Little room for error in mayor’s $800 million housing ask | Editorial

On paper, Mayor Cherelle L. Parker’s $800 million housing initiative makes sense. But the devil is in the details as to whether it will be a success or a costly flop.

Those details were still getting ironed out Wednesday evening in advance of City Council’s expected initial vote Thursday on the mayor’s proposed $6.7 billion budget, which includes her signature housing initiative.

To its credit, Council is asking the right questions about Parker’s Housing Opportunities Made Easy, or H.O.M.E., program.

Starting with this: Given the political and economic uncertainty in Washington, does it make fiscal sense for the city to saddle taxpayers with an additional $800 million in debt?

Councilmember Isaiah Thomas voiced the strongest reservation about the price tag and focus on housing given other pressing needs such as education, gun violence, and SEPTA.

The city expects to pay roughly $65 million a year in interest and principal on the bonds over the next two decades. The cost is manageable in a nearly $7 billion budget. But it only makes sense if the investment pays off in actually restoring the projected 16,500 dwellings and building 13,500 affordable homes.

Another concern is the unpredictability of President Donald Trump, who has been slashing federal aid to cities, states, and foreign countries. Philadelphia received $2.2 billion from the federal government last fiscal year, mainly for social service programs, and has already lost $7 million in funds.

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What happens if Trump decides to cut off more funding, provided it survived a likely court challenge?

Parker has refused to engage in “what if” scenarios or criticize Trump, but has proposed a $95 million reserve in the city budget for unanticipated losses in federal funding.

“I … can’t be distracted by that,” she said of the potential loss of funding in a meeting with the Inquirer Editorial Board.

Some Council members are concerned the funds for the home repair program will not go to the people who need it most because Parker wants to increase the income eligibility from $71,650 to $119,000 for a family of four.

Parker said income limits don’t always tell the full picture because many people have other debts, including credit cards or student loans. She wants the program to extend from poorer to middle income neighborhoods.

“I’m not going to pit the have-nots against those who have just a little bit,” Parker told the board.

Other Council members have questioned whether the housing initiative was being spread too thin since it is going to 38 different programs. Would a more targeted investment lead to a greater impact?

Parker argued the programs are “not new” and have proven track records, but the funding and increased income limits will help to scale them up and broaden the reach to average workers such as teachers, nurses, and firefighters.

“We’ve got to find a way to incentivize those people to choose Philadelphia and not one of the counties that we are competing with,” she said.

While there is no big wow factor, the housing initiative fits with Parker’s broader vision to create a cleaner, greener, and safer city.

Owning a home and being able to maintain it can be transformative in many ways. It provides safety and stability for children and their caregivers. It is the best way to create generational wealth and help families move up the income ladder.

Any success will be told in the individual stories of programs that help people stay in their home, buy their first house, and stabilize city streets as opposed to a signature development like a stadium or convention center.

In a city known for its neighborhoods, that is important.

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Council also voiced concern that the city plans to issue taxable bonds instead of the usual tax-exempt bonds that do not require investors to pay taxes on the proceeds. This will increase the borrowing costs for the city and make the bonds less attractive to investors.

The Parker administration said it needs to issue taxable bonds because it plans to transfer city-owned land to private developers to build housing — and tax-exempt bonds prohibit the private sector from benefiting.

Parker said the taxable bonds provide greater flexibility, which is key to making sure the program succeeds.

Of course, flexibility is important but so is transparency and oversight. The Parker administration needs to move quickly to ensure the program doesn’t get bogged down, à la former Mayor Jim Kenney’s anemic Rebuild program that fell far short of its goals.

But the housing program must also be done right.

That means guarding against the kind of politics and cronyism that all too often derail even the best-intended plans in Philadelphia. Homeowners who need help must receive it, while taxpayers must be confident they are getting the best bang for their $800 million bucks.