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July 14th, 2022 | By: Paletz Law Press

Pandemic rent relief had ‘extreme’ impact on tenants and landlords. What happens now that it’s gone?

Michigan’s COVID Emergency Rental Assistance program is coming to an end and tenants and landlords alike praised the $1.3 billion program that helped keep nearly 140,000 people from losing shelter, or having utilities turned off, as the coronavirus raged.

Stacee Smith replaced two roofs, dug out a basement and paid taxes with the $30,000 or so she got from a Michigan rent relief program.

Tenants at four properties she owns — one in Redford, three in Detroit — lost jobs to the coronavirus pandemic and couldn’t cover what they owed.

Without funds to cover tenants’ payment gaps, she said, “I probably would have lost my properties in the end.”

“I can’t tell contractors or DTE that my tenants don’t have it so I don’t have it,” she said.

Instead, she was able to collect the bulk of the payments and put the money back in her properties, thanks to the state’s COVID Emergency Rental Assistance program.

As the CERA program comes to an end — new applications closed at the end of June, though tenants most at risk of eviction may still have access to money for the next month —
tenants and landlords alike praised the $1.3 billion program that helped keep nearly 140,000 people from losing shelter, or having utilities turned off, as the coronavirus raged.

“Definitely thousands and thousands and thousands of families who would have otherwise been evicted were not,” said Kelly Rose, the chief housing solutions officer for the Michigan State Housing Development Authority. “I think if this assistance had not been appropriated federally, we would have seen large-scale evictions, a homelessness crisis. … We would have seen a trickle-down effect in a lot of different ways.”

More than 300,000 applications for help were received by the state through partner agencies; almost 147,000 were approved, and nearly 70,000 are still being evaluated. The
bulk of the outstanding applications are in Wayne County, where Rose said tenants are likely to keep getting approved for help into the fall.

“We’re processing them until we run out of funds,” she said. “There’s a lot of money still left for Detroit.”

Courtney Hierlihy, the empowerment and integration department director for Wayne Metropolitan Community Action Agency, said it would have been “extremely difficult” to keep people housed through the crisis without the influx of cash.

“Truly, it’s remarkable,” she said of the $277.4 million that has so far been distributed in Wayne County, part of $812.7 million that’s already been sent out statewide. “You look at
those numbers and it’s nothing like what we’ve ever seen before.”

The CERA program, which started in March 2021, ended up being able to pay more than a year’s rent for tenants who needed help including, critically, three months of future payments. Residents were also able to apply more than once for aid if they remained unable to cover their expenses. Rose said she expects $1.1 billion to be distributed by the time CERA shuts down; MSHDA also had a $52 million rental assistance program in 2020.

The three months of future payments were particularly helpful for David Smith, who said the freedom from worrying about his next rent payment gave him the time he needed to find a new job. He now has $4,800 in savings, putting away $300 a month — a figure he said would have been inconceivable before.

Smith, who is unrelated to Stacee Smith, lost his job as a delivery driver for a shed company when the coronavirus pandemic hit and quickly fell behind on his $700-a-month rent on Detroit’s west side. He works as a delivery driver for AT&T now, making more money, and said the seven months of payments CERA covered while he got back on his feet kept him afloat.

“It gave me everything, it takes a weight off your shoulders,” he said of the CERA program. “I’m thinking two steps ahead now. … It’s more than just that rent. The whole process
humanizes you.”

Shakenda Williams, a Southwest Detroit resident who had to leave a housekeeping job for childcare reasons, also received three months’ future rent from the program in addition to utility payments. She found a job at Fed/Ex, but said she mostly worked to pay for her rideshare to and from the job.

When her rent was paid, though, she could save money for a $2,100 car. Without the help, she said, even with the new job she likely would have fallen behind again.

“I felt like that was God,” Williams said. “It makes a heck of a difference.”

Williams became an evangelist for CERA, she said, telling friends about the program and urging them to apply for aid. One, Damon Isom, who was laid off from a mechanic job from a place that didn’t reopen, said he had been trying to apply for the program but his application didn’t go through. He didn’t realize the deadline for help had passed.

“I guess I’ll keep looking for other things,” the northwest Detroit resident said.

Applications for help

The COVID Emergency Rental Assistance program in Michigan stopped accepting most applications at the end of June. Just more than 300,000 people applied in Michigan. Hover over the bars to see the breakdown.

Rent relief

The COVID Emergency Rental Assistance program in Michigan stopped accepting most applications at the end of June. More than $1.1 billion is expected to be distributed before money runs out this fall. Here’s how much money was distributed in metro Detroit and how many people were helped here.

A bigger safety net

A number of agencies continue to offer help for tenants who need it, but the resources aren’t nearly as robust as they had been through this summer. Hierlihy, with Wayne Metro, said the future rent payments CERA offered allowed countless residents to regain stability or even better their circumstances.

“A program like this could go long term,” she said of the amount of need in the community. “It’s more of a safety net than what we had in the past.”

Applications surged in the program’s final weeks, Hierlihy said. That was also the case in Oakland and Macomb counties, as well as statewide, where Rose said there was a “pretty substantial uptick” — more than 41,000 applications in June, as compared to about 16,000 inApril. The rules for approval have become stricter, and applicants now have to owe back rent from March or earlier or they can’t get any assistance.

“We would have spent more money by now if we didn’t have that constraint,” she said.

Applicants must have also had a COVID-related financial hardship, including loss of income, and must make less than 80 percent of the area median income — $57,300 for a two-person household in metro Detroit. The program prioritizes those who are most at risk of losing their homes, and was heavily advertised, particularly to those at high risk of eviction. Rose said about half of applicants are now being rejected.

Others didn’t get their applications in in time, or didn’t apply at all, said Ted Phillips, the executive director of the United Community Housing Coalition. Some were technologically challenged, others had mental health issues and some simply “put their heads in the sand and didn’t really pay attention,” he said.

But for those who did apply, and whose applications were accepted, Phillips said he relished being able to call them to say all of their back rent would be covered.

“You could hear it, a huge sigh of relief,” he said. “I don’t like to make people cry, but it was always a good cry.”

In Macomb County, Ernest Cawvey said the payments provided “a lot of piece of mind to people in crisis.”

“The headline is, during an unprecedented pandemic, urgent and immediate relief was needed and CERA helped provide that,” said Cawvey, the director of Macomb Community Action, which administered the program. “It really was a source of hope.”

The rent and utility payments kept the crisis from spiraling, Cawvey said. It meant there was less homelessness than there would have been otherwise, but it also kept people from
dealing with the trauma of evictions or incurring a “mountain of debt” as they tried to stay housed.

Cawvey said the program lasted “an impressively long time.”

“Everybody knew it couldn’t go on forever,” he said. “Only time will tell if it ended too soon.”

The money was sometimes slow to be distributed, Cawvey said. Changing requirements for the program led to confusion, said Karen Bertram, the senior director of quality and organizational development at the Community Housing Network in Oakland County. But for a quickly-conceived safety net program, both said it was largely a success.

“We’ve never before seen this level of financial assistance afforded to our community,” Bertram said. “I suspect we’ll never see it again. I suspect we’ll look back on this time and really be in awe of the amount of people we provided real-time assistance to. The fear, the things people faced, the loss of income, it was a really terrifying time. And we helped people stay in their homes.”

Landlords recoup their losses

Tenants, of course, weren’t the only beneficiaries of CERA. The rent payments went to landlords like Stacee Smith, a full-time special education teacher who rents out her houses for $475-$800 a month.

While one tenant who was seven months behind on payments was denied, and it’s taken months for Smith to get some of the payments she’s owed, she said she’s “so glad” for the help it offered.

“It really helped landlords save their homes,” she said. “It’s really nice the government stepped in and helped people who couldn’t pay their bills. … It helped prevent homelessness,
it helped landlords keep their property. I can see it in the history books somewhere.”

Kathy Deja, who rented a Lincoln Park house to tenants who could not pay, said she got seven months of rent from the program. Though her tenants left without paying the final month’s rent when she declined to renew their lease, she said she was grateful for the program.

“The good thing, of course, is that landlords have some way to recoup their losses,” she said. “Complete financial collapse, it was probably avoided by this.”

Not everyone was as complimentary of CERA. Scott Rubin, with Andover Management, said he wasn’t a fan of the program — though he didn’t specify why.

“I didn’t have a choice, I had to participate in it, but I wasn’t happy with it,” he said.

Matthew Paletz, the CEO of Paletz Law, said he had heard “mixed reviews” of CERA — often based on how slow money was to be distributed. Even those who were complimentary of the program acknowledged that there were issues with under-staffing that could delay the processing of applications and the distribution of funds.

Paletz said, too, he’s seen abuse and fraud in the program — residents saying they were living in places they were not, for example, or getting money that they did not then give to landlords. In Detroit, landlords who didn’t have a certificate of compliance on their property could have 20 percent of the rent withheld; those funds were held in escrow and sometimes sent to tenants.

He said such decisions had deterred investment in Detroit, hurting the city’s tenant population.

Paletz also wondered whether tenants who hadn’t paid rent in more than a year would come to be dependent on the program, a question Stacee Smith echoed.

Still, Paletz said, there’s no playbook for how to handle a once-in-100-years pandemic. He said he “wouldn’t throw the baby out with the bathwater,” despite wishing parts of the
program would have operated differently.

“It helped tenants in a time of crisis and it had its place,” he said.

Phillips, with the United Community Housing Coalition, said it felt good to help small-time Detroit landlords, keeping them in business, though some larger ones were difficult to work with. Hierlihy, with Wayne Metro, said many large property managers encouraged tenants to apply for the program. For independent landlords, she said, it was “extremely impactful.”

Cawvey, with Macomb Community Action, said he heard from landlords in crisis who benefited from the help. And Bertram, with the Community Housing Network, said she talked to landlords who were “so grateful” for the assistance.

“Landlords need to have money, too,” she said.

In addition to keeping people housed, CERA helped forge relationships between agencies that will persist, Hierlihy said. She said that lasting impact will be to the region’s benefit,
something that will make it easier to deal with housing instability even when CERA funds are finally exhausted.

Rose, with MSHDA, said she continues to look for other resources, as well. CERA was “a great boon to landlords,” she said, helping them pay their mortgages and taxes. Without it,
she said, many small landlords likely would have been forced to sell their properties — a problem in a rental ecosystem that needs more options.

Rose said she has concerns that eviction rates will start to rise again — indeed, they already have — but she hopes the length of the program keeps it from getting to a crisis level.

“When people have stability in their housing situation, they’re able to look at additional employment rather than constantly managing the crisis,” she said. “It’s easier to stay
employed when you’re not worried about your housing situation.”

View the original article here, or at https://www.crainsdetroit.com/real-estate/cera-funding-ends-michigan-11-billion-be-distributed