Gov. Josh Shapiro wants to spend $80M to attack Pennsylvania’s housing crisis. Here’s how

Gov. Shapiro’s proposed budget would put state money behind a popular home repair program, anti-homelessness initiatives, and public legal defense against evictions.

The interior of the Pennsylvania Capitol in Harrisburg.

Pennsylvania State Capitol building in Harrisburg on July 26, 2023. (Amanda Berg for Spotlight PA)

This story originally appeared on Spotlight PA.

Housing is often considered a local issue, but there is a growing consensus in Harrisburg that state-level action is necessary to combat Pennsylvania’s persistent shortages and rising costs.

That shift can be seen in Democratic Gov. Josh Shapiro’s budget proposal, which would put $80 million toward funding public legal defense against evictions and anti-homelessness initiatives, and restarting a popular home repair grant program. It can also be seen in pending legislation that would preempt local zoning policies to spur housing construction and protect tenants amid increased evictions post-pandemic.

These policy changes aren’t a sure thing. Lawmakers who support them will likely face opposition from the lobbies representing municipal governments and landlords.

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But the size and scope of the state’s housing shortfall makes doing nothing unpalatable for lawmakers in both major parties. By one estimate, Pennsylvania has a shortage of almost 100,000 housing units.

The state will be hard-pressed to achieve its goals around economic competitiveness and education without addressing that deficit, said Dana Hanchin, CEO of Lancaster-based HDC MidAtlantic, a nonprofit developer of affordable housing.

“We are constantly falling behind in meeting that need because of the systems that we have in place right now,” she said. The governor’s proposed budget is a start, Hanchin said, but “we need to be doing a lot more than we are to stop treading water or losing ground.”

Here’s a breakdown of Shapiro and the legislature’s proposals:

More funds for an affordable housing program

Last year, Shapiro successfully pushed to expand a state program that gives older and disabled Pennsylvanians a partial refund on their rent and property taxes.

Now, he is taking aim at other housing challenges.

Additional funding for a statewide affordable housing program is one of the biggest.

Created in 2010, the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund provides grants to local governments, nonprofits, and developers to build affordable housing, provide rental assistance, and pay for home repairs, among other uses.

“It is the most flexible funding the commonwealth has in housing,” Robin Wiessmann, executive director of the Pennsylvania Housing Finance Agency, which runs the program, told lawmakers during a budget hearing in February. “It’s driven by community needs.”

The program receives three times as many applications as it can fund, Wiessmann said.

It has previously received bipartisan support: Lawmakers increased the program’s funding cap from $40 million to $60 million in 2022.

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Shapiro wants to replace the program’s current funding formula, which is tied to revenues from a state tax on real estate transactions, with a guaranteed amount each year. Under his proposal, that allocation would increase to $70 million in the next fiscal year and rise to $100 million over the next four fiscal years.

Home repairs, homelessness, emergency housing

Shapiro also wants to direct $50 million to a popular state program that helps homeowners pay for essential repairs. The money can also be used to make units accessible for people with disabilities, improve energy efficiency, and provide construction-related workforce training.

Since it launched last year, the Whole-Homes Repair program has faced overwhelming demand, which has led to application windows as short as 24 hours in some counties and long waitlists.

The program was due to receive more funding in last year’s state budget, but lawmakers failed for months to reach a deal on additional legislation to allow the money to be spent. The final deal on those bills, reached in December, did not include more funding for the home repair program.

Shapiro is also proposing an extra $10 million for a program that addresses homelessness, an increase of more than 50%. The initiative has been flat-funded since at least 2016.

The governor’s budget proposal would additionally direct $5 million toward a new program that would rehouse people after natural disasters and other emergencies when other forms of state and federal aid might not be immediately available.

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