Following an involved conversation among Pittsburgh City Council, all nine members voted to advance legislation that would approve an enhanced tax abatement program designed to attract and retain reinvestment and redevelopment downtown.
50
number of full-time jobs needed for commercial project to receive 100% tax abatement
6
number of years of standard tax exemption
3
potential projects to start rehabbing by year’s end
15,900
target number of future downtown residents
The proposed, enhanced Downtown Local Economic Revitalization Tax Assistance (LERTA) program offers financial incentives for organizations and developers while fostering the creation of affordable housing and jobs in the central business district. Commercial, commercial residential and residential uses are all eligible for the tax exemptions, under a range of conditions.
With the goal of building a diverse and accessible downtown neighborhood, the legislation supports developers in creating affordable housing units with a tiered system that givesthe developer a range of abatement percentages:
- A 100% tax exemptionfor commercial residential projects if at least 10% of the units are for people earning at or below 50% of the area median income (AMI)
- A 95% exemption if the project creates 10% of the units to target residents earning at or below 60% of the AMI
- A 90% exemption if the project creates 10% of the units to target residents earning at or below 70% of the AMI
- An 80% exemption if the project creates 10% of the units to target residents earning at or below 80% of the AMI
Pittsburgh’s AMI is $101,200 for a family of four, according to 2024 calculations from the U.S. Department of Housing and Urban Development.
Beyond vibrancy, a major reason for converting buildings to residential use is to secure the real estate tax base in downtown, said City Councilmember Bobby Wilson, who introduced the legislation.
“This legislation is a step in the right direction to get cranes in the air,” Wilson said, noting that Cleveland used similar incentives to spur renovation in its struggling downtown core.
City Councilmember Erika Strassburger, whose district represents East End neighborhoods including Shadyside and parts of Squirrel Hill and Oakland, is among several co-sponsors of the legislation. Strassburger’schief of staff, Scott McMurtry, noted that all 90 city neighborhoods benefit from services funded in great part by taxes generated by downtown real estate, a base that comprises 25% of the city’s budget.
McMurtry said he also understands how expensive such conversions from commercial to residential can be for developers.
“If we can help make the math work out better for them, we’re happy to do it,” McMurtry said. “The tax abatement program would start to build back the value of our downtown, and we hope that invigorates the Golden Triangle with a rebirth.”
Commercial and industrial developments that fall outside of the affordable housing tiers can obtain tax exemptions by increasing the net number of full-time jobs that adhere to the following guidelines:
A 100% abatement for a commercial project that creates 50 full-time jobs
A 95% abatement for creating between 40 and 49 jobs
A 90% abatement for creating between 30 and 39 jobs
“The bill was set up that the market will dictate what will happen and what the need is for what will be a sustainable project,” Wilson said. “There are different avenues for developers and investors to see themselves investing in downtown.”
Many members of the IndexPGH group, including the Allegheny Conference on Community Development,support the enhanced LERTA legislation for its ability to advance key projects immediately, create much-needed affordable units and full-time jobs, and breathe life into some of the area’s most iconic real estate.
As downtown Pittsburgh faces an uncertain future with employers decamping for other regions, leaving buildings dark, the need for commercial properties to evolve their intended use is increasingly urgent.
“We are aware that capital is mobile,” McMurtry said. If we didn’t offer this signal to the developers and the market that we’re serious, then those investments would go to other cities, who would reap the benefits in their downtowns.”