Housing providers that get federal funding were thrown into chaos and concern this week over a memo from the Office of Management and Budget (OMB) declaring a federal funding freeze until programs were shown to comply with a raft of executive orders.
Late in the afternoon on Tuesday, Jan. 28, shortly before the order was scheduled to take effect at 5 p.m. ET, U.S. District Judge Loren AliKhan temporarily blocked the decision, delaying its implementation until Feb. 3. Legal challengers had said the freeze was not only disastrous for American families, but an illegal overreach restricting already-appropriated funds.
“It’s lawlessness. It’s utter disregard for norms, standards, and legality in a way that sends every single person who’s ever done anything in the federal sphere totally spiraling and spinning,” said Noëlle Porter, director of government affairs at the National Housing Law Project (NHLP), a housing law and advocacy center. “Because we know it’s illegal, but we don’t exactly know why, how, or where. And that’s a problem because we don’t exactly know from which angle to tackle it and how quickly we can do it.”
As of Wednesday, they don’t have to tackle it—at least not yet. Around midday, the OMB memo was rescinded, although White House Press Secretary Karoline Leavitt confusingly stated in a tweet that the funding freeze was not over, possibly referring to programs the administration did not conclude were in compliance with its executive orders. Later that day, District Court Judge John McConnell referenced that tweet and said that he plans to block the funding freeze.
The quick changes left advocates scrambling to react. “It’s so soon afterwards that we’re all sort of trying to understand what it means,” said Sarah Saadian, senior vice president of public policy and field organizing at the National Low Income Housing Coalition. Saadian expects that Leavitt’s announcement means the administration will “try again to withhold federal funds,” she added. “But for now, this is a victory for advocates and our congressional champions who pushed back really hard against a very harmful, extreme proposal from the Trump administration.”
For now, this is a victory for advocates and our congressional champions who pushed back really hard against a very harmful, extreme proposal.”
Sarah Saadian, National Low Income Housing Coalition
Before the memo’s recission, housing providers that receive federal funds, including public housing agencies and Continuums of Care, which distribute federal funding to homelessness service providers, spent a day or more scrambling to figure out if the order applied to them. Derek Antoine, executive director of Knox County PHA in Illinois, said his fellow directors of public housing authorities were spread along the spectrum of “slightly concerned to panic.”
A statement from OMB late in the day on Tuesday said rental assistance was not included, but did not clarify what fell under “rental assistance.”
Several PHAs and homelessness services nonprofits reported to other outlets, and to Shelterforce, that they were locked out of the federal payment processing system eLOCCS as of Tuesday, Jan. 28, even though the order was not supposed to take effect until 5 p.m. ET that day. This meant they had effectively lost access to their federal funds for all programs already. Courtney Guntly, CoC director of the Iowa Balance of State Continuum of Care, which disburses federal funds to homelessness service providers across the state outside of larger cities, says they were never told their programs were exempt from the memo, and they understood it was only public housing authority rental assistance funds, such as Section 8 housing vouchers, that weren’t covered. They remained locked out of eLOCCS until Wednesday around the time the memo was rescinded.
Researchers at Texas A&M University with a grant under the U.S. Department of Housing and Urban Development’s (HUD) Hispanic Serving Institutions Research Center of Excellence grant program received emails at 5:05 p.m. ET on Tuesday (despite the judge’s injunction) instructing them to cease all work on their grants to comply with the OMB memo. They received emails after the memo was rescinded on Wednesday telling them they could continue with their work. Professor Shannon Van Zandt says they are going to continue their research, but she worries the threats will return and she won’t be able to pay the students on the project, affecting their ability to stay in school.
Going forward, it remains unclear how the administration is going to assess whether programs already funded by Congress are in line with the president’s executive orders, and if it will try to use more targeted threats of withholding appropriated funding in order to change or cancel programs.
NHLP’s Porter said that although withholding appropriated dollars is unusual because “Congress doesn’t like to rescind its own funds,” it could earmark line items in the appropriations bill as ineligible for federal funding—such as a homeless shelter that serves trans youth, for example. She also noted the budget reconciliation process—which allows Congress to expedite consideration of specific spending, debt limit, and tax legislation—as another opportunity for defunding programs Republicans don’t like.
“It’s definitely a priority, and if they have the votes, reconciliation is absolutely an opportunity for rescission of funds,” Porter said. “The [Inflation Reduction Act] contained a bunch of green energy investments for multifamily developers and single-family homeowners . . . and that is one of the big targets to claw back all these greenification and resilience funds that have been spent so they can give their billionaire friends tax breaks.”
During all the uncertainty, one thing was very clear—timely federal payments are crucial for preventing a wave of homelessness across the country, and even temporary threats to that system could have substantial effects. “In Iowa, we’re pretty dependent on that federal funding,” said Guntly. “Without access to those federal dollars, there really is no homeless support system anymore.”
And regardless of whether the funding freeze recommences, Saadian said, the short-lived block had consequences. Amid the confusion about which of a host of crucial programs that rely on federal assistance (among them, older adults receiving meals on wheels and low-income folks getting funds to heat their homes) were affected, there was time for distrust to develop.
“I think maybe the bigger effect here is that it sends a terrible message to landlords who participate in HUD programs that they might not be able to rely on the federal government to be a partner to them, and that makes it harder to recruit landlords to participate in the Section 8 program. It really undermines the trust that’s needed between the federal government and landlords to make the Housing Choice Voucher program successful,” Saadian said.
“I don’t know if our landlords will be open to being that patient with us,” if funding ever gets delayed, Guntly worried on Tuesday.
“Advocacy takes vigilance,” Saadian said. “We will be continuing to monitor to help protect HUD programs and the people who rely on them, but this is the first of many fights that we have ahead.”
Has your organization’s work, research, or technical assistance been affected or threatened by the potential funding freeze or executive orders? Tell us about it at [email protected].
Shelterforce’s Lara Heard and Shelby R. King contributed to this article.
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