The Gold Rush

Allentown received millions in pandemic relief,

but can cash solve our housing crisis?

By Lillian Bernstein

This article was supported by a grant from Brown University’s Royce Fellowship.

Published August, 1, 2023

Reeling from the COVID-19 pandemic, the federal government gave Allentown a windfall of over $57 million dollars in 2021 to support the city’s recovery. “It’s like Christmas in July,” said Ray O’Connell, who was mayor at the time, to city council. “Well, Christmas in March.”

Eligible uses for the relief funds, known as American Rescue Plan Act or ARPA, range from infrastructure projects to revenue replacement to “helping the community,” thus creating a slew of possibilities for potential projects in Allentown. The mayor’s office immediately asked city council to allocate roughly half of the $57,463,557 in ARPA funds for city projects and improvements which they used to buy two ambulances, pay for sewer and roof improvements, a fire academy, and to build the Irving Pool on the east side. 

At the end of 2021, O’Connell presented a budget proposal to council for allocating the remaining funds, suggesting they spend $2.5 million on assisting local nonprofits and $4.7 million on housing assistance. But all ARPA discussions were tabled until 2022 by which time council had become disconnected from the O’Connell administration’s goals and recommendations.

With a new administration in place in 2022 and $28 million still on the table, ideas began flooding into city council with everyone from private investors to local nonprofits looking to get a piece of the pie. Despite months of meetings where members of the public repeatedly urged city council to use the funds to address the increasingly dire affordable housing situation in Allentown, they never pinned down a process nor a budget for allocating the remaining funds.

And while council eventually approved ARPA funding for two affordable housing projects, the stagnation in creating a transparent allocation process resulted in opportunity disparities for organizations ill-equipped to navigate the bureaucracy. We investigated the last two years of ARPA discussions and allocations to determine if money alone can meet Allentown’s need for affordable housing.

February 2022

No ARPA for you

If you’ve driven past 314 Lehigh Street, you may have noticed a lot of new construction. After tearing down nine out of eleven buildings in the Little Lehigh public housing complex for redevelopment, the new structures are starting to take shape. The original housing was built in 1975 and included 76 residences managed by the Allentown Housing Authority (AHA), but needed repair. Pennrose, a mixed-income developer who also replaced an aging public housing development on Hanover Avenue, is nearly done with the construction of 50 apartment units and a community building that will replace Little Lehigh with Bridgeside Estates.

According to the AHA, Bridgeside Estates is just the first part of the total development which will ultimately include almost 100 units (although Pennrose is not involved in the second stage). Pennrose aims to complete the 50 units by winter 2023 and expects leasing activity to begin soon. As an affordable housing community, Bridgeside Estates will reserve units for residents making a specific percentage of the average area income.

But funding the Little Lehigh project has been challenging. A request for $2.7 million in ARPA money to help the project came before city council in February of 2022 but was tabled. Councilmembers argued that they needed to establish a transparent process for organizations to request ARPA funding. Leonard Lightner, Allentown’s chief operating officer at the time (he has since left the city), suggested a potential application process for city council to implement. “They do an application,” explained Lightner to city council, “submit the required documents as needed. At that point, they get scored, get awarded a certain dollar amount, and one of the members or two of council will be part of the scoring committee just like they do in HUD.” But the city council ended the meeting without making any decisions on an application process.

While city council debated the process to apply for ARPA money, AHA managed to find other ways to fund the first phase of the project.

April 2022

Centering community

Community Action Lehigh Valley came before city council in April 2022 to ask for help funding a community center on Ninth Street. “Most children that get in trouble do so between the hours of 3:00-6:00 pm while they are waiting for their parents to get home from work,” explained Dawn Godshall, executive director of Community Action, to city council. She then outlined Community Action’s plan to build a space for youth to do their homework, play sports and learn job skills. The cost for the project would be over $12 million and they are currently in negotiation with the Allentown School District to purchase the shuttered Cleveland Elementary School property for the center. The project is not ‘shovel ready’ per se, but Community Action already has committed donors and says they can fundraise in a capital campaign as long as they have 50% of the funds in hand. That’s where ARPA comes in. “If there is any leeway for funds that can be designated towards the youth center,” said Godshall to city council in April, “we would be grateful.”

In May of 2022, Community Action came back before city council, once again asking for support for the project. And then they were back again in June, where Godshall explained that the community center would provide services “where youth in the city of Allentown are able to come to a one stop shop where they can have fun, do their homework, and be safe.” Councilperson Daryl Hendricks supported the idea, saying “there is nothing more important to our youth than to get them out of poverty on a track of a functioning and successful career in life.”

But for now, Community Action is waiting to finalize the purchase of the property. “Then I will be right back in front of them asking for help with this project because it’s not just for Community Action. It’s for the children in the city of Allentown.”

Godshall plans to ask for ARPA funds, “if there are still ARPA funds left.”

October 2022

It all seems so simple

In October of 2022, city council heard a new request for ARPA funds – an affordable apartment building for low-income senior citizens, with apartments reserved for those with intellectual disabilities. The presentation to city council from the Lancaster-based non-profit developer HDC Mid Atlantic included renderings, a budget and a commitment that they were investing in Allentown for the long haul. The apartments would be built on the empty lot next to the Community Music School on Hamilton Street, just on the edge of the Neighborhood Improvement Zone. “We see ourselves as a long-term partner, an owner, a property manager and provider of supportive services to ensure housing stability for those who reside in our properties,” Dana Hanchin, president and CEO of HDC Mid Atlantic, told city council. She asked for over a million dollars in ARPA funds to close the gap in their $19 million project.

In March of 2023, HDC was back at city hall, this time talking to the Community and Economic Development (CED) committee with full support from the CED director Vicky Kistler. The proposal was forwarded favorably to city council where, in April, they approved an allocation of $1 million.

It all seems so simple–they asked for ARPA funds in October and six months later they got their money. But that’s because HDC had done a ton of legwork before they even showed up to that first city council meeting. They chose to do this project in Allentown, not just because the city has a need, but because they saw a city government that was very supportive of affordable housing. They began talks with the city about the project back in 2020, secured tax credits from the Pennsylvania Housing Finance Agency (PHFA), got zoning approvals and managed to survive criticisms from their future neighbor that the project would cause parking issues. “We had a really great partner in the mayor, Matthew Tuerk, and in the planning department, Mark Hartney and Vicky Kistler. They have been real champions in the project,” Benjamin Van Couvering, senior development officer at HDC Mid Atlantic, explained to the Allentown Voice. “It is really complicated and requires an experienced development team. It’s a long process of engagement.”

At this point, a year had passed since the AHA’s request had been tabled and city council still had not established a formal ARPA request process.

June 2023

Affordability for profit

Soon after non-profit developer HDC received ARPA funds for their affordable housing project on Hamilton Street, a for-profit developer arrived before city council with an ARPA request of his own.

At the June 2023 CED committee meeting, developer Jonathan Strauss of Cortex Residential requested $2 million in ARPA funds for an affordable housing unit on the parking lot next to the Life Church on South Eighth Street. The four-story building for 52 residents already received PHFA tax credits and Cortex secured the land from Life Church. Strauss urged that the “for-profit sector should be leveraged by the public sector” to help meet the demand for affordable housing.

Public comments overwhelmingly supported the project. “John Strauss actually lives right around the corner from where he wants to build this affordable housing,” said resident James Whitney to the committee. “It’s just great to see a developer who is also a neighbor. We don’t get that very often.” The committee forwarded the request to city council who voted to allocate the ARPA funds to Cortex at their July 19 meeting.

But while this project had overwhelming support, both the June committee meeting and the July city council meeting were overshadowed with criticism directed toward city council for their lack of transparency for how specific requests are considered.

“I think it’s unfair that the process is not a process,” said Jessica Ortiz, executive director of the Ortiz Ark Foundation, at the June committee meeting. “I’m not a big developer. I don’t have the friends or associates that he has, I don’t have the experience, I don’t have the fancy grant money. So what I’m asking is when will we have a process so that we can come up here? Who gets to get supported? We are being pushed out as businesses, as homeowners. I have people sleeping on our nonprofit lots because they don’t have housing because there’s nowhere for them to go. When are the rest of us going to get the support from the city and from council?”

2024: Beyond ARPA

A multifaceted approach

When city council was given this ARPA windfall back in 2021, by not creating a formal process for requesting and allocating the funds they essentially created a gold rush. Sophisticated developers have been able to access this “free money,” as Councilperson Ed Zucal once described the ARPA funds, while citizens and smaller nonprofits are fighting over the remaining scraps. It’s hard to count the number of times Councliperson Ce-Ce Gerlach asked when they were going to create a process to approve the funds, how they were keeping track of allocations and what was their plan for divvying up the “free money.” Residents lined up during public comments to admonish city council for claiming they want to help the community with the ARPA windfall without any follow-through when it came time to allocate funds.

Meanwhile, as city council debated ARPA appropriations, a slew of market rate and luxury apartments began to fill up downtown. City Center Investment Corporation added nearly 1500 market rate rental units in the Neighborhood Improvement Zone (NIZ). There’s also talk of 118 more units if the PPL Plaza project moves forward, not to mention countless more apartments in both the proposed Landmark Towers on Ninth Street and the proposed apartment building on the site of the former Trexler mansion on Hamilton Street. Meanwhile, only about 100 affordable units have been approved downtown and residents living around the NIZ feel like they are getting priced out. With ARPA funds drying up, how can the city continue to attract affordable housing development?

Solving Allentown’s housing crisis will require a multifaceted approach involving collaboration between government entities, private sector stakeholders and community organizations, says Robbie Matthews, director of the Sixth Street Shelter that provides housing for 25 families. “Mix-income neighborhoods which encourage and foster diverse communities while providing a sense of community,” she says. “Rental assistance programs which provide vouchers to cover a portion of their rent. Collaborations with non-profit organizations who possibly specialize in affordable housing which leverage and provide resources to assist in this housing crisis. Supportive policies that protect tenants’ rights.” Some of that work is happening, but perhaps not at a pace to keep up with need.

And while ARPA money is going to run out, there are other programs that are already in place to help defray the costs of building affordable housing, including Community Development Block Grants (CDBG) and HOME Investment Partnerships Program funds from the federal government that can be prioritized for affordable housing. HOME funds are how the Allentown Housing Authority managed to fund the Little Lehigh project despite getting shut out of ARPA money. 

At a July budget meeting for Allentown’s Community and Economic Development Committee, talk turned once again to how to increase home ownership and affordable housing development in the city. Kistler, the CED director, said that while they have a pot of government funds including a type of HOME fund that is earmarked for affordable housing, they are hearing that local community partners still feel priced out of development projects. “We’re hoping to redefine our relationship between our housing partners—the redevelopment authority, the housing authority, Habitat, Community Action—to fine-tune a strategic plan on how we are going to attack, together, the issues of the lack of home ownership opportunities and the lack of affordable housing.”

As a city, Allentown can also explore ways to lift restrictions on where and what can be built. “I think that cities should explore zoning reform so that projects that have a community benefit in terms of getting affordable apartments can either have their municipal fees reduced or get density bonuses, like some other cities are doing, which can allow you to build more apartments on a piece of land and reduce your cost per apartment,” said Van Couvering. He also suggests that Allentown can advocate for a federal bill currently in the house that would expand the Low Income Housing Tax Credit. “The Low Income Housing Tax Credit has been the most successful program for building affordable housing in the last 30 years, but it didn’t exactly keep pace with increases in construction costs. Mayor Tuerk has been a real supporter, and I think that he and other Pennsylvania mayors should really talk to the Affordable Housing Tax Credit coalition and see how they could express support.”

But while tax credits might help fund new affordable housing developments, many of the aging homes in downtown Allentown still need a lot of investment to ensure they are liveable, and home repair programs haven’t been able to meet the need. Downtown Allentown residents are predominantly renters, and landlords are not incentivized to invest the money needed to maintain these aging structures. Consider the idea of ‘house hacking’–buying a property to both live in and rent out so that you can generate income from your home. This was a game changer for Shelby Ek who purchased her first property, a two-unit home in downtown Allentown, at the age of 22 using a loan that only required a 5% down payment. “I couldn’t afford to pay rent with what I was making,” said Ek. “But by purchasing a two-unit building, I was able to collect rent and live in the other unit to offset my mortgage payment. It helped me build a financial foundation.” Ek currently owns several rental properties that she rehabilitated in downtown Allentown. “I care about this place because I live here and my neighbors are thrilled to see us fixing up properties in the neighborhood.”

Another opportunity for community investment is exemplified by the non-profit Common Roots in Meadville, PA, a small city on the other side of the state that is experiencing similar issues when it comes to aging industrial-era homes and a desperate need for quality affordable housing. In 2017, they raised money and purchased a house using a combination of volunteer labor and grant-funded construction work to rehabilitate it. Common Roots then turned the house over to a cooperative group of residents who committed to working together to establish leasing agreements, budgets and policies that build rental equity.

Property owners like Common Roots prioritize the renter’s autonomy. “Once you get a big developer involved, there’s all these restrictions about how it’s managed, and the residents don’t have a voice at that point,” said Julie Wilson, executive director of Common Roots. They offer an alternative to the huge developments we’ve seen in downtown Allentown, but these types of community-driven ventures depend heavily on the support of local government. “How do we set up the kind of financial infrastructure and tools to make the development possible so you’re not only relying on grants and programs that are built for big developers, but you have your homegrown funds?” asks Wilson.

So what does success look like in downtown Allentown? Is it a rise in rent costs? An increase in the median income? Perhaps success can only be determined from within, and the power to decide Allentown’s future should be put in the hands of those most personally invested and present in the community, those who have and will continue to make downtown Allentown feel like a neighborhood. For Common Roots, the process is slow but with community buy-in for funding, renovating and maintaining the property means they are invested for the long run in making their city feel like home for everyone.

“We’re trying to steward permanently affordable, sustainable housing,” says Wilson. “We’re trying to bring people together to figure out how we can organize ourselves to take care of our own housing and to create better housing options for our community.”

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