Government Shutdown and Your Property Management Company

Posted by Andrea Drennen, CMCA on January 24, 2018

The big news this week was the gridlock in the Senate leading to a government shutdown. For now the shutdown has officially been lifted and the vote pushed for another three weeks until Feb. 8, 2018 but that means that come Feb. 8, we could enter another shutdown if a budget still isn't agreed upon.

Regardless of which side of the aisle you fall on, your management company needs to be able to keep up business as usual. How can a future government shutdown affect your management company? Let's explore:

The Government Shutdown for property managers

The (temporary) Good:

Neither Snow Nor Rain Nor Government Shutdown
Self-funded and essential agencies will stay open. That means an essential staple of community management, the US Post office, will continue to be available.

Yes, Your Honor
The federal court systems will continue to stay open, at least temporarily (many estimates say courts can stay open for at least two weeks). State courts are good too, so your pending law suits will go on as planned (I know, right?).

Automated Systems Still Work
The FHA has implemented multiple automated systems that will continue to work through a shutdown, including condo recertification. (+1 for modernization!) CAI has a detailed analysis of what is and is not automated.

Cleanups Continue
Ongoing recovery activities that have already been funded through FEMA will continue as scheduled, so you won't have to live with all that debris for any longer than you were going to before.
 

The (not so) Bad:

No More Scenic Shortcuts
Access to communities may be restricted if you live near a national park. Even though the President has assured the public that parks will stay open, not enough rangers means many parks will need to close off some areas. Some roads and access routes through national parks may be shut down, and if community members use the park as an alternate access route they may be affected.

Complaints Will Go Unanswered
96% of Housing and Urban Development (HUD) is considered non-essential staff. This means that any non-emergency fair housing complaints or ongoing investigations will be placed on hold during the shutdown.

The Tax Man Won't Cometh
With 55% of Treasury employees furloughed, tax services will be delayed during a Federal Government Shutdown. That doesn't mean you can skip deadlines though! All W2s and 1099s are still due January 31st!

You'll Be Missing Your Daily Dose of Cute
The Panda Cam showing the newborn Giant Panda at the National Zoo will likekly shut down! By day three of the 2018 shutdown, the camera was still live and the National Zoo had announced plans to remain open as long as possible using funds still available from prior years, but there was no indication on how many days this would be able to continue. If and when the Panda Cam shuts down, you can still get your baby panda cub fix here or here or here!

 

The (this could get) Ugly:

Salaries and Benefits Not Paid
A number of government agencies do not pay out salaries and benefits during the shutdown. Depending on your location, this could severely impact the ability of your homeowners to stay current with dues and fees. Agencies that may affect you more than you thought include:

  • All non-essential government employees under furlough won't get paid (as many as 800,000 people nationwide), and even essential employees may experience payment delays (more than 2 million people).  
  • All government contractors do not get paid.
  • Payments to the public housing authorities may be stopped or delayed.
  • Military personnel will remain on the job, but paychecks may be delayed.  
  • Benefits checks from veterans affairs including disability and pension checks may be delayed.

Flood Insurance Under Water
The National Flood Insurance Program (NFIP) is tied to the budget that's currently in dispute. If the government shuts down again, the regulatory power for NFIP goes away too, and homeowners could be left ankle-deep. However, FEMA assures us that Congress has never failed to do the right thing when it comes to flood insurance and government shutdowns.

Fewer Homes Loans Approved
Due to reduced staff, far fewer loans guaranteed by the Federal Housing Administration will be approved, potentially impacting home sales in your communities (although Fannie Mae and Freddie Mac loans are not expected to be affected).

Especially if You Manage Condos
Specifically, the agency has stated that it will focus on single-family homes during the shutdown, setting aside loan applications for multi-family dwellings. HUD has a FAQ that explains all of their emergency proceedures.

 

The government has shut down 18 times prior to 2018. The last time the government shut down was in 2013 and lasted for 16 days. Our thoughts go out to all who are (or will be) affected, and we pray for a swift reinstatement to gridlock as usual.

We've previously mentioned that in the event of major disasters, it is important to remain compassionate and understanding, as many who are impacted will be impacted financially and unable to pay assessments. Of course, before we were talking about natural disasters like hurricanes or wild fires, but we urge that same compassion in this event as well. Goverment employees who are furloughed will be losing paychecks for the time that a shutdown remains active, and may not ever get that money paid to them (though after the 2013 shutdown there was an agreement reached that furloughed employees would be paid retroactively for the days impacted). Consider your homeowners and their struggles during this challenging time.

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