The Government Shutdown: How It Affects Landlords and Tenants

(Note: After this article was written, the U.S. government reopened on Monday 1/28/2019 after a 35-day partial shutdown)

What The Government Shutdown Means for Property Managers of HUD Properties

Federal contracts for more than 1,000 government-funded properties housing low-income renters have expired, according to Jereon Brown, a spokesman for the Department of Housing and Urban Development (HUD), with 500 more contracts expiring in January 2019, and an additional 550 in February 2019, if the shutdown continues. This is because Housing and Urban Development employees responsible for transferring government funds are furloughed… potentially leaving landlords without compensation and low-income families without monthly financial assistance.

Approximately 1.2 million households live in public housing units. Some Section 8 voucher recipients receive 30 to 40 percent of their income in rent each month, with the remaining rent paid to the landlord by HUD. Should the government continue its hiatus, Section 8 voucher holders across the U.S. could lose their assistance, face massive rent increases, or possibly be evicted.

HUD has released a contingency plan on how they will proceed during the lapse in government.
Here are HUD FAQs listed in their plan:

Q: Will HUD make payments under Section 8 contracts, rent supplement, section 236, or PRACS where there is a permanent or indefinite authority or multi-year funding?
A: For Section 236’s, interest reduction payments will continue based and Rent Supplement payments from prior-year funding and recaptures will continue. The Department will make payments under Section 8 and Project Rental Assistance Contracts where there is a permanent or indefinite authority or multi-year funding, or where there is budget authority available from prior-year appropriations or recaptures. This includes processing Section 8 and PRAC renewals for expiring contracts and processing amendment funds for non-expiring Section 8 contract renewals.

Q: Will HUD staff continue to approve HUD-9250s for releases of residual receipts to offset monthly voucher requests for Section 8 housing assistance payments?
A: Yes.

Q: Will Section 8 waiver requests be processed?
A: For the most part, no. However, for properties that have received designations by HUD as troubled assets through its rating of insured and assisted assets, minimal staff will be available to provide necessary oversight to ensure that actions can be taken to resolve imminent threats of claim or abatement.

Q: Will Performance Based Contract Administration (PBCA’s) continue to perform their duties?
A: Yes, PBCA contracts are funded at this time and they will continue their services as long as appropriated funds remain available.

Q: Will HUD continue to process tenant certifications and electronic voucher payment requests?
A: Yes. Tenant Rental Assistance Certification System (TRACS) will be available to process vouchers, provided that appropriate funds are available.

Q: Will HUD continue to process requests for contract renewals during the shutdown?
A: HUD will continue to process contract renewals to the extent that there is budget authority available from prior appropriations or recaptures.

Q: Will HUD continue to operate the Multifamily Housing End User Support Help Desk during the shutdown?
A: Yes. The Multifamily Housing End User Support Help Desk will respond to questions from users for the following systems:

• Development Application Processing System
• Integrated Real Estate Management System
• Tenant Rental Assistance Certification System