CARH'S BROADCAST EMAIL - Legislative and Regulatory Alert
CARH Broadcast Email—Legislative and Regulatory Alert
January 9, 2019
Partial Shutdown of Government—Week Three
As CARH members know, portions of the federal government have been shut down since December 22nd when the President and Congress could not reach agreement on border security issues or on a new Continuing Resolution (CR) for several agencies that had yet to receive appropriations. While 75% of the government remains open due to Congress passing full year funding measures for several agencies, 25% of the government, covering much of the federal government’s domestic, non-military functions across nine agencies and departments, is closed.
Closed departments include the Departments of Agriculture (USDA), Housing and Urban Development (HUD), and Treasury. In CARH’s December 27th Broadcast Email, we informed members that should the shutdown be prolonged, there would be an impact on a variety of services provided by the agencies, including payment of Rental Assistance (RA) and Section 8 rental subsidy by Rural Development and HUD, as well as closings and over all functioning of affordable housing programs. As we approach the end of week three of the shutdown, the following outlines current program operations as we know them:
Rural Development (RD)
According to officials at RD, all RA payments through January have/will be paid. They are able to do this because the CR expired on December 21 and RA received in January is actually for December payments. Many CARH members have contracts that were renewed in the first three months of the new Fiscal Year (FY). In those instances, while payments have been made for Oct-December, under procedures of CRs, the Office of Management and Budget (OMB) allocates based on spending rates during the duration of the CR, not for the full year of the contract. Should the shutdown continue through the end of January or beyond, CARH members need to be aware that RA payments will not be made, because there was only a three month allocation of funding. The last time that there was a lapse in funding for RA was in FY 2015. At that time, the Agency allowed money to be taken from reserves and other servicing agreements were put in place. The problem today is that there are a limited number of employees working in the national office of RD and no one in the state offices. This means that there is no one to sign-off or approve a request. CARH has been in touch with officials at the Agency who have been designated essential personnel and are working. They are aware that some procedures need to be put in place, but nothing has been officially issued or sent to CARH and or industry stakeholders.
Anyone who is in the middle of a preservation, transfer, or new construction that will require the use of Section 514, Section 515, or Section 538 funding and the stakeholder did not close before the December 21st CR expired, you are in a holding pattern because no one at RD can issue conditional commitments or provide funding. As noted above, funding has lapsed and state offices are closed. The Centralized Servicing Center (CSC) in St. Louis, Missouri is open and staff assigned to the CSC are working, which means that as soon as procedures can be approved and the shutdown resolved, automated payments can be processed relatively quickly.
Based on information we have received, between 1,000 and 1,500 assisted properties, including approximately 1,100 project-based Section 8 rental assistance contracts (PBRA) have not been renewed or are expected to receive no funding this month. The majority of PBRA contracts have been renewed, and funding is expected this month, and possibly in February. Beyond that is speculative at this time. It may be that even renewed PBRA properties will not see payments this month or timely payments. We understand HUD is working on a strategy for HUD PBRA or properties with HUD insured loans that have reserves under the owner or HUD control to utilize those reserves if a payment is missed. HUD is instructing owners to obtain prior approval and their January 4th letters to owners indicate that the HUD contact is Jen Larson (202) 402-7141, Jennifer.L.Larson@HUD.gov.
There are some HUD staff in the field offices and we recommend emailing the HUD staff (including the relevant Regional Administrator) if you have an emergency or a need to access reserves and if no response is received to contact Ms. Larson. We understand that voucher programs are facing similar limitations and recommend you contact your local housing authority for questions about HUD Housing Choice Vouchers.
At this time House Democrat leadership is moving a series of bills to reopen all agencies through the end of the fiscal year (including USDA, HUD, and Treasury) and Homeland Security into February. The President has said he would oppose such bills and the Senate Republican leadership has not agreed to vote on those measures. Further discussions among House and Senate leadership and the White House have been reported. However, there is no clear path to resolution at this time. It is important for your representatives in the House and Senate to hear your concerns. We are communicating the impacts we are already seeing and if you want to pass along your concerns or specific problems you are experiencing, please email the CARH staff at email@example.com. But, even more importantly, please contact your Representatives in the House and your Senators and let them know we need USDA, HUD, and Treasury reopened while the political issues are resolved, separately. Click here for contact information for your Senators and click here for contact information for your Representatives.