PPBC One Page on Housing
Housing
Issue: Gentrification displaces established residents.
While neighborhood improvement is desirable, gentrification disrupts established communities. Increased property values lead to higher real estate assessments and taxes that put economic strain on poor, elderly residents. The City has responded to this problem by establishing the Longtime Owner Occupants Program (LOOP). But, because LOOP provides a tax abatement, the City foregoes revenue and caps this program (at $30 million). Although the intent of LOOP is positive, existing programs are insufficient to alleviate the negative impacts of gentrification.
Need: Provide financial stability for residents in gentrifying communities.
The City should assure stabilization of occupancy and economic security for vulnerable residents as it guides the dynamic improvement of neighborhoods through the development and rehabilitation of privately-owned homes.
Solution: Create a Philadelphia Public Bank to mitigate gentrification impacts.
Instead of foregoing tax, by issuing a form of tax anticipation note, a Philadelphia Public Bank could finance increases in real estate taxes that would otherwise destabilize our communities. Deferred tax liabilities could accrue until a sale or transfer of the property, at which time the PPB would receive payment from the sales proceeds. The City would receive current revenue that the homeowner would not need to pay currently, since funds would be provided by investors who acquire the PPB notes. The increased value of the property would always exceed the amount of deferred tax accrued; so, the property owner would not lose net asset value in a gentrifying market.
The PPB could further promote improvement of the housing stock in targeted neighborhoods by providing credit enhancement for loans from community banks and lending institutions for property repairs and upgrades. The PPB would have a vested interest in the property. Furthermore, gentrification mitigation could be coordinated with companion PPB programs for improving energy efficiency through insulation, weatherization, and replacement of systems and equipment as well as by promoting renewable energy projects involving the property.
