Pittsburgh's public housing will see a one-year surge in investment next year that would advance two major developments but leave a reduced bank account for the future.
The Housing Authority of the City of Pittsburgh board last week approved a $174 million budget -- a $25 million increase over last year's balance sheet, driven largely by the ongoing reconstruction of the Hill District's Addison Terrace.
The budget draws on $40 million from the authority's reserves, which will leave the savings account at around $20 million. The redevelopment work will be accomplished largely through the authority's nonprofit development arm, the Allies and Ross Management and Development Corp., which plans to earn money from some of the resulting public-private deals.
"The Housing Authority has to reposition itself so we are working as a business," authority executive director Caster Binion said, "and being a partner in the community while changing the face of public housing."
The authority built up its savings account over years in part because it has special status under the federal Department of Housing and Urban Development's Moving to Work program. That program allows 36 authorities nationwide to shift money freely among their operations, capital and housing voucher programs.
When the savings is gone, though, the proposed building boom could go bust. The board Thursday approved a long-term plan that contemplates a plunge in development spending from $54 million in 2014 to just $10 million in 2015.
The board also voted to increase the authority's investment in the Addison project to $58.5 million out of a total cost of about $160 million. Addison's 734 low-income housing units are to be replaced with some 400 apartments for a mix of incomes.
The increase consists of a $7 million grant to Allies and Ross to fill a funding gap in the Addison effort. It's needed because federal belt-tightening and timing problems combined to nix a hoped-for loan from PNC Bank to the project, Mr. Binion said.
Instead, Allies and Ross will lend the funds, at 5.8 percent interest, to a private partnership led by Columbus-based developer Keith B. Key that is rebuilding Addison and will manage the new community. Over 40 years, the loan will pay Allies and Ross $11 million in interest, which will be plowed back into low-income housing, Mr. Binion said.
"The Housing Authority is making an investment and is also generating income for the future," he said.
Allies and Ross has been the subject of scrutiny this year.
In April, city Controller Michael Lamb issued an audit finding that the authority's use of Allies and Ross is legal. Allegheny County District Attorney Stephen A. Zappala Jr. is engaged in an active and ongoing review of the nonprofit, his spokesman said Thursday.
The board sent another $12.6 million to Allies and Ross to construct new housing in Larimer. That infusion, plus $3.9 million previously dedicated to the project, will pave the way for about 85 new homes.
The city's Urban Redevelopment Authority is separately leading the construction of 50 new homes there.
The housing authority this month applied for a $30 million federal Choice Neighborhoods Implementation Grant that could help to bring the total to 350 new residences in Larimer.
The authority is among 44 applicants seeking slices of a Choice Neighborhoods pie that is expected to total $109 million. The competitors include the city of Philadelphia and the housing authorities of Atlanta, Milwaukee, Buffalo and Cuyahoga, Ohio.
Authority officials have maintained that even without the grant, they can turn long-struggling Larimer around.
"Everyone's on the same page now and I think the future of that community is bright," said Ricky Burgess, who is the authority board's chair and the city councilman representing Larimer.
Rich Lord: email@example.com, 412-263-1542 or on Twitter @richelord.