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Lavelle & Burgess Propose URA Bond, Realty Tax Increase To Fund Affordable Housing

Money from the Housing Opportunity Fund could be used for home rehabilitation.

Pittsburgh City Councilmen Daniel Lavelle and Ricky Burgess on Tuesday introduced bills to finance the city’s affordable housing trust fund.

One of the bills proposes a 1 percentage point increase in the total realty transfer tax buyers would pay. But that increase, from 4 to 5 percent, wouldn’t go directly to the fund.

Instead, it would go to pay off a $100 million bond that the other bill would authorize the Urban Redevelopment Authority to issue.

Lavelle said that such a level of up front funding is necessary to make the program effective.

“So that you can immediately begin trying to attack and transform neighborhoods and blocks at a time as opposed to one home there, one house there," he said. 

Money from the Housing Opportunity Fund will be used for rental assistance, rehabilitation of existing homes and construction of new affordable units.

Council passed legislation creating the fund in December, but Lavelle said he held off on introducing the funding mechanism because of concerns from colleagues on council.

But he said since then, no one else has come forward with a viable alternative funding source.

According to the text of the bill that created the fund, the city is down 23,000 affordable housing units.

The Realtors Association of Metropolitan Pittsburgh has come out against the tax proposal.

Executive Vice President John Petrack said increased taxes depress sales.

“When less people are buying, more people are renting, so therefore it has the adverse effect of pushing rents higher,” he said.

Petrack called it a self-defeating proposition.

“Either he doesn’t know or he hasn’t looked at the numbers (in) our proposal,” said Councilman Ricky Burgess. “The Housing Opportunity Fund helps first time homeowners with down payments, so we’re going to help people buy their own houses.”

Furthermore, he said 40 percent of the current transfer tax revenues come from property sales with a price tag of $1 million or more, while 85 percent are properties with $150,000 or more, and that those buyers can afford the 1 percent increase.

(Photo credit: Flickr user Nick Normal)