Pittsburgh created a trust fund for affordable housing. Now it just has to find the funds to fill it, and the places to build new housing.
Pittsburgh is considered one of the most affordable cities in the U.S., if not the world. Still, that doesn’t mean it’s affordable for the 17,241 households that make less than 50 percent of the city’s median household income. Compared to other cities, that’s a modest number; in fact, the National Low Income Housing Coalition ranks Pittsburgh among the metropolitan areas with the highest availability of affordable rental units. However, Pittsburgh is currently benefitting from a burst of economic growth, a quickly sprouting tech industry, and a plethora of “most livable” designations—all of which are setting the table for that pesky visitor named “gentrification.”
That’s why Pittsburgh city council member Daniel Lavelle created a task force in January 2015 to get in front of the affordability issue before it became a severe problem. In May, that task force recommended that the city set up an inclusionary zoning policy, increase the use of federal low income housing tax credits, and to set up a housing trust fund. Lavelle introduced legislation for the trust fund this summer, which the city council passed this week, committing the city to depositing at least $10 million annually. So far, the affordable housing campaign in Pittsburgh has seen little resistance—no council members voted against it.
“What we’re seeing in some pockets of the city are residents asking for affordable housing because all of a sudden they’re seeing their neighborhood turning to the point where the average person can’t stay there, or seniors can’t keep up with the taxes,” says Lavelle. “They’re actually clamoring to slow down development, and that’s working to our benefit.”
The funds will likely be used more to rehab existing units and assist renters than to build new housing, Lavelle says. But first the city has to find a way to fill this new piggybank. While the $10 million allocation was added into the budget, so far there’s no revenue stream to fill it. This will prove challenging for a city whose state limits its ability to create new taxes.
When it comes to raising revenue, Pittsburgh only has three options: increase its wage tax, millage rates, or realty transfer tax. City council members are taking a hard look at that last option, which is already rankling the local realtors association over concerns that a higher property tax will hurt home sales and depress the rental market. There’s little evidence of this ever happening, though. In fact, in Florida, housing advocates convinced the realtors lobby to support a similar setup given that it would help increase homeownership.
In Florida, however, the state has diverted housing trust funds for other purposes. New Orleans had a similar problem when for years the city would use money from its Neighborhood Housing Improvement Fund on services like code enforcement rather than to help low-income families with housing costs, as originally intended.
To avoid that kind of mission creep, Pittsburgh’s law says the money must be used exclusively for affordable housing purposes. But then there’s the dilemma of collecting the taxes to begin with. Large corporations have been able to skirt these taxes in both Pittsburgh and Philadelphia, shortchanging the city programs that those taxes are supposed to support.
That means Pittsburgh will likely need a combination of revenue schemes to keep the housing trust fund full. One city council member suggested having the state and/or federal government fund it. Pennsylvania has a housing trust fund, established in 2012 and funded from fees from natural gas fracking. It provides rental assistance and builds affordable housing, but only in cities and counties directly affected by fracking. A recent state audit found, however, that officials are using its funds for other non-housing purposes.
As for federal help? Between Ben Carson and Paul Ryan, don’t count on it. There is a federal trust fund for affordable housing, but it just began allocating funds this year. Pennsylvania received about $3.8 million, which must be spread among cities across the state. That means there would still be a large gap for Pittsburgh to reach the $10 million mark. Otherwise, federal funding for affordable housing has been declining for years. As noted in the Pittsburgh Affordable Housing Task Force report: HOME and CDBG grants, the city’s two primary sources of federal funding for affordable housing, have decreased by 52 percent and 28 percent respectively since 2010.
The other question is where to put new affordable housing once the fund has enough money. There is a lively debate right now about whether new development should be focused in neighborhoods that have suffered decades of neglect and disinvestment, or used to infuse low-income housing and services into neighborhoods with greater access to better schools and jobs. The second approach is encouraged under a legal mandate to affirmatively further fair housing—essentially, integrating low-income housing into higher-income communities. But people making the place-based argument say families deserve to remain in their own communities.
“I’m a firm believer that you shouldn’t have to move out of your neighborhood to get access to good jobs and education,” says George Moses, a long-time fair housing advocate in Pittsburgh and former chair of the National Low Income Housing Coalition. “I think it’s more about bringing those things to the neighborhood instead of having to move out of your neighborhood to get them. When looking at where you have an opportunity to build new housing, it’s those neighborhoods that were torn down and left to decay.”
Lavelle says this is what that he and the city’s housing leaders are grappling with, especially for the historic African-American Hill District, which abuts the city’s downtown. He started his affordable housing mission here, where the city razed the homes of thousands of families in the 1950s to make room for the Civic Arena. The Hill District’s homeownership rates dropped considerably in the decades after while its poverty rate increased. The arena has since been demolished and there are now plans to install a lot of fancy new amenities in its place, including 1,200 units of new housing. But right now only 20 percent of those units are expected to sell at below-market rates, and virtually none are available for families with very low incomes.
Meanwhile, the city won a federal CHOICE Neighborhood grant this year to redevelop the Hill’s Bedford Dwellings public housing projects, meaning it will be replaced with mixed-income housing. That’s exactly the kind of plan that worries Moses, because of the displacement that comes with it. Lavelle says it could be an opportunity to reconsider how the city has concentrated so many low-income families in the Hill for decades.
“We’re grappling with that internally, saying, yes, we want residents of the Hill to have affordable housing, but don’t we also need homeownership?” Lavelle says. “If we’re going to bring back the commercial corridor, don’t we also need market rate development to support it? I’m not saying I have the answers, but those are absolutely legitimate questions and concerns that we’re going to have to work through.”