Projected sources of financing

Rehabilitating and redeveloping PHA’s public housing inventory through its Opening Doors Initiative is estimated to cost $3.8 billion. The following are some of the expected sources of financing:

  • PHA Funds: Funds include existing and continued federal funding through HUD’s Moving to Work program, which provides federal dollars to support innovative local housing authority strategies.

  • Hard Debt: First mortgage proceeds that PHA expects to raise as a direct result of converting to long-term Section 8 subsidy contracts.

  • 4% Tax Credit Equity: This will help fund major rehabilitation projects and some redevelopment projects. These 4% credits are “as of right” but their availability at a given time is subject to state bond volume caps. 

  • 9% Tax Credit Equity: PHA has used 9% tax credits to support 22 projects over the past 10 years and anticipates using this critical resource to generate equity for future redevelopment projects.

  • Choice Neighborhood Initiatives Grants: Over the years, PHA has also been successful in obtaining HOPE VI and Choice Neighborhood grants. The plan assumes a total of three CNI awards, including the $50 million awarded in July 2023 for the Bartram Gardens redevelopment.

  • Seller Note: As part of its 4% rehab transactions, PHA will dispose of the buildings to the new tax credit partnerships but will keep ownership of the land. It will then offer a seller note, which boosts the tax credit basis, generating additional equity.

  • Excess Mortgage Proceeds/Scattered Sites: Additional mortgage proceeds that PHA expects to raise from refinancing its scattered site properties. Proceeds will mostly be used to support redevelopment projects.

  • Other: Existing reserves, deferred developer fees and other local grants, including the Pennsylvania Housing Affordability and Rehabilitation Fund (PHARE) and the Redevelopment Capital Assistance Program (RACP).

Anticipated Schedule

PHA’s Opening Doors Initiative anticipates a 10-year timeline to convert all 12,900 units to Section 8. The biggest factor will be the availability of external funding, particularly 4% and 9% credits. Here’s the approximate schedule for the three major development categories:

  • Scattered Site (3,950 units): Will be converted in three phases of about equal size over a three-year period from 2024-2026.

  • Redevelopment (3,850 units): Will occur in three major waves. Each redevelopment project takes 5-6 years and will involve multiple phases to allow for a “build first” strategy, where most residents remain in existing units until new units are built on-site.  The first wave of will include Westpark, Harrison, Fairhill, and Bartram; the second wave will include Johnson Homes, Rosen, R. Allen, and Spring Gardens; and the third wave will be all remaining projects, with a timeline of planning to completion from 2027 to 2033.

  • Rehabilitation (5,100 units): About half of the units require light or moderate rehabilitation. This inventory is expected to convert by 2026. The remaining units in this grouping require major rehab and will be recapitalized using 4% tax credits over a six-year period from 2024-2029.