Trump Administration Throws Hundreds of Affordable Housing Projects into Limbo after Contract Cuts
The Trump administration has stalled at least $60 million in funding intended largely for affordable housing developments nationwide, throwing hundreds of projects into a precarious limbo, according to information and documents obtained by The Associated Press.
Funding Freeze and Staffing Cuts
The move is part of a flurry of funding freezes, staffing cuts, and contract cancellations by the Trump administration at the U.S. Department of Housing and Urban Development (HUD), changes that have instilled widespread uncertainty in the affordable housing industry.
Seed Funding for Affordable Housing Projects
The $60 million is intended to go to small community development nonprofits in small grants. The money is often used as seed funding for affordable housing projects, turning a concept into a viable development, and consequently drawing in more public and private investment.
Contract Cancellations
Congress chose three nonprofits to distribute the grants, but HUD said in letters that it was cancelling contracts with two of the organizations, which together were to distribute the $60 million. This has pushed millions in funding already promised to small nonprofits, or yet to be awarded, into the twilight zone.
Impact on Nonprofits and Communities
Many of those organizations have already committed funds to pay workers, such as HVAC technicians, local contractors, and homeownership counselors, said Shaun Donovan, CEO of Enterprise Community Partners, one of the two groups whose contract was cancelled. "They will have to stop that work immediately. That will cost local jobs, hobble the creation of affordable homes, and stall opportunity in hundreds of communities."
HUD Response
A spokesperson for HUD said the program, called Section 4, will continue and is not being cut, but that "the department is consolidating some grants, while others remain." It remains unclear how or when the funding will arrive to the small nonprofits, which has thrown their work into disarray.
Nonprofits in Limbo
Not knowing for me means we assume that the money is not coming, and that means that I have to pivot, said Jonathan Green, executive director of a nonprofit in Mississippi that’s building a 36-unit affordable housing development in Biloxi. Green said about $20,000 in grant dollars are now in limbo, money that was meant to pay for an environmental review that could cost upwards of $10,000, and licenses and permits. That threatens discussions Green is having with potential partners and investors who want to see all the up-front work done first.
Conclusion
The development is supposed to be in East Biloxi, where lots still remain empty after Hurricane Katrina in 2005. Before an ounce of dirt has been moved on the project, Green’s organization has received enough calls from people eager to become tenants that they’ve started a waiting list. That’s the position hundreds of other small nonprofits have found themselves in, with not just their grant funds in question but investments on the line.
Frequently Asked Questions
Q: What is the purpose of the $60 million in funding?
A: The funding is intended to go to small community development nonprofits in small grants to support affordable housing projects.
Q: Why are the contracts being cancelled?
A: The Trump administration has cancelled the contracts, citing non-compliance with Trump’s executive order targeting diversity, equity, and inclusion initiatives.
Q: How will this affect the nonprofits and communities?
A: The cancellation of contracts will cost local jobs, hobble the creation of affordable homes, and stall opportunity in hundreds of communities, according to Shaun Donovan, CEO of Enterprise Community Partners.
