Some Pittsburgh City Council members question URA’s city-funded affordable housing plan

Pittsburgh City Council members expressed concerns Wednesday over a proposal that would put city taxpayers on the hook for $62.5 million in bond repayments to support Urban Redevelopment Authority affordable housing programs.

Mayor Ed Gainey’s administration and the URA have provided few specifics on how the money would be spent, and some council members said they thought it was unusual for the city to agree to pay back an independent authority’s bond debt.

“It doesn’t sound like you have a plan,” Councilwoman Deb Gross, D-Highland Park, told URA officials last week.

City Council members had their second public discussion on the proposal Wednesday.

The proposal would allocate $2.5 million a year for 25 years — a total of $62.5 million — from the city’s general fund to the URA, according to Jake Pawlak, director of the city’s office of management and budget. The URA would then use the money to pay back their debt on a bond that officials estimated would bring in between $25 million and $40 million over the next three years.

City and URA officials have not specified how the bond money they’re hoping to get would be spent, other than to say it would be used to support existing affordable housing initiatives. Pawlak and URA officials on Wednesday declined to specify which initiatives would be supported and whether money would be distributed as loans, grants or both.

URA Executive Director Susheela Nemani-Stanger said officials can’t outline a specific spending plan now because they haven’t priced the bond. Officials won’t know exactly how much money the bond will bring in until they take it to market, she said.

Nemani-Stanger said the money would support “very relevant housing programs” that benefit residents, developers and small landlords. She said the URA would look to create new affordable housing and preserve existing affordable housing units.

“A formalized allocation has not been developed,” Pawlak said. “The intention here is to utilize these funds to support existing affordable housing programs, of which there are many.”

Pawlak said the impetus for the bond proposal came as city officials saw “the need for affordable units grow at an increasing pace.”

He could not provide specific numbers Wednesday for how many people needed affordable housing in the city.

The bond money, he said, could allow the URA to “close the gap between the demand for units and our pace of production” in the short-term.

If the city’s proposed allocation to the URA is approved, the money would go straight to the URA and then the authority’s board of appointed directors would approve how the money will be spent, officials said. Proposed spending would not go back to City Council for approval, they said.

In addition to the lack of specifics, some council members questioned using city funds to pay back the authority’s bond debt. Pawlak said the city would not be paying off the debt directly, only allocating money to the URA for it to do so.

Council members had a closed-doors briefing on the measure with members of the URA and the administration Tuesday.

Pawlak said the city “would not be accepting liability for the debt” and argued the legislation was not inherently different than any other budgetary allocations.

The city planned for the expenditure in its 2023 budget, Pawlak said.

According to Pawlak, the last time City Council approved a similar measure was in the late 1990s when it authorized a debt payment for the URA to support the Pittsburgh Development Fund, which supports an array of business development initiatives throughout the city to this day.

During Wednesday’s council discussion, opinions were split.

Gross said she is working to craft amendments to the bill that would create “broad conditions” on how the funds would be spent.

“There (is) a desire from our constituents and among members to give it some criteria … so that the public and members know what they’re committing 25 years of funding to,” she said.

Councilman Anthony Coghill, D-Beechview, said he’s not sure about supporting the measure without details on how many affordable housing units could be created, where they’d be built and which specific programs would be funded. He also pointed out that, with interest, the city could pay nearly double what it gets from the bond.

“If we decide to go down this road, it’s going to be many, many years of large investments I don’t know this city is ready to take on,” Coghill said, adding there are many other “immediate needs” across the city.

Councilman Ricky Burgess, D-Point Breeze, however said he thinks the city should do more. He’s already pushing for two more similar bond issuances within the next decade.

“This should be the first of a series of bond lendings over the next few years,” he said. “The people of the city of Pittsburgh deserve an investment significant enough to (meet) their need.”

Councilman R. Daniel Lavelle, D-Hill District, urged council members to move quickly on amendment proposals so they can advance the measure next week.

“The reality is the problem is not getting any easier. The need is greater than the cash on hand,” he said. “We need to be able to move this forward as expeditiously as possible.”

The authority received about $70 million in federal covid relief funding, about $42 million of which is dedicated to affordable housing initiatives, Pawlak said. It must be spent by the end of 2026.

Outside of that funding, the URA typically gets about $10 million a year from the Housing Opportunity Fund, roughly $2 million a year from the city through the Home Investment Partnership and about $3 million annually in Community Development Block Grant money to dedicate to housing efforts, URA Director of Housing Evan Miller said.

“We’re talking about a much larger sum of money,” he said, referring to the potential $25 million to $40 million the bond is expected to provide.

Council members unanimously voted to hold the measure for a week. It will be discussed again in committee next week, and could go up for a preliminary vote as soon as next week.