Pittsburgh's requirements for affordable housing being blamed for bringing projects to standstill
PITTSBURGH (KDKA) — Pittsburgh Mayor Ed Gainey rode into office fighting gentrification and the displacement of the city's working poor.
He vowed to build more affordable housing to make living and working in Pittsburgh viable for everyone. But the city's requirements for affordable housing are now being blamed for bringing several development projects to a standstill.
When Google Pittsburgh moved into the old Nabisco plant on Penn Avenue 13 years ago, Bakery Square was born, soon to grow with upscale stores, restaurants and luxury apartments. More than a decade later the developer, Walnut Capital, plans a major expansion called Bakery Square 2.0.
Estimated at $500,000,000, it would double the size of the development with more retail and office space and 350 high-quality apartments. Though Walnut Capital is prepared to begin construction, the project is stalled because of a lack of city approvals.
"Time kills all deals," Todd Reidbord of Walnut Capital said. "In our business, when you're ready to go, you have to move forward. You can't keep delay, delay, delay."
In public statements, Gainey has been adamant that this project will not move forward unless it includes at least 10 percent on-site affordable housing, something he reiterated on a recent walk with KDKA-TV in Downtown Pittsburgh.
"I was clear with everybody and I meant what I said. We want to build affordable housing, and we're going to build affordable housing," Gainey said then.
But developers faced with an already challenging climate of high interest rates, high construction costs and shrinking demand say the mayor's affordability requirements have tipped the scales, effectively killing projects across the city.
"We're talking about millions of dollars they're mandating the developers just eat," Jim Eichenlaub of the Builders Association Of Metropolitan Pittsburgh. "And at that point, the developers say the project doesn't make money, I can't do the project."
Recently the developers of a proposed grocery and apartment building in Bloomfield said they tried to comply with affordable housing requirements by increasing the height and density of the building, but the zoning board denied their application, and the developers, Echo Development, have now filed suit.
The Builder's Association of Metropolitan Pittsburgh has also taken the city to court, saying so-called inclusionary zoning requiring affordable housing has saddled projects with millions of dollars of extra costs — forcing developers to pull the plug on several others projects.
"If they can't make money and they can't make it work, they're not going to move forward with the project," Eichenlaub said.
But the city says it remains committed to developing affordable housing to avoid the displacement of residents in gentrification and having housing options available to young service workers making an average median income of $17 an hour.
"It's important for having folks being able to access things like transportation, access to jobs, employment opportunities, to have ample housing options available to them," Chief Development Officer Kyle Chintalapalli said.
In the case of Bakery Square, Walnut Capital negotiated a community benefits agreement to help build or restore 100 affordable units off-site but has resisted including affordable housing on-site without help from the city.
"To meet the mayor's agenda and to include affordable housing, what you need is certain incentives for developers to make this happen," Reidbord said. "We're 100 percent in agreement with the mayor's agenda for affordable housing. We do think it needs to be accompanied with incentives."
"I believe there's a solution here," Chintalapalli said.
The city says it can find a middle ground.
"It's not an either-or, and there's a way for us to take an approach here that allows for us to bring to bare things like tax abatements, changes to the zoning code, improvement to the permitting process," Chintalapalli said. "So that the project can move forward and include affordable housing."