The Trump administration has halted at least $60 million in funding that was primarily earmarked for affordable housing initiatives across the country, placing hundreds of projects in a difficult state of uncertainty, based on information and documents acquired by The Associated Press.
This action is part of a series of funding freezes, staffing reductions, and contract terminations by the Trump administration at the U.S. Department of Housing and Urban Development (HUD), which has led to widespread unease in the affordable housing sector.
Approximately $60 million was designated to assist small community development nonprofits through minor grants, often utilized as seed funding for affordable housing initiatives, transforming ideas into workable developments and subsequently attracting additional public and private investment.
Congress selected three nonprofits to manage the grants, but HUD communicated in letters that it was terminating contracts with two of those organizations, which collectively were responsible for distributing the $60 million. This cancellation has thrown millions in committed funding to small nonprofits, or funding yet to be allocated, into an uncertain future.
Volunteers carry a newly-constructed wall section inside the Habitat for Humanity Owensboro’s indoor workshop, Jan. 13, 2024, in Owensboro, Ky. (Greg Eans/The Messenger-Inquirer via AP, File)
“Many of those organizations have committed funds for labor, including HVAC professionals, local contractors, and homeownership advisors,” mentioned Shaun Donovan, CEO of Enterprise Community Partners and a former HUD secretary under President Obama. Enterprise is one of the two organizations whose contracts were terminated.
“They will have to halt that work immediately. This will cost local jobs, hinder the progress of affordable housing, and limit opportunities in hundreds of communities.”
A HUD spokesperson claimed that the program, known as Section 4, is still operational and not being reduced, but indicated that “the department is consolidating some grants, while others will continue.”
It remains uncertain when or how funding will be allocated to the small nonprofits, causing chaos in their operations.
“Not having clarity means we operate with the assumption that funding is not forthcoming, forcing me to make adjustments,” explained Jonathan Green, executive director of a nonprofit in Mississippi working on a 36-unit affordable housing project in Biloxi.
Green stated that roughly $20,000 in grant funds is now in uncertainty, money originally meant for an environmental review that could cost over $10,000, plus licenses and permits. This jeopardizes ongoing discussions Green has with potential partners and investors who expect all preliminary work to be completed first.
“I worry that if we halt the project completely, we might never be able to get it off the ground again,” he shared.
The development is planned for East Biloxi, where many lots have remained vacant since Hurricane Katrina in 2005. Before construction can begin, Green’s organization has received enough inquiries from prospective tenants that they’ve started a waiting list.
Firefighters from the Los Angeles Fire Department search through the rubble of buildings damaged by Hurricane Katrina along the coastline in East Biloxi, Miss., Sept. 7, 2005. (AP Photo/Darron Cumming, File)
That’s the dilemma facing hundreds of other small nonprofits, as not only their grant funding hangs in the balance but also potential investments. For every dollar in grants allocated by Enterprise Community Partners, local nonprofits are able to attract an additional $95 in external capital, according to CEO Donovan.
Congress assigned the responsibility of managing the grants and reviewing hundreds of applications to the national nonprofits, alleviating the burden on the government, as stated by Donovan.
In one contract termination letter acquired by the AP, HUD indicated the contracts were ended following directives from the Department of Government Efficiency. The letter stated that the group’s operations “were not in compliance” with an executive order from Trump seeking to limit diversity, equity, and inclusion initiatives. The letter also permits the organizations to appeal the termination.
The Local Initiatives Support Corporation is the other entity whose contract was canceled.
“Without access to this essential seed capital, housing projects for hardworking families will stagnate, exacerbating shortages and pushing vulnerable communities into overcrowded living situations or homelessness,” the organization stated in a press release.
Habitat for Humanity International is the third nonprofit responsible for distributing the grants, but they have not responded to multiple inquiries regarding whether their contract has also been canceled.
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Bedayn is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in
