AHA seeking shutdown insurance
Line of credit will be used to cover costs if stalemate extends beyond January
The Altoona Housing Authority on Wednesday authorized its solicitor and executive director to negotiate a line of credit to cover the authority’s $565,000-per-month operational costs in case the federal government shutdown extends beyond January.
The line of credit with Reliance Bank would cover landlord subsidies, payroll and accounts payable if the money to pay those isn’t forthcoming from the Department of Housing and Urban Development, which pays most of the authority’s bills.
The money is available, but if the shutdown continues, there would be no one working at the department to approve its withdrawal, according to Executive Director Cheryl Johns.
“(The line of credit) is a cushion if we need it,” Johns said.
“I don’t see a downside,” authority member Scott Brown said.
“It’s prudent,” authority Chairwoman Robin Beck said.
Reliance will make the line of credit available without fees, although not necessarily without interest, Johns said.
There would be no charge if the authority doesn’t need to tap the funds.
“(The line of credit) will just sit there,” said solicitor Bill Haberstroh.
If the authority must borrow, the interest payments shouldn’t be high, as the authority would pay everything back as soon as the shutdown ends and the department releases the funding, Haberstroh said.
The bank will use the authority’s about $850,000 in certificates of deposit as collateral, Johns said.
Simply not paying the bills until the shutdown ends could result in problems, Haberstroh said.
Some landlords might be OK with a month or two delay in their subsidies, but others working on slim margins might not, he said.
The shutdown issue is unpredictable, according to Johns.
“The government may reopen tomorrow,” she said. “But I have an obligation to look at what happens if it doesn’t.”
“Surely they can’t do this for too long,” Haberstroh said.