For growing cities, a cautionary tale from Pittsburgh - Technical.ly

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Jun. 2, 2017 9:59 am

For growing cities, a cautionary tale from Pittsburgh

Pennley Park South has become an example of what not to do in urban planning. How can cities ensure affordable housing while still encouraging new development?

Construction in Pittsburgh's East Liberty neighborhood.

(GIF via YouTube)

This story is part of Grow PA, a reported series on economic development across 10 Pennsylvania counties underwritten by the Chamber of Commerce for Greater Philadelphia. Sign up for our weekly curated email here.
How can cities attract and retain new talent without pushing out long-term residents? In Pittsburgh’s red hot East Liberty neighborhood, what was to be a new development has become a cautionary tale.

Pennley Park South was planned as a complex in which the first phase would include 200 apartments and some 12,000 square feet of office space. The development was to be anchored by a new Whole Foods grocery store.

But first, the owners of the property, LG Realty Advisors, had to raze the existing buildings on the Penn Avenue site. In 2015, the company began eviction proceedings against the 100 residents of the two buildings. Many of the residents were low-income and finding new places to live was a challenge.

Now, almost two years later, Whole Foods has pulled out of the plan (its first Pittsburgh store, which opened in 2002, is about a half mile away on Centre Avenue) and LG Realty Advisors, Pennley Park’s parent company, and the city are suing each other.

Neither representatives from the city nor attorneys for Pennley will discuss the case, after a judge ordered them to not to speak publicly about it while it was in mediation.

But the project runs the risk of becoming an example of what not to do in urban planning: Exclude long-term residents from the future of their community.

The City of Pittsburgh and LG Realty Advisors, Pennley Park’s parent company, are suing each other.

LG bought the Penn Plaza apartment complex from the Urban Redevelopment Authority in 1966. Once the Federal Housing Administration (FHA) mortgage was paid off in 2000, LG was free to do what it wanted with the property, and didn’t have to continue providing rent-controlled apartments.

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This was potentially significant, considering the Penn Plaza apartments represented about 10 percent of all affordable housing in East Liberty.

Development in East Liberty has been rapid, with a Whole Foods kicking things off in 2002, followed a few years later by a Trader Joe’s and the opening of Ace Hotel in 2016. Housing prices in the neighborhood have skyrocketed, with many longtime residents moving to nearby Garfield or Homewood in search of cheaper rents.

When word of the Penn Plaza evictions came out, Mayor Bill Peduto and his administration intervened on the residents’ behalf and got a temporary stay. The last of the residents moved out in March of this year.

The city and Pennley Park entered into a Memorandum of Understanding requiring the developer to give a portion of any tax abatement on the project to a fund for affordable housing in the city, but it didn’t include a provision for any affordable units in the new development.

“This is not a day for celebration, but an example of why we need better protections for low-income tenants in our city,” Peduto said at the time.

The city has sued Pennley Park, claiming the developer began demolition before all the residents were out. In April of this year, Pennley Park filed a countersuit after Whole Foods announced it was pulling back on the project for the time being. According to their claim, Pennley Park suffered $10 million in damages as a result of Whole Foods’ action, which the developer says was brought on by the city’s involvement.

"This is not a day for celebration, but an example of why we need better protections for low-income tenants in our city."
Pittsburgh Mayor Bill Peduto

Pittsburgh attorney William Pietragallo is mediating the legal fight between the city and Pennley Park South. He declined to discuss any developments this week, citing the gag order from Common Pleas Senior Judge Joseph James, but said they were “working diligently” on finding a solution.

The question remains: How can Pittsburgh ensure enough affordable housing is available while still encouraging the development that has led to a boom in the city’s eastern neighborhoods?

Tim McNulty, the city’s communications director, also cited the judge’s order and declined to talk about any progress with the court cases. But he said the city has taken steps to try to provide more affordable housing options, which aim to avoid a repeat of the situation in East Liberty.

“Obviously we’re doing our best — generally, not specific to Pennley Park — to balance the need for affordable housing with that of supporting new additions to our tax base,” McNulty said.

He pointed to a report by the city’s Affordable Housing Task Force, formed in 2015, which included recommendations for a citywide housing trust fund “incentive-based inclusionary housing requirements” on any development receiving public subsidies, the expansion of low-income housing tax credits and efforts to protect homeowners and tenants.

“Every resident of Pittsburgh, especially those struggling with low incomes, should have the opportunity to be part of our city’s growth. At the same time, they shouldn’t become victims of it,” Peduto said in announcing the task force recommendations.

The city council voted unanimously in December to create the $10 million affordable housing trust fund, but is still grappling with how to pay for it.

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Kim Lyons is an experienced business and tech journalist based in Pittsburgh. Her bylines have appeared in numerous regional and statewide publications, including the Pittsburgh Post-Gazette, Pittsburgh City Paper and others. A native of Boston, Kim was a 2015 Kiplinger Fellow in Public Affairs Journalism at Ohio State University, and is a founding member of the Pittsburgh chapter of the Online News Association. Find her on Twitter @socialkimly.

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