by Jay Goldstein

On Tuesday, the City of Philadelphia enacted unprecedented legislation that requires private developers to set-aside housing units at affordable rates. Here’s what you need to know.

  • Effective July 18, 2022, affordable housing requirements will apply to zoning permit submissions for new housing developments of 10 or more units within the Mixed Income Neighborhoods Overlay District. The newly created zoning district extends to select areas of North and West Philadelphia including portions of University City and South Kensington.
  • The new zoning district requires that subject permit applicants set-aside 20% of all on-site housing units as affordable to renter and owner-occupied households earning up to 40% and 60% of Area Median Income, respectively. Applicants must also share marketing, occupancy, and economic opportunity plans with Registered Community Organizations.
  • Permit applicants within the new zoning district will be eligible for select height, density, and parking bonuses. Beyond the zoning district, permit applicants who voluntarily set-aside, or pay the Philadelphia Housing Trust Fund to provide, affordable housing units, will remain eligible for a Mixed Income Housing Bonus, as revised by companion legislation.

As of January 1, 2022, residential housing development in Philadelphia is also subject to a reduced property tax abatement and a 1% tax on construction. The City recently published construction tax regulations, which provide developers the option to estimate construction costs based on International Code Council rates, and which clarifies that 50% of the calculated taxes are payable upon the issuance of a building permit and a certificate of occupancy, respectively.