Lehigh Valley

Building affordable housing is a tough sell, businessmen say

"It's not possible, not without subsidies."

ALLENTOWN, Pa. - You've probably heard the name J.B. Reilly.

He's the main downtown Allentown developer.

Rent inside his Strata apartments average between a $1,000 and $1,00 per month.

"We have limited opportunity and have to develop in a dense way," he said.

Reilly says demand is high for his 480 downtown units inside the six block square of Allentown's tax friendly NIZ.

"Is there room inside the NIZ for lower income apartments?” I asked him inside his city center offices.

"Not really because there is not that much land," he said.

"We start at $650, we don't have many that go to $900," developer Nat Hyman explained inside one of his Allentown apartments.

Hyman owns a million square feet of city apartment space in and around Allentown, his prices are lower than Strata.

He targets singles, not families. His reason…economics.

"With the cost of materials, labor, and meeting modern building codes such you can't rent at an affordable rate," he said.

Hyman says city fees can add as much as $3,000 to the cost of each unit.

"So it's not economically feasible to build affordable housing?" I asked him.

"It's not economically feasible and it's not economically attractive," Hyman added.

A clear clue on why there's a shortage of affordable housing both in the Lehigh Valley and around the country.

Affordable housing is defined as spending no more than 30 percent of your income on rent.

The average Lehigh Valley two-bedroom apartment cost is $1,038 per month, pricing out those on or near minimum wage.

According to the Harvard University Joint Center for Housing Studies, new options for wealthier renters are rising, while new options for the poor are shrinking.

"Most markets can't produce affordable housing. It's not possible, not without subsidies."

Community Action Committee of the Lehigh Valley head Alan Jennings adds those subsidies are being cut both on the state and federal level.

"The reduction in the tax rate from 35 percent to 21 percent to reduce the value of the credit," non-profit Housing Development Corporation MidAtlantic's Matt Pardon said.

Pardon is talking about Low Income Housing Tax credit. It's been the key incentive for developers and non-profits like HDC to build low income housing, like the 46 unit building on Bethlehem's Hays street.

"The demand is very intense. Every time we build something we normally have a long waiting list," Pardon said.

Pardon says those waiting lists will grow, as that tax credit, because of the new tax plan, has a reduced value costing millions in equity for new projects.

"Build less because of that loss," he said.

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