The Trump administration has stalled at least $60 million in funding intended primarily for affordable housing developments nationwide, putting hundreds of projects in jeopardy, according to information and documents obtained by The Associated Press.
The move is part of the Trump administration’s flurry of funding freezes, staffing cuts, and contract cancellations at the U.S. Department of Housing and Urban Development, which has caused widespread uncertainty in the affordable housing sector.
The $60 million is intended to be distributed to small community development nonprofits in the form of grants. The money is frequently used as seed funding for affordable housing projects, transforming a concept into a viable development and thus attracting additional public and private investment.
Congress selected three nonprofits to distribute the grants, but HUD announced in letters that it was cancelling contracts with two of the organisations that were to share the $60 million. This has pushed millions of dollars in funding promised to small nonprofits or yet to be awarded into the twilight zone.
“Many of those organisations have already committed funds to pay workers, such as HVAC technicians, local contractors, and homeownership counsellors,” said Shaun Donovan, CEO of Enterprise Community Partners, one of the two groups whose contract was terminated.
“They will have to stop that work immediately. This will cost local jobs, impede the construction of affordable housing, and stymie opportunity in hundreds of communities.”
A spokesperson for HUD stated that the program, known as Section 4, will continue and will not be cut, but that “the department is consolidating some grants, while others remain.”
It is unclear how or when the funding will reach the small nonprofits, which has thrown their work into disarray.
“Not knowing for me means we assume the money is not coming, and that means I have to pivot,” said Jonathan Green, executive director of a nonprofit in Mississippi that is constructing a 36-unit affordable housing development in Biloxi.
Green stated that approximately $20,000 in grant funds are currently in limbo, intended to pay for an environmental review, which could cost up to $10,000, as well as licenses and permits. That jeopardises Green’s discussions with potential partners and investors, who want to see all of the initial work completed before proceeding.
“My fear is that, if the project stops altogether, we may never get it started again,” he told me.
The development is expected to be in East Biloxi, where lots remain vacant following Hurricane Katrina in 2005. Before any dirt has been moved on the project, Green’s organisation has received enough calls from potential tenants to start a waiting list.
Hundreds of other small nonprofits have found themselves in this situation, with not only grant funds at stake, but also investments. According to CEO Donovan, for every dollar in grants awarded by Enterprise Community Partners, local nonprofits leverage an additional $95 in other capital.
Congress delegated the task of administering grants to national nonprofits, who field and evaluate hundreds of applications so that the government would not have to, according to Donovan.
In one of the contract termination letters obtained by the AP, HUD stated that the contracts were cancelled at the request of the Department of Government Efficiency. It stated that the group’s operations “were not in compliance” with Trump’s executive order on diversity, equity, and inclusion initiatives. The letter also allows the organisations to challenge the termination.
The Local Initiatives Support Corporation was the other group whose contract was cancelled.
“Without access to this seed capital, housing projects for hard-working, families will stall, worsening shortages and pushing distressed neighbours into overcrowded conditions or homelessness,” according to a statement from the organisation.
Habitat for Humanity International is the third nonprofit to distribute the grants, but the organisation has yet to respond to repeated requests for comment or say whether their contract has been cancelled.
