Pittsburgh’s economic development agency Thursday approved a raft of tax-funded housing development initiatives throughout the city, with a special focus on the Downtown area.
The Urban Redevelopment Authority’s [URA] board of directors is looking to convert Downtown’s empty office spaces into apartments through tax breaks for potential developers and amending a conversion program that began in January but has only attracted one developer.
In January, the Pittsburgh Downtown Conversion Program was introduced to spur the conversion of office spaces that were considered underutilized. To do this, the program provided interested developers with $60,000 to $100,000 per unit for housing projects that reserved 20% of their listings to households that make no more than 80% of the area’s median income. For a household of one person, the area’s median income is $53,100; the income scales up to $100,000 for a household of eight.
In an attempt to attract more applicants, the URA on Thursday amended the program to increase the per-unit subsidy to $100,000 per unit. The funding increases if developers reserve units for lower area median incomes — with $150,000 available per unit if units are reserved for households making no more than 60% of the area median income and $200,000 for those making no more than 50%.
Aaron Sukenik, vice president at Pittsburgh Downtown Partnership, noted that bolstering the initiative was welcome.
“Despite our healthy 91% residential occupancy rate Downtown, this is a very challenging time with construction costs and interest rates — for both affordable and market-rate projects,” Sukenik said during the board meeting. “This Downtown Conversion Program is an important tool to not only support affordable housing, but also the Downtown tax base, which contributes a significant percentage of the total property tax revenue that the city collects.”
The URA is also looking to expand an existing tax break program to benefit Downtown developments. James Reid, manager of strategic initiatives and business growth for the URA, said the “stimulus” was needed to diversify the buildings in the Downtown area by bringing more residential options to keep it “that core, vital part of the Pittsburgh region.”
The URA approved the expansion and urged the county and Pittsburgh Public Schools to also sign off on the tax break. If passed, the tax abatement program would last for 10 years for development projects that increase a property’s value after buying it.
Developments that would be eligible for these tax breaks fall under four categories of mixed commercial and residential developments as outlined by the URA. This includes commercial-residential development with at least 10% of total residential units affordable to and occupied by households earning incomes no more than 50% AMI; mixed development with at least 60% of total residential units affordable to and occupied by households earning incomes no more than 60% AMI; a multi-unit for-sale or owner-occupied residential development with at least 10% of the units affordable to and occupied by households earning incomes at or below 80% AMI; commercial and industrial developments that increase the net number of full-time jobs by at least 50.
The URA gave the example that if a property’s value is assessed at $1 million prior to undertaking one of the four eligible development projects and is then assessed at $3 million after redevelopment, the value of the improvements would be $2 million. That increased value would fall under the tax abatement with tax relief capped at $250,000 per taxing body. But if no value is added, then tax relief will not be provided.
Evan Miller, director of housing at URA, said these two initiatives would “help to emphasize affordability, affirm the URA’s commitment to Downtown as a neighborhood, leverage other sources outside of the URA and accelerate the pipeline of potential conversions that are going to take place here Downtown.”
Kyle Chintalapalli, the URA’s chief economic development officer, said that altering the tax break program is an example of URA members “learning stuff in the field and the marketplace and hearing from the folks who are on the front lines and refining what we’ve put out there in order to improve it and hopefully have that impact.”
The board also approved several other items related to homeownership assistance in the Hill District, Garfield and other neighborhoods.
Land trust eyes Garfield property
Earlier this year, the owner of a house in Garfield contacted the City of Bridges Community Land Trust to sell them their property in hopes of maintaining affordable housing in the neighborhood, according to the trust’s executive director Ed Nusser. Land trusts generally operate by taking permanent ownership over land that houses sit on and sell only the structure to potential buyers. By doing this, proponents of the model argue, land trusts “lock in” affordability by preventing future sellers from accessing the appreciation of the land that a structure is located on.
“Whenever we get calls like that, it’s amazing,” Nusser said. “It’s a house that’s been taken care of and doesn’t need much by way of updates.”
The URA board approved giving the land trust on Thursday a For-Sale Development Program grant of up to $100,000 to buy the four-bedroom townhouse.
The grant will be used to update the home with a new air conditioning system, roof, furnace and fresh carpeting, among other improvements. The total cost to acquire and renovate the property is projected to be $308,425. The land trust so far has $208,425 from previously secured funding, including a line of credit from PNC Bank and a Hillman Foundation grant. The land trust sought the URA grant to cover the remaining development costs.
Once renovations are complete, the land trust will aim to sell the townhouse for $195,000 to a homebuyer whose household income is no more than 80% of the AMI.
The board noted during the meeting that the land trust has completed more than 10 renovation projects of similar size in the last five years.
The URA approved another grant of $400,000 to complete the renovation of four single-family homes in the Fineview-Perry Hilltop area with the goal of selling them affordably.
Greater Hill District funding
With the dust still settling around the Lower Hill District redevelopment, the URA board released the first set of funding that was put aside by the development team as part of their contribution to investing in the Hill District.
About $465,000 will go toward helping homeowners repair their houses in the Hill District with a priority given to those in need of critical repairs. The funds are part of the $7.1 million in the Greater Hill District Neighborhood Reinvestment Fund that was contributed by the developer behind the Lower Hill Development team in 2021. These contributions were made as part of the agreement to allow the Pittsburgh Penguins’ selected developer, Buccini/Pollin Group [BPG], to build the First National Bank Tower.
Eric Jankiewicz is PublicSource’s economic development reporter, and can be reached at ericj@publicsource.org or on Twitter @ericjankiewicz.
