Allentown to spend $2M to help affordable housing complex get off the ground

ALLENTOWN, Pa. — Allentown will give $2 million of its pandemic-relief money to a local developer who plans to build a large affordable housing complex downtown.

That grant will help Cortex Residential fill a funding gap as the developer works to put 52 apartments for low-income residents at South Eighth and Walnut streets.

• Allentown City Council approved $2 million in funding for a downtown affordable housing project
• The money will come out of the $57 million Allentown received in ARPA pandemic-relief funds
• One council member questioned the legality of giving those funds to a for-profit company

The project, which will include the demolition of a parish house next to Life Church, is expected to cost Cortex about $22 million, according to company President Jonathan Strauss.

Cortex is seeking about $15 million in tax credits for low-income housing projects, which will serve as the development’s primary funding mechanism, he said.

Other funding sources have closed the project’s funding gap to about $3 million, Strauss said last month as he requested some of the city’s $57 million in American Rescue Plan Act funding.

‘Monumental project’

Strauss told LehighValleyNews.com he is even more confident that his project will earn tax credits after securing the $2 million Wednesday from Allentown City Council.

The Pennsylvania Housing Finance Agency, which administers the tax credits, wants to see that projects have “overwhelming support from the community,” Strauss said.

“One of the best ways to measure that is through financial support from the municipality,” he said.

The $2 million grant “helps us actually build a stronger case as to why the state should finance this through the tax credit program,” he said.

Strauss said demolition of the parish house would start in the second quarter of 2024 “if everything goes according to plan.”

The building, which he called “a very monumental project,” could have its first residents in about two years.

“I think it's a win for the city, and it's a win for the residents as well,” he said.

‘A good investment’

Council member Santo Napoli said the lack of affordable housing is one of the most “prominent” issues in Allentown; many have labeled it a “housing crisis.”

“Affordable housing was on the tip of everyone’s tongue,” Napoli said, recalling his conversations with voters while campaigning this spring.

“The impact of this is not just [52] affordable apartments. I think there's more to it than that.” Napoli called it a great project.

Giving $2 million to Cortex’s project “is a good investment for our city,” Councilwoman Candida Affa said. She also said affordable housing is “desperately needed.”

‘I enjoy my freedom’

But one Allentown City Council member was not sold on the proposal.

Council passed the spending measure by a 6-1 vote, with Ed Zucal questioning its legality before voting against it.

The American Rescue Plan Act “was very specific on how this money was supposed to be spent,” Zucal said.

ARPA requires Allentown to spend its money on infrastructure — “recovery of city finances that were suffered during COVID,” and affordable housing efforts through nonprofits,

It was not for for-profit companies such as Cortex Residential, Zucal said.

He told his council colleagues he worries about a potential probe into how the pandemic-relief money was spent in Allentown.

“I will be voting no because, quite frankly, I enjoy my freedom,” Zucal said.

“I'm not interested in being part of a federal investigation."