A $100 million state program using federal CARES Act money to help renters and homeowners who fell behind on making payments because of the coronavirus pandemic has begun distributing funds to landlords, banks and utilities.
Created by Gov. Tim Walz in July after state lawmakers were not able to reach agreement on the size and scope of the plan, the new program began accepting applications one month ago. The Minnesota Housing Finance Agency, which is running the program, estimates that about $10 million has flowed to those owed money so far.
About half has gone toward past due rent, a quarter to mortgage payments and about 14 percent to unpaid utility bills, said Ryan Baumtrog, assistant commissioner of policy for the housing finance agency. As of Tuesday, there have been 19,600 applications started across the state with more than 4,500 completed. The amount requested in those 4,500 applications, which require proof of income and indebtedness, is more than $25 million.
“To have that many applications in progress is pretty significant and I think demonstrates the overall need for the housing assistance,” Baumtrog said.
The state has an existing program called the Family Homelessness Prevention and Assistance Program that helped a total of 6,000 households statewide during all of 2019.
Administrators with 44 different agencies review the application, contact those owed money and approve payments. The United Way is the central intake entity for the program through it’s 2-1-1 call centers, and applicants can go to the housing finance agency’s website for information about eligibility and to start the application process.
There are four primary requirements for applicants: you must be a Minnesota resident; you must be a renter or homeowner with income at or below 300 percent of the federal poverty level ($51,720 for a two-person household); you must have housing expenses that were due after March 1 and that are past due; and you must be unable to pay the money owed for reasons related to the pandemic, such as unemployment or illness.
The programs were envisioned as a response to fears that — even after Walz suspended most evictions during the state of emergency — accumulated past-due payments could lead to debt that low-income renters and homeowners wouldn’t be able to get out from under. Once the eviction moratorium is lifted, the fear is that unpaid rent could lead to a rush of evictions.
While multifamily housing owners haven’t reported large numbers of tenants who are missing rent payments, the number has been ticking up. And while tenants may be prioritizing rent payments, they could be missing other payments, which may explain the utility bill requests the state is seeing.
“We’re a little bit surprised in the utility assistance being as high as it is,” Baumtrog said. The agency is talking with the state Department of Commerce, which administers existing utility assistance programs, to see why more help isn’t coming from those initiatives.
The concept of a rental assistance program had support from both landlords and tenant organizations and among both Republicans and DFLers in the Legislature. But a deal could not be reached despite months of negotiations. Walz stepped in to have a program in place when the federal $600 per week unemployment insurance add-on expired at the end of July.
Walz’s Office of Management and Budget made the request for CARES Act money on July 14. Under state law, the governor has to inform a group of House and Senate members called the Legislative Advisory Commission that the administration intends to spend federal dollars that it received after the state’s two-year budget is approved. The commission members cannot block the use of the money. Of the $1.87 billion received directly by the state from the CARES Act, Minnesota has spent or committed to spend all but $118 million.
One aspect of the state program came as a surprise to those who provide housing for the lowest-income residents. People who already receive rental assistance that adjusts with income are generally not eligible to apply for the COVID assistance program, though they can still apply for assistance for utility expenses.
Some housing offered by Catholic Charities, such as at the Dorothy Day Place in St. Paul, uses such a method to calculate rents that some tenants pay, and so they are not able to get assistance from the program, managers there have said. Others pay a flat rent, however, and might be able to apply.
Baumtrog said the agency reasoned that those renters are already getting assistance and the agency decided to preserve as much of the fund for low-income tenants who had no other options.
“That’s geared to the overall need and the scarcity,” Baumtrog said. “In that case the individual has rental-assistance subsidy where not many people do. We wanted to prioritize those currently without federal rental assistance in order to target the resources. We agree that’s a challenge and unfortunate.”