Last week President Trump proposed a $33.6 billion cut to HUD in his “skinny” budget – a high-level outline of his budget priorities. Overall, the HUD budget is slashed by nearly 44%, with complete elimination of some programs and harmful policies designed to undermine the remaining programs. If enacted, it would dismantle the housing safety net for over a million people across New York State, upend rental payment assistance contracts to landlords, and place an incredible financial burden on the state and localities to fill in the gap.
If President Trump’s reckless and chaotic plans for HUD are enacted into law, it is likely that New Yorkers would face mass evictions, a wave of mortgage defaults concentrated in multifamily buildings in low-income neighborhoods and create significant consequences for lenders, FHA and ultimately for Fannie Mae & Freddie Mac.
Block Grants and Term Limits Would Wreak Havoc on NYC’s Housing Market
The most devastating proposals are concentrated on the programs that directly keep low-income American families housed, which serve over half a million households in New York. President Trump proposes rolling the Section 8 Tenant and Project Based Voucher Program, Public Housing, and Housing for the Elderly and Disabled into one block grant program and cutting them by almost $27 billion, which will force termination of assistance in these fully subscribed programs. The President further proposes a 2-year time limit on assistance for able-bodied adults.
In 2023, NY received almost $13 billion for these programs. Combining programs and block granting funding to states shifts the burden to states to manage future cuts, which will likely lead to reduced assistance and help fewer renters in need. It would also undermine the public-private partnerships successfully developed in federal rental assistance programs over the past 4 decades, without regard to financial harm caused to building owners and financial institutions.
Time Limits Would Cause Catastrophic Homelessness & Mortgage Defaults
In New York State, 243,000 households utilize Section 8 Housing Choice Vouchers, 100,000 households live in Section 8 Project Based housing and 164,000 households reside in public housing. 24% of HUD-assisted people are elderly and 30% are disabled. We estimate that at least 200k households could be forced to move after 2 years of assistance, flooding housing courts and homeless shelters. This number could be even higher depending on how elderly and disabled households are defined to be excluded.
This policy change would also hurt thousands of landlords across the state. NYCHA alone contracts with 26,933 landlords in their Section 8 program. For the buildings receiving Section 8 project-based assistance, this support has leveraged billions in private mortgages. Building owners and investors of this privately-owned housing did not sign up for programs designed to churn out tenants after only 2 years, destabilizing communities. These buildings are likely to lose significant rental income if forced to evict and they may face challenges refinancing or selling with such conditions tied to the assistance programs. For rent stabilized buildings and small building with high voucher concentration, being forced to evict a large share of the tenancy, will undoubtably lead to costly and lengthy periods in housing court and building income could quickly fall below required debt service coverage minimums. In neighborhoods with concentrated voucher use, mortgage defaults could quickly become widespread if drastic turnover over tenants is required by the federal government.
In New York, 15 years is the average tenure in the HUD rental assistance programs. In NYC public housing, the average tenant remains for 26.3 years. With a 1.4% vacancy rate and few affordable apartments available to rent, HUD-assisted households do not have viable market options.
The average household income for Section 8 recipients in New York state is roughly $21,000. An affordable rent for these households would be $525 per month. To afford Fair Market Rent in New York City for a two-bedroom apartment, the average household would need to increase their income by 5 times!
Under Trump’s proposed policy, HUD assisted households that can no longer afford their current rent after 2 years would be evicted. Landlords would also lose income during the eviction process, and landlords of project-based Section 8 buildings would likely be forced to evict most tenants at once. When these renters search for new housing, they will find that the vacancy rate for units renting at less than $1,100 is 0.39% – 2,290 units vacant at that rent at any one time. However, tens of thousands of households may be forced to move each month under Trump’s plan.
Concentrated Impact in Bronx and Brooklyn
According to NYU Furman Center, a voucher holder’s typical building is more than half rent stabilized. Close to a third of NYCHA voucher households and a fifth of HPD voucher households live in buildings with less than 10 units. For rent stabilized building owners and for small landlords, prolonged evictions and nonpayment by the government for continued assistance could lead to mortgage defaults. This is especially concerning for neighborhoods with concentrated voucher utilization– some neighborhoods have more than 5,000. The count of voucher holders is highest in areas of the Bronx, including the Fordham-Bedford Park-Norwood, Morris Heights-Mount Hope, and Highbridge-Concourse neighborhoods. Outside of the Bronx, the highest counts of voucher households are in East New York-Cypress Hills in Brooklyn and Washington Heights-Inwood in Manhattan. Additionally, there are high numbers of voucher holders in Greenpoint-Williamsburg and some areas in southern Brooklyn (Coney Island-Brighton Beach and Borough Park-Kensington).
Term Limits Make It Harder to Achieve Self Sufficiency
Restrictions on assistance like term limits do not encourage self-sufficiency – they only punish the poor. A significant number of those receiving housing assistance are elderly or disabled while the majority of those who are eligible to work, already do. Their wages are simply too low to afford market rents in the midst of a growing national housing affordability crisis. Forcing families into eviction causes crisis not self sufficiency.
Consolidating and Time Limiting Homeless Assistance Programs
The Budget proposes to consolidate Continuum of Care (CoC) and Housing Opportunities for Persons with AIDS (HOPWA) programs into a more targeted Emergency Solutions Grant (ESG) program that provides short- and medium-term housing assistance, to homeless and at-risk individuals with a 2-year limit on assistance. In FY24, New York received $409M in these programs ($27.6 million ESG, $54.9 million HOPWA and $326.5 million CoC).
This change would steer remaining dollars for addressing homelessness into the most temporary solutions and kick vulnerable populations off assistance before they have a chance to get back on their feet. In New York, CoC dollars for example, help address the many needs of those experiencing homelessness by funding supportive, permanent and transitional housing, domestic violence shelters, coordination with healthcare services, and more.
-$438M In Cuts Is the Starting Point
While the skinny budget doesn’t offer enough specifics to calculate full impact, it is clear that NY would stand to lose hundreds of millions in housing funds. At least $438 million would be eliminated in the following programs:
– Community Development Block Grant (CDBG) program – In FY24 NY received over $320 million in CDBG. The program funds a variety of housing and economic development programs across the state. In NYC, CDBG funds many planning functions and code enforcement, including addressing hazardous conditions and emergency repairs.
– HOME Investment Partnerships Program – In FY24, NY received over $116 million from HOME. The program helps fund finance new construction and preservation of affordable housing for rent or homeownership and rental assistance to low-income people. In NYC, it’s used to help finance supportive and senior housing.
– The Fair Housing Initiatives Program (FHIP) – In FY24, $1.7 million in FHIP grants went to NY organizations to fund their fair housing work. Fair housing organizations are critical to uncovering and remedying instances of housing discrimination. In 2019, the Fair Housing Justice Center and Newsday exposed systemic discrimination against potential homebuyers of color in Long Island leading to a package of fair housing bills passed in Albany. According to the National Fair Housing Alliance, in 2023, nonprofits processed 75% of a record 34,000 fair housing complaints across the country, half of which were filed for disability discrimination.
The budget also defunds what are described as “woke” programs including Pathways to Removing Obstacles (PRO) to Housing; Community Development Financial Institutions (CDFI) and Community Services Block Grants (CSBG). The White describes as “woke” $4 million in funding to New York City to improve its environmental review policy to make it easier to build housing.
Next Steps on Policy Analysis and Advocacy
Full budget details are expected to be released by the White House later this month. We will provide further analysis and be sure to include more specific impacts on NYCHA’s preservation strategy as well.
Over the next weeks and months, New York Housing will be sharing our analysis with the New York Congressional Delegation. If you have impact examples to share, please reach out.