A lot of our behind-the-scenes work at ELDI centers around finding ways to fund the affordable housing projects that are crucial to fostering a healthy, mixed-income community. Since 2018, we have been working with a powerful federal funding mechanism: the New Markets Tax Credit Program (NMTC Program). This program incentivizes private investment into low-income and economically disadvantaged communities by providing investors with a federal tax credit for investing in economic development projects in those communities.
According to the NMTC website, for every $1 invested by the federal government, the NMTC Program generates over $8 of private investment. These funds flow through Community Development Entities (CDE) and go towards a wide range of projects, from large multi-use retail and commercial buildings to loans for local businesses. The idea is that this boost of new investment will create a ripple effect that catalyzes further revitalization in an area.
We already talked about how exactly this program works, but today we want to look at the NMTC Program from another angle, spotlighting one of our key Pittsburgh partners in this work: Rebecca Davidson-Wagner, president of Pittsburgh Urban Initiatives. Pittsburgh Urban Initiatives (PUI) is Pittsburgh’s CDE that applies for and facilitates NMTC investments for projects across the city. PUI is one of only 100 entities in the nation to receive this competitive funding and one of only 16 serving local markets.
Since February 2011, PUI has received $238 million in NMTC allocation in seven awards. Previous tax credit awards have helped to finance numerous Pittsburgh developments, including East End Cooperative Ministry’s Community House, the Energy Innovation Center, Wood Street Commons, and working with ELDI on scattered site affordable housing in Garfield and East Liberty.
We had a conversation with Davidson to learn more about her work, why NMTCs are particularly effective at subsidizing affordable housing, and what she sees as crucial to ensure a vibrant future for East Liberty and the East End.
Why are you passionate about this work?
I am passionate because working with the NMTC Program allows me to facilitate private investment into low-income communities, and I can see the impacts of these investments. It also means that I can translate what may be a financing tool that seems out of reach to a hands-on application that brings real benefit.
Why is the New Markets Tax Credit Program an effective financing tool for subsidizing affordable housing and homeownership?
Affordable housing is very difficult to finance due to the high cost of construction and the need to keep the resale costs down. There is a natural gap that will always occur. NMTCs can leverage grant and loan funding already in place and increase those investments by nearly 25%. This can be critical in bringing, what would be an impossible project, to market.
How many PUI projects have focused on affordable housing?
We have engaged in projects that have provided either for-sale or rental housing, creating 451 of these units. Of those, 308 have been affordable to 80% or below of the Area Median Income. Given the nature of the program, NMTC can’t invest in straight rental, but we have been able to participate in projects that are mixed-use. In these projects, we have a minimum threshold of 20% affordability for us to participate. Additionally, we have funded nonprofits that provide transitional or emergency shelter for those in need.
Which projects has PUI supported in East Liberty and the East End?
PUI has heavily invested in Council District 9, the district that encompasses East Liberty and points further East. Around half of our investment total has gone to projects in the East End. This is because there have been a lot of opportunities in this area with new community facilities, hospitality, and the for-sale housing model. The NMTC Program can’t initiate development, but it can help development that is occurring.
PUI is accountable to low-income communities through board representation. Can you tell me more about that? Which communities are represented on the PUI board?
PUI has two boards, a governing and an advisory board. The advisory board demonstrates the low-income community (LIC) representation. Representatives either live in a LIC, or their organization serves primarily LIC geographies in the City of Pittsburgh. Current Representatives on the PUI Advisory Board include ELDI, Hilltop Alliance, Hazelwood Initiative, Action Housing, Brashear Association, Neighborhood Allies, Partner4Work, and others.
What are the criteria that PUI considers when deciding if it will apply for NMTC investments for a project?
It considers community impact, readiness, and alignment with City goals in regard to targeting investment as part of a coordinated strategy. Currently, Avenues of Hope and Downtown are two specific areas that the URA and City are targeting for investment.
What do you think of the transformations that have occurred in East Liberty?
I think that the transformation of East Liberty can be jarring for those that aren’t from Pittsburgh or who haven’t lived here for a long time. East Liberty knew its value in the early 90s and executed a plan to showcase and attract investment to the area. That plan worked and was done intentionally. Affordable housing was a key component, along with market-rate retail and market-rate housing. We live in a capitalistic society, so we can’t control the market or tell people what to do with their money, especially if they want to invest in something, build something, move somewhere, renovate something, etc.
East Liberty is in a tough spot now, having to manage the unmanageable, but they continue to have faith in the process and their partners and continue to work to build a community for all. That was in their charge in the beginning, and it is still what they are executing on. They are one of the most successful CDCs in the City and should be championed as an example of how it is done.
What do you see as critical to ensuring a vibrant future for the East End and Pittsburgh as a whole?
I think that fostering the immigrant population and providing places for them to thrive is essential for Pittsburgh’s continued success. They are the future, and they will provide the innovation and ideas that will take Pittsburgh further. I’m not sure how to do this exactly, but we need to invest in attracting more immigrant populations to the city to build our population and provide the diversity that will make us stronger and more resilient in the future.
