Inside PHA’s $6.3 billion plan to save public housing

The Philadelphia Housing Authority is embarking upon its most aggressive expansion and redevelopment plan since at least the 1960s.

Over the next decade, the $6.3 billion strategy would see the agency overhaul all 13,000 of its existing properties, build 3,000 new units, and purchase 4,000 units in private sector buildings for conversion to affordable housing.

“We can’t just build to get ourselves out of the housing crisis; we have to preserve the existing portfolio,” said Kelvin Jeremiah, president of PHA. “There isn’t going to be a savior. We’ve been waiting for one for the last 25 years, and they haven’t come yet.”

PHA‘s ambitions hardly come at an advantageous moment, and some skeptics fear that the agency may not have the resources or staff to fulfill Jeremiah’s vision.

Interest rates and construction material costs remain elevated amid the chaotic policy landscape of President Donald Trump’s second term. The new administration intends to dramatically reduce the size of the federal Department of Housing and Urban Development (HUD) and slash programs that PHA relies on like Section 8 vouchers.

PHA says it will not alter its plans based on reported federal cuts that have not happened yet. If the cost of new construction soars due to tariffs, Jeremiah says funds could be moved from that aspect of the initiative toward acquiring more private sector units.

Jeremiah says that his relations with the administration are good and that during his tenure the agency has broken with its recent history of corruption, scandal, and inertia.

“More than any other housing authority in the country, PHA reflects a lot of the values that the Trump administration has been espousing,” Jeremiah said. “We’ve taken a lot of steps to address the structural deficit. Waste and mismanagement no longer exists.”

While PHA‘s proposals look unusually expansive in comparison with its recent history, they are of a piece with the plans of other big cities. Public housing in the United States has been chronically underfunded for much of its history, and all large housing authorities face similar challenges of aging infrastructure and perennial lack of interest from Congress.

The nonprofit Center for Public Enterprise, which advises housing authorities throughout the country (although not PHA), reports that cities like New York City and Boston are also accelerating redevelopment of their housing.

Even if PHA‘s ambitions may be stymied by factors beyond its control, supporters say action is needed, especially with more than 100,000 people on their waitlists and a shortage of 64,500 units affordable to lower income residents.

“You don’t get the ball rolling without a big kick,” said Paul Williams, executive director of the Center for Public Enterprise. “If the best time to do this might have been when interest rates were zero, the second best time is now.”

PHA‘s best years date back to the midcentury heyday of liberalism, the last time the federal government dedicated sustained resources to affordable housing. But by the 1970s, when Richard Nixon shifted policy away from public housing and toward public-private partnerships, the agency increasingly became an underfunded backwater known for patronage, retrenchment, and incompetence.

PHA‘s biggest policy achievement in the 1990s and 2000s was razing many of its high-rise apartments and replacing them with mixed-income developments and single-family homes.

While the towers had been unpopular and poorly maintained, the net result was a reduction in PHA‘s portfolio from 21,000 to 13,000 units.

During Jeremiah’s tenure — which began in 2013 after the two previous executive directors were ousted by scandal — PHA has continued to gut, rehabilitate, and demolish some of its oldest buildings, forcing tenants to leave their apartments and neighborhoods.

But unlike previous administrations, the current PHA leadership is committed to one-for-one replacement of units when it razes an old site and guarantees tenants a right-to-return to rehabbed projects.

Jeremiah’s new initiative takes this a step further, with the aim of rehabbing every extant unit while replacing all the units that were lost in the 1990s and 2000s.

“We want to make sure our residents understand that in acquiring property, we are not abandoning our existing portfolio,” Jeremiah said. “We are repositioning the existing sites, preserving them for generations to come, while at the same time building back to the 21,000 number.”

A quarter of Jeremiah’s $6.3 billion plan would come from Low Income Housing Tax Credits. Almost half would come from PHA funds like its capital reserves and from money raised by bond issuances. The rest would come from mortgage proceeds as well as state and local funding. PHA is not anticipating an influx of funds from Washington, D.C.

The rehabilitation of PHA‘s existing portfolio will necessitate substantial disruption for current residents. The existing traditional public housing is going to be moved into the project-based Section 8 program, which has been reliably funded. In many cases that will mean takeover by private management companies, although PHA will retain the ground leases.

Twenty percent of the agency’s existing housing requires rehabilitation so extensive that tenants will have to move out. While PHA will seek to place them elsewhere in the system, or give the displaced Section 8 vouchers, historically that’s been challenging, especially when large numbers of tenants have to be relocated.

But in recent years, as Philadelphia has seen a historic surge in market-rate apartment construction, some building owners have been desperate to fill vacancies and unload properties that haven’t proven as profitable as hoped. More private sector landlords actively court Section 8 voucher holders, and PHA itself is purchasing struggling buildings for half the cost of building themselves.

Such acquisitions are a key part of Jeremiah’s plan to get back to 21,000 units. He says private sector owners regularly get in touch with PHA to offer buildings. (Many are too old to be of interest.)

The most recent acquisition is the Riverward Group’s 220-unit Somerset Station project, just north of Lehigh Avenue, which had been advertising to Section 8 voucher holders.

After many of Somerset Station’s new tenants ended up being voucher holders, PHA approached Riverwards Group about selling the building outright. The agency bought it for over $58 million.

“It’s a very, very smart strategy, and it’s going to truly change the landscape of affordable housing availability in Philadelphia,” said Mohamed “Mo” Rushdy, managing partner of the Riverwards Group. “If they continue doing this for three or four years a big part of our affordable housing crisis will be solved.”

Jeremiah’s new goal comes in the midst of intense local political attention to housing policy, as Mayor Cherelle L. Parker pursues her goal of rehabilitating or building 30,000 units during her term.

If PHA‘s goals are met, the agency alone could account for over half that.

“As the mayor has emphasized repeatedly, this is an all hands on deck moment,” said Jessie Lawrence, Philadelphia‘s director of Planning and Development. “PHA is a key partner … nothing would make us happier than for our collective efforts to not only meet but to well exceed the 30,000-unit goal.”

But some skeptics, including former employees of the agency, say that PHA has struggled with development schedules in normal times — let alone in the midst of a redevelopment blitz unprecedented in modern times.

While the agency is seeking to staff up and creating a new department for property acquisitions and asset management, turnover has been high.

The longtime head of the design and development team, Nicholas Dema, left several years ago and hasn’t been replaced. Nor have many of his subordinates. Crucially, most of the team responsible for navigating the complex Low Income Housing Tax Credit process left the agency in recent years.

Long running redevelopments of historic public housing sites like Bartram Village, West Park, and Fairhill — which predate the current campaign — are far from complete, and families will not begin moving back in until 2027.

Jeremiah points in part to regulatory delays that beset PHA just as they do private sector developers, including difficulties navigating the city’s land bank and zoning board.

That’s partly why the agency increasingly relies on acquiring struggling private sector buildings, as opposed to building new.

“Another reason for the acquisitions is the very bureaucratic, convoluted regulatory process that one has to go through to get from concept in your head about what you want to build to ultimately a shovel in the ground,” Jeremiah says. “That’s an 18-month process if everything goes right. I haven’t had a development that was that smooth.”

Still, despite the litany of challenges facing PHA, national housing experts say that Jeremiah’s aggressive campaign is better than the alternatives.

PHA can’t wait for rescue from the federal government. In the face of mounting housing affordability pressures — and a spike in people living on the street — the agency’s commitment to renewing and expanding its affordable housing stock is in stark contrast to the managed decline of its past.

“For a long time, we’ve seen PHAs treated as passive managers of existing public housing,” said Vincent Reina, professor in the Department of City and Regional Planning at the University of Pennsylvania. “This is clearly a movement toward being an active agent of increasing the overall affordable housing supply. Setting out ambitious goals like this is a really nice signal and if they can fulfill them, that’s even better.”