The Case for Rental Assistance: Why It is Necessary and How Cities Can Fund It

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Housing instability plagued many Americans long before the COVID-19 pandemic, but the global health crisis has recently pushed it to the forefront of many policymakers’ minds as more families are urged to shelter in place. With orders to stay-at-home to help curb the spread of the virus, the question of who has a home to stay in, and how long they can afford it, is increasingly pertinent in light of the millions of individuals filing for unemployment or having their work hours significantly reduced. Given that nearly half of renters spend more than 30 percent of their income on rent and utilities and almost 11 million are severely cost burdened by spending more than half their income on rent, the housing affordability crisis is threatening to quickly become a public health crisis. 

Acting swiftly, Congress recently passed The CARES Act, which includes the provision of funds directly to state, local and tribal governments through the Coronavirus Relief Fund. This act was an important step toward protecting tenants — but significant gaps remain for renters. The federal law prevents evictions from federally supported housing and from single-family and multifamily properties financed by federally backed mortgages, such as by Fannie Mae, Freddie Mac or Department of Urban and Housing Development (HUD) loans. The Urban Institute estimates that roughly one-in-four rental units (12.3 million) will be covered by the 120-day federal eviction moratorium, leaving states and cities nationwide scrambling to provide support to those at risk of falling through the cracks.  

States nationwide are rapidly rolling out policies that protect renters from being removed from their homes amidst the current coronavirus outbreak, but in many cases cities are stepping in to provide additional protections. In California, Governor Gavin Newsom issued an executive order that prohibits nonpayment evictions, provided that renters can show documentation of COVID-19-related loss of income. However, the statewide California moratorium, and others like it, does not prevent evictions in cases where tenants don’t meet the documentation requirements in a timely manner, for other alleged breaches of a lease, or “no fault” evictions. In Oregon, Governor Kate Brown’s order puts all law enforcement actions related to residential evictions for nonpayment of rent on hold, but does nothing to alter the process once the state’s courts reopen and restart processing. The Oklahoma Supreme Court’s closure of courthouses postpones the majority of eviction hearings from taking place, but does not prevent evictions from being filed.  

It has fallen to cities such as San FranciscoOakland, Santa Cruz, Hayward, CA, and  Beaverton, OR to issue additional measures to prevent landlords from evicting tenants, including barring evictions for a broader range of reasons such as pausing the processing of eviction requests, or not enforcing eviction orders. Some city leaders are also looking ahead to repayment processes that will begin in earnest once eviction protection measures are phased out and the clocks start ticking again for evictions in process. Legislation passed by the Fresno City Council gives tenants up to six months from the time the emergency declaration is terminated to repay deferred rent, while Los Angeles residents have a full year from when the local emergency order is lifted. 

The Case for Rental Assistance  

Regardless of whether or not a city or state has a comprehensive moratorium on evictions in place, the process of recovering rent will only become more complex as the economic ripple effect of the coronavirus on renters, low-income workers, and landlords themselves intensifies. Although the CARES Act expands eligibility for unemployment benefits and millions of Americans are expecting to receive a one-time stimulus check, many renters and low-income households lack sufficient financial padding: Four out of every 10 Americans report that they would have difficulty paying for an unexpected $400 expense, and many renters already struggle to meet their basic needs. The National Multifamily Housing Council recently reported that based on data from 13.4 million rental units across the country, almost a third of households had not paid their monthly rent in the first five days of April, compared to 18 percent of households at the same time last year.  

Paying rent on a monthly basis and the eventual repayment of unpaid rent are likely to become increasingly difficult for many Americans, particularly for those counted among the millions who have filed for unemployment or who have seen their work hours decline. State, local, tribal, and territorial governments should take equitable steps to ensure that renters  especially those with the lowest incomes and those that have been disproportionately impacted due to structural racism do not face an eviction cliff when moratoria are lifted.  

Cities Implementing Rental Assistance 

Many cities have already started putting measures into place to support households as they aim to make rent, often leveraging general funds or partnerships with nonprofits and philanthropies. The City of Boston (where courts have suspended most eviction proceedings), recently announced a $3 million investment in a Rental Relief Fund. Managed by the Office of Housing Stability at the Department of Neighborhood Development in partnership with two local nonprofits, the fund offers up to $4,000 in financial assistance for rent to income-eligible residents. Similarly, Chicago, IL’s Department of Housing will award $2 million from the Affordable Housing Opportunity Fund in partnership with the Family Independence Initiative as grants to 2,000 individuals at or below 60 percent of the area median income (AMI). The City of Hillsboro, OR has committed $100,000 in rental assistance as part of a larger crisis funding package. The Saint Paul, MN City Council has allocated $3.3 million from the Housing and Redevelopment Authority budget to the St. Paul Bridge Fund, in order to provide $1,000 grants to families at or below 40 percent AMI.  

Providing Rental Assistance with Federal Funds 

In addition to drawing on existing reserves or general funds, cities receiving federal funds will have a greater opportunity to offer direct assistance to some of the households who need it most by making allocations to rental assistance from CARES Act funding for the following programs:  

Community Development Block Grants (CDBG) 

$5 billion in CARES Act funding is allocated directly to state, local, and territorial governments, with housing assistance payments included as an eligible activity. The CARES Act also suspends the usual 15 percent services cap on CDBG expenditures, meaning that grant recipients may spend 100 percent of funding on rent payment assistance for distressed and low-income households.  

Emergency Services Grants (ESG) 

A total of $4 billion in ESG funding will be allocated, with half of those funds being directed to current grantees within 30 days of enactment of the CARES Act.  These funds can be used for homelessness prevention efforts, including rental assistance and rental arrears, to prevent individuals or families from moving into an emergency shelter— rapid re-housing to help individuals or families move into permanent affordable housing and achieve housing stability, street outreach, and shelter operations and administration.    

Whether with federal dollars, general funds, or local partnerships, cities should move quickly to provide supplemental rental assistance to their most vulnerable residents. If not done in tandem with emergency rental assistance or good-faith payments to impacted landlords and property owners, the positive impacts of any economic stimulus could easily be canceled out by the financial cliff that many households find themselves on the brink of.  

About the Authors:

Lauren_Lowery_smallLauren Lowery is the program director for housing & community development at the National League of Cities.

 

 

Screen Shot 2020-04-17 at 10.38.11 AMNatasha Leonard is a graduate student intern for the Center for City Solutions team at the National League of Cities. She is completing her master’s degree in public policy at Georgetown University’s McCourt School of Public Policy. Follow her on Twitter @NatashaJLeonard.