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News > Context Summer 2023 > Philadelphia's Preservation Challenge

Philadelphia's Preservation Challenge

Source: National Housing Preservation Database
Source: National Housing Preservation Database

By Sue McPhedran, Kyla Weisman Bayer, Carolyn Placke, and Daniel Swain 

According to The Pennsylvania Housing Finance Agency’s (PHFA) 2020 Comprehensive Housing Study, there is an unmet need for nearly 72,000 affordable housing units for Philadelphia’s low and extremely low-income households.1 This has been made even more challenging in that Philadelphia has lost roughly 24,000 unsubsidized low-cost rental apartments, or “naturally occurring affordable housing”, with rents (including utilities) less than $750 per month.2 This problem has only deepened during the COVID-19 pandemic, with almost 21% of Philadelphia landlords putting a property up for sale in 2020, a more than 600% increase than the previous year.3 

The worsening affordability gap and the loss of unsubsidized units has increased the urgency of preserving the nearly 34,200 units of publicly assisted affordable rental housing in Philadelphia as these properties age and/or rental assistance contracts expire. As a general rule, residents in publicly assisted affordable rental housing pay no more than 30 percent of income toward rent.  

The map to the right illustrates the magnitude of Philadelphia’s publicly assisted challenge, and the nearly 4,800 apartments owned by non-profit owners.  

Preservation of Existing Publicly Assisted Affordable Rental Housing Helps Solve Housing Insecurity & Builds Strong Neighborhoods.  

Where do you call home? Is it a rowhouse in South Philadelphia? A suburban home on a quiet tree-lined street? A house shared with roommates in Fishtown? A studio apartment in Center City? Imagine your circumstances change and you are no longer able to afford your own home or your rental apartment building is sold and no longer affordable—what would you do? Where would you live?  

Answering this question is a very real challenge for people who lose their housing — particularly those without a safety net. More times than not, these individuals and families are at risk for homelessness and this risk is amplified by the shortage of available affordable housing.  

The statistics paint an unfortunate picture. In Pennsylvania, 14% of households are housing insecure, which has been proved to directly impact a household’s ability to thrive personally and economically, and hinders growth in our communities. In Philadelphia, nearly 8,000 households are in emergency shelters or transitional housing (Philadelphia OHS FY2021 Data Snapshot) in need of permanent supportive housing. At a time when more than 19 million households across the United States are spending more than 50% of their income on housing, expanding access to and availability of affordable housing is more important than ever. 

Collaborative Approaches to Preserving Affordable Rental Housing 

LISC Philadelphia is one of 38 local offices of Local Initiatives Support Corporation (LISC), a national community development intermediary and financial institution. 

LISC Philadelphia is the convener of the Preservation Network, a multi-sector collaborative of private, non-profit, and public sector agencies committed to preserving and protecting at-risk publicly assisted affordable rental housing in Philadelphia. LISC’s role evolved from serving as the lead consultant for the City of Philadelphia’s Housing Action Plan. 6 

This spring, LISC Philadelphia launched the Non-Profit Preservation Initiative (NPPI), in response to the critical needs of non-profit owners of affordable rental housing as identified through in-depth discussions with owners, analysis of past investments, and a report, “The Preservation Challenge: Projections & Policies for Maintaining Non-Profit Affordable Rental Housing in Philadelphia” ⁷ The first phase of NPPI aims to preserve 650 non-profit owned publicly assisted affordable rental units.  

Mid City Apartments Meets the Need for Permanent Supportive Housing in Center City.  

Mid City Apartments is part of the permanent supportive housing solution in Philadelphia. Located in a former YMCA residence originally constructed as a hotel at 2025 Chestnut Street, this apartment building has provided housing for previously homeless individuals since 1999.  

In 2016, the City of Philadelphia approached Mission First requesting that it save Mid City Apartments from closure by acquiring the project from its for-profit owner. In its location, just off Rittenhouse Square, rents are 35% higher than the City-wide average and a studio apartment rents for around $2,000. This put Mid City Apartments at acute risk of conversion to market rate housing, which would result in the loss of affordable housing in Center City and displace 60 households.  

To combat this risk, Mission First accepted the challenge in 2016. Now, with forward vision, it has committed to renovate the property and make it viable as permanent supportive homeless housing for the next 45 years. Mid City Apartments’ residents, the Center City Residents Association and the City of Philadelphia are supportive of the plan. 

Building for Sustainability 

Mission First knew that as part of the recapitalization of Mid City Apartments, a redesign was needed to support its future sustainability. It turned to CBP Architects, formerly Cecil Baker + Partners—a firm with deep experience in both Center City luxury high-rise residences and affordable rental housing—to redesign the existing structure, making Mid City Apartments as comparable as possible to other downtown residences.  

Local Developer Working to Preserve Affordable Housing 

Mission First Housing Group—a nonprofit real estate developer whose mission is to develop and manage affordable, equitable, safe sustainable homes that support residents and strengthens communities—serves an important role in creating and preserving affordable housing in Philadelphia. Mission First is a leader in preservation, with a niche specialty in difficult projects—preserving more than 700 apartments in Philadelphia and planning to preserve 500 more in the next five years. For nearly 35 years, Mission First has successfully preserved affordable housing in cooperation with lenders, investors and community partners, all the while helping to stabilize neighborhoods, keeping people in their homes and housing some of the City’s most vulnerable. 

The development plan eliminates all of the single-room occupancy (SRO) units with shared kitchens and in their place creates small efficiency apartments, each with its own full kitchen and bath. Existing one-bedroom apartments will be renovated, and the lobby will be reconfigured to create separate entrances for the apartments and the building’s other use. All building systems, fixtures and finishes will be replaced and security enhanced with the addition of cameras and fobbed entry to the building, elevator and apartments. 

 “It was critical to Mission First that we maintain as many units as possible as we transitioned from the single room occupancy model to the efficiency units. We also needed a solution that was as cost effective as possible. We devised a plan that takes three contiguous SRO units and converts them to two efficiencies. Doing this allows us to keep and reuse two of the existing bathrooms with new fixtures and finishes provided. Many demising partitions will remain. This approach provides both efficiency in construction and controls costs, maintains the maximum number of overall dwelling units, and eliminates difficult to manage shared spaces.” 

— Nancy Bastian, AIA, Managing Partner of CBP Architects 

A Complex Financial Structure 

Preservation of Mid City as affordable housing involves a myriad of partners as part of a complex financing structure that supports needed renovations and provides sufficient funds for operations over the long term. Philadelphia LISC provided key early stage pre-development resources to support Mission First’s efforts to determine whether the recapitalization/redevelopment strategy was feasible. 

Local, state and federal government agencies are involved in providing resources for Mid City Apartments, including rent support from HUD’s Rental Assistance Demonstration program, a “soft” loan from the Philadelphia Housing Development Corporation, and Low Income Housing Tax Credits and a “soft” loan from the Pennsylvania Housing Finance Agency. The Federal Home Loan Bank of New York is providing a $2 million grant. In the end, Mission First has pulled together a complex financing structure with 11 separate funding sources totaling $19 million of investment for the preservation of Mid City Apartments. 

“Preserving Mid City Apartments in such an amenity-rich neighborhood speaks to the core of our mission and commitment to ensuring that everyone has a safe place to call home,” said Sue McPhedran, Director of Development for Mission First Housing Group. “Our development and design partners understand the importance of housing preservation and sustainability that supports our residents and the communities we serve.” 

Developing a multi-faceted strategy that preserves existing publicly assisted affordable rental housing, amidst the need for new units and diminishing public resources, is at the heart of the Philadelphia’s preservation challenge. This challenge is all the more acute in neighborhoods experiencing the displacement of residents by rising rents and loss of affordable units.  

Non-profit owned properties moving towards expiration of their affordability restrictions face complex challenges. Property owners will need new financing, including new Low Income Housing Tax Credit (LIHTC) awards and “soft” loans from public agencies to replace obsolete systems, make energy efficiency upgrades, and modernize apartments. Without adequate funding, owners may need to opt out of rental assistance programs, convert to market-rate housing, or sell properties.  

Despite such challenges, preserving existing affordable housing is often less expensive than building new, helps protect previous public investments4,5 and preserves the opportunity for those most vulnerable to live in clean, modern and affordable homes. 

Sue McPhedran is the Director of Development for the Philadelphia Region, Mission First Housing Group. Kyla Weisman Bayer is Senior Development Project Manager for Mission First Housing Group. Carolyn Placke is the Senior Program Officer for LISC Philadelphia. Daniel Swain is Assistant Program Officer for LISC Philadelphia. 

For more information about Mission First Housing Group, go to For more information about LISC, go to 


1. “Pennsylvania Comprehensive Housing Study: County Profiles.” The Pennsylvania Housing Finance Agency, May 2020. pp 52. Available at: 

2. “Gentrification and Changes in the Stock of Low-Cost Rental Housing in Philadelphia, 2000 to 2014,” p. 2; Seth Chizeck (January 2017) Available at: 

3. “How Are Landlords Faring During the COVID-19 Pandemic?” Elijah de La Campa, Vincent J. Reina, Christopher Herbert. August 2021. pp. 32. Available at: 

4. “Preserving Affordable Rental Housing: A Snapshot of Growing Need, Current Threats, and Innovative Solutions” (Summer 2013). Available at: 

5. “Preserving and Expanding The Supply of Affordable Rental Housing: Reforming Policies, Practices and Capital and Building Trust” (April 2021). Available at: 

6. City of Philadelphia, “Housing for Equity: An Action Plan for Philadelphia” Available at: 

7. “The Preservation Challenge: Projections & Policies for Maintaining Non-Profit Affordable Rental Housing in Philadelphia,” (August 2022). Available at: 



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