Philadelphia City Council Mandates 15% Affordable Units in New Housing Projects

Philadelphia City Council voted 12-5 on July 6 to amend the city's inclusionary zoning ordinance, requiring developers of projects with 10 or more units to reserve 15 percent of units for households earning up to 60 percent of area median income. The change applies citywide to multifamily buildings receiving any form of public subsidy or exceeding 50,000 square feet.

The vote follows a two-year review of the 2022 zoning code updates and aligns Philadelphia's requirements with those already in place in Boston and Washington, D.C., where similar percentages have been in effect since 2023. City records show that 47 projects currently in the pipeline would fall under the new threshold once permits are issued after September 1.

Effects on Philadelphia Households and Builders

For residents seeking rental housing in neighborhoods such as Fishtown, Point Breeze and University City, the rule means a portion of new apartments will carry income restrictions tied to the city's 2025 area median income figure of $78,000 for a family of three. Developers have noted that the set-aside replaces earlier voluntary guidelines, which produced fewer than 400 restricted units between 2022 and 2025 according to the Philadelphia Housing Development Corporation annual report.

Local advocates note that the policy will interact with the existing Low-Income Housing Tax Credit program, which allocated $42 million in credits for Philadelphia projects in the most recent state round. Construction firms have stated they will adjust pro formas to account for the mandated mix, potentially shifting some market-rate units to higher price points within the same building.

Comparisons to Other Cities and Next Steps

Under the updated rules, Philadelphia's 15 percent requirement sits between Chicago's 10 percent floor for projects over 20 units and New York City's 20-30 percent range depending on the zoning district. The legislation states that compliance can occur through on-site units, off-site construction within two miles, or a fee-in-lieu payment calculated at $250,000 per required unit.

City planning staff will begin accepting applications under the new standards on August 15. The first projects subject to the ordinance are expected to reach the Zoning Board of Adjustment by early 2027, with initial occupancy of restricted units projected for 2029 at the earliest.