States rush to distribute billions in rent subsidies before federal deadline to use or lose it

Entering New York Governor Kathy Hochul faces multiple pressing challenges when she takes the helm this month. Among the most important to many residents of his state: Distributing nearly $ 800 million to needy tenants before the federal government takes them back.

New York State received $ 1.3 billion from Congress last year as part of a a first installment of federal rent assistance. As of this week, however, less than $ 100 million has reached landlords to cover what their tenants owe in rent.

Federal guidelines allow the US Department of the Treasury to recover unused funds from September 30 and reallocate them to programs in other states that have used at least 65% of their funding. The impending deadline worries some housing advocates in New York, who fear that the state will lose rental assistance if it delays in distributing it.

Jordan Dewbre, a staff attorney at BronxWorks, a nonprofit that helps both tenants and landlords seek help, expressed concern that if the state does not distribute enough money to tenants, “the Treasury can recover these funds and allocate them elsewhere.”

“It’s a definite concern,” Dewbre told CBS MoneyWatch. “In June, I was like, there’s no way it’s going to happen.”

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A Treasury official told CBS MoneyWatch that the target of distributing 65% of rent assistance by September 30 was only a guideline for identifying programs that might be eligible for additional funding – not a spending deadline. The official added that the agency encouraged states to use the full financial allocation they received in the first round of emergency aid funding.

“The administration is laser-focused on encouraging jurisdictions to move the money faster, and they want to use the September 30 step – not the ‘deadline’ – as a push for faster delivery of goods. fund, “said Stockton William, executive director of the National Council of State Housing Agencies, which is part of a group of organizations that have called for flexibility by September 30 in a July letter.

While some states and counties fear losing funds, Stockton suggested that the Treasury Department would take a generous approach to assess progress in the distribution of rent assistance, looking at the total amount of money approved as well as the request that the programs had received – not just money that went into the hands of landlords or tenants.

If a program stays well below the 65% threshold taking into account all the money in the pipeline, “I think Treasury will want to ask very focused questions and understand how the jurisdiction plans to accelerate funding, and what. type of request he expects in the coming month, “he said.

The money barely flows

Many states and cities have been slow to get money from tenants. Seven states – Alabama, Arkansas, Mississippi, Indiana, North Dakota, South Carolina and Wyoming – have spent less than 2% of their rent assistance funds, according to the National Low-Income Housing Coalition, which tracks progress of States in the disbursement of funds.

Among the large states, Florida spent just 3% of the $ 870 million allocated to it in the first round of rent assistance funding. Georgia spent 2% and Ohio spent about 7%. Nationally, only 17% of the first round of financing reached tenants, according to the NLIHC.

As of this week, New York has paid about 7% of its funds to tenants. The state received more rent assistance funding than any other except Texas, but the New York program was one of the last to start on June 1. The first payments were not made to tenants until July 19.

Many community groups have lambasted the Empire State’s online-only application process, calling it cumbersome, opaque and unreasonably slow to get money to desperate tenants.

“We can’t solve any problem, we can’t check the status, see where the request is, if it is pending, if it needs more information. We do not receive a notification if a request has been refused or approved, “Lakisha Morris, who heads the rental assistance program for Catholic charities in New York City, told CBS MoneyWatch.

“This generates significant anxiety for tenants,” Xing Hui Zheng, deputy director of University Settlement, said in an email. “What will happen to tenants who already have eviction cases in court? The New York eviction moratorium ends August 31,” she said.

(The U.S. Supreme Court on Thursday blocked part of New York’s eviction moratorium and allowed landlords to challenge their tenants’ economic hardship claims in local courts.)

Millions of people at risk of homelessness


In response to those complaints, New York’s Office of Temporary and Disability Assistance, which manages the program, announced a number of improvements this week, including the ability to save an incomplete online application. OTDA Commissioner Michael Hein defended the state’s efforts to distribute rental assistance during a hearing before the New York State Assembly on Tuesday.

“The New York program timeline is not out of step with other states when we factor in when each program was launched,” Hein said.

The OTDA also noted that New York City approved $ 460 million in rent assistance, much of which was awaiting landlord approval to be paid, a key step in the multi-step application process. According to the agency’s calculations, the state must move $ 780 million by the end of September to be clear.

“For those concerned that New York City faces a potential clawback of federal funding for not committing sufficient funds by the September 30 deadline …. I’m happy to say New York is on track to meet this important federal requirement, ”Hein told the Assembly. .

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Smaller programs already in use

On the other end of the spectrum, some local housing programs have already reached their first round of rent funding and are looking forward to more.

The city of Los Angeles stopped accepting rental assistance applications on April 30 citing “An unprecedented demand that far exceeded the funding of the program”. The rental assistance program in Tucson and Pima counties, Ariz., Has so far heard from about 16,000 tenants, and “it continues to grow,” according to Meghan Heddings, executive director of Family Housing Resources, one of the participating non-profit organizations.

The local program to date has sent $ 21 million in aid, nearly double the amount the state of Arizona has distributed to counties that do not have local programs.

“Our state received $ 200 million and much less was brought to the local [program]”Heddings told CBS MoneyWatch.” Is there a way for them to provide us with more funds? I hope this request will be made. We have proven that we know our community and that we can get these funds. “

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