Tackling the Housing Crisis in Pennsylvania’s Boomtowns
The influx of workers to Pennsylvania's Marcellus Shale region has triggered a housing crisis in many communities. Image Courtesy of Steve Williams, Penn State College of Agricultural Sciences.
The production of natural gas since 2005 from the Marcellus Shale formation — a formation buried deep beneath the surface that contains untapped natural gas reserves — is proving to be an economic boon for the state of Pennsylvania. The natural gas fields can be found beneath 60 percent of Pennsylvania’s total land mass, stretching from the southwestern portion of the state to the northeast corner. In many parts of the state, the rapidly expanding natural gas industry has created jobs as well as royalties for property owners with wells developed on their land, spurring the first substantive economic development in years. However, this rapid expansion challenges local governments to deal with a lack of affordable housing.
State Response to Housing Crisis
Counties with the highest drilling activity in southwestern and northcentral Pennsylvania are facing an affordability crisis as an influx of workers caused housing demand to spike amid an already inadequate housing supply. In some of the most supply-constrained areas, rents have tripled over the last few years. And although the effects of the housing shortage have rippled throughout the market, they disproportionately affect low-income residents faced with limited housing options. In response to these growing challenges, the state of Pennsylvania passed legislation in February 2012 that allows local governments to assess impact fees on developers of natural gas wells within their jurisdiction.
Act 13 creates two funding streams for housing: one for local and county governments that adopt the fee and the other for the Pennsylvania Housing Affordability and Rehabilitation Enhancement (PHARE) fund, which was created in 2010 but not funded. The local share is not exclusive to housing and can be used for various community needs, whereas the money allocated to the PHARE fund will be devoted entirely to housing.
In the impact fee’s first year, $50,000 will be assessed for each nontraditional gas well in the Marcellus region drilled before 2012. A portion of the total revenue generated ($5 million a year) will be directed to the PHARE fund. The Housing Alliance of Pennsylvania estimates that with a steady revenue source the Pennsylvania Housing Finance Agency (PHFA) — which administers the housing fund — could generate up to $70 million by financing a bond.
Flexible Funding To Address a Range of Housing Needs
In addition to its financial benefits, Act 13 has helped draw attention to the affordable housing crisis, fostering innovative strategies and expanding public-private partnerships across the state. At a housing summit held at Lycoming College in Williamsport, local governments, nonprofit organizations, and developers exchanged ideas about creating housing solutions.
Thinking critically and creatively about the use of the PHARE Fund is essential to informing how the PHFA allocates its resources. The agency is currently asking the public for input about how to allocate Act 13 funds. Because of the complexity of the issue and the diverse challenges facing communities and regions, a one-size-fits-all approach is unlikely. Brian Hudson, executive director of the state’s housing finance agency, highlights the responsive role the PHARE fund will play in meeting the needs of local governments. “We are considering numerous strategies, from rental assistance to helping establish community development and faith-based organizations in regions that lack capacity and technical expertise. At this point, nothing that fits within the parameters of the legislation is off the table, and the public comment process is allowing [the PHFA] to vet ideas.”