The Trump administration has frozen approximately $60 million in funding intended for affordable housing developments, leaving hundreds of projects in limbo. The decision, affecting small community development nonprofits, has created significant uncertainty in East Biloxi, Mississippi, where a major housing project was set to begin. This comes as a blow to areas still recovering from Hurricane Katrina in 2005, where empty lots remain a stark reminder of the devastation.
Jonathan Green, executive director of a nonprofit in Mississippi, reported a high demand for tenancy even before ground had been broken. His organization has already started a waiting list due to the number of calls from potential tenants. However, with $20,000 in grant dollars now uncertain, Green faces difficult choices. The funds were meant for an environmental review and necessary permits, which could cost upwards of $10,000.
"Not knowing for me means we assume that the money is not coming, and that means that I have to pivot," said Jonathan Green.
The funding halt is part of broader actions by the U.S. Department of Housing and Urban Development, including other funding freezes and staffing cuts. According to documents obtained by The Associated Press, these decisions have created an administrative challenge for nonprofits tasked with managing the grants. Congress had assigned these national nonprofits the responsibility of administering the grants to streamline government processes.
Enterprise Community Partners and the Local Initiatives Support Corporation are two of the organizations whose contracts were unexpectedly cancelled. The contract termination letters indicated the cancellations were directed by the Department of Government Efficiency. Shaun Donovan, CEO of Enterprise Community Partners, highlighted the broader implications of these cancellations.
"Many of those organizations have already committed funds to pay workers, such as HVAC technicians, local contractors, homeownership counselors," Donovan stated.
"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."
The Section 4 program, which manages these grants, will continue with some consolidation of grants while others remain untouched. However, there is no clear timeline or assurance as to when the frozen funds might become available again.
Habitat for Humanity International, another nonprofit involved in disbursing these grants, has yet to comment on whether their contract was affected. Despite repeated requests for information, they have remained silent on the issue.
For every dollar distributed by Enterprise Community Partners through these grants, local nonprofits can leverage an additional $95 in other capital. This multiplier effect underscores the critical role these funds play in enabling affordable housing projects.
"Without access to this seed capital, housing projects for hardworking families will stall, worsening shortages and pushing distressed neighbors into overcrowded conditions or homelessness," warned the Local Initiatives Support Corporation.
In East Biloxi, where the empty lots are a haunting reminder of past tragedies, any delay in housing development could have profound consequences. Green expressed his concern about the future of the project.
"My fear is that if the project stops altogether, we may never get it started again," he said.
