Home-buyer's Incentive Encourages Use of Public Transportation

If you're thinking of buying a house in Allegheny County, chances are good that you will qualify for a financial incentive called Smart Commute. The program is available to those who wish to buy homes in neighborhoods within two miles of public transit, which includes most of the county.

Smart Commute, a program of home mortgage company Fannie Mae, takes into account the money commuters save by using public transportation, up to $3,000 per year, and adds that amount to the individuals' annual income to calculate their eligibility for a mortgage. Those who live near a Port Authority bus stop or T-station may qualify to buy homes as much as $10,000 more expensive than those they would qualify for based on income alone.

"They get $10,000 more home than they could otherwise have," said Mark Steele, President of Howard Hanna Financial Services, which is originating the mortgage loans locally to homebuyers.

The incentive was originally introduced nearly two years ago, thanks to the cooperation of Howard Hanna with Fannie Mae, and the support of former Allegheny County Chief Executive Jim Roddey, Pittsburgh Mayor Tom Murphy, and the Port Authority of Allegheny County.

Smart Commute promotes sustainability in two ways -- by encouraging the use of public transportation, thus reducing fossil fuel emissions and improving air quality, and by promoting home ownership in areas served by public transit, which boosts the population of city neighborhoods and inner suburbs and discourages home-buyers from moving to less developed areas where public transit is not available.

The program is available only to households with no more than two cars. In addition, participants may be asked to agree to use public transit to commute to work, though there is no way to enforce this. Fannie Mae has not conducted a survey to determine whether Smart Commute has encouraged more people to use public transit. While the program may have limited success in enticing homebuyers to begin using public transit, it rewards those who already use buses and trains on a regular basis by making it easier for them to purchase their own homes.

"We are very much interested in helping people buy homes," said Steele.  Home ownership is an important element in the health of a community -- places dominated by rental properties are often more depressed and crime-ridden than areas where most homes are privately owned.

Two years ago, Howard Hanna agreed to initiate up to $10 million in mortgage loans through Smart Commute. Steele said that to date, Howard Hanna has initiated less than $1 million in loans through Smart Commute. Nationally, Fannie Mae has purchased approximately $9 million in Smart Commute mortgages from originating companies, including Howard Hanna. Smart Commute began as a pilot program in Pittsburgh and Minneapolis, and now is available in 16 cities.

Steele said the program competes with several other home buyer programs, especially those aimed at first-time home-owners, who are more likely than those who have owned homes previously to rely on public transit. Michelle Desiderio, senior project manager for Fannie Mae, said that the program is less popular in Pittsburgh than in other cities, and is most popular in Minneapolis and Salt Lake City.

Susan Jacobs for Sustainable Pittsburgh