Regarding the Penn Plaza settlement, the most interesting fact is while LG is abandoning building 200 apartments as part of this development (which will be strictly office/retail) it's committing to help build 251 low-income units, and 239 market-rate units within a one mile radius. Hence, we're ultimately getting more housing - even more market rate housing - out of the deal.
The question is of course where the new apartments will end up. LG owns two plots right near the Penn Plaza location - the former Babyland site across the street, and the former Monroe Muffler site catty corner - which could be built up. That would seem to be the cheapest option, considering it does not need to acquire any additional land. Of course, that isn't anywhere near enough land to develop 490 units at feasible density. Maybe the plan for LG to help with part of the "Mellon's Orchard" housing development is back on the table?
Edit: An image of a one-mile radius around the site. Includes all of East Liberty, Garfield, and Friendship, plus chunks of Bloomfield, Shadyside Squirrel Hill North, Larimer, Highland Park, Morningside, and even a sliver of Stanton Heights.