Sequestration to hit housing’s most needy residents


When legislators walked out without settling sequestration, they also walked out on hundreds of thousands of needy households and housing industry related jobs.

Washington’s failure to act likely won’t sink the housing recovery, but it could put a dent in a host of special housing relief efforts.

U.S. Senate Committee on Appropriations testimony, from U.S. Department of Housing and Urban Affairs (HUD) Secretary Shaun Donovan, puts it bluntly:

“These cuts would be deeply destructive, would damage the economy, and would harm numerous families, individuals, and communities across the nation that rely on HUD programs.”

What is ‘sequestration?’

Sequestration is a process that automatically cuts the federal budget across most departments and agencies.

Congress included the threat of sequestration in the Budget Control Act of 2011 as a way to encourage compromise on deficit reduction efforts.

Not surprisingly, Congress couldn’t agree on a budget by the deadline set in the Budget Control Act, so mandatory budget cuts were scheduled to go into effect on January 2, 2013.

Congress stopped the cuts by passing the American Taxpayer Relief Act (the fiscal cliff deal) on January 2.

This law pushed the budget cuts back until March 1, 2013 – today – but most federal legislators closed shop yesterday and went home.

Absent some frenzied 12th-hour action today, sequestration will force President Obama to begin to dole out $85 billion in funding cuts. As usual, inept federal bureaucracy will cause the already hardest hit to suffer most.

According to Secretary Donovan, here’s the long list of what’s at stake in the housing market:

Housing assistance programs to suffer

• About 125,000 individuals and families, including elderly and disabled individuals, could lose assistance provided through the Housing Choice Voucher (HCV) program (formerly known as “Section 8″) and be at risk of becoming homeless. The HCV program, which is administered by state and local public housing agencies (PHAs), provides crucial assistance to families and individuals in renting private apartment units.

• Some 75,000 fewer households will receive foreclosure prevention, pre-purchase, rental or other counseling though HUD housing counseling grants. Counseling is crucial for families recovering from the housing crisis and trying to prevent foreclosure, refinance their mortgages, avoid housing scams, and find quality, affordable housing.

• Sequestration cuts to HUD’s Continuum of Care could also result in more than 100,000 formerly homeless people, including veterans, being removed from their current housing or emergency shelter programs, putting them at substantial risk of becoming homeless.

• Cuts to the Housing Opportunities for Persons with AIDS program would result in 7,300 fewer low-income households receiving permanent and short-term supportive housing assistance, including rent or utility assistance.

• Cut’s to HUD’s Office of Healthy Homes and Lead Hazard Control and related HUD programs addressing housing-related health hazards would put some 3,000 kids at risk.

• Sequestration cuts would mean that more than 900 Native American families would lose access to housing loan guarantee programs.

• Sequestration unleashed will force public housing agencies (PHAs) to defer maintenance and capital repairs to public housing, leading to deteriorating living conditions and, over the longer term, risking the permanent loss of this affordable housing that serves 1.1 million of the nation’s poorest residents.

• PHA cuts will trickle down to local communities. PHA spending on maintenance and capital repairs results in expenditures for goods and services throughout local economies.

• HUD’s HOME Investment Partnerships program will loose out on building and rehabilitating 2,100 affordable housing units for low-income families, with a similar down stream affect on the local economy.

Impact on housing-related jobs

• Sequestration also comes with significant cuts to community development funding for public services, facilities, and infrastructure improvements nationwide. These funds improve local communities, support jobs for construction workers and others who build or rehabilitate public facilities, infrastructure, and housing.

Community development related funding over the past decade has sustained 400,000 jobs in local economies across the country. In 2012 alone, nearly 21,800 permanent jobs were created or retained using CDBG funds and more than 32.5 million people benefitted from CDBG funded public facilities activities.

• Long overdue appropriations approved weeks ago for communities suffering Superstorm Sandy devastation will lose some funding. Again, jobs hang in the balance.

• HUD’s own staffing face furloughs or other personnel actions leaving the agency less able to provide services in a wide range of areas, such as Federal Housing Administration mortgage insurance and sales of FHA-owned properties.

About the author

DeadlineNews.Com's Publisher, Executive Editor and Founder, Broderick Perkins, was the first real estate journalist to manage a daily newspaper's online real estate section. He parlayed more than 30 years of old-school journalism into a digital real estate news service offering "News that really hits home!" -- the Silicon Valley bootstrap, DeadlineNews.Com. Network with Broderick Perkins on LinkedIn, FaceBook, Twitter, Google+ and the Bloomberg Business Exchange.

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