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Pittsburgh Affordable Housing Is Replaced by Whole Foods Store in Epitome of Gentrification

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For decades, poor residents of East Liberty found refuge in Penn Plaza. Now it’s being demolished.

By: Nick Keppler / AlterNet / September 29, 2016/Read the full article

Photo by Nick Keppler.

Suzette and Richard Haroldton (not their real names) watched as the roof of the small house they rented caved in. When rainwater finally seeped through the ceiling, they decided to split. “The landlord was not going to fix it,” recalls Suzette. “My husband and I had to get out and fast.”

The Haroldtons, then both entering middle age, had lived in the majority-black Pittsburgh neighborhood of East Liberty most of their lives. It was 2009 and a particularly tough time for them. Richard’s 20-year career as a chef came to a halt due to a mix of diabetes, heart disease and mental illness. He went from a living wage to Social Security Disability checks. Suzette worked part-time at a grocery store. They had a teenage son. Money was tight, and they wrecked their credit trying to get by.

They went to a place where poor residents of East Liberty had found refuge for decades: Penn Plaza. The two-building complex was completed by the city’s Urban Redevelopment Authority in 1966 and given over to private owners with 40 years of affordable housing stipulations attached to it. When the structure was planned, whites were ditching once-prosperous East Liberty for the suburbs, and the city saw an opportunity to ease overcrowding in the nearby black neighborhood of Homewood and resettle families displaced when the building of the Civic Arena rearranged the other bastion of black Pittsburgh, the Hill District. The two buildings, with a total of 312 apartment units, opened in 1966, with a daycare on the ground floor. Penn Plaza made up about 9 percent of East Liberty’s housing stock, according to Kendall Pelling, director of land recycling for the nonprofit East Liberty Development, Inc.

“At the time [we moved in], it was a beautiful place,” recalls Suzette. “Everything was kept up. Everything worked. You had the usual issues with neighbors, but everyone was nice and respectful.” They rented a two-bedroom apartment for $715 a month. (In 2010, monthly rents at the complex ranged from $400 to $800.)

Today, the Haroldtons are part of a dwindling band of residents in the one remaining building, next to demolished pieces of the other.

The current owner of Penn Plaza, LG Realty Advisors, has removed more than 200 mostly poor black residents and is demolishing the buildings to make way for a new development that will be anchored by a Whole Foods. If the arrival of the foodie grocery chain is a benchmark for gentrification, then East Liberty has been pushed toward that mark for years. Chain stores and high-end apartment complexes are popping up, shaking out residents who lived there through the area’s bleakest days, in a storyline that’s played out in Wicker Park, Hell’s Kitchen, the Mission District, D.C.’s U Street Corridor and other once-affordable neighborhoods across the U.S.

East Liberty’s Whole Foods will be across the neighborhood from Target, Staples and Trader Joe’s, all of which arrived in the last 10 years. The dividing line of Centre Avenue separates them from Penn Avenue’s drag of black hairstylists, sneaker shops and dollar stores. Pristine new luxury apartments and condos loom over the neighborhood, offering studios at $1,290 and two-bedrooms at $2,775. Occasionally, construction cranes have hovered above East Liberty Presbyterian Church, whose 75-foot tower once dominated the local skyline.

Beyond East Liberty, east on Penn Avenue, sits Bakery Square, a development in another once economically ravaged black neighborhood, Larimer. It’s now home to Google’s Pittsburgh office, as well as LA Fitness, Panera Bread and Anthropologie.

This bit of Pittsburgh real estate was once a sea of boarded-up buildings plagued by crime. As with many other minority neighborhoods, it took the worst of the city’s economic decline. The loss of steel manufacturing jobs put Pittsburgh through economic pains and population decline. But in the 21st century, tech and education have remade the city, which regularly makes “most livable” indexes.

East Liberty rebounded a few years behind other neighborhoods. From 2008 to 2012, strategic efforts led to a 49 percent decrease in crime in its residential area and a doubling of residential property values, according to a report commissioned by East Liberty Development, Inc. Meanwhile, the affordable housing covenants attached to Penn Plaza, which had fallen into the hands of LG Realty Advisors, expired after 40 years. The company owns a wide swath of Pittsburgh area developments and is run by members of the Gumberg family, a prominent real estate family whose combined partnerships were revealed to have more than $500 million in value in a 2008 court case.

Photo by Nick Keppler.

Zachary Gumberg, principal and managing member of LG Realty Advisors, says the company began reconsidering use of the nine-acre tract on which Penn Plaza sits in mid-2012. “Generally, we looked at what was happening in East Liberty and the surrounding communities in terms of growth, development and potential and weighed a variety of options for what could be the best use of the property,” he told AlterNet in an email. “These are big, difficult decisions with big ramifications, so they aren’t entered into lightly.”

The two buildings were in poor shape, he says. “[T]here were a multitude of major repair and renovation projects coming down the pike,” says Gumberg. “These 50-year­-old buildings would have required millions of dollars to address everything from replacing outmoded stairway ventilation units to the hard­wired door system to more visible items, like replacing the exterior concrete banding.” He says 30 percent of the units were vacant and would have required “complete gut­ rehabs” to be rentable again.

Gumberg concludes, “While we kept the buildings in good repair over their 50­-year history, the amount of money it would have taken to reconfigure and rehab the units didn’t make sense.”

Last fall, the company successfully petitioned the city to rezone the land for mixed use. In the months before, it stopped renewing annual leases and moved tenants to month-to-month agreements. After the rezoning, LG Realty issued 90-day notices to all Penn Plaza residents.

There was an uproar that included a demonstration of residents before the Pittsburgh City-County Building. “My plan was to fight for my community,” says Randall Taylor, 51, a cafeteria manager who lived in Penn Plaza in the ’90s and again from 2012 to 2016. “My next-door neighbors had been there since 1979. Some people had been there for longer. We didn’t have any problem with anyone new coming into the community, but many people who lived [in Penn Plaza at the time] lived in East Liberty when it was on its back and patronized its stores and rode the bus. They made it so there was something here when the students and Google employees came in.”

Mayor Bill Peduto’s administration stepped in. Negotiations between LG Realty, a tenants’ council and the city eased the time table. The company agreed to pay $1,600 per apartment for residents who left by Feb. 28, 2016, and $800 for residents who left by March 31, 2017. The city contracted with the nonprofit Neighborhood Allies to help relocate residents and arranged for 50 percent of tax increments in the first 10 years of the new development to go to its Affordable Housing Fund, meaning half the money from future property tax increases will go into the fund.

Gumberg says his family’s company did “what no private developer in Pittsburgh has ever done: provide generous relocation assistance and stagger the development so that those who wanted to stay would have housing for an additional 18 months. To date, we have spent more than $400,000 both on the relocation assistance and in refurbishing existing units.”

Taylor says the payouts neutralized talk of tenant ownership or pressuring the city to take the land by eminent domain. “We were told they were big and powerful people and there was nothing we could do and they were willing to give us some money,” Taylor says. “That’s a powerful combination for poor people.”

Zak Thomas, senior program officer of Neighborhood Allies, says the organization helped moved several poor, disabled, veteran and elderly residents into affordable housing created for those populations. About half of the tenants had Section 8 vouchers. Thomas says about 50 people remain at Penn Plaza, all moved into the one remaining building. Many don’t fit into a category eligible for special help and are still hard up for a place.

This includes the Haroldtons. Richard and Suzette are determined to stay in East Liberty. They don’t have a car and need easy access to Richard’s medical providers and Suzette’s job. He checks the vacancy ads posted in the relocation office Neighborhood Allies set up, but 10 months after the eviction notice, they still haven’t found a place in their price range.

“It’s hard to find a place less than $1,000 [a month],” Richard says. “Rent around here is three times what it used to be.”

He has seen a few places that seemed workable, but their credit is an issue. They’ve applied to social service agencies and affordable housing developments, “but we make too much,” Richard says. (The family received $39,000 in salaries and benefits last year.) “No one is helping us a damn bit.”

Richard describes an existence ground down by illness and poverty. “I am worried half to death, most of the time. We can’t afford anything. I have one pair of gray pants and a gray shirt. That’s it. Those are my only clothes. Sometimes, we go without dish detergent. Our teeth are falling out.” If they don’t find a place by the March 2017 deadline, he says he doesn’t know what he will do.

The Haroldtons and several other residents say that LG Realty Advisors reduced efforts toward security and maintenance as soon as they got permission to redevelop the land.

“You used to see the security guard at his little station,” Randall Taylor recalls. “Almost as soon as we got the eviction notices, we didn’t see him anymore.”

“I haven’t seen security in forever,” says O’Harold Edmunds, 24, a retail employee who lives in the building with his parents and is one of the few remaining regulars at the basketball court behind Penn Plaza. “I used to see them all the time.”

“There are people running in and out, ringing people’s doorbells at any time of night,” says Suzette Haroldton. “I don’t think most of them live here or are supposed to be here.…The owners don’t do much of anything anymore.” She says she and Richard went more than two weeks without a stove while they waited for a maintenance worker to repair it. Their kitchen faucet stopped working, forcing them to use the bathroom sink for weeks until it was fixed.

Gumberg counters that they contract with a security company that has employees on the site seven days a week from 10pm to 6am (though, by press time, the company had not responded to a followup question asking if that was a reduction in security presence) and two full-time maintenance workers live in the building. He says most repairs are dealt with in 24 hours but some require ordering parts or bringing in outside contractors.

LG Realty was tight-lipped about what would go in the space, which seemed peculiar to some area development professionals. Rick Swartz, executive director of the Bloomfield Garfield Corporation, a nearby neighborhood association, remarked to Pittsburgh City Paper, “They want this to happen in a much quicker process. To evict 200 people to achieve a vision but not tell people what that vision is going to be, doesn’t make sense to me.”

Gumberg acknowledges that, “we absolutely should have done a better job talking about the development in its totality.”

In late July, it was reported that Whole Foods would be the anchor tenant of what was dubbed East Liberty Marketplace. Since 2002, the Austin, Texas-based chain has operated a store in the nearby neighborhood of Shadyside. Many expect it to move that operation to a larger site on the former Penn Plaza, as the store has expressed interest in expanding. But the presence of a high-end grocer on the gravesite of a residential complex whose residents probably couldn’t afford to shop there regularly has drawn threats of a boycott.

Annie M. Cull, a spokesperson for the chain, wrote in an email to AlterNet, “We recognize that there are a variety of opinions and perspectives on the ongoing development process, of which we are only a small part, and we firmly believe that our company’s mission—with a focus on making the healthiest and most high-quality food available, partnering with local suppliers and giving back—provide an overall benefit to the East Liberty community.”

Neither Cull nor Gumberg would say when Whole Foods became involved in the development, though Gumberg said the company was one of many interested.

A third of East Liberty’s housing stock is protected from redevelopment by some affordable housing agreement, according to Kendall Pelling, East Liberty Development, Inc.’s land use point person. “It’s really in that other two-thirds of the pie chart where there’s a lot of instability,” he says. “There’s a high end of the market that wasn’t there a few years ago.”

Pelling says East Liberty Development has tried to increase the amount of subsidized housing, but many of the federal, state and local programs that arrange affordable housing covenants think that East Liberty has enough of it. “We’ve applied and been turned down often in the last five years,” he says.

He adds that increased real estate value isn’t entirely bad for long-term residents: 20 percent are homeowners. “They will see the equity in their houses restored.”

Pittsburgh’s black population has been pushed to new zip codes before, which is what recreated East Liberty as a majority-black neighborhood in the 1960s. Randall Taylor can trace his family’s moves to shifts imposed on the community: His family was one of 8,000 displaced by a 1956 development plan for the Hill District, which resulted in the Civic Arena and cut the neighborhood off from others in Pittsburgh. He was born in Homewood, where many Hill residents relocated. After a developer bought their house to make way for a new residential building, the family moved to East Liberty.

“There is a narrative believed by every African American in Pittsburgh that there is an attempt to drive us out,” he says. He’s managed to stay in East Liberty, paying $800 for a one-bedroom, as opposed to the $670 he paid in Penn Plaza.

Taylor is one of a fraction of former residents who has stayed in the neighborhood. If Penn Plaza can be viewed as a test of how readily the population can stay in East Liberty after ejection for a new development, the experiment does not bode well for those without affordable housing protections. Zak Thomas of Neighborhood Allies says a third did not stay within Pittsburgh or even a “first ring” suburb bordering the city. He calculates that between one-third and a quarter of former Penn Plaza residents stayed in East Liberty.

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