abused over the last seven years by my husband. My husband would beat me when he was frustrated with life, if I complained too much about needing help around the house or simply not doing what he wanted me to do when he wanted me to do it. There were times he choked me for not getting the children dressed or the house cleaned fast enough. Often I would call the police to have him removed from our home, but they wouldn't, simply because he was my husband. 172 11/28/07 - HOUSING - BILL 071005 My husband made life miserable for me. I thought I had to deal with the abuse because of the children, until one day I said the wrong thing to him and he dragged me down the steps, busted my knee and cut me with a knife. I knew then that I had to escape and leave my husband. I ran. I left all material belongings, things that I worked so hard to get, clothes for my children, furniture, whatever a house should contain in it. Let me not forget the house that was mine, too. I took all six of my children and ran. I thought that I did the right thing. I felt that if I did not leave, he would eventually kill me. Until recently, I lived in a shelter with my six children. It was hard raising six children in a shelter environment. It took a toll on them psychologically and emotionally. It hurt me to see that my children were suffering because I did not have the resources to 173 11/28/07 - HOUSING - BILL 071005 put them in a home. I make $15,000 a year. I work at McDonald's. What kind of housing could I afford for my family of seven? The average cost for a three-bedroom apartment ranges between $700 and $1,800 per month, and these prices do not include utilities. And we all know that gas prices have skyrocketed. I have just moved with my family into one of WRCP's affordable housing units, and it is so great to finally have a stable home for my six children. But there are so many women like me in the City that do not have the opportunity to get out of the shelters and into decent, affordable, stable housing. City Councilmembers, there is a problem in the City of Philadelphia. Far too many abused women, poor and working-class people are forced to live in housing that does not meet their 174 11/28/07 - HOUSING - BILL 071005 needs. We live in shelters, dilapidated housing and sometimes no housing at all. We are good citizens, working citizens, hurting citizens and forgotten citizens. There were percent more 7 people living in shelters this summer 8 than there were last summer, and it is 9 clear that this is a problem that is 10 getting worse and worse. The bill 11 proposed by the Philadelphia Campaign for 12 Housing Justice will help people like us 13 who are experiencing a real housing crisis by providing more people the opportunity to achieve what I have achieved and find stable places to raise a family. The bill proposed by Darrell Clarke would do nothing for people of this City that needs the most help.
There is no one here testifying on behalf of the upper/middle class and their housing crisis, because there is no 24 upper/middle class housing crisis. Anyone who earns $90,000 a year can 175 11/28/07 - HOUSING - BILL 071005 afford to live in almost any neighborhood in this City. )
Now that I have shared my story with you, I hope that you will not vote this bill out of this Committee and instead work to pass laws that create housing for people that really need it. Today I leave here feeling a tad bit better, because my situation has changed, but yet I still feel angry and sad inside for others who are still in the situation that I was so fortunate to get out of. Many of you cried or felt saddened by my testimony last year. Well, I urge you to do something for the many homeless, abused and below-poverty families who are yet still in these situations. Today let's show them a better way. Vote no to the Darrell Clarke bill. (Applause.)
Good afternoon, 176 11/28/07 - HOUSING - BILL 071005 City Council. My name is Doris Berris and I am a lifetime resident of North Philadelphia. I live in the 1500 block of North 9th Street in the Fifth District. I am a member of the Women's Community Revitalization Project and the Philadelphia Campaign for Housing Justice. I am here today to speak out against Darrell Clarke's inclusionary bill, which does not include me and many others. Before 1989, I was a certified nursing assistant working at a nursing home and in some hospitals around the City. My husband, Robert, worked as a prep cook and a laundromat attendant. Both me and my husband had some health problems and it was next to impossible to stay in one place with the rising costs of rent in North Philadelphia. Over the last two decades, our health has deteriorated rapidly and our struggle has become a nightmare. I've 177 11/28/07 - HOUSING - BILL 071005 suffered several heart attacks, have a stent in my heart and have had a stroke. And my husband was diagnosed with diabetes, which led to his renal failure and the loss of both of his legs. He is wheelchair bound for life and on dialysis. It was while he was in the hospital for his second amputation that I was evicted from my sixth place of residence in years. The stress and 13 the toll of trying to move brought on yet 14 another heart attack. I now have a stent 15 in my heart, and I'm trying to make it. It is known all over the world that moving is one part of a level of stress that is measured. Constantly having to move from here to there is not easy on a healthy person. It is overwhelming on someone with disabilities like us. (Applause.)
We can't make it like it is right now. The rich get 178 11/28/07 - HOUSING - BILL 071005 richer while the poor get poorer. And at one point, I was forced to have to move into the house of my deceased mother, because we had nowhere to go. I came home from that situation of watching my husband lose his second leg and found that I was being evicted. I fled to what I thought was an arc of safety, my mother's home, but it was not. The front door had been broken into, windows had been broken out. There were holes in the floor. There were holes in the ceiling. They had ripped out a great deal of the electric. We had faulty electric, if any at all. We had no heat because we had no 17 heating system. Water was a luxury that we could not even have, lest more it was a real necessity. Money was scarce. I took what little bit I had and I bought a kerosene heater and I turned to the LIHEAP program to help me with the kerosene for me and my husband to stay warm. While the City did come to our 179 11/28/07 - HOUSING - BILL 071005 rescue to a degree, we got all new electrical wiring in our home, some plumbing work was done, the roof was repaired, yet still there are many other things that the house needs such as windows, doors. We need a ramp. I've been on the waiting list for a ramp for eight years and have still been denied a ramp. I have to pay the drug addicts, the junkies, whoever will, to take my husband in and out the house so that he can live somewhat of a normal life. It's a struggle, and I don't know how I continue to try to survive. I'm sinking fast. I need help. The wheelchair-accessible people have denied us for the last eight years, and my taxes on my home due to the redevelopments around me escalated from $278 near about now to almost $400 a year. I don't have the money to pay the taxes, let alone the back taxes on this house. I have nowhere to go. I have nothing. I'm a victim of the system that 180 11/28/07 - HOUSING - BILL 071005 failed. I need help. People who are disabled in this City often find no place to live with dignity. There are over 65,000 disabled people in this City on high priority housing lists. We have people sleeping in the streets because they have nowhere to go. The shelters are filled. We need an inclusionary housing bill that will work. Of the 65,000 people that are disabled, there are only 2,138 subsidized and accessible homes out here. The waiting list is horrendous. The last time I went and applied on the waiting list two years ago, I was told it was well over seven years long. I don't know what to do. The inclusionary housing bill 21 as proposed by Darrell Clarke seeks to build housing for people who make $90,000 a year. My total income a month is less than $500. My husband's likewise, because we're a couple. We can't make 181 11/28/07 - HOUSING - BILL 071005 it. Please hear our cry. People that make $90,000 a year don't seem to incur the housing crisis of us, the many. I'm not saying everybody doesn't need housing, but we need housing now, not trickled down to by the time it gets to us, there's nothing. We need housing now. Please hear our cry. Amend this bill or cast it out and create a new bill that will serve the people who need it the most. Thank you for hearing me. (Applause.)
Thank you very much. We thank you all. And we will say that it's been 15 minutes. We have to go to the next group. I hope we don't offend you. Any questions? (No response.)
Thank you. The testimony was wonderful. We 182 11/28/07 - HOUSING - BILL 071005 appreciate you all coming in. Thank you very, very much. Disabled in Action, as well as -- because we have the same people except for one for Liberty Resources. Thank you very much for both. And then after Disabled in Action/Liberty Resources, is Valeria Harvell here from Temple Presbyterian Church? Okay. We have you after this group. And so far as I know, that will be our last testimony for the day. I suppose the Public Property Commissioner will be very glad to hear that. All right. Thank you very much and we appreciate your patience. Please identify yourself for the record and begin your testimony.
My name is Nancy Salandra. I live in District 6, Councilwoman Krajewski's district. I'm a member of Disabled in Action, a proud member of the Philadelphia Campaign for Housing Justice and I also work with 183 11/28/07 - HOUSING - BILL 071005 Liberty Resources. Between Liberty Resources and Disabled in Action, we represent almost 6,000 disabled individuals in the City of Philadelphia, and I'm here today to tell you to say no to Bill 071005. The people I work with and the people I'm friends with in the disability community are and have been in need of permanent, affordable, accessible, integrated housing for the past years 13 and it gets worse by the day. We have 14 many individuals locked in nursing homes 15 because they got ill, lost their housing 16 and could not get affordable housing. 17 To stay in a nursing home, it costs between $85,000 and $90,000 a year, mostly with public dollars. And you'll say, well, that's federal dollars, not our problem, but we do own the Philadelphia Nursing Home and we're paying approximately, for 500 people to live there, $10 million of taxpayers' money. It would not cost $10 million to 184 11/28/07 - HOUSING - BILL 071005 have them live out in the community. Disabled people are people that also once they get out of nursing homes are taxpayers, can get jobs and become bigger taxpayers, can buy homes. But if we continue to not have any imagination to change the way we deal with housing in this City, it's a problem. I'm tired of being number one in poverty in the City, number one in murders in this country and being dead last in the City putting their money into changing the affordable housing situation. We ask you today that we want permanent, affordable, accessible, integrated housing that will reach people's incomes that are below -- are for 50,000 and below. We're hoping that you will say no to this bill today. Thank you. (Applause.)
Good afternoon. My name is Robert Mears. I'm a resident of Riverview Homes on State Road and Rhawn. 185 11/28/07 - HOUSING - BILL 071005 It's a City-run facility. Three years ago I suffered a stroke, and it's taken me all this time to get back into a working -- it's taken me three years to get me back to a place where I can walk again. But one of the reasons is, I need to have a home, and the subsidized housing is a very long waiting list, and I don't want to waste my time in a nursing home. The legislation that Councilman Clarke has is not for people with disabilities. It's for people who make $90,000 a year, and I don't see where the humanity is in $90,000 if that's what it costs. So in my needed affordable housing, I want to return to independent life. Thank you. (Applause.)
Good afternoon. My name is Josephine Jordan and I'm a 186 11/28/07 - HOUSING - BILL 071005 mother of three, and I had to move back home because I can't afford the rental properties that ya'll have. I mean, it's a shame that ya'll want to pass this bill. I used to make -- I'm an aide. I work for -- I take care of disabled people. And, you know, like me, like them, we should all have affordable housing. I don't see why we can't. I can't afford a $300,000 house. I can't afford a house, period, because I can't keep up the maintenance, nothing. Even rent, I mean, rent is just too high. I can't pay rent, gas and electric. I don't think none of us can. The bill is ridiculous. I used to make $45,000 a year, but now I don't. You know, I had to change jobs. So what are we supposed to do as people? I think Philadelphia, we need to come together and stop segregating one another, you know, because this is not the '60s. This is 2007, 2008, and I still feel like we just segregated. We're not looking out 187 11/28/07 - HOUSING - BILL 071005 for one another or nothing. We just looking out for the rich and not about the poor. It's like we in Good Times, you know. That's all. (Applause.)
My name is Kathleen Curcio from Disabled in Action, DIA, and Liberty Resources. I'm hard of hearing and I (unintelligible) this bill to be passed today as much as possible. Poor people began (unintelligible) and I fight it every day to even make it with myself on my income. This bill will not be -- Philadelphia should not be -- we're supposed to be the City of Brotherly Love, but right now we're just the city of poverty and people. I feel as though this bill should not be passed because it's targeted to people that are high 188 11/28/07 - HOUSING - BILL 071005 income and not targeted to people for low income that can't afford it and they have to stay in a nursing home because they can't afford housing. And I feel as though today to not pass this bill. Please, please do not pass this bill, please. (Applause.)
Thank you very much. May we have a copy of your testimony when you're finished, all three of you. May we have a copy of your testimony when you're finished. Thank you, and we'll give that to the stenographer. Thank you very much. Next person. Thank you very much. Please give us your name, and then when you're finished, we'll give your testimony to the stenographer.
Good afternoon. My name is Marsha T. Peurifoy. I live in the 58th and Baltimore Avenue area, and Jannie Blackwell is my district representative. I'm here due to the fact 189 11/28/07 - HOUSING - BILL 071005 that for the past three years I've been searching for an accessible apartment within my budget of $15,000 a year for three people. With such an income, moving someplace is truly laughable. My family can move elsewhere, but I would have to go to a nursing home if I could not find a place that's accessible and affordable. For this reason, I, for one, am opposed to Councilman Clarke's legislation. The average four-person family income is around $33,000, and many live below even this amount. We desperately need affordable housing in Philadelphia. If City Councilmembers would vote against Councilman Clarke's legislation, it would be a big help to the average family who live at or below poverty levels. Thank you for your time and consideration. (Applause.)
Thank 190 11/28/07 - HOUSING - BILL 071005 you very much, Ms. Peurifoy.
My name is Karen Burrison and I live in Councilman Clarke's district, 1821 North Marshall Street, Apartment A, 19122. I am an advocate through Liberty Resources for disabled people who are in institutions such as nursing homes who want to transition into the community into their own homes. I fought hard to get out of the nursing home myself and did with the help of Liberty Resources. Since 1992, I have lived in Section 8 housing. Though it is a blessing to be in decent, affordable housing, I, as well as many others, would like to live the dream of becoming homeowners. Then I can set my own rules to live in my own house. My family of five has an income of SSI and welfare, not by choice, under $14,000. This is far below the income of $50,000 annually where your bill starts. Many low-wage earners and other disabled 191 11/28/07 - HOUSING - BILL 071005 people I know wouldn't begin to qualify. Councilman Clarke, your bill 4 will not help us. I urge Council to vote no to his inclusionary housing legislation. (Applause.)
Thank you very much. Ms. Peurifoy, if you would stop in my office, maybe we can help you with your housing issue. All right. I thank you very much. You all were very excellent. Temple Presbyterian Church. I'm sorry. One more individual. I forgot you were back there. Thank you.
My name is Debra Russell. I am a member of the disability community, a long-time member of the Philadelphia community, resident, and as you've heard, you've heard a representation from Liberty Resources and Disabled in Action. I'm a proud member 192 11/28/07 - HOUSING - BILL 071005 of the disability community, a proud member of Disabled in Action and long-time staff member of Liberty Resources. I am also proud to be a part of the Philadelphia Campaign for Housing Justice. I'm here today because I wanted to speak out on behalf of many people in this City that this current piece of legislation is overlooking. You are not recognizing, as has already been said by others, but you are not recognizing the majority of the City's residents. There are many of us who are disabled. This City has a population of 70 percent of disabled people, elderly people and homeless people that this piece of legislation is not going to help. I am here today to urge Council to oppose this inclusionary legislation as it is written, because it is truly not. It is not allowing those of us who are fortunate enough to have housing to continue to maintain that housing or to 193 11/28/07 - HOUSING - BILL 071005 have funding for modification for those of us who need it. It is not including those of us who are working, who have a low-income wage, who can barely afford to pay rent, let alone have an opportunity to buy a home. It is not supporting our right as members of this community, as citizens of Philadelphia, looking to our Council to support our right to live and choose to be a part of the community. It is not supporting that at all. So I urge you please do not consider this bill in its present form, because it's not helping anyone. You've heard different things about where income levels are starting and so many in this City whose incomes don't even start anywhere close to whether it's 43, 50 thousand, whatever it is. There is many of us who have incomes of well below 20,000, let alone something about 43 or 50. (Applause.)
This City belongs 194 11/28/07 - HOUSING - BILL 071005 to us all, and our Council and City officials need to represent us all and include us all, and this bill in its present form is not including us. (Applause.)
Thank you very much. Thank you for your testimony. Any questions? (No response.)
Thank you very much. Temple Presbyterian Church. Thank you for your patience. Valeria Harvell, Reverend Harvell. Thank you for your patience. Please identify yourself for the record and begin your testimony.
Certainly. My name is Reverend Valeria Harvell. I am the Pastor of Temple Presbyterian Church, which is located on the corner of 1300 North 7th Street within the Fifth District of Councilperson Clarke. We are a church with a very 195 11/28/07 - HOUSING - BILL 071005 long history. We've been there 172 years. Not an extraordinarily big church, except in terms of our heart and community service. Ninety-five percent of the church's members is comprised of single-parent women between the ages of and 60. These women, many of whom are 9 mothers and grandmothers, are caring on 10 average for about three church, and of 11 those, about half are primary caregivers 12 to aging parents. Nearly all of the 13 women who reside at the -- who are 14 members of our church also reside within 15 the Fifth or the Seventh District, but 16 most important, the vast majority of 17 these women represent that one-third of 18 Philadelphia's segment population who 19 makes under $20,000 a year. 20 Over the last several years, I've watched the complexion of our community change, in that numerous families within the community and within our church have been uprooted and dislocated. The most egregious and the 196 11/28/07 - HOUSING - BILL 071005 most recent involves a family who is also a member of our church. She was moved overnight, along with her aging mother, to a, quote/unquote, housing complex that was far inferior to the space, accomodation and accessible amenities than the place where she was previously located. The home where she was could have been repaired, thus saving both the family and the entire community an assessment in social capital with networking and resources that I think we have yet to recuperate from. I am not sure there's anything else I can add that the last five or six speakers have not eloquently underscored about the rejection of this bill. I have a nice long list, but most of those things have already been highlighted. I just want to say one more thing, and, that is, that I think that the current bill proposed by Clarke, that one of the biggest problems of that bill 25 is that its own minimum income threshold 197 11/28/07 - HOUSING - BILL 071005 is much too high to meet the maximum amount of people who are currently in need with a low income. (Applause.)
At present, we need a bill that is going to address those who make far below that minimum threshold of 40,000. And most important for me, I think it is important for us to try to get a bill that would provide for individuals who, if the money is put in, who could access that money to repair homes, to offset subsidies for their taxes and who can use that also for rent, and that that "in lieu" money should be taken into account for those people, especially the residents who have stayed in those communities, raised families and endured the bad time long before that property became what many developers are looking at as a cash flow. Those people who withstood the bad times should be around to enjoy some of the good times, particularly with respect to housing. 198 11/28/07 - HOUSING - BILL 071005 Thank you. (Applause.)
Thank you very much. Thank you very much. Is there anyone else here to testify? We thank you very much. We will wait for -- please come forward. State your name for the record, begin your testimony. And one more person, is that it? Yes.
Good afternoon. Thank you so much for allowing me to testify. I do not have written testimony. Many of the Councilpeople here have seen me many times over the years representing people with mental retardation. I am the Senior Project Director -- COUNCILMAN DiCICCO: Identify yourself for the record.
Yes. My name is Norman L. Baker. I'm the Senior Project 199 11/28/07 - HOUSING - BILL 071005 Director for the Arc of Philadelphia, Governmental Affairs. The reason that I'm here today was just basically to listen, and as I did that, it became clearly apparent and from other discussions with people that our community, people with mental retardation, of course, would oppose this bill for so many reasons, but one of the things that I think is apparent, Madam Chairman, is that the good work that you know that you have done for our population and your husband as well has just been so much. However, this bill 16 would not do the same at all. So we need to find a way to come up with new solutions. One of the things that always has been so curious to me through the various elections -- and we've been through a few of them together in the past -- is that our new Mayor has a claim stating that his Administration will be a new way, and we can see that a new way is 200 11/28/07 - HOUSING - BILL 071005 already approaching just by the way he's doing things. I'd like to suggest respectfully to this Council that it's perhaps a time to do things a little differently and in a new way, and this you might take up amongst yourselves. The way that people from the minority community, like the disability community that I represent and some of the others that have been here in the last hour or two, are always relegated to the last position, and, frankly, that is an old way. A new way would be to put the community at-large in the beginning and those commissioners and developers and others perhaps not in first place. (Applause.)
This has been an ongoing sort of thing. We've seen it from time to time. The press is here for the early people and then they leave, but they never really have a chance to hear our positions. We know, Madam Chairman, you're always here on our side, and we 201 11/28/07 - HOUSING - BILL 071005 would just respectfully suggest that perhaps we need to reverse that order in terms of allowing our community to be represented first. Thank you so much, and I look forward to working with you again.
This is the last person who will testify on this bill. The Public Property Committee has been waiting since 1 o'clock, I suppose it is. We will hear this testimony, and that will conclude our testimony on this bill. Welcome. Please identify yourself for the record.
My name is Delfina Avin. I'm a tenant -- 202 11/28/07 - HOUSING - BILL 071005
I'm Tenant Union Representative Network. Long story short, I transferred here from Ohio six and a half years ago and I met a person called Al Searight, and this gentleman for the past five and a half years has been on my side, and without people like that, I just wanted to state for the record, without people and organizations like that, people like me that make under 15,000 a year on disability, we have a problem here. Let's look at the situation. You hear people talk about the same thing over and over and over. So doesn't that let you 203 11/28/07 - HOUSING - BILL 071005 know that there is a problem with the bill? And all I ask you is please reconsider the bill. Thank you for giving me the time. (Applause.)
Thank you very much. The Chair will note that Mr. Searight is in the room. Thank him for your help over the years. We know him as well. He's been a great advocate for people. (Applause.)
Thank you very much. That will conclude our testimony for today. We'll take a five-minute recess. Thank you very much, all of you who are here. (Short recess.)
As there's no one else to testify with regard to Bill No. 071005, we will conclude our hearing and enter our stated 204 11/28/07 - HOUSING - BILL 071005 meeting. The Chair recognizes Councilman Clarke for the purpose of explaining amendments that are to be offered during this part of our meeting.
Thank you, Madam Chair. I want to thank all of you for your time and input, being patient on this very, very crucial issue. As I indicated earlier, we had adopted and actually during the course of the hearing continued to adopt and be prepared to propose several amendments that we believe will address the core issues of some of the things that have been raised by all parties involved. As I said earlier, there's never going to be a bill 20 that will address 100 percent of everybody's issue. That's just not the real world. I'd like to go over quickly the explanation of the amendments prior to the submission, and then I'll make copies 205 11/28/07 - HOUSING - BILL 071005 available for everybody so they can review it. The first thing we wanted to address on the first amendment, there were some concerns that under the proposed legislation -- and it was inadvertent, believe me. Actually, the affordable housing developments would be required to adopt the standards in this particular bill, and I'm glad it was brought to our attention, because we do not want the affordable housing groups who say, for instance, may build housing for people who make 40 percent of median income to be required to have housing in there that's 125. So that provision is out. No affordable housing will be subject to this bill. The second part of the first amendment, that the options in the original bill as the language read were limited to on-site construction of affordable units and the "in lieu of" payments going to the General Fund. 206 11/28/07 - HOUSING - BILL 071005 Number two talks about off site. It gives three options. Actually -- I'm trying to explain this without confusing myself. Some will say that's not very difficult. The first option, on-site affordable housing; second option, off-site affordable housing, but if you build it off site, it increases from ten percent to percent. The third option, 12 which is the "in lieu of" payments, I'll 13 talk about that in the second amendment. 14 The issue with respect to the 15 income ranges -- and we had heard that there have been some concerns, and actually this version of the bill had actually pushed it back from the original version, which was 80 to 150. The current bill calls for 60 to 125. Because of the continued concern about not addressing -- and, in all honesty, I think that the "in lieu of" payments will address it, but I'm a very flexible person. What we did is require that half 207 11/28/07 - HOUSING - BILL 071005 of the units go from 80 to 125, the average of that number. So depending on the number of units that developer wants to build either on or off site, they will have to build an average in that upper part of the development. The second part of it is from 80 percent to zero. So that developer will have to build the average of the 80 to zero. The reason why I'm not giving you a specific number is depending on the number of units that are going to be built in terms of what they will come. Some of the units might be 60, some might be 20. So we have pushed that effectively from zero to 125, will be the effective number on the inclusionary housing provisions. Amendment two, it clarifies the "in lieu of" funds, and this is something that legislatively -- I just want to be very candid with you -- legislatively the City Council cannot officially direct, but it's my assumption that this 208 11/28/07 - HOUSING - BILL 071005 Administration and the next Administration will follow the recommendations of the legislation. It calls for the "in lieu of" funds -- that means the money -- if the developer decides he's not going to build units in his building or he's not going to build units outside of it, he can give an "in lieu of" fund in exchange for that. That "in lieu of" fund will be the cost of an affordable unit. Those "in lieu of" funds will go to the Housing Trust Fund. The Housing Trust Fund mandates that 50 percent of its revenue go to below 30 percent median income.
So it's addressing the population of the lowest, lowest income. So 50 percent of that money will in fact go to 30 percent and below. Amendment three, as you heard earlier, there were some concerns about the implementation date, and I understand that. What we wanted to do to keep people's concerns at a minimum, what 209 11/28/07 - HOUSING - BILL 071005 we're going to require, that Bill No. 3 071005 will not take effect until the introduction and the adoption of a second ordinance, which I call Phase II, that address, but not limited to, the following things: the developer incentives, which we call them here; expedited permitting processes; enacting tax credit legislation; the provisions of land for affordable units at a reduced or nominal consideration; building code modifications, and there will be some other things as we discuss this problem, because we do truly want to make sure that there are the appropriate things in place to make sure that this program is going to work. So what we want to do is propose these three amendments. And one other thing I just want to say, because I was asked this question earlier. If there -- well, first of all, I think that we should have additional discussion on all aspects of the one bill 25 and the other proposed bill. I think 210 11/28/07 - HOUSING - BILL 071005 that is a very, very important program, but it is also a very, very complicated program. So I'm going to ask all parties involved to diligently get involved in the discussion to talk about the implementation phase. As I said earlier, the reason why I set an effective date, because unfortunately in the City of Philadelphia, if you don't make people do something, they're not going to do it. So we hope that these address, in a reasonable way, the issues that were brought up today. Thank you, Madam Chair, for allowing me to explain it.
Thank you. Are there any questions from members of the Committee? (No response.)
The Chair recognizes Councilman Clarke for the adoption of amendments one, two and three to Bill No. 071005. 211 11/28/07 - HOUSING - BILL 071005
The Chair recognizes Councilman Clarke for the purpose of asking for the adoption of the amendments, three amendments, one, two and three, to Bill No. 071005.
Madam Chair, I ask for an adoption of the amendments to Bill 071005 as earlier referenced in my statement and explanation. We will make copies available to all the individuals on the actual amendments to make sure that they reflect what was given in the explanation. So I move for the adoption of those amendments. (Duly seconded.)
It has been moved and seconded that the amendments to Bill No. 071005 be adopted. All in favor say aye. (Aye.)
Opposed? 212 11/28/07 - HOUSING - BILL 071005 (No response.)
The ayes have it and the amendments are adopted. The Chair now recognizes Councilman Clarke with regard to the adopted amendments and the bill passing out of this Committee with a suspension of the rules.
Thank you, Madam Chair. Madam Chair, I move that Bill 071005 be reported out of Committee with a favorable recommendation -- I'm sorry; as amended, be reported out of Committee with a favorable recommendation and a request for rules suspension as to allow reading at the next session of Council. (Duly seconded.)
It has been moved and seconded that Bill No. 23 071005 as amended be reported out of Committee with a favorable recommendation and, furthermore, for a suspension of the 213 11/28/07 - HOUSING - BILL 071005 rules so as to permit first reading at our next session of Council. All in favor will say aye. (Aye.)
The ayes have it and so the bill passes. Thank you all for your patience. Thank you for the Public Property Committee too, and this will conclude our dealings with the Housing Committee today. Thank you.
I'd just like to say one thing. Will the representative organizations within the next week or two contact us in whatever way necessary so we can start the process of the next phase of the bill, because I think this is an important issue. We need to get involved on an expedited way so we can work on the formulation of the 214 11/28/07 - HOUSING - BILL 071005 second phase of the program. Thank you all very much. (Committee on Housing, Neighborhood Development and the Homeless adjourned at 3:30 p.m.) - - - 215 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on November 28, 2007, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)