Mayor won’t settle on housing deal
Peduto hasn’t given up on tax credits for Civic Arena site
Pittsburgh Mayor Bill Peduto wants the Penguins to continue to pursue greater levels of affordable housing at the former Civic Arena site even after the team lost out on critical tax credits needed to carry out the plan.
In an interview, Mr. Peduto stressed that “the greatest amount of affordability is what we’re looking for” in the 935 units of housing to be built on the lower Hill District real estate by the Penguins and their developer, St. Louis-based McCormack Baron Salazar.
Those efforts were dealt a huge blow last month when the project was not among 39 statewide to be conditionally awarded 9 percent low-income tax credits by the Pennsylvania Housing Finance Agency.
Contingent on getting those credits, the Penguins and McCormack Baron had pledged to make 20 percent of the 935 units affordable to households at 60 percent or below the area median income for 35 years.
After missing out on the credits, the team said it might have to fall back to the deal negotiated earlier with Hill leaders — 20 percent of the units affordable to households earning 60 to 80 percent of the area median over eight years.
But it does not appear as if Mr. Peduto wants to settle for that.
“We need the 9 percent in order to make the affordability numbers work that we’re seeking,” he said. “We need the 9 percent [tax credits] to be part of that development plan. If we could do it without it, we would. It’s just a component of making sure that affordability is part of that mix.”
Now it’s “back to the drawing board” in trying to secure the levels of affordable housing the credits would have provided, the mayor said.
“It doesn’t mean that it can’t happen in the next round, but the state is looking for a little more equity from the developer to match what the 9 percent would be able to provide,” he said. “It just means we have to wait for another round, tighten the numbers a little bit, and
be able to reapply.”
The next round of tax credits won’t be awarded until May 2019.
That means reapplying could cause significant delays well beyond the latest proposed start date of early next year for the 250- to 265unit first phase, said Travis Williams, the Penguins chief operating officer.
It also could jeopardize the requirement that the team develop nearly 6.5 acres on the 28-acre publicly owned site by 2020 or forfeit a portion of the parking revenue it receives.
Had the tax credits been awarded, the Penguins, who hold the development rights to the land, and McCormack Baron had intended to start construction in November.
Another complication, Mr. Williams said, is that McCormack Baron has applied for 9 percent tax credits in the next round for a housing development in Larimer as part of the Choice Neighborhoods initiative. It is rare, he said, for one developer to be given the tax credits for two projects in the same year.
Given all of that, the Penguins plan to move forward in the first phase with the level of affordable housing outlined in the deal negotiated with Hill leaders in 2014, Mr. Williams said.
“From our perspective, we worked with the county executive and the mayor in moving forward on the low income tax credits. It’s unfortunate that we didn’t receive them,” he said. “As a result, we have to change course.”
Dan Gilman, Mr. Peduto’s chief of staff, said the administration wants the highest levels of affordable housing possible at the arena site, where about 500,000 square feet of office space and 250,000 square feet of entertainment and retail are also planned.
It has put the message out, he said, that if there are projects that have been awarded 9 percent tax credits that can’t be completed and there are opportunities to have the credits transferred, it would be interested in pursuing that.
Scott Elliott, a Pennsylvania Housing Finance Agency spokesman, said there have been situations where a project was deemed not feasible and the tax credit award was rescinded and used elsewhere.
Ultimately, what’s most important “is to get it right than to rush it,” Mr. Gilman said. “But we also realize time is of the essence. So it’s a delicate balance.”
He acknowledged that while higher levels of affordable housing based on 9 percent tax credits are the goal, the parties involved may have to look at other percentages and funding streams if the higher levels can’t be achieved in a timely fashion.
Even the lower levels of affordable housing called for in the deal with Hill leaders could require public subsidies or financing or additional private investment to close a gap estimated at $3 million, Mr. Williams has said.
Marimba Milliones, president and CEO of the Hill Community Development Corp., has urged the Penguins and McCormack Baron to pursue 4 percent tax credits for the first phase.
She has said they would be less competitive to obtain while allowing the Penguins to maintain the greater levels of affordable housing at the arena site.
Vince Bennett, McCormack Baron president, has said the 4 percent tax credit program would more than double the funding gap because of the unit sizes and type of housing required under it.