Bethlehem’s first large-scale affordable housing rental project in more than a decade will be able to break ground next year after it was awarded highly competitive tax credits.

The 60 units in the first phase of the Gateway on Fourth are part of the $66.5 million in low-income housing tax credits awarded by the Pennsylvania Housing Finance Agency board to fund the construction of 1,900 new and rehabilitated affordable units statewide. The units will be affordable to households earning at or below 60 percent of the area median income. In the Lehigh Valley, a family of four would need to earn $60,120 annually or less to qualify for these units.

The Gateway on Fourth, 1400-1414 E. Fourth St., is a 120-unit mixed-income development planned for South Bethlehem and developed via a unique public-private partnership between the City of Bethlehem, Lehigh Valley Industrial Park and Pennrose, one of the nation’s leading affordable housing developers. More than two-thirds of the units will be affordable, while the remainder will be market rate.

“Opening Doors is about keeping the promise of America and creating opportunities,” Bethlehem Mayor J. William Reynolds said, referencing the city’s affordable housing strategy, which was released in early 2024.

“Recognizing we cannot solve our regional housing crisis alone, our administration has been laser focused on building innovative coalitions to bring more attainable and affordable homes into our community. Bethlehem’s first tax credit award in more than a decade is something for our entire city to celebrate.”

The estimated $29 million development at the city’s Eastern Gateway is one of two Lehigh Valley projects that were awarded the highly sought after tax credits this funding round. Six local projects submitted applications seeking funding.

The Low-Income Housing Tax Credits awarded by PHFA to the Gateway on 4th will help fund the first phase ,consisting of a 44-unit mid-rise building at East Fourth and William streets anchored by a health clinic operated by Neighborhood Health Centers of the Lehigh Valley. This phase will also include a 16-unit townhome building along East Fifth.

The two-phase development was made possible due to LVIP’s extremely generous donation of the former Szilagyi Fuel and Dancho sites, which it purchased earlier this year for a cost of more than $4.5 million, including the environmental remediation. The land donation revived a community-driven neighborhood plan that is more than 15 years in the making.

“LVIP is so proud to be partnering with Mayor Reynolds and his staff and Pennrose on this transformational housing initiative, said Kerry A. Wrobel, LVIP president. “We’re thrilled PHFA shares our vision for Gateway on Fourth.”

The Gateway is one of three applicants statewide awarded additional matching dollars for developments that recognize the strong connection between stable housing and improved health outcomes for residents through PHFA’s Health for Housing Investment Program. Neighborhood Health Centers of the Lehigh Valley’s $400,000 investment in the Gateway is being matched dollar-for-dollar by the state housing agency.

“We are honored to partner with the City of Bethlehem and LVIP to bring the Gateway on Fourth to life,” said Jacob Fisher, Regional Vice President for Pennrose. “This project exemplifies our commitment to creating high-quality, affordable homes that strengthen communities. By integrating health care services directly into the development through our partnership with Neighborhood Health Centers of the Lehigh Valley, we’re not just building housing—we’re investing in the long-term health and stability of South Bethlehem residents. We look forward to breaking ground on this transformative project and working with our partners to address the critical need for affordable housing in the Lehigh Valley.”

The affordable homes will be rented to residents earning between 20 percent to 60 percent of area median income, about $14,040 to $42,120 for a one-person household and $20,040 to $60,120 for a four-person household. Rents will range from $279 for the lowest cost one-bedroom up to $1,442 for the highest cost three bedroom.

Construction for phase one is anticipated to begin in late 2026 and wrap up in spring of 2028. Leasing of the units will begin immediately and wrap up in the fall of 2028.

Pennrose intends to apply for more tax credits to fund the second phase of the Gateway, which calls for a second 44-unit mid-rise building and another 16-unit townhome building.

Bethlehem’s last tax credit project was HDC Mid-Atlantic’s Southside Lofts, which opened in 2014. The Low-Income Housing Tax Credit program is the nation’s largest source of affordable rental production.

Since 1987, it has created 3.7 million affordable homes by leveraging IRS tax credits to lower costs and the loss of rental income from renting at well below market-rate rents. Developers sell credits to investors who use them to offset their federal income taxes. The program requires a 30-year affordability period.

The IRS issues the credits to states based on their population size and the Pennsylvania Housing Finance Agency awards the credits annually through a competitive application process. The 2025 applications were submitted to PHFA in February 2025 and the board awarded the projects last week.

State Senator Lisa Boscola and State Rep. Steve Samuelson have secured $928,623 in state funding for the Gateway on Fourth development: $500,000 from the Commonwealth’s Redevelopment Assistance Capital Program and $428,000 from the Pennsylvania Local Share Account for the project.

The City of Bethlehem is investing $3.1 million in the first phase.

In addition to these tax credit awards, PHFA’s board authorized Pennsylvania housing tax credits and recognized the agency will also contribute first mortgages and/or soft funding sources to many of the awarded developments. Additionally, these low-income housing tax credits will be used to leverage local, state, federal and private financial resources needed to complete the financing plans for these construction initiatives. The 41 multifamily housing developments being awarded tax credits today are identified on the PHFA website at phfa.org/mhp/; see the list of tax credit recipients under “News & Awards 2019 - Present” and dated 10/9/2025.

Contributed article