It wasn’t part of the $330 million COVID-19 response bill that passed the Minnesota Legislature last week, but an unlikely coalition of housing advocates and landlords have come together to push a new initiative for when lawmakers gather again: a $100 million fund to help lower-income Minnesotans pay rent.
The money would flow through an existing rental assistance program that operates in all state counties and tribal nations. Applicants who meet income eligibility requirements would get help with rent and utilities on a short-term basis, with rent payments sent directly to landlords and property managers.
The push for rental assistance follows an executive order signed by Gov. Tim Walz on March 23 that bans most evictions until April 30.
That order doesn’t forgive rents, only delays them, and the state Housing Finance Agency reminded landlords and tenants Monday that “once the suspension has ended, owners can file for evictions and removals can be enforced.”
That was one of the reasons there was a push to get rental assistance included in the bill the Minnesota Legislature passed last week. Though the provision wasn’t included, Walz had asked for a $10 million infusion into the Family Homelessness Prevention and Assistance Program, which operates in all 87 counties and 11 tribal nations and makes payments directly to landlords for beneficiaries who meet certain income criteria. (The program can also be tapped by homeowners who are suddenly unable to make mortgage payments.)
Advocates are now watching for when the session reconvenes, which is now planned for April 14 but could happen sooner. One reason rental assistance wasn’t approved when the Legislature met last week is because there wasn’t unanimous agreement among the four legislative caucuses, a prerequisite for inclusion in the emergency legislation.
Rep. Mike Howard, a DFLer from Richfield, called the Walz order “the right step” but said it was limited to stopping evictions temporarily. “It really puts both renters and landlords in a challenging spot,” he said. “If folks aren’t able to afford their rent, they could potentially fall behind and be in a difficult financial situation in the future. And if too many folks are in that situation, then landlords, especially smaller landlords, will find themselves in challenging positions to pay their mortgage. This is going to start to become an issue on April 1, and it will be magnified by May 1.”
Ryan Baumtrog, assistant commissioner of the state Housing Finance Agency, said the COVID-19 layoffs will be especially hazardous to 140,000 Minnesota households estimated to pay 50 percent or more of their incomes on housing costs.
“We had a really fragile and breaking system to begin with,” he said. The existing rental assistance program received $21 million in the state’s 2019-2021 budget.
An unlikely coalition
The issue has attracted consensus among people who don’t always agree: those who own and manage rental housing and those who advocate for tenants and low-income people.
Cecil Smith, the president and CEO of the Minnesota Multi Housing Association, called the ad hoc coalition “unprecedented.” The governor’s executive order, Smith said, created “a moral hazard where some people might use it as an opportunity to say ‘I’m taking a pause on paying my rent’ when they can afford to pay their rent,” he said. If there is no penalty for that, then there needs to be rental assistance, because owners and operators still need to pay their mortgage, property taxes and utilities, he said.
The Minnesota Multi Housing Association had already issued guidelines to its members before Walz’s executive order. The group’s recommendations included calling for halting evictions and rent hikes, the waiver late fees, and flexible payment plans. It also advised landlords and managers to help tenants access resources such as unemployment insurance and emergency assistance.
Smith called the $100 million amount for the program a “back-of-the-napkin calculation,” and said that building owners would know more in the coming days about how many tenants are not paying rent for April.
Anne Mavity, executive director of the affordable housing advocacy organization Minnesota Housing Partnership, said the request is valuable because it has “dual outcomes”: preventing tenants from getting into a financial hole and helping landlords maintain available housing.
“It’s just math,” she said. “Someone who starts getting behind and has an inability to pay — getting two or three thousand dollars behind that they will eventually owe — I don’t know how someone gets out of that on a minimum wage salary.” The organization has predicted “a cascade of evictions” once the moratorium ends.
The measure would also help ensure that landlords stay in business. “We want to make sure that they have operating income to keep those doors open,” Mavity said. Most private affordable housing providers might only have a few months of reserves and can’t last long with a 20-40 percent loss of rents.
Public and non-profit housing providers are also at risk. An analysis by the Greater Minnesota Housing Fund and others found that such providers might need to absorb between $86 million and $173 million in lost rent. That could, in turn, cause financial failures of housing projects and the loss of more affordable housing.
Hard to get lawmakers’ attention
Sen. Torrey Westrom,, R-Elbow Lake, chair of the Senate Agriculture, Rural Development and Housing Finance committee, issued a statement Wednesday afternoon: “We’re working on a comprehensive bill that includes the appropriate temporary funding to support those tenants and landlords who have been impacted by this emergency and need help the most right now. This pandemic is stressful enough for everyone. We want to be sure there is clarity for both renters and property owners on the expectations and protections they have during the peacetime emergency. We also need to ensure these funds are used to help those most in need and that there are sufficient guardrails to avoid fraud or misuse of funds.”
There were statements made during the Legislature’s one-day session that the state should not fund items that could be paid for by the federal government. While details are scant, there appears to be $2 billion for rental assistance and $685 million for public housing in the $2.2 trillion federal COVID-19 response bill. But whether those funds will help what may be the emerging problem isn’t yet known.
Baumtrog said the pots of money appear to be for two groups of people already receiving some assistance. And though the housing finance agency is still waiting for more information from federal housing officials, Baumtrog said he thinks it will not address all of the threats to lower-income renters. “There’s still going to be a significant need,” Baumtrog said.
In addition to housing money, the federal bill does have other provisions that could help renters in a jam, including direct payments of up to $1,200 per adult and $500 per child. And it adds $600 a week to state unemployment insurance checks while extending unemployment insurance to gig workers and self-employed people, even if they weren’t part of the unemployment insurance system.
Eric Hauge, the executive director of HOME Line, which operates a hotline for tenants with legal questions, said the organization has fielded nearly 350 calls within the past few weeks in which COVID-19 was cited in some way. At first, many of those calls were about possible evictions before shifting to questions about the executive order.
“Calls about COVID are taking quite a bit longer than normal; people have multiple questions and we have to walk through some fairly complicated issues that seem to change daily,” Hauge said.
Mavity said it has been difficult to get some lawmaker’s attention because the span of time in dealing with housing issues is often measured in years, not months.
“In the world of housing, where we are dealing with 15-year funding commitments and 30-year mortgages, one month is a very short time,” she said Tuesday. “And this crisis started in March and it is still March.
By next week, she said, “we’ll find out what the rate of non-payment is and what the scope of this is,” noting that what might not have seemed an emergent need when the Legislature passed the last COVID-19 response bill could become one soon.
Update: This article was updated to include comments from the Senate Republican lead on housing issues.