The State Of Illinois Is Getting Its Rental Assistance Dollars Out And May Avoid An Eviction Tsunami
In response to a steep rise in the number of Covid infections, the Biden administration Tuesday extended the moratorium on evictions in most of the country by another two months, a move that will temporarily ease housing advocates’ fears that a wave of evictions was about to sweep the U.S. Those fears were heightened by many states’ inability to deliver federally authorized relief funds, which now total roughly $47B, into the hands of desperate renters, many of whom lost jobs and income due to the coronavirus pandemic.
Now Illinois' head start in getting funds out the door could light the way for other states to follow.
“The moratorium is ending before the [relief] funds go out, and that’s the problem,” Lawyers Committee for Better Housing Executive Director Mark Swartz told Bisnow last week before Biden’s announcement.
Both landlords and tenants are scrambling to fill out and submit applications for rental assistance dozens of pages long. The latest moratorium extension could give state officials the chance to catch up on all that paperwork, get the aid out and avoid a mass eviction crisis.
If it survives legal challenges, the eviction delay could benefit Illinois renters most of all. Advocates say the state, which also has its own moratorium in place until Aug. 31, had already done better than most states in approving applications and covering the back rent that piled up over the past 18 months.
Her group has been facilitating meetings throughout the year between state, city and county officials to help coordinate the rental assistance programs available in Illinois, as well as educate tenants and landlords on how to navigate the process.
If the state had decided to do nothing, Covid had the potential to upend the housing market. A study published in September 2020 by the National Council on State Housing Authorities predicted between 350,000 and 540,000 households in Illinois would be at risk of eviction by 2021 due to a rental shortfall of between $857M and more than $1.2B.
Neighborhoods with a lot of workforce or low-income housing might have been hit especially hard. In 2019, just over 18,000 eviction cases were filed in Chicago, with about 60% of cases ending in an eviction order, according to LCBH data. And mostly Black neighborhoods saw far more eviction cases than the rest of the city. There were more than six eviction cases filed per 100 rental units in majority Black areas in 2019, versus 1.2 and 2.4 per 100 in White and Latino areas, respectively.
Back in August 2020, Illinois Gov. J.B. Pritzker dedicated funds from the federal CARES Act to an emergency rental assistance program, which eventually provided more than $230M to 46,000 households, Andrew Field, spokesperson for the Illinois Housing Development Authority, which administers rental assistance programs, stated in an email.
And on May 17, Pritzker said more than $1.5B would be made available to state and local officials to help Illinois renters and landlords still struggling due to Covid.
“This funding, in addition to Illinois’ eviction moratorium, will satisfy the rental shortfall due to the pandemic,” Field said.
“Through July, IHDA has paid $195M in past-due or future rent payments on behalf of 22,262 renters,” Field added. “Those numbers will continue to grow as we continue to review and approve the pipeline of eligible applications and work with tenants who are missing the federally required documentation necessary to approve funding.”
The efforts have put Illinois near the head of the pack.
"According to Treasury data, the state went from reporting zero dollars worth of rental assistance distributed in May to ranking the second highest provider of rental assistance among all grantees in June,” a July 23 report in Time magazine stated.
“The owners aren’t wrong to complain, because finishing these applications is difficult, but Illinois is doing better than other states,” Young said.
Deciding to apply for rental aid can be a risk, according to apartment landlord Trent Anderson. Once an application is submitted, it’s a waiting game. Officials must sift through the documents before deciding if renters’ financial troubles are Covid-related, making them eligible for the federal aid. Some tenants haven’t paid rent in 18 months and if they end up not qualifying, it could mean several more months of zero rent collected on such units.
“That puts us in a really difficult position,” Anderson said.
Anderson has about 600 rental units in Chicago and manages another 200, split roughly between the city’s West Side and South Side neighborhoods, such as South Shore.
Still, going through the hassle is worth the risk, he added. The number of tenants taking advantage of the moratorium and simply not paying is small and the rental assistance programs give the company a shot at finally securing a big chunk of the back rent, as well as avoiding evictions, which cost money and time.
“A lot of my tenants are living paycheck to paycheck and month to month, so if someone has been legitimately impacted [by Covid], and is working with us and communicating with us, we really don’t want to evict them,” Anderson said.
Anderson and his tenants were able to submit about 125 online applications for rental relief, he added, which both parties have to pass back and forth, providing detailed financial information, including whether the tenant was impacted by Covid, and signing electronically. A few were rejected because tenants did not fill out their section properly, but Anderson said calls to a state hotline fixed the errors and the applications were resubmitted.
So far, Anderson has done relatively well. Although about 90 or so applications for rent relief are still up in the air, around 25 were approved. If that pattern holds, 2021 could still be a good year for his company.
“In my business, I already expect to lose 5% of the rent every year,” he said, citing tenants losing jobs or simply moving out, as well as evictions. “That’s factored into our business model.”
But in normal years, there’s no government backup, Anderson added. This year, if enough applications get approved, the company may even improve its performance over previous years. That’s what happened in 2020 when the first round of rental assistance programs made up for the roughly $200K in rent lost due to Covid, even putting the company a bit ahead of its 2019 performance.
“If the government had not intervened, we would have been off by $200K, so it was certainly impactful,” he said. “[For 2021,] if we get 75% of what we asked for, we will be slightly up from last year.”
That doesn’t mean Anderson is completely happy with the situation. The applications are time-consuming, with a lot of back and forth between landlord and tenant, and it sometimes has to take priority over day-to-day operations. The eviction moratorium also takes away the last tool landlords typically use to get tenants to pay rent.
“There are some nuances that could be done better,” he said. “But overall, big picture, I’d say it’s working.”
Drexel Properties President Jeff Weinberg said he would also prefer using state rental assistance before trying evictions.
“A lot of the people we serve are in the hospitality and travel business, so from a business perspective, we try to be compassionate,” he said.
His company manages more than 400 units at 32 properties, mostly on the city’s North and Northwest sides. In a typical year, Drexel collects 100% of the rent, but so far this year, it’s down about 5%, and it has helped 17 tenants file applications for rental assistance with the state.
His tenants run the gamut from a couple he thinks could pay but applied for assistance anyway, he said, to an immigrant whose husband returned to Guatemala about 10 months ago and couldn’t return, leaving her unable to pay.
The results have been a mixed bag, with seven applications rejected without explanation, five getting approved, and another five still “in no man’s land,” he said.
He added that he ultimately expects to get about half of what the company and its tenants applied for, nearly matching performance last year, when they got about $60K from the state after tenants failed to pay about $100K in rent.
Both Anderson and Weinberg said because their operations are relatively large and accustomed to dealing with sometimes complex documents, they can provide tenants, including those who don’t speak English, with the assistance needed to complete and submit applications. But small operators, those with just one or two buildings, may not have those resources.
“The programs are kind of working, and there is a lot of money there, but making sure tenants, owners and government agencies are all working together to close that loop is very difficult,” Weinberg said.
If the landlord of one three-flat has just one tenant get their application for state aid rejected, perhaps for not checking the right box, that may result in the mortgage not being paid, Anderson said.
“If I get funds for 90 of my units, but miss on the other 30, it will all average out, but if I’m the landlord of just one building and that’s all I had, I would be in a world of hurt.”
The state did bring aboard 72 community organizations and nonprofits, including The Resurrection Project in Pilsen and the Garfield Park Community Council on the West Side, among many others, to work with both renters and small landlords, helping them get all the needed documents and information together.
“These organizations are available to answer questions about the programs and assist both tenants and landlords with preparing the application, assembling the federally required supporting documents and submitting the application if they lack access to a computer or a smartphone,” Field stated. “This help is completely free.”
Mike Tomas, executive director of the Garfield Park Community Council, said he understands why government agencies are asking for so much information.
“There is just tremendous demand for these dollars and it’s hard to get it all organized, but what the state is concerned about, and rightfully so, is fraud,” he said.
Starting in mid-May, his organization has helped 133 housing providers complete their applications, along with 129 tenants, and provided information on the assistance programs to hundreds of other households, he added.
“We’ve been extremely busy, with both foot traffic and on the phone, in both English and Spanish.”
The council hasn’t yet heard back from the state on which applications were approved or rejected, but Tomas said he expects to start getting results some time later this month.
He added that their goal is to help Garfield Park avoid what happened during the last economic disaster.
“I’ve lived and worked in this neighborhood for 17 years, and back in 2008 and 2009, we saw 20% of our rental properties fall into foreclosure,” he said.
But Swartz said as long as IHDA continues to process applications, the state has a good shot at avoiding a worst-case scenario. Landlords pursuing eviction cases will still have to contend with the legal costs, as well as invest a lot of time, all without the chance to get back missed payments. And renters can get up to $25K in aid from the state, he pointed out.
“It’s hard to imagine that much money wouldn’t resolve most eviction cases.”
CORRECTION, AUGUST 9, 8:50 CST: Stacie Young's correct title is president and CEO of the Community Investment Corp. The story has been updated.