Housing Production Fund One-Pager

The Problem: Permitted Projects Can’t Get Built

Philadelphia has 2,930 shovel-ready housing units across 39 permitted apartment projects that are approved but unbuilt. Each holds a live building permit and has gone a year or more without taking the next step. Every council district has stalled housing; District 1 leads with 1,150 units, followed by District 5 with 536 and District 2 with 375.

The bottleneck is not regulation — it’s financing. In today’s interest rate environment, construction loans cover roughly 50% of project costs, down from 65%+ in recent years. Developers must fill the gap with private equity demanding double-digit returns, making many projects — especially those with any affordable units — financially impossible to start.

The Solution: A Dedicated Construction Loan Fund

The Housing Production Fund would be a revolving construction loan fund that provides low-cost, short-term subordinate financing to get permitted multifamily projects built. It replaces expensive private equity with patient public capital — then recycles that money into the next project when the construction loan converts to permanent financing.

This is not an acquisition fund. It is not a preservation fund. It is construction money for new housing.

How It Works

• $60,000 per apartment in subordinate debt at below-market rates — roughly 20% of construction cost — sitting behind the bank loan and ahead of the developer's equity
• Eligible projects start at 10 apartments, with no upper limit. A cap on project size would exclude the eleven large buildings that hold 74% of the stalled housing
• No single project may borrow more than $15–25M, so one deal cannot consume the fund, with a share set aside for small and minority developers
• Projects are mixed-income: 70% market-rate, 30% affordable at 60–120% AMI
• The Housing Authority buys each finished building and holds it permanently at that 70/30 split. Because PHA pays no property tax, the affordable apartments stay affordable
• The money comes back every 5–7 years when PHA buys or the project refinances, then goes out again
• Construction must begin within 6 months of the award
• A loan, not a grant. Over twenty years $100M lends about $300M; $100M in grants spends once and stops

Why This Is Different

National Momentum

Pioneered by Montgomery County, MD ($100M fund, 731 units built, 2,399 in pipeline), this model is now operating or in design in Atlanta, Chicago ($135M), Massachusetts, Michigan, Seattle, Chattanooga, Rhode Island, Hawaii, Oregon, Raleigh, Syracuse, and Kingston. Nationally, ~$283 million in revolving loan fund capital has been committed with 5,000+ units built or in pipeline.

In Pennsylvania, Bethlehem has hired the Center for Public Enterprise to design a revolving loan fund. Lehigh County and Allegheny County are also pursuing similar programs. Philadelphia — the state’s largest city — should be leading, not trailing.

The Path Forward

The legal authority already exists. The HOME bond authorization passed in spring 2024 includes language permitting bond funds to be spent on a revolving construction loan fund. Council has not yet appropriated bond money to this purpose. We are advocating for $100 million in the second tranche of HOME bond funding to capitalize a Housing Production Fund, housed at PHDC. This is what PHDC does. It already runs the Redevelopment Authority and the Land Bank, and it incubated the Philadelphia Accelerator Fund before that fund spun off on its own as a CDFI.

There is also one step that costs nothing. Seven buildings with 1,078 apartments have had their permits expire since January. The City can extend those administratively instead of making the developers start over, taking the shovel-ready total from 2,930 apartments to 4,008.

Simultaneously, advocates are working toward a state-level revolving construction fund at PHFA, which would complement local efforts and provide additional construction capital across Pennsylvania. Multiple PA jurisdictions are already moving — Philadelphia should lead.