Partial Government Shutdown Challenges Owners and Puts Tenants at Risk

Threats Include Eviction to Almost 3,000 NJ Families, Increase in Homelessness as Critical Housing Programs Remain Unfunded

The National Low Income Housing Coalition (NLIHC) has provided this update on the partial government shutdown which challenges housing owners and puts tenants at risk.

On December 22, 2018, the federal government began a partial shutdown when Congress and President Trump could not agree on an appropriations bill or continuing resolution that would continue to fund certain federal agencies, including the U.S. Dept. of Housing and Urban Development (HUD.) Now the longest in U.S. history, this shutdown threatens to create hardships for subsidized housing owners who rely on rental assistance contracts with HUD which cover a portion of tenants’ rents, and the tenants who rely on these contracts to help them afford their housing.

In New Jersey, more than 62 HUD contracts have either expired or are set to expire by the end of February. The contracts support 2,952 rental homes for seniors, people with disabilities, and the lowest income families in New Jersey.

On January 23, 2019, volunteers across New Jersey participated in NJCounts 2019, the state-wide point-in-time count of the homeless.  It is feared that an ongoing shutdown may add to the number of individuals and families experiencing homelessness who were counted earlier this week.

Across the U.S., more than 1,700 HUD contracts have either expired or are set to expire by the end of February. Between December 1, 2018 and January 15, 2019, 702 contracts expired. Another 1,029 are set to expire by the end of February.

These contracts support 59,116 rental homes for seniors, people with disabilities, and the lowest income families. The programs include Section 8 Project-Based Rental Assistance (PBRA), Section 202 housing for low-income seniors and Section 811 housing for people with disabilities. All three programs serve some of the most financially vulnerable individuals and families in the country.

The average annual income of renters relying on Section 8 PBRA, Section 202, and Section 811 for stable, affordable housing is $12,505, $13,349, and $11,459, respectively. They cannot afford their housing without the assistance provided by these rental contracts.

Owners without income from these rental assistance contracts need to rely on their reserve funds to cover ongoing operating expenses, such as mortgage debt payments, maintenance, and property management. The extent of these reserves and how long this shutdown will continue are unclear. Owners, however, cannot operate their buildings without income from the rental contracts indefinitely.

HUD is running out of funds for key programs and is sending letters to Section 8 property owners and other landlords that receive rental assistance asking them to use their reserves to cover any shortfalls, a stopgap measure that does not provide stability for tenants.

The partial government shutdown is the longest in U.S. history and, as of this writing, there appears to be no end in sight. Congress and the Administration must act immediately to fund HUD and avoid the potentially disastrous consequences of an even longer shutdown for both property owners and tenants.

If the shutdown is not resolved by the end of February, HUD will be running dangerously close to exhausting all of its accounts, causing uncertainty about the potential to continue serving millions of low-income households. In addition to the impacts on government programs and the people they serve, there are currently 800,000 furloughed federal workers, 450,000 of whom are required to report to work without pay.

The government’s failure to meet its financial obligations to HUD-assisted property owners and tenants constitutes a severe breech of the trust required to maintain current and future public-private partnerships. Secretary Carson has consistently promoted such partnerships as the ideal means of delivering housing assistance. If the Secretary is sincere in his beliefs, he should demand unconditional and immediate funding of the HUD budget.

Enterprise Community has joined with affordable housing stakeholders and partners across the country in calling on Congress and the Administration to end the government shutdown and pass full-year spending bills that provide strong funding for affordable housing and community development.

On January 21, The New York Times reported, “Shutdown’s Pain Cuts Deep for the Homeless and Other Vulnerable Americans.” Families who have been waiting years for federal housing assistance received the crushing news that while they have recently been approved for federal housing vouchers, the hope of a new home is on hold until the shutdown ends.

“If the shutdown continues, all these organizations will be left having to consider a spectrum of bad to terrible options, including staff layoffs and, in the worst-case scenario, evictions,” said Diane Yentel, president of the National Low Income Housing Coalition.