A guide to affordable housing in Pittsburgh

What does “affordable housing” mean?

People walk along Bedford Avenue near the Bedford Hill Apartments in Pittsburgh’s Hill District. (Photo by Ryan Loew/PublicSource)

The U.S. Department of Housing and Urban Development [HUD] sets the guidelines and formulas to calculate housing affordability in different parts of the country. In Pittsburgh, the city and supporting agencies use the resulting formulas to calculate affordability based on local income and cost of living figures.

As HUD puts it, “Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care.”

Using this definition, the vast majority of developers concerned with affordability set rent prices to be “affordable” for households making 60 percent of the average median income [AMI] or below for Allegheny County. In other words, they price those units to not exceed thirty percent of that particular applicant’s monthly income.

The AMI is not a single number: It changes based on household size. For a single person in Allegheny County, the median income before taxes is $53,200. Therefore, an individual making 60 percent of the county’s AMI would make $31,920 and meet some organizations’ threshold for affordable housing. On the other hand, Allegheny County’s AMI for a household of four is $76,000, so the 60 percent AMI threshold for a household of this size is $45,600.

Several developers in the city tier their housing. One common example is to price half of the units in a complex at rates for families earning 20 percent and 50 percent AMI, and the other half of the units for those making 60 percent AMI. Developments with 40 percent of their units priced at 60 percent AMI, or 20 percent of their units priced at 50 percent AMI, are eligible for federal tax incentives.

Who needs affordable housing the most?

A participant at the Housing is a Human Right Rally downtown Pittsburgh in September 2016. (Photo by Njaimeh Njie/PublicSource)

Households that spend more than 30 percent of their monthly income on housing are considered in need of affordable housing. According to HUD guidelines, these families are burdened by housing costs. Certain groups—such as seniors, veterans and the disabled—often receive priority for affordable housing.

A family of four with household income of $38,000 per year would qualify for housing designated for those making 50 percent AMI, and a family of four with household income of $45,600 would qualify for housing designated for those making 60 percent AMI. For individuals, the qualifying yearly wages would be $26,600 and $31,920, respectively. Those units would be priced to cost no more than 30 percent of their monthly income. So, a family of four at 50 percent AMI would pay no more than $950.00 per month (utilities included), and the same family would pay no more than $1,425 per month in housing designated for 60 percent AMI.

The Federal Poverty Guidelines also come into play with helping families maintain affordable housing, but they are not used in the same way. Local AMI figures determine who is eligible for affordable housing, whereas organizations use federal poverty guidelines to determine eligibility for other supportive housing programs, such as weatherization grants and assistance with utilities.

What can the government do to get affordable housing to those who need it?

The Housing is a Human Right Rally downtown Pittsburgh in September 2016. (Photo by Njaimeh Njie/PublicSource)

Once federal, state or local governments decide there is a need for more affordable housing and choose to get involved in the situation, there are several ways they can go about it.

The PA Housing Finance Committee grants Low Income Housing Tax Credits [LIHTC] (that is, federal tax breaks) to developers who price their units affordably. This allows private for-profit and nonprofit developers to create affordable housing that is still financially sustainable for their organization.

Deed/Income Restricted Housing (D/IRH) refers to housing with income restrictions for renters or usage restrictions written into its deed. An example of income-restricted housing would be an apartment building owned by the housing authority that caps rent at 50 percent of the area’s median income.

On the other hand, deed-restricted housing might include townhomes built exclusively buyers making 60 percent AMI, and priced accordingly. The deed stipulates that when the homeowner sells the property, the home will remain affordable for whomever lives there next.

What types of affordable housing are available in Pittsburgh?

(Photo by Ryan Loew/PublicSource)

Because there are many creative solutions to affordable housing shortages, an exhaustive list is impossible, but the main types of housing available to families and individuals in need are:

The Housing Authority of the City of Pittsburgh [HACP] and the Allegheny County Housing Authority own and run housing units throughout the metropolitan area. Many are clustered in self-contained developments, such as Northview Heights in the North Side or Bedford Dwellings in the Hill District, while other units are scattered throughout the city. The city sets rents for these units based on income. The rents are on a sliding scale, which means that as a resident’s income increases, so does their rent. Each year, residents are required to provide proof of income to the organization managing their housing, and are instructed to report any changes in income as soon as they occur. Some housing is designated specifically for seniors or individuals with disabilities.

This program is frequently called Section 8, after the section of the Housing Act of 1937 that introduced the program, but the correct term is housing choice vouchers. The Housing Act of 1937 authorized the payment of government funds to private landlords on behalf of low-income households. The federal Department of Housing and Urban Development defines and monitors the program, and city and county housing authorities administer it locally. Tenants can use the vouchers to pay monthly rent to approved landlords or put the vouchers toward the purchase of a home.

For a tenant to use housing choice vouchers, they must rent from a landlord willing to accept them, and the local housing authority is supposed to inspect their unit annually, though this is not always enforced and can lead to unfavorable living conditions. Applicants receive vouchers on a lottery system, and they almost always face waiting periods ranging from a few days to a few months.

Some for-profit developers commit to providing affordable housing and receive low-income housing tax credits [LIHTC] for their efforts. These developers earn tax breaks or abatements by pricing their units affordably for tenants making no more than 60 percent AMI.

HUD sets the guidelines for receiving LIHTC based on Allegheny County’s median income. Trek Development Group is one example of a local developer receiving LIHTC. Their portfolio includes a mix of low-income, market rate and commercial real estate. Their most recent project is rebuilding Allegheny Dwellings in the North Side into mixed-income housing units along Federal Street.

Nonprofit entities also provide affordable housing in the Pittsburgh area, funded by LIHTC as well as donated funds. ACTION-Housing, for example, is one of the largest housing nonprofits in the Pittsburgh area. In addition to providing services like homebuyer workshops and weatherization programs, it also develops and runs affordable housing projects. Some are designated specifically for seniors, veterans or those with disabilities. A full list can be found here. Other local housing nonprofits include Oakland Planning and Development Corporation and Allies and Ross Management and Development Corp.

Pittsburgh has recently begun to utilize land trusts for affordable housing. In other cities such as Austin, land trusts have successfully reduced the number of households burdened by housing costs. Vacant properties are acquired by a local community organization an added to their land trust, which protects the land from being sold to for-profit, market-rate developers.

Pittsburgh has many abandoned deeds—around 14,000 parcels—that could potentially be incorporated into land trusts. After acquiring the land, these trusts build housing on it and lease the building to qualified low-income residents. The homeowners receive favorable loan terms, down payment and closing assistance, and they often do not pay mortgage insurance. The home builds equity, and it is fully inheritable if the owner dies. This arrangement builds generational wealth.

The community organization keeps the land affordable by maintaining ownership of the land itself and leasing the housing on top of it to the homeowner typically for 99 years. The homeowner gets the benefits of ownership––increased financial stability, a firm place in a local community and the opportunity to build equity––while the community organization protects the land from becoming unaffordable as housing prices rise. There are some restrictions: The homeowner can leave the home to their family upon their death, but they cannot rent it out.

Nonprofits across Pittsburgh are beginning to create community land trusts. Lawrenceville Corporation founded the first one in the metro area in July 2015; Oakland and Garfield have established newer trusts; while citizens of Spring Garden and Millvale have begun to explore the process.

Several communities around Pittsburgh are considering zoning changes to make it easier to add accessory dwelling units [ADUs] or “granny flats” to single-family lots. ADUs are a newer tool in the effort to create affordable housing. Whether they are backyard cottages, apartments above garages or converted basements, ADUs are often affordable at market rate due to their small size. Because they are additions to existing lots, they can increase the amount of affordable housing in densely populated areas that otherwise would not have much room for new construction. Garfield is the first community in the city to bring ADU legislature to the table, which was approved for a two-year trial period in September 2018.

Making it easier for homeowners to build ADUs is one way to increase the number of these units, and therefore the amount of affordable housing stock in areas with rising property values. For instance, zoning variances and “ADU overlay zones” allow homeowners to add a small rental unit to their property without all of the zoning requirements of new construction, and a lower price tag.

What barriers are there to increasing the amount of affordable housing?

The Brew House on the South Side of Pittsburgh is one example of a mixed-income development financed by a private developer. (Photo courtesy of the TREK Development Group)

Pittsburgh has a large amount of housing stock. The city proper includes approximately 150,000 housing units, and the City of Pittsburgh holds the deeds to over 14,000 abandoned properties. By some estimates, it is more affordable for a city to maintain and upgrade existing housing stock than to construct new housing. That should make it easy to keep housing affordable—so why isn’t it?

Property prices are rising across the city, which presents an issue in maintaining or increasing the amount of affordable dwellings. Large-scale development is eliminating many of the city’s properties, and they are not being replaced with affordable options. Most of these developers rent at market rate, and they do not seek low-income housing tax credits or include plans for affordable housing in their development schemes. The influx of higher-income residents to Pittsburgh has led developers to target these high-margin tenants, erecting luxury buildings that are unaffordable for most Pittsburghers.

For instance, the majority of high-rise amenity apartment buildings erected in the last 10 years in the East End do not meet affordability thresholds. This disparity is especially noticeable in neighborhoods such as East Liberty and Garfield, where many households need affordable housing but find their options are more limited every year.

How did we get here?

Housing development Bakery Living Blue near Bakery Square. (Photo by Kat Procyk/PublicSource)

Residential units that are eligible for LERTA tax abatement [Local Economic Revitalization Tax Act District] can receive up to $150,000 in city tax credits and $250,000 in credit toward their Pittsburgh Public School taxes. Designed to increase development in economically depressed areas of the city, some of the most recent LERTA projects have included Bakery Living Blue, the Penn at Walnut on Highland Ave., and the Doughboy apartments in Lawrenceville. None of these projects include affordable units, and all start with single-occupant studio rents of at least $1,000 per month.

The program has been accused of aiding gentrification to the detriment of city taxpayers and Pittsburgh Public Schools. The city is currently working to change how TIF and LERTA are used and applied for. (The Pittsburgh Post-Gazette has listed all the projects receiving LERTA abatements here.)

What data do I need to know about affordable housing?

There are 150,000 dwellings in Pittsburgh

About 16,000 of those units are deed/income restricted and meet the definition of affordable housing.

Why this matters: Of these 16,000 units, 1,700 have their affordability restrictions set to expire in the next five years.

There is a roughly 17,000 unit shortage of dwellings affordable enough for households living at or below 50 percent of the average median income.

What is Pittsburgh doing to preserve existing affordable housing?

Participants of the Housing is a Human Right Rally downtown Pittsburgh in September 2016. (Photo by Njaimeh Njie/PublicSource)

The city’s Affordable Housing Task Force recently created the Housing Opportunity Fund, funded by the city’s realty transfer tax and is currently in the final stages of preparing to accept proposals for funds this fall. The first proposals considered will be for owner-occupied property rehabilitation, rental property development, and closing cost assistance. The fund is guaranteed $10 million annually, through an increase in realty transfer tax, and will be distributed by an appointed board of community members.

This money may be used to provide low-income homeowners with grants for repairs or to create new, permanently affordable housing through deed restrictions or community land trusts.

City council has also voted to change how certain controversial tax breaks, including tax increment funding [TIF] and Local Economic Revitalization Tax Act District [LERTA] abatements, are distributed. Many criticize how TIF and LERTA have been used in the past to assist development in areas that do not need revitalization, while struggling areas have been largely ignored. New changes will require that TIF and LERTA recipients take measures to ensure that residential housing remains affordable.

The changes to these programs have been voted on procedurally, and the legislation will be added to the agenda for deliberation this fall.

Who are the stakeholders in this issue?

The cost-controlled units for people whose incomes are $29,000 or less are the same as the market-rate apartments in the Brew House complex in the South Side, said John Ginocchi, vice president of development for TREK. (Photo courtesy of TREK Development Group)

• URA - Runs TIF, LERTA, Housing Opportunity Fund and the Affordable Housing Task Force.
• Private developers - Some promote affordability while others appear to build purely for profit. TREK is an example of a private company pursuing affordability through LIHTC and Oak Glade Realty does so through the use of housing vouchers and purchasing abandoned property, Milhaus and Walnut Capital are private companies appear to be profit-driven.
• NPO community organizations - This would include community groups such as Bloomfield Development Corp., Lawrenceville United and ACTION housing.
• City Council - Votes on any changes to code, zoning, etc. Council’s stamp of approval is necessary for most changes to happen.

If I need affordable housing, where can I look?

Resources:

• Action Housing
• Housing Authority of the City of Pittsburgh
• Allegheny County Housing Authority
• PA Housing Finance Agency
• Tenant’s Rights: Fair Housing Partnership of Greater Pittsburgh

Meg St-Esprit is a freelance writer based in Bellevue. She can be reached at megstesprit@gmail.com or on Twitter @MegStEsprit.

This story was fact-checked by Juliette Rihl.

Web design and development by Natasha Vicens.

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