The Shutdown's Impact on Affordable Housing

BY Rebecca Prybell

Affordable housing advocates have been blogging and posting for some time now about the federal government shutdown.  As it enters its second month we reach uncharted territory.  While the worst case scenarios have been avoided so far for most, they have not been avoided for all.  Estimates range from 600 to 1,500 HUD assisted apartment complexes that did not have their rent subsidy contracts renewed and thus have not received subsidy payments.  Another 700 projects are in the same position in the USDA Rural Development rental housing programs.  The National Low Income Housing Coalition (NLIHC) estimates that over 70,000 low income renters are already at risk of rent hikes and evictions, with many millions more facing similar impacts should the shutdown extend through the end of February.  


On January 4, 2019, HUD issued letters to FHA Multifamily Lenders and Section 8 and other Property Owners, explaining which services would remain available for the initial 30 business days of the shutdown.  Ongoing operations include closings on FHA loans that received Firm Commitments, however, things become less clear if those closings are awaiting a HAP assignment or renewal approval.  The HUD letters were also silent on what happens after February 15, 2019.  Owners of properties with FHA insured mortgages or 202/811 Capital Advances were encouraged to submit release requests for replacement reserves to cover funding shortfalls.


HUD officials are on record saying payments on active contracts will extend through February.  However, after March 1, owners may begin to face an unprecedented situation where HUD fails to make payment on some or all of its obligations.  Effects are also being felt in Public Housing programs, as uncertainty grows around when public housing authorities will have access to the both capital and operating funds.  The Public Housing Capital Fund for 2019 will not be available until at least 60 days after a spending bill is signed into law, and while public housing authorities did receive Operating Fund payments for January and February, payments for March and after will not be made until the shutdown is over.  


Other HUD programs, including the Housing Choice Voucher Program, disaster recovery programs, and other HUD grant programs, are advising participants to expect delays in funding and staff response times, and warning that funding for many programs will lapse as early as March 1.

Tags: HUD