Only a Quarter of the $9 Billion HUD Got to Combat COVID Impacts Has Been Spent

The massive pandemic relief bill of March 2020 contained about $9 billion that the U.S. Department of Housing and Urban Development could divide up between states and cities to deal with housing-related coronavirus fallsout.

The funds could be used for rental assistance to tenants who cannot pay their landlords. They could also be used for housing homeless people in safe, sanitary places rather than in crowded shelters.

Twenty-four months later, cities and states have only spent about a quarter.

The funds were split between two programs which existed long before COVID-19 was introduced: the Emergency Solutions Grant program and the Community Development Block Grant program.

The Coronavirus Aid, Relief and Economic Security Act (CARES) Act provided $4 billion to the ESG program, which aids the homeless population. CDBG was awarded an additional $5 billion to fund a variety of programs. These included the conversion of temporary shelters to permanent affordable housing, and the shoring up of public facilities, homeless shelters, and senior centers that can handle airborne viruses.

Only $1 billion of ESG money and $1.2 million of CDBG money have been spent.

ESG and CDBG funds were supposed to be spent by 2022 or 2026 respectively. However, some communities were unable to use them because housing agencies tried to spend federal money with tighter deadlines.

“They should be going faster,” said Nan Roman, CEO of the National Alliance to End Homelessness, which monitors ESG spending. “The loss of income and the inability to pay rent have led to greater and greater housing instability and — despite the significant measures taken to prevent it — to possible evictions and fears of increasing homelessness in the future.”

Before the pandemic, the United States faced an affordable housing crisis. Only four homes were available for every ten renters at the lowest income. According to the National Endowment for Financial Education 36% of employed adults are working. could not coverA significant unexpected expense such as car repairs or medical costs.

Low-income communities of color have been bearing the brunt of the housing crisis — before and during the pandemic. According to a report, people of color are most at risk of having an eviction order filed against their homes. Public Integrity analysisPublished last year.

ESG funds should be used primarily for homeless people to find temporary housing. CDBG funds can be used for a variety of programs including rental assistance, legal support to tenants facing eviction, purchase of hotels or motels as permanent affordable housing and pop-up vaccination clinics, testing sites, and overflow centers for hospital.

As federal, state, and local eviction moratoriums expire in some areas of the country, eviction courts have begun to reopen in some parts.

There isn’t a national dataset that paints a picture of what’s happening in every city and state, but the Eviction LabPrinceton estimates that more than 61,000 households have been affected by the pandemic in the 31 cities and six states they track.

“There’s not really a scenario at this point where I’d say we’re good now,” said Anne Kat Alexander, a project manager with the Eviction Lab. “I’m always going to say, ‘This could be more efficient. This could get to people better.’”

Richard Cho, senior advisor for housing services to HUD Secretary Marcia Fudge, said many communities were able to use other sources of funding for their more immediate needs, so they’ve shifted to using CDBG and ESG funds from the CARES Act on longer-term projects that take time to complete, such as redeveloping old properties into permanent shelters.

However, “there are some communities where they need to rethink their use of those funds,” Cho explained. “The way they’ve obligated the funds puts them at risk of not spending it all by the deadline.”

HUD invited mayors and governors to join a group that will set clear goals for how to invest the funds.

“We expect to see, with the communities that joined the initiative, the spending rate will increase,” Cho said.

Speed is not the only thing that matters.

How fast a department spends its money shouldn’t be “the only measure of success,” said Geoffrey Ross, deputy director of the federal financial assistance division with the California Department of Housing and Community Development.

“It should be how are we using these funds, what outcomes are we trying to achieve, what is the highest and best use of these dollars, and doing that quickly and efficiently,” Ross said. “It’s not just the pace itself. We’re not trying to manage homelessness. We’re trying to end it.”

To date, California agencies have spent about 3% of the state’s $151 million CDBG allocation from the CARES Act and about 37% of its $315 million in ESG money. These initiatives include the conversion of hotels and motels to permanent affordable housing, support for migrant workers, economic development for small business, and funding for food banks and COVID-19 clinics.

Ross stated that California received 25 times the amount of funding it would normally receive to fight the coronavirus.

“The challenge is being able to scale up and being able to respond quickly,” Ross said. “This amount of funding, while absolutely needed, is more than communities and organizations are used to receiving, so it takes time to build the capacity.”

Abby Ng, policy and communications coordinator with the New York-based nonprofit advocacy organization Tenants & Neighbors, is on the front lines of the housing crisis and said agencies need to spend the pandemic recovery money faster.

“I talk with tenants every day and they have a sense of urgency to get these [rental assistance] applications in because this is their lives,” Ng said. “It’s really disappointing that people running these agencies don’t have the same sense of urgency.”

Coast to Coast: Spending Delays

Linda Jenkins, director of the Community and Economic Development division of the Los Angeles County Development Authority, said her agency knew ESG and CDBG funds from the CARES Act “had a longer runway,” so it slowed down the spending of that money.

Her agency spent approximately 17% of the ESG money received from the CARES Act through October and 37% of the CDBG money.

Across the country, housing agencies have been dealing with a “capacity issue,” Jenkins said. “There’s just a lot more money out there than what people are used to working with.”

New York’s Office of Temporary and Disability Assistance has spent approximately 20% of the $50,000,000 it was allocated in ESG money under the CARES Act.

“The agency remains committed to working with its local partners to ensure that the remaining funds are utilized expeditiously to assist vulnerable fellow New Yorkers at risk of, or experiencing, homelessness and housing instability,” said Anthony Farmer, director of public information for the Office of Temporary and Disability Assistance.

New York Homes and Community Renewal has committed $40 million from its $127 million allocation of CDBG funds under the CARES Act. The funding of projects includes small business assistance, improving the air quality in public buildings, conversion of underutilized properties for affordable housing, and vaccination outreach and awareness.

Homes and Community Renewal “is working closely with local governments, community nonprofits, and stakeholders to swiftly address shifting pandemic priorities, as the unpredictable nature of the pandemic impacts communities and their needs in real-time,” said Charni Sochet, spokesperson for the division.

Michigan’s ESG money has been spent by groups contracted with the Michigan State Housing Development Authority for 33% of its ESG money under the CARES Act. While some of the money has been used for rental assistance, the state heavily relies on the U.S. Department of the Treasury’s Emergency Rental Assistance program to help families who need rent assistance. According to Treasury data, Michigan had spent only 44% of the money by September 30.

“I think it’s just having all of these other resources at the same time,” said Kelly Rose, chief housing solutions officer for the Michigan State Housing Development Authority. “It’s a blessing and a curse. It’s kind of feast or famine with these nonprofits, and we’re asking them to deal with a budget that’s three times what they’re used to having to deal with.”

Mid-November, Illinois had not spent any of the $70million in CDBG money received from the CARES Act. The first programs funded with the money will be launched in the first quarter of 2022, said Lauren Huffman, deputy director of media relations and communications with the Illinois Department of Commerce & Economic Opportunity.

“Much like a number of other economic recovery programs launched to date, our goal is to maximize the impact of CDBG-CV funds to aid our most vulnerable communities in Illinois and to assist them with rebuilding in the wake of the pandemic,” Huffman said, declining to go into more detail about why the program hasn’t spent any of its allocation to date.

Other Housing Funding Slowly Distributed

Other forms of COVID-19 assistance have also been slow to distribute, failing to reach people who really need it.

Public Integrity & The Associated Press reported earlier this yearThe $425 million that was set aside for rental assistance from Coronavirus Relief Fund had been either transferred to other programs or left unutilized one year after the CARES Act passed.

Another pot of money, called the Emergency Rental Assistance program, contained $45 billion that Congress had set aside to assist tenants who are struggling to pay their landlords. However, the money has not been delivered on time. As of September 30, only 24%All funds were spent.

That’s widespread: The National Low Income Housing Coalition, which tracks ERA spending, found that 32 states and 80 local governments have spent less than 30%Their rental assistance allocations. The Treasury Department might move some of those funds — $1.2 billion — to other agencies.

As is the case with federal money, all of these programs have spending deadlines. The Coronavirus Relief Fund dollars were meant to be spent by Dec. 30, 2020. But Congress extended it an additional year three days prior.

Administrators of these programs focused more effort on spending the funds first, as cities and states were facing the Coronavirus Relief Fund deadline in 2020.

“They’re really overwhelmed,” Roman said. “Jurisdictions don’t have the bandwidth.”