Pittsburgh City Council member: There aren’t enough votes to increase tax to pay for affordable housing fund

Theresa Kail-Smith made that claim at a post-agenda hearing Tuesday.

Homes on Western Avenue

Homes on Western Avenue

Paul McCarthy / Flickr
Sarah Anne Hughes

Updated, 9:30 p.m.

All nine members of Pittsburgh City Council have voiced support for a trust fund that will help create new affordable housing, maintain existing units and provide other support for homeowners.

But according to council member Theresa Kail-Smith, a majority of members still don’t agree on how to pay for it.

Kail-Smith made the remarks at a post-agenda hearing on two bills — introduced by council members Ricky Burgess and Daniel Lavelle — that would increase the realty transfer tax by one percentage point and authorize the Urban Redevelopment Authority to issue $100 million in bonds. The money raised by the tax increase would be used to pay off the bond debt.

Councilwoman Darlene Harris also said she would not support a tax increase, while Councilwoman Deb Gross said there’s a fear raising the tax would disincentivize home buying. “It’s not exactly the perfect solution,” Gross said. “I believe there’s a will to find the right funding stream. … I do believe we’ll find the right funding mix before the end of the year.”

Council President Bruce Kraus originally told other members and witnesses he remains open to other mechanisms to raise the $10 million a year needed for the fund. But toward the end of the post-agenda, Kraus said one of the witness’ statements that the tax is only levied when people are buying into and getting out of a community may have swayed him.

“It may have shown me the light,” he said of the comment.

According to Post-Gazette reporter Adam Smeltz, Kail-Smith told reporters five members of council support an alternate idea to raising the funds. She declined to provide additional details.

The post-agenda was held ahead of a 6 p.m. public hearing on how to fund the affordable housing trust fund. Speakers from organizations like the URA, Bloomfield Garfield Corporation and the Northside Community Development Fund spoke in favor of the trust fund and expressed support for raising the realty transfer tax. So did Chief Financial Officer Sam Ashbaugh, who called raising the tax to pay off the bonds the “most responsible” option available.

Mark Masterson of the Northside Community Development Fund, who served on the Affordable Housing Task Force, said raising the realty transfer tax is the most progressive option available. Other ways to raise capital that may seem appealing, he added, would require state approval.

Kyra Straussman, director of real estate for the URA, echoed that. As federal and state funding for affordable housing decreases, she said other localities are creating their own dedicated, locally controlled funding sources.

“This is what the most progressive cities in the U.S. are doing right now,” she said.

Kail-Smith left the post-agenda meeting early after expressing fears that the fund would be used as a slush fund and asking the witnesses if their organizations were promised funding. (Each witness emphatically denied that accusation.) She also said there hasn’t been a willingness to come to the table to discuss other solutions with realtors who oppose raising the tax.

Lavelle responded that he had met with the realtors and asked them to bring forth other solutions.

“I’m willing to listen to other ways to generate  the revenue,” he said. “To date, those other ideas haven’t been brought forward.”

Déjà vu

Tuesday’s public hearing on the realty transfer tax increase was essentially a replay of September’s on the trust fund.

The majority of people who signed up to speak were in favor of raising the tax to pay for the fund, saying it is an equitable way to raise the needed capital. Those who spoke against the bill primarily represented the real estate community.

That included Daniel Berkowitz of Atlas Development. The bill “most affects developers,” he said, noting that there are thousands of unoccupied homes in the city in need of redevelopment.

But Billie Vaughn, a city employee who also testified in September, countered that “people in poverty should come before developers.”

According to an analysis by Bob Damewood of Regional Housing Legal Services, who spoke at the post-agenda, 11 percent of the realty transfer tax would be generated from “lower-end home sales.” The rest would come from sales to nonresidential buyers, corporate buyers, flippers and higher-end home sales.

Gross said she was concerned about that 11 percent, adding that levying a higher tax on moderate-income people “is counter-productive.” Lavelle, as well as some witnesses, pointed out that money from the trust fund can be used to assist low- and moderate-income buyers with closing costs.

Seven months after unanimously agreeing to create a housing trust fund, council will soon be faced with a vote to fund it. Kraus said he intends to bring the bills up for a vote.

Between now and then, Kraus said he will continue to work with other members. Councilman Dan Gilman echoed that, but added that council’s options are really limited. He said other funding mechanisms brought forth by the public would be great — if they didn’t require cooperation from Harrisburg.

“It’s chasing unicorns,” he said.