Federal funding that helps Lancaster County affordable housing projects in question

• By Jade Campos / LNP | LancasterOnline

Three years ago, the Olan family bought a townhouse in Lancaster’s southeast. Labell Olan said she liked the location because she could easily walk to the grocery store and to her two children’s schools.

They were able to buy the home from SACA, which created 18 townhouses on Chesapeake Street for families earning less than 80% of the area median income.

In June, Rebecca Miller and her son, Brendon, moved into an affordable apartment of their own on College Avenue after 18 years of living with family in York County. Miller said the wheelchair-accessible space made it possible for her to cook meals for Brendon who took over for cooking and cleaning in their previous two-story house.

And by this time next year, nine units will open on Manor Street for young adults who are aging out of the foster care system. Local housing officials say it will be the first project of its kind in Lancaster County entirely dedicated to former foster care youth who can’t afford to live on their own.

What do all of these developments have in common?

They were partially funded by the U.S. Department of Housing and Urban Development’s HOME Investment Partnerships Grant. The money is intended to help families who bring home less than 60-80% of the area median income.

Since 2018, Lancaster city has invested $7 million of HOME funding to create 220 affordable units.

But the future of that money is unclear. Congress is debating whether the HOME program should continue to be funded after President Donald Trump in May recommended it be eliminated entirely.

Rebecca Geiser, the city’s deputy director of health, housing and community development, said the HOME program supports the construction of new affordable rental units as well as the rehabilitation of existing properties, which helps keep families in their homes or encourages first-time homebuyers who may be reluctant or unable to afford fixing up an existing home.

The HOME program, Geiser said, requires that the monthly cost of houses and apartments be fixed at an affordable rate for 20 years at the minimum.

“This isn’t a duplicative service or duplicative funding source,” Geiser said. “This is one of the major affordable housing sources coming from the federal government.”

The Trump administration proposed cutting the program, arguing that state and local governments should be responsible for funding this sort of work.

Local developers still have time to seek HOME funding this year. The Lancaster County Redevelopment Authority and City of Lancaster are looking for developers to apply for a portion of a joint funding pot of $2.7 million. The deadline to apply for funds is Oct. 6.

Marisol Maldonado, the Redevelopment Authority’s director of housing and community development, said the authority and city have worked together to hand out grant dollars since 2009. The HOME grant, she said, is intended to provide “gap funding,” meaning the dollars are not a developer’s primary source of funding but instead offer the final boost needed to see a project through to its end.

“It’s scary to think about the funds not being available for development, because while HOME is traditionally considered gap financing… We know there’s always gaps in these affordable projects,” Maldonado said.

Attempts to reach U.S. Rep. Lloyd Smucker and U.S. Senators John Fetterman and Dave McCormick for comment were unsuccessful.

Local impact

Dana Hanchin, president and CEO of the College Avenue Apartments developer HDC MidAtlantic, called the HOME grant a “critical resource” for the community.

HDC is relying on HOME funds to complete all three phases of its College Avenue housing project. Hanchin said the 64 units that opened in June were just the first step, which HOME provided $850,000 to complete.

Hanchin said $1 million in HOME funding has already been secured for the second phase of the project, which will create 37 units at the former St. Joseph’s Hospital, located across from the new College Avenue units.

While $1 million can seem like a small chunk of a multimillion dollar project, Hanchin said HDC will feel the impact of HOME cuts across the board. The developer is currently working on 1,000 new units across the region, and a loss of HOME dollars for each project will eventually add up.

“If you can’t fill (the funding gap), that deal might go away,” Hanchin said.

Chad Martin, director of local developer Chestnut Housing, called HOME funds an “anchor” for its 8-unit complex Millburn Apartments in southeast Lancaster, which wrapped up construction this summer. HOME funds covered around 25% of the $2.2 million project, which Martin said was one of the most expensive developments the organization has taken on to date.

“(HOME) really laid the groundwork for us to take on a project of that scale,” Martin said.

Jose R. Lopez, president and CEO of SACA and SACA Development, said the organization applies for HOME funds annually to help families become first-time homebuyers.

SACA uses the funding to rehabilitate blighted properties before selling them to people at an affordable price. The goal, Lopez said, is to give families the chance to build generational wealth. He’s adamant about finding a way to keep the program alive without HOME dollars.

“I’m into trying to create opportunities for people to get out of the cycles of poverty that exist in the marginalized communities that we serve,” Lopez said.

What’s next?

Hanchin is hopeful HOME will continue.

One positive sign from Washington is Trump’s call to expand the Low-Income Housing Tax Credit, which allows private developers to sell government-issued tax credits to private investors to raise money for projects.

It’s a popular program that has support from Democrats and Republicans.

That’s a positive sign, Hanchin said, noting the tax credit helps HDC raise most of the funding necessary to complete its work. HOME and the tax credit programs are usually closely intertwined, she said.

In the meantime, housing officials are bracing for the end of HOME. HDC officials predict developers would need to rely on a mix of state funding and charitable giving to keep affordable projects going without it

Kim Krauter, HDC’s senior vice president of real estate development, said HOME’s elimination could mean affordable housing projects take longer to finish. Other projects may not see the light of day, she said, because developers may run into too many roadblocks securing enough funding.

Construction costs have soared after the pandemic, Krauter said, meaning developers already rely on a growing number of financers to finish a project. Before COVID, she noted, HDC projects typically counted on three or four funders. The College Avenue Apartments required close to 20 funders, and Krauter said that number is certain to grow without HOME.

“We usually find a way,” she said.

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