Germantown Avenue: Evaluating Upper Floor Opportunityfor the Village of Arts & Humanities

University of Pennsylvania Weitzman School of Design Department of City and Regional Planning

Germantown Avenue

Evaluating Upper Floor Opportunity for the Village of Arts & Humanities

Germantown Avenue: Evaluating Upper Floor Opportunity for the Village of Arts & Humanities Spring 2020 This report summarizes the findings and recommendations of the Community and Economic Development Practicum at the University of Pennsylvania’s Stuart Weitzman School of Design.

Report by Kelsey Edelen, Tiffany Hudson, Emelyn NĂĄjera, Natasha Tabachnikoff, and Laure Wassen.

Germantown Avenue

Evaluating Upper Floor Opportunity for the Village of Arts & Humanities

Acknowledgments The research team would like to extend our sincere gratitude to our client, instructor, and interviewees who contributed to this project.

Instructor The Village of Arts & Humanities

Philadelphia City Council Business Owners

Neighborhood Progress Fund LISC Philadelphia

People’s Emergency Center

Lisa Servon, Department Chair Akeem Dixon, Director of Economic Development Aviva Kapust, Executive Director Lillian Dunn, Senior Manager of Outreach Faith Bartley, People’s Paper Co-Op Joe Val, Oval Project Management Various staffers Lucreatia Russell, Art of Beauty by DeCreed Chris Forsyth, Jerry’s Reco Owens, Executive Director Melissa Kim, Deputy Director Rachael Viscidy, Assistant Program Office James Wright, Director of Development

Authors

Kelsey Edelen

Tiffany Hudson

Natasha Tabachnikoff

Emelyn Nรกjera

Laure Wassen

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Germantown Avenue

Village of Arts & Humanities

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Table of Contents 1

Executive Summary

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Background Mission and History of The Village Community Economic Development on Germantown Avenue

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Project Framing & Methodology Research Question Methodology

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Commercial Corridor Revitalization Comparison Study of Philadelphia Commercial Corridors Existing Grants & Subsidies in Philadelphia Peer City Precedents

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Research Findings Germantown Avenue Corridor Survey Ownership & Tax Findings Philadelphia Doors & Windows Ordinance

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Recommendations Alternative Solutions Criteria Redevelopment Approaches Project Financing

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Next Steps Project Summary Corridor Property Database and Financing Model Tools

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Appendices

Executive Summary

The Village offers vibrant testimony to the role that art can play in bringing a desolate urban landscape back to life and engaging youth and families in the arts. Photo courtesy of The Village.

This report presents tools and findings to guide and target investment along the 2500-2900 Germantown Avenue Corridor (the Corridor) prepared for The Village of Arts and Humanities (The Village). Despite multiple efforts to jump start investment, the Corridor has not seen a “Phase One� investment that could reverse long-standing disinvestment. The emphasis of this project is to target near-term feasibility, rather than large scale development, while leveraging the role of The Village to ensure that future investment will spur

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Germantown Avenue

growth and upward mobility for current residents.

The research team aimed to answer the following question: How can The Village leverage the opportunity of vacant upper-floor spaces within its target area to drive equitable development and create pathways to upward mobility for people with ties to the Corridor, and provide affordable housing to low- and moderate-income Philadelphians?

Philly Painting, a project by Mural Arts with artistis Dre Urhahn and Jeroen Koolhaas, painted 54 storefronts along the Germantown Avenue Corridor. Photo by Steve Weinik (Mural Arts Philadelphia).

Investing in Upper Floors to Catalyze Neighborhoods The research team looked to other commercial corridors in Philadelphia, as well as commercial corridors outside of Philadelphia to better understand redevelopment trends, challenges, and opportunities. The team analyzed four similar corridors in Philadelphia to learn from their successes and failures, as well as attempt to determine a tipping point for gentrification.

Existing Philadelphia funding programs and pilots were explored to determine what resources currently are available to property owners and uncover any potential gaps in financing upper floor residential renovations on commercial corridors.

Case studies outside of Philadelphia gave insight into various initiative other cities have taken, cost and scale of the projects, ownership changes, and timelines. This research helped lay the groundwork for the strategic recommendations proposed in this report.

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Phases and Approaches to Physical Redevelopment To spur catalytic investment in the Corridor, the report proposes five alternative approaches to redevelopment. These approaches are not mutually exclusive. Rather, a combination of all five will likely be used by The Village and other property owners on Germantown Avenue. These approaches allow stakeholders to weigh their priorities, focusing on quick wins at a lower cost and smaller scale, or tackling more complicated and capital-intensive projects that may require more coordination. Approaches are broken up into phases, with each phase offering solutions for building types.

• Phase 1 looks at developing individual properties

Because access to upper floors is a large hurdle for putting residential units on the upper floors of historic corridors, different approaches have been included under each phase. A buildings designate projects where a secondary egress exists, while B buildings lack a secondary egress.

• Approach 1A: Individual building with upper floor vacancy, and existing upper floor street-level access • Approach 1B: Individual building with upper floor vacancy, without existing upper floor street-level access • Approach 2A: Aggregate buildings with upper floor vacancy, where one building in the group has upper floor street-level access

• Phase 2 considers assembling properties together for larger-scale development

• Approach 2B: Aggregate buildings with upper floor vacancy, where none of the buildings have existing upper floor streetlevel access

• Phase 3 includes buildings that don’t appear to be vacant on the upper floors, but might still be considered in an acquisition strategy

• Approach 3A: Individual building without upper floor vacancy, but has existing upper floor street-level access

The Village of Arts and Humanities takes a unique approach to disinvested properties, transforming them into parks that have inspired countless visitors, artists and neighborhood leaders. Photo by Emelyn Nájera.

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The Tools To help guide investment in ways discussed above, this report provides multiple tools to guide The Village in reviewing the assets present on the Corridor, analyzing the financing possibilities and financing gaps for each address, and comparing existing programs and potential future programs that would fill the financing gap. The property database and financial model are combined in one file as an appendix to this report, with a user guide in Appendix 1.

Corridor Property Database

It can be used to: • Reference key information from the property database • Estimate budgeted development costs • Determine sources of funding and gap (if any) • Assess projected post-renovation cash flows and returns to make a case for investment or guide investment strategy

Funding Mechanisms This summary aims to inform how investors could fill their financing gap with existing programs.

The Corridor Property Database is an Excel tool that combines data from the Office of Property Assessment, Department of Records, Department of Licenses and Inspections, and surveys conducted by the research team to provide a comprehensive look at every property along the Corridor.

It can aid to: • Review eligibility criteria for different programs • Direct property owners to existing resources • Target new programs to fill financing gaps in underinvested neighborhoods • Advocate to City or lenders to fund new financing sources

The tool can be used by The Village to: • Quantif y opportunities along the Corridor • Identif y potential approaches to the redevelopment of the Corridor • Explore ownership patterns • Contact existing owners • Distribute information on risks, challenges and opportunities • Manage the Corridor as it evolves

Due to The Village’s proactive approach for inclusive development, this research aims to reduce an existing financing gap, creating a better understanding of existing subsidies and grants, as well as uncover current gaps in these programs. This comprehensive review of funding mechanisms helps create a path forward for community-driven investment that can help increase housing stock along the Corridor.

Financial Model The Financial Model is nested within the Corridor Property Database Excel file. These additional tabs in the workbook allow The Village to make projections about costs of renovating and/or redeveloping properties along the Corridor. While the tool has assumptions built into it, users can input more accurate costs as quotes are produced by contractors. The tool can be used to estimate costs, identifying the financing gap, and quickly provide the information to potential investors.

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Background

The Village of Arts and Humanities provides theatrical productions, festivals, exhibits, and artist residency programs in the Ile Ife Park “Center for Creation.” Photo courtesy of The Village.

The Village of Arts and Humanities is a nonprofit community-based arts organization in the FairhillHartfrant neighborhood of North Philadelphia.

The Village’s mission is to support the voices and aspirations of the community in its target area by providing opportunities for self-expression rooted in art and culture. Inspiring people to be agents of positive change, The Village provides programs that encompass arts and culture, engage youth, revitalize community, preserve heritage, and respect the environment. The Village serves over 10,000 primarily African American residents of Fairhill-Hartfrant.1

storefront building at 2544 Germantown Avenue into a community meeting space for dance and artistic expression. In this space, the Ile Ife Black Humanitarian Center was born. Meaning “Land of Creation” in the Yoruba language, Ile Ife was Philadelphia’s primary conduit for sharing and celebrating the great traditions of Africa in building community through a shared sense of strength and pride. 2

History of The Village

In the summer of 1986, Arthur Hall invited Chineseborn artist and art professor Lily Yeh to transform the vacant lot adjacent to the center into an art park that, to this day, continues to serve as a meeting place for the community.3

In 1969, world-renowned dancer and civil rights activist Arthur Hall transformed a vacant

In 1989, Arthur Hall left Philadelphia and Ile Ife was entrusted to Lily Yeh and the community

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to continue its mission of engaging residents in arts and cultural activities while preserving the community’s Black American heritage. Lily Yeh turned the Center into the Village of Arts and Humanities, and with Jojo, Big Man, and countless other neighbors, transformed over 100 lots into art parks and gardens at a time when 75% of the area consisted of vacant lots and abandoned properties.4 Lily Yeh grew The Village around the promise that creativity can be a means of human and environmental transformation.5 By focusing on beautifying physical spaces, the organization attempts to shift the way residents view and value their neighborhood and themselves. Today, The Village is an established community asset, managing 15 art parks and 10 program buildings.6 These vibrant, awe-inspiring spaces declared that the neighborhood’s inner beauty could become its external reality. The Village learned that people and place work in concert to help young people in the neighborhood imagine and pursue limitless possibilities. The Village offers vibrant testimony to the role that art can play in bringing a desolate urban landscape back to life and engaging youth and families in the arts.7 In a neighborhood facing many challenges, The Village of Arts and Humanities uses innovative arts-inspired

programs to create place, build self-esteem, and foster community in North Philadelphia.

Community Economic Development From its beginning, The Village has crafted an artistic vision that reflects the needs of the people and their spaces. The Village’s legacy is anchored in artist-facilitated community building. In recent years, The Village has successfully positioned itself as a leader in arts-based community development and as de facto community development entity for Fairhill-Hartfrant.

The Village has built nationally recognized programs that prioritize trust, continuity, and boldness in order to transform the narrative of reentry; provide pre-employment opportunities for youth and young adults; reclaim and revitalize physical space; and build residents’ power for self-determination. The depth and urgency of current neighborhood needs runs parallel to The Village’s unique ability to convene, educate, and mobilize stakeholders who are vital to combating the root causes and symptoms of poverty.

The Village uses its Community Development Corporation (CDC) Tax Credit in concert with annual grants, contracts, and investments to drive economic growth in the Fairhill-Hartranft community. The Village’s programs, projects, and strategies impact four major focus areas: equitable development, safe and healthy neighborhoods, training and workforce development, and civic power and leadership.8

Germantown Avenue

In 1986, Lily Yeh was hired to help transform the vacant lots that bordered the Ile Ife building. Photo courtesy of The Village.

The Village is the official steward and Corridor Manager of the 2500-2900 blocks of the Germantown Avenue Corridor. As part of this program, The Village provides people with advice, coaching, and connections to help find lowinterest loans, upgrade storefront appearances, handle Licenses and Inspections citations, apply Village of Arts & Humanities

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for business assistance grants, and more. The Germantown corridor consists of 140 storefronts, 80 of which have first floor occupants.

As part of The Village’s focus on equitable development, The Village promotes catalytic, coordinated, double bottom line investments that hope to reclaim and repurpose at least 70% of the Corridor’s vacant or inactive inventory. Efforts include the 100 Families Project, Community Connectors, and Commercial Corridor 9 Management.

• 100 Families: The Village’s anti-gentrification initiative seeks to stabilize 100 neighborhood families with 100 homes and 100 jobs for 100 years, using a shared equity homeownership program and holistic system of services to support upward mobility.

• Community Connectors: Originally created

by LISC Philadelphia, this program seeks to connect neighbors with relevant community programs, resources, and events, and listen

to neighbors’ opinions and ideas to inform The Village’s and their partners’ services.

• Commercial Corridor Management: Their goal is to make Germantown Avenue a clean, safe commercial corridor that meets neighborhood shopping needs and attracts destination shoppers.

The Village’s 2020-2025 Community Economic Development Strategic Plan progress update includes numerous active projects along the Corridor: • 2637 Germantown Avenue: Business owner Chris Forsyth is opening a second location of Jerry’s, a music rehearsal and recording studio.

The Village provided a support letter and guidance for an application for grant funding through a North Central Empowerment Zone Neighborhood Economic Development Impact Grant from the City of Philadelphia.

• 2623 Germantown Avenue: The Village is working with property owner Craig Myers

Community members meet with their block captain, to organizes the renovation of seniors’ houses so they can stay in their homes. Photo courtesy of The Village.

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Germantown Avenue

on property acquisition, the zoning process, renovation, and determining highest and best use.

• 2623 Germantown Avenue: The Village is working with property owner Laura Gottlieb in renovating the first and second floors of the building as “corridor prototype” for mixed-use development.

11th St

• 2460 Germantown Avenue: Construction and business development will begin in 2020 for Village Laundry Lounge and Village Studios.

W Lehigh Ave

• 2565 Germantown Avenue: The Village is working on acquiring, stabilizing, and developing this property.

W Huntington Street

3 “Ile Ife Park (1986).” Association for Public Art, https://www.associationforpublicart.org/artwork/ile-ifepark/.

4 “Village of Arts and Humanities,” n.d. https:// villagearts.org/.

Ave

2 “Africa in the Arts of Philadelphia: Bullock, Searles, and Twins Seven-Seven.” Woodmere Art Museum, https:// woodmereartmuseum.org/experience/exhibitions/africa-inphiladelphia-bullock-searles-and-twins-seven-seven.

n tow

1 “Village of Arts and Humanities,” n.d. https:// villagearts.org/.

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References

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This report focuses on The Village’s future efforts in rehabilitating vacant upper-floor spaces along the Corridor in order to catalyze future investment and drive equitable development. The following sections will delve into the project framing and the methodology of the research, findings, and strategic recommendations to meet The Village’s equitable development goals.

Ge

• 2700 Germantown Avenue: The Village is establishing a partnership and plan for developing the Sun Pay Building.

Cumberland St

The Village’s 2020-2025 Community Economic Development Strategic Plan progress update includes numerous active projects along the Corridor.

5 “The Village of Arts and Humanities.” United Way, https://volunteer.unitedforimpact.org/agency/ detail/?agency_id=33715.

6 “Village of Arts and Humanities,” n.d. https:// villagearts.org/.

7 “Going Toward the Light: Philadelphia’s Village of Arts and Humanities.” Wallace Foundation, Mar. 2003, https://www.wallacefoundation.org/knowledge-center/ pages/philadelphia-villiage-of-arts-and-humanities.aspx.

8 “Village of Arts and Humanities,” n.d. https:// villagearts.org/.

9 “Village of Arts and Humanities,” n.d. https:// villagearts.org/.

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Project Framing & Methodology

While the Village of Arts and Humanities is primarily and arts-based organization, they have increasingly engaged in economic development in North Central Philadelphia, acting as the Corridor Manager for the 2500-2900 portion of Germantown Avenue. The Fairhill-Hartranft neighborhood has seen major disinvestment in recent decades. Many of the Corridor’s buildings, built around the end of the 19th century, show signs of disinvestment, with dilapidated façades and boarded-up second floor windows due to high vacancy.

The Village sees an opportunity to leverage existing grants and direct investment to increase affordable housing and spur community-driven revitalization, and insulate the neighborhood from speculative acquisition and development that would be harmful to the area’s heritage and its residents.

Despite efforts to jump start investment, Germantown Avenue has not seen the catalytic investment other corridors in Philadelphia have experienced. Many consultants have provided large-scale proposals, and while it’s important to think strategically and holistically about redevelopment, The Village is focused is on near-term feasibility. The emphasis of this project is on providing the groundwork for long-term strategic redevelopment plans, while providing more feasible smaller-scale opportunities in the short term.

Research Question How can The Village leverage the opportunity of vacant upper-floor spaces within its target area to drive equitable development and create pathways to upward mobility for people with ties to the Corridor, and provide affordable housing to low- and moderate-income Philadelphians?

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Methodology This report synthesizes primary and secondary research data pertaining to properties, processes, and programs. Parcel-level property details were analyzed for observations on vacancies, conditions, and ownership to Identify development opportunities.

Understanding the process of rehabilitating vacant structures, including practical considerations for property and business owners, as well as the process of financing such construction, informed strategic recommendations specific to the Corridor. Lastly, a survey of existing and potential funding programs is incorporated into the creation of feasible redevelopment approaches for the Corridor.

The types of data and methods are summarized below, with reference to other report section for detailed discussion of findings and analysis.

Property Research Data and Methods Pertinent property information includes building and parcel details, such as descriptors of the extent, type, and condition of development on each parcel. The research team referenced online records maintained by the City of Philadelphia’s Office of Property Assessment (OPA), the Department of Records (DOR), and Licenses and Inspections (L&I), as well as property information provided by The Village. Such information included a business inventory, a list of vacancies, and anecdotal reflections on the history and potential of specific properties.

In addition, the research team manually collected property data through an in-person survey of the Corridor. The corridor survey focused on property condition, obvious code violations (namely, broken or boarded-up doors and windows), and apparent vacancies. The building survey occurred on February 20, 2020, and roof condition photography was taken on March 17, 2020. It should be noted that data from these surveys represent a

point-in-time reflection of the Corridor; conditions and occupancy status are ever-evolving. A list of these data variables, fields, and sources can be found in Appendix 1.

The Corridor Property Database developed by the research team compiles these data sources and facilitates further analysis. The database can be updated by the Corridor Manager as conditions change for ongoing monitoring and record-keeping. Spatially visualizing the Corridor properties and their characteristics informed the strategic redevelopment approaches that are discussed in this report. The property database also populates a financial model that summarizes the estimated costs and potential cash flows from redevelopment of buildings/ parcels. Refer to Appendix 1 for further discussion of the property database and financial model, and to Recommendations pp. 48-54 for the redevelopment approaches.

Process Research Data and Methods In order to develop strategic recommendations for corridor redevelopment, the research team gained an understanding of the property redevelopment process. Data collected pertains to challenges and opportunities specific to the Germantown Avenue Corridor, commercial corridors throughout Philadelphia, and corridors under redevelopment across the United States.

Semi-structured interviews with corridor business or property owners provided insights on operational, construction, and financing challenges specific to the property redevelopment process. Interviews with local lenders and grant funders focused on the availability and accessibility of financing for redevelopment along the Corridor.

Data Types, Methodologies, and Sources Data

Method

Source(s)

Program

Process

Property

Parcel-level data on: Building/property details Ownership Tax status

Online records/databases

Office of Property Assessment Department of Records Licenses and Inspections The Village

Condition Vacancy Violations

Observation

Visual survey by research team

Components and challenges of: Corridor business owner Local business ownership/ operation Interviews Corridor property owner Property renovation The Village Construction Local lender Interviews Financing Local grant funder Availability, eligibility, and capacity of: City, state, federal agencies Existing loan and grant programs Online records Local lender Potential new program Interviews Local grant funder designs City Council staff Village of Arts & Humanities

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In addition, the research team investigated other commercial corridors in Philadelphia, particularly focused on analyzing changes over time. After identifying comparable corridors based on corridor type and development stage data from the City of Philadelphia, the research team gathered socioeconomic and demographic data from the American Community Survey (ACS) at various points in time. Insights from this research are intended to guide The Village in monitoring neighborhood change, and craft responses that combat gentrifying forces. Refer to Commercial Corridor Revitalization pp. 20-25 and Appendix 2 for further discussion of the findings from research of comparable commercial corridors in Philadelphia.

The research team also explored precedent case studies from across the United States to identify potential funding mechanisms and project structures, as well as to predict project outcomes in terms of ownership and participation. Refer to Commercial Corridor Revitalization pp. 27-32 for further discussion of precedent case studies.

Program Research Data and Methods Lastly, this report summarizes existing programs to support property investment and ownership stability and contemplates the creation of new programs to further these goals. The research team compiled information on loans and grants through publicly-available online resources published by city, state, and federal agencies. In addition, local interviewees (property/business owners and lenders/funders) directed the research team to additional programs. The financial model captures loans, grants, and subsidies as potential funding sources for a redevelopment project.

Conversation with City Council staff for the several councilmembers provided insight on the background of existing programs and the political feasibility of garnering political support for a new

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funding program. Refer to Recommendations pp.

55-57 and Appendix 3 for further discussion of existing and potential funding programs.

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Commercial Corridor Revitalization

Buildings at the intersection of Germantown Avenue and Lehigh Avenue. Photo by Steve Weinik (Mural Arts Philadelphia).

Commercial Corridor Comparison The Village aims to invest in the Germantown Avenue Corridor without negatively impacting current residents or spurring gentrification with extreme increases in real estate values.

With 1960s suburbanization, many commercial corridors suffered not only loss of population, but also loss of businesses. In some neighborhoods, recent reinvestment in commercial corridors has spurred swift residential turnover and cultural loss. Philadelphia’s Changing Neighborhoods, a 2016 study on gentrification conducted by the Pew Charitable Trust, did not include the census tracts encompassed by the Germantown Avenue Corridor amongst tracts identified as gentrifying since 2000.1 However, there is a fear that future investment along the Corridor might lead to displacement of current residents.

In order to make sure that any development would meet The Village’s goal of equitable development, the research team tried to glean

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lessons from similar corridors in Philadelphia.

The research team tried to answer the following questions to understand development patterns along commercial corridors in Philadelphia: • Are there actions The Village can take to ensure equitable development?

• What must The Village avoid to ensure equitable development?

• Are there indicators, and/or other initiatives done by other corridors that The Village can reference to mitigate negative impacts of investment?

The research team analyzed four comparable corridors: East Girard, West 52nd Street, North Broad Street and Cecil B. Moore Avenue, and Lancaster Avenue, taking a data-driven approach to classify development shifts and understand what (if anything) can be done to ensure development of upper floors into affordable housing will result in positive outcomes for current residents. While limited in its scope, the research shows that several commercial corridors have managed to maintain affordability, possibly making them good research precedents.

Comparison Corridor locations. Image by Laure Wassen and Natasha Tabachnikoff.

The Corridors The City of Philadelphia’s Planning Department has a record of all of Philadelphia’s commercial corridors, surveying them regularly to track changes including: type of corridor, gross leasable square footage, total commercial area, commercial vacancy rates, and development stages, amongst other metrics. 2 The Germantown Avenue Corridor is categorized as a “Neighborhood Center” (30,000 to 120,000 gross leasable square feet with anchor tenants including supermarket, variety store, bank, pharmacy, and/or post office).

The Corridor was considered stable in 1995 and redeveloping (visible repurposing of acreage and gross leasable area through investment and maintenance) in 2016, with an overall good to fair condition throughout the same time period.

Based on corridor type, development changes, and overall conditions, the research team chose North Broad Street and Cecil B. Moore Avenue in North Central Philadelphia and East Girard Street in Fishtown. The 52nd Street Corridor and Lancaster Avenue were added to the corridor list for comparison as well, based on conversations with The Village, People’s Emergency Center, and LISC Philadelphia.

East Girard (Fishtown) The East Girard Corridor is managed by the New Kensington CDC, though their focus is on Frankford Avenue. Along with Frankford Avenue, East Girard has experienced major changes over the last two decades.3 The corridor is considered a Neighborhood Center by the Commercial Corridor Survey. Despite Fishtown’s historic status as a middle-class neighborhood, reports and articles have described East Girard as showing signs of displacement and rapid wealth accumulation from incoming new residents instead of wealth-building by current residents.4

East Girard Corridor in Fishtown. Photo by Hidden City.

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Cecil B. Moore Avenue and North Broad Street Cecil B. Moore is managed by Beech Interplex, a 501c(3) nonprofit organization. The corridor is considered a Neighborhood Center by the Commercial Corridor Survey and has experienced a significant change over the years. Reports have described this corridor as rapidly changing due to its proximity to Temple University.5 52nd Street Managed by The Enterprise Center CDC, the corridor has been actively improving storefronts and attracting new investments to the surrounding neighborhood. While not yet considered “redeveloping” by survey standards, residents and business owners are wary of rapid change.6 Because of the large area that the commercial corridor encompasses, it is considered a Community Center (100,000 to 500,000 gross leasable square feet) rather than a Neighborhood Center by the Commercial Corridor Survey.

Cecil B. Moore Avenue and North Broad Street. Photo by WHYY.

Lancaster Avenue Lancaster Avenue is managed by the People’s Emergency Center (PEC), which has been actively improving storefronts and adding new affordable housing units along the corridor. 7 It is considered a Neighborhood Center, like Germantown Avenue, but has seen much more investment due to PEC’s efforts. By initiating programs for housing above commercial corridors that is both affordable and suited to current residents’ needs, the fabric of the commercial corridor has been maintained.

The revitalization of the corridor focused on quick wins in the form of incremental rehabilitations paired with community art projects. Since PEC owns most of the redeveloped properties, they have been able to maintain more control over neighborhood character.8

Comparison Analysis 52nd Street Corridor. Photo by Hidden City.

Data used to try to understand how the neighborhoods surrounding these corridors changed in the last 10 years included: • The number of permits pulled (as a proxy for investment), and • 5-year American Community Survey (ACS) data for the census tracts encompassing the corridors.

Lancaster Avenue. Photo by NextCity.

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No Pattern Showing Peak Investments Using construction permits as a proxy for investment within the corridors, Germantown Avenue lags behind the other four corridors; however, there is no clear trigger to understand why development increases and what drives the fluctuations, due to a lack of data. Between 2007 and 2019, the corridor that has seen the most investment is East Girard (with 937 permits, or 26% of total permits for the five corridors), followed by Cecil B. Moore and North Broad Street (792 permits, or 23%), 52nd Street (771 permits, or 22%), and Lancaster (654 permits, or 18%). Investment activity on the Germantown Avenue corridor falls significantly behind, with only 340 permits, or 9% of total permits for the five corridors (see Table below).

Trends over time do not show a clear reason for a spike in investment. The comparison corridors experienced peaks in the early- to mid2010s, followed by decreases in new permits.

Germantown Avenue has seen less fluctuation throughout the years as the comparison corridors, but has seen increases in the number of permits since 2017. Permits do not show a clear pattern of investment increasing along a corridor or decreasing after a certain number of projects have been completed. The fluctuations seem to point towards external factors that could be further investigated.

Population Changes in Surrounding Neighborhoods Trends reflect an overall increase in the population of the neighborhoods encompassing these corridors, with some areas growing faster than others. Census tracts encompassing the Germantown Avenue Corridor saw a 12% increase in population between 2010 and 2018. Tables detailing the following changes can be found in Appendix 3.

Per Capita Income Changes Adjusting for inflation, most neighborhoods have seen an increase in per capita income overall, with the exception of the census tracts encompassing 52nd Street. Per capita incomes in Fishtown, represented by the East Girard corridor, have historically been significantly higher than the other corridors. In 2010, median per capita income for the East Girard corridor was $33,000 compared to $10,000 for Germantown; by 2018, its per capita income increased to $49,000 compared to $13,000 for Germantown. Overall, with the exception of 52nd Street, each neighborhood has seen a sharp increase in per capita income, with the smallest increase for Lancaster Avenue (10%), followed by Cecil B. Moore (25%), Germantown (26%), and East Girard (46%). The more stable increase for Lancaster Avenue could be due to the work that People’s Emergency Center has done to target investment towards current residents.9

Permits per Commercial Corridor 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Total

Cecil B. Moore

100

79

39

27

41

65

74

91

90

32

66

46

38

792

East Girard

52

47

33

56

63

72

59

80

100

110

85

74

90

937

Germantown

19

37

43

35

21

16

13

30

18

21

15

28

37

340

52nd Street

60

46

46

71

86

35

39

62

66

52

58

59

80

771

Lancaster

53

41

39

61

41

55

58

44

39

27

42

63

78

654

Total

284

251

200

250

252

244

243

309

313

244

267

270

323

3503

Source: Open Data Philly.

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Rapid Tenure Changes High homeownership rates help to mitigate neighborhood changes.10 Most of the Philadelphia neighborhoods studied by the research team experienced a decrease in homeownership over the last 10 years, demonstrating potential issues when new investment spurs increased rents and potential displacement for people unable to afford the increases.11 Overall, 52nd Street and Lancaster Avenue are the only two corridors that show steady homeownership rates, hovering around 48% and 31% respectively, while the rest of the corridors have seen decreases in homeownership (25% loss for Cecil B. Moore, 16% loss for Germantown, and 12% for East Girard). Despite being known as a gentrified neighborhood, Fishtown has seen the slowest decline in homeownership rates.

No Signs of a Tipping Point from Available Data Based on available data, the research team was unable to determine a gentrification tipping point.

Philadelphia has seen many changes in the last 10 years, many of which have been analyzed

by Pew Charitable Trust.12 Our research shows that investments do not seem to follow similar patterns—population has been continuously growing in all neighborhoods, per capita income has increased faster in some neighborhoods but not in others, and ownership rates have continuously decreased.

Colorful Germantown Avenue within the greater Fairhill-Harntraft neighborhood. Photo by Iwan Baan (Mural Arts Philadelphia).

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Per capita income surrounding Lancaster Avenue is still low compared to the other corridors. The slow increase in income paired with a slight decrease in owner-occupied housing shows a path for increasing investment without creating rapid change to the neighborhood. People’s Emergency Center has been successful in intentionally retaining its current residents through their investments.

Key Findings and Takeaways Each of the four commercial corridors studied here has seen their fair share of disinvestment and reinvestment. This research could not determine a clear tipping point for gentrification.

However, more should be done to try to remove the any factors that might have an effect on other variables, or to include more historical data not currently available. Negative impacts of redevelopment can be mitigated with targeted investments, as seen with Lancaster Avenue.

Philadelphia Funding Sources There are several grant and loan subsidy programs available to both business and property owners along Germantown Avenue.

Some of these programs are targeted towards improving housing conditions, supporting small businesses, reversing disinvestment, or promoting homeownership. The research team cataloged the following programs with a two-fold goal. First, this inventory provides The Village with a comprehensive list of programs with guidance as to which property owners could apply.

Second, it enables The Village to demonstrate to policymakers the existing gap between support for low- to moderate-income homeowners and storefront improvements funds for small, mixed-use buildings along commercial corridors.

It is clear from several interviews with policymakers that any program using public funds must have an outsized impact on, and be narrowly targeted to serve, vulnerable residents. An example of this is the Restore Repair Renew Program which provides repairs to make owner-occupied homes healthier.

Programs that facilitate owner-occupancy are likely to be attractive to policymakers because they can build wealth for low- to moderateincome residents. Many of these aid programs do not directly assist renters because policymakers are wary of rewarding well-resourced landlords, which is a challenge for improving rental units within mixed-use buildings, such as those on the Germantown Avenue Corridor. Despite previous programs, the City has started to make efforts towards rehabilitations of rental housing through the Small Landlord Loan Program Pilot.

A healthy corridor comes out of not just the businesses on it, but also residents who can make up a local customer base. Overall, the emphasis on homeownership-oriented programs limits the impact of storefront and commercial corridor incentive programs because public programs then lack the tools to address revitalization Village of Arts & Humanities

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Local subsidies prioritize owner-occupied housing for rehabilitations, making it difficult to improve residential units in mixeduse buildings along commercial corridors. Photo from the City of Philadelphia.

of commercial corridor areas holistically. A willingness to work with owners of mixed-use buildings to rehabilitate them is also a way to infuse density in a context specific manner without altering the built environment, and to provide higher-quality housing The following programs and pilots are potential sources of funding and technical assistance in future efforts to rehabilitate and restore the building stock along the Corridor, and are detailed further in Appendix 3: • Philadelphia Residential Programs • Restore, Repair, Renew Program • Small Landlord Loan Program • Philly First Home Program

26

Germantown Avenue

• Philadelphia Storefront and Commercial Programs • Storefront Improvement Program • Merchant’s Fund Stabilization Grants • Federal and State Place-Based Programs and Incentives • Low Income Housing Tax Credits • Housing Choice Vouchers • New Market Tax Credits The following subsection discusses the varying approaches adopted by cities and neighborhoods to rehabilitate and create affordable housing units in mixed-use commercial corridors.

Driven by the Southwest Detroit Business Association (SDBA), the Southwest Corridor Initiative guided building owners in the renovation of their vacant upper floors into reasonably-priced, market-rate apartments. Photo from Detroit Free Press.

Upper Story Redevelopment Case Studies

Organization-Driven Efforts: Southwest Corridor, Detroit, MI

Additional research focused on methods other cities and neighborhoods have used to rehabilitate vacant upper floors along commercial corridors. Selected case studies focused on the rehabilitation and restoration of mixed-use commercial property along active commercial corridors. Research on each precedent corridor consisted of the participating organizations and programs; the scale of the restoration and rehabilitation project; total cost and timeline to implement; funding sources; and property owner contribution and ownership. The issue of vacant upper floors has been addressed by cities, organizations, and individuals; each case study assesses the varying approaches.

Driven by the Southwest Detroit Business Association (SDBA), the Southwest Corridor Initiative guided building owners in the renovation of their vacant upper floors into reasonablypriced market-rate apartments. The Pilot Program began following an inventory of properties along Detroit’s West Vernor Highway and Springwell Street; this review identified more than 80 buildings with vacant upper floors. The SDBA saw an opportunity to renovate these units and offer them at a moderate rate. During the initial Pilot Program, the SDBA worked closely with property owners of three commercial mixed-use buildings to make repairs necessary to convert the upper floors into twelve affordable apartment units.

Village of Arts & Humanities

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Funding Sources The SDBA was one of 17 grantees of the Kresge Foundation’s Detroit Program, securing a $135,000 grant (allocating $8,500 per apartment unit) to drive the project forward. While this initial investment did not cover the full cost of renovation – which ranged from about $80,000 to $120,000 per building – the money incentivized building owners to invest in the vision.13 Timeline The timeline for the implementation and completion of the Southwest Corridor Pilot Program was approximately two years: • 2017: SDBA is awarded the $135,000 Kresge grant.

• 2018-2019: Rehabilitation and construction in progress.

• 2019: 12 apartment units made available to rent by the end of 2019.14 Lessons Learned This project has had a considerably brief timeline when compared to similar rehabilitation projects.

Much of this can be attributed to the fact that the rehabilitation was a joint effort between the SDBA and current property owners. As the driver for this project, the SDBA has been strongly involved in providing technical assistance and connecting property owners with general contractors and funding sources. Furthermore, while the properties benefited from reinvestment, they were not deteriorated at the start. These factors make the case study a close comparison to the situation currently seen in The Village’s project area and a valuable resource in understanding the future role of both the Village and property owners.

28

Germantown Avenue

The Annex Mills at High Falls relied on State Historic Preservation Tax Credits for its rehabilitation. Photo from the Rochester Landmark Society.

Organization-Driven Efforts: Annex Mills at High Falls, Rochester, NY This case study highlights the Urban League of Rochester’s efforts to restore and rehabilitate five historic mixed-use properties in Rochester, New York. The buildings had once contributed to a thriving commercial corridor until the end of the twentieth century, then were boarded up and sat vacant for about 15 years before rehabilitation.

The Urban League of Rochester sought to adapt this row of neglected buildings to create safe and affordable housing, and to expand current residents’ opportunities. Notably, this project was a recipient of a 2012 Preservation Award from the Preservation League of New York State.15 Funding Sources Total project cost was approximately $7 million.

Key funding sources included private investors, the City of Rochester, Low Income Housing Tax Credits, and Federal and State Historic Preservation Tax Credits.

Timeline The project was completed within two years: • April 2010: Properties acquired by the Urban League of Rochester, restoration breaks ground.

• July 2011: Project completed. A total of 21 units for low-income families and residents with physical disabilities, as well as market-rate lofts and apartments are now fully occupied.16

Site of the rehabilitated Nash Lofts in Buffalo, NY. Photo from Buffalo Rising Press.

Lessons Learned This project’s brief timeline can be attributed to the joint efforts between the Urban League of Rochester, private investors, and the City.

Furthermore, prior to restoration, roof leaks had caused partial collapse of some sections of the roofs and floors, and mold, asbestos, and lead paint added to the hazardous conditions; while these conditions did not considerably influence the timeline of the project, they did contribute to additional costs. However, the project’s eligibility for historic tax credits did offset some of these incurred costs.

City-Driven Efforts: Nash Lofts, Buffalo, NY This case study highlights the City of Buffalo’s efforts in the restoration and rehabilitation of four mixed-use commercial properties located within its historic Michigan Street African American Corridor. Despite their historical ties to the community, the buildings had sat vacant for 15 years before being purchased by a development group in 2015. The City contributed to the project’s funding, actively moving this project, in addition to other reinvestment along the corridor, forward.

Funding Sources The $6 million Nash Lofts rehabilitation project used a combination of public and private funding that included a $450,000 capital grant from the Western New York (WNY) Regional Economic Development Council; a $750,000 bridge loan through the Buffalo Urban Development Village of Arts & Humanities

29

Corporation under the Buffalo Building Re-Use Project fund; as well as $1.7 million in Historic Tax Credits. The balance for both the construction loan and permanent financing was provided through Evans Bank, a regional bank serving western New York.17 Timeline The timeline for the implementation and completion of the Nash Lofts Rehabilitation Project was approximately five years: • 2015: Buildings were acquired by the present development team.

• 2017: Ground broke on the construction and rehabilitation phase of the project.

• 2017-2019: Rehabilitation and construction in progress.

• 2020: Work scheduled to be completed.18 Lessons Learned As last reported, the total cost sat at $6 million and the project took approximately 5 years to complete. It should be noted that because of a long period of disinvestment and vacancy, these properties were significantly more deteriorated than the properties that we see on Germantown Avenue. Furthermore, it is important to note that there was no involvement from the previous property owners, and the rehabilitation project did not begin until it was purchased by the current developers. Nevertheless, the project attempts to meet the needs of the surrounding community, with a design that includes 18 apartments on the upper floor (spread across the four buildings) and commercial and office space on the ground floor.

The project benefited from its status as a historic property and the fact that the City of Buffalo has allocated funds specifically for adaptive reuse and rehabilitation of existing and older building stock. Currently there are no designated historic properties along the Germantown Avenue corridor and while other cities have adaptive reuse project funds, Philadelphia does not. Ultimately, both situations might change in the future.

30

Germantown Avenue

City- and Owner-Driven Efforts: Third Street Corridor, Niagara Falls, NY This case-study highlights the role of property owners and the city when the rehabilitation of mixed-use properties is part of a larger coordinated effort to improve a commercial corridor. In 2005, USA Niagara Development Corporation, in partnership with the City of Niagara Falls, completed a $3.7 million comprehensive streetscape and road reconstruction initiative for the Third Street Business District. Improvements included traffic lane narrowing to allow for wider sidewalks; tree planting along the promenade to drive foot traffic; identification of gateways to the area; and installation of special markers, new lighting, and street furniture. These improvements catalyzed investment in the storefronts and upper floors of mixed-use buildings along the corridor.

With financial incentives available through its grant program, USA Niagara Development Corporation has helped leverage private investment by assisting with façade and capital improvements to several Third Street buildings. Recent projects along the corridor include: • 223 Ferry Avenue: A $700,000 renovation project of a formerly vacant two-story building on the corner of Ferry Avenue and Third Street. Renovations created two second-floor apartments, retail space for a locally owned craft-beer theme restaurant, and retail space for two storefronts.

• Funding Breakdown: Project was awarded $20,000 from the City’s rental rehabilitation program. It also received a $10,000 façade grant.

• 444 Third Street: A retail renovation project of a formerly vacant one-story building. The $500,000 project created retail space for a locally owned restaurant. The project also included acquisition of adjacent property

Multiple properties have been restored along the Third Street corridor. Photo from the Niagara Gazette.

at 440 Third Street for an outdoor patio or forecourt for dining.

• Funding Breakdown: Property owner received $10,000 Neighborhood Finance Corporation (NFC) Grant to help with renovations, and the business received another $10,000 grant for startup costs.

The project also was approved for a $10,000 grant for façade work through the city’s commercial façade program.

for nearly a decade, the building is one of the largest structures in the heart of the Third Street Business District. The project included renovations towards four commercial storefronts and eight residential units.

• 421 Third Street: A façade restoration and retail renovation project. Renovations of $90,000 upgraded a locally owned and operated restaurant.

• Funding Breakdown: $200,000 grant from the city’s NFC Development Corp., a $100,000 USA Niagara grant, $55,000 in state aid funds and $50,000 as part of a state Division of Housing and Community Renewal weatherization grant. The remainder of the project cost involved $300,000 in owner acquisition and equity and $162,000 in tenant investment.

• 451 Third Street: An $843,000 restoration and rehabilitation project of an existing 13,000-square-foot, 1920s-era, mixed commercial/retail structure. Formerly vacant

• 454 and 460 Third Street: Currently in progress, the project will rehabilitate four mixed-use buildings. The ground-floor commercial space will become two or Village of Arts & Humanities

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three storefronts, while the upper floors will become four apartments.

• Funding Breakdown: Property owners received $40,000 grant through the city’s rental rehabilitation program ($10,000 for each unit). They also received $20,000 through the city’s commercial façade program, with plans calling for the refurbishment of the front and rear of the building.19 Lessons Learned Although less relevant to the goals of The Village, this case study highlights the multiple funding resources that property owners have used in the process of rehabilitating their mixed-use properties. These sources vary between grants, state aid funds, and funding associated with different city programs.

References 1 Pew Charitable Trusts, “Philadelphia’s Changing Neighborhoods.”

2 “Commercial Corridors of Philadelphia OpenDataPhilly.”

3 Pew Charitable Trusts, “Philadelphia’s Changing Neighborhoods.”

4 Gammage, “Study”; Pew Charitable Trusts, “Philadelphia’s Changing Neighborhoods”; Moselle and John-Hall, “The Surprising Truth behind the Racial Dynamics of Gentrification in Philly.”

5 Laughlin, “One End of North Broad Thrives; the Other Struggles. Can a Revitalization Plan Bring Them Together?”

6 Laughlin, “In a Plan for a Safer, Vibrant 52nd Street, Worried West Philly Neighbors See Gentrification Looming.”

7 Brey, “Philly Business Corridor Seeks Right Mix of Growth, Preservation”; Wright, Activation of the Second Floors along Lancaster Avenue.

8 Wright, Activation of the Second Floors along Lancaster Avenue.

9 Brey, “Philly Business Corridor Seeks Right Mix of Growth, Preservation.”

10 Goodman and Mayer, “Homeownership and the American Dream.”

32

Germantown Avenue

Key Takeaways for The Village and Germantown Avenue The Village of Arts and Humanities seeks to maintain continuity of ownership of the Corridor’s mixed-use properties in the hands of present property owners. Ultimately, these case studies have only recently been completed, and only time will tell whether these rehabilitation efforts will inadvertently contribute to a change of ownership or change within the larger community.

Nevertheless, these projects sought to include property owners and community leaders in the decision making process and implementation of the rehabilitation approach and may serve as useful examples for The Village’s future rehabilitation approach.

11 Pew Charitable Trusts, “Philadelphia’s Changing Neighborhoods.”

12

Pew Charitable Trusts.

13 Mondry, Aaron. “Affordable Housing Roundup: 3 Projects Recently Completed across Detroit Now Available for Rent.” Curbed Detroit, May 7, 2019.

14 Reindl, J. C. “New Detroit Apartments for Rent for $750? Here’s How That Happened.” Detroit Free Press.

15 “Award of Merit: Annex, The Mills at High Falls – Landmark Society,” October 31, 2012, https://www. landmarksociety.org/award-of-merit-annex-the-mills-athigh-falls/ 16 Robach, Joseph. “Annex The Mills at High Falls Ribbon Cutting.” NY State Senate, September 21, 2011.

17 Desmond, Mike. “Nash Lofts Taking over Historic African American Corridor Corner,” August 4, 2017.

18 Buffalo Rising. “Construction Watch: 163-167 Broadway,” May 22, 2017; Epstein, Jonathan D. “Buffalo’s Redevelopment Boom Is, at Last, Extending Out to Broadway.” The Buffalo News, October 18, 2019.

19 Besecker, Aaron. “Three Downtown Niagara Falls Ventures Get Backing From City.” The Buffalo News, January 15, 2015; Scheer, Mark. “New Life on Third Street.”

Niagara Gazette, July 8, 2011.

Research Findings

The Doors and Windows Ordinance was initially adopted in 2003, but violations were issued only sparingly until it was fully implemented in 2011 as the “centerpiece of L&I’s efforts to combat blight.” Photo by Ashley Hahn (WHYY).

Doors and Windows Ordinance Under the Doors and Windows Ordinance, the City of Philadelphia’s Department of Licenses and Inspections (L&I) can fine property owners for missing, broken, or inoperable doors or windows on properties. The ordinance applies only to mostly-occupied blocks, where overall vacancy is lower than a 20% threshold. Property owners in violation can be fined $300 per day per noncompliant opening. Based on a February 2020 visual survey of the Germantown Avenue Corridor, approximately 135 potential violations were identified. This translates to approximately $81,000 in potential daily fines imposed on the Corridor.

Significant Legal Challenges Philadelphia’s Doors and Windows Ordinance was initially adopted in 2003, but violations were issued only sparingly until it was fully implemented

36

Germantown Avenue

in 2011 as the “centerpiece of L&I’s efforts to combat blight.” 1 At this time, the City focused on enforcing the ordinance in neighborhoods with relatively stronger real estate conditions, where a property owner could reasonably expect to (a) be able to pay fines if imposed and (b) eventually earn a return on the capital invested to come into compliance.

In 2015, enforcement was put on pause after a property owner appealed L&I violations cited on his property in the Kensington neighborhood. The owner argued against the Ordinance’s requirement for sealing openings with functioning doors and windows (rather than other lower-cost means, such as bricks or boards). The owner critiqued this remedy as being a misdirected response, inappropriately concerned with aesthetics instead of adequately curbing blight. The ruling judge found the Ordinance’s cost to the property owner to be “completely disproportionate” to the potential reduction in blight. 2

Door and Windows Violations, by Year 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0

1,786 2015: Appeals process begins 2011: Full implementation

865

946

928 565

13

7

21

28

4

11

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

The City then appealed the lower court’s ruling to the Commonwealth of Pennsylvania’s Supreme Court for further review. In 2018, the Supreme Court determined “the City, through its exercise of police power, has the inherent right to attack blight within its confines” and that the City’s antiblight use of the Doors and Windows Ordinance was appropriately informed by third-party research summarizing economic, not aesthetic, impacts.3 The figure above shows the distinct rise of enforcement after the 2011 policy, and the sudden ceasing of violations after the 2015 case.

However, the data also indicates that since the time of the Supreme Court’s favorable ruling, the Doors and Windows Ordinance has not been enforced. Local regulators may be wary to enforce due to the legal uncertainty surrounding the ordinance. Furthermore, elected officials may avoid enforcement in order to avoid appearing punitive to constituents. Finally, as development in Philadelphia has picked up and after several prominent building collapses, L&I might be overly burdened with monitoring construction.

Research-Based Merits of the Ordinance Research conducted by The Reinvestment Fund (TRF) challenges the aesthetics-only argument against the outcomes of the Doors and Windows Ordinance. Studying areas where L&I concentrated enforcement of the Doors and Windows Ordinance, TRF found positive financial returns to the City’s coffers from violation fines.

Additionally, enforcement was related to increased property values, generating returns to the City from increased transfer and real estate tax revenue. In enforcement areas, average sales prices increased 32% from 2008 to 2012, compared to a 2% increase city-wide.4 For each real estate transaction, the City of Philadelphia imposes a transfer tax (3.278% of the sale price, as of 2020).5 At the time of the TRF report in August 2014, the higher transaction values were translated into an estimated $2.3 million in additional real estate transfer tax revenue for the city. In addition, the TRF research found that annual property tax collection rates increased in the enforcement areas, producing additional City revenue.6 Village of Arts & Humanities

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To give The Village an accurate portrait of the buildings along Germantown Avenue, on the research team cataloged the overall condition of the building as visible from the sidewalk. Photo from Google Street View.

Relevance to The Village The TRF report measures the value of the Ordinance in terms of transfer tax revenues to the City from property sales. While this is a compelling argument to city officials facing perennial budget constraints, it is inherently at odds with The Village’s development priorities. More specifically, The Village seeks to maintain property ownership within the community. Data that touts the potential value appreciation from property investments to come into compliance should be deployed judiciously, since rapid increase in real estate assessments can spur displacement.

In addition, hyperlocal market fundamentals impact the efficacy of the Ordinance, as suggested by the strategic enforcement. Potential fine revenue of $81,000 for the Corridor was calculated without adjustment for actual collectability. If neighborhood property owners are not well-

38

Germantown Avenue

capitalized enough to actually pay the hefty fines, or if neighborhood property values are not high enough to justify investing more to retain or improve a property, the Ordinance will not generate the intended outcomes. The following research was conducted in order to understand the present physical condition of the Corridor, its ownership landscape, and the effects of enforcing local inspection ordinances. This information will inform the approaches and solutions most suitable for each building.

Building and Roof Survey On historic corridors like Germantown Avenue, building typologies accommodated small business owners who resided above their shops.

Redeveloping these spaces as mixed-use is a challenge because the access from the ground floor to upper stories is often within the commercial space and not accessible from a separate door for

On March 17, 2020, the research team worked with drone pilot Joe Val to conduct a survey of roof conditions along the Corridor. Poor roof quality can result in costly leaks and damage. Roof Photo by Joe Val.

residents. Adding a separate door and staircase as an access point is costly, and in the case of buildings with narrow frontage, can be impossible to accommodate while maintaining the existing storefront. This was a major concern for The Village as they assessed the costs of potential rehabilitation projects. In addition, they need accurate information about building conditions, and about violations of the City of Philadelphia’s Doors and Windows Ordinance to calculate the potential fee that could be levied on the Corridor.

To give The Village an accurate portrait of the buildings along Germantown Avenue, on February 1, 2020 the research team conducted a survey along the Corridor. We catalogued the overall condition of the building as visible from the sidewalk. Conditions recorded included: commercial and upper floor vacancy, clear building code violations, and existing separate upper floor access. To supplement this façade and

vacancy information, the research team worked with a drone pilot to photograph dilapidated roofs, which can be another major rehabilitation expense.

Though detailed, this survey data is only a snapshot of corridor conditions which are constantly changing—windows break, they get replaced or boarded, and businesses close and open. This data should serve as a way of assessing overall needs and conditions, and less the specifics of any address. If examining a certain property, this assessment can be used to verify the Philadelphia Office of Property Assessment’s building conditions metric or identify if a discrepancy exists.

Village of Arts & Humanities

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Excellent

Well-maintained historic structure or recent construction showing signs of occupancy with operable windows.

Good

Complete, clean envelope with operable windows, well-maintained storefront with recent investment.

Maintenance encouraged, but no evident structural defects.

Fair

Decent exterior conditions with some signs of deferred maintenance, such as poorly sealed windows. Repairs and maintenance required.

Deteriorated

Signs of long-term vacancy or disinvestment or unremediated structural issues such as open envelopes or sinking floors. Requires significant rehabilitation.

Demolished

Building Condition Definitions and References

Razed.

The research team assessed building condition, scoring from excellent to deteriorated. Photos by Natasha Tabachnikoff and from Google Street View.

40

Germantown Avenue

During the roof conditions survey, two buildings were identified as having deteriorated roofs and six buildings were identified as having poor roof conditions. Roof Photo by Joe Val.

Building Conditions The research team assessed building condition, scoring from excellent to deteriorated according to the definitions at left.

Findings Out of 136 properties, 112 had structures on them, while 24 were vacant. Of those containing structures: • 13 were in excellent condition, 30 were in good condition, 60 were in fair condition, and 9 were deteriorated.

• 55 properties had upper floor vacancies, while 46 properties had occupied upper floors and 11 had only one story.

• Of the 55 properties with vacant upper floors, most buildings are in fair condition (32 fair, six good, and six deteriorated).

• Many buildings with vacant upper floors do not have separate access. Only 11 buildings with vacant upper floors have separate access, while 44 do not.

This information is used to project the average costs for rehabilitations and calculate the estimated lost revenue to the City of Philadelphia from fees under the Doors and Windows Ordinance, if L&I levied them.

Roof Conditions On March 17, 2020, drone pilot Joe Val assisted the research team in surveying roof conditions along the Corridor. Two buildings were identified Village of Arts & Humanities

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as having deteriorated roofs and six buildings were identified as having poor roof conditions.

The research team incorporated this into the Corridor Property Database as a potential major rehabilitation expense. This section of the database can be manually updated so that The Village can input more information about roof conditions as new properties are inspected.

Overall, the building survey shows the expected physical signs of disinvestment, vacancy, and substandard building conditions. However, it also demonstrates that there are many parcels that should be regarded as opportunities for redevelopment based on vacancy, existing or needed access to the upper stories, and proximity to other buildings that are attractive redevelopment parcels. Refer to the Approaches section to see how the observations from the building survey are incorporated into five strategic approaches for the Corridor.

Ownership and Tax Findings The City of Philadelphia’s Office of Property Assessment (OPA) data contains information on property ownership, including owner name, mailing address (where available), and most recent purchase price. The research team obtained this information for every parcel on the Corridor. Data analysis included identification of trends in transaction volume, and investigation of owners for any evident concentrations of ownership. Owners with addresses outside of Philadelphia are a particular area of focus, as these out-of-town landlords may operate as “absentee landlords” that do not actively monitor property conditions and are less willing to invest in necessary maintenance of their properties. The research team also explored the use of Philadelphia’s controversial property tax abatement through review of taxable values at the parcel level, to understand if the abatement has had potentially gentrifying effects as It has in other Philadelphia neighborhoods.

Ownership Details Ownership, and the associated participation in future value appreciation, aligns with The Village’s focus on building equitable development and civic power within the neighborhood. Therefore, protecting and increasing property ownership by individuals with ties to the Corridor is a main goal of The Village’s community economic development and real estate strategy. In many redeveloping areas, property ownership through formal structures such as limited liability corporations (LLCs) is viewed as a harbinger of gentrification.

These entities allow landlords to externalize the costs of risky investment activities, and also grant anonymity to owners that complicates tenant organizing. In one study of Chicago’s Albany Park neighborhood, LLCs were found to “instrumentalize dilapidation to displace tenants” and engage in other problematic management practices that coerced tenants to leave their

42

Germantown Avenue

homes.7 The lack of legal and social accountability associated with LLCs can be a threat to cohesive community fabric, and purchases by LLCs should be monitored as the Corridor evolves.

At the time of this report, OPA data reveals that 24 of the Corridor’s 134 developable parcels are owned by LLCs or other corporate entities.8 The majority of these corporate purchases (14 parcels) have occurred within the last decade. Further, approximately half have sold to out-of-town or out-of-state owners/landlords.

While the Corridor does contain a number of city-owned properties, as well as parcels owned by religious or other nonprofit organizations, the majority (88 parcels, or 66%) are owned by individuals. There are few owners of multiple properties on the Corridor, with some exceptions: There are five individuals who each own two properties. In addition, there are five parcels registered to the Kleiman family (parents of Laura Gottlieb, who is known to The Village) and four parcels registered to Amoui/Amy Truong. Owners, especially those with multiple property holdings, are key stakeholders to Corridor redevelopment.

In addition, considering the location of these owners parcels along the Corridor may reveal strategic opportunities for parcel aggregation or other creative redevelopment approaches.

It should be noted that this data concerns only those properties along the Corridor, and does not take into account ownership of properties on nearby streets, or in other areas of the city. There may be additional observations if ownership concentration was studied on a larger scale than is reflected here.

The OPA data also contains owner address information for 96 of the 134 developable parcels recorded in the Corridor Property Database. Of these, 55 parcels are registered to Philadelphiabased owners, and an additional 28 have owner addresses located in the Philadelphia suburbs (Pennsylvania and New Jersey towns within 30

miles). Out-of-state owners include individual owners located in Nevada, Florida, and Ohio, and corporations registered in New York. A summary of the owner locations is shown on the following page, along with the type of owner.

Property Sales Activity Certain peculiarities in the OPA data challenges analysis of sales trends along the Corridor. Of the 134 developable parcels recorded in the property database, 45 parcels have nominal sales prices ($10 or less), and the majority (39 parcels) are recorded at $1. This typically reflects a deed transfer or other non-market transaction. Because of this data limitation, local sales price trends cannot be meaningfully analyzed.

However, the data allows for observations of general sales activity. A rapid increase in sales activity (typically in conjunction with increases in sales price) indicates changing market conditions that may correlate with predictors of gentrification.

OPA data corroborates that the Germantown Avenue Corridor holds many long-time owners: one parcel has been held by the same owner since 1946, and an additional 12 parcels have not changed hands since the 1970s.

In many cities, the Great Recession, which began in 2008 and had significant negative impacts on property values, was a boon for opportunistic buyers to enter new markets, often at the expense of long-term owner stability in those markets.

Studying the Corridor, slightly more than half of the parcels have been held by the same buyer since at least 2008, suggesting that the Corridor was relatively insulated from such opportunistic entrants. Indeed, although non-Philadelphia buyers have increased in number during the last decade, the rate of increase approximates the increased purchases by local buyers. Thus, it does not appear that recent investment is disproportionately coming from outside of the Corridor.

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Owner Type and Location Out-of-State

Total (Address Known)

Total (incl.

Address Unknown)

23

4

59

88

10

5

7

22

24

City

5

0

0

5

5

Religious/ NFP

6

0

0

6

14

The Village

2

0

0

2

3

Total

55

28

11

94

134

Philadelphia Address

Out-of-Town

Individual

32

Corporation

Owner Type and Decade of Sale Individual

1940s

1970s

1980s

1990s

2000s

2010s

Total

1

7

9

12

27

32

88

2

2

6

14

24

Corporation City

1

1

2

1

5

Religious/ NFP

4

6

2

2

14

The Village Total

1

12

0

2

0

1

3

18

16

37

50

134

Owner Location and Decade of Sale 1940s

1970s

1980s

1990s

2000s

2010s

Total

1

4

10

4

13

23

55

Out-of-Town

3

6

5

14

28

Out-of-State

1

3

4

3

11

5

3

15

10

40

0

2

0

1

3

18

16

37

50

134

Philadelphia

Unknown

8

The Village Total

1

12

Source: The research team’s analysis of data published by the City of Philadelphia Office of Property Assessment.

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Germantown Avenue

Property Tax Abatement The 10-year property tax abatement is another tool intended to spur investment which is often maligned for driving gentrification to Philadelphia’s neighborhoods. Since 1997, Philadelphia has offered a ten-year abatement of property taxes on the incremental assessed value of homes following significant rehabilitation or new construction. Opponents of the abatement have critiqued it the mechanism’s unintended consequences: tax breaks for wealthy residents, often targeting neighborhoods with higher vacancies to accommodate new development, and “a catalyst for the destruction of historic buildings in pursuit of larger, taller, denser, and fully abated new construction projects.” 9 In response to significant opposition, the abatement was recently altered to phase out incrementally over the tenyear period; although reduced, the abatement still represents meaningful cost savings to a potential investor. While the tax abatement has incentivized investment that may not have occurred otherwise, the observed outcomes suggest that this mechanism is potentially counterproductive to The Village’s focus of equitable redevelopment.

Like LLC ownership, use of the tax abatement

along the Corridor should also be monitored as the Corridor evolves.

Given that the abatement applies only to renovation or new construction since the late 1990s, the relative lack of capital improvements along the Corridor in recent years suggests that the abatement is likely not prevalent. OPA data can also reveal use of the tax abatement, as indicated by a taxable building or land value of $0. Based on OPA data captured in the Corridor Property Database, there are ten improved parcels (versus vacant/razed lots) with recorded taxable building values of $0. All of these parcels are owned by the City, The Village, or other local nonprofits/religious institutions, all entities that would be tax-exempt regardless of the property tax abatement program.

This data confirms the intuitive observation that the property tax abatement has not influenced investment along the Corridor. That being said, as available development opportunities dwindle in other neighborhoods, the Corridor may become an increasingly attractive area for new investment, some of which may be incentivized by the abatement.

References

taxes/property-taxes/realty-transfer-tax/.

1 Jared Brey, “Judge Questions City’s ‘Doors and Windows’ Ordinance,” WHYY (blog), October 28, 2015, https://whyy.org/articles/judge-questions-city-s-doorsand-windows-ordinance/.

6 The Reinvestment Fund, Policy Solutions, “Strategic Property Code Enforcement and Its Impacts on Surrounding Markets.”

2

Ibid.

3 Anthony M. Rufo and TR Gretz, LP v. Board of License and Inspection Review and City of Philadelphia (Pa. Supr. Ct. 2018).

4 The Reinvestment Fund, Policy Solutions, “Strategic Property Code Enforcement and Its Impacts on Surrounding Markets,” August 2014, https://www. reinvestment.com/wp-content/uploads/2015/12/Strategic_ Property_Code_Enforcement-Report_2014.pdf.

5 City of Philadelphia Dept of Records (last), “Realty Transfer Tax,” City of Philadelphia, accessed May 1, 2020, https://www.phila.gov/services/payments-assistance-

7 Efadul Huq and Stacy Anne Harwood, “Making Homes Unhomely: The Politics of Displacement in a Gentrifying Neighborhood in Chicago,” City & Community 18, no. 2 (June 2019): 710–31.

8 The 134 parcel count excludes 2646 and 2648 Germantown Avenue, which are currently in use as Villageowned public parks.

9 Kimberly Haas, “10-Year Tax Abatement Bill Approved, But a New Battle Is Brewing,” Hidden City Philadelphia, December 13, 2019, https://hiddencityphila. org/2019/12/10-year-tax-abatement-bill-approved-but-anew-battle-is-brewing/.

Village of Arts & Humanities

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46

Germantown Avenue

Recommendations

The Village of Arts and Humanities’ 35-year legacy is anchored in artist-facilitated community building. Lily Yeh grew the organization around the promise that creativity can be a means of human and environmental transformation. By focusing on beautifying physical spaces, The Village attempts to shift the way residents view and value their neighborhood and themselves.

The vacancy along the Germantown Avenue Corridor is a missed opportunity, and The Village hopes to find creative solutions to these present challenges. While there are significant existing resources available, such as façade improvement grants, these often go unused in the Fairhill-Hartfrant neighborhood.

As part of The Village’s focus on equitable development, The Village promotes catalytic, coordinated, double bottom line investments that hope to reclaim and repurpose at least 70% of the Corridor’s vacant or inactive inventory. A critical component of revitalizing the commercial corridor is incorporating a strategy to turn the upper floors of the commercial spaces into affordable housing.

Accomplishing this transformation would fulfill at least three goals: activating the Corridor; providing investment opportunities; and adding to the supply of quality affordable housing. The Village currently owns several properties along the Corridor and is working with property owners on redeveloping several others: • 2460 Germantown Avenue • 2540-2544 Germantown Avenue • 2565 Germantown Avenue • 2623 Germantown Avenue • 2637 Germantown Avenue • 2700 Germantown Avenue The Village is considering acquisition of other properties and is also exploring partnerships for the purchase of other properties. Most of the buildings along the Corridor only have one egress, the original storefront door. Therefore, renovation

48

Germantown Avenue

would likely require the construction of a separate entrance for the proposed residential space.

Central Question The research team aimed to answer the question: How can The Village leverage the opportunity of vacant upper-floor spaces within its target area to drive equitable development and create pathways to upward mobility for people with ties to the Corridor, and provide affordable housing to low- and moderate-income Philadelphians?

Measuring Alternatives There are several, non-mutually exclusive solutions to this issue. The potential strategies for redevelopment are myriad and the research team and The Village must narrow them down to a manageable few or preferred one. The process of analyzing and evaluating alternatives applies evaluation criteria to options in a way that facilitates decision making. This may be a single- or multi-step process, depending on the complexity of the alternatives and the decision.

The evaluation process may include refining alternatives to develop a final approach. A critical element in this step is the evaluation of all ideas using an established set of criteria.

Criteria The research team developed the criteria at right with the understanding that the most successful approach towards The Village’s goal of affordable, occupied upper floors would balance the priorities, goals, and capacity of the Village of Arts and Humanities and the surrounding community.

Each criterion is intended to act as a measure for evaluating the success of each alternative regarding a single principle; when combined the criteria will provide a holistic measure for selecting the appropriate approach to be implemented.

Scale of the Intervention

This criterion dually describes the expected Increase in stock of affordable housing and/or commercial space once the approach is actualized; and the applicability of the approach to the total vacant building stock along this corridor and potentially other corridors.

Time to Implement

This criterion focuses on the length of time expected to implement the selected approach; as well as the impact on finances, accumulation of interest, and potential market competition threats that may arise from delays or extensions.

Political Feasibility

This criterion focuses on the potential cost and burden to available public programs and services in Philadelphia, as well as the feasibility replicate the approach in the city’s other corridors

Cost and Capacity for Property Owners

This criterion focuses on the expected contribution by, or on behalf of, individual property owners in implementing the selected approach. Contribution in this case consists of individual capital, and the time required to complete the necessary paperwork to secure available public assistance grants and funding.

Cost and Capacity for The Village

This criterion focuses on the expected contribution by, or on behalf of, The Village in implementing the approach. Contribution consists of capital funding, time invested in completing administrative tasks, and the technical assistance and guidance that The Village may provide to business and property owners throughout the project’s timeline.

Village of Arts & Humanities

49

Approaches for Redevelopment One of the greatest challenges for redeveloping historic corridors for housing is access to the upper floors. Many corridors were built at a time when shop owners lived above their business, which is not the case today. Bringing affordable or market-rate rental units to the second and third floors of Germantown Avenue will require adding a new egress to the faรงade of many of the buildings. Aside from increasing renovation costs, this might also be impossible for some buildings with a smaller frontage without removing the existing storefront.

Because of the varying building types along the Corridor, each building might require a different approach. Not every building needs a new egress and not every building without one can support adding one. In order to best analyze the Corridor, the team divided opportunity buildings into two groups: A properties are buildings with an existing secondary egress, while B properties are buildings that will need a new secondary residential entrance added. Because there are also many contiguous vacant properties along the corridor, the team has divided the approaches for priority properties into two phases: Phase 1 looks at developing individual properties one at a time, while Phase 2 considers the possibility of assembling buildings together for a

Phase 1 - Individual Properties

Phase 2 - Assembled Properties

Illustrations of Phases 1 and 2. Images by Emelyn Nรกjera.

50

Germantown Avenue

larger-scale project. If buildings are grouped together, an existing egress for one building could possibly serve as the access point for multiple addresses’ upper floors. If none of the buildings in the grouping have an egress to access the upper floors, one new egress can serve multiple addresses. This egress could be built in one storefront with a larger frontage or one storefront could be sacrificed in the grouping. Another option might be to build the secondary egress at the side of a corner building, or along the back of the buildings if there is an accessible alleyway residents could access.

Applying the Criteria These approaches estimate the potential number of buildings suitable to each approach based on vacancy and the existence of a secondary egress. It is likely that no single approach will be selected, but rather a combination of approaches must be taken to redevelop the Corridor. Each redevelopment project will have unique characteristics and challenges, as well as tradeoffs.

The following criteria aid in the selection of an approach:

Phase 3 has been included to capture non-priority properties. These buildings are not currently vacant on the upper floors; however, these buildings do have an existing egress, which could change the potential opportunity for grouping properties. These properties may also qualify for existing funding programs that are only available to occupied and/or residential properties.

• Scale of the intervention: How many buildings are included and how many units of housing could be created?

This division of properties results in five approaches:

• Political feasibility: Do existing city programs apply to the project? Do new funding sources need to be established?

• Approach 1A: Individual building with upper floor vacancy, and existing upper floor streetlevel access • Approach 1B: Individual building with upper floor vacancy, without existing upper floor street-level access • Approach 2A: Aggregate buildings with upper floor vacancy, where one building in the group has upper floor street-level access • Approach 2B: Aggregate buildings with upper floor vacancy, where none of the buildings have existing upper floor streetlevel access • Approach 3A: Individual building without upper floor vacancy, but has existing upper floor street-level access

• Time to implement: Does the project require acquisition of additional properties?

How much construction is required due to the building condition, existence of an upper floor egress, etc.?

• Cost and capacity for property owners: How much capital will the project require of the property owner? Are they able to secure funding for the project? Do funding sources require additional hurdles?

• Cost and capacity for The Village: Is The Village managing the acquisition and renovation of the project or supporting an existing landlord in the process?

Phase 2 approaches have a larger scale of impact; however, they will require more time, more money, and more coordination. Phase 1 approaches have a smaller scale but are more quickly achievable.

Additionally, any single building redevelopment done by The Village or other entities could alter the potential for future opportunity of an individual building or grouping of buildings.

Village of Arts & Humanities

51

Cambria St

9th St

Approach 1A: Individual Building with Upper Floor Vacancy, and Existing Upper Floor Street-level Access

Somerset St

While The Village should consider the long-term vision and redevelopment strategy for the Corridor, its current priority is individual buildings. The buildings in Phase 1 can be more easily acquired and redeveloped, and can act as catalysts for future redevelopment.

W Lehigh Ave

Potential opportunity: 11 buildings • 2563 Germantown Ave

11th St

• 2562 Germantown Ave • 2565 Germantown Ave • 2600 Germantown Ave • 2601 Germantown Ave

W Huntington Street

• 2612 Germantown Ave • 2634 Germantown Ave • 2638 Germantown Ave ve nA ow ant rm Ge

• 2642 Germantown Ave • 2722 Germantown Ave • 2726 Germantown Ave* * does not have another opportunity parcel next to it

52

Germantown Avenue

Cumberland St

Cambria St

9th St

Approach 1B: Individual Building with Upper Floor Vacancy, without Existing Upper Floor Street-level Access

Somerset St

Potential opportunity: 36 buildings W Lehigh Ave

• 19 buildings have opportunity parcels next to them • 17 buildings do not have any other opportunity parcels next to them, meaning there is no potential for Phase 2 aggregation: • 2731 Germantown Ave

• 2625 Germantown Ave

• 2733 Germantown Ave

• 2631-33 Germantown Ave

• 2735 Germantown Ave

• 2635 Germantown Ave

• 2742 Germantown Ave

• 2639-41 Germantown Ave

• 2752 Germantown Ave

• 2648 Germantown Ave

• 2813 Germantown Ave

11th St

• 2549 Germantown Ave

W Huntington Street

• 2650 Germantown Ave • 2652 Germantown Ave • 2714 Germantown Ave ve nA ow ant rm Ge

• 2729 Germantown Ave • 2730 Germantown Ave Cumberland St

Village of Arts & Humanities

53

Cambria St

9th St

Approach 2A: Aggregate Buildings with Upper Floor Vacancy, where one building has Upper Floor Street-level Access

Somerset St

These approaches assume all 47 of the priority buildings are available for aggregation. Any redevelopment of individual buildings impacts the potential opportunity for aggregation of contiguous buildings.

W Lehigh Ave

Potential opportunity: 30 buildings • Group 2: 9 buildings

11th St

• Group 1: 3 buildings • Group 3: 6 buildings • Group 4: 5 buildings W Huntington Street

• Group 5: 3 buildings • Group 6: 3 buildings

ve nA ow ant rm Ge

Cumberland St

54

Germantown Avenue

Cambria St

9th St

Approach 2B: Aggregate Buildings with Upper Floor Vacancy, where none of the buildings have existing Secondary Access

Somerset St

Potential opportunity: 28 buildings

W Lehigh Ave

• Group 1: 2 buildings • Group 2: 4 buildings • Group 3: 5 buildings • Group 5: 3 buildings • Group 6: 4 buildings

11th St

• Group 4: 3 buildings

• Group 7: 3 buildings • Group 8: 2 buildings

W Huntington Street

• Group 9: 4 buildings

ve nA ow ant rm Ge

Cumberland St

Village of Arts & Humanities

55

Cambria St

9th St

Approach 3A: Individual Building without Upper Floor Vacancy, but has Existing Upper Floor Street-level Access

Somerset St

Potential opportunity: 24 buildings

W Lehigh Ave

• 2756 Germantown Ave

• 2550 Germantown Ave

• 2808 Germantown Ave

• 2555-61 Germantown Ave

• 2814 Germantown Ave

• 2556 Germantown Ave

• 2819 Germantown Ave

• 2636 Germantown Ave

• 2821 Germantown Ave

• 2654-58 Germantown Ave

• 2738 Germantown Ave

• 2701 Germantown Ave

• 2739 Germantown Ave

• 2716 Germantown Ave

• 2740 Germantown Ave

• 2743 Germantown Ave

• 2741 Germantown Ave

11th St

• 2517 Germantown Ave

W Huntington Street

• 2745 Germantown Ave • 2747 Germantown Ave ve nA ow ant rm Ge

• 2749 Germantown Ave • 2751 Germantown Ave • 2753 Germantown Ave • 2755 Germantown Ave Cumberland St

56

Germantown Avenue

Financing There are several existing funding streams that could reduce the project financing gap for upper story rehabilitations. However, as pointed out previously, there is not a dedicated source of public funding for mixed-use buildings in Philadelphia, and private financing products are limited and often not customized to a mixed-use project.

In addition to smaller funds from existing storefront programs, the existing financing avenues that could fill the major funding gap for these projects are quite competitive and require a great deal of coordination. These more extensive endeavors would be best suited to the Phase 2 approaches, which involve more ambitious rehabilitations of multiple properties in tandem.

As it works to provide additional housing along the Corridor, The Village could use its influence to bring about a program targeted at these buildings for the corridor and other places in Philadelphia that have similar needs. The Village, as a decadesold community organization with demonstrated success in various projects along the Corridor, has an established reputation in the city and working rapport with City Councilmembers. As a result, The Village is uniquely situated to use this political capital to bring new funding sources to fruition. With regards to redevelopment projects, either through direct acquisition or in partnership with owners, The Village could pursue existing subsidies, or work with a lender or City agencies to create new sources of funding.

Funding sources to reduce the project financing gap include:

Existing Sources Project-Based Housing Choice Vouchers (HCV) The Philadelphia Housing Authority (PHA) could become a partner to provide Housing Choice Vouchers to a single landlord (The Village) or

many landlords, to limit housing costs to a portion of tenants’ household incomes. This would require political support from PHA, which could be coordinated through City Council. A voucher can be layered with other residential subsidies to make rents deeply affordable.

Low-Income Housing Tax Credits (LIHTC) The Village could pursue LIHTC to finance about 70% of the project costs of rehabilitation to create new affordable rental housing units. Competitive LIHTC projects require dozens of units and extensive performance scoring, making applying for the credit a major undertaking. The properties do not have to be physically located next to each other (instead called a “scattered site” project).

Additionally, LIHTC requires site control, so it would not be possible to maintain continuity of ownership with existing owners. The tradeoff between ownership continuity and large-scale affordability should be considered.

New Market Tax Credits (NMTC) If it seeded businesses (such as a property management business) and/or wanted to continue developing community assets, The Village could apply for New Market Tax Credits to recoup between 15 and 25% of the project costs of mixed-use redevelopment. NMTCs can be used can be used in defined geographic areas, and on residential projects where less than 80% of gross revenue of a project is from dwelling units. Additionally, at least 20% of units must be affordable at 80% of area median income (AMI).

AMI in the Philadelphia metro area is much higher than the Fairhill-Harntraft neighborhood’s median income, so this strategy would be best used in combination with other sources to deliver deep affordability.

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New Proposed Sources

Applying the Criteria

Private Bank Loan Working with a local lender like the Neighborhood Progress Fund (NPF), The Village could work to design new financial products. NPF presently targets borrowers who are excluded from traditional banks due to insufficient credit, equity, or documentation. The Executive Director of NPF indicated that the bank has available capital to be distributed into the community, but matching borrowers to the right financial products can be challenging. Low interest rate loans, with lower eligibility requirements (e.g. credit scores, required equity contributions, etc.) would make property rehabilitation projects more accessible and help to increase housing stock along the Corridor.

It is important to note that the above funding sources are not mutually exclusive, and may be creatively stacked together for a single project.

At the same time, some funding sources are better suited to individual rehabilitations (Phase 1) and some are better suited to aggregated rehabilitations (Phase 2). Further, some funding sources are only available to single actors who have full site control, while some can be provided to many owners with a central actor like The Village or a lender offering technical assistance.

The table at right provides details of the funding mechanisms, allowing The Village to weigh the two key factors of a project: phasing and ownership.

Targeted City Program Using the materials provided here, The Village could advocate to City Council for a new City program (in the same thrust as Restore Repair Renew or the Small Landlord Loan Program) to help moderate-income Philadelphia property owners create and rent affordable units in mixed-use areas. The research team’s findings corroborate The Village’s position that commercial corridors cannot presently secure the same level of City funding that is available to single-use residential owners. This situation does a disservice to commercial corridors, as solely storefront program funding does not address commercial corridors holistically as a place where people live, work, and spend in a local economy.

The above funding mechanisms require different outcomes, which changes the potential impact of a project. As noted, they also operate at different scales and with different key actors.

None are mutually exclusive, but some work better in combination with others (Housing Choice Vouchers leveraged with a City grant, for example). Each equity source will have unique obligations and challenges, and provide different levels of funding.

58

Germantown Avenue

Ownership and Aggregation Possibilities of Identified Funding Sources

New

Existing

Phase 1 - Individual Properties

Phase 2 - Assembled Properties

The Village

Existing Owners

The Village

Existing Owners

Project-Based HCV

X

X

X

X*

Low-Income Housing Tax Credits

X

New Market Tax Credits

X

X*

X

X*

Private Bank Loan - TBD

X

X

X

X*

Targeted City Program - TBD

X

X

X

*These programs may be feasible for an individual property owner, but would likely require technical assistance or other guidance from resources like The Village. Nuanced exploration of these programs on behalf of an individual property owner is outside the scope of this project, but could be fruitful further research.

The following criteria can aid in the discussion of funding mechanisms: • Scale of intervention: How many buildings are included and how many units of housing could be created?

• Time to implement: Does the project require acquisition of additional properties?

Should multiple funding application cycles be anticipated?

• Political feasibility: Do new funding sources need to be established? Do they require a City Council vote? How much deep affordability will be created?

• Cost and capacity to the property owner : How much capital will the project require of the property owner? Do funding sources require property owners to overcome many administrative barriers?

• Cost and capacity requirements to The Village: Is The Village managing the acquisition and renovation of the project or supporting current property owner(s) in the process? Would the approach require partnering with a development entity, or approaching Council for a long period of advocacy?

Village of Arts & Humanities

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60

Germantown Avenue

Next Steps

As the official steward and Corridor Manager of the 2500-2900 blocks of the Germantown Avenue Corridor, The Village provides people with advice, coaching, and connections to help find lowinterest loans, upgrade storefront appearances, handle L&I citations, apply for business assistance grants, and more. These efforts are a part of The Village’s focus on equitable development, promoting catalytic, coordinated, double bottom line investments to revitalize Germantown Avenue. The question the research team set out to answer was: How can The Village leverage the opportunity of vacant upper-floor spaces within its target area to drive equitable development and create pathways to upward mobility for people with ties to the Corridor, and provide affordable housing to low- and moderate-income Philadelphians?

This research team gathered and synthesized primary and secondary research data pertaining to properties, processes, and programs. This included collecting online records from the OPA, DOR, and L&I; understanding redevelopment through interviews and case studies; and compiling information on loans and grants through publicly available online resources published by city, state, and federal agencies.

Key lessons learned included: • Predicting neighborhood tipping points for gentrification is nearly impossible; however, there are still learnings to gain from commercial corridors that are inclusive in their efforts or that spur displacement.

• Many City programs lack a holistic approach to redevelopment, focusing solely on commercial properties or façades, and not the residential development required to support these commercial corridors.

• Because equitable development has only become a focus in recent years, there are

62

Germantown Avenue

not many successful case studies to serve as useful examples; however, there are recent projects to follow to see how ownership on the Corridor changes from large-scale investments.

• While investments from LLCs can serve as a harbinger of gentrification, the majority of owners along Germantown Avenue are individuals.

• The Corridor was relatively insulated from opportunistic entrants following the Great Recession.

• Developing housing on historic commercial corridors continues to be a challenge because of secondary access for the upper floors from the primary commercial entrance.

• If the Department of Licenses and Inspections was to pursue the $300 per day fee for violations of the Doors and Windows Ordinance, the 135 current violations translates to approximately $81,000 in potential daily fines imposed on the Corridor.

This research led the team to develop a series of approaches to redevelopment along Germantown Avenue. These approaches consider smaller scale projects that can be executed more quickly, and larger scale projects that may require more time and investment, but could significantly increase the amount of housing units created.

Transforming the upper floors of these spaces into affordable housing would achieve at least three positive outcomes: activating the Corridor; providing investment opportunities; and adding to the supply of affordable housing. These outcomes support three of the strategic goals for The Village: • Equitable Development: To promote catalytic, coordinated, double bottom line investments that reclaim and repurpose at least 70% of the Corridor’s vacant or inactive inventory.

• Safe and Healthy Neighborhoods: To make the Corridor a clean and safe community asset with an environment that strengthens morale, fosters mutual respect among residents and merchants, and supports a renewed public image for the Fairhill-Hartranft neighborhood.

adjacent opportunity parcels next to it, meaning

• Civic Power and Leadership: To ensure meaningful resident participation, leadership, and ownership of economic development efforts.

construction costs. While there is still much

Tools The team has developed Excel-based tools to assist in this transformation: a property database and a financial model. The Corridor Property Database aggregates building and parcel details so The Village can identify project types (approaches) and quantify the opportunity for redevelopment along Germantown Avenue. The database can also serve as a tool to explore ownership patterns and reach out to existing owners to distribute information on risks, challenges, opportunities for redevelopment.

This database also feeds into a financial model tool that references key property information that would be relevant when considering a renovation project. The model helps estimate budgeted development costs, summarize funding sources, and identify funding gaps (if any). This tool will help The Village or other property owners assess projected post-renovation cash flows and returns, to make a case for investment or to guide investment strategy.

A user guide can be found in Appendix 1.

the project would not limit any future Phase 2 projects that assemble multiple properties. 2726 Germantown Avenue also has no observed roof issues, decreasing the likelihood of surprises with structural integrity or mold which would increase more work to be done in assessing the viability of 2726 Germantown Avenue, the research team recommends this and the ten other properties in Approach 1A as a starting point for considered acquisition.

The ten additional properties for consideration are: • 2562 Germantown Avenue • 2563 Germantown Avenue • 2565 Germantown Avenue • 2600 Germantown Avenue • 2601 Germantown Avenue • 2612 Germantown Avenue • 2634 Germantown Avenue • 2638 Germantown Avenue • 2642 Germantown Avenue • 2722 Germantown Avenue While these properties appear to be “quick wins” based on the strategic approaches, all 11 structures appear to be in fair condition based on the research team’s survey. Two of the structures have observable roof issues. The owners are all individuals and not LLCs. Approximately half of the owners are located outside of Philadelphia, and one structure (2565 Germantown Avenue)

Next Steps

is owned by the City of Philadelphia. These

The research team found 2726 Germantown Avenue to be a potential “quick win” project based on these approaches and tools. The property appears to have a vacant upper floor, with existing upper-floor access from a separate entry. It has no

acquisition strategy for The Village, or by current

additional details will need to be considered in the property owners The Village hopes to partner with on renovations.

Village of Arts & Humanities

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64

Germantown Avenue

Appendices

Appendix 1: Tools Property Database Tabs Master_FINAL: This tab is the main page of the database. It removes all formulas from the Master_ FORMULAS tab. Columns can be filtered to look for patterns in ownership, property assessments, etc.

Master_FORMULAS: This tab houses all of the formulas that aggregate data from the data input tabs: DOR_Parcels, OPA_Assessments, Corridor Survey, Owner Description, L&I Inspections, Blight, and Tax Delinquency.

Master_APPROACHES: This tab is a subset of Master_FINAL, containing only properties with an upper floor that might be considered for a redevelopment project. Columns C through I indicate which approaches might be applicable for each property. Columns D and F indicate potential for aggregation into a larger project not. Columns J through AQ pull in all of the data from the Master_FINAL tab. This worksheet can be filtered by columns to look for patterns in ownership, property assessments, etc.

All blue tabs indicate raw data dropped into the tab. Updated data can be downloaded as a .CSV from the source link in the DATA_Sources tab. The orange tabs indicates manually updated data.

The Corridor Survey tab includes manually entered data from the research team’s survey. The Owner Descriptions tab includes manually entered data categorizing owner types and locations based on the research team’s review of OPA data.

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Germantown Avenue

Property Database Fields Address: • Reconciled Parcel List • OPA Address Building Information: • Stories • Frontage • Depth • Total Area • Liveable Area • Year Built • Year Built Estimate Building Conditions: • OPA Date of Survey • OPA Conditions Description • Penn Survey Conditions • Roof Issue • First Floor Vacancy

• Second Floor Vacancy • Second Floor Access • Window Violations Owner Information: • Business • Market Value • Sale Price • Taxable Building • Taxable Land • Date of Sale • Owner 1 • Owner 2 (if applicable) • Owner Type • Tax Delinquency • Mailing Address • Mailing City • Mailing Zip

Appendix 2: Commercial Corridor Comparisons The following tables supplement information provided in the “Commercial Corridor Comparison� section of this report. Data is sourced from the American Census Survey (ACS) across various Philadelphia census tracts.

Population Change by Corridor 2010

2011

2012

2013

2014

2015

2016

2017

2018

% Change for 20102018

Yearly Change 2010-2018

52nd Street

10,369

10,459

10,448

10,601

10,928

11,511

11,524

11,308

11,550

11%

1.4%

Cecil B. Moore

18,169

18,288 18,854

19,613

19,016

19,375

19,641

19,804 19,308

6%

0.8%

Fishtown

12,091 12,736

13,463

13,797

14,422

14,731

15,589 16,383 16,992

41%

4.3%

Germantown

15,514

16,019

15,497 15,998

16,090

16,033

16,079

16,482

17,345

12%

1.4%

Lancaster Ave

10,758

11,087

11,216

11,076

11,589

11,964

12,444 12,659

18%

2.1%

Source: 5-year ACS.

11,306

Per Capita Income by Corridor % Yearly Change Change for 2010- 20102018 2018

2010

2011

2012

2013

2014

2015

2016

2017

2018

52nd Street

$19,173

$18,308

$16,555

$16,478

$16,382

$14,998

$15,469

$17,047

$15,683

-18%

-2.5%

Cecil B. Moore

$12,275

$12,307

$11,530

$11,080

$11,079

$12,235

$12,095

$12,417

$15,358

25%

2.8%

Fishtown

$33,323

$34,239

$33,481

$34,474

$36,130

$40,683

$42,123

$42,860

$48,775

46%

4.9%

Germantown

$10,326

$10,426

$10,172

$9,834

$12,250

$13,099

$11,384

$13,080

$13,055

26%

3.0%

Lancaster Ave

$15,857

$15,889

$14,591

$13,182

$12,895

$12,404

$13,677

$15,170

$17,486

10%

1.2%

Source: 5-year ACS, adjusted for inflation.

Homeownership Rate by Corridor 2010 52nd Street Cecil B. Moore

2011

2018

% Change for 2010-2018

Yearly Change 2010-2018

49.2% 49.3%

47.9%

0%

0.0%

27.7%

26.8%

25.1%

-25%

-3.5%

54.5% 53.7% 53.3% 50.9%

51.9%

54.2%

-12%

-1.5%

46.1%

42.4%

41.7%

37.5%

35.9% 38.0%

-16%

-2.2%

32.2% 28.5%

29.1%

28.4%

28.7%

28.7%

-1%

-0.2%

2012

48.0% 46.9% 50.4%

61.3%

Germantown

45.4% 46.8% 48.2%

Ave

31.6%

60.2%

31.6%

Source: 5-year ACS.

68

2014

2015

49.0%

49.1%

49.1%

33.5% 33.5% 29.2% 28.2% 30.5% 28.4%

Fishtown

Lancaster

2013

Germantown Avenue

57.8%

2016

2017

31.1%

Appendix 3: Philadelphia Funding Sources The following tables explain local, state, and federal programs that may be a suitable resource in securing funding for projects along the Corridor. These programs vary between residential restoration, commercial improvement, and state-wide incentive programs. The tables further elaborate on the terms, uses, and eligibility requirements for each program.

Philadelphia Residential Programs Restore, Repair, Renew Program

Philly First Home Program

Small Landlord Loan Program

Financing Client interface CoordinatProvided by agencies ing agencies

Program Information City of Philadelphia and City of Philadelphia and City of Philadelphia and the the Philadelphia Housing the Philadelphia Housing Philadelphia Housing Development Development Corporation Development Corporation Corporation (PHDC) (PRA) (PRA) Clarifi, Philadelphia Council for Community Investment, and Public Health Management Corporation

Approved housing counseling agencies

PHDC

Philadelphia Housing Development Corporation (PHDC)

Philadelphia’s Division of Housing and Community Development (DHCD)

$400,000 grant from PHDC and the Pennsylvania Housing Finance Agency (PHFA)

Housing Type

All tenants receiving rehabilitations Up to 120% of AMI based Up to 120% of AMI based must have incomes no more that on household size ($75,720 on household size ($75,720 100% of AMI; and 1/3 of tenants must for one person households) for one person households) have incomes less than 50% of AMI

Neighborhood

Single family homes Homeownership unit which or duplexes (condos is the owner’s primary not eligible); must also residence complete a homeownership counseling program

Income

Eligibility

n/a

n/a

Rental housing; landlord must have no more than 10 rental units in their portfolio, must have attended a Fair Housing certification training, and must have a valid rental license

Some targeting to landlords in the 19144, 19132, 19134, 19140, and 19141 zipcodes.

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Philly First Home Program

Credit score

580+ (680+ is considered prime)

n/a

To be determined by lender

Incometo-debt

n/a

Up to 43%

n/a

To be determined by lender

Loan-to-value (after rehab)

Owner occupants with clear title and homeowner’s insurance who are up to Buyer must be a first-time date on utilities and taxes homebuyer or have not and who do not have been a homeowner for the Licenses & Inspections past three years; must have violations (clients can be lived in Philadelphia for at in a tax or utility payment least three years plan/have violations that will be corrected during the repair)

Small Landlord Loan Program

Up to 105%

n/a

To be determined by lender

Housing costto-income

Tenure status

Restore, Repair, Renew Program

n/a

n/a

To be determined by lender

70

Germantown Avenue

Restore, Repair, Renew Program

Philly First Home Program

Small Landlord Loan Program

3%

n/a

To be determined by lender

Loan/grant amount

Loan $2,500 to $24,999

Grant up to $10,000 (or 6% of the home’s purchase price, whichever is lower)

Loan up to $24,999

Length of loan

Interest rate

Terms

10 years

n/a

10 years

Sources

Bid assistance

Eligible repairs

Uses and Technical Assistance Building improvements, mold and lead removal and Used for principal and to repairs, improvements, and cover down payment and upgrades related to health, loan closing costs safety, and quality of life

Guidance for bidding and contracting

Homeownership counseling required

Health and safety repairs, including lead abatement and code enforcement which must be remediated before other repairs

To be determined by lender

“Request for Proposals: Small Philadelphia Housing Landlord Loan Program (SLLP).”

Philadelphia City Council, Development Corporation. Philadelphia Housing Development “Long Description of “Philly First Home.”

Corporation, April 18, 2019; Restore Repair Renew Accessed February 23, Philadelphia Housing Development Program Flyer,” July 15, 2019, 2020. https://phdcphila.

Corporation. “Small Landlord Loan http://phlcouncil.com/ org/residents/homebuyersProgram.” Accessed February long-description-of-restoreand-renters/philly-first23, 2020. https://phdcphila.org/ repair-renew-programhome/. contractors-and-businesses/ flyer/. businesses/small-landlord-loanprogram/.

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Philadelphia Storefront Programs Storefront Improvement Program

Stabilization Grants

Coordinating agencies

City of Philadelphia Commerce Department/Office of Neighborhood Economic Development

Merchant’s Fund

Client interface agencies

Commerce Department

Merchant’s Fund

Financing Provided by

Program Information

Commerce Department

Merchant’s Fund

Building Type

Business/commercial building owners

Philadelphia small businesses open for at least three years; sole proprietor must be active employee and depend on business as primary source of income

Neighborhood

Eligibility

Must be used on eligible corridors (see application)

n/a

72

Germantown Avenue

Storefront Improvement Program

Stabilization Grants

Interest rate

n/a

n/a

Loan/grant amount

Up to 50% of the cost of eligible improvements to a maximum of $10,000 for a single commercial property, or up to $15,000 for a multiple-address or corner business property; Businesses on the Corridor may also be eligible for an extra 25% match due to their location in the North Central Empowerment Zone, although that program has formally expired.

$500 to $10,000

Length of loan

Terms

n/a

n/a

Eligible uses

Façade improvements: Masonry/brick pointing, cornices, exterior painting, windows/glazing, exterior doors, exterior façade lighting, see-through, security grills, signage and awnings

Priorities: to fund essential community-based businesses, to fund impactful projects, to fund businesses with demonstrated need that cannot be filled elsewhere

Bidding and selection assistance

Business/commercial building owners gather some information to apply including contractor quotes; Commerce Department staff also give guidance on improvements

n/a

Sources

Uses and Technical Assistance

“Storefront Improvement Program Application.” Philadelphia: City of Philadelphia, Department of Commerce, May 23, 2019. https://www.phila. gov/media/20190523104321/SIPapplication-5-23-19.pdf.

The Merchants Fund Philadelphia.

“Stabilization.” Accessed March 10, 2020. https://merchantsfund.org/grants/ stabilization/.

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State and Federal Place-Based Incentives Low Income Housing Tax Credits

Housing Choice Vouchers

New Market Tax Credits

Geography

US; Philadelphia managed by the Philadelphia Housing Authority

US

Subsidy Type

A highly competitive ten-year federal income tax credit

A voucher (issued to the landlord) to provide a shallow rent subsidy

Federal income tax credit

Rental housing, rented affordably to low-income households at or below 60% AMI for 35 years

Privately-held affordable housing

Community development including property acquisition and construction or substantial renovation

Ongoing program

Expires on December 31, 2020 but there are bipartisan bills in both the House and Senate to make it a permanent tax credit

Sources

Credit value

Length of eligibility

US; Pennsylvania managed by the Philadelphia Housing Finance Agency

Qualified Investments

Program Information

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Ongoing program

Difference between actual About 70% of eligible basis (if and affordable rent (30% the 9% credit, lower if the 4% of tenant’s income) for credit) households at or below 50% AMI Pennsylvania Housing Finance Agency. “Allocation Plan for U.S. Department of Housing Program Years 2019-2020: Low and Urban Development Income Housing Tax Credit (HUD). “Housing Choice Program;” Keightley, Mark P. Vouchers Fact Sheet.”

“An Introduction to the LowAccessed April 27, 2020.

Income Housing Tax Credit.” https://www.hud.gov/ Congressional Research program_offices/public_ Service, January 15, 2020. indian_housing/programs/ https://crsreports.congress.gov/ hcv/about/fact_sheet. product/pdf/RS/RS22389.

Germantown Avenue

15-25% of eligible basis

PIDC Philadelphia. “New Market Tax Credits (NMTC).”

Accessed February 23, 2020. https://www.pidcphila.com/ financing/tax-advantagedfinancing/new-markets-taxcredits-nmtc/, New Markets Tax Credit Coalition. “New Markets Tax Credit Fact Sheet,” June 6, 2012. https:// nmtccoalition.org/factsheet/.

The research team also investigated the following funding sources, but determined that projects in the Corridor would not meet eligibility requirements: • PA Keystone Opportunity Zones (not location eligible) • North Central Choice Neighborhoods Implementation Grant (not location eligible) • Empowerment Zones (eligible but expired) • Neighborhood Transformation Initiative Philadelphia program funding demolition and blight removal under Mayor Street (expired) • Qualified Opportunity Zone (QOZ) - North Philadelphia Station Area (only covers a corner of the Corridor)

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