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The state is putting $100 million toward rental assistance for low-income Minnesotans. Why did it take so long?

It took four months for the state to put a rental assistance program amid the economic fallout of COVID-19 — even after there was a general agreement on the issue among Republicans and DFLers. 

Gov. Tim Walz looks on as Lt. Gov. Peggy Flanagan speaks during Tuesday's press conference.
Gov. Tim Walz looks on as Lt. Gov. Peggy Flanagan speaks during Tuesday's press conference.
MinnPost photo by Peter Callaghan

Why did it take four months for the state to put a rental assistance program in place for  lower-income Minnesotans struggling amid the economic fallout of COVID-19 — even after there was a general agreement on the issue among Republicans and DFLers; landlords and tenants; and Gov. Tim Walz and his critics?

And why, even after there was consensus that it was better to help people cover rent payments than have an epidemic of evictions, did a proposal to address the issue not go through the Legislature at all? Why was it done note with a vote, but by the action of Gov. Tim Walz, who announced on Tuesday that he had agreed to put $100 million in federal CARES Act money toward the program? 

For the Minnesotans who will benefit from the program, people who have not been able to pay rent, mortgages and utilities due to the COVID-19 recession, the answers may not matter all that much. Going forward, those who qualify — people earning less than 300 percent of the federal poverty level (about $52,000 for a two-person household) — will be able to have payments sent directly to landlords, banks and utility companies under the program, which people can apply for once the state accepts bids from local partners, expected in mid-August

“We’re committed to breaking all speed records,” in doling out the money, said state Housing Finance Authority Commissioner Jennifer Ho.

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But all that doesn’t explain why even an issue with broad support needed four months to go from concept to creation. Or why the hyper-partisanship of a divided Legislature means striking any agreement is difficult — even when lawmakers agree. Or why the program took repeated detours, each either creating new slowdowns or simply gobbling up time.

So why did it take so long to implement the program? 

Let us count the reasons.

1. The size of the problem 

Initially, way back in March, Walz asked for $10 million as part of his first COVID response package, which was worked out mostly behind closed doors with legislative leaders. The money was to be added to an existing Family Homeless Prevention and Assistance Program that had received $21 million for the 2019-2021 biennium.

But when the $330 million package of relief was finally approved, the rental assistance money was nowhere to be found. For proposals to be included in the relief package, all four caucus leaders had to agree, and they didn’t on rental assistance. Not then, anyway. 

Part of the problem was scale: advocates wanted $100 million for the program, Senate Republicans started at $30 million.

There was, however, a budding consensus among landlord groups, housing providers, housing advocates and social service agencies. Though under his emergency powers Walz had imposed a moratorium on evictions for non-payment starting in March, monthly accumulations of rent debt would come due once the moratorium ended, and there was a fear that such large debts for people already in financial trouble could result in an eviction storm.

2. The timing of the problem 

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As the first of the first pandemic rent payments approached, housing advocates and tenants rights groups predicted that unpaid rent would be at crisis levels. Landlords approached April 1 with a similar amount of apprehension.

But surveys done by the Minnesota Multi Housing Association and some large owners of market rate and affordable housing did not show that non-payment of rent was above pre-pandemic levels in March, April, May and June. That didn’t mean no families were struggling financially; unemployment rates, the use of food assistance and other indicators more than suggested that they were. But rents, for the most part, were being paid. That took some of the need for haste away.

3. The ‘off-ramp’ detour

Landlord groups were keen on getting money from the fund for those eligible for the program. But they worried that renters who could afford to pay, would take unjust advantage of the eviction moratorium and forego paying rent as well. If that were to happen, landlords would be short of the monthly money they use to pay their own mortgages, hire staff, pay for utilities and maintenance.

Housing Finance Authority Commissioner Jennifer Ho: “We’re committed to breaking all speed records.”
MinnPost photo by Peter Callaghan
Housing Finance Authority Commissioner Jennifer Ho: “We’re committed to breaking all speed records.”
So landlords and their GOP allies in the Senate began pushing for an end to the moratorium sooner than Walz might have wished. They referred to this as the moratorium needing an “off ramp,” a predictable and sooner-than-later expiration. But the executive order on rents was set to run as long as there was a peacetime emergency, and advocates were loath to let it expire sooner.

In addition to showing that struggling people were paying rent, however, the rental payment surveys also showed that market-rate-apartment dwellers were paying their rent as well.

4. The concerns about a rent strike

As the Walz Administration and legislative advocates for the expanded rental assistance plan worked on the issue, some local government officials were taking a different approach. In mid-April, they sent a letter to Walz urging him to allow people to suspend rent and mortgage payments.

“I urge you to support the suspension of rent and mortgage payments, as well as enact a moratorium on commercial evictions, to mitigate the financial devastation families, residents, and local businesses, are facing across the state.,” stated the letter, which was signed by majorities of the Minneapolis, St. Paul and Richfield city councils.

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Walz didn’t go there. But the existence of the ‘suspend’ letter and the organizing of a rent strike for May 1 fed anxiety among GOP lawmakers that it would trigger a financial crisis in the rental and mortgage markets.

In response to questions from GOP senators, Ho made it clear she opposed the rent strike. She and Lt. Gov. Peggy Flanagan also met with advocates to urge them to back off to give Walz time to come up with a better solution: namely, tax dollars to cover rent and mortgage payments.

The rent strike didn’t materialize in any significant way, but the incident did create strains between Walz and parts of the DFL coalition.

5. The fight over regulatory reform 

In May, during the closing hours of the regular session, it appeared that there was significant movement by GOP lawmakers on the issue. A bill that would provide $100 million in assistance (the DFL number) and no early end to the moratorium (Walz’s position) was brought to the Senate floor for debate.

With Walz’s endorsement, though, DFL lawmakers opposed the bill. Why? Because the GOP bill wedded the issue to a series of regulatory measures that had been on the Republican agenda for several years. Mostly, the changes would lessen the authority of local governments to impose zoning and design demands on new housing, something developers say increases housing costs. The session ended before the bill could come up in the House, where it was certain to fail anyway. 

And that was the end of the Legislature’s action on rental assistance.

6. The unemployment problem

Once Walz made it clear that he could and would use some of the state’s $1.87 billion in direct payments under the federal CARES Act to create a rental assistance program, there was no longer an incentive for either side to bargain the details.

And so, the only question left for the program was the timing. While the governor could have created the program at any time since he first declared a peacetime state of emergency March 13, a move followed by his moratorium on evictions, the urgency for the program was determined by the ending of another piece of the CARES Act: the $600 per week federal add on to state unemployment benefits. 

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That extra money expires at the end of July, and on Tuesday, Walz and Ho said the pending financial hit from the end of the federal unemployment boost makes it critical to have the program ready to go in time for Sept. 1 rent payments, and to cover any back rent owed since the pandemic began. (The aid is retroactive to March 1.)

“Legislative bodies in a democracy are meant to move slowly,” Walz said. “I certainly don’t enjoy that these decisions have to be made by executive order or made by the executive branch alone. I am very happy to have the legislative branch do these things. But it’s just very hard to get a decision that way and some of these things need to move.”

Correction: The state will be taking bids from local agencies to administer the rental and mortgage assistance program. The story had stated incorrectly that the program would be run through local and tribal agencies through the existing Family Homeless Prevention and Assistance Program.