The city of Philadelphia, Pennsylvania is experiencing a boom in the real estate market! Some homes have been reported to have increased 200 percent in value since the year 2000. Housing booms are certainly a good thing, but the down side is that as home prices go up, so do rents, leaving low-income residents struggling. Philadelphia is proposing a small fee on developers which will generate more money to pay for new affordable housing.
Pros and cons
The "impact fee" being proposed would be anywhere between $1.10 and $4.80 per square foot on new market-rate houses and rental units. It is one of many ideas advocates are proposing to City Council members that would double the Housing Trust Fund, giving the city more money to pay for new affordable housing and projects to fix up older homes.
On the downside, some feel the fee would discourage developers from building. This could reduce real estate market activity. The impact could be as little as 3 percent if the fee imposed was on the lower end, to 14 percent, if the highest fee was imposed.
Not enough money in the fund
Regardless, the impact fee could double the money in the trust fund. The fund took in $11.7 million last year that came from a portion of the mortgage and recording fees paid by new homebuyers, but it's not enough. They need more in order to meet the needs of Philadelphia's affordable housing. Some feel that even doubling the fund to $25 million might not be enough.
Read more at www.newsworks.org/index.php/local/philadelphia/91825-impact-fee-on-developers-proposed-to-aid-low-income-residents-in-path-of-philly-housing-boom
