Pittsburgh Mayor Luke Ravenstahl and city Councilman William Peduto yesterday introduced competing plans for giving 10-year tax breaks on new housing, primarily Downtown.

Both men, candidates for mayor in this year's election, proposed plans that would give housing developers abatements of 100 percent on their city property taxes for 10 years.

Though the intention of both plans is to boost Downtown housing, Mr. Ravenstahl's would include 20 city neighborhoods, while Mr. Peduto's would be concentrated in the Downtown, lower Hill District, Uptown, Strip District, and on the North Shore and South Side.

		Graphic: Tax abatement plans

The tax breaks would aid not only developers but also people who buy the units.

Mr. Ravenstahl's plan, which he outlined at the annual meeting of the Pittsburgh Downtown Partnership yesterday morning, calls for the tax breaks for new construction, conversions from office space to housing, and residential rehabilitation projects launched between now and 2012. The abatements would apply to the first $250,000 of each housing unit's market value.

"It's not just Downtown Pittsburgh," the mayor said. "It's 20 other communities throughout Pittsburgh that have been neglected."

The mayor also wants to offer low-interest loans to help add housing in buildings that have businesses on the first floor, but whose upper floors are vacant. He said the city has identified as many as 130 such structures, and low-interest loans would come from a $5 million fund to be created by the city, local foundations and private lenders.

He also wants to offer deferred second mortgages of up to $10,000 for middle-income Downtown home buyers. Those eligible could have incomes no higher than $46,200 for one person, or $52,800 for two. The program would initially be limited to 50 households.

Mr. Peduto will discuss his plan at a special council meeting at 1:30 p.m. today and present a 64-page report put together by consultant Steven Zecher. The councilman said he paid for the consultant, using $9,000 in city funds, and an 18-member task force guided his work.

He would give a tax abatement for new housing in Downtown and five surrounding neighborhoods for 10 years, and would offer the same break on new industrial and commercial buildings for five years. Mr. Peduto said if it works in those areas, it can be expanded.

It also calls for state action allowing the city to give developers credit against their tax bills for spending on historic preservation, environmentally friendly features and public art.

Both men said they based their plans on a model enacted in Philadelphia in 1997. That plan, implemented citywide, froze a property's taxes at its pre-development level for 10 years, and has been credited with spurring development and a 24 percent increase in the number of Center City households.

"We're still looking at an affordable housing component," Mr. Peduto said. That could include tax credits or subsidies for less expensive housing, or a requirement that abatement recipients make some units affordable to middle-income families.

A showdown is ahead for the plans. Because they would give tax breaks, both would have to be approved by City Council.

The mayor and councilman disagreed on the extent of the tax breaks. Both would exempt city property taxes, but Mr. Peduto said the lure won't be big enough unless Allegheny County and the Pittsburgh Public Schools also grant abatements.

"Certainly if the school district and county buy in, that's more incentive to the home buyer," the mayor said. "However, we can proceed without the school board and the county."

"The incentive is not great enough with just the city's involvement," said Mr. Peduto, noting that the city's levy makes up just one-third of the typical property tax bill.

Neither county nor city school district officials had seen the plans yesterday.

"Dan [Onorato] is more than willing to sit down and take a look at the proposals and see what they're all about," said Kevin Evanto, spokesman for county Chief Executive Onorato.

A tax abatement would probably require school board action, said district Chief of Staff Lisa Fischetti.

According to the study Mr. Peduto presented, all three taxing bodies would see tax revenue go up, in part because people will move in and pay wage taxes. By 2021, the consultant estimated, the city, county and school district would be getting a combined $56.8 million more in property and wage taxes than they would without the abatement plan.

The Ravenstahl administration did not have exact figures on the tax impact of its plan. Chief of Staff Yarone Zober said the plan is expected to triple the average construction of Downtown homes to 270 a year, and that the new wage taxes would offset the revenue the city would pass on because of the property tax abatement.

The city has used favorable tax treatments to encourage Downtown housing development before.

In 2000, the city passed an abatement giving developers who build or improve Downtown housing a 10-year break on the increased taxes resulting from the higher property value. The tax advantage would disappear as soon as the property was sold, meaning it aided apartment developers but didn't help much with for-sale housing.

By allowing homeowners to receive the abatement, the mayor's plan taps into a crucial aspect of the Downtown housing market, the growth of condominiums alongside rental units, said Aaron Stauber, principal of Rugby Realty.

"The dynamics of our city are such that most of the developments that you would pencil in would be condominium developments," he said.

On the whole, attendees at the Pittsburgh Downtown Partnership's meeting applauded the mayor's plan. Partnership Executive Director Mike Edwards said the plan would "help accelerate what's going on."

He said that whereas developers are now focused on high-end housing Downtown, the abatement would reduce the risk inherent in building more affordable housing.

But Meagan Moore, who manages 1.5 million square feet of office space in the Gateway Towers complex for the Hertz Investment Group, cautioned that while "any improvement in residential is going to enhance office space," more housing alone would not revive Downtown's office market, which has languished for years.

Council is expected to get both tax plans by month's end, and could hold public hearings in the early spring before putting them to a vote.

The emergence of two tax abatement plans in one day is good news, said Downtown architect Robert Pfaffman.

"Any kind of incentive you can provide is worthwhile," he said, since Downtown construction costs are high and the profitability of housing there isn't as high as in some other cities.

"The competition for ideas is the good thing about having a mayor's race."