Housing: Even With Empty Lots and Homes, Philadelphia’s Struggling to Make Housing Affordable

Nicole Westerman can’t help but feel that new real estate projects have torn Kensington’s identity in two: half a developer’s paradise, half a neighborhood struggling for survival amid intersecting crises of gun violence, housing and substance abuse. 

“It is incredibly ironic to me that we have living conditions that are unthinkable and would never occur in any other part of the city, and yet the residents who are having to literally clean human waste from their doorsteps and who have been stabbed by needles are then having to worry about a new development a few blocks away,” said Westerman, the director of real estate and economic development for the New Kensington Community Development Corporation

With vacant lots checkering the neighborhood, Kensington is one of the areas most impacted by Philadelphia’s housing crisis. 

Philadelphia home sale prices have increased by 21% since 2020 — reaching a towering median value of $223,055 — and with incomes remaining relatively flat in the same period, housing affordability has suffered. A majority of Philadelphians spend at least 30% of their income on housing costs, making them “cost-burdened” according to the U.S. Department of Housing and Urban Development.

For decades, policymakers have suggested harnessing vacant parcels as a solution to the city’s affordable housing crisis — why leave properties empty in a city struggling to afford housing? Their efforts have included everything from repairing recently abandoned homes to offering incentives for building entirely new units on empty lots. 

But progress has been slower than envisioned. While some vacant lots have collected dust for decades, others are being snatched up by developers who turn them into homes that current residents can’t afford yet inflate their property taxes. 

As gentrification prices longtime residents out of their own neighborhoods, what’s holding back affordable redevelopment efforts? 

MOVING PAST THE ‘CREAM OF THE CROP’

There’s a winding history behind Philadelphia’s abundance of vacant parcels. 

In the 1950s, Philadelphia’s population declined as the automation of manufacturing jobs and rise of suburbia lured people out of the city, leaving thousands of abandoned properties in their wake. These buildings were either demolished into grass patches or left to decay. 

City programs throughout the 1990s provided subsidies for community groups to acquire and rehabilitate vacant houses. The program often targeted houses that were recently vacated because they were the easiest to fix up — they had intact rooms and typically only needed minor repairs like new roofing and new heaters.

However, those efforts lost steam by the mid-2000s.

“The cream of the crop, at that point, was picked,” said David Feldman, executive director of the Development Workshop, a statewide nonprofit promoting development in the Philadelphia region. “There’s actually very few city-owned standing houses. The [Philadelphia Housing Authority] has a bunch, but the City of Philadelphia has probably no more than 40.”

What’s left today? Thousands of vacant homes under private ownership and even greater swathes of dilapidated structures and empty lots, all of which are more expensive and time-intensive to repurpose than the homes of decades past.

Philadelphia is a city of small landlords, with most owning just one or two units. They hold onto vacant parcels — the collective term for vacant lots and vacant properties — for a grab-bag of reasons: some are waiting for the right time to sell; some are tracking down old owners; others simply don’t want to deal with the hassle of caring for or selling the property.

For-profit developers have long purchased privately owned vacant parcels to create housing. They primarily focus on vacant properties in high-income — “desirable” — neighborhoods because there is a greater potential to yield major profits from tenants. 

“Everyone’s going to concentrate in Center City because that is where you can get revenue,” said Mo Rushdy, the vice president of the Building Industry Alliance of Philadelphia.

Over time, profit-driven redevelopment strategies have left vacant properties largely untouched in low-income neighborhoods across North, South and West Philadelphia — the areas where developers would generate the least revenue. And the longer the properties sit vacant, the more expensive they become to rehabilitate.

“You’re really just running against the clock with the value of the land,” said Christina Rosan, a geography and urban studies professor at Temple University. “Now it’s more expensive and the cost of building affordable housing has gone up, along with the competition for what else you could build with it.” 

This is an inescapable cycle. Developers don’t want to build in low-income neighborhoods until more affluent residents move in, which won’t happen until the neighborhoods become more attractive, which requires redevelopment. Or even worse, developers are creating market-price housing in low-income areas to attract wealthier residents, which displaces longtime residents as their once-familiar neighborhoods become unaffordable and unrecognizable, as the state of development in Kensington shows. 

High vacancy rates reduce property values, and the lost tax revenue harms local schools, creating fewer opportunities for youth and more reason to move away for those who can afford to, perpetuating the cycle. Vacancies are also linked to high crime rates, with gun violence concentrated in high-vacancy neighborhoods, further depressing property values. 

The need for repurposing vacant parcels is dire. Housing activists recognize it, developers recognize it, city officials recognize it. So what’s delaying action? 

REDEVELOPMENT IN A CITY OF ‘FIEFDOMS’ 

Community groups are spearheading hyperlocal efforts to repurpose vacant parcels, but they can only move so fast.

The process for repairing vacant houses is relatively straightforward because they’re likely to be in decent shape — still livable, just in need of minor fixes like updated appliances and window replacements. Feldman estimates they take about six months to repair, costing a base price of $45,000 with up to $75,000 in additional fees if it’s in particularly poor condition.

But vacant structures can have outstanding mortgage or tax liens, so acquiring them is a riskier endeavor than vacant lots. This is why some groups opt to construct new units on empty lots, even though new construction is a more arduous process than rehabilitating vacant properties. 

The New Kensington Community Development Corporation created two market-price homes in the past year, and are using the sale proceeds to build affordable homes. New construction is a long process — designs can take four months, plus an additional few months for permitting and at least nine more for construction. It’s also expensive, with the construction alone costing about $250,000 to $300,000 per project.

The biggest challenge NKCDC experiences when rehabilitating vacant parcels is difficulty securing the necessary capital. As a community organization, their funding primarily comes from highly competitive grants, rather than the loans that private developers have access to. Even the process of applying for grants is expensive and labor-intensive — some applications are so complicated that they have to hire consultants for help filling it out. 

“The work that we are doing won’t allow any bank to give us money. We simply can’t access that capital,” Westerman said.

Even though for-profit developers have greater access to the capital necessary for rehabilitation, they may shy away from affordable development because little profit means little motivation.

Still, Rushdy was quick to point out that a few for-profit groups have pursued affordable development, including his own luxury development company, the Riverwards Group. 

“What I’m telling you, you’re probably going to say ‘No way, there are applications [from for-profit developers] out there to build affordable housing?’ And the answer is yes, absolutely yes,” Rushdy said. 

So if there are efforts — albeit, vastly disparate — from both community groups and developers to repurpose vacant parcels into affordable homes, what’s slowing the process? 

One answer lies with policy. 

The City of Philadelphia opened a land bank in 2015 to take public ownership of the thousands of vacant, tax-delinquent parcels across the city and distribute them to entities — private developers, community groups, even individuals — with “productive” redevelopment plans, pending approval from City Council. 

However, the process for transferring privately owned vacant parcels to the Land Bank can get expensive. The Land Bank most often acquires properties through sheriff’s sales, which are public property auctions. This means a buyer has to outbid their competitors to get a vacant property. 

According to Feldman, state law gives the Land Bank a “superpower” — it can purchase properties from a sheriff’s sale before they’re auctioned off, saving it from costly bidding wars. But the Land Bank still struggles with its limited funding, and Feldman estimates it may only be able to acquire as few as 20 parcels a year. 

For properties the Land Bank has managed to acquire, for-profit and nonprofit developers both run into the same issue when trying to make purchases: councilmanic prerogative

Councilmanic prerogative is an unspoken rule where City Council allows each of the 10 district representatives to determine how land is used in their jurisdiction.

At its best, councilmanic prerogative helps average individuals — through their elected officials — prevent unwanted development in their neighborhoods. But because council members aren’t required to disclose why they make decisions, prerogative has become a tool for them to advance their personal agendas. 

“It gives the City Councilpeople a lot of power over land use in their area and prevents the more comprehensive approach to land use planning that you would need,” Rosan said. “You can’t have the city run as a bunch of fiefdoms.”

When asked about councilmanic prerogative, a spokesperson for Council President Darrell Clarke referenced his decision to delay plans for seven affordable units on Page Street near 16th in North Philly in October 2021 — a case where he said prerogative was used to uplift residents’ concerns about how the development would impact parking. He later reintroduced a resolution to permit the project after it was reduced to six units, keeping one lot for parking.

For Westerman, councilmanic prerogative has “absolutely” affected NKCDC’s affordable development efforts. She recalled a time in October 2021 where NKCDC was only given 11 days’ notice that the Philadelphia Land Bank was conveying 49 parcels in their service area, including a mix of affordable and market-rate single-family homes. Although the Land Bank ultimately delayed the conveyance, Westerman doesn’t think NKCDC was given enough time to prepare applications for the properties.

“We would have loved to have been told by anyone — Land Bank, Council district office, anyone — that those parcels were going to be in play,” she said.

Failing to provide community groups with enough time to prepare applications for Land Bank properties is a way for City Council to control who gets ownership of vacant properties, essentially excluding them from the scramble to acquire properties. 

And prerogative isn’t just affecting community groups. Rushdy’s found that City Council has ignored or denied every application he’s submitted to acquire Land Bank properties and to turn them into affordable homes.

“It’s for-profit companies that are coming to the table with the solution, and today, Council is picking and choosing who’s to do affordable housing,” Rushdy said. 

City Council has approved multiple pieces of legislation in the past year intended to incentivize affordable development in neighborhoods with high vacancy rates, like one bill requiring new developments in certain neighborhoods to provide affordable units and another allowing developers to bypass zoning regulations if they provide affordable units or contribute to the city’s Housing Trust Fund. 

But because of councilmanic prerogative, private developers, housing activists and researchers do not believe the city’s new bills will be effective. 

“Say your City Councilmember is not interested in affordable housing, what do you do?” Rosan said. “We don’t necessarily have the right structures in the city’s government to pull this off.” 

As affordability concerns escalate, pressure is mounting to redevelop and repurpose vacant parcels. What happens if councilmanic prerogative, among other obstacles, continues stalling the process?

THE ‘FRONTLINE’ OF GENTRIFICATION

Gentrification is a process where high-income populations rapidly move into predominantly low-income neighborhoods, bringing with them development campaigns to expand the area’s business and housing options. Consequently, it inflates the cost of living in a neighborhood, which displaces longtime residents.

Some, like Rushdy, believe the consequences of gentrification are a myth. 

“How people get lifted from poverty is when you bring in money to their area, people with high-paying jobs, who bring in commerce. All of a sudden, your property value goes up, you’re building equity in the neighborhood,” Rushdy said.

But when developers turn vacant properties into market-rate houses, it can increase the property value of adjacent buildings until the neighborhood’s original residents can no longer afford their own homes.

Developers can also become predatory when they enter low-income neighborhoods. They want to purchase as many nearby properties as possible, and may buy out longtime residents when the neighborhood’s stockpile of available properties, especially easily repairable vacant properties, runs dry or becomes too expensive to repurpose. 

“There’s a lot of pressure on you to sell, and you’re probably going to sell it,” Rosan said.

Those who don’t sell are still at risk of losing their homes because some developers in gentrifying neighborhoods fail to take proper construction precautions, which can severely damage the houses neighboring their projects. Michelle Carrera Morales, the executive director of the Norris Square Community Alliance, has seen gentrifying projects harm multiple properties within her organization’s service area, resulting in everything from cracked walls to damage so extreme that homes become uninhabitable. 

“Obviously people are devastated because of the damage that they cause,” Morales said. 

Morales said community groups are sometimes able to step in to help tenants confront reckless construction, but developers are often left unchecked because tenants cannot afford the legal fees necessary to challenge them.

Westerman is already seeing gentrification encroach on Kensington, pointing to more than 2,000 new residential units going up in the area — a majority of which are not marked as affordable.

But Westerman doesn’t think Kensington’s destined to be the new Fishtown or Northern Liberties — she thinks the city’s given up. She believes officials have taken a “containment” strategy, preventing development in certain segments of the neighborhood to sequester, rather than improve, issues like crime and substance abuse.  

“Where we are right now is the absolute front line of gentrification,” Westerman said. “The city has kind of thrown up their hands to say, ‘We’re not going to try to fix the problem, we’re just going to try to limit it here.’”

And beyond displacement, gentrification can pose another problem for neighborhoods: exacerbating violence. 

Zach Porreca, a graduate student at West Virginia University, studies the relationship between gun violence and gentrification in Philadelphia. His research has shown that, after a block gentrifies, violence in the surrounding neighborhood increases. One explanation for this, he said, is that gentrification results in some locals becoming unable to afford their longtime houses, forcing them to move to unfamiliar areas surrounded by similarly displaced neighbors. The unfamiliar environment can cause excessive tension, spurring conflicts that become physical and sometimes lethal. 

“Say you’re forced to move into the small remaining non-gentrified section of a neighborhood, you might be living on top of the people that you were warring with as teenagers,” Porreca said. “You’re going to see increases of violence as you concentrate a lot of people that didn’t need to be concentrated.”

Porreca found that the link between gentrification and gun violence is particularly high in areas with entrenched drug markets, including Kensington. Gentrification encroaches on the market’s operations, so its leaders typically try to secure new territory in an adjacent area, which can get violent. 

“Nothing’s gone on in Kensington to try to make things better for the people, it’s been a heroin market since the 80s,” Porreca said. “The city’s taking this approach where it’s just let it stay there, stop it from spreading. And as development begins to push up against Kensington, I think we’re seeing the area shrink, which is a disappointing thing because now you’re just displacing what was a vibrant neighborhood.”

Part of the problem, Rosan said, is the city has divided up responsibilities for urban planning among too many departments and offices, which makes it incredibly difficult to establish a cohesive vision for neighborhood development. As the city considers proposals for repurposing vacant parcels, she hopes officials prioritize communities’ visions for their own neighborhoods, taking into consideration the need for green spaces and improvements to existing housing options. 

“What I worry about is Philly’s going to really just miss this opportunity,” Rosan said. “And I think they already missed a lot of opportunities. They knew gentrification was going to happen.”

Morales hopes everyone — the city, developers, community organizations and communities themselves — recognize the dire need for affordable housing and take action before gentrification makes neighborhoods unrecognizable.

“The reality is that if we don’t develop enough affordable housing, entire communities are going to be displaced, and the city is not going to reflect the diversity it has right now,” Morales said. “It comes to erasing human rights.”

Please email any questions or concerns about this story to: editor@philadelphianeighbors.com.

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