This story was originally published in Affordable Housing Finance.
As the partial government shutdown drags on, some of the nation’s poorest families and seniors look to pay the price.
“The shutdown puts low-income families, seniors, and people with disabilities at increased risk of eviction and potentially homelessness,” says Diane Yentel, president and CEO of the National Low Income Housing Coalition (NLIHC). “Residents living in HUD (Department of Housing and Urban Development)-subsidized properties are some of our country’s most vulnerable people. The vast majority are deeply poor seniors, people with disabilities, and families with children.”
As a result of the shutdown, HUD cannot cover the costs for certain subsidized homes housing an estimated 70,000 low-income seniors and people with disabilities, Yentel says, adding that owners of these properties are being asked to cover the costs in the meantime, but the longer the shutdown continues the less likely they will be able to do so.
In its third week, the government closure is unprecedented in both length and the lack of preparation, adds Sunia Zaterman, executive director of the Council of Large Public Housing Authorities (CLPHA).
At this time, HUD officials have “frontloaded” payments for housing vouchers and the public housing operating subsidy through February, according to Zaterman. “But the anxiety is nevertheless there, particularly for seniors and persons with disabilities on vouchers,” she says.
For voucher holders, it’s an “existential threat” past February because housing authorities will need to make payments directly to landlords to supplement the rents paid by residents, explains Zaterman. If funds are not available after February, the concern becomes that housing authorities will not be able make payments and landlords will start to evict residents.
With each passing day of the shutdown, local housing authorities also grow increasingly concerned about their ability to maintain and make repairs at their properties as well as pay their employees if HUD funding is suspended, according to Zaterman.
At this time, much of the HUD staff, including those in the field offices are furloughed, so there’s no one to answer questions or provide information.CLPHA continues to survey public housing authorities to see how they are being affected, she says.
Denise Muha, executive director of the National Leased Housing Association, is also closely watching to see what happens with the voucher programs. At this time, she also believes HUD has monies to fund most project-based rental assistance through February or a little longer.
"Having said that, there are HAP (housing-assistance payment) contracts that won't be renewed during the term of the shutdown if the expiration dates are December 2018 or later,” she says. “This is, of course, is not acceptable but where we find ourselves."
Muha adds that she believes HUD is doing its best to manage the funding situation within the limitations of the shutdown.
"We expect that any shortfall of funding will be retroactively provided when the shutdown is over thereby avoiding negative impacts on the residents," she adds. "The last thing we want to do is to frighten residents at this point (or lenders for that matter). Most owners will be able to accommodate a short-term lapse in funding by using reserves or other remedies to pay debt and operating expenses. Should Congress and the White House fail to open the government by late February, it is a different conversation."
This week, members of the Campaign for Housing and Community Developing Funding sent a letter to congressional leaders calling on them to “protect low-income Americans by ending the government shutdown and passing full-year spending bills that provide strong funding for affordable housing and community development programs.”
Led by NLIHC, the campaign is a group of more than 70 organizations working to ensure the highest allocation of resources possible to support affordable housing and community development.
According to the letter, as of Jan. 3, roughly 1,150 project-based Sec. 8 contracts are up for renewal but currently under suspension (i.e., not executed) in HUD’s system because funds were not obligated prior to Dec. 22. “The 1,150 contracts that HUD didn’t renew in December will affect roughly 70,000 to 85,000 low-income households,” says the letter. “Roughly two-thirds of these households are people who are elderly or who have disabilities; on average, these households have incomes of less than $13,000 per year. HUD is determining whether it has any available funds that could be obligated to renew these contracts and working through the processing of these contracts to determine what could be signed if funding is available.”
In addition to concerns about HUD, industry leaders are paying close attention to the households in rural communities that rely on rental assistance through the U.S. Department of Agriculture (USDA).
“In terms of rental assistance, it my understanding that the agency has enough rental assistance to pay until the end of January. But, this is the caveat, the government funds in arrears, and the January payment was for December. My understanding is come February there is no money,” says Colleen Fisher, executive director of the Council of Affordable and Rural Housing.
Owners may be able to tap into a property’s reserves. However, some reserves at these properties are at the bare minimum so there’s no money to take from. “The owner may have to put in their own money and hope to get repaid. And all of this is hoping there will be back payments, but no one at this point knows,” Fisher says. “Obviously USDA Rural Development officials know there could be potential problems. And I think they want to make sure everyone is whole. They don’t want the residents to not have rental assistance, and they don’t want the owners to be strapped.”
Fisher says another issue is that Rural Development is not processing any loans, and that is stalling transactions from being finalized and the start of construction. “All of that has come to a standstill since there is no one in the state offices, and there is a minimal amount of people in the national USDA office. Most of the people at USDA have been furloughed,” she says.
She says it’s also of concern for those in the country who are in the middle of construction and have to get approval from the agency for a drawdown and there’s no one available to that.
“If the developers are not getting paid, the contractors aren’t getting paid,” she adds. “If this lasts longer than the end of the month, then we will start seeing the residual effects on people who are working for companies doing the construction and building.”
This story was originally published in Affordable Housing Finance.