Beechview could be the answer to Pittsburgh's affordable housing problem

Bob Bauder (Trib Live)
Original Article Here

Real estate developer Daniel Berkowitz says Beechview could hold the key to beefing up Pittsburgh's lack of affordable rental housing.

Berkowitz of Squirrel Hill has been investing in the southern Pittsburgh neighborhood over the past year, acquiring commercial properties along the Broadway Avenue business district through his company Atlas Development.

He and partner Ben Samson also are buying residential properties bordering Broadway with plans to renovate and rent single-family homes at roughly $400 to $500 per month.

He said older houses in the neighborhood available at lower costs — Atlas has purchased homes for $30,000 to $85,000 — permit affordable rents without public subsidy.

Pittsburgh officials estimate 17,000 to 22,000 city residents need housing at below competitive market rates. Developers typically seek subsidies when building low-income housing because, they say, rents aren't high enough to cover their costs.

"Between the cost to acquire and the cost to do the necessary repairs and improvements — fix life, safety and code issues — if that's all we do, those can be rented at (affordable) rates," Berkowitz said.

But Berkowitz said he wants to take that a step further and make the housing "passive," meaning they have low utility costs. That goal likely would require financial help, whether it be public subsidies or foundation grants, he said.

In addition to his Beechview holdings, Berkowitz has interests in Greensburg, where he and partners built a 27-unit apartment building for college students. He received approval last year from Greensburg council for a second apartment building.

"The homes, the structure of the (passive) home, is insulated in such a way that it maintains an internal temperature of 65 degrees up to an external temperature of negative 7 degrees," he said. "It's also 65 inside when its 90 degrees outside. The mechanical systems in a property like that very rarely have to turn on. It basically means the residents of the home pay virtually zero in electric and gas."

Berkowitz said Beechview is uniquely positioned to accommodate "workforce housing."

He noted the business district, with an IGA market and access to public transportation — a Port Authority of Allegheny County light-rail line runs the length of Broadway, the main drag — are within walking distance and the neighborhood is close to Downtown.

"Workforce rates, virtually zero utility bills in a neighborhood with public transportation, now you've hit on three major cost drivers that make so much of the housing not affordable," he said. "That's why the neighborhood is so unique."

Atlas and its subsidiaries so far have purchased 11 commercial and residential properties in Beechview at a total cost of $745,400, county real estate records show. That includes seven houses and a building on Broadway that will house Atlas offices, a video production business and basement space for storage or retail.

A deal with the Pittsburgh Urban Redevelopment Authority to purchase two more commercial buildings on Broadway is nearly complete, said Kevin Acklin, who chairs the URA board and serves as Mayor Bill Peduto's chief of staff.

Berkowitz said he has tenants lined up to open a restaurant, jazz club and bed-and-breakfast in one of the buildings. He's planning to renovate the second building for retail space.

The three buildings once were owned by failed developer Bernardo Katz. Berkowitz was one of the few developers interested in acquiring and rehabbing them, Acklin said.

Katz bought 80 percent of the business district more than 10 years ago but left the neighborhood in limbo when he fled the United States for Brazil to avoid prosecution on federal mortgage fraud charges. Katz's buildings sat vacant and tax delinquent for years until 2015, when the city was successful in tracking down Katz and serving him with notices that permitted the URA to take ownership and clear the titles.

Acklin said he was unaware of Berkowitz's affordable housing plans, but the city is willing to listen.

"Without knowing the details of what he is pursuing, I think we would be open to that conversation if there's additional capital that he or others would be wanting to invest in a neighborhood like Beechview," Acklin said.

Residents said they're hopeful Berkowitz is successful.

"I think (the Katz legacy) set Daniel up to maybe jump through some extra hoops," said Beechview resident Melissa Harmon. "He went to our community meetings, and he didn't have to. He was very open about speaking to the neighborhood about his projects. He said, yes, in development (a Katz scenario) can happen, but he did everything to prove he's not like that."

Bob Bauder is a Tribune-Review staff writer. Reach him at 412-765-2312 or bbauder@tribweb.com.

Michael Sorg