ALLENTOWN, Pa. – Allentown City Council held a special meeting Wednesday night to hear a presentation on how to use housing funds which are being accumulated from an increase in the deed transfer tax.

Council President Santos Napoli explained that last year council made a unanimous decision to increase the deed transfer tax for real estate transactions by a half percent.

“This increase did not affect any existing homeowners or seniors and was focused on improving housing conditions citywide,” Napoli said. “This additional revenue was all pointed to a housing fund within our Community and Economic Department.”

Napoli said that based on last year’s data, the estimate of the housing fund would be about $2.3 million.

As of June 30, Napoli said the fund has received $1,080,000.

“This legislation also calls for an annual action plan, which is a public meeting to discuss how best to utilize housing fund dollars for housing initiatives,” he said. “That’s why we’re here tonight.”

Recommendations for the fund were been prepared by Karen L. Black, CEO of May 8 Consulting Firm Inc., Philadelphia.

Vicki Kistler, director of community and economic development, presented four options for use of the new funds: a rehabilitated first-time homebuyer purchase program, a Local Economic Revitalization Tax Assistance Act (LERTA) ordinance for affordable housing, an owner-occupied home repair grant and a childcare facility improvement loan.

Rehabilitated home purchase program

The program’s goal would be to deliver a code-compliant, move-in ready home at a price an eligible first-time homebuyer could finance.

Black has suggested the city begin with a pilot program to rehabilitate three publicly owned single-family homes at a cost of between $100,000 and $200,000.

The homes would be sold to city residents who have a household income at or below 80% of the area’s median income.

Buyers would be selected from a lottery among qualified applicants.

The city is anticipating offering a maximum sales price of $230,000 for the first-time home buyers.

Proceeds from the sale of the homes would be used to continuously expand the program by adding more available homes.

LERTA for affordable housing

The LERTA program allows municipalities to exempt the assessed value of improvements from local property taxes for up to 10 years.

An affordable housing LERTA would reduce the cost structure for developers, allowing them to create affordable rental and homeownership opportunities for residents at or below 80% of the area’s median income.

Developers would receive 100% abatement in initial years and then the amount would decline by 20% in the later years.

Owner-occupied home rehabilitation program

This program would provide loans up to $40,000 per property to low- and moderate-income homeowners to address critical repairs to stabilize homes.

The loans would be secured by a lien recorded against the property, and repayment would be required upon the sale of the property to allow the city to continue to offer the grants.

Family childcare facility improvement program

The program would provide zero percent-interest home repair loans up to $50,000 to licensed family in-home childcare providers to improve the safety and quality of the homes where childcare is offered.

The idea would be to preserve viable family childcare businesses that are at risk of closure due to deteriorating facility conditions.

The loans would be paid back to the city when the homes are sold or transferred, or when the business ceases operations.

Next steps

Kistler said her department is seeking feedback from City Council on ways to amend the recommendations, and to determine which programs the city would begin in 2027.

Councilmembers said they will submit questions to Kistler and begin to discuss the programs at the committee level.