City council wrestles with affordable housing fund

When Pittsburgh City Council agreed to a trust fund for affordable housing, Councilman R. Daniel Lavelle hoped to have financing options “to the table” by early February.

Instead, council members are still wrestling with how to pay for the $10 million housing effort they approved Dec. 20. Now supporters doubt that council can solidify a funding stream before the May 16 primary elections, frustrating advocacy groups that encouraged the legislation.

“Haven’t been able to fully flesh out the details and the nuances of the potential funding

sources,” Mr. Lavelle said last week.

He introduced the trust fund measure, for which he said several financing possibilities remain in play. Those include an increase in the city’s realty transfer tax, a bond issuance, support from major nonprofit groups, backing from the Urban Redevelopment Authority or some combination of sources, Mr. Lavelle said. The Democrat is running unopposed for re-election this year.

“If there was a way to utilize the URA to be able to come up with an upfront, set amount of cash to be able to fund this [instead of] having to raise a tax — I would prefer that,” Mr. Lavelle said. “I’m not sure if that’s viable.”

He said he wants the funding question “to become a much more public conversation” this month, likely through a formal council proposal or an open meeting to review options. An increase in the realty transfer tax remains the main possibility under discussion, Mr. Lavelle said.

That idea — raising the levy by as much as 1 percentage point — has troubled the Realtors Association of Metropolitan Pittsburgh, which cast a higher transfer tax as a bigger barrier to home ownership. Pittsburgh residents already pay the highest transfer taxes in Allegheny County at 4 percent, with half the revenue going to the city.

The association has encouraged council to focus on unused, residential real estate already on the city's books. Selling some of that property for deed- restricted affordable housing could ease demand, the group has argued.

“The difficulty of finding other options has been part of this [delay], of trying to figure out another way to do this,” Councilman Ricky Burgess said.

Now he hopes policymakers will settle on a transfer tax increase “as the beginning of this funding,” said Mr. Burgess, who is not running for reelection this year. Proponents have long argued the tax hike would be a progressive approach.

The trust fund follows city findings that more than 23,000 Pittsburgh households spend more than half their income on housing amid higher prices and tax burdens. Such families are especially susceptible to foreclosure, eviction and other hardships, according to last year’s council legislation.

A task force found both low- and moderate-income residents face a shortage of affordable housing, a gap that activists have dubbed a crisis.

“We see people every day getting evicted, being unable to get housing in neighborhoods with good transit access,” said Molly Nichols, director of Pittsburghers for Public Transit.

The advocacy group wanted faster action to pay for the trust fund, hoping that the solution will lean on larger, for-profit companies that make money in the Pittsburgh housing market, she said.

“It is frustrating. But as with all good things, you’ve just got to keep working at it,” said Mark Masterson, executive director at the Northside Community Development Fund, referring to the funding delay.

Mr. Masterson served on the city’s affordable housing task force, which last May recommended the trust fund, resident protections and other policy mechanisms.

As approved by council, the trust legislation sets a $10 million annual funding goal. Trust offerings could range from down-payment assistance and home rehabilitation to foreclosure prevention. It also could help remake vacant housing owned by the city into affordable homes.

To propel the work swiftly, Mr. Burgess said, he would like to see the URA take out a bond up to $120 million. He said that would enable “enough scale to actually begin.”

Buoyed by extra income from the transfer tax, Mr. Burgess said, the city could dedicate part of its budget to the URA for trust-fund expenses. Other entities could pay into the push, which would deliver such returns as broader economic and community development, higher property values and more real estate tax revenue, he said.

Mayor Bill Peduto also emphasized the URA, which he said could examine restructuring its portfolio to finance the affordable housing trust. Other development targets, such as market-rate housing, can take shape without public subsidies, he said.

“Our priority now needs to be how to keep everyone as a part of this growth that we’re seeing in the city,” Mr. Peduto said. “So the priority should be from the URA to be able to create this fund.”

He likened the URA pitch to a revolving fund, established under then-Mayor Tom Murphy, that the authority used for Downtown development. Mr. Peduto said Pittsburgh still could revisit the transfer tax to promote pre-kindergarten education. He is facing two challengers — Councilwoman Darlene Harris and the Rev. John C. Welch — for the Democratic nomination for mayor.

Mrs. Harris abstained from the vote that established the housing trust, saying federal and state money should cover such endeavors. Rev. Welch has supported the trust fund but said such initiatives should move faster.

At the Pittsburgh United coalition, executive director Barney Oursler said the trust has backing across the city. He forecast a heavier public focus on funding after the primary elections.

“No. 1 for a politician is making sure you’re still a politician,” Mr. Oursler said. “We understand and accept that.”

Pittsburgh residents already pay the highest transfer taxes in Allegheny County at 4 percent, with half the revenue going to the city.