Update, July 3: On Wednesday, the county commissioners approved the Lancaster County Redevelopment Authority’s Annual Action Plan for using its federal housing funding. The vote was 2-0, with Commissioners Josh Parsons and Alice Yoder voting “aye”; Commissioner Ray D’Agostino was away this week.
Previously reported:
Thousands of working households in Lancaster County are paying a disproportionate amount of their earnings toward rent, due to the area’s extremely tight housing market and the scarcity of affordable units, Michaela Allwine told the Lancaster County commissioners Tuesday morning.
Allwine is the Lancaster County Redevelopment Authority’s director of housing & community development. She was presenting the agency’s 2024-25 “Annual Action Plan,” its plan for spending its latest allocation of federal housing dollars.
The authority’s board approved the plan last month, following a similar presentation. Approval must also come from the commissioners, who are scheduled to vote Wednesday morning.
For more information
- For a “Citizen Summary” of the Lancaster County Redevelopment Authority’s FY2024 Annual Action Plan for using federal housing funds, click here.
- For the full plan, click here.
Including some program income, the authority has $5.34 million to spend. It comes from three U.S. Department of Housing & Urban Development programs: The Community Development Block Grant ($3.27 million), HOME ($1.82 million) and Emergency Solutions Grants ($254,156).
While incomes have gone up since the pandemic, housing costs have shot up more, creating a wide gap between households’ resources and available housing. According to Allwine’s presentation, which used a mix of federal and real estate industry statistics:
- In 2023, Lancaster County’s vacancy rate was just 2.5%, considered extremely low.
- The county’s homeowner market is even tighter, with a vacancy rate of just 0.5%.
- Of Lancaster County’s 62,500 rental units, just 4,135, less than 7%, would be considered affordable to households earning 50% or less of median family income (which is $106,700 for a family of four).
- As a result, two-thirds of households making 80% of median family income or less are considered “cost-burdened,” paying more than 30% of their income on housing. That’s roughly two in five, or 40%, of all renter households.
- From 2017 to 2023, median rent increased 27.4%, from $977 to $1,346.
To keep pace with development, the county would need to build about 1,150 affordable rental units a year, Allwine said. Currently, just 322 are in the pipeline.
Residential developers must cover their costs; the higher those costs rise, the harder it is for them to build affordable product. Regulation is frequently cited as a major cost-driver: Asked where reform would help the most, Allwine cited municipal zoning. It makes building multifamily housing — a designation encompassing anything from duplexes to apartment buildings — “difficult to impossible,” she said.
HUD requires jurisdictions to develop five-year strategies, then align their annual action plans accordingly. Lancaster County is nearing the end of its current five-year period, which covers 2021-25. Its strategy calls for creating affordable housing, both rental and owner-occupied; reducing blight; and supporting efforts to shelter and rehouse homeless individuals.
This main difference in this year’s plan, Allwine said, is a shift away from funding affordable rentals and toward funding owner-occupied units. The plan calls for putting $1 million toward owner-occupied projects, versus about $790,000 in 2023-24; and for putting just under $638,000 toward rental unit development, versus $1.7 million in 2023-24.
The change, Allwine said, is partly to balance investments after several years of focusing more on rental projects, leading to a backlog of pending projects that are seeking state funding; and partly in response to stakeholder feedback, including from the commissioners.
Commissioner Josh Parsons said he appreciated that. It’s essential to facilitate homeownership, he said: It helps people build wealth and it changes lives.
Parsons said he’s confident Commissioner Ray D’Agostino, who was absent Tuesday, would be supportive, too. He and Parsons have both highlighted the value of homeownership in previous statements.
The authority’s funding subsidizes affordable housing developers, helping them cover the gap between construction costs and what tenants or homeowners will be paying. The Spanish American Civic Association, for example, used a mix of federal, state and private funding at its 18-unit Conestoga North project; each home cost more than $400,000 to build and was sold for $155,000 to $177,000.
On owner-occupied projects, the authority typically underwrites about $200,000 per unit, Allwine told the redevelopment authority board last month, so $1 million will likely suffice for five units.
“It’s quite costly,” Allwine said at that meeting: Typically, not only are construction costs subsidized directly, so is the mortgage that qualifying homeowners eventually pay.
The complexity of such projects makes them daunting, and only a couple of local developers tackle them. Still, Allwine told the commissioners, subsidized owner-occupied housing is “an important piece of a multilayered housing plan.”
Overall, authority funding has gone toward 193 rental units and 27 homeowner units since 2021.
