Trump policies could threaten Pittsburgh's low-income housing efforts
February 14, 2017 12:00 AM
Mandel Ngan/AFP/Getty Images
President Donald Trump and the Republican-controlled Congress are expected to decrease corporate taxes, which in turn has lowered the market value of housing tax credits.
By Mark Belko / Pittsburgh Post-Gazette
As the city battles to increase affordable housing in Pittsburgh, it fears that Trump administration policies could jeopardize a decades-old tax credit program crucial to that ambitious effort.
Kevin Acklin, Mayor Bill Peduto’s chief of staff and Urban Redevelopment Authority board chairman, said reductions in the low-income housing tax credit market could undermine plans to create thousands of affordable rental units in the city, including those at the former Civic Arena site.
“If we don’t continue these programs, we’re going to see a lot of displacement, a lot of gentrification and people being pushed out of their communities,” Mr. Acklin said. “Without those federal investments and tax credits, it would be catastrophic to plans like Mayor Peduto has to keep Pittsburgh affordable.”
The uncertainty comes as the city is looking for ways to finance an affordable housing trust fund, which is intended to supplement federal investments. One option under consideration is tweaking a controversial proposal to raise the 4 percent deed transfer tax by as much as 1 percentage point.
For decades, the low-income housing tax credit has been the primary way to create new affordable housing not only in Pittsburgh but in the United States as a whole. Through the program, created in the 1980s, developers compete for a limited number of tax credits each year. Investors then buy the credits.
The program is administered by state entities, including the Pennsylvania Housing Finance Agency, which allocated more than $40 million in tax credits for state projects last July, including seven in Allegheny County.
President Donald Trump and the Republican-controlled Congress are expected to decrease corporate taxes, which in turn has lowered the market value of the tax credits. Mr. Acklin said that could lead to gaps in financing for affordable housing developments.
One key project that could be affected is the former arena redevelopment in the lower Hill District, where the Pittsburgh Penguins are planning 1,200 units of housing, with 20 percent of those earmarked as affordable.
The team and its developer McCormack Baron Salazar have been facing a $5 million funding shortfall in the $45 million first phase. The city has been encouraging them to investigate low income housing tax credits as a means of filling the gap.
But that could be all for naught with lower-valued tax credits. The Penguins declined comment.
In December, city council voted to establish a dedicated trust fund for affordable housing, with a goal of raising $10 million a year to support it.
But Mr. Acklin said the fund itself is not going to “make a significant dent” in achieving the investments that the city wants to make. It is intended to supplement the federal investments, not be a substitute for them, he said.
“Really it’s a call to arms in terms of the advocacy community to really pay attention to what’s happening in Washington because it really threatens to undermine the entire structure of what we’re trying to achieve here in our city,” Mr. Acklin said.
One key project that could be affected is the former arena redevelopment in the lower Hill District, where the Pittsburgh Penguins are planning 1,200 units of housing, with 20 percent of those earmarked as affordable. (Post-Gazette photo)
The city has yet to decide how to fund the affordable housing trust fund.
While Mr. Peduto has supported raising the deed transfer tax, his administration also is concerned that an increase could hurt homeownership in the city.
To address that, one idea it has considered is possibly raising the tax on large commercial sales while leaving it the same for residential ones.
“This is one of the things we’re looking into as to how we could perhaps capture revenue just by large commercial transactions and exempt homeowners. The last thing we want to do is make it more difficult to buy a home here in the city,” Mr. Acklin said.
He noted the problem is that taxing commercial sales at a different rate than residential ones likely would violate the uniformity clause of the state constitution.
Mr. Peduto’s administration has had “early conversations” with some state legislators about a possible change in law that would allow varying tax rates but has not pursued it any further, Mr. Acklin said.
The Realtors Association of Metropolitan Pittsburgh opposes an increase in the tax, whether it’s applied to all sales or just those involving commercial properties, said John Petrack, executive vice president.
“We feel it’s very unjust to target a limited amount of Pittsburgh residents or real estate consumers to fund something that collectively should be contributed to by all city residents,” he said.
It has suggested that the city look at the estimated 20,000 to 23,000 properties it already has on the books as a way of addressing the housing issue. Selling some of those for deed-restricted affordable housing could provide help, Mr. Petrack said.
Last year, a city task force estimated a shortage of about 17,000 affordable rental units in Pittsburgh.
Mark Belko: email@example.com or 412-263-1262.
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