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Shutdown Jeopardizes Housing for 1,578 Low-Income Hoosier Households

15 Jan 2019 7:16 PM | Anonymous

As the longest government shutdown in U.S. history continues, more than 1,500 units of federally assisted housing supporting low-income seniors, people with disabilities, and families with children throughout Indiana are in jeopardy. As outlined in the chart below, Prosperity Indiana has noted the 1,578 units of Project-Based Rental Assistance (PBRA) contracts that expired in December or stand to expire this month or next as the Department of Housing and Urban Development (HUD) is unable to renew them and is scrambling to fund rental assistance in the short-term without an end in sight to the federal shutdown.

How did we get here?

National advocates had previously received word from HUD that the agency had the budget authority to renew PBRA contracts through January. As a Jan. 6 Washington Post article revealed, however, that was not the case. The article quotes HUD spokesman Jerome Brown as saying that “[HUD] budget and contract staff are ‘scouring for money’ to figure out how to fund the contracts on an interim basis.” The piece outlined how 1,500 landlords received letters from the agency on January 4 in order to try and prevent the eviction of tenants after certain HUD officials had allegedly not realized had expired on Jan. 1. Those letters apparently outlined what activities will take place during the first 30 business days of the shutdown and how to prevent the eviction of thousands of tenants who live in homes covered by the Section 8 Project-Based Rental Assistance program or Section 202 (for the elderly) and Section 811 (for people with disabilities) programs.

According to the National Housing Trust, HUD shared that 1,150 contracts were not renewed in December affecting approximately 70,000-85,000 low-income households. Additionally, HUD has indicated that will be unable to renew 500 contracts that expire in January, affecting another 30,000-40,000 low-income households.  While HUD has expressed it is working within currently obligated funds at its disposal to cover most rental assistance payments, but if the shutdown continues, 550 more contracts are set to expire in February without HUD in a position to renew these contracts or obligate funds. HUD has indicated that Section 202 owners are expected to rely on their reserves, but advocates have concerns that budget reserves are not sufficient to meet the rental payments. HUD has also stated it plans to use funds carried over from prior years to fund these contracts for December and January, but beyond that, the agency may have to figure out a way to fund these contracts on a short-term basis.

In rural housing, the USDA shutdown plan indicates that direct loan programs will not issue any additional funds, including Section 504, 514, and 502.  Further, the guidance noted that banks are unlikely to close on these loans until the government shutdown ends, delaying homeownership. At present, it is not clear if USDA will continue paying rental assistance or vouchers for low- and very low-income tenants.

Click here for the NLIHC breakdown of the shutdown’s impact on major housing programs.

Congressional Call to Action

Prosperity Indiana is urging Congress to pass clean FY19 Transportation Housing and Urban Development and U.S. Department of Agriculture budgets so that thousands of extremely low-income families, seniors and the disabled are not denied critically needed housing assistance. Short-term renewals are destabilizing for private owners of PBRA properties. They limit the owners’ ability to supportive services to their tenants, delay property rehabilitation, and could potentially increase rent burdens on fixed-income populations. The average income of a household receiving PBRA is less than $12,000 and 56 percent of these households have someone who is elderly or someone with a disability, so they can certainly not afford to shoulder this burden imposed by the shutdown. 

Guidance for Owners

HUD has shared that owners experiencing delays in payments can request access to replacement reserves, but should not do so without approval. Those requests should be directed to the Director of the Multifamily Hub or Satellite office, all of whom should be working as essential employees.

Prosperity Indiana
1099 N. Meridian Street, Suite 170
Indianapolis, IN 46204 
Phone // 317.222.1221 
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