The Equity Factor

Pittsburgh Housing Authority Doubles Down On Redevelopment

Last week, the Pittsburgh Housing Authority approved a $174 million budget. Could a public-private partnership help spur more development of affordable housing?

Artist’s rendering of the Addison Terrace development.

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Public housing in Pittsburgh is set to see an injection of cash next year. Last week, the city’s Housing Authority approved a $174 million budget — a $25 million increase since last year, according to the Pittsburgh Post-Gazette. This budget dips into the Authority’s reserve funds for $40 million, which will leave its savings account hovering around only $20 million.

It’s a calculated gamble. The long-term outlook is bleak, with development funds dropping from $54 million in 2014 to $10 million in 2015. But Housing Authority Executive Director Caster Binion calls it a necessary business move.

“The Housing Authority has to reposition itself so we are working as a business,” Binion told the Post-Gazette. “And being a partner in the community while changing the face of public housing.”

In a way, the Housing Authority is doubling down now in hopes of seeing returns later. The budget plan helped fill a $7 million funding gap in the redevelopment of Addison Terrace, the city’s oldest housing project. Through its non-profit arm, known as the Allies and Ross Management and Development Corp, the Authority hopes to demolish the 734-unit complex and replaced it with a 400-unit mixed-income community.

The $7 million grant will go to Allies and Ross, who will then lend the funds at 5.8 percent to Columbus, Ohio-based developer Keith B. Key, who will actually redevelop and managing Addison Terrace. The Post-Gazette reported that the loan will pay Allies and Ross $11 million in interest over 40 years, which the Housing Authority intends to invest in more low-income housing stock.

The Authority dedicated another $12.6 million to Allies and Ross for construction of new houses in the Larimer neighborhood.

Allies and Ross has its share of skeptics. The city controller did an audit for legality in April, and though the corporation was deemed legal, the audit found problems with an anti-drug effort and what was characterized in news reports as a now-defunct contract for guards patrolling low-income communities.

This is the kind of public-private partnership that give many people pause. Still, this move by the Housing Authority ensures that the Addison Terrace community gets built, especially since a loan from PNC Bank was killed. And by all accounts, Addison Terrace has the makings of a smart development.

I called Liz Hersh, executive director of the Housing Alliance of Pennsylvania, to take the temperature of state housing advocates outside Steel City.

“I can tell you that the housing authorities that have diversified their funding base and have gotten involved in development and are expanding the affordable housing stock, in general, are doing better at meeting the needs in the community,” she said. “This is a strategy that has been used by Allegheny County Housing Authority, so it’s a good model and a local model. It’s a model that’s been used all over Pennsylvania and all over the country.”

Hersh does have displacement concerns for Addison Terrace. “Obviously we always want to make sure — and we’ll be watching out — that there’s some sort of protections against displacement,” she said. After all, there were 734 low-income units before and only 400 mixed-income units planned. But Addison Terrace itself, and the Authority’s willingness to take risks, could be worth the extra investment.

“A lot of this housing stock is very old and our knowledge has improved,” Hersh said. “In 1940, when we started building housing projects, it was a different world. And now we know that mixed income is better… so I think it’s not just expanding the stock, it’s hopefully making the stock more sustainable, more affordable, better for neighborhoods, better for opportunity.”

The Housing Authority is laying all of its cards on the table here and taking significant cash from its coffers. But if Addison Terrace succeeds, it could lead the way for more mixed-income developments in Pittsburgh, which in turn could — at least in theory — bring good schools, diverse neighborhoods and the opportunity for economic mobility.

The Equity Factor is made possible with the support of the Surdna Foundation.

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Bill Bradley is a writer and reporter living in Brooklyn. His work has appeared in Deadspin, GQ, and Vanity Fair, among others.

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Tags: affordable housingeconomic developmentreal estategentrificationequity factorpittsburghpublic-private partnerships

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