Trump administration throws hundreds of affordable housing projects into
limbo after contract cuts
[March 08, 2025]
By JESSE BEDAYN
The Trump administration has stalled at least $60 million in funding
intended largely for affordable housing developments nationwide,
throwing hundreds of projects into a precarious limbo, according to
information and documents obtained by The Associated Press
The move is part of a flurry of funding freezes, staffing cuts and
contract cancellations by the Trump administration at the U.S.
Department of Housing and Urban Development, changes that have instilled
widespread uncertainty in the affordable housing industry.
The some $60 million is intended to go to small community development
nonprofits in small grants. The money is often used as seed funding for
affordable housing projects, turning a concept into a viable development
and consequently drawing in more public and private investment.
Congress chose three nonprofits to distribute the grants, but HUD said
in letters that it was cancelling contracts with two of the
organizations, which together were to distribute the $60 million. That's
pushed millions in funding already promised to small nonprofits, or yet
to be awarded, into the twilight zone.
“Many of those organizations have already committed funds to pay
workers, such as HVAC technicians, local contractors, homeownership
counselors,” said Shaun Donovan, CEO of Enterprise Community Partners
and former HUD secretary under President Barack Obama. Enterprise is one
of the two groups whose contracts were cancelled.
“They will have to stop that work immediately. That will cost local
jobs, hobble the creation of affordable homes, and stall opportunity in
hundreds of communities.”
A spokesperson for HUD said the program, called Section 4, will continue
and is not being cut, but that “the department is consolidating some
grants, while others remain."
It remains unclear how or when the funding will arrive to the small
nonprofits, which has thrown their work into disarray.
“Not knowing for me means we assume that the money is not coming, and
that means that I have to pivot," said Jonathan Green, executive
director of a nonprofit in Mississippi that's building a 36-unit
affordable housing development in Biloxi.
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Housing and Urban Development Secretary Scott Turner speaks as
President Donald Trump looks on during a reception in the East Room
of the White House, Feb. 20, 2025. (Pool via AP, File)
Green said about $20,000 in grant dollars are now in limbo, money
that was meant to pay for an environmental review that could cost
upwards of $10,000, and licenses and permits. That threatens
discussions Green is having with potential partners and investors
who want to see all the up-front work done first.
“My fear is that, if the project stops altogether, we may never get
it started again,” he said.
The development is supposed to be in East Biloxi, where lots still
remain empty after Hurricane Katrina in 2005. Before an ounce of
dirt has been moved on the project, Green's organization has
received enough calls from people eager to become tenants that
they’ve started a waiting list.
That's the position hundreds of other small nonprofits have found
themselves in, with not just their grant funds in question but
investments on the line. For every dollar in grants disbursed by
Enterprise Community Partners, the local nonprofits leverage another
$95 in other capital, CEO Donovan said.
Congress gave the national nonprofits the job of administering the
grants, fielding and assessing hundreds of applications, so that the
government doesn’t have to, Donovan said.
In one of the contract termination letters obtained by the AP, HUD
said the contracts were cancelled at the direction of the Department
of Government Efficiency. It said the group's operations “were not
in compliance" with Trump's executive order targeting diversity,
equity and inclusion initiatives. The letter also allows the
organizations to appeal the termination.
The Local Initiatives Support Corporation is the other group whose
contract was cancelled.
“Without access to this seed capital, housing projects for
hardworking, families will stall, worsening shortages and pushing
distressed neighbors into overcrowded conditions or homelessness,"
it said in a statement.
Habitat for Humanity International is the third nonprofit disbursing
the grants, but the organization has not responded to repeated
requests for comment or said if their contract was cancelled.
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