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Development & Transportation

A new housing model could reshape Oakland, and challenge ideas of affordability

WalnutCapital_OaklandCrossings_illo.png
Walnut Capital
As part of its proposed Oakland Crossings development, Walnut Capital has committed to build walk-to-work housing.

The Oakland Crossings development proposal doesn’t just seek to transform nearly 18 acres of Oakland with new greenspace, housing for non-students and a grocery store. It also seeks to create a new means of making housing more accessible: “walk-to-work” housing, an approach whose benefits stem from where one works instead of what one earns.

Developer Walnut Capital says walk-to-work housing can create affordable housing in less time than would be needed for more traditional approaches like tax-credits. Critics say it’s less a shortcut to housing affordability than an end-run around it.

But Walnut Capital President Todd Reidbord said, “Every single neighborhood has … a different opportunity to create affordable housing. We’re not going to solve every single problem of affordability ... but here’s a chance to take a step forward. Let’s give it a chance.”

‘Our faculty and staff are pretty excited’
Any home from which people walk to work could be called “walk-to-work housing.” In the development world, however, the label refers to a program in which an employer underwrites the cost of housing, to reduce prices for workers who want to live nearby.

The legislation that would govern the Oakland Crossing development, for example, defines walk-to-work housing as units subsidized by the building’s owner or a “third party.” Those subsidies would ensure residents pay no more than 30 percent of their income in rent. But the legislation makes clear the benefit would be “made primarily available to employees and/or independent contractors of the third party institution.”

In Oakland Crossing, 100 of 1,000 housing units would be designed as walk-to-work. And that third party would be the University of Pittsburgh.

Pitt’s walk-to-work housing plan is in its very early stages, said Lina Dostilio, the university’s vice chancellor for engagement and community affairs. She said Pitt is considering how any incentive could be applied across income ranges to meet the needs of the university’s “very large faculty and staff, with a great diversity of housing type needs and income levels.”

“[W]e know that it’s going to be [a program] our faculty and staff are pretty excited about,” she said.

Pitt’s initiative would be the first in the city, but there are similar programs in Philadelphia and Cleveland.

Oakland would be a notable local test-case. It’s a sort of microcosm of the city’s economy, which is supported by large institutions that employ thousands of people. In a relatively small area, the University of Pittsburgh, UPMC, Carnegie Mellon University, and hundreds of businesses combine to make Oakland the third largest job center in Pennsylvania, behind only Philadelphia and Downtown Pittsburgh.

But Reidbord said that compared to other university districts, Oakland has fallen behind when it comes to attracting and retaining long-term residents. While roughly 120,000 people work in the neighborhood every day, only a very small number of them actually live there. Oakland Crossings would begin to change that, he said.

Dostilio said the university is excited about “developing additional projects” beyond Oakland Crossings, and that other large employers may follow suit.

“I hope that other institutions are as excited about this benefit, both to their staff as well as to the greater communities that they're located in,” she said.

An early analysis of the value of “walkability” in the U.S. found that being able to walk to work increased employee satisfaction, attendance, and retention. Helping people live close to their jobs can create a civically active place, Distilio said, and create more long-term residents for the neighborhood.

And Reidbord said Walnut Capital has had preliminary discussions about walk-to-work with UPMC, which has already made significant investments in housing.

‘A parody of affordability’?
Oakland Crossings has already drawn opposition from people worried about its impact on Oakland -- and about how Walnut is seeking approval before the community finishes the master plan that might set new expectations for such projects.

Among those requirements could be provisions for affordable housing. While Pittsburgh still offers a lower cost of living than many of its peer cities, rental prices have increased by nearly 10 percent in the last year alone, according to real estate analysis firm Apartment List. A draft vision statement for the Oakland master plan ends with a call for housing strategies that “overcome long-standing issues of resident displacement due to the high demand for housing.”

Oakland Planning and Development Corporation has emerged as Oakland Crossings’s lead critic, and recently described the walk-to-work proposal as “a parody of ‘affordability.’” While it acknowledged that the daily crush of commuters puts traffic and parking pressures on the neighborhoods, the organization argues that without an income cap, nothing prevents the developer from offering pricey units to people that earn far more than the median income.

OPDC prefers affordable-housing approaches like inclusionary zoning, which do include specific income targets. But Walnut Capital's Reidbord said he trusts Pitt to develop a walk-to-work program that addresses the needs of their employees.

“They’re not going to give the tenured professor a subsidy to live in Oakland,” he said. “No university would do that. It’s not fair, it’s not equitable, that’s not going to happen.”

Walk-to-work housing, and the incentives used to drive it, can have powerful effects, said Lee Huang, president and principal of Econsult Solutions, Inc. The firm marries economic analysis, policy research and real-world strategy, and is serving as a consultant on Oakland Crossing.

Most walk-to-work programs aim to help people buy homes, Huang said. Hospitals and universities, for example, “want people to commit to a neighborhood,” he said.

That’s a goal more often associated with home ownership than with renting. But while rental subsidies are more rare, Huang said his firm’s research has shown that if institutions make a housing incentive widely available, it “does tend to create opportunities for income diversity.”

If a school were to offer all full-time faculty and staff up to $1,000 per month in rent, for example, it would disproportionately help people who can only afford a less expensive rent, he said. And the ability to live without a car and be closer to work and amenities may also give lower-income households a boost.

However, Huang said, institutions have to be thoughtful about how their investments affect the community. Whether a university invests in a new green space or in housing, “by definition, it makes the place more valuable,” Huang said. “People are willing to pay more to be in the area … and what’s increased price? Increased unaffordability.”

The solution, Huang said, is to create more supply to balance out increased demand. Huang noted that prices have gone up in Philadelphia and Cleveland, partly as a result of the housing incentives, “and you kind of wish that there was more aggressive action on the supply side.

While it’s important to advocate for more affordable housing, he said, part of the mindset ought to be “let’s build more housing, period.”

‘Show me where they're not affordable’
Reidbord agrees that it’s crucial to create a greater supply of non-student housing in Oakland. He sees the walk-to-work component of Oakland Crossings as a place to get started. Furthermore, Reidbord is not convinced there’s a housing price squeeze in Oakland.

Show me apartments folks lived in over the past 20 years, and show me where they're not affordable today,” he said.

At least for now, the walk-to-work provisions are the project’s only nod to affordable housing.

Pittsburgh City Councilor Bruce Kraus, who represents the area, introduced zoning changes for the project during a Council committee meeting in October. He said he wanted highly-paid physicians as well as building custodians to be “recognized and respected” — and that his office wanted to address both affordable housing and walk-to-work housing. But only language for the latter is part of the bill now.

A community meeting on the larger Oakland Crossings plan is scheduled for Monday, Nov. 29. Reidbord said he expects to go before the Planning Commission early in 2022.