Nearly seven months after Pittsburgh City Council voted to create a fund for affordable housing and neighborhood rehabilitation, it’s still not clear where the money will come from.
Two bills before Council center on one option: an increase to the realty transfer tax. The additional revenue generated by the tax, approximately $10 million, would offset a proposed $100 million bond to be issued by the Urban Redevelopment Authority, or URA.
Discussion at a post-agenda meeting and public hearing on Tuesday revealed Council members, real estate agents, affordable housing advocates and the public at large aren’t completely sold on proposal. The current realty transfer tax stands at 4 percent, the highest in Allegheny County and much of the nation. While the funding mechanism created dissent, most supported the need to find a sustainable funding stream to support affordable housing and neighborhood redevelopment initiatives; nearly 20,000 units are needed to meet the city’s housing shortage.
City Councilman Ricky Burgess, who called the issue of affordable housing his “cause” for being on City Council, said the Housing Opportunity Fund would help low-income residents with a variety of housing issues.
“Paying their rent, living in new affordable housing, buying their first home, repairing their existing home, buying and rehabbing abandoned houses, clearing liens and judgments from their properties,” Burgess said.
Councilman Daniel Lavelle, who co-sponsored the two bills with Burgess, said that’s why the fund is called the Housing Opportunity Fund, and not the Affordable Housing Trust Fund, as had been suggested in the May 2016 report from the Affordable Housing Task Force.
Lavelle said the fund will not only help low-income people rent and buy homes, but will keep elderly people in the homes they already own, help maintain property values and revitalize blighted neighborhoods.
“We have, in District 1 alone, a thousand vacant structures. A thousand potential homes for people to live in,” said Kyra Straussman, director of real estate at the URA. “It’s very difficult to source the funding to do even modest rehab or comprehensive rehab to make these places available for someone.”
Rick Swartz, executive director of the Bloomfield Garfield Corporation, said the fund can help low-income people find homes in the neighborhoods where jobs are located. He used the example of someone who makes $25,000 per year working at Children’s Hospital of UPMC in Lawrenceville, where rent prices have risen dramatically.
“The market, the private market, isn’t going to be able to serve that need,” Swartz said. “The simple reason is, it’s very hard to make housing for low-income people profitable.”
Those in favor of the realty tax increase are well-meaning, but unaware of its ripple effects, said Anthony Benvin, of Troy Hill, at the public hearing, citing a client who chose to buy a home in the suburbs versus the city because of “oppressive” real estate taxes.
“At a time when Pittsburgh is doing all it can to attract the young generation of new residents to the city, why would Council want to create another disincentive to living here?” Benvin asked, adding, “Pittsburgh did not become a great city by picking the pockets of its citizenry.”
The Realtors Association of Metropolitan Pittsburgh said raising the realty transfer tax will make homes more expensive, not more affordable. Charlene Haislip, president of the association, cited a 2011 study from Brown University that showed a 1.1 percent increase in Toronto’s Land Transfer Tax resulted in a 15 percent decline in the number of home sales.
But Swartz said Council could write into the legislation a way to ameliorate the potential impact of an increased tax on homebuyers. For example, they could use the fund to create a credit for low-income home buyers or exempt the first $100,000 of a sale from the second percent of the realty transfer tax rate.
Pittsburgh is at a moment where it still has the ability to solve the housing crisis equitably, said Celeste Scott, affordable housing organizer for Pittsburgh United.
“We are in a time like none other,” said Scott. “The fund will help not only families living in Pittsburgh currently, but the families of tomorrow.”
At the end of nearly two hours of public testimony for and against the legislation, Council members made brief comments.
“Do I think increasing the real estate transfer tax is a great idea?” asked Councilman Dan Gilman. “No. Do I think it is the only tool I have in my very, very, very small Harrisburg toolbox? Yes.”
Earlier in the day, Councilwoman Theresa Kail-Smith said she was troubled by the entire process, adding it had been “divisive.”
“You don’t have five votes for this, you’re not going to have five votes for this as long as this continues,” Kail-Smith said.
She also expressed concern that the HOF could be used as a “slush fund,” and said that more parties should have been brought to the table for discussions.
Lavelle said over the last two and a half years, the Affordable Housing Task Force, City Council and the Peduto administration had met with a variety of stakeholders.
“I’m willing to listen to other conversations, other ways to generate this revenue. To date, none of those recommendations have actually materialized,” Lavelle said.