A City of Pittsburgh bond intended to cover significant investments in affordable housing has yet to materialize, a delay that has affected efforts to budget other funds for housing in the city.
On June 1, Mayor Ed Gainey announced that his administration, working alongside the city’s Urban Redevelopment Authority, would float a bond specifically to advance the creation and preservation of affordable housing. At the time, officials anticipated selling those bonds by the end of the summer.
But that was always the most optimistic timeframe, said Kyle Chintalapalli, Pittsburgh’s chief economic development officer and board chair for the URA. And discussions with Pittsburgh City Council — which had to agree to pay back the money earned through the bond sale — slowed the process down.
Those discussions “took an appropriate amount of time given the weight of the decision before [council],” Chintalapalli said. “So we got a little bit of a later start than originally anticipated.”
Since council greenlit the effort in July, city officials have had regular calls with financial advisors, lawyers, and underwriters to prepare for the sale. At the moment, the city is preparing to have a ratings agency rate the bonds they intend to sell. Once rated, the bonds can be placed on the market, where they will be for sale for three to five days, said Quianna Wasler, the URA’s chief housing officer.
“[The sale] is a pretty quick process,” she said. “Once that happens, we’ll understand what the numbers are, what the yield is.”
Chintalapalli and Wasler said they expect the bonds to be on the market by the end of November, or by the end of the calendar year at the very latest.
Buyers will ultimately determine what the City of Pittsburgh’s bonds are worth, though Chintalapalli and Wasler say the city still expects to raise between $28 and $45 million from the sale. Still, it’s impossible to say for sure — and that uncertainty has proven difficult for the city’s Housing Opportunity Fund.
During budget season, the HOF’s advisory board has to decide how to spend its annual $10 million allocation. Over the years, HOF programs have included support to build affordable housing, as well as providing services and aid to help keep people in the apartments and houses they already call home. During the COVID-19 pandemic, HOF worked to add a legal assistance program that helps people navigate eviction proceedings.
At the advisory board’s most recent meeting, member Adrienne Walnoha summarized the challenge of deciding how best to split money between physical programs — building new buildings — and the more service-oriented ones.
“It’s infinite need and limited funding,” she said. “Determining the most laser-focused strategy to have the most impact is incredibly difficult.”
The task is being made even more complicated by the uncertainty surrounding the bond money.
Bond proceeds will almost certainly be restricted to physical projects – building construction or renovation. Because of that, the advisory board focused on funding social programs in the plan it approved for HOF’s existing $10 million allocation.
But in the meantime, the cost to develop affordable housing is only going up, said HOF advisory board member Lena Andrews during the meeting. Andrews is vice president of real estate development for ACTION Housing.
“And in that environment we’re decreasing our resources” to build housing, Andrews said. She acknowledged that the city is pursuing a bond issue, and there are still federal pandemic aid dollars for housing, but said the exact impacts of those funding sources are uncertain.
“I would hate to impact our ability to create a long-term, permanent stock of affordable housing that is controlled by mission-driven entities,” she said.
Still, both Chintalapalli and Wasler empathized with the HOF advisory board members. Thinking about “the whole ecosystem” is important, said Wasler.
Chintalapalli said the big question is “how are we ensuring that all of these funds are acting in complement to one another, given the incredibly challenging environment.
“It is why we wanted to have this significant addition of resources that the bond can bring to the picture,” he added.
