Expect at least one very early test of Pittsburgh Mayor Ed Gainey’s development philosophy.

Zoning changes written for the Oakland Crossings development proposal are set for a City Planning Commission hearing and vote on Jan. 11, just a week into Gainey’s term as mayor of Pittsburgh. Developer Walnut Capital’s plan to rezone 18 acres of Central Oakland and South Oakland was endorsed by Mayor Bill Peduto but drew skepticism from the commission at a December briefing because it did not include low-income housing and skipped normal planning channels.

The commission isn’t bound to work a mayor’s will but often considers elected leadership’s guidance. Gainey said he’s still studying the rezoning proposal, but will apply an inclusive approach to that and other development concepts.

“We’re looking forward to meeting with the community and the community groups to find out what the procedural issues are going forward,” he told PublicSource in a Dec. 22 interview. “We want to talk to all of the stakeholders,” he added.

Ed Gainey declaring victory as Pittsburgh’s next mayor at a celebration at the Benedum Center on Nov. 2. (Photo by Nick Childers/PublicSource)

Gainey’s insistence on broad community input could slow the progress of some development proposals. His campaign’s emphasis on affordable housing, on the other hand, could add urgency to policy change in that area.

The Democrat is no neophyte to development issues. He served for nine years as a state representative from Lincoln-Lemington-Belmar, and since 2014 on the Urban Redevelopment Authority [URA] board, which each year provides millions in aid to construction projects, community initiatives and affordable housing programs. 

Now he’ll make appointments to the URA board, plus the City Planning Commission, the Housing Authority of the City of Pittsburgh [HACP] board and other agencies that make decisions on development.

Those appointments will come amid a shifting economic landscape that includes ongoing processes, new partners, unprecedented federal funding and an ongoing pandemic.

Here’s a look at nine housing and development issues that are likely to play out during the first year of the new administration.

Rents are rising

Anecdotes about rising rents abounded in 2021. According to one national expert, most Pittsburgh rents were relatively flat — until autumn.

The median rent sought by landlords in Pittsburgh rose from $1,150 last January to $1,200 per month, with the increase occurring almost entirely in November, according to Dwellsy, a company based in Los Altos, Calif. Dwellsy lists more than 10 million rental properties on its website, and tracks rents at 1,500 properties in the Pittsburgh area.

Dwellsy CEO Jonas Bordo called the timing of the increase “really quite surprising” because autumn is typically a time when rents dip as apartment hunting declines. 

Bordo said there are reasons to believe the upswing will continue.

  • The trend toward remote work could prompt professionals to move to Pittsburgh, viewed by many as having high quality of life and low costs compared to coastal cities.
  • If COVID-19 allows, more households will form as young people who stayed with their parents or with roommates during the heights of the pandemic strike out on their own.
  • High prices for single-family homes could reduce the traditional flow of tenants into homeownership, keeping rental demand high.

As a result, “2022 is going to continue to be a year where we see pressure on rent growth,” said Bordo. That could prompt landlords who have served Housing Choice Voucher (Section 8) tenants to instead go after market rents, he said.

Pittsburgh’s efforts to compel landlords to take vouchers have been nixed by courts, but Gainey takes office amid an ongoing effort aimed at … 

… powering up Section 8.

Caster Binion, executive director of the Housing Authority of the City of Pittsburgh. (Courtesy of HACP)

In the city, 5,858 households use housing vouchers and another 6,009 are on waiting lists to receive the benefit, under which the tenant pays 30% of their income toward rent and the government covers the rest, up to limits based on area rents. Housing Authority Executive Director Caster Binion said that even if he boosted the number of vouchers, most recipients wouldn’t be able to find units with landlords willing to accept the payment.

“We are slowly exhausting the availability of affordable housing in the city of Pittsburgh,” Binion said in a December interview. “Right now the market is tough. People, instead of putting their house on the [Section 8] program, can sell these houses for three or four times the amount they used to get for them.”

The authority took three measures last year to get more landlords to accept vouchers.

  • HACP gave 50 landlords bonuses of $1,000 for each new unit rented to a voucher holder.
  • It created a pre-inspection program under which 90 units were approved for the program in advance, so that when landlords connected with voucher-holding tenants they could move them in promptly.
  • It joined with the Allegheny County Housing Authority and the county’s Department of Human Services to win a federal grant enabling the use of enhanced vouchers and intensive customer support to help families to move out of high-poverty areas.

“We put these programs out,” said Binion. “Sometimes people take advantage of them, sometimes they don’t.” The key, he said, will be “robust marketing” to both tenants and landlords. “We’re going to be like a Fuller Brush salesman.”

It’s hard to market something that doesn’t exist, so some city officials want … 

… affordable housing requirements in more new neighborhoods.

Since 2019, developers who want to build 20 or more apartments or for-sale homes in Lawrenceville have been required by the city to ensure that 10% are affordable to families of modest means, for 35 years.

That rule, dubbed inclusionary zoning, caused the creation of 40 affordable housing units in its first two years, according to a presentation made by the Department of City Planning in April. In November, the City Planning Commission got a first briefing on a proposal to expand the rule to Polish Hill and Bloomfield. It could hold a public hearing and vote on Jan. 11, which would then be followed by a binding vote of Pittsburgh City Council by spring.

“There’s still upward pressure [on housing costs], and every developer is going to try for just luxury housing and luxury rents,” said City Councilwoman Deb Gross, who has led the push for inclusionary zoning. “As they’re adding units at the top end, we need to make sure that we’re also adding units at the affordable level.”

Pittsburgh City Councilwoman Deb Gross (right) at the City Council table with former colleague Darlene Harris. (Photo by Ryan Loew/PublicSource)

Gross said she’s “definitely ready to begin the discussion” on expanding the program much more broadly.

“We’re open to looking at all models of inclusionary zoning to see what best fits the city,” Gainey said. He said he’ll work with Gross, and with community organizations “and begin to expand it out, and in that way I think we’ll be able to stabilize this housing market.”

He noted that affordability rules must be balanced with market realities. Inclusionary zoning would backfire if it deterred developers from building any new housing. 

If the administration needs new ideas for encouraging the creation of affordable housing, it needs look no further than … 

… energized housing advocates.

The city’s Housing Opportunity Fund [HOF] is powered by $10 million a year, gleaned from deed transfer taxes and dedicated mostly to financing new or rehabilitated affordable rental and for-sale housing, helping out with repair costs and averting foreclosures and evictions.

Its budget comes through a process involving the URA and the Housing Opportunity Fund Advisory Board, led now by attorney Kellie Ware, formerly executive director of the NAACP’s Pittsburgh chapter, and now director of community partnerships and sustainability at The Forbes Funds. She wants the HOF to embrace more creative options.

“I would like to see community ownership [of housing]. I would like to see permanent affordability” for some HOF-backed units, she said. She’d also like to see proposals for housing co-ops in which residents collectively own apartment buildings and manage them democratically.

“There’s still not enough money to meet the need,” advisory board member Mark Masterson added. “We could easily do with $20 million in the Housing Opportunity Fund.”

Gainey said his transition team would be weighing potential enhancements to the HOF, adding that it was too early to endorse specific measures.

The HOF isn’t the only backer of affordable housing. A bigger bang might come from … 

… a deal-hungry housing authority.

Even as he’s trying to goose the Section 8 program, Binion has built a portfolio of investments in privately owned affordable apartment buildings that he plans to expand in 2022, even as the HACP reaches for $50 million in new federal funding.

Since 2018, the authority has granted developers special housing vouchers, plus loans of as much as $90,000 per unit, in return for guarantees that specific numbers of units within a building stay affordable for decades. The developers use the HACP money to plug gaps in financing packages that are usually anchored by federal low-income housing tax credits.

The authority has used its gap financing program to back affordable units in the Hill District, Larimer, Garfield and Homewood. In 2022, it plans to support similar developments in East Liberty, Hazewood, Uptown and Fairywood.

“We get the money back,” said Binion of the $90,000-per-unit long-term loans. “It might be slowly, but it’s definitely increasing affordable housing. We have no other choice.” 

Actually, the authority has another option: the federal Choice Neighborhoods Program, which granted $30 million to an ongoing revamp of housing in East Liberty and Larimer. A year ago, the HACP won a $450,000 Choice Neighborhoods planning grant for an area including the Allegheny Dwellings complex in Fineview. 

Binion is all-but guaranteeing another win. He’s seeking tax credits and a Choice Neighborhoods grant — potentially as large as $50 million — for a redo of the Bedford Dwellings community in the Hill.

“We’re going to get it,” Binion said of the impending Bedford bid.

Bedford Dwellings was a subject of a Pittsburgh Post-Gazette investigation of HACP maintenance practices, and the authority was far from the only area landlord faulted for poor upkeep this year. City officials plan to address that problem with … 

… another push for rental registration.

Pittsburgh’s nearly 15-year-old effort to compel owners of rental housing to register, pay per-unit fees and submit to occasional inspections has so far been thwarted through lawsuits filed by landlords’ advocates. The city is appealing its latest court defeat in which a judge found its proposed $45 to $65 per unit registration fee structure was not in line with the costs of administering the program.

Even as the Law Department appeals, city council in December passed a new set of fees including a $16 charge for rental registration intake, and an inspection fee of $5.50 per building plus $14 for each unit.

“We will be implementing this in May of 2022,” said city Councilwoman Erika Strassburger. “We are essentially ready to go.”

Gainey endorsed rental registration and inspection during his campaign. “If we can do it in May, or before May, I’m interested,” he said in the December interview. “I’m looking forward to working with council on that.”

City of Allentown Housing Inspector Modesto Medina shows an example of the certificate property owners receive when their buildings pass inspection. Unlike Allentown and Erie, Pittsburgh has no routine rental unit inspection program. (Photo by Rich Lord/PublicSource)

Strassburger characterized registration and inspection as a health and safety issue. “There should not be a risk of an electrical fire because of an improper connection. There should not be the risk of mold exposure or lead exposure, especially if you have a family with young children.” 

If that’s too much to ask from some small fraction of the city’s landlords, she hopes they’ll sell their properties to someone else.

New ownership doesn’t guarantee improvement, but there is initial optimism about … 

… Fenway’s arrival on the Hill.

The pending purchase of the Penguins by Boston-based Fenway Sports Group [FSG] is likely to send ripples from PPG Paints Arena up into the Hill District.

The Penguins-affiliated Pittsburgh Arena Real Estate Redevelopment LLC and Delaware-based Buccini/Pollin Group are building a new headquarters tower for First National Bank. That’s the start of a planned 28-acre, billion-plus-dollar complex of office, entertainment, retail, mixed-income residential and recreational construction on land once occupied by the Civic Arena, and before that by a vibrant mostly-Black neighborhood.

Part of the Lower Hill District site formerly occupied by the Civic Arena is being prepared for a new First National Bank headquarters tower. (Photo by Kaycee Orwig/PublicSource)

That history has driven neighborhood demands that the development benefit the Middle Hill and Upper Hill, following goals detailed in a Community Collaboration and Implementation Plan [CCIP] and monitored by an Executive Management Committee [EMC].

As of December, neither the EMC nor the pivotal Hill Community Development Corp. had contact with FSG.

Hill CDC President and CEO Marimba Milliones said her organization will bring “an open mind and willingness to collaborate” to conversations with FSG and will measure success based ong “whether public returns are commensurate with the amount of public subsidy they’ve received.”

FSG is barely more than a rookie in the development arena. In late 2020, the group and development partners announced their intention to pursue a 5-acre office, apartment, retail and hotel development near the home field of the Red Sox.

So far, FSG’s relations with organizations around its flagship Fenway Park are “top tier,” said Josh Zakim, who represented Fenway and nearby neighborhoods on Boston City Council from 2013 through 2020. He’s now executive director of Housing Forward-MA, a nonprofit which encourages affordable housing development in Massachusetts.

“They listen to people” when concerns come up regarding issues like event-day traffic and trash around Fenway, Zakim said. “I can’t think of an instance where neighborhood concerns were not addressed, were not answered, at the senior level.”

Gainey said he’d had only “pleasantries” with FSG leadership.

“I’m always going to be optimistic because I believe [FSG’s arrival] brings opportunity,” said Gainey. “I’m going in there with a clear conscience about how we can move the Hill forward.”

The Hill isn’t the only neighborhood poised for change. Gainey’s inbox is likely to include … 

… a new blueprint for Hazelwood Green.

A new zoning plan for the 178-acre Hazelwood Green brownfield, allowing for temporary surface parking potentially covering a quarter of the site, worried some in the neighborhood. But at a Dec. 22 public hearing, City Councilman Corey O’Connor and representatives of the development team revealed a compromise plan for incentives to encourage alternative forms of transportation to the site.

That could make Hazelwood Green — controlled jointly by the Richard King Mellon Foundation, the Heinz Endowments* and the Claude Worthington Benedum Foundation — the least contentious big development on the new mayor’s plate.

“I’m supportive of the redevelopment of Hazelwood Green,” Gainey said on Dec. 22. He noted a pledged $100 million R.K. Mellon Foundation investment in a University of Pittsburgh BioForge life sciences facility slated for the site. “I think life sciences are going to be a major industry in this city.”

His caveat: “We don’t want dislocation or displacement in Hazelwood.”

A rendering of the Mill 19 complex, on the Hazelwood Green site, as it would look after completion of the development beneath its vast solar array, presented to the City Planning Commission on July 13, 2021.

In 2022, Hazelwood Green will likely see construction of more infrastructure, continued coordination with Pitt and Carnegie Mellon University on their development of research facilities and communication with neighborhood leaders, according to Todd Stern, managing director of U3 Advisors, which is spearheading the process for the foundations. 

Stern acknowledged a common critique that progress has been slow since the foundations took over two decades ago. “There is more momentum on the site than there has been for many, many years,” he said, adding that the development team is “really poised to make significant progress this coming year.”

Just one concerned neighbor showed up at council’s hearing on Hazelwood Green, but attendance will likely be heavier when … 

… Oakland Crossings gets its close-up.

Here’s Walnut Capital’s Oakland Crossings plan in a nutshell: Demolish the student-dominated housing on McKee Place and Halket Street, plus the defunct Quality Inn along the Boulevard of the Allies. Redevelop that, plus the former Isaly’s building across the boulevard, with a potentially broad mix of uses including a grocery store, other retail, teaching and lab space and housing geared to people who work in Oakland. Building heights could reach 108 feet along McKee and 160 feet along the Boulevard.

The Oakland Planning and Development Corp. has opposed Walnut’s proposal, saying it’s premature as the neighborhood works on a vision for the next decade. The Oakland Business Improvement District, by contrast, has said the plan is in line with community goals. 

This map from Walnut Capital’s plan for Oakland Crossings shows the benefits that the developer says would accrue to the neighborhood.

Little heard, so far, is the population that would be most immediately affected: students.

Pitt Student Government Board Community and Government Relations Committee Chair Dominic Victoria said that elimination of Central Oakland apartments would give students two unpalatable options: spending more years in pricier university-affiliated housing or moving further from campus and adding to both travel time and town-gown stresses.

Students “are going to push deeper, for example, into South Oakland, and that’s going to cause a lot of concern for long-term residents, and understandably so,” said Victoria.

He said students have not been consulted on Walnut’s plans in a neighborhood he’d like to continue to call home even after graduation. 

Gainey said he can change that. 

“Oakland is a college neighborhood,” he said. “It’s a residential neighborhood, too.”

Students “have a voice at the table,” he said. “I believe that we should reach out to them as well and get their opinion and begin to talk to them.”

Gainey said his administration is still studying many of the specifics of ongoing and impending development issues, and he won’t make big decisions alone. 

“I do come with a certain skill set when it comes to development,” he said, “but I’m understanding that it’s not one, but a team, that moves development forward.”

Rich Lord is PublicSource’s economic development reporter. He can be reached at rich@publicsource.org or on Twitter @richelord.

*PublicSource receives funding from The Heinz Endowments and has received support from The R.K. Mellon Foundation in the past.

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Rich is the managing editor of PublicSource. He joined the team in 2020, serving as a reporter focused on housing and economic development and an assistant editor. He reported for the Pittsburgh Post-Gazette...