Arkansas Eviction Scare Is A Preview Of Shutdown Hell

It might be illegal for landlords to evict tenants because the government hasn't paid rent subsidies, but they might try it anyway.

WASHINGTON ― None of this would have happened if only someone in the government had picked up the phone.

Annette Cowen manages 50 properties in Arkansas, mostly apartment buildings for low-income tenants with government-subsidized rent. She said her usual federal contact got furloughed when several agencies shut down last month, so she had nobody to tell her if the government would pay its share this month.

So last week she sent her tenants some upsetting letters.

“Due to the shutdown of the federal government, your rental assistance portion of your rent is not being paid,” Cowen said in her letter. “As of now, you have no rental assistance and your rent must be paid prior to January 20th or eviction procedures may begin against you.”

It turned out to be a false alarm. This week Cowen said she finally talked to an official who said she would still receive payments for the government’s portion of her tenants’ January rent. She said they would all get new, more reassuring letters.

But the eviction threat may be a picture of what’s to come if the shutdown continues.

Cowen’s tenants are beneficiaries of a little-known U.S. Department of Agriculture housing initiative that is essentially a rural counterpart to the Department of Housing and Urban Development’s much larger programs. And those programs could be severely affected if the shutdown goes on for months or years, as President Donald Trump has said it might.

The housing agency has already said it’s unable to renew some contracts with landlords in its Section 8 project-based rental assistance program, which supports 1.4 million households. Under the program, HUD contracts with private building owners to set aside at least 40 percent of their rental units for low-income families, including seniors and people with disabilities. The shutdown has prevented the agency from renewing 1,150 contracts, affecting more than 40,000 households.

An additional 2.2 million households use a different kind of Section 8 voucher that is portable, meaning families use it to find landlords on their own. That program is funded until March.

Spokespersons for HUD have not responded to requests for comment about whether it would be legal for landlords to evict tenants because of the government’s failure to pay. The department has asked landlords to dip into their own reserve funds to meet expenses if necessary. It has said shutdown evictions have never happened before. But it has not informed tenants about how the shutdown could possibly affect them.

For the tenant-based voucher program, HUD regulations do not allow for landlords to evict tenants in the event that the government fails to pay its share. And the regulation doesn’t allow landlords to charge tenants for what the government isn’t paying.

“During the term of the lease the owner may not terminate the tenancy of the family for nonpayment of the [public housing authority’s] housing assistance payment,” the regulation says.

“There’s no way that they can evict anybody.”

- Rep. Collin Peterson (D-Minn.)

Section 8 beneficiaries are typically required to devote 30 percent of their income to rent, with the subsidy making up the rest.

If the shutdown drags on, and landlords start going broke, it’s possible they could try to justify evictions based on another part of the regulation. It says owners can evict tenants for business or economic reasons, ”such as sale of the property, renovation of the unit, or desire to lease the unit at a higher rental.”

The partial government shutdown, in its fourth week, is already the longest in history. Housing policy experts say landlords can only hold on for so long before they run out of money too.

“This is uncharted territory,” Michael Kane, executive director of the National Alliance of HUD Tenants, told HuffPost. He said the Section 8 system will “start to break down” as the shutdown continues, and building owners will be forced to eventually shift costs to tenants.

It’s not clear if the regulation prohibiting landlords from evicting tenants with portable Section 8 vouchers also applies to project-based vouchers or to USDA’s rural housing assistance programs. Some members of Congress said they didn’t think any evictions would be legal.

“There’s no way that they can evict anybody,” Rep. Collin Peterson (D-Minn.), the chairman of the House committee that oversees the USDA, said in reference to the Arkansas situation.

The USDA told HuffPost this week that rural rental assistance is fully funded for January, but didn’t say anything about the following months.

Panic and confusion over a given program’s status are the essential byproducts of a government shutdown. In 2011, for instance, the mere threat of a shutdown prompted a social services agency in Washington, D.C., to warn more than 100 elderly residents that they would lose their next home-delivered meal. The shutdown ultimately didn’t happen.

“Panic and confusion over a given program’s status are the essential byproducts of a government shutdown.”

The Arkansas situation got resolved thanks partly to media attention. Local TV stations did stories on the eviction threat, and HuffPost and NBCNews followed up. One resident, a 76-year-old retiree named Jerald McLelland, said he had no idea how he would pay his full rent.

“I’ll have to call the finance people that my finances my car and see if they will extend my payment and I will have to take that money to pay the rent ― that’s the only way I can do it,” McLelland told the local ABC affiliate.

Cowen said that because the government had shut down, she believed her agreement with USDA to house subsidized tenants was no longer in effect. There was nobody to tell her otherwise.

“These complexes are not designed to make money, only to try to break even on a yearly basis. This is done in order to keep the rents as low as possible,” Cowen said in an email. “If the government does not open soon, my management company will have to send my employees home and my maintenance people that maintain these complexes because there will not be funds to pay the employees.”

The USDA official who contacted Cowen this week, Cowen said, did so because there had been several inquiries from members of Congress, and presumably the news coverage had something to do with it.

“We wouldn’t allow that to happen,” Rep. Rick Crawford (R-Ark.) said Thursday of the eviction threats.

Sen. Tom Cotton (R-Ark.) walked away from a request for comment in a Senate hallway.

The partial shutdown isn’t anywhere near a resolution, and the threat to housing assistance is just one of many mounting problems. An estimated 800,000 federal employees have already missed paychecks. More than half of them have been deemed essential and have to keep working without pay.

But President Donald Trump has been steadfast in his demand that Congress appropriate $5 billion for 200 miles of wall (or fence) along a border that already has nearly 700 miles of barriers. Democrats haven’t budged an inch, pointing out that Trump has repeatedly promised Mexico would pay for the wall.

If the shutdown goes on for another several weeks, it will begin to interfere not only with housing assistance but also the tax filing season and food benefits for tens of millions. And Cowen will be right back where she was last week.

“The president says he’s prepared for the shutdown to go on months, even years,” Cowen said. “My concern is, where am I going to get money?”

HuffPost readers: Are you affected by the government shutdown? Email us about it. If you’re willing to be interviewed, please provide a phone number.

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