When Postgreen Homes named the 14-unit housing development they designed for the Philadelphia neighborhood of Kensington Awesometown, they courted the smirks and sniggers the name elicits. However, with the project touting four “affordable units” in a gentrifying area, I looked past the branding eye rolls — and found some notable financing on both the building and the buying ends.
The developer of Awesometown is the New Kensington Community Development Corporation (NKCDC), which has been working on the public/private collaborative with Postgreen Homes for four years. The mixed-income development is on a former industrial site. Postgreen Homes, which received acclaim for their ambitious 100K House, is aiming for “extreme energy efficiency.”
“We’re building almost a passive-house-level of insulation, air sealing, thermal bridging and all of that geeky green-building stuff,” says Chad Ludeman, president of Postgreen. “That stuff is mainly done for custom homes for an owner-builder with a really big budget, spending a lot of time. We obviously have a smaller budget and a smaller timeframe, so that’s unique.”
Instead of using federal support, Awesometown is relying on a combination of private financing and local support (a property tax abatement from the city) to build the project. “This is one of the few public-private partnerships where we’re using private funding in order to bring a mixed-income development to Philly,” says Ludeman. “You’ll see a lot of partnerships where they’re trying to get money, and that’s why they are partnering. This is one where we’re using a normal construction loan from a normal bank to get this off the ground.”
On the purchase end, a sale is already pending for one of the market rate units at $459,725, while the moderate-income units are also pending for $399,000. While the gap between those prices seems curiously shallow, and $400,000 doesn’t seem particularly “affordable” by Philadelphia standards, the NKCDC is providing a purchase price subsidy loan that isn’t reflected in the deed.
NKCDC’s real estate development director Kevin Gray says that they provided the loan to “reduce the amount the buyer needs to pay for the house via buyer’s deposit, down payment and mortgage.” The subsidy, structured through a mortgage program sponsored by the Pennsylvania Housing Finance Agency, was capped at $200,000 and was provided to buyers earning “at or below” the area median income.
“Potential buyers were required to complete an application and schedule a screening with a member of our housing counseling staff for financial capacity/readiness and their ability to obtain a mortgage preapproval,” Gray explains. “Then all successful applications for the subsidized units were selected via an anonymous public lottery.”
With its approach, NKCDC could be paving a path to affordable housing that is less dependent on government help.
The Equity Factor is made possible with the support of the Surdna Foundation.
Alexis Stephens was Next City’s 2014-2015 equitable cities fellow. She’s written about housing, pop culture, global music subcultures, and more for publications like Shelterforce, Rolling Stone, SPIN, and MTV Iggy. She has a B.A. in urban studies from Barnard College and an M.S. in historic preservation from the University of Pennsylvania.