Missouri could lose millions in federal rental assistance because it's not getting used fast enough
Jill McCormick shook her head and lifted her eyes to the ceiling.
“What is the hold up for getting that money directly to [tenants]?” McCormick, a tenant advocate with the nonprofit Action St. Louis, asked St. Louis’ new director of human services, Yusef Scoggin, at a community meeting Tuesday.
The city has received more applications for rental and utility assistance than it can fund, Scoggin said, and is struggling with a four- to six-week turnaround on those applications. Meanwhile, in St. Louis County the turnaround time is only about eight to 10 days.
And compared to the city, which has spent 57% of the rental assistance money it’s received from federal COVID relief legislation, the county has spent 71%, as of Sept. 30.
The slow pace has frustrated city residents and inspired calls for action.
But advocates say that the situation at the state level is even more uncertain.
Missouri is at risk of losing millions in federal rental assistance because it isn’t getting the relief funds out to residents fast enough.
As of the end of September, the state had awarded only 18% of the $323.7 million it received as part of the Emergency Rental Assistance Program (ERA1), the COVID-relief package Congress approved in December.
Earlier this month, the U.S. Department of the Treasury sent a letter to states and municipalities saying that if they hadn’t distributed 65% of the first batch of rental assistance funds by Sept. 30, they should submit an improvement plan to the treasury by Nov. 15.
And for places like Missouri that fell below 30%, they are in jeopardy of the feds determining that the state “has excess funds subject to recapture,” the letter states.
None of this was mentioned Thursday during a meeting of the Missouri Housing Development Commission, the state agency tasked with administering these federal relief funds.
Steven Whitson, community initiatives manager for MHDC, told commissioners during a virtual meeting that everything was looking “very positive” and on track.
“The program is moving very well,” he said. “We’re pushing out more money every single week.”
There was no mention of an intention to submit an improvement plan in two weeks, and none of the commissioners asked questions about this.
“Based on new guidance from U.S. Treasury, we made some changes to the application process, which are already benefiting applicants,” Brian Vollenweider, the public information administrator for the commission, Told the Independent in an email after the meeting. “We do not anticipate recapture.”
With the federal moratorium on evictions ending on July 31, advocates say that they are seeing eviction proceedings resume back to normal, just as expected. Funding is still needed to prevent evictions, especially now, said Sarah Owsley, policy and advocacy director for the nonprofit Empower Missouri.
“If we don’t get these dollars out, they don’t exist in our state anymore,” Owsley said. “And that’s going to have a really significant impact.”
The hold up
One of the state’s biggest challenges is capacity.
The State Assistance for Housing Relief, or SAFHR, program has 60 application processors working to distribute the $320 million in federal aid and has been fielding about 500 calls and responding to about 200 emails per week, Whitson said in a September commission meeting.
Comparatively, St. Louis County has 20 application processors to distribute its $26.6 million. And according to its dashboard, $24 million has been awarded, as of Oct. 27.
In January, Stetzler vowed to state legislators to limit the commission’s administrative spending to 2.5% — though the federal government allows for up to 10%.
As the state was committing to a 2.5% cap, those who had already been processing CARES Act rental assistance applications for months knew that it wasn’t going to be enough.
“Employees have to be paid, and new staff has to be paid to be doing this work,” said Steve Conway, former chief of staff to Mayor Lyda Krewson, in January response to the state’s 2.5% administrative fee.
Before the onset of the pandemic, MHDC had administered only about $3 million of housing assistance a year.
During the summer, MHDC had been distributing between $3 million and $4 million a week through the SAHFR program. That number dipped considerably in September, with one week being as low as $800,000 . The reason for that month of lows wasn’t discussed during the commission’s Thursday meeting. But numbers in October have since gone up, with one week as high as $6.5 million a week.
The state is currently using SurveyMonkey to power its application process, which is significantly different than the platform St. Louis County is using, Scoggin said. Another challenge is that the state had to quickly develop partnerships, he said, whereas the municipalities already had established relationships with service providers and their communities.
“It’s a whole other thing if you’re in Jefferson City, and you’re saying you need to deploy to rural and urban places all over the state and with limited to no partners,” Scoggin said.
Beginning this spring, the state has contracted with 30 nonprofits to do outreach, eviction prevention and conflict resolution. And while anyone in the state can apply to the SAHFR program, the state is focusing its outreach efforts on rural Missouri.
“We’ve kind of expanded our reach to the urban areas a little bit more,” said Whitson on Thursday. “We still focus on the rural areas.”
However, when the turnaround time for applications through the SAHFR program is about four to six weeks, it’s hard to get both people to sign on, several advocates told the Independent.
That’s particularly true among landlords, advocates say, who have heard about the challenges and delays.
“The amount of time that it takes me to get the money through is discouraging landlords from applying,” said Kennard Williams, lead organizer at Action St. Louis. “And then you have these eviction attorneys who do their best to move in on the opportunity and advocate against the rental assistance programs.”
The U.S. Treasury reports show that the seven Missouri municipalities and counties that received money directly from the federal government — totaling $84.2 million — have collectively spent 74% of those dollars.
As of Sept. 30, Kansas City has already spent all of its $14.8 million, plus $2 million more. Clay County has spent 75% of its ERA1 funds. Jackson County was at 69%, Greene County at 61% and Jefferson County at 24%.
St. Louis officials estimate that St. Louis County and city will be eligible to receive the ERA2 funds in December. At that point, the two governments will merge their application systems to speed up the turnaround time even more, Scoggin said at the community meeting.
The initial deadline to spend this ERA1 money was Dec. 31, but it was extended to Sept. 30, 2022 with the passage of ERA2.
However, that deadline extension is not a sure bet for the states and municipalities that aren’t getting that assistance out the door. The U.S. Treasury will begin identifying excess funds for potential reallocation in mid-November, stated Deputy Secretary of the Treasury Adewale Adeyemo in his October letter. And submitting a program improvement plan could “mitigate” the federal government recapturing the state’s money, he said.
Vollenweider did not comment on whether or not MHDC would be submitting a plan.
States and municipalities will be eligible for these extra funds once they have substantially expended their ERA1 allocation and obligated at least 75% of the ERA2 funding. In recent weeks, the treasury paid out the remaining ERA2 allocations to grantees who met these criteria and is now launching a formal process to meet this growing demand.
Owsley said the state’s inability to get out assistance quickly is a reflection of several decades of Missouri starving its social services budgets. And that stems from how the state views poverty, in general.
“It’s a false sense of belief that people in poverty have made bad choices, or could make different choices and leave poverty,” Owsley said. “Or that there are a bunch of folks who are just choosing not to take advantage of resources that we’ve made really difficult to access.”
This story was originally published on the Missouri Independent.