Where is the rental assistance?

It’s been three months since Minnesota received $375 million from the federal government for emergency rental assistance, but landlords and renters have yet to receive a single dollar, and the state’s housing agency still can’t say for certain when they will.

Some hope for landlords and renters came just last week, when the state housing agency — known as Minnesota Housing — launched its sleek, custom-built website to begin accepting applications.

State officials attribute the delay to the complexity of standing up a new benefits program, replete with complicated federal requirements and that dwarfs the state housing agency’s typical annual budget.

The pile of money Minnesota Housing is currently sitting on is expected to nearly double in the coming weeks as the federal government distributes another $20 billion to state and local governments from the relief package passed in March. At that point, the amount of emergency rental assistance the agency has to distribute over the next year and a half will be nearly ten times its $62.5 million annual budget.

Like each relief package before it, March’s American Rescue Plan has slightly different rules governing rental assistance, adding to the bureaucratic burden for state and local governments.

But Housing Commissioner Jennifer Ho says the wait to do the program right, rather than first, will be worth it.

“I think the hardest part is actually behind us,” Ho said. “I think now, we’re going to be just ironing things out.”

Few states have moved quicker. Still, that Minnesota isn’t alone in taking months to distribute emergency relief — some states haven’t even begun accepting applications — is little consolation for landlords and renters, about one third of whom are not certain if they can pay rent next month, according to a recent Census survey.

“When you look at the bills you don’t sleep,” said Awa Dolley, 41, who owes about $10,000 in rent and utilities on her townhome in Brooklyn Center.

Dolley supports her mom and son working as a home health aid, which pays $13 an hour. But since the pandemic began, she hasn’t been able to piece together enough hours for it to be full-time. She got sick with COVID-19, which kept her home for weeks. And then many people canceled service, afraid that health aides might infect them.

Despite a state executive order barring landlords from kicking tenants out for not paying rent, Dolley says her landlord has threatened her with eviction — a fear that hangs over her head.

Dolley has applied for rental assistance three times, with the help of the community non-profit African Career, Education and Resource, Inc., which serves African immigrants in suburban Minneapolis.

“I had no clue what to do. So I didn’t want to put anything on it that would be a mistake,” Dolley said.

The application took about an hour to complete — a process she’s gone through three times now over the past six months, although funds have yet to be distributed.

How quickly the state can approve and distribute funds to renters will determine how smoothly the state can roll back the eviction moratorium, which has blocked landlords from evicting tenants for not paying rent for over a year.

The state Senate recently passed a plan to override Gov. Tim Walz’s eviction moratorium with bipartisan support earlier this month.

But the state was sluggish to distribute the last round of rental assistance — $100 million authorized by Walz in July last year. Some landlords were receiving payments from that round of stimulus this month to pay for missed rent from last year.

“With that program, the issue we got into was by the time people got checks, they were at least two months behind again,” said Dan Largen, CEO of Mint Properties, which leases 1,540 apartments in Minneapolis and St. Paul.

That has been addressed in the latest rounds of federal relief, which will pay up to 18 months of rent, including pre-paying up to three months of rent.

To say the past year has been hard doesn’t quite capture it, Largen said.

Their revenue is down 20-25% month to month. Their tenants have a total of $375,000 in unpaid rent from the start of the pandemic.

But that just includes the back rent owed by current tenants.

They’ve lost $160,000 over the past year from tenants who failed to pay and then moved out. They’ll likely never recoup much of that loss. Even if they could get a former tenant to fill out the paperwork, emergency rental assistance can only be used by people to pay rent where they currently live.

That’s on top of higher-than-normal vacancy rates as the pandemic and civil unrest drove some people out of the city, Largen said.

They did receive federal Paycheck Protection Program loans, and some of their lenders allowed them to suspend payments for a couple months.

“We just turned to refinancing just so we could survive another year of it being really bad,” Largen said. “So the hope was we get out of this and things should hopefully be okay as long as we can just survive in the interim.”

With the first round of stimulus, Largen says they hired a few people to call tenants and go door-to-door to help them apply for assistance.

This go-around, he says they’ve made custom rent statements for all their tenants behind on rent with checklists for what information they need to apply. They also plan to set up a couple computers in their office so they can sit with people to complete their applications.

Minnesota Housing has also contracted with more than two dozen community organizations like ACER, which helped Dolley apply, to find renters who need assistance and help them apply. Renters can also call 211 to be directed to someone to help apply.

The help is needed because the federal government requires significant documentation to apply: an ID, a rental agreement, 2020 tax documents for all adults or two months of pay stubs, an invoice from the landlord stating how much rent is owed and any unpaid utility bills and other housing costs like court fees.

The assistance is available to people making less than 80% of the area median income, or about $80,000 for a family of four in the Twin Cities. Expenses renters have already paid, however, cannot be reimbursed.

The Housing Justice Center’s first call was from a man who doesn’t use the internet, can’t read and didn’t have access to many of the documents needed on the checklist, said Margaret Kaplan, the nonprofit’s president.

“And this wouldn’t be an unusual thing,” Kaplan said.

They spent about two hours on the phone with him to get him ready to submit an application.

“I will say you can tell they did a lot of work to improve the system,” Kaplan said. “And so for people who have good internet access, I think the system will work pretty well.”

Kaplan noted a bitter paradox: The assistance can’t be used for internet, although it can go toward other utilities like electric and gas.

Both landlords and tenant advocates concede that federal money only rarely comes without regulations or strings attached.

Which means paperwork and bureaucracy.

Ho said she doesn’t know yet what the cost of running the program will be, although the state could spend tens of millions of dollars administering the program. They’re allowed to use 10% of the funding for administering the assistance from the December package and up to 15% from the March package.

The department will contract with outside agencies to do most of the work. It’s paying non-profit community groups to find people who are eligible for the assistance and sign them up. It’s also contracted with a national firm to verify every application.

Asked if she thinks Congress made the application process too burdensome, Ho was diplomatic.

“I’m glad Congress gave us this money,” Ho said. “It’s my job to implement it, not to criticize it.”

She encouraged everyone to take their time and do the application right the first time, which will allow them to process them more quickly.

Kaplan criticized the process for the government’s paternalism.

“Fundamentally, we have a system that does not trust low income people to make good choices,” Kaplan said. “This is a really complicated way to essentially provide very low income renters with money. Money that for the most part will never be in their hands.”

For their part, tenant advocates like Kaplan are mistrustful of landlords and lobbied Minnesota Housing to require landlords who accepted the assistance to renew their renters’ lease agreements unless they had a reason not to.

Ho said her department declined to exact any agreements from landlords in exchange for accepting the money, believing those decisions are best left to the Legislature and so as not to discourage landlords from participating.

Most people are willing to apply for the assistance, landlords say, although there are a handful who are not. Some renters have experienced the opposite — landlords who are unwilling to fill out the necessary paperwork for the assistance.

With the latest round of rental assistance, there is a way for renters to collect the assistance if their landlords don’t participate. But there is not a way for landlords to apply for the assistance for their tenants.

Lisa Marvin, who manages 1,580 units across the state and is the central Minnesota chair of the Minnesota Multi Housing Association, says they’ve also hired a fulltime person to help tenants apply for assistance. Most do, but she has a number of tenants who refuse to apply for the assistance because they’ll likely be evicted anyway as soon as the moratorium expires.

“Some have some pretty horrific lease violations, and they know they’re going to be non-renewed,” Marvin said. “So they have no intention of paying.”

The eviction moratorium allows landlords to kick out tenants who are a danger to other residents or cause significant property damage. But Marvin says, in practice, it’s not easy to get in front of a judge.

The effect is they have problem tenants who they can’t remove and can’t collect rent from — even via federal assistance.

“It’s been terrible,” Marvin said.