How will another $10 million impact affordable housing? A breakdown of the 2019 Housing Opportunity Fund plan

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People walk along Bedford Avenue near the Bedford Hill Apartments in Pittsburgh’s Hill District. Pittsburgh City Council voted to approve the 2019 plan for the Housing Opportunity Fund. (Photo by Ryan Loew/PublicSource)

Pittsburgh City Council unanimously approved a second annual spending plan for the $10 million Housing Opportunity Fund [HOF]. The programs, managed by the Urban Redevelopment Authority [URA], tackle various affordable housing issues in Pittsburgh.

Before the vote, Councilwoman Theresa Kail-Smith said she supported the plan even though she believes a majority of her West End constituents don’t. “I think there’s a lot of value in this program,” she said, not elaborating on opposition in her district.

Councilman Anthony Coghill said he was initially skeptical residents would know about the fund’s programs, which offer affordable housing funding to both residents and developers. But hearing of two recent home sales made possible through one of the fund’s programs “was just music to my ears,” he said during the meeting.

Council first approved the creation of the fund in 2016, but the implementation of programs did not start in earnest until last November, according to HOF Director Jessica Smith Perry’s briefing of the program at the URA’s May board meeting.

The $10 million in annual funds comes from an increase in real estate transfer taxes, and Council approved the fund’s first allocation plan in October.

Tim McNulty, spokesman for Mayor Bill Peduto, applauded the program’s success so far.

“The mayor thanks City Council, the URA and the HOF Advisory board (both of which previously approved the allocation plan) for their commitment to this much-needed fund,” McNulty wrote in an email. “It has been helping people in any number of ways, including with down payment and closing cost assistance, which we celebrated last week in Brighton Heights.”

In Brighton Heights last week, officials celebrated the new home purchase of a resident who received $5,000 in assistance from the program.

Affordable housing activist Celeste Scott also cheered the program.

“We’re just really happy about the impacts that it is making, it will make,” Scott, housing justice organizer at Pittsburgh United said before Tuesday’s council meeting. Scott has advocated for the programs and connected residents to the fund’s services.

This 2019 allocation largely continues the work set out last year, though funding levels differ. Programs outlined last year are still getting off the ground. Any unspent funds from the previous year carry over to the next.

URA officials estimate a total of 565 residents or households will benefit from the set of six programs. The 2016 Affordable Housing Task Force report identified a gap of about 20,000 affordable housing units.

A breakdown of Housing
Opportunity Fund programs
Rental Gap Program

2019 allocation: $3.75 million
2018 allocation: $3.87 million

Housing Stabilization Program

2019 allocation: $800,000
2018 allocation: $750,000

Down Payment and Closing
Cost Assistance Program

2019 allocation: $500,000
2018 allocation: $750,000

Homeowner Assistance Program

2019 allocation: $2.2 million
2018 allocation: $2.37 million

For-Sale Development Program

2019 allocation: $1.25 million
2018 allocation: $1.25 million

Demonstration Program

2019 allocation: $500,000
2018 allocation: None

Rental Gap Program

The biggest line item of the fund, the rental gap program, provides “gap financing” for housing projects pursued by developers with the URA. Housing units offered below market rates bring in less income, and developers fill that gap by looking for funding sources besides rent.

Under the program, the URA offers loans of up to $60,000 for every unit reserved for households at or below 30% the area median income [AMI], and $30,000 per unit for 50% AMI to finance qualifying projects. URA officials estimate the 2019 allocation will create 85 new below-market units. Of the total allocation, $2.5 million is earmarked for units 30% AMI, and $1.25 million for 50% AMI.

A household of four at 50% AMI currently has $38,000 in yearly income; at 30% AMI, yearly income is $22,800.

In May, Smith Perry reported $2.5 million in spending since November for various housing developments, including the Mellon’s Orchard development in East Liberty.

For that project, the URA approved a no-interest 35-year loan of $690,000 to help finance 37 apartments below market rate.

Housing Stabilization Program

This program provides short-term rental assistance and legal support for residents who make at or below 50% AMI and are experiencing homelessness or at risk of homelessness.

In March, the URA board approved contracts with several nonprofit service providers to administer the program, including the Urban League of Greater Pittsburgh and Macedonia FACE, a social services organization based in the Hill District. At the URA’s May board meeting, Smith Perry said she expected the URA to release the application this month for individuals needing assistance. The URA estimates that the 2019 allocation will serve 250 residents.

Down Payment and Closing Cost Assistance Program

First-time homebuyers with incomes at or below 115% AMI can receive a no-interest loan to help pay for down payment and closing costs. Loan payments don’t start for five or 10 years, depending on the applicant’s income.

“The applications are kind of flying in,” Smith Perry said at the URA’s May board meeting. The URA will likely take another six months to deploy the rest of the allocation made in 2018, she said.

Sixteen residents have gone through the program since January, according to a Friday press release from the mayor’s office. That total represents a commitment of $60,000 from the 2018 allocation of $750,000.

The URA estimates that the 2019 allocation will serve 80 homebuyers.Danielle Graham Robinson, a real estate agent with eXp Realty, said the program is notable for helping residents purchase homes inside Pittsburgh city limits.

“This helps me as a Realtor to work with people in the city I live in and the city I love,” she said to council.

Homeowner Assistance Program

Homeowners with incomes at or below 80% AMI can apply for money to address unsafe or unhealthy living conditions. Applicants can receive funds directly from the URA or from partner nonprofits to pay for things like a new roof, new furnace, weatherization or accessibility modifications.

In February, the URA board approved $1.7 million in contracts with partner nonprofits, including Habitat for Humanity and ACTION-Housing. At the May URA board meeting, Smith Perry said the URA released the application for homeowners in April, and she expects the program will soon process eight to 10 applications a month when it’s in full operation.

“I’ve gotten calls from people who really need those funds,” Councilwoman Deb Gross said before Tuesday’s vote. “When a leak happens or something critical happens inside your house, you’re unable to stay in your home.”

The URA estimates the 2019 allocation will aid 80 homeowners.

For-Sale Development Program

This program provides gap financing for builders refurbishing existing homes or building new ones for sale. The financing is meant to fill the difference between the development cost and the eventual below-market sale price. The program will be administered by community development corporations, and the URA board will approve those contracts from its 2018 allocation as early as their June 13 meeting, according to Smith Perry at the May URA board meeting.

Qualifying projects are for homebuyers with incomes at or below 80% AMI. The URA predicts that 20 households will benefit from the 2019 allocation.

Demonstration Program

This item serves as emergency funding, for instance if numerous residents lose affordable housing at once, Smith Perry said at the May URA board meeting.

Scott called the new item “creative,” saying it will provide support in cases of mass displacement.

In the fall, the URA board and city council will consider allocation plans for 2020, Smith Perry said at the May board meeting. The ordinance that established the Housing Opportunity Fund says the URA and HOF advisory board is to submit to the city council an allocation plan for the following year by Oct. 31. The council then has until Dec. 31 to finalize and approve it.

Tom Lisi is PublicSource's Develop PGH reporter. You can reach him at 412-368-6480 or by email at tom@publicsource.org.

Develop PGH has been made possible with funding from The Heinz Endowments.

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