Rent abatement, housing renovations and new affordable housing construction projects could be on the agenda if City Council approves a tax increase worth an estimated $10 million.
A 90.5 WESA analysis shows the proposed 1 percent hike added to realty transfers, which could include homebuying, land sales and commercial sales, would represent a larger investment per capita than most other American cities have made to similar funds.
Officials in Philadelphia – a city with a population more than five times greater than Pittsburgh’s, according to the U.S. Census – has invested $12.5 million in the Philadelphia Housing Trust Fund in the current budget year. That comes out to just below $8 per resident, or about $30 for each of the roughly 418,000 Philadelphians living under the poverty line.
In Pittsburgh, a $10 million contribution to the proposed Housing Opportunity Fund would proportionally be about four times greater, providing about $140 for each Pittsburgher living in poverty.
City Council will hear testimony on the fund, proposed by Councilman Daniel Lavelle, at a public hearing on September 21.
“I think Pittsburgh would be leading some of the way on actually providing the kind of funding that’s needed to tackle the problem and crisis many cities are facing around affordable homes,” said Katy Heins, a senior organizer for the Housing Trust Fund Project at the D.C.-based Center for Community Change, which keeps tabs on about 770 existing affordable housing trust funds across the nation.
“Other cities, while they have the (trust) funds, it is the political will to get enough money in those trust funds in order to really build the housing that’s needed for our communities,” Heins said.
Leaders in St. Louis, which has an estimated 2015 population slightly greater than Pittsburgh’s, sent $4.7 million to their city’s Affordable Housing Trust Fund in its latest budget. Pittsburgh’s proposed investment would also outweigh the per capita support in Minneapolis and Chicago. Washington D.C. leads the nation with a massive $100 million contribution that provides approximately $817 per low-income applicant.
Heins said a similar ballot question to fund affordable housing was recently approved by 68 percent of voters in Seattle, while an initiative to create an affordable housing trust fund in Baltimore is also underway.
How Would The Trust Fund Be Filled?
One potential funding mechanism for the trust would be an increase to the city's realty transfer tax from 2 percent to 3 percent.
When someone buys a home or any other property, local governments typically levy a one-time fee based on the sale price. According to realtors, payment of this fee is usually split between buyers and sellers as part of the closing costs of the property sale.
Including 1 percent transfer taxes also levied separately by the school district and the state, the total realty transfer tax within Pittsburgh city limits would increase from 4 percent to 5 percent if this funding mechanism is adopted, according to Burkhardt Reiter, a realtor with Neighborhood Realty Services in Regent Square.
For a Pittsburgh home priced at the city’s 2010 census average of $91,500, the transfer tax burden would increase from $3,660 to $4,575 if the increase is approved.
In Beltzhoover, where the 2010 median home sale price was just $2,744, the average transfer tax bill would increase from about $110 to roughly $137. In Squirrel Hill North, whose median home sale price was $377,500 in 2010, the total transfer tax burden would grow from $15,100 to $18,875 on average.
Organizers at the nonprofit group Pittsburgh United said Tuesday they'd gathered roughly 13,000 signatures in support of putting the realty transfer tax increase proposal on the ballot in November -- well more than the threshold of about 7,500 signatures needed to authorize a ballot question. However, the group stopped short of submitting those petitions to the Allegheny County Elections Division, instead opting to let the funding process be hashed out through Pittsburgh City Council.
Representatives of Pittsburgh United estimated that actual yearly revenues for the realty transfer tax increase would be closer to $10.75 million based on recent data, though potential exemptions for low-income residents and first-time homebuyers could reduce that figure.
Funding Mechanism Drawing Realtors’ Ire
Reiter, who said he hasn’t made up his own mind on the proposed tax increase, said the Beaver County Association of Realtors has urged its Pittsburgh-based members to oppose any potential ballot question.
“What we see, particularly with first-time homebuyers, is just them having enough savings in general, and savings not only for the down payment, which is a certain percentage, but then our closing costs in Pennsylvania are added onto that,” Reiter said.
BCAR’s most recently available online newsletter said the association “will continue to work on effective methods of increasing affordable housing without tax increases that would adversely (affect) the real estate consumer.”
The website of the Realtors Association of Metropolitan Pittsburgh expressed a similar sentiment, arguing that it supports affordable housing but that “it is self-defeating to place the cost on the backs of the real estate consumer.”