How two brothers are using the Land Bank to build homes working Philadelphians can afford (12/4/2018)

Source: Philly.com
Byline: Caitlin McCabe
Date:

When Arthur N. Green arrived in Philadelphia’s West Poplar neighborhood in 1990, he was homeless and struggling with addiction, spending nights in and out of abandoned houses that withered along empty streets.

The blocks were vacant, he said, “trashy.”

“There was all kinds of debauchery going on — a lot of drugs, a lot of gunplay,” Green recalled. Gangs operated out of the neighborhood’s Richard Allen Homes, one of the city’s first low-income housing projects. Drug-related killings were frequent.

“The ground that we sit on has a lot of blood in it,” said Green, now the Democratic leader of the neighborhood’s 14th Ward. “A lot of turmoil. A lot of pain.”

Twenty eight years since he landed in the neighborhood, he can hardly believe how it has changed.

West Poplar — stretching from Spring Garden Street to Girard Avenue, and from Broad to Ninth Streets — is one of the latest neighborhoods in Philadelphia to experience a real estate renaissance. With the Callowhill neighborhood changing to West Poplar’s south and with Francisville undergoing a development boom to the west, investors and developers have begun moving into West Poplar, seeking lower-priced parcels for better returns.

The result: New townhouses have sprouted on abandoned land. Parcels have flipped quickly. In one case, an overgrown plot that sold for $8,321 in 2009 was transformed into a $250,000 rowhouse, property records show. Another lot that sold for $109,000 in 2013 went for nearly $1 million two years later after a three-story apartment building was constructed on the site.

The median price of a home in the neighborhood has skyrocketed nearly 485 percent in two decades, jumping from $60,000 in 1998 to $350,000 in the first three quarters of 2018, data from Philadelphia economist Kevin Gillen show.

“There used to be an abandoned house over there — I used to sleep in that,” said 66-year-old Green, who has been sober for 26 years. “Look at what’s happening. It’s transforming.”

The kind of real estate boom underway in West Poplar is a familiar story in Philadelphia. Neighborhoods just beyond Center City that were once beleaguered by poverty and crime have seen new construction and tenants in recent years. While a welcome addition for some longtime residents who say the development has made their neighborhoods safer, many also worry about rising taxes and rent — and, ultimately, displacement.

To combat these concerns, Philadelphia has revved up efforts to create more affordable and workforce housing — both in short supply in a city where the poverty rate hovers around 26 percent. Earlier this year, officials released the city’s first comprehensive plan to address housing needs. One goal: creating 6,000 new workforce housing units by 2028.

Last month in West Poplar, 26 of those new units got underway. And city officials are already hoping they could be a model for workforce housing in the future.

Frankel Enterprises, a fourth-generation development company that splits its time between South Florida and Philadelphia, broke ground last month on the first of the 26 houses, which will be scattered around West Poplar. Priced at $229,999, each two-story brick rowhouse will have three bedrooms, two bathrooms and a private backyard. The homes qualify for a 10-year tax abatement.

With Philadelphia-bred brothers Max and Zachary Frankel, 33 and 30 respectively, leading the project, the workforce development aims to provide more affordability to Philadelphians who have been long left out of the housing equation. With not enough income to afford market-rate housing in some neighborhoods, but with too much income to qualify for government-subsidized affordable housing, Philadelphia residents who hold low- to middle-income jobs — teachers and firefighters, for example — often struggle to find housing that works with their wages.

Workforce housing units, including these 26, are available to people who make up to 120 percent of area median income. In the Philadelphia region, that means $73,440 for a single person, $84,000 for two, or $104,880 for a family of four. (Affordable housing, in contrast, generally serves households that are below 80 percent of area median income. In 2018, that was $48,950 for one person and $69,900 for four.)

Called the West Poplar Homes, the project is the latest to come out of the Philadelphia Land Bank, a five-year-old institution that has struggled to get off the ground. Established after considerable debate within City Council, the Land Bank was designed to streamline the way Philadelphia acquires and sells vacant and tax-delinquent land. Recent counts have pegged Philadelphia as having as many as 40,000 vacant parcels — nearly 8,500 of which are city-owned. In theory, the Land Bank would help turn those swaths into tax-producing projects, such as affordable-housing units or community gardens.

For the last few years, however, the Land Bank has been criticized for being slow to sell those parcels. Interested buyers have alleged that despite making their interest in properties known, they have received little or no response from Land Bank officials. Other critics have lambasted the agency for its slow acquisition of lots — something that City Council President Darrell L. Clarke has blamed on some offices, including the Department of Revenue. In January, he accused the city of bypassing the Land Bank when selling public property, sending parcels instead “straight to Sheriff Sale to be snatched up by high-end developers and do-nothing speculators.”

In an interview, Angel Rodriguez, the Land Bank’s new executive director, said changes within the last year have positioned the agency to better fulfill its mission. The Land Bank’s staff has more than doubled — jumping from 8 to 18, with one more position to fill, Rodriguez said — and the agency has ramped up acquisitions of tax-delinquent land, acquiring more than 400 delinquent parcels to date.

In total, the Land Bank controls nearly 2,300 of the city’s vacant parcels. A spokeswoman said 151 have been sold since January 2017, when the first property settled. The transactions have produced 243 units of affordable and workforce housing.

The average price of the sales thus far is $50,680, Rodriguez said. The median is $217,501. (Both figures include deals with multiple lots. The Frankels paid $5,200 for 15 parcels.)

“This is like a Crock-Pot — I’m slow-cooking this thing, and when it’s done, you’re going to love it,” Rodriguez said. “But it has been a lot of detail-oriented work trying to figure out what the systems are, how to tweak the systems, and getting staff trained.”

Even as some details are being worked out, officials have heralded the soon-to-come West Poplar Homes as a road map for workforce housing. Greg Heller, executive director for the Philadelphia Redevelopment Authority, called the project the “definition of public-private partnership.”

To make their project work, the Frankel brothers also tapped Heller’s public agency. Using the redevelopment authority’s credit enhancement program — meaning the PRA assumes 25 percent of the default risk on their loan — the Frankels were able to obtain construction financing from the Reinvestment Fund.

“The Redevelopment Authority provides additional credit enhancement, which allows our lender to get a little more comfortable with the terms of workforce housing,” Zachary Frankel said. The Frankels are the first developers to use the program, which the city said it hopes to expand.

“Hopefully this will be a template for what we do across the city as we move ahead,” Clarke said at the project’s groundbreaking.

Yet for the Frankels, the most important part of the project remains the ability to give back, they said. While their company, started by their great-grandfather EJ Frankel in the 1930s, has built luxury developments in South Florida and Philadelphia (including 220 W. Rittenhouse), they said they “both felt a great responsibility toward giving back to this city.”

“Philadelphia has instilled a lot of values within us that we feel is a great debt to repay,” Zachary said. And when they saw that “no one was really taking advantage of workforce and affordable housing in Philadelphia,” Max said, they thought they were in a “prime opportunity to take advantage of this niche.”

Frankel Enterprises will partner with Mural Arts Philadelphia, which will paint murals around the neighborhood. The 26 units, the first of which will be available in the spring, are now for sale.