89% of the federal hire subsidies will not be given as a result of the eviction disaster is looming

WASHINGTON – Approximately 89% of federal rental subsidies approved by Congress goes unused, despite efforts by President Joe Biden to encourage states and cities to get the money out faster as a potential eviction crisis looms.

The Treasury Department released updated payout numbers on Wednesday, showing that states and cities paid out $ 1.7 billion to landlords and renters in July, a modest 10% increase from $ 1.5 billion in June.

All in all, states and cities spent $ 5.2 billion of the $ 46.5 billion in rent relief approved since December from COVID-19 bailout packages – $ 4.7 billion of that directly to households and the rest for administrative costs. Approximately 11% of the total federal allocation has now been distributed.

According to the US Census Bureau’s Household Pulse Survey, an estimated one in six tenants is behind on their rent.

More:“An epidemic in itself”: Why billions of federal aid don’t reach tenants and landlords during the pandemic

However, in many states, landlords and renters are struggling to get approval for funds designed to help tenants unable to make payments during the pandemic.

Several states hired third-party vendors to run the programs, requiring lengthy procurement processes that delayed the initial provision of funds. Computer systems in several states were not working and preventing tenants from applying. Some states require tenants to provide more documentation than required by federal law, which experts say has created unnecessary hurdles to getting money out the door.

Troubled tenants received a reprieve this month as the Centers for Disease Control and Prevention put in place a targeted moratorium on evictions in areas hardest hit by the coronavirus. But the new policy banning evictions in counties with high COVID-19 transmission rates expires on October 3 and the freeze is the subject of judicial challenges.

The Treasury Department called the latest numbers “continuous progress” and found the funds have helped nearly 1 million households. About 341,000 households received rental subsidies in July, up from 293,000 households in June. The department also announced new guidelines to expedite the release of the money.

More:US appeals court refuses to end CDC’s eviction moratorium

This also means that applicants can provide evidence of their financial hardship, the risk of homelessness or housing instability, and their income, rather than providing documents. States and cities can also work with nonprofit organizations to offer upfront payments to households at risk of eviction and to make additional payments to landlords who hire tenants who face major barriers to obtaining a lease.

Activists protest evictions near City Hall on August 11 in New York City.  New York State's current eviction moratorium expires on August 31st.  The Emergency Rental Assistance Program, created in the state budget to cover rent and utility bills for one year for tenants with or below 80% of the median income, has struggled to handle the thousands of cases of tenants facing eviction.

In February, about $ 25 billion in federal funds flowed into states and cities to help tenants unable to make payments amid the pandemic, followed by the approval of an additional $ 21.55 billion in Biden’s American Rescue Plan in March.

To receive money from the Emergency Rental Assistance Program – which was funded by Congress for the first time in December – tenants must file an application with their landlords. The largest cities or counties in most states usually run their own rental support programs in addition to the state-run programs.

Eligible tenants must have suffered a loss of income as a result of the pandemic, be at risk of losing their home and have a household income of 80% or less than the median income of the region under federal law. The money usually goes directly to the landlord.

Reach out to Joey Garrison on Twitter @joyegarrison.

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