Federal Shutdown Could Impact Housing, Health and Hunger in the City

By Amy Zimmer on October 4, 2013 3:29pm 

 The soup kitchen at CHIPS on Park Slope's Fourth Avenue serves (pictured) about 150 meals a day, six days a week. The Food Bank for New York City said there should be enough food at pantries through October, but then they have concerns.
The soup kitchen at CHIPS on Park Slope's Fourth Avenue serves (pictured) about 150 meals a day, six days a week. The Food Bank for New York City said there should be enough food at pantries through October, but then they have concerns.
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DNAinfo/Leslie Albrecht

MANHATTAN — The federal government’s partial shutdown is having an immediate impact on New York, from federal employees who aren't getting paid to tourists who are being turned away from landmarks like the Statue of Liberty and national parks.

But ripple effects could hit other corners of city life if the shutdown persists:

Health and Science Sector

The furloughs are already hurting New York’s biomedical research community.

Many scientists rely on federal grants that have well-defined funding cycles, with an important deadline for grant applications coming up on Oct. 5., according to Dr. Gary Koretzky, dean of the Weill Cornell Graduate School of Medical Sciences.

But with much of the National Institute of Health’s staff out of work, there’s no one to receive the submissions, which are then reviewed several months later and paid out several months after that, he explained.

“It’s demoralizing,” Koretzky said. “It’s extremely disruptive. Even a few days or weeks can turn into many months of disruption because these processes and deadlines are so finely tuned.”

Moreover, many review panels meet this month to discuss previous submissions. With panels composed of 20 scientists traveling from around the country, it’s not so easy to reschedule meetings.

For young researchers who devote years to their work, “it’s like the rug has been pulled from under them,” said Koretzky, whose colleagues relying on funding in this cycle are worried about keeping labs staffed and research running.

(The scientific community was already reeling from $1.5 billion in NIH cuts because of the sequester, many said.)

The city’s medical institutions where patients are part of federally funded clinical trials, fortunately, have not yet been impacted, hospital officials said. (The NIH’s hospital in Bethesda, Md. was given permission Friday to bring some federal workers back so patients in need could enter trials again, reports said.)

Also, although the Centers for Disease Control and Prevention has been affected by the impasse, city health department officials said that federally funded services including flu vaccines and HIV services would not be affected since grants had already been appropriated.

Hungry New Yorkers

Though the shutdown has not yet affected the payment of food stamps, advocates are bracing for tough times ahead.

With workers on furloughs and the businesses serving them struggling to the point of having to cut staff hours, the shutdown could potentially push more people into the already strained soup kitchens and food pantries, advocates said.

“About half of Americans live paycheck to paycheck,” said Mark Dunlea of the Hunger Action Network of New York State.

The Department of Agriculture’s nutritional program helping pregnant woman and new moms is allowing states to use funds from other programs to cover the Women, Infants and Children (WIC) program through October.

But a memo from the Agriculture Department noted that state agencies "may still face funding shortfalls" during the shutdown.

The city’s food pantries may be stretched dangerously thin in few weeks, according to officials from Food Bank for New York City, which delivers food to a network of roughly 1,000 charities.

"Our doors will continue to remain open in order to serve those in need, but Food Bank For New York City’s network of food pantries and soup kitchens across the five boroughs are already stretched thin — more than 60 percent are already reporting food shortages," said Margarette Purvis, president and CEO of the Food Bank. "The charitable emergency food system will not be able to meet the increased need triggered by Congressional inaction."

At the soup kitchen run by the Greenpoint Church, where roughly half its food is from federal sources, the Rev. Ann Kansfield said they would have to rely more on the city and state and private donations if the shutdown is prolonged.

“Right now we’re all operating on reserve,” she said. “Then it means we’ll start running through the city and state money really fast until we’re operating on zero.”

She was most concerned about the WIC program.

“If the WIC situation doesn’t pan out, I’d like to figure out how to do a drive for formula and baby food,” she said.

Apart from the shutdown, come Nov. 1, sweeping cuts are slated to hit food stamp benefits, resulting in the estimated loss of 76 million meals annually for New York City residents, or nearly $19 million per month in New York City, the Food Bank said. 

Housing Market

New York City’s housing market has been propped up by buyers paying in cash — particularly in Manhattan and Brooklyn’s hot neighborhoods. But there are still many who need mortgages, and many loans depend on government action, whether they are underwritten, insured or owned by the government, or whether lenders processing loans simply need tax transcripts or Social Security number verification.

Loans will continue to go through the system, albeit at a slower pace, said president of the National Association of Mortgage Brokers Don Frommeyer.

He was initially worried that the loan verification process was going to come to a standstill, tying the hands of lenders working through the shutdown. But he said things were already starting to turn around.

“Now they’re opening up a little the IRS,” he said. “I think you’ll start seeing an opening from the lenders to get these things closed and processed.”

With the Federal Housing Administration operating with a smaller staff, delays were expected on processing FHA-backed loans, which had the potential to impact purchases in less pricey parts of the city since these mortgages are geared toward first-time and low-income buyers.

“We don’t expect the impact on the housing market to be significant, as long as the shutdown is brief,” the Department of Housing and Urban Development contingency plan said.

But if it persists, the memo said, “We do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market.”

The uncertainty could put a dent in consumer confidence, as borrowers may worry about fluctuating mortgage rates during delays, some experts said.

New Yorkers have already seen an impact of changing rates: The city recently saw a record number of broken contracts, possibly because the recent rise in rates hurt deals in the making.

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