Three days after Thanksgiving last year, the residents of 5620 Rippey Street in Pittsburgh’s East Liberty neighborhood got some bad news: Their apartment building had been sold to a private developer who would not be renewing their leases. Everyone would have to move out.
By now, the erosion of the supply of affordable apartments in East Liberty is a familiar story. The neighborhood saw waves of closures in the 1990s and early 2000s as large towers were torn down. Then in 2015, the owners of more than 300 units at the Penn Plaza Apartments announced they would demolish the complex to make way for a new, mixed-use development. Penn Plaza became a flashpoint in discussions about who gets to live in the “new Pittsburgh,” and made the neighborhood into a kind of poster child for displacement and gentrification.
But this time, the property was sold by an owner who is uniquely aware of the challenges facing residents of modest means: community development group East Liberty Development, Inc.
ELDI has spent years trying to attract new investment to the neighborhood while maintaining affordable rental housing. But its officials now say the neighborhood needs more owner-occupied homes to create more long-term community stability. And it says it will pay for those homes by selling the affordable apartments it used to manage.
“Hoping and praying”
On Wednesday a handful of Rippey Street residents who asked not to be named told a WESA reporter that finding an apartment has been difficult. Four people who stopped to talk were all seniors: All rely on Housing Choice Vouchers, also called Section 8, to help pay for their homes. Waiting lists for apartments that accept vouchers can be years-long and other buildings are too expensive or too far from East Liberty’s stores and bus access, they said.
“People are just hoping and praying that something pops up,” said one woman.
Rippey Street provided what experts call “naturally occurring” affordable housing: It was inexpensive but did not rely on direct government subsidy. Over the years, ELDI accepted Housing Choice Vouchers, commonly referred to as Section 8, and kept rents down as part of its mission, said Skip Schwab, ELDI’s deputy director. Prices ranged from roughly $800 for a one-bedroom to $1,200 for a large two-bedroom. The average asking price for one-bedroom units in East Liberty begins at $1,000, according to housing aggregator Zumper.com.
But ELDI sold the building to Costello Properties, LLC for $1.625 million in November.
The sale shouldn’t have come as a surprise to residents, Schwab said, because everyone had been on month-to-month leases for the previous two years. But Costello originally set a Feb. 28 deadline for vacating the building, and residents called ELDI to say there was no way they could find apartments so quickly – especially in the dead of winter. ELDI worked with the new owner to delay the move-out timeline to summer or early fall.
“We realized that there was going to be a problem with the tenants finding proper units for the relocation,” Schwab said.
ELDI brought back the building’s former property manager to help people navigate finding a new apartment, and the organization will pay each resident $1,000 to help defray the costs of displacement. In addition, Schwab said Costello Properties would release tenants’ security deposits before they move out, so they have money to cover a new security deposit and the costs of moving. Last Wednesday, residents said they thought if they moved out after April 1 they would only receive $500, and hadn’t heard anything about an early release of their security deposit.
John Costello of Costello Properties, LLC did not respond to an interview request.
Rippey Street residents said they continue to look for new places to live but they feel helpless. There’s lots of new construction around the building, and freshly renovated homes, but despite being just blocks away, they’re out of reach. One man said he’d moved four times in the last three years as the East Liberty apartments he lived in changed hands.
Schwab said the sale is emotional, both for residents and for ELDI, which supported rental units for years as a part of its mission.
But “there needs to be an economic basis to every discussion, right?” he said. “You have to balance that economic decision with the emotional decision.”
Changing priorities
Schwab said ELDI no longer has the resources — and arguably never did — to maintain a portfolio of affordable rental apartments. Furthermore, it was a job the organization never really intended to take on.
Schwab said ELDI’s entry into the world of affordable housing was driven by a desire to stabilize the neighborhood “so that the private market could function.”
As Pittsburgh experienced population loss in the 1970s and economic collapse in the 1980s, East Liberty saw an increase in crime and perceptions that it was no longer safe. Schwab said ELDI tried a number of different ways to address those concerns, but when nothing seemed to work, “We decided we were going to acquire the problem. So that got us into property management.”
ELDI bought properties throughout East Liberty; the thinking was that being in an ownership position would allow them to work through problems that contributed to poor perception of the neighborhood. Schwab said the Rippey Street building, for one, had been seized by the federal government in a major drug crime prosecution. ELDI acquired it in 2007 as crime-fighting effort.
But “it was never the long-term strategy” to hold those properties, Schwab said.
In fact, it’s fairly uncommon for community-based organizations and community development corporations to do so, said Chris Rosselot, director of policy at the Pittsburgh Community Reinvestment Group.
“It boils down to capacity,” he said. Managing properties “requires time and resources, working with tenants. A lot of our members don’t have that capacity.”
And while ELDI jumped into the rental market, “a healthy community has a mix of rental and homeownership,” Schwab said. He said East Liberty has tipped too far in one direction: Roughly 70% of the neighborhood’s homes are rentals. So the organization plans to shift its focus to the creation of for-sale homes, both market-rate and affordable.
“The best way to break the Black-white wealth gap is through homeownership in neighborhoods where property values are increasing,” he said. “Not where they’re declining or stagnant.”
ELDI has built two for-sale homes, and sold many of the single-family homes it owned in Enright Court to buyers of modest means, but it wants to do more. Recently, the organization has shrunk its staff and its office space, while beginning to sell off rental units in order to create the funds it needs to build that pipeline.
ELDI isn’t alone in identifying owner-occupied homes as a need. Housing advocates often talk about the importance of helping people with low or moderate incomes purchase homes. The national growth of community land trusts, which own the land under a house to temper increases in its price, is one way the pool of affordable for-sale homes has expanded. Pittsburgh’s Housing Opportunity Fund also offers funding to help homeowners of modest means to repair and stay in their homes; the idea is to insulate them from increasing market pressures.
ELDI intended to sell the Rippey Street apartments six or seven years ago, but amid the fallout over Penn Plaza, “We decided to hold off on that.”
Given ELDI’s familiarity with Penn Plaza, and the neighborhood’s continued need for affordable housing, Randall Taylor said he was shocked the organization sold the Rippey Street complex to a private developer.
“We know what a private owner is going to do,” said Taylor, an organizer with Penn Plaza Support and Action Coalition, which works to bring former Penn Plaza residents back to East Liberty. “They try to extract as much profit out of that property as they can.”
That’s why it’s important to try to keep moderately-priced and affordable rental units out of the private market, Taylor said. He said it’s reasonable for ELDI to sell if it can no longer maintain a rental portfolio and needs operating income, but “let’s see if the Housing Authority [of the City of Pittsburgh] might be willing to purchase that housing, maybe a nonprofit group like ACTION-Housing, or maybe we could seek an alternative,” he said. “Is there a path where tenants could purchase the property?”
Schwab said ELDI did not reach out to the Housing Authority or the Urban Redevelopment Authority before putting the property on the market. He said in an email that the organization has “no knowledge of the URA or the HACP buying existing buildings.”
‘We’re headed toward a cliff’
All of this is happening as the price of housing has surged well beyond East Liberty, making affordable housing increasingly difficult to find anywhere in the area.
Between 2012 and 2019, average monthly rents increased by 8% in Allegheny County, according to a January 2020 report from the U.S. Department of Housing and Urban Development. And the average home sale price in the county went up by 4% each year from 2010 to 2017. Meanwhile, out-of-town buyers are increasingly on the hunt for homes, said Jennifer Rafanan Kennedy, executive director of the advocacy organization Pittsburgh United.
“Naturally occurring affordable housing … is really under this pressure from speculation,” she said. “We’re seeing dramatic increases [in sale prices] which lead to accompanying increases in median rents.”
Renters now outnumber homeowners in Pittsburgh, and the demand for affordable housing outstripped supply by some 20,000 units even before the pandemic exacerbated the housing squeeze, Rafanan Kennedy said.
“We’ve had historic levels of unemployment in Pittsburgh and Allegheny County, and significant losses of household income … and people have still not fully recovered,” she said.
But as COVID has waned, eviction moratoria have ended along with emergency rental assistance. In just the last year, Pittsburgh rents have jumped by nearly 10%, according to Apartment List, another online real estate aggregator.
“We’re headed toward a cliff somewhere in the next few months where it will be a crisis moment for people,” Rafanan Kennedy said.
Given the scale of Pittsburgh’s need for affordable housing, the impact of selling one 18-unit building may seem negligible. But “for every single one of those people or families it’s a crisis,” she said. What’s more, “those sales are happening all the time,” as the city becomes increasingly inaccessible for people of modest means.
“When a mission-driver owner, a nonprofit owner, sells something we need to have systems in place to make sure other mission-driven owners can compete, and get those properties to keep them affordable,” she said.
Nonprofits, advocacy organizations, Pittsburgh city councilors, and quasi-governmental agencies such as the URA agree the preservation of affordable units is critical: It’s far less expensive than building new. But there are few mechanisms in place to buy up vulnerable units at scale.
Pittsburgh United has advocated for using $70 million of Pittsburgh’s and Allegheny County’s combined pandemic relief funds, roughly 10% of the total received, to help acquire places like Rippey Street; Rafanan Kennedy said the group estimates that money could protect between 1,700 and 1,800 units. The federal government’s investments in states and municipalities means “a historic influx of capital to deal with the crisis,” she said, which is key to creating an equitable city. “Having a roof over your head is just critical to everything else in your life.”
Taylor, of Penn Plaza Support and Action Coalition, believes it’s possible to house all the people who need affordable housing – if everyone is serious about making that a reality.
“There is no housing plan in this city, there never has been,” he said. “There’s got to be a better way.”
