With some renters still waiting weeks or months for a promised rent check from Colorado’s share of federal rent assistance, the state Department of Local Affairs said it has switched vendors so all payments approved by July 31 should be paid within two weeks.
“As of Aug. 17, we have switched to Bill.com for making payments, which will allow us to make payments much more quickly and provide greater transparency on the payment process,” Deputy Director of Housing Wendy Hawthorne said in an email this week.
The old system wasn’t designed for “efficient and quick payment,” Hawthorne said, and that resulted in an undisclosed number of landlords and tenants who’d been approved for the state’s rental program going for weeks and months without a payment.
The state’s Emergency Rental Assistance Program has had a rough go ever since it launched earlier this year to distribute $444 million in federal rental relief. An additional $240 million was provided to 11 cities or counties with more than 200,000 residents. While the number of payouts increased last month, the extreme backlog showed up Wednesday in a U.S. Department of Treasury report showing that Colorado has only paid out about 7.4% of its available federal rental assistance funds.
According to the Treasury Department, the state has disbursed about $33 million of its approximately $444 million as of July 31 — or about 7.4%. Local governments have paid out $35.8 million of their $246 million, or about 14.6%. The funds have so far helped 12,690 Colorado households pay rent.
Colorado has been doling out more ERAP money in each of past three months: $2.4 million in May, then $11.4 million in June and $12.8 million in July.
But it’s hard to tell from the data shared by DOLA. As of Tuesday, the state’s pandemic housing data showed that $147.6 million had been approved or paid to about 40,000 applicants. That includes roughly $90 million in rent payments to landlord and tenant housing programs that existed before ERAP. Officials could not provide an answer as to how much has been approved but not paid.
The programs have encouraged landlords to work with tenants unable to pay rent due to pandemic-reduced income. They’ve spent most of the year under a national eviction moratorium, though evictions for non-pandemic situations have continued. DOLA’s change to a new payment vendor may speed things up.
“We have seen an improvement in the speed at which we see approvals and payments,” said Destiny Bossert, government affairs manager for the Colorado Apartment Association. “That being said, it’s still slow. But the speed can be measured in weeks so usually around four to six weeks rather than multiple months for payments.”
Landlords are still under an eviction moratorium, though it is slightly different from the one that expired July 31.
On Aug. 3, the Centers for Disease Control and Prevention issued a new public eviction moratorium that offers narrower protection to tenants “in the hardest hit areas” of the COVID-19 pandemic, or U.S. counties experiencing “substantial” and “high” levels of transmission levels. Most of Colorado is under the moratorium. As of Wednesday, only five Colorado counties — Jackson, Crowley, Washington, Bent and Yuma, weren’t in high-COVID transmission areas. But to be excluded from the moratorium, which ends Oct. 3, counties must remain at lower levels and see continuous improvement for two weeks. The moratorium has already been challenged in court.
Jana Happel, a staff attorney with Colorado Legal Services who helps tenants facing evictions, said some of her clients waited two months after getting approved for the subsidy, which offers a maximum of 15 months of rent or rental arrears. But she has noticed that some are finally getting paid.
“While aid has recently been received from DOLA for some of our clients who have been approved for months, others are still waiting,” Happel said. “On the other hand, we are now trying to direct our Denver applicants to CSF, instead of DOLA.”
CSF is the Colorado Stability Fund and it’s one of a number of nonprofit organizations that work with tenants on applying for state Emergency Rental Assistance Program funding, or ERAP. It was set up by the creators of the COVID-19 Eviction Defense Project, which provides free legal help to tenants facing evictions.
Zach Neumann, the project’s cofounder, said all states have had a slow rollout of federal funds, and he doesn’t blame DOLA, which works with the Colorado Stability Fund.
“The way Congress appropriated the money, it is difficult to get it out the door,” he said. “But the other roadblock is that we just don’t have a national infrastructure built in designed to stabilize housing. A lot of organizations around the country are building the plane as they fly it. In March of 2020, we weren’t doing rental assistance, and now in March of 2021, we’re dispersing hundreds of millions of dollars. It takes a long time to build those systems and to hire staff and build the customer management and tracking system to figure out payment processes.”
Overwhelming demand for rental help combined with the new income-eligibility requirements and anti-fraud measures resulted in severe delays with the state approving applicants back in the spring. But renters and landlords who were approved prior to August should see a resolution within two weeks, Hawthorne said.
“We are planning to make payments twice per week,” she said. “We are working through the older payments that are due and expect to be caught up through anything pre-August within two weeks.”
Speeding up the system
The Treasury Department said that as of July 31, state and local governments had made payments valued at $5.1 billion to 1 million applicants. There’s still nearly $40 billion remaining in the program. But even in states that adopted federal recommendations for the rent programs, the agency said, “many grantees need to do more to urgently accelerate efforts to prevent harmful evictions of vulnerable families.”
Colorado isn’t alone in its slow disbursal of rent checks to renters and landlords. The U.S. Treasury Department, which oversees ERAP nationwide, has only disbursed 11% of federal rent assistance, The New York Times reported.
But new Treasury guidelines released Wednesday also aim to improve how fast landlords and tenants get their rent relief. A key one is to allow more self-attestation by applicants to say they are in need due to the pandemic, instead of requiring documentation of income that may not be available.
“That means there’s less document gathering,” Neumann said. “Now, what needs to happen is state and county programs need to make that a part of their program. But the federal money now has gotten more flexible to use for state and county administrators, and also nonprofits like ours who operate under the umbrella of the state and county programs.”
The Colorado Stability Fund also figured out a way to get payments to needy tenants much faster, sometimes with just a few days wait instead of weeks or months. The fund does this using a revolving line of credit provided by its partner the Colorado Housing and Finance Authority. That allows CSF to pay rent checks quickly and go through the reimbursement process with DOLA later.
“It just moves money quicker,” Neumann said. “You really don’t want that risk of delay to sit with landlords or tenants. And so if you can put it on a nonprofit’s line of credit that can absorb some losses, then everybody gets their money faster. Occasionally, these cases aren’t going to get reimbursed, but that risk is allocated to a party that can more effectively bear it.”
CSF works with referrals from other agencies and nonprofit organizations, like the Colorado Legal Services, which has offices all over the state.
DOLA officials said that if landlords take the delayed payment after a tenant has left the rental home or was evicted, the agency will refer the tenant to a pro-bono attorney.
“We will investigate the case and potentially require that the funds be returned. A tenant can log into their account and see what months were approved for assistance,” Hawthorne said.