Pittsburgh City Councilors still have qualms about using a bond to raise money for affordable housing. However, members approved the effort Tuesday despite those doubts.
“All of us have some little bit of apprehension,” said Council President Theresa Kail-Smith. “Mostly it’s about voting for something we’re not seeing yet.”
The bond is expected to raise between $25 million and $40 million to address a shortage of affordable homes. But unlike the bonds council approves each year, which pay for specific projects detailed in the annual capital budget, the affordable housing bond must be worded more generally.
That’s partly because while there are many affordable housing projects that could use an infusion of cash, the exact list of projects to receive funding can change quickly. Development, particularly of affordable housing, is highly dependent on financing sources, which can appear or disappear quickly and sunder a deal. City officials say they need flexibility in order to fund eligible projects that come through.
Amendments introduced last week by Councilor Deb Gross helped assuage some concerns, by requiring the URA to report on how the bond dollars are spent, and to submit to an annual audit.
Still, the current high cost of borrowing worried Councilor Anthony Coghill, who voted against the effort. Once interest payments and taxes are calculated, the city could spend up to $62.5 million paying the bondholders back.
“I can’t support this today,” Coghill said. “I want to make clear it's no reflection on the URA, it's no reflection on affordable housing. It's simply looking at it from a business point of view.”
Councilor Bruce Kraus worried about how the city would be able to handle the additional debt in the future, noting that borrowing money now is pretty scary due to rising interest rates. However, he ultimately voted to approve the bond issue.
Kail-Smith thanked everyone for their hard work and said that while she had misgivings about the move, she was more nervous about the costs of not issuing the bond.
“Every one of us gets calls to our office trying to help people that are looking for housing,” she said. “And I mean, terrified that they're going to be out on the street.”
“It was the fear of what is known, not the fear of what was unknown that made me decide that I was going to vote for this,” she said.
The URA will continue to work with bond counsel to prepare to go to market late this summer.
