About a dozen years ago, several members of East Chestnut Street Mennonite Church in Lancaster banded together to start a nonprofit focused on creating affordable housing, with a focus on people experiencing homelessness.
Their first project was the purchase and conversion of a single-family home at 639 E. Chestnut St. Over the next decade, the nonprofit Chestnut Housing Corp. added more than a dozen units.
The organization is now poised to take a bigger leap – and make a bigger dent in the shortage of affordable housing plaguing Lancaster.
In 2023, Chestnut Housing set out to add 100 affordable-housing units over five years. It currently operates 22 units, said Chad Martin, the nonprofit’s executive director. “It’s a pretty significant growth trajectory for us.”
The nonprofit is already making progress. It is developing eight units in formerly blighted properties at 607-609 Rockland St. in the city’s southeastern neighborhood. And now, Chestnut Housing is poised to add nearly a dozen more units in the former Strawberry Hill Bistro and neighboring properties, which are currently owned by the Lancaster City Land Bank Authority, an entity designed to combat blight and promote redevelopment.
The projects are not as big as the 64-unit affordable-housing complex slated to rise at 213 College Ave. under the aegis of Lancaster-based HDC MidAtlantic, a nonprofit developer that manages more than 3,700 affordable apartments in eastern and Central Pennsylvania, Delaware and Maryland. Nonetheless, smaller players like Chestnut Housing have a crucial role to play in creating homes that people can afford to rent, officials say.
For starters, their collective impact is significant, said Thomas Gilbertson, a senior planner for Lancaster city and an adviser to the land bank authority. They also tackle smaller properties in need of rehabilitation.
However, smaller projects are not always easy projects. They involve potentially tricky renovations and updates to aging infrastructure in buildings that may have been intended for other uses, Gilbertson said.
It can cost more than building from scratch, he said. “But by doing so, they are really doing a great favor for the community because they are taking a property that might sit for a few more decades.”
Finances also can be a hurdle for smaller developers. A nonprofit with several hundred apartments can more easily absorb a single vacancy than a developer with a dozen, said Dana Hanchin, president and CEO of HDC MidAtlantic.
Nonetheless, she said it was important for developers of all sizes to satisfy the need for affordable housing. Lancaster County is estimated to face a shortage of about 10,000 units, while the statewide figure is estimated to be around 235,000.
“You need to do big things and you need to do small things because everything that we do to meet the need is important and relevant,” she said.
Next steps
Chestnut Housing expects to begin construction in March on the Rockland St. project, dubbed Milburn Apartments. The properties had been used as rooming houses but have been vacant for about four years following a fire, Martin said.
At an overall cost of about $2.2 million, the nonprofit plans to create eight units: six studios and a pair of two-bedroom units, Martin said. When the units open next year, they will be reserved for households earning 50% or less of the area median income, or about $48,000 a year for a family of four.
In addition to its own capital, Chestnut Housing is relying on a $200,000 donation from the High Foundation and $500,000 in federal funds awarded by the city under the American Rescue Plan Act. The nonprofit has about 15% of the project left to finance, Martin said.
The Strawberry Hill project is still in its infancy. It originated last year with a request for proposals by the land bank authority, which was looking for someone to redevelop the properties, which are at the confluence of West Strawberry, West Vine and South Mulberry streets. The properties include the former restaurant at 128 W. Strawberry St,, as well as 122 W. Strawberry and 401 Vine streets, They span about 8,660 square feet.
Chestnut Housing was the only applicant to submit a formal proposal, Gilbertson said. It was accepted at a meeting in February. The authority and Chestnut Housing are now finalizing a purchase agreement, with a price set at $350,000. The authority bought the building in 2023 for $400,000.
“The land bank is very excited for this project,” Gilbertson said.
The rehab plans call for dividing the properties into a dozen units, Martin said. Plans are still being finalized, he added. But the apartments would range in size from studios to three-bedroom units. A quarter of the units would be set aside for people making up to 60% of the area median income, with the remainder for people earning up to 80%.
Chestnut Housing also plans to create about 1,000 square feet of office space for itself and for SoWe, a group representing residents of southwestern Lancaster city, Martin said. Some of the space may also be reserved as a community meeting place.
As it bites off larger projects, Chestnut Housing has been learning how to navigate the complex process for acquiring properties and securing outside funding, Martin said.
“We are in a great position right now where we are a respected organization,” he said. “So, even though we are smaller compared to some local players, the city trusts what we’re doing, our funders trust what we’re doing. That makes the path smoother.”
