A raise in Pittsburgh’s realty transfer tax gets preliminary City Council approval

A raise in Pittsburgh’s realty transfer tax gets preliminary City Council approval

Author: Alanna Koll/Wednesday, December 13, 2017/Categories: Pittsburgh

Pittsburgh City Council has advanced legislation that would increase the city’s realty transfer tax from 4 percent to 4.5 percent in 2018.  

The money garnered from the tax is expected to go toward the affordable housing trust fund, also known as the Housing Opportunity Trust Fund, which was approved by council last December. It is also expected to supply the fund with $10 million annually for the next five years to build housing and rehabilitate older homes for those who qualify under low-income standards.  

The tax is a one-time charge based on a property’s sale price and is paid at the time of purchase. Revenue from the charge is split between the state, the local school district, and the city. Under the new plan, the city would receive 2.5 percent of the tax.  

The legislation, which received a preliminary vote Wednesdayis a compromise deal supported by seven council members to only raise the tax .5 percent through 2019. The tax will then jump to five percent by 2020.  

Realtors speaking during the public comment period of Wednesday’s council meeting opposed the increase, stating that it would hurt real estate investment in the city by significantly increasing the already burdensome cost of closing costs for homebuyers.  

“[Homebuyers] might be able to afford a mortgage, but as far as closing costs go, once those get put in there, that could basically bump them off and make them not eligible,” said Lynn Bingham, a realtor in the city’s South Side area. “You’re going to take a number of people who are attracted to the city and want to live in the city and they are going to become essentially not eligible to buy.”  

Supporters of the increase pointed to the soaring rental rates in many of the city’s neighborhoods and noted that the funding would provide much-needed subsidies to those looking for and needing affordable housing. 

This is about improving the lives of Pittsburgh’s neighborhoods,” said Celeste Scott, an affordable housing advocate with Pittsburgh United. “We look forward to working with you as this is a first step towards closing the housing affordability gap in the city.”  

Councilwomen Darlene Harris (District 1) and Natalia Rudiak (District 4) were the two negative votes on the legislation, stating their concerns of the increase making housing more expensive and being an increased burden on low to moderate income home-buyers.  

Officials have estimated that over 17,000 residents need housing at or below competitive market rates in the city.  

Councilman R. Daniel Lavelle (District 6), one of the sponsors of the bill along with Rev. Ricky Burgess (District 9), said he is very pleased with Wednesday’s vote. 

“I’m very glad that council has gotten to this point,” said Lavelle. “A year ago, we passed legislation saying that we needed to do this but we then argued over how to fund the Housing Opportunity Fund, but I’m very proud that my colleagues were able to come together and come up with the best compromise possible.”  

Last week, a small coalition of Councilmembers including Rudiak and Councilman Corey O’Connor (District 5) put together a series of budget bill amendments that would fill the housing fund by cobbling together money from unused accounts from the city’s budget.  

One such account is the Worker’s Compensation Fund, which Council voted to take $1.2 million from earlier this week to be put toward affordable housing efforts.  

The coalition plan also called for pulling $2 million from the city’s budget surplus to go into the city’s Community Facilities Fund for improving childcare centers. Council was able to accomplish that as a budget amendment on Wednesday.  

Councilman Deb Gross (District 7) who is a member of the coalition and who supported the $2 million amendment said affordable housing and affordable childcare go hand in hand and should be supported together.  

“We know that well over a majority of low-income households are female-headed households with children,” said Gross. “Childcare and housing are a double burden. I fully support moving $2 million from our $550 million operating budget today so that we can support Pittsburgh’s neediest families.”  

Councilwoman Theresa Kail-Smith (District 2), however, said the $2 million is not going to be enough and that council is just patting themselves on the back by passing the amendment. 

“I’d really like to see us do this in a way that will really make a difference.”  

A final vote on the realty transfer tax and the city budget and its various amendments is expected next Tuesday, December 19.