Program to help Michigan renters avoid eviction on hold until Legislature approves funding

Michigan renters and landlords who are eligible for federal rental assistance are waiting for the state Legislature to allocate federal dollars intended to help Michiganders stay in their homes.

Renters are caught between the end of federal rental assistance that ran through December, and federal new assistance, totaling more than $622 million, that will become available after the Legislature distributes it. 

Meanwhile, Michigan Republicans say they plan to distribute the new federal aid in installments, starting with $165 million, about a quarter of the rental assistance that Congress has earmarked to help Michiganders stay in their homes. 

“The Michigan House is already taking steps to approve this rent payment assistance as part of our COVID-19 recovery plan. Measures that include a portion of this funding will be discussed and possibly voted on in the House Appropriations Committee this week," House Appropriations Chair Thomas Albert, R-Lowell, said in a statement Monday afternoon.

"More funding would be released at a later point. We are calling for releasing this funding in installments simply to ensure accountability and transparency in the process," he said.

Eric Hufnagel, executive director of the Michigan Coalition Against Homelessness, in a statement, encouraged the Legislature to allocate the full amount of federal funds earmarked to help Michigan renters. 

"Our communities all have different capacity and needs, making it more difficult to assess how much of the federal funding should be made available and when," he said. "We shouldn't be holding back any resources that would keep someone safe in their home right now."

In his statement, Albert recognized federal deadlines to spend the rental assistance.

Hufnagel said those requirements mean the pace of spending is important. Congress requires that 65% of the money to be spent or earmarked for specific cases by Sept. 30. If the state doesn't reach that threshold, the federal government can claw back unused assistance. Delays in the program mean the state has to spend more each month — $50 million if the program launched Monday and $60 million if it launches March 1 — to meet the federal government's spending rules, according to a January report from the Michigan Department of Labor and Economic Opportunity.

"If Michigan obligates only 60% of funding by September 30, 2021, this would result in the federal government recapturing approximately $260 million, and the loss of rental assistance to over 25,000 families," the report said.

Gov. Gretchen Whitmer and Michigan Democrats have proposed COVID-19 relief bills that make all of the federal rental and utility assistance available immediately.

"This is all part of the larger, I guess I would say, conflict between the legislative leadership and the governor over COVID response," said Julie Cassidy, a senior policy analyst at the Michigan League for Public Policy. 

The decision to allocate a fraction of the federal funds for rental assistance comes after the House GOP threatened to withhold federal education dollars unless the Whitmer administration gives up the authority to ban in-person school or sports because of the COVID-19 emergency. The Republican COVID-19 relief plan holds back swaths of the federal dollars that Congress has distributed to Michigan, including money for the state's vaccine efforts, requiring regular updates from the governor to explain why additional funding is needed before the Legislature distributes it.

"If the federal government is providing all this money to us, why wouldn't we be using it? There's that Sept. 30 deadline, so we need to start getting this money out the door in order to spend it quickly enough to maintain the full allocation," Cassidy said. "We don't want to see money still sitting on the table when we know that there's so much need out there." 

'Michigan needs to get its act in gear' 

The first round of federal rental assistance, distributed through Michigan's Eviction Diversion Program, ran through December. A program that would utilize the new federal funding that passed Congress in December, is on hold until the Legislature distributes the money. The Michigan State Housing Authority, which will administer the funds, is ready to begin allocating emergency rental aid through the new program after the Legislature approves funding. 

MSHDA plans "to have application documents and program guidance issued within one week of the appropriations bill passing," said Katie Bach, MSHDA communications director. 

Meanwhile, leaders at local housing agencies say renters and landlords are caught in the middle. The gap between the two rental aid programs "puts so many tenants and landlords in jeopardy," said Lisa Chapman, director of community programs and outreach at Community Housing Network in Oakland County in an email. 

Michigan’s central 211 dashboard reports that rent continues to be one of the top COVID-19 related needs for which people call the service. About 174,000 Michiganders, from Jan. 6 through Jan. 18, said they're at risk of eviction or foreclosure in the next two months, according to the Census Bureau's Household Pulse Survey. 

Cases are piling up at the United Community Housing Coalition until the new program starts, said  UCHC Executive Director Ted Phillips. 

"We need to get rolling with this ... the feds have allocated these funds," Phillips said. "Michigan needs to get its act in gear." 

Matthew Paletz, CEO of Paletz Law, a Troy-based firm that represents landlords and property owners said landlords continue to struggle and any aid is welcome. 

“This continues to be an extremely financially precarious time for landlords, as with tenants, so I'm sure that landlords, just like any other industry, do not want to get ensnared in the power struggle between the governor and the Legislature," he said.

Paletz went on to say: "We're here to assist in facilitating getting that assistance in the hands of our clients, and to help tenants not get evicted. My clients don't want to evict their tenants, they just want the rent paid.”

How new federal rental funding will work 

The new round of money could assist as many as 60,000 Michigan families, Kelly Rose, MSHDA chief housing solutions officer, said in December, shortly after Congress passed its latest COVID-19 relief package. 

The new program — the COVID Emergency Rental Assistance (CERA) — can help renters with their past due rent and utilities, according to MSHDA.

CERA can help renter households that have incomes less than 80% of area median income and who show evidence of one of the required COVID-19 hardships including: unemployment, loss of income, increased expenses, past due utility, rent notice or other economic hardships. 

In the Detroit-Warren-Livonia metropolitan area, 80% AMI translates to a one-person household making $44,000 or less. 

Both landlords and tenants can apply for the program, according to MSHDA. The state budget office says CERA can potentially provide up to 12 months of rental assistance and one-time utility payments. 

"At the program's outset people will apply with their local service agencies much like (the Eviction Diversion Program)," Bach said in an email. "We are working on getting an online, paperless application portal set up to start taking applications toward the end of March. This online application will help speed up the process for applying and processing of applications." 

CERA follows the state's Eviction Diversion Program, which ended in December. About 16,000 households were approved for EDP's $50 million, according to MSHDA.  

The Centers for Disease Control and Prevention last week extended a federal moratorium on some evictions through March 31. 

But that's not enough, housing experts and advocates say. The stay — which requires tenants meet eligibility requirements and submit a declaration form — needs to be paired with rental aid. 

"When that moratorium expires, people who have accumulated back rent are still going to be on the hook for that money," Cassidy said. "We really don't want that to happen. There could be a tidal wave of evictions and that is the last thing that we need right now as a state."

Free Press staff writer Dave Boucher contributed to this report.

Nushrat Rahman covers issues related to economic mobility for the Detroit Free Press and Bridge Detroit as a corps member with Report for America, an initiative of The GroundTruth Project. Click here to support her work.

Contact Nushrat: nrahman@freepress.com; 313-348-7558. Follow her on Twitter: @NushratR. Sign up for Bridge Detroit's newsletter. Become a Free Press subscriber.