The apartment industry has begun to feel the ramifications of the steep spending reductions known as the “sequester,” which took effect March 1, as local housing authorities send out notices to owners regarding possible rent reductions in the Housing Choice Voucher (HCV) program. Rent reduction is just one cost-saving strategy HUD continues to recommend to public housing authorities (PHAs) administering the program as part of a larger effort to address financial shortfalls (Notice PIH 2011-28). Additional measures include removing non-compliant families from the program, withdrawing vouchers that had been issued but not leased, ceasing all new leasing, stepped-up income verification efforts, review of utility allowances, stricter adherence to portability absorption rules and revisions of subsidy standards, among others.
The recent passage of the Continuing Resolution, which establishes government spending levels for the balance of the fiscal year, could further complicate matters. In mid-to-late May, it is expected that the federal housing agencies will provide PHAs with information on funding amounts for the rest of FY 2013; additional budget reductions could add stress to a number of affordable programs already affected by the sequester. Apartment owners should consider establishing regular communication with their local PHAs to be prepared for upcoming funding deficits.
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