The climate in Washington, D.C., under the new administration has left many affordable housing stakeholders asking questions about potential effects on the Department of Housing and Urban Development (HUD) and its programs. Nixon Peabody’s Affordable Housing team is closely monitoring these developments. Here are insights from our March 6, 2025, webinar about navigating these impacts.
Staffing Cuts and Changes
The new administration has announced goals to reduce staff throughout the federal government, including at HUD. So far, HUD has seen the termination of probationary employees, employees opting into a deferred resignation, and announcements of potential additional staff reduction targets. Changes are happening rapidly, and have the potential to affect both internal and external operations, including application and request processing times.
The Office of Management and Budget (OMB) has also asked agencies to create reduction-in-force (RIF) plans. Agencies, including HUD, are expected to respond to this request by March 13. Such reports are likely to provide additional details for future plans. It is also likely that staffing plans will be affected by federal budget negotiations.
Funding Interruptions
The new administration’s policy goals are also leading to questions about funding for HUD’s programs. Very early in the administration, a memorandum from OMB ordered a temporary pause on disbursements. This memo created confusion and, in some cases, temporary delays in funding. The memo was rescinded, but the administration has expressed the continued goal of reducing federal spending, causing continued uncertainty and confusion about whether and to what extent HUD funding and programs will be affected.
At this time, most HUD programs have continued to operate without interruption. However, some administration actions and announcements have still caused uncertainty about future funding. For example, while no official announcement or action has been made about the Green and Resilient Retrofit Program (GRRP), the program website has been taken down and it is unclear whether funds will be disbursed for closed and/or other obligated projects.
Federal Budget Process
The federal budget process is another critical aspect of the situation affecting agencies, including HUD. Constitutionally, “power of the purse” resides in Congress and historically, the Impoundment Control Act has acted to restrain the executive branch from disregarding congressional appropriations. Under the Impoundment Control Act, freezing funding for a program that receives a specific congressional appropriation would not be within the executive branch’s authorized powers. Courts are in the process of hearing cases related to this issue.
To the extent the Impoundment Control Act is upheld, the federal budget negotiations, and the resulting appropriations, would be a key factor in determining the extent to which HUD programs continue uninterrupted through this fiscal year.
Currently, the federal government is operating under a continuing resolution, which expires on March 14. The House and Senate must reconcile their budget frameworks and agree on an appropriations bill by that date, or issue another continuing resolution. If they do not achieve either of those outcomes, the federal government could shut down. The administration’s budget priorities will play a significant role in these discussions.
Outlook and Opportunities
Looking ahead, we must continue to keep a close eye on events as they unfold. In evaluating impacts, it is helpful to separate stated policy goals from implemented policies. In addition, while past experiences can help inform our observations, we must continue to assess the situation based on the most current facts and events.
The possibility of a government shutdown is one such potential event. It remains unknown whether Congress will reach agreement in budget negotiations in time or whether disagreements will lead to a government shutdown. A shutdown would certainly cause delays and disruptions, but the extent of such disruptions will be affected by whatever shutdown operations and staffing plan HUD puts into place. In the past, for example, deals with funding commitments, such as FHA firm commitments and RAD conversion commitments, have been allowed to proceed while deals that have not reached commitment milestones have experienced more significant disruptions.
We will monitor HUD’s contingency plans in the event of a shutdown to help navigate potential disruptions.
Looking further ahead, the president’s proposal for the 2026 budget, which is expected soon, will provide further insight into the administration’s priorities. We anticipate proposed cuts to HUD programs, so it is essential to advocate for the importance of these programs and their impact on affordable housing across the country.
Despite the challenges, there are opportunities to work with the new administration to achieve regulatory relief and streamlining of HUD processes. The administration has expressed a desire to cut through red tape and make it easier to produce and preserve affordable housing. We are actively engaging with the administration and Congress to suggest improvements that could save our clients time and money, and ultimately result in more affordable housing in a faster timeframe.
