As Philadelphia officials work to boost the supply of affordable housing in the nation’s second-poorest large city, a local kingmaker for low-income housing tax credit funds has changed the way it allocates gap financing in an effort to bring more units online.

The Philadelphia Housing Development Corp. removed its tight deadline for 4% low-income housing tax credit gap financing applications this summer and replaced it with a year-round rolling one. This was meant to improve the quality of submissions it receives and better align the organization with the Pennsylvania Housing Finance Authority.

PHFA is responsible for administering federal LIHTC funds across the entire commonwealth. In Philadelphia, it wants buy-in from the city for these decisions, and the PHDC gap financing is the mechanism used to indicate that support.

“The goal is to really have shovel-ready projects at the time of award,” PHDC CEO David Thomas said of the rolling deadline, which went into effect June 1.

PHDC has also added a per-unit component to its allocation formula to boost the volume of new housing it supports.

The city-affiliated nonprofit community development corporation could award up to $85M of Philadelphia Department of Planning and Development funds to LIHTC projects in the form of gap financing in 2026. 

Developers seeking the gap financing in recent years have often not had their entitlements or capital stacks in place, which led to extended delivery timelines that clashed with PHDC’s mission of bringing more affordable housing online as quickly as possible.

Thomas attributed this to the single request for proposals the organization has historically issued annually, often with a different deadline than the previous year.

“People aren't always aware when that is coming,” he said.

“When they are alerted to the notice that is being issued, they're often not ready for submission but fear that if they don't get it in now that they have to wait another year. So they give you an incomplete application.”

Pennrose Regional Vice President of Pennsylvania, New Jersey and Delaware Lindsey Samsi has built several LIHTC projects in Philly with this gap financing, including the 55-unit Good Shepherd Senior Residences in Overbrook and 64 units on the way at Bartram Village in Southwest Philly.

She said the move to a rolling deadline will help developers meet PHDC's expectations.

“It makes for a more substantial and vetted application going into them,” Samsi said. “Developers will have the opportunity to check all the boxes we typically would.”

PHDC also added a unit-count criterion to its allocation process for the 4% gap financing this year. 

Instead of all projects being eligible for up to $3M regardless of size, developers can now get $100K per unit for up to 30 apartments. They are eligible for $50K per unit beyond the initial 30, for a total maximum grant of $4.5M.

The addition of a volume metric is in part to help Mayor Cherelle Parker meet the goal of adding or rehabilitating 30,000 units outlined in her HOME Initiative, Thomas said.  

The rolling application deadline is meant to better align PHDC’s process with the PHFA in terms of timing. The agency, which makes decisions about the allocation of federal LIHTC funds across the commonwealth, also has a rolling deadline for the 4% program, Thomas said.

Alignment between the two organizations is helpful for developers because PHFA treats the PHDC gap financing as a prerequisite, Samsi said.

Pennrose has never done a LIHTC project in Philadelphia without PHDC gap financing during her tenure.

“The state wants to see that the stakeholders in the city are supportive of the deal that’s happening,” Samsi said.