Moral bankruptcy: Part 2, the camel’s back
[Continued from yesterday’s Part 1.]
Yesterday we saw that HUD not only is under-funding Section 8 contracts, it is using the holdback of even the partial payments as a coercion to compel owners to sign new amendments acknowledging that HUD is doing so.
Are you thinking what I’m thinking?
A system that depends on the government honoring its obligations breaks when the government breaks its word. NAHMA quite rightly points first at the Administration:
At the very root of this problem is insufficient funding for project-based Section 8 contract renewals. The Bush Administration’s insufficient budget requests for project-based Section 8 and unwillingness on the part of the Office of Management and Budget (to date) to formally request additional funding for Fiscal Year 2008 threatens to wreak havoc on the program.
Willful refusal to request enough money is a reprehensible, dereliction of duty. It’s not for the treasurer or the accountant to decide which bills should be paid.
Historically, the Administration has not requested enough money from Congress to ensure HAP payments will be made on time and in full. For FY 08, the Administration has actually requested a cut for contract renewals.
The shamelessness of this is appalling. There’s a quality of willfully denying reality, as if programs we dislike can be disobligated out of existence.
This is particularly troubling as the start of Fiscal Year 2008 approaches on October 1 and a temporary continuing resolution [CR] to keep the government operating is looming.
Under a CR, everything is level-funded – you get a ratable share of whatever you got last year. So if a program is under-funded, a CR simply continues the starvation diet.
You can have more of what you had last week
Nor is Congress blameless:
NAHMA also remains concerned and disappointed by Congress’ response to date.
Congress has known for years that HUD has not been making timely HAP payments—as evidenced by conclusions of GAO reports, constituent contacts from agents and owners, and House Committee report language which accompanied the last two HUD appropriations bills.
Despite projected shortfalls for FY 08 HAP renewals which were voiced in Senate appropriations hearings in early 2007, funding for project-based Section 8 contract renewals will fall well short of the actual need. While the House appropriations bill increases funds above the FY 07 level, it will not be sufficient to fully fund the 12 month renewals. The program fares worse under the Senate bill, which adopted the Administration’s proposed cut.
The situation is disgraceful.
It is possible that funding for project-based Section 8 contract renewals will be increased in the final appropriations bill—whether it’s the stand-alone Transportation-HUD bill or an omnibus funding measure which combines several different spending bills. Another vehicle for increasing funds could be an emergency supplemental appropriations bill, which provides money for the
You might think this is a temporary crisis … but it’s not.
HUD began using the new short-term funding language for contract renewals in the 4th quarter of FY 2007 (i.e. July, August, and September of this year). The Department intends to continue using this language indefinitely.
Let the government get away with shorting its contracts once, and there’s no reason it won’t do it again and again.
NAHMA believes the project based Section 8 program is at a crossroads. It is well past time for Congress and the Administration to stabilize funding for this important program and to ensure HAP payments are made on time and in full.
No money in any direction
Myself, I’d call it a last ditch.
Years ago, in one of the many recessions I’ve worked through, I recall learning the hard way (for a client, not for myself!) about bankruptcy issues. Drummed into my head was the definition of bankrupt, which included “admitting in writing an inability to pay its debts.”
That’s where we are today – HUD is not only admitting this in writing, HUD is trumpeting it:
According to HUD, the benefits of the new contract renewal language are two-fold.
1. It allows the Department to keep some money flowing to owners when funding for the full contract term is not available.
2. It notifies owners about the status of funding for the contract.
[…]
c. HUD will provide additional funding for the remainder of the Renewal Contract term subject to the availability of sufficient appropriations. 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.
There it is, an unambiguous statement, what my litigator friends would call an admission against interest. As NAHMA puts it:
The new short-term funding language in the HAP renewal contracts only underscores the importance of fully funding HAP renewals for the full 12 month term (or 12 month annual increments for multiyear contracts). Our advocacy efforts will continue to insist on these points.
· Owners and agents should not have to resort to terminating their HAP contracts, testing the courts on eviction of assisted tenants, providing routine opt-out notices “just in case” the federal government fails to follow through on its commitments, or trying to make HUD change its contract language (which the Department is extremely unlikely to do).
· Likewise, we believe Congress should amend the enhanced voucher statute to make these tenant protections available when HAP payments stop for any reason (especially due to the government’s failure to pay owners) and also to provide these vouchers to tenants even before the end of a one year notice period.
[…]
NAHMA believes the time is long overdue for Congress to hold formal oversight hearings on the timeliness of project-based Section 8 HAP payments, with particular emphasis on the true funding need for FY 08. Furthermore, if the Administration will not submit a revised funding request, Congress should use its own best judgment to increase funding for project-based Section 8 HAP contract renewals.
Simply breaching moral obligations isn’t a sexy scandal like salacious staffers, dubious donors, or signals in bathroom stalls – but it’s much more important. Several hundred thousand families are at risk of imminent harm, to say nothing of owners and properties. This is not hyperbole.
These and more at risk
On the Section 8 issue, HUD is morally bankrupt, and Congress is complicit.
NAHMA believes HUD will need an additional $1.2 billion to fully fund (for 12 months) the FY 07 renewals, and an additional increase above the FY 08 request of about $2 billion is necessary to fully fund the 12 month terms of contract renewals in FY 08.
I’ve previously written about the breakdown in the public housing delivery system. Now the HUD assisted housing system is breaking down.
If HUD were a car, this is what it would look like
NAHMA strongly urges all members to contact their Senators and Representatives as soon as possible and tell them to find the necessary $3 billion in appropriations to fully fund project-based Section 8 HAP renewals for the 12 month terms of FY 07 and FY 08 contracts.
Resolutions and pleas are not enough. Reason has been ignored, brushed aside, or met with unilateral edicts.
Twenty years ago, I sued the Federal government on a point of principle. This crisis has been slower in coming, a gradual dislocation rather than a sharp blow, but the effect is the same. The stakeholders – owners and residents – have common cause here. Sometimes litigation is the only way to hold government accountable.
It’s time to get out the litigators and sue.
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