Revitalizing West Philly in a different way

Since 1989, Neighborhood Restorations/West Philadelphia Real Estate has been turning decaying houses into viable rentals.

Mostly one house at a time, one block at a time, with the 27-year total closing in on 1,100 projects at 900 different locations in West Philadelphia - an investment of $160 million, said James Levin, a partner in the development company with Scott Mazo and George Bantel.

Theirs is what is known as a "scattered-site" approach to revitalizing a neighborhood - increasing the value of the surrounding homes by turning a blighted property into a useful one.

This approach has increased the total current market value of all properties in the area by $500 million, a study shows.

Each blighted house - sometimes more than one, if Levin and his partners find the situation warrants - is acquired, usually through sheriff sale. It is then gutted and rebuilt using sustainable practices, so that a low-income family who rents it lives in an affordable, healthy, and energy-efficient home in a solid neighborhood.

When they rehabbed one house recently, "the neighbors set up lawn chairs across the street so they could watch the work," Levin said.

The partners use federal low-income tax credits for acquisition and rehab - a program that marked its 30th anniversary this year. It provides a tax incentive to owners of affordable rental housing - an annual dollar-for-dollar reduction in federal taxes earned 10 years after the units are placed in service, assuming that program requirements are met.

A developer syndicates the credits to investors, whose contributions are used as equity in the project's financing plan. "When the program started, the government encouraged low-income housing developers to obtain them, but now they are much harder to obtain," said Levin, whose company averages about 50 houses a year.

Nearly 18 months ago, the partners "began getting signals from the PHFA that single-site development [multiple units on vacant lots] might be more cost-effective than scattered site in stabilizing neighborhoods," said Ira Goldstein, the Reinvestment Fund's director of public policy and program assessment.

Levin, Mazo, and Bantel had "a long track record of stabilizing blocks" by fixing what was already part of the neighborhood rather than creating new, Goldstein said.

The PHFA, however, was wondering whether new market conditions warranted a different approach.

At the developers' request, Goldstein and the Reinvestment Fund and May 8 Consulting embarked on a study that might answer the question, said Karen Black, CEO of May 8, who conducted interviews to create what she called a "full-use study" to see whether the scattered-site approach is a more cost-effective and better option than single-site new construction.

What Black and Goldstein found was that while both approaches benefit the surrounding communities, scattered-site rehab was "significantly more effective," providing a greater selection of areas and kinds of homes and amenities, such as basement and private backyards.

Home-sale prices within 21/2 blocks of single-site projects were 25 percent higher than for houses that did not have projects that nearby, they said.

Sales within those 21/2 blocks were 50 percent higher than those with no developments nearby.

Scattered-site rehabs can affect a wider area and are more cost-effective than single-site, they said. Costs are 24 percent less than for single-site construction and 27 percent less for single-site rehabilitation, Goldstein and Black said.

The approach uses no public subsidies, compared with the financing of 10 percent to 52 percent of other projects. Historically, 65 percent of the construction work force is from the community, and the minority participation rate is 60 percent.

While the numbers provide a useful benchmark, how people feel about where they live really tells the story.

Black noted that renters surveyed said single-family homes "offer more privacy and are a better place to raise children."

aheavens@phillynews.com

215-854-2472@alheavens