VSCreating more affordable housing in Pittsburgh is a top priority for city officials. But how can this be accomplished when housing costs continue to skyrocket here and across the country?
The Pittsburgh City Council is considering a move to explore the expansion of Housing cooperatives with limited capital (LEC) as a way to make home ownership more accessible.
LECs are a mix between rental and home ownership. Tenants pay for shares of their homes in monthly payments, rather than paying rent or mortgages. Instead of owning the real estate, the residents own shares in the company, which they can sell later if they want to move. All tenants must make monthly payments and follow the rules created by the democratic society.
LECs accumulate equity because people own shares of real estate. This housing is also more affordable as the banks help these societies with loans at lower interest rates because many people are involved in the society.
the legislation, sponsored by Councilwoman Deborah Gross and Council Chair Theresa Kail-Smith, is leading Pittsburgh’s Planning Department and Department of Permits, Licensing, and Inspections to prepare a report on LECs that includes the current number of operations in the city and their characteristics. This could eventually provide incentives for the construction of new LECs and encourage landowners to convert to LECs and citizens to move into them.
According to Gross, the citizens of Pittsburgh are looking for an opportunity to become homeowners without breaking the bank.
“People try not to pay all their money in rent, want to be [owners]but need a lower barrier to entry,” Gross said. 90.5 WESA. Financial experts say housing costs should be less than 30% of your gross monthly income; for homeowners which should include your mortgage as well as home insurance, property taxes and utilities.
LECs have been used effectively by Pittsburgh in the past, Gross said. After World War II, they were created by unions and other groups to fight low wages and high housing costs.
“It’s really a different form of home ownership that we haven’t used in a very long time, but that Pittsburgh was very good at,” Gross said. TribLive. “The opportunity is that you can buy incrementally because you’re really just buying stocks bit by bit. So you don’t need a big down payment, but you can still have the security of housing that ownership provides, and you’re building wealth and equity, a little at a time.
LECs provide economic and social benefits. They are affordable because of lower down payments and they remain affordable because monthly costs remain stable. LECs offer residents community control since there is no landlord – people are responsible for their homes.
The Pittsburgh City Council could vote on the proposal as early as next week. If approved, an LEC report would be submitted by the end of August.
This legislation is the latest effort to create more affordable housing in the city.
Earlier this month, Mayor Ed Gainey signed into law a measure that would expand an area of affordable housing from Lawrenceville to the Bloomfield and Polish Hill neighborhoods. Under this law, any new development or major renovation on a building with 20 or more units must have at least 10% of them targeted at low-income residents. However, a group of homebuilders are challenging the action in court, saying it violates Pennsylvania Home Rule Law.