Witnesses wait to testify before the Pittsburgh City Council on the Housing Opportunity Fund.

Witnesses wait to testify before the Pittsburgh City Council on the Housing Opportunity Fund.

Sarah Anne Hughes / THE INCLINE

Pittsburgh wants an affordable housing fund, but hasn’t figured out how to pay for it

Would a realty-tax transfer increase help or hurt millennials?

The testimony was familiar but not diminished in its emotion.

Pittsburgh residents talked about rising rents, about poor housing conditions, about absentee landlords. About being pushed out of their neighborhoods just as the areas improve, about gentrification, about not knowing what to do next.

“I work here. I come to work everyday. I love my job, but I have nowhere to live,” Billie Vaughn, a city employee and mother of three, told the Pittsburgh City Council. Vaughn said she has a Section 8 voucher, but landlords have denied her even the opportunity to look at housing in some parts of town.

More than 50 witnesses testified to members of the council into the evening Wednesday on the proposed creation of a Housing Opportunity Fund. The legislation, introduced by Councilman R. Daniel Lavelle, would set aside millions each year to preserve and produce affordable housing. (“Affordable,” as defined in the bill, means a household spends no more than 30 percent of its gross income on housing.)

Support for the fund was near-unanimous: Pittsburgh needs to produce and preserve affordable housing, and it needs to do it now.

But how the city should pay for the legislation, which calls for council to appropriate at least $5 million in 2017 and at least $10 million each year after that to the fund? That was another question.

A question of affordability

A household is considered “severely burdened” when it pays more than 50 percent of its income for housing. More than 25,000 Pittsburgh households fit that bill, according to Lavelle’s legislation.

The city currently lacks 17,241 affordable rental units needed for households that make half or less than half of the area median income (that’s $35,600 for a family of four), according to the Affordable Housing Task Force. 

At the same time, federal and state money for affordable housing is drying up. Mark Masterson, a member of the task force and executive director of the Northside Community Development Fund, which helps businesses with financing, said Pittsburgh can no longer rely on that money.

“For the first time in decades, market rate housing development is able to occur with little to no public subsidy. The upper boundary of our real estate market is increasing in value at a rapid rate, and there are many positive outcomes brought with this,” the task force wrote in its recommendations, released in May. “However, without conscientious, intentional supports built into the system, the unintended consequence is that the entire market, including the lower ends, are also rising, vastly outpacing wages and creating housing insecurity for many individuals and families.”

With $10 million a year, the task force estimates the fund could produce or preserve 6,840 units over 10 years.

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Affordable Housing Task Force

A taxing tax?

The realty-transfer tax — a fee on property sales traditionally split between buyer and seller — was at the center of the dissent Wednesday.

Raising the tax to pay for the fund was one idea proposed by the city’s Affordable Housing Task Force. The increase of one percentage point — from a total of four percent to five percent — would generate an estimated $9 million a year.

“Should the mayor and city council decide to pursue potential revenue sources from dedicated tax increases, it is recommended that these be subject to a public referendum,” the task force wrote.

Pittsburgh United wanted voters to take up raising the realty-transfer tax to pay for the fund later this year through a ballot initiative. But after collecting signatures, the labor and social justice coalition instead threw its weight behind Lavelle’s bill, which does not identify a dedicated funding stream.

Local realtors strongly objected to a tax increase.

“We’re out there every day. We are keenly aware that there is an affordable hosing problem,” said Charlene Haislip of the Realtors Association of Metropolitan Pittsburgh. But “increasing the cost of buying a house,” she said, could force first-time buyers “across the border” — into other parts of Allegheny County where the tax is one or two percentage points lower.

Haislip focused on millennials, saying this much-talked-of group wants to stay in their homes, not for a handful of years, but forever.

“If we drive them out now with higher costs in the name of making things affordable, we’ve lost city residents for an entire generation,” she said.

The battle for millennials

Silas Russell of SEIU Healthcare Pennsylvania — a union for nurses and other health-care employees — testified about how housing is also a healthcare issue. But he also told council that those who oppose raising the realty-transfer tax to supply money for the fund had made the supporters’ point.

“Millennials want to purchase homes and keep them for a long time,” he said. “Why should it not be that folks who are purchasing homes more often, who are contributing to the increase in market rate, who are flipping houses have more stake in funding a solution to the problem?”

Lavelle reiterated to those gathered that “there is no bill to increase the realty-transfer tax.” When Council does identify a funding source, there “will be a robust debate then,” he said.

Council will likely use the next several months to hash out this issue before taking a vote by the end of the year. But what this hearing made clear is that Pittsburgh residents — millennials, seniors, everyone in between — can’t wait much longer for affordable housing.

Josh Malloy is 25 and makes just above $13 an hour working for University of Pittsburgh Medical Center. “That’s not enough to live in the city,” he told Council.

“We already have low wages in Pittsburgh,” he told The Incline. “If we don’t have affordable housing to at least match those wages, we’re going to be forced out of the city.”

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