Housing Follies


Now that Pittsburgh’s elites have discovered a shortage of “affordable” housing in the city, they are scrambling to attach themselves to “solutions.”  The days of commissions, committees, panels, and other tactical diversions have passed. Resolute activism and community organization have exposed the raw human costs, making academic talk and endless study untenable.

So the mayor and his accomplices at the Urban Redevelopment Authority propose establishing a “set aside” to “underwrite” affordable housing. The source of this revenue is the magical “TIF”—the mechanism for “capturing” future value increments coming from the projected escalation of tax revenues that are expected to follow development. In practice, TIFs have served most often as a method of public subsidy of private developments. Despite the love affair urban leaders have with TIFs, they have at least four unspoken, negative consequences:

•TIFs support the financing of schemes that would otherwise not be financed through conventional means (banks view the project as too risky or the developers as not credible).
•TIFs gamble with public funds.
•TIFs create an environment where every developer expects a TIF for every project (everyone else got one!)
•And TIFs encourage developer speculation and the gentrification that usually follows.

Apart from the evasive language and promissory tone of the mayor’s solution, the TIF-share proposal is merely a call for the bottom-feeding developers to pitch the URA for some subsidy money to participate in gentrification by building HUD compliant non-luxury housing. Peduto’s scheme is far from a genuine answer to the displacement of those forgotten by local government.

Councilman Ricky Burgess offers a different solution that doesn’t employ arcane financial maneuvers or put public funds at risk: require all landlords—without exception—to accept federal housing subsidies available to low income renters. Regardless of Councilman Burgess’s stated motives, this approach isn’t a step towards solving the affordable housing problem. Instead, it’s thin cover for his failure to take action on the city’s callous dislocation of neighborhoods in his district. Burgess knows how ineffective Section Eight—the Federal housing subsidy– has become. He knows that the voucher program is critically backlogged. He knows that the program has been overwhelmed by the destruction of public housing. And he also knows that the stock of potential section eight housing in the city diminishes as gentrification pushes prices and rents upward (to read a more thorough review of the Section Eight problems, see Rebecca Nuttall’s article in the City Paper).

Both the Peduto and Burgess approaches evade the elephant in the room: the unrestrained gold rush to build ultra-profitable “luxury” residence on relatively cheap property while exploiting the tax and subsidy advantages available for “blighted” areas. No one in city or county government has a desire or plan to rein in this monster.

Consequently, we see 1200 units of “market rate” apartments projected for the Lower Hill (the master plan touts the fact that 20% will be set aside for those with 60-80% of the area’s median income, a level out of the reach of the bottom 28% of Pittsburgh households), 326 apartments planned for the perimeter of Oakland, and nearly 900 “high-end” or “luxury” accommodations coming to Lawrenceville (balanced by 9 “affordable” apartments in Doughboy Square), all announced in the last few months.

Add to this the Walnut Capital, Mosites, forthcoming Gumberg, and stealthy Echo Realty projects flooding East Liberty and we have the makings of a luxury residence boom… or bust.

In fact, there is every reason to doubt that each new residence will find a resident. While no developer wants to be left behind in the scramble to exploit explosive property value inflation and big payouts, the expansion will inevitably encounter economic and demographic limits.

With population growth stagnant and job growth lagging behind most counterpart cities (see Pittsburgh Today), that day of reckoning may come sooner rather than later. Is a luxury housing bubble looming in Pittsburgh?

Greg Godels


One thought on “Housing Follies

  1. East Liberty luxury “development” looks awfully bubblicious to me. How are they going to find enough luxury people to fill all those luxury condos and apartments?


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