City realty transfer tax hike lacks votes

Plan would finance affordable housing

A proposed increase in Pittsburgh’s realty transfer tax doesn’t have the five votes necessary to win approval on City Council, Councilwoman Theresa Kail-Smith warned Tuesday.

Extra revenue from the increase — an estimated $10 million a year — would finance the affordable housing trust fund that council approved in December. Councilmen Ricky Burgess and R. Daniel Lavelle have proposed raising the levy in the city to 5 percent from 4 percent to address an estimated shortage of more than 17,000 homes for low- and moderate-income families.

But “we don’t feel comfortable raising taxes,” Ms. KailSmith said at a council meeting Tuesday afternoon on the subject. “We feel like we misspend a lot of money. Our residents feel like we misspend a lot of money.”

She doesn’t oppose tackling the housing matter, but council lacks enough details on pending proposals, she said. Rev.

Burgess and Mr. Lavelle also proposed authorizing some $100 million in bonds for affordable housing initiatives under the trust fund — efforts that could range from down-payment assistance to home rehabilitation and foreclosure prevention.

Revenue from the higher realty transfer tax would enable the bond issuance, city officials have said. Rev. Burgess laid out a four-point plan aiming to leverage the $100 million debt into $1 billion in overall investment, including private investment in depressed neighborhoods, over 10 years.

“These neighborhoods deserve this $1 billion community benefit,” Rev. Burgess said, adding that the city has a responsibility to create and rehabilitate thousands of dwelling units as affordable housing.

The increased transfer tax could support about 700 new and rehabilitated affordable units each year, although the city could move much faster with the upfront bond issuance, Mr. Lavelle has said.

“Do I think increasing the realty transfer tax is a great idea? No. Do I think it’s the only tool in my very, very, very small toolbox? Yes,” Councilman Dan Gilman said at a public hearing later Tuesday on the issue.

He said state rules prevent the city from exploring a variety of other options to raise sufficient revenue for the trust fund, which calls for an annual funding goal of $10 million. Council has yet to establish a revenue source.

Yet in a brief exchange with reporters, Ms. KailSmith said she and four other council members have an alternate concept to pay for the housing push. She declined to detail the idea but said specifics should emerge after council goes on recess for much of August.“We have an idea of what we want to do,” she said.

Councilwoman Darlene Harris also said Tuesday that she would not support a tax increase, but she endorsed addressing the housing issue.

Pittsburghers already face the highest realty transfer tax rate in Allegheny County. Realtors and other critics have said raising it could discourage home buyers — especially first-time buyers — from purchasing in the city. Mr. Lavelle said the pending legislation would make lower- and middle-income home buyers eligible for extra assistance. The assistance would be more than enough to cover the higher transfer tax, he said.

“Pittsburgh no longer feels like home to those who struggle through the trenches of the city,” said Billie Vaughn, a city worker who was among more than 30 people who spoke at the public hearing to support the BurgessLavelle legislation. She said impoverished Pittsburghers should be a higher priority than developers.

About 10 people spoke against — or more critically of — the legislation. Many said they worried about pushing away prospective home buyers. Neil Hayden, who bought a home on the North Side a couple of years ago, said the city should embrace millenials “who are going to be moving here.”

An extra percentage point in the realty transfer tax would have put his home out of reach, Mr. Hayden said.

“Our goal should be to make it easier for them, not harder,” he said.