Reimagining Local Housing Types

The Small Cities Lab is partnering with the City of Bethlehem, Community Action Lehigh Valley, Community Action Development Bethlehem, and New Bethany to increase housing availability and affordability in Bethlehem through the revival of Alley Houses, a 19th-century precursor to today’s “accessory dwelling units” (or ADUs).

Bethlehem is a city of 75,000 residents with a deepening housing crisis and strong market-rate competition for limited developable land. Located less than a two-hour drive from New York and Philadelphia, Bethlehem is seen as accessible to major urban centers while remaining relatively affordable. Housing prices started to climb in 2015, as newcomers from larger, more expensive cities began to seek relatively affordable options. Like many small cities, this steady price growth exploded during the COVID pandemic, spurred in part by the mass migration of affluent professionals and remote workers from neighboring large metros. City data reveal that since 2020, rents have increased by over 57%, outpacing Philadelphia and leading to a crisis-level rental vacancy rate of 2%.

In response, Bethlehem municipal authorities released a housing plan in 2023, entitled “Opening Doors,” calling for land-use reform to increase housing supply. The Alley House Program is a key initiative in this plan, which stems from over a year of community outreach and detailed analysis of local housing market conditions. Opening Doors recommends that the City create “regulations, guidelines, resources, and technical assistance for an accessory dwelling unit pilot program to support homeowners and local nonprofits to add affordable rental units on single-family parcels.” The Alley House Program was explicitly written into the “Opening Doors” report and directly addresses this recommendation with collaboration between public and private sector partners.

Alley Houses were originally built as secondary units on the alley-facing sides of residential properties to accommodate for the increase of migrants to Bethlehem during the boom of Bethlehem Steel. Alley Houses also served diverse tenancy needs, offering flexibility for various household types and adaptive reuse options, from a three-bedroom unit for a single parent to a smaller home for the elderly’s dignified aging-in-place. By reintroducing Alley Houses, the program aims to provide affordable, adaptable housing options in a city facing persistent land scarcity and rising housing costs.

Alley Houses

The Alley House Program has worked to overcome perennial conflicts around housing and build consensus through community-engaged research and design methods. The team employed oral histories, existing conditions surveys, and design visioning exercises to position land-use reform within the built tradition of the city. Undergraduate students are directly involved in all project tasks, providing opportunities to practice the civic processes necessary to manage urban change. Over 60 students from 12 majors participated in the Program’s research, engagement, design, and construction efforts. Students surveyed 50 miles of alleyscape, documented 919 existing Alley Houses, conducted resident interviews, navigated zoning variances and public meetings with city officials, and are constructing the first Alley House pilot unit with guidance from CALV. The pilot Alley House units will inform future zoning revisions (the City will propose updates to its zoning ordinance to allow for ADUs in the coming year) and lower barriers to housing access.

The Alley House Program has been awarded over $1.5 million to support its efforts. Grants include a $196,722 United States Department of Housing and Urban Development Grant; $850,000 in Community Projects Funding through the Transportation, Housing, and Urban Development (THUD) bill with the support of Senator Bob Casey and Representative Susan Wild; and $500,000 through the Pennsylvania Housing Finance Agency's PHARE program.