Federal Policy | Analysis | State Policy | Local Policy | Coronavirus | May 1, 2020

City Halls and State Capitols Are Stepping Up with Rental Assistance. Where Are the Feds?

Written by Mike Kingsella and Melissa Winkler

Reading time: 6 minutes

Over the last several weeks, we have discussed at length the interventions at the federal level necessary to keep people in their homes and ensure rent is paid on time. The Emergency Rental Assistance Act of 2020, sponsored by Rep. Denny Heck (D-WA), is one proposal we support that would provide direct rental assistance to millions of Americans in need. This legislation proposes  leveraging an existing program, Emergency Solutions Grants, to distribute direct help to the millions of American renters who face economic hardship because of COVID-19. The bill would allocate$100 billion to be administered by the states and available to renters making up to 80% of area median income (AMI). Just yesterday, House Financial Services Committee Chairwoman Maxine Waters (D-CA) highlighted Congressman Heck’s proposal to provide $100 billion in rental and utility payment assistance to renters in non-assisted housing.

While the federal government debates the best way to help renters in need, in recent weeks, many cities and states were quick to recognize the dire consequences of COVID-19 on Americans’ ability to pay rent. While the headlines generally focus on rent suspensions or eviction moratoria, some places have determined that direct financial is assistance is critical for keeping people in their homes. The tremendous demand for this limited assistance is yet another sign that federal leadership and capacity is urgently needed to ensure that the far-reaching consequences of a lack of rent payments do not spiral out of control.

Minneapolis, which has much deserved reputation for its visionary housing policies, passed a $3 million fund to help low-income renters pay their rent. The program is designed primarily to benefit those making 30% of AMI or below with payments generally up to $1,500. The city designed the fund to help about 1,500 families, but applications have already soared to nearly 8,000 – a clear sign of the growing need for rental assistance.

Staying in the Midwest, the situation is similar in Chicago, where a fund enacted in March to provide $1,000 in rental assistance for 2,000 families in need attracted 83,000 applicants in just five days. The city also opened grant funding for affordable housing landlords while making it easier to refinance their loans to help them make up for the loss of rental income. However, as Chicago Housing Commissioner Marisa Novara stated in an op ed that calls for, among other things, direct federal rental assistance, COVID-19 has made Chicago’s housing affordability crisis even worse.

In the nation’s capital, the Department of Housing and Community Development will open applications in early May for a rental assistance program that will provide renters with $600 per month, for a minimum of six months and potentially up to two years. Los Angeles County passed a similar rental assistance program, as did the City of Los Angeles. And it’s not just a coastal or big-city phenomenon; even small town Whitefish, Montana has created a fund to help local renters with up to $300 in rental assistance, capped at 50% of current rent.

Some states are getting involved with helping state residents pay rent. In Nevada, the state Attorney General redirected $2 million in funds from a previous legal settlement towards emergency rental assistance. Rather than being administered through a state agency or program, the funds are directed to two United Way chapters that serve the northern and southern parts of the state. The story in Delaware bears a resemblance to the situations in Minneapolis and Chicago. The state was forced to halt new applications for the Delaware Housing Assistance Program after being overwhelmed with applications.

Several of these programs rely on dollars – or anticipated funding – from the CARES Act. While this may seem like good news, it also means that other critical state and local priorities may not be getting the resources they need to respond to the myriad challenges created by COVID-19. In reality, the multitude of state and local programs focused on direct rental assistance underscore the need for a significant federal investment to shore up rental payments.

Despite their best efforts, local governments simply do not have the resources to meet the tremendous demand for help with the rent – especially as state and local budgets suffer as a result of the virus. Reduced Sales tax receipts and other critical revenue streams have left state and local governments financially strained, with little ability to increase funding for the already limited local programs designed to support renters.

To ensure rent is paid on time and Americans can stay in their homes, the federal government must step up and pass robust direct financial assistance for the millions of Americans who need – or will soon need – help with the rent.