In the Zone with Clementa Amazan

What is Zoning Bonus?

Over the years, the City of Philadelphia has begun implementing the inclusionary zoning bonus program, which allows real estate developers to build a larger, higher-density project than would be permitted under the current zoning laws. In return, real estate developers have to provide additional features to their projects such as mixed-income housing, green roof, underground parking, etc. While once considered a controversial policy, we have seen more and more real estate developers come to us asking about these bonuses offered by the City of Philadelphia.

A Recent Example

There are various bonuses that are mostly related to the specific property’s zoning type. We have been working with real estate developers to obtain incentives from the City of Philadelphia, and a great example of this is the work the team at Nochumson P.C. has recently done with a CMX1 property in the Washington Square neighborhood of Philadelphia.

CMX1 properties, which you will generally find on corners lots, have small-scale, low impact commercial use on the ground floor and residential use on the upper floors.

For the project located in Washington Square, we determined that the best approach was to utilize the mixed-income housing bonus, allowing for both additional density and an additional 7 feet in height.

In terms of affordability, there are 2 tracks to consider – moderate-income and low-income. With moderate-income, there is a 25% increase in density allowed and, with low income, a 50% increase in terms of the amount of residential dwelling units so allowed.

For this project, there were 3 residential dwelling units that were allowed as of right, meaning that, without a variance or special exception, our real estate developer client was able to have 3 residential dwelling units and one commercial unit in the proposed building structure. However, after taking a closer look at the square footage of the property and applying the mixed-income housing bonus, we came to the realization that an additional residential unit could be obtained by applying to the low-income bonus track.

When performing the calculations involving affordability under the mixed-income housing bonuses, attention to detail is imperative. If you have a fraction of a residential dwelling unit, you must round down.

For this project, 25% of 3 allowable residential dwelling units equated to a bonus of 0.75 residential dwelling units. Rounding that down, our real estate developer client ended up with zero residential dwelling units, thus being ineligible for the moderate-income level bonus. However, for the low-income bonus track, which is a 50% increase, 50% of 3 allowable residential dwellings equated to a bonus of 1.5 residential dwelling units. Rounding that down, our real estate developer client was eligible for 1 additional residential dwelling unit in the proposed building structure under the mixed-income housing bonus. Our real estate developer client had the option to either pay into the city’s trust fund, in this case, a total of about $43,800, or to provide an affordable housing unit.

Our next step was to take a comprehensive look at the property in regards to which overlay district it fell into. Since it was located in the Center City Overlay District, the calculations changed a bit. CMX1 would actually be able to have 6 units with the moderate-income tract level, while either providing the affordable unit or making a payment to the city’s trust fund of about $36,500. And finally, with the low-income tract level, our real estate developer client would be able to get a total of 7 residential dwelling units, with payment to the city’s trust fund of about $60,000.

Our real estate developer client was also be able to take advantage of the 7 feet height bonus, regardless of the tract level it decided to apply for.

Lesson Learned

If you are a real estate developer looking into what you can do with a property you own within the City of Philadelphia, make sure to take a look at your property’s land use and zoning report as well as different zoning bonus options that you might get within a particular zone. If you need help navigating through the zoning process in Philadelphia, contact us today or call us at (215) 399-1346 to see how we can take your project to another level.

At Nochumson P.C., we are more than legal counsel. We are people serving our neighbors and community in Pennsylvania and New Jersey. Knowing that real communication between real people can help lead to real positive results, our team of attorneys are available 24/7 to help answer your legal questions and to fight for you with skill and fortitude, whatever the case may be. When you hire us, you can expect a sensible and cost-effective approach to legal counsel. We think fast, think ahead, and get things done.