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As deadline looms, Minnesota struggles to spend COVID funds set aside for rental, mortgage assistance

The plan was to use $100 million of Minnesota’s federal CARES Act money to pay for the COVID-19 Housing Assistance Program. 

MinnPost photo by Corey Anderson
As of the end of November, $68 million in federal CARES Act money had been requested from 28,000 applicants.
Minnesota officials and housing advocates were hopeful in July when they announced a new program to cover rent, mortgage and utility payments for people financially pressed by the pandemic.

Coming after months of legislative failures to provide relief and created by executive order, the plan was to use $100 million of Minnesota’s federal CARES Act money to pay for the COVID-19 Housing Assistance Program, making it one of the largest such programs in the U.S. 

But now, with struggling renters and homeowners only having one week left to apply for the aid, the program may find itself pressed to get all of that money out the door in time for the federal government’s Dec. 30 deadline to spend CARES Act funding. 

As of the end of November, $68 million in relief had been requested from 28,000 applicants. While some of those requests have been denied for lack of eligibility, nearly 2,800 are still being processed, and more than 9,000 have been completed but are awaiting a ruling on eligibility. For the more than 13,000 applicants approved so far, $47 million has been sent to local program administrators.

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Waiting for checks

A moratorium invoked by Gov. Tim Walz in the early days of the pandemic stopped most evictions. It didn’t, however, end the legal requirement to pay rent, mortgage and utilities. 

That is where the housing assistance program came in. Announced in July, the same month the federal government ended its extra $600 weekly unemployment insurance benefit, the program had bipartisan support and the endorsement of both landlord organizations and tenants rights groups. 

It allowed tenants and homeowners to request money to cover unpaid bills — assistance that can go for rent, mortgage payments, homeowners association dues, homeowners insurance and utilities. Households with income at 300 percent of the federal poverty level or less could apply (for a two-person household, that is about $52,000), and applicants have to show that their financial stress was caused by the pandemic.

Gov. Tim Walz looks on as Lt. Gov. Peggy Flanagan speaks during Tuesday's press conference.
MinnPost photo by Peter Callaghan
Gov. Tim Walz looking on as Lt. Gov. Peggy Flanagan speaks during a press conference announcing the funding in July.
Yet the assistance checks flow to the landlord, bank or utility, not the applicant. And some landlords have since expressed concerns that they often wait a long time to receive money. 

Cecil Smith, the president and CEO of the Minnesota Multi Housing Association, which represents owners and managers of multi-unit housing, said his members are concerned that they’re getting notified that tenants have been approved for help but that checks have been slow to arrive. “An approval doesn’t pay our mortgage,” he said. “We’ve got to see the check to pay the mortgage.”

Smith said he knows the money will ultimately be paid and didn’t want to complain too much when bars and restaurants are in a much worse position. He also noted that renters have generally been making monthly payments, sometimes late but nearly all within a month of due dates.

‘Hard to quantify what the level of need would be’

Jennifer Ho, the commissioner of the Minnesota House Finance Agency, which created the aid plan, said that creating a system involving 52 local government and non-profit administrators in just a few weeks was a challenge. 

Ho said that one unforeseen issue was that there were more applications than expected but for lower amounts than expected. Though the state finance agency is not taking any of the allotted money for its administrative costs, it is compensating the local agencies between 10 percent and 15 percent of money allocated, and has allowed some to request higher payments to increase staffing to help process applications.

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And while she isn’t ready to conclude that the need for housing payment assistance may not have required $100 million, she said she preferred to request more than enough rather than less, and any unspent funds will flow to other CARES Act needs should it not be spent, she said.

“It was hard to quantify what the level of need would be,” Ho said Thursday. “To me, the most important thing is that our partners who are out there doing this work have continued to roll up their sleeves and adapt and adapt and adapt.”

A push for more applications

Applications from tenants for the housing assistance fund must be submitted by midnight Monday, and on Thursday, Gov. Tim Walz and members of his administration launched an effort to increase applications by the cutoff.

While the federal government’s CARES Act funding expires Dec. 30, Lt. Gov. Peggy Flanagan said the state has received grants totaling $1.5 million from the Bush Foundation and the McKnight Foundation to cover the administrative costs of the local agencies after Dec. 30. That will permit them to continue to move approved checks into the new year.

Commissioner Jennifer Ho
Commissioner Jennifer Ho
“There’s still money available. We’ve got room for one more big push right now,” Ho said. “We know the need is out there. It is the federal deadline that is forcing us to have to close this.”

There is also a chance that Congress could at least extend the Dec. 30 deadline for spending CARES Act money appropriated last spring, even if it can’t agree on additional assistance for states, businesses and individuals.

Rep. Mike Howard, DFL-Richfield, has been an advocate of rental assistance since the pandemic began. He doesn’t doubt the need for the entire $100 million but acknowledged the administrative burden of getting it distributed has proven to be difficult. 

He said he is proposing to extend the program into 2021 for up to $50 million, something he will raise when lawmakers convene mid-month to act on a state COVID relief package. One change could be to let landlords make applications for money if tenants aren’t making payments. Similar rules have been imposed in King County, Washington and Washington, D.C. 

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Data compiled by the Minnesota Housing Finance Agency shows that 56 percent of applicants so far are people of color or Native Americans, 23 percent have been homeless and 7 percent have been evicted.

Housing advocates and landlords both fear that without housing payment assistance there could be a rush of evictions once the state’s eviction moratorium ends, especially among those who have allowed back rent and mortgage payments to build up. Ho said she hopes to meet with lawmakers next year to come up with what she termed an off-ramp from the moratorium.

“It’s not in anybody’s interest to have the avalanche of evictions,” Ho said. “At a time when the homelessness system is too strained, is not the right time to deal with thousands of more people needing homeless services.”