In late December, Pittsburgh’s City Council passed legislation creating the Housing Opportunity Fund (HOF), a special fund overseen by a governing board that will create and preserve affordable housing in the city. However, one major component was missing from the legislation – how it will be funded. The Affordable Housing Task Force, first convened by Mayor Peduto in 2016, recommended a funding goal of $10 million per year. That money is predicted to create and/or save around 700 units of affordable housing per year given current market conditions. The most stable form of funding would be from the City budget, but that option is not being considered. Instead, the HOF’s funding will likely have to rely on at least two, if not several, disparate sources. The primary concern among PCRG and our members is how regressive any one funding source will be on low and moderate income earners.
The two most common forms of funding affordable housing trust funds like the HOF are real estate transfer taxes (RETT) and property taxes. However, Pittsburgh is somewhat unique in that both our RETT and our property taxes get diverted to several different areas. In the case of the RETT, which is currently at 4% of the sales price, 1% goes to the state, 2% to the city, and 1% to the school district. The suggested increase to the RETT is 1%, meaning that a home selling for $200,000 in East Liberty would owe $10,000 in RETT-related closing costs. The city’s property tax is similarly divided up between the city, county, the Pittsburgh Public Schools, and the Carnegie Library of Pittsburgh. Choosing just one of these to meet the yearly funding goal will concentrate the burden and take a disproportionate amount of income from those least able to contribute.
Another option on the table is the creation of a developer impact fee, meaning a developer must set aside a certain number of affordable units (typically pegged to a certain percentage of Area Median Income) or pay a fee. The calibration of that fee is crucial – set too low and it becomes another cost of doing business and does not adequately fund the HOF; set too high and it could result in political upset and a cooling off of the housing development market.
While a RETT is common source in other cities and states for funding affordable housing, their rates are universally lower than Pittsburgh’s (or Pennsylvania’s for that matter). More to the point, their lower RETT is typically dedicated to fund one thing, be it affordable housing, nature conservation, etc. Pittsburgh’s RETT is already being split three ways, and soon to be four if the HOF is included. Both the high amount and degree to which our fund is split up makes it anomalous. Much like the RETT, property taxes are also regressive. Despite this, Pittsburgh’s population is large enough that a very small increase in the property tax – even just a 0.25 mill increase – could make a large dent in the $10 million needed for funding the HOF.
Impact fees should absolutely be considered as part of the HOF’s funding strategy, but we should leave behind the idea that the fee is given in-lieu of the creation of affordable units. When an impact fee is an option, it seems that developers almost always select it. This is not to say that below-market units should be discouraged, but we should focus more on getting the impact fee right. The Philadelphia Coalition for Affordable Communities may be a resource for Pittsburgh’s own efforts.
Pittsburgh’s housing market is faring well on the whole, but is highly uneven from neighborhood to neighborhood. Therefore, the RETT’s impact on neighborhood markets will also be uneven and could cool the overall market slightly. While that might be a benefit in rapidly gentrifying neighborhoods like Lawrenceville and East Liberty, the cooler market areas may be resistant to a devaluation of their homes due to higher taxes. It is also unclear whether a 1% increase in the RETT will be stable and large enough to accomplish the goals of a future housing trust fund. There is also the less quantifiable impression such a high tax gives people looking to purchase property in Pittsburgh, and could further incentivize people to locate outside city bounds.
PCRG and its members want to make homeownership and its attendant wealth generation available and affordable to all Pittsburghers. We believe that relying solely on a 1% increase to the RETT to fund the HOF puts too high a burden on LMI buyers and sellers. It also locks the HOF into only one source – a volatile one – and does not build resiliency into the HOF’s ability to achieve its goals. The cost of the HOF could be successfully distributed across current homeowners, businesses, developers, and home buyers and sellers if we can accept the complication of a multi-stream funding structure.
VISTA (Volunteers in Service to America) was founded in 1965 as a national service program to make an impact on the fight against poverty in the United States. In 1993, VISTA was brought into the AmeriCorps network of national service programs creating AmeriCorps VISTA. PCRG and its four subsidiary sites (Economic Development South, Millvale Community Library, New Sun Rising, and Work Hard Pittsburgh) currently have six VISTAs and one VISTA Leader serving in the Pittsburgh region. Our VISTA members are building infrastructure that will strengthen the programs within their site by community outreach, researching and collecting data, recruiting and managing volunteers, implementing new systems, and engaging the residents in their communities. Each month, we will be featuring one of our VISTA members through our Newsletter and social media. Stay tuned!
We are currently recruiting for a Program VISTA at the PCRG office that will begin their year of service on March 21, 2017. The Program VISTA will serve directly under our community outreach manager and play a large role in fundraising and grant writing. If you or someone you know is interested please contact Caley Yakemowicz, VISTA Leader, at email@example.com for further details!
Our VISTAs spent MLK Jr. Day volunteering alongside a fellow Pittsburgh AmeriCorps group, KEYS Service Corps, at the Greater Pittsburgh Community Food Bank.
If you’re interested in buying a fixer-upper and would like to learn more about a unique financing option, Pittsburgh Community Reinvestment Group (PCRG) will hold an info session for the Community Acquisition and Rehabilitation Loan (CARL) on Wednesday, February 8th from 6 – 7 PM at PCRG (1901 Centre Avenue, Pittsburgh, PA 15219). These information sessions will be reoccurring and will take place on every second Tuesday of the month.
At the info session, we will provide attendees with:
Following the presentation, we will answer questions from all the attendees, and we are also happy to stay after to discuss things on a one-on-one basis.
RSVP with Alyssa Lyon at firstname.lastname@example.org or (412) 391 – 6732.
In 2016, a new program began making a significant impact on communities served by PCRG’s members. PCRG has been involved with land revitalization work in Pittsburgh for many years, both through direct, on-the-ground work in communities and through programs like the Vacant Property Working Group. As an extension of our work enabling our member organizations to access vacant and abandoned properties for redevelopment in their communities, PCRG was approved to serve as a community buyer through the National Community Stabilization Trust in May.
Since May, PCRG has partnered with the National Community Reinvestment Coalition and other member organizations to provide access to the NCST Property Acquisition Program. This partnership allows our members and affiliates committed to affordable housing redevelopment to access homes before they reach the open market, and at a significant discount.
PCRG and our partners have closed on houses in areas spanning the Pittsburgh Region—from the East Hills, Northside neighborhoods, and McKees Rocks, to neighborhoods in the South Hills. Pictured below are before and after pictures of one of the houses NCRC has renovated for resale.
Interested in learning more? An information session about the NCST Program will take place at PCRG’s offices at 1901 Centre Avenue, Suite 200 on January 20, 2:00 – 3:30 PM. Email Sarah Slater, Program Coordinator for Land Use, at email@example.com to RSVP, or to stay informed about future information sessions.
PCRG’s Seventh Annual Community Development Summit will take place this May 24-25, 2017 in downtown Pittsburgh, Pennsylvania. Our call for presenters is now open, and we invite you to submit a session highlighting the work you’ve done over the past year.
In 2016, we received rave reviews of our keynote speakers, Charles Montgomery, author of Happy City, and Charles McMahon, Senior Fellow at the Urban Land Institute. With over 500 attendees, we awarded more scholarships and had more sponsors than ever before, enabling PCRG to reach more of the community development sector. Read more about the 2016 Summit on our conference website.
This year, we hope to diversify our Summit even more. Our theme is CommUNITY: The Power of People in Action. Sessions and workshops will explore the theme as broadly defined below:
CommUNITY: The Power of People in Action examines how people take concepts, build support, and put them into action. Community development leaders across the spectrum want to know how to smartly effect change, in every area that impacts our communities and their people. We seek lasting change that pays dividends to residents, entrepreneurs, responsible developers and investors. We want to break the cycle of triage management and create true wealth and opportunity. At the 2017 Community Development Summit, we will lift up models that have successfully achieved these goals.
Proposals will be accepted online at our Summit website between December 19, 2016 and February 12, 2017. Selected sessions and workshops will be diverse in subject matter, content, and format. This year, we are especially seeking presenters with different perspectives, nontraditional backgrounds, and experience working across boundaries.
Visit our Summit website for more information about our theme and the kind of session we hope to feature. You can also contact Chris Sandvig at firstname.lastname@example.org with any questions you may have. Best of luck!
The policy agenda pursued by PCRG is shaped by the needs of our membership. For 2017, one of the major initiatives of PCRG’s policy department relates to the establishment and implementation of the Pittsburgh Land Bank (PLB).
At the PLB Board of Directors meeting on January 13, 2017, the discussion centered around the release of the land bank’s Policies and Procedures, and the communications contract the PLB Board of Directors has signed to publicize those policies and procedures.
At the meeting, Ivette Mongalo represented her firm, Mongalo-Winston and Fourth Economy Consulting, who were awarded the initial communications contract for the PLB in December. Mongalo gave an update on the progress made on that contract so far. Mongalo-Winston and Fourth Economy will be developing an online presence for the land bank. Because the PLB will be established as an authority rather than a department of the City of Pittsburgh (like the Pittsburgh Water and Sewer Authority, or the Port Authority), they will have a separate online presence from the City. Mongalo-Winston and Fourth Economy will also be hosting the five community meetings required by the enabling legislation. Those community meetings will happen this winter and spring, starting in February and likely continuing through the end of March. Meetings will be held in each of the major regions of Pittsburgh.
The Board of Directors also announced that the Policies and Procedures will be released to the public by the end of January. The Policies and Procedures, a technical document that will govern the operation of the Pittsburgh Land Bank, is currently subject to internal review. It has also been reviewed by the city agencies who will be responsible for carrying out parts of the land recycling process facilitated by the land bank. The Pittsburgh Land Bank will be accepting feedback in a variety of ways, and PCRG encourages our members and partners to make your voices heard.
To stay informed about the progress being made by the Pittsburgh Land Bank, you can sign up for official notifications from the Pittsburgh Land Bank here, or visit the Pittsburgh Land Bank website at http://pittsburghpa.gov/landbanking/. For more information about PCRG’s advocacy regarding the Pittsburgh Land Bank, visit our policy website: http://www.pcrg.org/policy/pittsburgh-land-bank/. You can also contact Chris Sandvig, Director of Policy, at email@example.com, or Alyssa Lyon, Manager of Community Outreach and Member Engagement, at firstname.lastname@example.org, with any questions you may have.
Friday, January 20
2:00 – 3:30 PM
Wednesday, January 25
1:00 – 2:30 PM
Monday, January 30
1:00 – 2:30 PM
Thursday, February 2
12:00 – 2:30 PM
Monday, February 6
12:00 – 1:30 PM
CARL Information Meeting
Wednesday, February 8
6:00 – 7:30 PM
Friday, February 10
9:00 – 11:00 AM
Members & Mingle | Wine & Cheese
Wednesday, February 15
6:00 – 8:00 PM
For more information on this newsletter, please contact Brigid O’Hara, Member Engagement and Communications Coordinator, at bo’email@example.com or (412) 391-6732 ext. 211.