Suspended $24M state rental assistance program has only disbursed $115,000 in New Orleans

28th September 2020   ·   0 Comments

By Michael Isaac Stein
The Lens

When the State of Louisiana set up a $24 million emergency rental assistance program in July, the response from residents was so overwhelming that they had to close the application period just three days after it opened. Two months later, the state has only dispersed $115,000 for rental assistance in New Orleans, or roughly two percent of the $5.6 million expected to go to the city, according to a presentation made to the New Orleans City Council.

“It’s blowing my mind right now,” Councilwoman Kristen Palmer said. “This is insane. We’re in six months. Just like [Councilman Jay Banks] said, there are a ton of small landlords hurting. They’re in danger of having their properties taken by the banks because they can’t pay their mortgage note because people aren’t paying rent. And I’m hearing we’ve got around $6 million that’s set aside for rental assistance and we can’t get it to hit the streets?”

“It’s hard to rationalize $6 million still sitting on the table when we know we have a desperate need for it,” Banks said.

The Louisiana Emergency Rental Assistance Program was launched on July 16. It stopped accepting applications on July 19 after receiving 40,000 applications and hasn’t reopened the application process since. The total funding for the program was $24 million, the majority of which came from the federal CARES Act. Payments from the program are paid directly to landlords, according to Marjorianna Willman, director of the city’s Office of Housing Policy and Community Development.

The program is administered by the Louisiana Housing Corporation. According to LHC Public Affairs Director Na’Tisha Natt, the $5.6 million referenced at the City Council meeting reflected “internal projections that are based on need.”

Along with the $115,000 that’s already dispersed in New Orleans, Natt said that there are applications for 497 households representing $1.3 million that are working their way through “the pipeline.”

“The pipeline represents individuals who have made it through the initial phase of screening and are likely to receive funding upon submission and verification of the required tenant and landlord documentation,” Natt said.

Statewide, there are 3,122 applications worth $7 million working their way through that process, Natt said. She added that the agency continues to contact applicants on a daily basis to determine their eligibility.

“On average, the application process takes approximately a month to complete due to the multi-level federal verification process and applicant self-reporting requirements,” Natt said.

Hannah Adams, a housing attorney with Southeastern Louisiana Legal Services, a group that provides legal counseling to tenants, told The Lens that she didn’t know why the program had such a slow pace, but that the need for rental assistance is still great.

“I got literally no fewer than 30 calls yesterday from people needing rental assistance,” Adams said. “We are at this point handling hundreds of new intakes a month. And I have yet to encounter a renter who is not interested in or dedicated to obtaining whatever assistance is available to pay their rent.”

Willman said there were a number of logistical issues that could cause applications to stall, including a lack of necessary documentation and difficulty getting a landlord to sign onto an application. Sometimes, people find other assistance sources or fall out of contact while their application is being processed, she said.

Willman also revealed that a different rental assistance program run by the city had spent $1.5 million out of $2.8 million in total funding.

Council members: Eviction moratoriums may disincentivize applicants

The city presentation didn’t include any information on the large number of renters who have applied and are still awaiting funding. Without that information, some council members theorized that the small amount of disbursements could be related to a low application rate. They spent time discussing how to boost the application rate, even though the program has been closed to new applications for months.

Banks and Palmer both argued that the moratoriums disincentivized renters from seeking assistance. And throughout the meeting, they focused on how to get relief to small “mom and pop” landlords who are at risk of defaulting on their mortgage or losing their property because their tenants can’t or won’t pay rent.

“If a tenant doesn’t even want to deal with it because they know they’re not going to be evicted, they’re just not going to deal with it,” Palmer said. “Meanwhile, these small landlords are hurting and have no resource.”

New Orleans has been subject to various federal, state and local eviction moratoriums since the pandemic began in March. The most recent moratorium was issued by the federal Centers for Disease Control and Prevention and lasts through Dec. 31 of this year. After the order was issued, eviction courts in New Orleans announced a temporary stay on all evictions for non-payment of rent. But those will continue next month under the rules of the CDC order, which is not universal. The order will stop evictions for non-payment of rent for some people who make less than $100,000 a year and have faced substantial income loss due to the coronavirus.

Willman agreed that “there’s been some disincentive because of the moratorium.”

Adams disagreed.

“That’s an absurd notion,” she said. “Maybe there’s a couple bad apples out there, but that is not the majority of renters. The majority of renters are terrified and just trying to keep a roof over their family’s head.”

Adams said that most of the renters she talks to don’t even know about the CDC eviction moratorium. And if they do know it, they hopefully also know that in order to be covered by the moratorium, they need to sign an affidavit that says “I have used best efforts to obtain all available government assistance for rent or housing.”

“It’s in the order. You can’t even qualify for the eviction moratorium under the CDC order unless you make every effort to get government assistance.”

Ellen Lee, the city’s Director of Community and Economic Development, was at the Tuesday meeting and pointed out that even if tenants are temporarily protected from eviction, their debt to their landlord doesn’t disappear.

“In three months when the moratorium is over, this rent is not forgiven,” Lee said. “It’s really just deferred. The tenant is still going to be responsible for rent for all those months.”

Palmer argued that most landlords would not go through the effort of taking tenants to court over back rent.

“No one’s gonna want to pay legal fees to track down somebody who left their property or sue them for lost lease. No one’s gonna want to do that.”

Breonne DeDecker, program director for Jane Place Neighbor-hood Sustainability Initiative, told The Lens that tenants do face consequences, past just an eviction, for not paying rent debt.

“Rent debt can financially ruin tenants through court judgments and debt collection agencies, leading to the garnishment of wages, poor credit, and loss of housing opportunities in the future,” DeDecker said in an email. “It was disheartening to hear elected officials placing the blame for the lack of fund distribution on stressed out tenants, the vast majority of whom just want to be able to pay their rent and not be under threat of a future eviction while racking up thousands of dollars of back rent.”

Adams said that even if landlords don’t take tenants to court, the debt often ends up on the tenants’ credit report.

“Landlords will all report, and tenants will have a huge debt on their credit report that will prevent them from getting future housing.”

Adams said that the more likely cause of the lethargic pace of the rental assistance program is the laborious application process.

“The main barrier I thought was with that program was the 55 page application,” she said. “I know that the application was 55 pages long and a lot of landlords wouldn’t fill it out. That created a barrier for a lot of tenants.”

The Louisiana Housing Corporation has a video tutorial on its website for how to fill out the application. The video is 25 minutes long.

Banks also brought up concerns about the application process.

“Do you need a PhD to fill it out?” he asked.

There was no state representative to answer questions at Tuesday’s meeting, so many of the council’s questions went unanswered.

“I know the state has worked hard to get money out on the street,” Willman said.

“But they failed,” Palmer responded. “The state failed if they’ve only given out $100,000. We have to fix the program.”

The above article originally appeared in The Lens on its website (www.thelensnola.org). The Louisiana Weekly enjoys a partnership with The Lens.

This article originally published in the September 28, 2020 print edition of The Louisiana Weekly newspaper.