Stop playing games with rent relief
One of my favorite Abbot and Costello routines is really a Lou Costello routine. The duo have to repay the rent, and Bud Abbot instructs Costello to avoid paying. It’s worth watching if you haven’t seen it.
Hilarious. Very funny. That is unless you are one of the thousands of housing providers or families in the United States who are considering an increase in unpaid rent balances. For these people, the schtick is all too familiar. States play bureaucratic and political games with much needed help, as does Costello. But to date, $ 25 billion set aside to reduce unpaid rents – unpaid as a result of government interventions to stop the spread of Covid-19 – is no fun, it is an ongoing tragedy. State and local governments just don’t know how or want to efficiently get the money where it needs to be. States need to involve lenders and create a program that is more like the Payroll Protection Program (PPP).
In conversations I have across the country, there is growing frustration over the inability to connect the big relief package to the people who need it. In Hawaii, I’ve heard that 10% overhead limits mean that setting up a distribution – which includes screening and processing claims as well as getting the money to the right person – costs more than that. In Ohio, housing providers don’t know where the money is coming from. In Washington state, a county employee says the money has not yet arrived, although that county believes it will be ready once the state government shows up with the money. And yet the media everywhere continue to make headlines about a “tsunami” of eviction instead of asking “where is the money?”
What’s ironically funny is how socialists and so-called progressives say they want to redistribute wealth, taking money from the “rich” and giving it to the “poor”. They seem to be very good for the “take” part, but really bad for the “redistribution” part. What the growing rent relief debacle shows is that if given the way, their policies would end up doing very little distribution. Currently, the program involves sending money to state governments, then state governments go out for requests for proposals, then local governments and nonprofits ask for money. Contracts need to be drafted, reviewed, then approved and signed. Then the local government has to do the same with dozens of nonprofits.
Along the way, the river of silver slowly evaporates. Every hour spent cramming money through systems expressly designed not to spend money and to add requirements based on outliers – errors or glitches in the system that could result in someone being paid. should not – create more and more overhead. Then once the money arrives, in Washington State anyway, the point is not to pay the rent. Instead, the funds are intended for
- Prevent evictions.
- Target resources on very low income households who are unemployed.
- Promote fairness in who is served, with an emphasis on fairness for groups of people who have not always had equitable access to rental assistance and those who have been disproportionately affected by epidemic of Covid-19: Latinx or Hispanics, young adults, Black or African American, American Indian and native of Alaska, native of Hawaii or other Pacific Islander.
A state-level staff member in Olympia said the money was not going to be used as economic aid but as a social program. In other words, the purpose of the money was to deal with issues of race and fairness, not to pay the rent. Washington State, now that it has the money, is not spending it on rent relief, but on trying to solve racism. They will now fail two things, instead of just one.
And that’s not all. The Department of Commerce is bound by a bill passed by the legislator to use a formula that “must include the number of tenants in a community, the unemployed and direct federal scholarships”. This formula has nothing to do with who actually has rent arrears, something the state has failed and refused to measure. So instead of quantifying the problem and then finding the funds as quickly as possible, the formula is based on the unemployed and the number of tenants.
Why should we guess who owes rent? Why not just let the people who owe the rent ask for the money? Finally, the law appropriates “365 million dollars for various items related to housing, including rent assistance”. A variety of housing related items? And the state has received over $ 500 million in rent assistance out of the $ 25 billion; where’s the rest of the money?
The Washington State Department of Commerce and the Governor’s Office make Lou Costello an amateur con artist. They refused and failed to determine how much unpaid rent there is in the state, skimmed over $ 150 on top and then vaguely said what remains would pay. “housing related articles? “Like what, new furniture?
The way it should have been done is to put lenders and financial institutions in the picture, just like the Payroll Protection Program (P3) did. We have come up with a simple solution to this problem that the Treasury Department doesn’t seem to have a problem with. I call it the Rent Assistance Advance Program (RAAP).
Community lenders and financial institutions will act as community action agencies to facilitate rapid obtaining of rent relief for residents and housing providers.
- Housing providers will claim from their bank or local lender the full amount of unpaid rent owed to them due to Covid-19 interventions creating lost revenue.
- Lenders will advance the outstanding balance to the housing provider and the provider will notice the resident that their rent is paid
- Lenders will apply for a grant under the T-RAP program in their state, including all eligible overheads
- When paying the state grant to the lender, the lender will notify the housing provider that the problem is resolved.
- If the grant is rejected, the lender will attempt to remedy the request and, if unsuccessful, may convert the unpaid rent advance or any unapproved portion to a low interest loan.
- The lender can charge the housing provider up to 5% of the advance if it is successfully resolved for additional overhead costs.
If state governments are serious about helping solve the economic problems of the poor who are disproportionately people of color, they would simply do pay the rent! We can make the distribution of rent relief more efficient if state and local governments step back and allow banks and credit unions to work with their customers to get unpaid rents, put money in their accounts. and sort out the details later.