The impact of the government shutdown on affordable property operations is not likely to be immediate or widespread.
Nonetheless, the impact could be very serious for individual properties and the owners who manage them. Both the extent and severity of the impact will increase if a federal budget is not passed within the next four weeks.
Outlook:
In the short-term, the primary impact will be on properties that have contracts up for renewal or have issues that require attention from HUD staff. Longer-term, the availability of funds for all rental subsidy programs is uncertain.
The affordable housing industry is relying on the HUD FY2013 Contingency Plan for Possible Lapse in Appropriations issued on September 25, which indicates that prior year appropriations will be used to fund rental subsidy programs (incl. Section 8 and public housing), however, it remains unclear how much funding is available for tenant vouchers relative to project-based contracts and the potential effects of the shutdown on HUD’s ability to efficiently deploy the funds to the housing agencies that directly provide the subsidies to the properties.
Various sources, including housing authority executives, have informed us that all rental subsidies will be funded during the month of October but if a budget is not passed before November, they are not sure if funds will be available beyond October for any program — vouchers, PBS8 contracts or public housing operating subsidies.
What are we doing?
TCAM is monitoring ongoing events such as how subsidies are handled by housing authorities and other administrators and the potential impact on available funds in the event of a prolonged shutdown. To learn more about how the shutdown might affect your portfolio contact Steve Spall (sspall@tcamre.com) or Allen Feliz (afeliz@tcamre.com) at TCAM at (617) 542-1200.