As Minnesota and other states gear up to distribute hundreds of millions of federal dollars to help tenants who’ve fallen behind in rent payments, the question remains: How many people are in that group — and how much do they owe?

Nationwide estimates have ranged from $36 billion (by Moodys Analytics) to $11 billion (by the Federal Reserve Bank of Philadelphia). But now, a new tool created by an Oakland, California-based research and policy nonprofit, PolicyLink, and the USC Equity Research Institute uses a combination of databases to show the scope of the problem in states and counties around the U.S. 

Bringing together data from the Census Household Pulse Survey and USC’s Understanding Coronavirus in America survey, the Rent Debt Dashboard estimates the national accumulated rent debt to be $19.8 billion, representing 5.74 million households with average debt per household at $3,400. In Minnesota, the total estimated debt is $155.6 million for 53,000 households owing an average of $2,900.

Of those Minnesota households, 60 percent are people of color, 43 percent report being unemployed, 75 percent earn less than $50,000 a year and 71 percent report having lost income during the pandemic. Just over half of the accumulated debt in the state is from the two largest counties — Hennepin and Ramsey — but there is evidence of a back-rent problem across the state.

Congress is distributing $25 billion for state rental assistance programs, and the state received $375 million from the December COVID relief bill for rental assistance. There is also a program to help with utility bills. The federal law allows up to 15 months of payments to the landlords of those behind on rent. In Minnesota, a combined program by the state Housing Finance Agency, the large metro counties and Minneapolis and St. Paul allows people behind on rent— or who expect to be unable to pay in the next several months — to apply at renthelpmn.org. If they meet the income limits and can demonstrate that the pandemic contributed to their hardship, they can qualify for help dating back to the start of the pandemic.

Landlords can help tenants with the application process and the payments go directly to landlords. Getting those payments to landlords remains a challenge, however, as it was for a state program last fall and winter that eventually spent $100 million of federal CARES Act money.

The new program ties directly into negotiations among legislative leaders and Gov. Tim Walz over how to end the 14-month-old eviction moratorium. All want a phase-out of the moratorium so as to ease the flow of evictions. The disagreement is over when the phase-out would begin — at a date set in the law or some days after Walz lifts his emergency authority.

How the dashboard came together

Sarah Treuhaft, the vice president of research at PolicyLink, said the dashboard emerged from a request by Contra Costa County in California for better data to help its board make decisions about eviction moratoriums. She said the Census last summer added a question to the Pulse survey about whether respondents are behind in their rent. That was an addition to an earlier question about whether respondents were confident that they would be able to make their next rent payment.

Meanwhile, the USC Understanding Coronavirus survey provided more data about the amount of back rent owed, and the dashboard grew out of tenant advocacy efforts during the pandemic. “It began with a need on the ground for more local data to inform anti-eviction work,” Treuhaft said last week. “We came up with a methodology to do that, to estimate how many households were at risk of eviction at the county level.

“It’s clear now that there is rent debt that has accumulated for some renters and that must be cleared for those households to stay in their homes and recover from the pandemic which unequally impacted them,” Treuhoft said.

Minnesota rates have been lower than the national average, Treuhaft told a recent meeting of the Minnesota Housing Partnership. “That is a good thing. But still, 53,000 households is a large number.”

The dashboard does not look at those behind in mortgage payments or utility debt. The latter is covered by the RentHelpMN program, while a separate batch of federal money will be used to help homeowners in arrears on mortgage payments. There was no attempt to measure other debt accumulation for tenants who have made rent payments but are still in financial trouble.

“People do everything to pay the rent,” Treuhaft said. “They (are forced to) make terrible tradeoffs on paying for food and clothing and medical bills.”

What about the landlords?

Every dollar of unpaid rent by a tenant is a dollar in money not received by the owner of the residential unit. While the rental assistance money will eventually flow to landlords, they have been without money for more than a year — money needed to cover loan payments, utility bills and payroll for their own employees.

Elijah de la Campa, a senior research associate in economics and urban analytics at the Bloomberg Harvard City Leadership Initiative, has been working with Minneapolis housing officials, which is why the city is one of eight he looked at in his research. “There are two sides to the market,” de la Campa said during a recent webinar on his research. On one side, you have renters who are struggling to make rental payments, depleting their savings, ruining their credit and amassing arrears.

“On the other side, we have the landlords who are not collecting as much in rental payments as they were prior to the pandemic and they’re struggling to stay afloat themselves, struggling to make their mortgage payments, make their property tax payments,” he said. “If we really want to understand the full extent of this crisis, we ought to study how actors on both sides of this market are faring.” 

Most landlord data that has been available comes from national rental housing associations that tend to represent larger companies with many units under professional management. Those surveys have shown non-payment of rent in the 2 to 4 percent range. In Minnesota, the Minnesota Multi Housing Association’s most recent survey indicates that rent payments were at 95 percent for the highest quality apartments and 86 percent for what is considered naturally occurring affordable housing.

De la Campa wanted to look at smaller operations, so-called mom and pop landlords with a handful of units, which represent half of the nation’s rental units. He looked at eight rental markets, including Minneapolis, by surveying landlords via city rental housing registry databases. The other cities were Albany and Rochester in New York; Trenton, New Jersey; Akron, Ohio; Racine, Wisconsin; Indianapolis and San Jose.

De la Campa found that landlords in all size groups report deferring maintenance on units with tenants behind in the rent. But there are differences in other responses based on size. Larger landlords, for example, are more likely to offer rent-payment plans to struggling tenants and decrease barriers to rent via rent cuts or lower tenant screening standards than small landlords. But they are also more likely to start eviction proceedings than small owners.

Minnesota has the strongest eviction moratorium of any of the states De la Campa studied, which is reflected in the few survey responses from landlords who say they have used eviction during the pandemic. But another question found that more large rental operators say they would consider evictions once they are allowed.

“The finding, that is robust to every sort of city and place that I look at, is that evictions are more likely among larger landlords and midsized landlords; they’re more likely in neighborhoods with more residents of color; they’re more likely in neighborhoods with lower incomes; and they are more likely to occur in the future,” de la Campa said.

Larger-sized landlords are more familiar with the eviction process in their cities, and consider it part of their business model, than are small landlords, de la Campa said, something true before the pandemic as well as during. In turn, owners of a small number of units are more likely than large landlords to report missing their own payment obligations on loans and taxes and are more likely to try to sell their holdings, de la Campa said.

De la Campa said that the highest number of responses came from Minneapolis, and he found that the rent payment problem in the city, while serious, is less so than in the other cities he examined. Between 2019 and 2020, the increase in units receiving less than 90 percent of what was owed in rent increased by 10 percentage points in Minneapolis. The same number for the three Midwest cities combined — Minneapolis, Indianapolis and Racine — was nearly 20 percentage points.

Still, the presence of units in arrears was higher among both renters and landlords in lower-income areas. In neighborhoods below the median Minneapolis income, the percent of units owing back rent was 20 percent, he said.