BETHLEHEM, Pa. — A new revolving loan fund aimed at prioritizing mixed-income housing would allow the city to negotiate with developers to offer more affordable units and even get some projects over the finish line, officials told City Council last week.
City Council unanimously approved a $12,000 contract with the Center for Public Enterprise out of Brooklyn, New York, to help with designing and implementing such a fund in Bethlehem.
Councilwoman Grace Crampsie Smith was absent.
The fund would offer low-interest, short-term loans for developing, preserving or rehabilitating mixed-income housing — “taking strong projects from infeasible to shovel-ready,” according to Laura Collins, Bethlehem’s director of community and economic development.
Establishing a revolving loan fund is one of many strategies outlined in the city’s affordable housing plan, known as “Opening Doors: Strategies to Build Housing Stability in Bethlehem.”
Support private investment, protect affordability
Collins said her team has been weighing what a revolving loan fund could look like locally for the past year.
“When a borrower repays the initial loan, the money returns to the fund, allowing it to be used for another project, thus creating a self-renewing, sustainable source of financing for future projects,” Collins wrote to City Council in an Oct. 1 request for approval.
The Center for Public Enterprise will help Bethlehem with “figuring out how to package incentives that will both support the private development but also ensure that there’s affordability that we have some sort of control over.”Bethlehem Director of Community and Economic Development Laura Collins
Collins said CPE will help the city with “figuring out how to package incentives that will both support the private development but also ensure that there’s affordability that we have some sort of control over.”
That could look like tax abatements, expedited permitting and other incentives, for example, to lower an overall project cost, while also making room for affordable units in the build, she said.
CPE will assist with “the creation and review of model pro formas for potential capital stack structures and developments” and “the identification of projects Bethlehem could develop/co-develop and provide a brief detailing strategies for the development of a pipeline of projects,” Collins wrote in her report to City Council.
Revolving loan funds have seen success in spurring development in a number of other communities, Collins said, such as Montgomery County, Maryland, and Chattanooga, Tennessee.
'Investment likely to pay off manyfold'
CPE is philanthropically funded — a couple of donors include the United States Energy Foundation and Working Families Organization — meaning the $12,000 contract costs much lower than what you may pay otherwise in the market, Collins said.
City Councilwoman Hillary Kwiatek said the new agreement gives the city “a little bit of a hand in the game” in making projects, especially those that hit financial snags, move faster to some degree.
“Filling that gap, speeding up timelines, potentially empowering smaller, local developers to participate."Bethlehem City Councilwoman Kiera Wilhelm
“Filling that gap, speeding up timelines, potentially empowering smaller, local developers to participate — I think the investment is likely to pay off manyfold,” Councilwoman Kiera Wilhelm said.
Councilwoman Rachel Leon said the new move could provide the market with a sort of “cooling effect” while also incentivizing affordability.
“This is pretty exciting and a very modest price, all things considered,” Leon said.
