New to Philly: Affordable Housing, No Roof Necessary – Next City
The Equity Factor

New to Philly: Affordable Housing, No Roof Necessary

Ribbon-cutting ceremony at Eastern Lofts in Philadelphia (Photo by Oscar Perry Abello)

With a ribbon-cutting ceremony scheduled at 4 p.m. Wednesday, the partners behind the new Eastern Lofts mixed-use development in Philadelphia’s Strawberry Mansion neighborhood were waiting all day for rainy, gray skies to clear. For Tonnetta C. Graham, president of the Strawberry Mansion Community Development Corporation (SMCDC), patience paid off in more ways than one. Not only did brilliant blue skies appear just before the appointed time, but also it had been at least 30 years since the existing, historic structure on the site was in use.

For more than 10 years, Graham says, different agencies and individuals tried to figure out what to do with the site, a triangular lot in North Philly (at the intersection of Cecil B. Moore and Glenwood avenues and North 30th Street) with Amtrak’s Northeast Corridor tracks on one side. The structure, built in 1922, was once known as the American Railway Express Company Garage. As one of many remaining signs of the neighborhood’s industrial past, it received national historical landmark status in 2006. Thanks to that designation, historic preservation tax credits were paired with new markets tax credits to finance a $7.6 million project.

“All these blighted former industrial buildings are on our radar as a CDC,” says Graham. “We do want these structures to be revitalized and repurposed. However we would like to keep the historical nature.”

This particular building is defined as much by what is there as by what is not: While the original outer walls remain intact, the roof was removed in 2004 for safety reasons, leaving only support crossbeams. SMCDC needed to find a developer who would work within the historical constraints — and without a roof. They found one, finally, in Mosaic Development Partners, a Philly-based real estate company established in 2008 by Gregory Reaves and Leslie Smallwood-Lewis.

“They had to think outside the box because they literally didn’t have a box to work in,” Graham says.

SMCDC also had a few more priorities for the site, including commercial and community space, as well as affordable housing. Mosaic was more than willing to find a design that would achieve all of that without a roof. In fact, in Reaves’ estimation, it would have been impossible if they had to build a roof.

“All of these things to me become math problems in terms of how they work,” says Reaves. “Having no roof allowed us to get probably 20 more apartments that were now two-bedroom, bi-level apartments, which all of a sudden made the math start to work. Something as simple as let’s not put a roof on the building gave us the ability to think differently about this structure.”

The resulting design ended up with 37 loft-style apartments on what was originally the second floor of the building, all arranged around a second-level courtyard, accented by the original columns and crossbeams that once supported the roof. Forty percent of the units are designated affordable for at least the next 10 years, priced for someone currently earning around $44,000 a year. While median household income in the ZIP code is only $16,500, that level of affordability was enough to give SMCDC the confidence to market the units to Strawberry Mansion residents, according to Graham.

There are also eight commercial spaces scattered throughout the first and second levels of the building, which Mosaic is calling “micro-office spaces,” all together about 12,000 square feet. Part of the original parking garage will also go into service once again as a business. The first level will also include a coffee shop that will open in the fall, a 500-square-foot community space that SMCDC will manage for workshops and other community events, and a second location for Places & Spaces for Growth Learning Center, a private childcare and preschool organization.

Fatima Hasan founded Places & Spaces 19 years ago in her basement to serve her neighbors in West Philly. After moving to another building, Places & Spaces became a certified STAR-3 childcare provider in the state of Pennsylvania, meaning that they meet state-inspected standards for high-quality childcare. (STAR-4 is the highest rating.) She plans to hire at least 15 new staff at the Eastern Lofts location, which will serve 80 kids initially and have room for more than 100 eventually. Hasan was on hand Wednesday to help with the ribbon-cutting, along with Graham, Reaves, Smallwood-Lewis, and a constellation of project partners and investors.

Philadelphia Industrial Development Corporation (PIDC) arranged the new markets tax credit financing for the project. PIDC has done 11 new markets tax credit projects so far, totaling $148 million in investments. Eastern Lofts investors included U.S. Bank, State Farm and Mazzarini Real Estate. LISC Philadelphia also extended a $3.7 million loan to provide upfront capital for Mosaic.

Mosaic and SMCDC also agreed to carve out opportunities for Strawberry Mansion contractors. SMCDC has a pool of contractors they keep up to date to connect with projects in the neighborhood. “Opportunities on this project came in demolition, some union carpentry work, electricians,” Graham recalls. “We were able to cover the gamut. Leslie and Greg would call me and say OK we need some plumbers and I had my list and said OK you want three, well here’s five, take your pick.”

PIDC and LISC also made provisions in their financing to ensure that the smaller, local contractors got paid upon completion of work instead of business as usual — having to wait until the project was finished.

Mosaic Development Partners is also moving its offices into the Eastern Lofts. SMCDC hopes momentum from the project will help revitalize other parts of Strawberry Mansion, with Mosaic being a key partner in their vision. “Some developers are all over the place,” says Graham. “This one decided to have their home offices in the neighborhood.”

At the same time, SMCDC has also been working with the Philadelphia Housing Authority to develop new public housing in Strawberry Mansion, adding 10 new units last July, and 21 more last September; two more projects are set to open soon with 67 and 55 units each.

“We can have a diverse community, we can have a mixed-income community — high-end, affordable and market rate,” says Graham. “There’s so much more opportunity to address so many more needs.”

The Equity Factor is made possible with the support of the Surdna Foundation.

Oscar is a Next City 2015-2016 equitable cities fellow. A New York City-based journalist with a background in global development and social enterprise, he has written about impact investing, microfinance, fair trade, entrepreneurship and more for publications such as Fast Company and NextBillion.net. He has a B.A. in Economics from Villanova University.

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Tags: philadelphiaaffordable housingreal estatehistoric preservation