Is mandatory inclusionary zoning next on City Council's agenda?

Councilwomen Maria Quiñones-Sánchez said she would introduce her proposal, which would limit the mandate to certain areas of the city, in January after legislators return from winter break.

After several failed attempts in City Council to pass inclusionary zoning over the years, Quiñones-Sánchez said city leaders should aggressively address the affordable housing crisis as the city’s economy rebuilds after the novel coronavirus pandemic.

“This affordable housing crisis is not going to take care of itself,” said the 7th District legislator on Friday. “This is about sharpening our existing tools and creating new tools so that we can have diverse, mixed-income housing.”

Councilwoman Jamie Gauthier, of the 3rd District, is the other legislator drafting a proposal. She declined requests for comment on Friday.

The proposals will face fierce opposition from the business industry.

The Building Industry Association of Philadelphia, which is focused on residential developments, is firmly against any mandates for inclusionary zoning, said Mo Rushdy, treasurer of the group.

Coupled with the high costs of construction in the city, affordable housing mandates for private developers would make projects economically infeasible, disincentivize building, lead to job losses, and potentially result in projects with extremely high densities, Rushdy said.

“Mandatory zoning kills the deals,” Rushdy said.

The city currently has an incentive-based program to encourage mixed-income housing developments.

The voluntary program offers developers the perks of adding greater density and height to their projects than the zoning code allows in exchange for the inclusion of affordable housing units or contributions to the Philadelphia Housing Trust Fund, which preserves and funds affordable housing.

The incentive-based program was expanded in 2018 after a mandatory inclusionary zoning bill, which Quiñones-Sánchez put forward in 2017, was killed by the building and real estate industries.

Quiñones-Sánchez said her proposal would require developers set aside at least 20% of their units for affordable housing on residential developments in some federally designated Opportunity Zones, where investments in underserved neighborhoods are eligible for significant tax breaks, as well as transit areas, like those along SEPTA’s Market-Frankford line.

Quiñones-Sánchez said she would couple the affordable housing mandate with incentive-based programs to encourage developers to build affordable and mixed-income housing. The councilwoman acknowledged her proposal would face opposition in City Council.

“The proposal will be very focused to my district locally because we’ve got to get buy-in,” she said. “Not everyone in Council has bought into the mandatory” inclusionary zoning program.

While previous attempts at mandatory inclusionary zoning failed, City Council has become more progressive with the addition of four new members this year, including Kendra Brooks of the Working Families Party.

Inclusionary zoning mandates could sour City Council’s relationship with the building industries. Just last week, legislators passed changes to the 10-year property tax abatement program and put in place a new 1% levy on new residential construction, all of which takes effect in January 2022. The BIA supported the construction tax.

Paul Badger, president of Black-owned development firm The Badger Group, said the timing was bad for any mandatory inclusionary zoning requirements: The pandemic has devastated the economy and legislators just passed the new building taxes.

“It’s kind of like death by a thousand cuts,” said Badger, who is a partner on a new residential and commercial tower on South Broad Street.

Badger said the city would have to offer significant incentives to have any chance of winning over the business industry, like higher buildings and density for projects than zoning allows, or extending the length of the 10-year property tax abatement.

Rushdy, who also is a managing partner at The Riverwards Group, said legislators already passed a bill to incentivize affordable housing in January 2020. The bill substantially cuts the bureaucracy around transferring city-owned property and requires 51% of the units to be set aside for affordable housing.

Rushdy said the effects of that bill were slowed due to the pandemic but would boost the construction of affordable housing in the city over time.

“Give that a chance to work,” Rushdy said. “And in three years, four years [if] you come back and you find that bill has not resulted in thousands of affordable homes, then do whatever you want.”

Council President Darrell Clarke signaled that City Council consider inclusionary zoning proposals “in the near future” during a WURD radio interview last week with Nick Taliaferro.

“Stay tuned on that,” Clarke told a listener about a new push for an inclusionary zoning proposal.

Councilmembers Helen Gym and Mark Squilla came out in favor of mandatory inclusionary zoning. Few other legislators wanted to discuss the topic.

“The future of housing in our city does not just rest in the desires of developers, but it should be balanced with the actual needs of our city,” Gym said in an email.