House Democrats investigate HUD as shutdown threatens affordable housing

Housing And Urban Development Department Secretary Ben Carson Testifies To
Housing and Urban Development Secretary Ben Carson testifies on Capitol Hill in 2017. Copyright Alex Wong Getty Images file
By Suzy Khimm and Laura Strickler and Daniel Barnes and Ben Kesslen with NBC News Politics
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One HUD employee said the agency took "a shrug of the shoulders kind of approach" to protecting low-income Americans from the shutdown.


House Democrats are using their new oversight authority to investigate the Department of Housing and Urban Development's management of the shutdown, as questions mount about HUD's failure to renew low-income housing contracts for more than 1,000 properties across the country.

"HUD knew for months about this impending deadline to renew the contracts, but for some reason they failed to take proper action in advance of the shutdown," said Rep. David Price, D-N.C., the incoming chairman of the House appropriations subcommittee on transportation and housing, in a statement.

"I am seeking detailed explanations from HUD officials about this failure and how they will mitigate the consequences, and I will call a hearing if necessary."

HUD told NBC News on Monday that about 1,150 contracts under a Section 8 program known as Project-Based Rental Assistance had lapsed. The program subsidizes rent and utilities for 1.2 million households, including families with young children, the elderly and the disabled.


The Trump administration estimates that about 500 more contracts are scheduled to expire this month and 550 in February unless the government reopens. The expiring contracts, which cover about 52 families apiece on average, have raised fears that landlords will not have money to repair and maintain the properties where tens of thousands of families live, and that low-income tenants could face eviction.

Administration officials said they were working assiduously to protect the program.

"HUD is leaving no stone unturned and using every resource Congress has provided the agency to make certain its rental assistance programs continue to operate with minimal disruption," Jereon Brown, spokesman for HUD Secretary Ben Carson, said in a statement.

"Secretary Carson urges Democrats to act swiftly and present an acceptable bill to the president so that HUD can continue its mission to provide safe and affordable housing to those in need," he added.

While some effects of the shutdown are inescapable, there has been growing criticism inside and outside of HUD that the department should have been better prepared to contain the fallout.

"Were the impacts fully anticipated, and was there the right level of concern given to these issues?" asked a HUD employee who works in a California field office, who asked not to be identified as he was not authorized to speak to the press. "It was more of a shrug of the shoulders kind of approach."


"Who was in charge?" asked one House Democratic staffer, who asked not to be identified as he was not authorized to speak on the record to the press. "If you thought you were going to have a problem, it should have gone up the chain."

The potential problem with the expiring contracts became clear in early December, when Congress passed a two-week stop-gap budget, said Jenny Hatcher, a 30-year HUD veteran who works in the department's Chicago multifamily office, which helps run the rental assistance program.

Hatcher, a union member, was not aware of any plan for handling the expiring contracts before the shutdown. With 95 percent of HUD's staff now furloughed, "no one is home" at the department to manage the program, she said.

"During my tenure, I've been through several shutdowns, but nothing as chaotic and ill-prepared as this," said Hatcher, referring to the government as a whole.

The lack of funding and lapsed contracts are imperiling the basic health, safety, and well-being of vulnerable tenants, said Michael Gerber, president of the Housing Authority of the City of Austin, Texas, and a former HUD employee. His organization helps run these rental-assistance programs in Texas and Arkansas, including eight properties with contracts that have expired under the shutdown.

"Police and security patrols become one of the first things that go," said Gerber, who worries that plumbing problems, electrical hazards, and other dangerous living conditions could also go unaddressed.


Another affected property is Quail Park Village Apartments in Austin, which houses 142 low-income families. The property's contract with HUD was supposed to be renewed on Dec. 31, but because of the shutdown, Quail Park's management doesn't know when the contract will be renewed and if payments will cease.

Without HUD funds, "we'll see deferred maintenance, we'll see things not being able to be repaired," said Sheila Melton, asset manager for Heartland Realty Investors, which manages the property. Tenants won't be evicted, she said, but residents "may find their quality of housing to be compromised a little."

Melton and Gerber don't blame HUD for the situation. "They made a good-faith attempt to try and anticipate immediate needs. Now this has dragged on, and we are getting to a deeper level of impact that's hard to plan for," Gerber said.

But others believe the administration could have better mitigated the impact of the shutdown. HUD's rental assistance program had received $400 million in funding on Oct. 1, a sum known as "advance appropriations" designed to ease the transition between budgets and fiscal years.

There's no immediately apparent reason for HUD to have used that stop-gap funding earlier, so it could have been used — at least in theory — to fund the expiring contracts, according to Democratic Hill staffers, housing advocates and budget experts.


Shortly before the shutdown began, HUD assured Ellen Lurie Hoffman, an affordable housing advocate, that a skeleton crew of employees would continue to process contracts due to expire — a step that would require having adequate funding in place.

"They said January renewals should be in process," said Hoffman, federal policy director for the National Housing Trust, an advocacy group that owns HUD-funded properties, referring to notes from her Dec. 21 conversations with HUD. "Everyone was very confident that funding should be available."

But when HUD revealed this week that 1,150 contracts had already expired — with more to come if the government remains closed — it said the lapses happened "because funds were not obligated" prior to the shutdown and that the agency was "determining whether we have any available funds" to renew the agreements, Brown said on Monday in a statement to NBC News.

The news came as a shock to the House Democratic staffer, who called HUD last week to check on how the shutdown was affecting the rental assistance program.

"If there isn't money there, then where has the advance appropriations been spent?" said the staffer. "The reason we do the advance [appropriations bill] is to make sure there is a buffer for at least the first quarter...what happened?"


While contracts have lapsed during previous shutdowns, the scale of the problem is significantly bigger this time around, housing advocates and Hill staff members say, and it will continue to grow if the standoff persists and more contracts expire.

"The scope and potential duration of this are different," said Hoffman, who believes "something went wrong, and we don't know exactly what that was, but the repercussions are really severe."

HUD did not answer NBC News' questions about why it had not renewed the expiring contracts or whether it had spent the advance appropriations funds.

Housing industry groups, advocates and other affordable housing professionals were hoping to get more answers from HUD on Tuesday afternoon, when they had a call scheduled with a veteran staffer.

But at the last minute, HUD pulled out of the conference call — which had about 100 people on the line, according to Hoffman, who helped organize the call — after higher-ups at HUD decided not to authorize its staff member's participation, said Hoffman and other participants. HUD did not answer NBC News' questions about the call.


"People really don't know what is going on," said Michael Kane, executive director of the National Alliance of HUD Tenants, an advocacy group. "No one really knows what happened in December, and who, if anyone, was responsible for this fiasco."

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