Slow mugging in broad daylight
Periodically, in the ad slots on my Red Line subway ride to work, the
One thinks, how incredibly low, to welsh on an obligation to your offspring.
Remarkably, something similar is happening in affordable housing, all across the country, and yet virtually no stories are written about it. Thousands of properties, perhaps millions of households, are being deprived of essential subsidies. Yet, aside from trade publications and email alerts, which report the news with a weary factualism, everyone is silent.
Who is the culprit? The Federal government, and particularly HUD. I’ll let NAHMA, the National Affordable Housing Management Association, explain it:
This afternoon [August 25 — Ed.], HUD held a conference call with industry representatives to update us on the HAP situation. A summary of the key points follows.
Status of payments for FY 2007 (
HAP is Housing Assistance Payments contract. It’s an agreement between HUD and an owner whereby the owner rents to Section 8 eligible residents, and charges them 30% of their income for rent, with the balance to be paid by HUD subsidy. One would expect this to be a contract — you know, binding on both parties?
And you each understand your respective obligations under this contract?
But all government contracts have take–it-or-leave-it fine print: subject to annual appropriations. So if HUD lacks appropriated funding to pay for its obligations, HUD just — doesn’t.
Oh well, reverend Morrison…in your policy…in your policy…(he open the drawer of the filing cabinet and takes out a shabby old sports jacket; he feels in the pocket and pulls out a crumbled dog-eared piece of paper then puts the coat back and shuts the filing cabinet)…here we are. It states quite clearly that no claim you make will be paid.
Oh dear.
You see, you unfortunately plumped for our ‘Neverpay’ policy, which, you know, if you never make a claim is very worthwhile … but you had to claim and, well, there it is.
“You had to claim and, well, there it is.”
Instead, HUD sort of apologizes:
HUD continues to process the funds for unexpired annual contracts. Per HUD, basic annual funding should be received by PBCAs (and hopefully owners) next Friday.
PBCAs are property-based contract administrators, the intermediary entities that actually review the owners’ paperwork and confirm the payment amounts.
HUD says funding for these contracts will be available through their anniversary date. In the case of unexpired multi-year contracts, owners will receive notification letters about the amount of funding available for a specified period of time.
Translation: HUD will tell you now how much it’s cost to short you in the future.
That doesn’t sound like my best friend.
For contracts that expired in the 4th quarter of FY 2007 (i.e. July, August, September of this year),
The Federal government runs on a September 30 fiscal year.
you will have to sign a new contract that includes HUD’s new short-term funding language.
There’s a statute, you see, that requires owners seeking to opt out of HUD contracts to give ample notice (like a year). There’s no ability to opt out if HUD, after you have declined to give the notice, declines not to fund.
I’m from the government and I’m here to explain it to you
Please recall from last week’s report this is the language HUD’s lawyers believe is necessary to continue providing short-term funding on contracts when funds for the whole term of the contract are insufficient.
Translation: If we don’t get you to waive your right to sue us for stiffing you, you might sue us — and we can’t have that.
The HAP contract forms are available as attachments to the Section 8 Renewal Guide and posted to HUD’s website at: http://www.hud.gov/offices/hsg/mfh/exp/guide/s8renewpgchg80907.pdf. These documents should begin circulation next week. They will have to be signed by owners, executed by PBCAs and returned to HUD. HUD states funding will be available once the contracts are executed.
Translation: If you need us to fund you, you have to agree we can de-fund you in the future.
There’s only one catch …
The Department is working to inform PBCAs about the new documents and procedures associated with contract renewals for this quarter and beyond.
As NAHMA reported last week, a new Section 2 was added to the project-based Section 8 contracts: Basic Renewal Contract One Year Term; Basic Renewal Contract Multi-Year Term; Renewal Contract Mark-Up-To-Market; Preservation Renewal Contract; Interim Full Mark-to-Market Renewal Contract; Interim Lite Mark-to-Market Renewal Contract; Watch List Renewal Contract. The substance of this new section is very similar across the board, but there are some modifications to the wording based on contract type.
For example, Section 2 of the new Basic One-Year Term contract reads:
You’d think that word ‘obligation’ means ‘promise to pay,’ wouldn’t you?
Worth the paper it’s written on?
Translation: you understand that we don’t pay if we don’t have the money.
When such appropriations are available, HUD will obligate additional funding and provide the Owner written notification of (i) the amount of such additional funding, and (ii) the approximate period of time within the Renewal Contract term to which it will be applied.
Translation: If we get some money, we’ll give it to you.
How came HUD to this ridiculous pass? By asking for too little money. HUD went up to Capitol Hill with a variety of stories and explanations about how much it would need. Congress was skeptical, and gave HUD more than it requested. Now that money has run out. So you’d think that HUD, with fiscal year 2008 looming, would ask for a higher figure, and maybe something to correct the current year’s shortage.
You’d be wrong.
“Wrong again buffalo breath.”
Project-Based Section 8 Funding for FY 2008 (
NAHMA remains concerned about likely shortfalls in the project-based Section 8 account for FY 2008.
Since the new Section 8 contract renewals give owners no recourse should HUD short the funding, what incentive has HUD not to short the funding?
Some estimates suggest the Administration’s request could fall $2 billion short of an actual $8 billion need.
That is, 25% less than required.
In early 2007, Senate Appropriations Committee principals announced they believed the Administration’s estimate was $1.2 billion short.
Whew! Only 15% less than required!
Actually, not fast, and not relief
NAHMA and industry partners are pressing HUD to submit a revised, accurate funding request to Congress. We are also in frequent contact with key congressional committees about the need for congressional oversight on the late HAP problem (and the inadequate funding which we believe is a root cause of the HAP interruptions) and the need for a substantial increase in project-based Section 8 funding for FY 2008.
Systematic under-funding is outrageous, a word I very seldom use. It was outrageous when it first happened, it has been outrageous each time it has been repeated, it remains outrageous, and it is becoming even more outrageous. One runs out of outrage, yet the conditions persist.
After all, you stop being outraged
A few weeks later, the Senate acted — more or less. As NAHMA reports it:
This morning [September 12 — Ed.], the Senate approved its Transportation-HUD Appropriations bill by a vote of 88-7.
At this time, it does not appear the Senate increased actual funding for the project-based Section 8 account, which continues to be a matter of grave concern.
Politic understatement.
Senator Russell Feingold (D-WI) offered S. Amdt. 2848 to require the Secretary of Housing and Urban Development to submit certain budgetary information to the Congress. The Feingold amendment calls for increased accurate reporting on the costs of full funding for project-based Section 8 contract renewals.
Senator Feingold
That would seem a necessity, wouldn’t it? You’d think it would not be necessary for the Congress to require this of HUD.
As next steps, NAHMA will seek technical corrections to this language in conference committee to tighten the reporting requirements on HUD.
Why, it’s almost as if they didn’t trust HUD!
We will also continue to push for a requirement that HUD request supplemental appropriations to fully fund contract renewals.
Additionally, Subcommittee Ranking Member Kit Bond (R-MO) made a floor statement on Monday calling on HUD and especially OMB to “get serious” about funding this account. He warned OMB “you cannot walk away from this problem” and called on them to provide necessary funds through a budget amendment, as part of a CR [Continuing Resolution — Ed.], or through emergency supplemental legislation. Bond’s remarks follow for your review:
Senator Bond
I thought we stopped doing this eighty years ago
I’ve always liked Senator Bond, as in my experience he has typified the old-school Senate: bipartisan, issues-oriented, practical, the same man in the majority as in the minority.
None of us wants to see that result.
Tactful, too.
HUD has been unable to fund in a full and timely fashion many of these contracts during fiscal year 2007, and this problem is only going to get worse in 2008 to the extent that HUD could have a shortfall in its budget of as much as $2 billion or more which is needed to meet its obligations to these contracts in the next fiscal year. If we don’t act in this bill, we are going to see a $2 billion shortfall. Think of the number of people who would be put out on the street if we don’t solve that problem. It is unacceptable.
But you took out our no-unacceptable-actions policy …
But clear and direct.
I know this program enjoys wide support, and I expect and hope that OMB will provide the necessary funds for the program through a budget amendment or as part of a continuing resolution or through emergency supplemental legislation.
To my good friends at OMB, I say: You cannot walk away from this problem. This problem is real. It must be addressed or we are going to see a tremendous tragedy for the Nation’s lowest income and most needy housing residents.
While I am pleased with much of the bill, especially spending in critical programs, I have to say that we are on a collision course with the White House on the spending levels contained in this bill. Both sides are going to have to make adjustments. Some of the adjustments we have outlined are absolutely essential, and we cannot lose the benefit of the positive investments we have made in this bill. This is a very important bill. It is a very difficult bill because we have some extremely serious challenges to face. We understand the need to be sensitive to the budget needs, but there are real pressing human problems we must meet in this bill.
Unfortunately, they are not yet addressed.
The House and Senate must now name conferees to work out the differences in the bills.
I wish I could be optimistic. I am not.
Not looking good, bro
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