An AP investigation reveals the Trump administration has frozen at least $60 million in funding earmarked for affordable housing projects across the country, jeopardizing hundreds of developments.
This action is part of a broader trend of funding freezes, staffing reductions, and contract terminations initiated by the Trump administration at HUD, creating significant instability in the affordable housing sector.
The $60 million in question is intended for small community development nonprofits in the form of small grants. These funds typically serve as initial capital for affordable housing projects, transforming ideas into viable developments and attracting further public and private investment.
While Congress selected three nonprofits to distribute the grants, HUD has sent letters cancelling contracts with two of them, which were responsible for distributing the $60 million. This has cast doubt on millions of dollars already promised or yet to be awarded to small nonprofits.
Shaun Donovan, CEO of Enterprise Community Partners, one of the affected groups, stated that many of these organizations have already allocated funds for workers like HVAC technicians, local contractors, and homeownership counselors.
He added that the immediate cessation of work will result in job losses, hinder the creation of affordable homes, and impede opportunity in numerous communities.
A HUD spokesperson asserted that the Section 4 program will continue and is not being cut, explaining that the department is consolidating some grants while others remain unaffected.
The uncertainty surrounding the timing and delivery of funds to the small nonprofits has disrupted their operations.
Jonathan Green, executive director of a Mississippi nonprofit constructing a 36-unit affordable housing development in Biloxi, stated that the uncertainty forces them to assume the money is not coming, requiring a shift in strategy.
Green explained that approximately $20,000 in grant money is now in limbo, intended for an environmental review costing upwards of $10,000, as well as licenses and permits. This jeopardizes discussions with potential partners and investors who require completion of upfront work.
Green expressed concern that the project might be permanently stalled if it is halted altogether.
The development is planned for East Biloxi, where vacant lots remain from Hurricane Katrina in 2005. Despite no construction having begun, Green’s organization has received enough inquiries from prospective tenants to begin a waiting list.
Hundreds of other small nonprofits are in a similar situation, facing uncertainty not only with their grant funds but also with related investments. According to CEO Donovan, for every grant dollar disbursed by Enterprise Community Partners, local nonprofits leverage an additional $95 in other capital.
Donovan emphasized that Congress assigned the responsibility of administering the grants, processing and evaluating hundreds of applications, to the national nonprofits to alleviate the government’s burden.
In one of the contract termination letters obtained by the AP, HUD stated that the cancellations were directed by the Department of Government Efficiency. The letter cited non-compliance with Trump’s executive order targeting diversity, equity, and inclusion initiatives. The organizations have the right to appeal the termination.
The Local Initiatives Support Corporation is the other group whose contract was cancelled.
The organization released a statement saying that without access to this seed capital, housing projects for working families will stall, worsening shortages and pushing distressed neighbors into overcrowded conditions or homelessness.
Habitat for Humanity International is the third nonprofit distributing the grants, but has not responded to requests for comment or clarified if its contract was cancelled.
