Peduto administration pitches use of Section 8 funds to subsidize home ownership
January 9, 2016 12:00 AM
Mayor Bill Peduto
By Chris Potter/Pittsburgh Post-Gazette
As a Rust Belt city on the upswing, Pittsburgh faces an unusual paradox. While long-struggling communities like East Liberty revitalize, residents worry about finding affordable housing … even though they may live just down the street from long-vacant homes.
Mayor Bill Peduto hopes the federal government will help him match that housing supply with the low-income families who need it most, under a proposal his administration calls “Bridges Beyond Blight.”
“There are no guarantees,” Mr. Peduto said, but “this could be a program ... the whole nation could look to.”
Mr. Peduto’s proposal envisions repurposing money allocated through the federal Section 8 rental-subsidy, under which low-income families pay 30 percent of their income to a landlord, and a voucher pays the balance of the rent. Mr. Peduto wants to subsidize homeownership instead, taking the anticipated value of 30 years’ worth of one household’s vouchers to purchase and renovate a home. Public housing officials would select the homes and finance the work, then set up buyers with a mortgage whose payments would also be set at 30 percent of their income.
That could, in effect, kill two birds with one loan, expanding affordable housing while reducing blight.
The administration also envisions rehab work being carried out by community-based developers, creating what policy staffer Alex Pazuchanics called a “triple equity-building” approach: “Equity for individuals, equity for workers who are doing the redevelopment, and equity for the community.”
Mr. Peduto first broached the idea with President Barack Obama in July, when he and the president shared a limo ride from the airport with Allegheny County Executive Rich Fitzgerald.
“He seized that opportunity to talk ... about affordable housing and this idea in particular,” said city Housing Manager Kyle Chintalapalli. Talks with the federal Department of Housing and Urban Development, which administers Section 8, have continued since then. “HUD has shown a willingness to work with us,” said Mr. Chintalapalli, who added that the administration hopes to use additional Section 8 money, rather than dip into current funding.
City agencies already offer programs to help lower-income families purchase homes, but “this concept would allow us to target blighted properties,” said David Weber, chief operations officer for the city’s Housing Authority.
While the proposal is still in the conceptual stage, community-development experts are enthusiastic, partly because home ownership can reduce price-pressures on low-income residents when a neighborhood is redeveloped.
“A rising tide lifts all boats — if you have a boat. Renters don’t,” said Kendall Pelling, director of land recycling at East Liberty Development Inc.
Concerns about gentrification have been mounting in areas like the city’s burgeoning East End, and some have pressed Mr. Peduto for an aggressive response.
Alethea Sims, president of Coalition of Organized Residents of East Liberty, said Bridges Beyond Blight “would be nice in Larimer, where there are more vacant homes than occupied.” But she was wary of diverting Section 8 money, given existing need: “There are people looking for places now, and a lot of them are in rental units that are being told they have to move.”
Mr. Weber said some 7,000 households were on a Section 8 waiting list, a backlog that could take “a couple years” to work through. But he said a more pressing issue was a lack of properties to spend those vouchers on, due to a shortage of participating landlords and properties that meet requirements. Currently, he said, “we’re not able to utilize our full voucher budget.”
Bridges Beyond Blight would not be a cure-all, and hurdles remain. Some families lack the financial or physical means to maintain a home, and due to federal regulations, Mr. Pelling said, “every time a HUD dollar hits a project, it creates complications.” It can also be hard to predict the cost of rehabilitating deteriorating homes, which may harbor unexpected problems behind the walls or in the basement.
Still, neighborhood advocates say the idea is worth pursuing. “It almost seems like low-hanging fruit,” said Bethany Davidson, neighborhood policy director at the Pittsburgh Community Reinvestment Group. “You’ve got a supply and a demand. But you have to match them, which always takes money.”
Chris Potter: email@example.com or 412-263-2533.
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