A City of Neighborhoods and the Challenge of Affordable Housing

We hear a lot about Philadelphia as a “city of neighborhoods.” The description certainly fits, as we have a wealth of distinctive communities offering all varieties of food, shopping, architecture, civic institutions, and other amenities that enhance our quality of life. But what makes Philadelphia uniquely neighborhood-centered? After all, Manhattan has neighborhoods, Boston has neighborhoods, and even sprawling modern suburbs masquerading as cities like Phoenix have neighborhoods. In my view, a very particular history created Philadelphia’s built environment, and those of us working in real estate development here in the city are duty-bound to understand and honor it.

At the Philadelphia Accelerator Fund, we focus on financing as much construction of affordable housing as possible, with an eye on preserving and enhancing what makes the city distinctive. The Fund is a recently organized non-profit corporation empowered to make loans and equity investments in affordable housing construction projects throughout the city. All projects we help to finance require that a majority of the housing built remain deed-restricted as affordable for at least 15 years. We also work to support small, MBE-owned development firms that often lack access to affordable capital. But beyond these policy guidelines, we have significant flexibility in what we finance, which is where a consciousness of the city’s history and the arc of its development becomes critical.

A major, underappreciated distinction between our city and its peers was the concentration of small-scale, neighborhood-based manufacturing, which predominated in Philadelphia going back almost to its founding. I alluded to this in a piece published last summer by AIA Philadelphia’s quarterly magazine.

In 1681, King Charles II deeded the land that became Pennsylvania to William Penn to settle debts owed to Penn’s late father. Despite his many flaws and shortcomings, Penn was sincere about religious tolerance and created Pennsylvania as a haven for oppressed Europeans who made up a significant part of the early colonial settlement. These new Pennsylvanians, beginning with nearly 100,000 Germans who immigrated before the American Revolution, brought a tradition of skilled artisan manufacturing that fit the needs of the burgeoning colonial-era economy like a glove. Settling primarily in and around Philadelphia (many clustered in what soon became known as ‘Germantown’), these colonists produced high-quality furniture, glass products, ironwork, textiles, and many other finished goods. Another wave of pre-industrial era German immigration further solidified the artisan economy that prevailed well into the next century.

Couple this immigration with Pennsylvania’s enviable diversity of natural resources – the timber of the northern tier, oil and gas in the northwest, anthracite and bituminous coal in the northeast and southwest, fertile soil for agriculture in the south-central region – and the commonwealth and city were primed from an early age to become a manufacturing powerhouse.

As urbanists like Richard Florida have persuasively argued, once a city establishes a particular economic foothold, there is a stimulative-multiplier effect on the region as a specialized hub. This was true in the 18th, 19th, and 20th centuries, just as it is today. Succeeding generations of immigrants to Philadelphia, including new waves of arrivals from Germany, Ireland, Italy, Eastern Europe, Mexico, Asia, and elsewhere, as well as hundreds of thousands of Black Americans escaping the Jim Crow South, were drawn to Philadelphia in large part due to the strength of its specialized, high-end manufacturing economy. They, in turn, contributed to and expanded the industrial base while maintaining its essential character.

By the early 1950s, nearly half of Philadelphia’s employment was in manufacturing, significantly exceeding the concentration of manufacturing employment in peer East Coast cities. To take just one data point, by 1928, Kensington was home to 350 individual textile firms. Many of these businesses were located on and around the American Street industrial corridor, within walking distance of a modest rowhome for many of the tens of thousands of people the area’s mills employed. The promise that Philadelphia offered to legions of new residents was a skilled profession, a comparatively high wage, and an affordable house within a manageable commute from their employer. The neighborhood was more than just a residential community; it was also, in many cases, a center of employment. These circumstances engendered deep neighborhood roots for many new immigrants and helped to create enduring civic institutions, nurturing the growth of local houses of worship, schools, groceries, commercial corridors, and democratic participation.

Jobs, Communities, and Housing

It is tempting to romanticize this history, and perhaps I have. To be sure, Philadelphia has struggled with poverty, hideous racial segregation, and employment discrimination, as well as a litany of other problems that have afflicted large American cities throughout our history. But one can still walk the streets and alleys of the city’s neighborhoods and appreciate what the long blocks of sturdy rowhomes meant for a burgeoning middle class. The built environment and character – the walkable neighborhoods, the civic institutions at the end of the block, the narrow streets disrupting Penn’s grid (1)– are fundamental to what makes our city unique.

Vestiges of the neighborhood-based manufacturing economy that undergirded Philadelphia’s early economic growth remain. There has even been a renaissance in certain aspects – the happy reemergence of local craft brewing and distilling over the last decade, for example. The scale of our neighborhoods has also mostly endured, even as local employment began to cluster in Center City and a handful of other hubs. With a few unfortunate exceptions, the city emerged from the 1950s, 60s, and 70s, having resisted the worst instincts of urban renewal and with a city of neighborhoods largely intact. Most recently, the growth in hybrid and fully remote employment stemming from the coronavirus pandemic poses difficult challenges for Center City but opportunities for neighborhoods. Office workers who spend less time commuting and spend more time at home can be better tethered to their communities and more likely to be active, engaged citizens. They are also a ready customer base for small retailers, and there is good reason to believe that an enduring hybrid work culture will be a boon for commercial corridors throughout the city.

At the same time, we continue to face a difficult affordable housing challenge. On the one hand, there is room to build, with 12% of our land vacant and a population hovering at around a half million people below our late 1950s peak. But we also have some of the highest construction costs in the country and a poverty rate north of 20%. These are the contours of the problem confronting affordable housing developers, policymakers, and nonprofit financing organizations like the Philadelphia Accelerator Fund. Here are just a couple of ways in which we approach our mission while remaining conscious of the importance of the neighborhood:

1. Promote rehabilitation of existing property when economically viable

2. Promote mixed-use development along commercial corridors

3. Promote development by local developers and community stakeholders

…learn more about these approaches