Trump Cuts Halt Countless Affordable Housing Projects

The Trump administration has paused at least $60 million in funding primarily designated for affordable housing projects across the nation, leading to significant uncertainty for many developments. This delay arises amid a series of funding halts, staffing reductions, and the termination of contracts by the U.S. Department of Housing and Urban Development (HUD), actions that have generated widespread apprehension in the affordable housing sector.

This $60 million, intended as small grants to aid community development non-profits, typically serves as seed money for affordable housing initiatives, effectively transforming ideas into feasible projects that can attract additional public and private investments.

Congress had appointed three organizations to allocate these funds. However, HUD has announced the cancellation of contracts with two of these groups, which were responsible for distributing the $60 million. This decision has left millions of dollars previously committed to small non-profits, or yet to be assigned, in a state of uncertainty.

“Many of these organizations have already allocated funds to compensate workers, such as HVAC technicians, local contractors, and homeownership counselors,” said Shaun Donovan, CEO of Enterprise Community Partners and former HUD secretary under President Obama. Enterprise is among the two organizations whose contracts were annulled.

“This will force a halt in their work immediately. It will result in job losses locally, hinder the creation of affordable housing, and impede economic opportunities in numerous communities.”

A HUD representative mentioned that the program, referred to as Section 4, remains intact but is being adjusted, which involves the consolidation of some grants while others persist.

There’s still ambiguity regarding the timeline and delivery of these funds to the small non-profits, causing disarray in their operations.

“For me, uncertainty means presuming the funds will not come through, necessitating a shift in plans,” explained Jonathan Green, the executive director of a Mississippi-based non-profit currently developing a 36-unit affordable housing project in Biloxi.

Green noted that approximately $20,000 in grant funding is now in a state of limbo. This funding was supposed to cover an environmental review, potentially costing upwards of $10,000, as well as permits and licenses. This predicament is complicating ongoing discussions with prospective partners and investors who require preliminary work to be completed before proceeding.

“My concern is that if the project halts entirely, restarting it may become impossible,” he remarked.

The development is slated for East Biloxi, where vacant lots have persisted since Hurricane Katrina in 2005. Although construction has yet to commence, the demand is so high that Green’s organization has already established a waiting list for potential tenants.

This scenario isn’t unique; numerous other small non-profits face similar challenges. Their grant funds and investments are in jeopardy. According to CEO Donovan, for every dollar distributed by Enterprise Community Partners, local non-profits generate an additional $95 in other capital.

Congress tasked these national non-profits with managing the grants and evaluating applications to alleviate the government’s burden, Donovan explained.

A contract termination letter obtained revealed that HUD canceled the contracts following an order from the Department of Government Efficiency, citing non-compliance with an executive order from Trump concerning diversity, equity, and inclusion initiatives. The letter does provide an option to contest the termination.

The Local Initiatives Support Corporation is the second organization to experience a contract cancellation.

“Without this seed capital, housing projects for working families will come to a standstill, exacerbating shortages and forcing distressed communities into crowded or homeless living conditions,” the organization stated.

Habitat for Humanity International is the third entity involved in distributing these grants, but the organization has not issued comments regarding whether their contract faced cancellation.