The Department of Housing and Urban Development (HUD) last updated its shutdown contingency plan in 2023, called the HUD Contingency Plan for Possible Lapse in Appropriations 2023. The agency used the plan in both 2023 and 2024, but has since removed the plan from its website. As of September 25, HUD had not yet posted an updated contingency plan, but staff told LeadingAge that a new plan would draw heavily on the 2023 approach.

Agency Staff and Operations: During a lapse in government funding, most federal employees are required to stop work because no funds would be available to pay them (and the government is prohibited from accepting voluntary services).

The 2023 plan only allowed three percent of HUD staff to continue working full-time as “excepted” employees to perform activities that are essential to operate HUD during a lapse in appropriations. Another 11% of HUD employees could be called in on an intermittent basis to work solely on excepted activities, which includes addressing emergency situations that would otherwise result in threats to human life or damage of property. In 2023, the number of “excepted” HUD staff was 244 and “intermittent” staff numbered 965, out of 8,573 total; HUD staffing numbers have since been reduced, and it is unclear how that will impact contingency planning.

The majority of the intermittent and excepted staff, as well as a small number of staff positions that are funded outside of the annual appropriations process, are employed within HUD’s Office of Housing, which handles multifamily housing programs like Section 202. However, during previous government shutdowns, very limited staff were available to approve routine housing transactions for multifamily housing providers.

Financial Transactions: Notably, HUD cannot enter into new financial obligations during a lapse in government funding. However, legally binding obligations entered into before the lapse remain valid.

The plan states that HUD will make payments under previously obligated Section 8 contracts, Project Rental Assistance Contracts (PRACs), and Performance-Based Contract Administrator (PBCA) contracts. The Tenant Rental Assistance Certification System (TRACS) will be available to process vouchers, provided that appropriate funds have already been obligated. However, previously obligated allocations may be insufficient to support ongoing program operations. In addition, HUD may eventually run out of money, depending on the length of the funding lapse.

New HAP Contracts and Service Coordinator Grants: HUD will only process Housing Assistance Payment (HAP) contract renewals to the extent that funds are available from prior appropriations (or recaptures). Regarding Service Coordinator grants, HUD funding staff will be available to ensure already obligated grants will be paid, but no new funding can be committed during the shutdown. This is particularly problematic in calendar year 2025 (CY25) because the Service Coordinator grants funding for the current year has yet to be obligated by HUD.

Safety Inspections through REAC: As for housing safety inspections through HUD’s Real Estate Assessment Center (REAC), where contracts have been obligated prior to the lapse in appropriations, contracted inspectors will conduct the inspection during a shutdown. However, HUD employees will not be able to conduct inspections during a government shutdown unless there is a known threat to life or property at a specific location. New inspection contracts or procurement will not be able to proceed.

The REAC Technical Assistance Center (TAC) will be operational, but no other staff will be able to provide technical assistance, for example on the use of REAC’s new inspection software. For example, while inspection results can be uploaded during a shutdown, they will not be reviewed by HUD staff. and therefore cannot be released.

HUD’s 2023 contingency plan also includes, starting on page 72, an FAQ for HUD stakeholders. FAQs specific to HUD’s Office of Multifamily Housing begin on page 81.

Impacts on LeadingAge Members

Funding Shortfalls: In the case of delayed rental assistance payments from HUD, housing providers may need to utilize accounts set aside for capital repairs and other property upgrades to pay for operating expenses instead.

For example, in instances where funding falls short and monthly voucher requests are not paid on multifamily housing contracts, housing providers can request releases of residual receipts or Reserve for Replacement accounts to offset the shortfall. Because limited staff will be available to process those transactions, requests should be submitted to the Asset Management Division Director of the assigned HUD office to ensure they are seen and processed in a timely manner.

A signed form HUD-9250 should be sent showing the request amount, balance in the account, and a certification that the funds will be paid back when subsidy is restored. Previously, HUD has also recommended that housing providers state in the email subject line that the request is for emergency purposes (rather than for routine or non-time-sensitive building projects). More information about HUD’s multifamily regions is available here.

LeadingAge recommends requesting a release of temporary reserve funds as soon as a shortfall situation becomes apparent for a particular property. However, in a 2023 nationwide survey, less than half of LeadingAge affordable housing member respondents said they had enough funds in their Reserve for Replacement account to cover operating expenses for even one month.

LeadingAge will provide more resources to assist members during any shutdown, as well as during an extended continuing resolution scenario.