WASHINGTON — About 89% of federal rental assistance approved by Congress remains unspent, despite President Joe Biden’s efforts to encourage states and cities to get the money out faster as a potential eviction crisis looms.
The Treasury Department on Wednesday released updated payout figures that show states and cities distributed $1.7 billion to landlords and renters in July, a modest 10% increase from the $1.5 billion distributed in June.
All told, states and cities spent $5.2 billion out of $46.5 billion in rental relief authorized from COVID-19 rescue packages since December – $4.7 billion of which has gone directly to households and the rest toward administrative costs. About 11% of the total allotment of federal funds has now been dispersed.
One of six renters is estimated to be behind on their rent, according to the U.S. Census Bureau’s Household Pulse Survey.
Yet in many states, landlords and renters have struggled to get approval for funds designed to help renters unable to make payments during the pandemic.
Several states contracted third-party vendors to lead the programs, requiring lengthy procurement processes that delayed the initial rollout of money. Computer systems in several states malfunctioned, preventing renters from applying. Some states are requiring tenants to provide more documentation than required by federal law, which experts say has created unnecessary hurdles to get money out the door.
Struggling tenants got a reprieve this month when the Centers for Disease Control and Prevention issued a targeted moratorium on evictions in areas hardest hit by the coronavirus. But the new directive, which bans evictions in counties with high rates of COVID-19 transmission, expires on Oct. 3, and the freeze is the subject of court challenges.
The Treasury Department touted the latest figures as “continued progress,” noting the funds have helped nearly 1 million households. About 341,000 households received rental assistance in July, up from 293,000 households in June. The department also announced new guidelines o try to expedite the release of the money.
That includes allowing applicants to self-attest, rather than providing documents, to prove their financial hardship, risk of homelessness or housing instability, and income. States and cities can also partner with nonprofits to offer advance money to households at risk of evictions and make additional payments to landlords who take on tenants facing major barriers to secure a lease.
About $25 billion in federal money poured into states and cities in February to help renters unable to make payments amid the pandemic, followed by the March approval of another $21.55 billion in Biden’s American Rescue Plan.
To receive money from the Emergency Rental Assistance Program – first funded by Congress in December – tenants must apply in tandem with their landlords. The largest cities or counties in most states typically operate their own rental assistance programs in addition to those led by states.
Eligible renters, according to federal law, must have experienced a loss income from the pandemic, be at risk of losing their home and have a household income 80% or below the area’s median income. The money typically goes straight to the landlord.
Reach Joey Garrison on Twitter @joyegarrison.