Impact from Federal Cuts

Some of HCA’s tenants and members have asked if recent actions at the federal level are impacting or hurting our work.  The answer is yes but it’s worth breaking that down a bit.

Thankfully, HCA’s nonprofit operating budget does not rely on federal funds; it is separate from our property budgets. HCA’s operating budget covers our staff and all of the expenses we need to run our programs out of our office, and also includes the grants we make for our Homelessness Prevention Program. This budget is supported by a mix of corporate and foundation grants, fees that we have collected from our most recently completed affordable housing developments, and all of the donations from you, our grassroots community.

Our affordable housing developments are a different story. There are two parts to any housing development budget: the funds you need to initially build or acquire the development, and the funds you need to operate the building year after year. The funds we need to build or acquire new affordable housing includes significant federal subsidies. We believe the largest of those – the Low Income Housing Tax Credit (LIHTC) – will be safe. That program provides large tax breaks to investors who put significant funds into affordable housing developments.  But there are other subsidy programs that are essential for making very tight housing budgets work that could be threatened, like the HOME, Project Based Section 8, and CDBG programs, all of which come out of HUD (the federal department of Housing and Urban Development). Every affordable housing project that HCA has developed to date relied on at least one of these programs to come into fruition. The tariffs on goods from Mexico, Canada, and, to a lesser extent, China, may also increase costs for our already tight Sunnyside construction budget, but the impact is not yet known.

The other side of our affordable housing is our properties’ annual operating budgets. Those budgets rely on our tenants’ rents to cover all the expenses of those properties. The properties all have monthly loan payments. Every year we also have to pay for insurance, snow removal, pest control, taxes, common utilities and more. The properties also have expenses relating to verifying tenants’ incomes and reporting to lenders to demonstrate that we are meeting affordability regulations.

While our rents are below the market, many tenants still rely on HUD’s mobile Section 8 vouchers to help them pay their affordable rent. If this program was slashed, it could have devastating consequences for our tenants and millions of others across the country. That, in turn, would have terrible consequences for property owners, including HCA, who suddenly would not be able to cover their basic property operating costs due to lower collections of rent. Most of our property budgets are very tight. Operating cost projections made when properties were first developed 10 or 20 years ago have not kept up with current economic realities. If we could afford to offer even lower rents, we would. But we need the rental income as it stands now in order to make loan payments and pay essential bills for our tenants’ homes.

The last, but most important piece of the puzzle are HCA’s tenants and other low-income families who rely on social programs because they can’t make ends meet given the current structure of our economy. I have heard from enough of our tenants to know that these families are scared. Will they have health insurance next month? Will the portion of their rent paid for by the Section 8 program come through the following month? If not, how will they care for themselves, or their child who has a chronic illness? If not, how will they pay the rent? Will they become homeless? These are the thoughts constantly with them.

We are lucky to be in Massachusetts, where state agencies will do all they can to prevent the failure of affordable housing developments and to support families. However, state resources are not unlimited. If these federal programs went away, it is highly unlikely that the state could adequately fill in the gaps. State resources for new affordable housing development and to support low-income tenants who cannot afford today’s astronomical rents are already strained.

I encourage all of our HCA supporters and Arlington residents to advocate for the protection of federal programs that support affordable housing and that support the ability of low-income families to remain stable in today’s inequitable economy. HUD programs, Medicaid (called MassHealth here) and other programs that enable low-income families, seniors, and others to remain healthy and thriving are essential for a stable, equitable and healthy society.

I encourage you to sign petitions, attend rallies, and write to your US Representative (that’s Katherine Clark if you live in Arlington) and Senators (Ed Markey and Elizabeth Warren for all of Massachusetts). The members of our congressional delegation all support these programs, but it’s still important that they hear from us about what we care most about.

We don’t know what the coming months and years will bring, and none of us, individually, can fix what is or may become broken, but we all can do our part to act as best we can to protect and care for each other and our society at large.

With gratitude and care for you,

Erica

“It is not your responsibility to finish the work [of perfecting the world], but you are not free to desist from it either.”  – Rabbi Tarfon, circa the year 100.