Construction Loan Guarantee Gives Developers the Tools They Need to Build Middle-Income Housing
PHILADELPHIA – The Philadelphia Redevelopment Authority (PRA) announces the expansion of the Workforce Housing Credit Enhancement —a loan guarantee that helps developers finance much-needed middle-income housing developments in rapidly appreciating neighborhoods.
The Workforce Housing (“WFH”) Program is a City initiative that promotes the development of housing for middle-income households (between eighty to one-hundred-twenty percent of Area Median Income).
“Affordable housing is a top priority for me,” said Mayor Jim Kenney. “The Workforce Housing program was created to help maintain affordability for hardworking Philadelphians like teachers, firefighters, police officers, and others who work every day, and want to live in neighborhoods that are becoming unaffordable for their budgets. I appreciate this effort, and am looking forward to the impact it can make on our great City.”
The City’s Housing Action Plan cites a need for 11,500 units of Workforce Housing over the next decade. PRA, which already offers financing for affordable housing at lower income levels, created this credit enhancement to allow developers to build Workforce Housing to help fill the gap in this missing middle of the housing spectrum. To date, the Workforce Housing program has resulted in 142 units of housing that has been completed or in development.
“At our core, Philadelphia is a city of workers, so we must do everything we can to ensure our neighborhoods remain accessible and inclusive – particularly in times of sharp high-end real estate growth. Supporting workforce housing is critical to our goal of shared health and prosperity across our city,” said Council President Darrell L. Clarke, 5th District. “This program will ensure that our city continues to welcome and celebrate working class people. In a time of ever greater inequities, we are working to make Philadelphia stand out as a superior place to live, work, and plan for the future.”
In February 2017, PRA tested a pilot credit enhancement in partnership with the Philadelphia Land Bank (PLB). Based on the success of that pilot, PRA is now expanding the credit enhancement to make it more widely available. The credit enhancement is now available to support the financing of any workforce housing within Philadelphia, for-sale or rental, that is built on land acquired from PRA, PLB, or Philadelphia Department of Public Property (DPP).
“Our goal is to partner with the private sector to come up with creative solutions that allows the market to build the kind of housing that our city needs,” said Gregory Heller, Executive Director of the PRA, “This partial loan guarantee allows developers to build, and banks to finance workforce housing, while ensuring that our scarce public resources can go as far as possible.”
“Working with the PRA and the Philadelphia Land Bank has been great,” explains Max Frankel, Frankel Enterprises. “Our Workforce Housing project in the West Poplar section of the City was possible because of this financing model. I am looking forward to working with PRA and the City on future projects.”
A full description and necessary requirements for developers to access Workforce Housing Credit Enhancement is found on the PRA website.