The Emergency Rental Assistance (ERA) program, a short-term program designed to protect Maine renters from the economic harm caused by government lockdowns, will run out of funding in November.
“Based on our current estimates we believe program funding will expire by the end of November 2022,” MaineHousing Communications Director Scott Thistle said in an email Thursday.
Under the ERA, Mainers could apply to receive government support to pay unpaid rent and ongoing support keeping current with payments. More than 33,000 people in Maine took advantage of the program, which ensured that landlords didn’t have to deal with widespread evictions in the middle of the government lockdowns.
The looming shortfall has been predictable since the program began in 2021. The MaineHousing Authority (MHA) has been winding it down for several months by narrowing eligibility requirements, capping costs, pausing enrollment, and generally trying to stretch the funding as far as it could go. Which turns out to be just after Election Day.
The program has sent more than $278 million to landlords and hotel operators since the start of the government lockdowns, according to an Oct. 26 MHA policy report.
The MHA has asked the U.S. Treasury to release additional funds to support the program, but the issue has not been resolved. The authority has also sought help from Maine’s Congressional delegation and Gov. Janet Mills, so far to no avail.
Mills communications staffers Scott Ogden and Ben Goodman did not respond to a request for comment on the looming rental assistance cliff from the Governor’s Office.
When the funding runs out, many Mainers may find themselves unable to resume paying for their own rent, putting them — and their landlords — between a rock and a hard place. Worse, some landlords may have taken advantage of the guaranteed government check to increase rents, meaning tenants will find themselves paying a higher monthly rate than before the government lockdowns. Especially vulnerable to the program’s end will be more than 500 families — many of them asylum seekers — currently living in hotels or motels.
“We know this is going to cause problems and pain for many households and are not assuming any of it will be seamless,” Thistle said in an email. “But there are plans and programs in place to help address it.”
Thistle said major state investments into new affordable housing projects should be able to accommodate the population of Maine residents and refugees who have benefited from the ERA when the government is no longer paying for rent.
There is also an effort underway to connect ERA enrollees with the Maine Department of Labor job bank in case they’ve had trouble finding a job opening.
The end of the program may have a disproportionate impact on Maine’s minority community. According to MHA data, 13.4 percent of program participants are black or African-American.
The program received funding from two massive federal spending bills, one signed by President Donald Trump and the other signed by President Joe Biden. The program was intended to protect renters from the consequences of government lockdowns, which hindered many Mainers’ ability to work, earn a living, and pay landlords. Although the government lockdowns have ended, the rental payment assistance for some have not, despite the original intent of the program being short-term.
Of the total taxpayer dollars spent on the ERA, payments for housing rent comprised $135.2 million, while past due rent accounted for $84.9 million. $47.1 million went toward what MHA calls “Other Housing Expenses” and $5.34 million in expenses were “uncategorized.”
As of October, the rental programs largest outlays occurred in Cumberland County ($77 million), York County ($45.8 million), and Penobscot County ($38 million). Piscataquis County accounted just just $1.5 million in total ERA payments.
According to documents reviewed by The Maine Wire, federal funding for ERA flowed first to the Maine Department of Economic and Community Development, then to the MHA. The MHA, an independent agency that is not part of the State executive branch, then funneled the money through a sprawling web of “Community Action Project” non-profits. Those non-profits were charged with soliciting applications, determining eligibility for the program, and coordinating payments to landlords.
The payments have covered not only standard rental housing, but also hotel-based accommodations. According to MHA, 13 percent of total rental relief funding has paid for families to remain in hotels or motels. Currently, there are 543 households receiving taxpayer funded rent relief payments to cover their hotel or motel stay in Maine, down from 844 in September.
The MHA has been warning state and federal officials about dwindling ERA funds since June, when the authority curtailed eligibility for the program. On Sept. 29, the MHA again signaled funding trouble looming on the horizon for the program when it announced it would no longer be accepting new applications for rental assistance.
“An unanticipated uptick in demand on the program, coupled with uncertain new revenue prompted MaineHousing’s leadership team to make this decision,” the authority said. “While MaineHousing initially projected program funds would last at least through December of 2022, this unexpected uptick in program demand over the last several weeks has accelerated the depletion of available funds.”
Increased demand to have the state pay rent also undermined changes MHA made in June to stretch funding, including reducing eligibility and placing price caps on hotel and motel rates paid by the program.
“Pausing new applications now allows MaineHousing and Maine’s community action agencies time to process more than 11,000 pending requests to the program,” MHA said. “This decision was necessary as a request from MaineHousing for additional funding from the U.S. Treasury remains unresolved.”
“This pause in applications is a fiscally responsible and reasonable move that will allow us to ensure all who have already applied to this program get a fair opportunity to receive help,” said MHA Communications Director Scott Thistle.
The MHA is continuing to seek resolution to the funding shortfall.
“MaineHousing continues to be engaged in talks with the U.S. Treasury, all four members of Maine’s U.S. Congressional delegation and the Governor’s Office as we work to determine the next steps,” said Thistle.
Thistle said the MHA has taken a number of steps to “soften the blow” when the program ends, including opening affordable housing development spaces in Bangor, Farmington, and Wells. He said MHA is underwriting and building more affordable housing than at any time in the history of the authority. He also pointed to bipartisan efforts last legislative session to use state and federal funds to support housing development across the state.
Maine is not the only New England state dealing with the consequences of supplying a generous benefit and having to take it away.
Last Wednesday, New Hampshire’s housing authority paused new applications for the NH Emergency Rental Assistance Program (NHERAP).
New Hampshire Gov. Chris Sununu has asked the Granite State’s congressional delegation to work with Congress to make more funding available before the program runs dry.
The Maine Wire attempted to request from MHA copies of all contracts with the non-profits involved in administering the rent relief; however, MHA requested fees pursuant to Maine’s Freedom of Access Act that were prohibitive. According to the blank draft contract obtained instead, payments to the non-profits were negotiated individually. Precisely how much the web of non-profits collected in administrative fees to administer the ERA program remains unknown.
The eligibility requirements for the program changed slightly according to the federal bill providing the funding. However, the non-profits, rather than a government agency, were responsible under both funding schemes for determining whether applicants were actually eligible for the rental assistance payments.
Neither the funding law signed by Trump nor the law signed by Biden required state agencies or non-profit sub-contractors to impose a citizenship requirement on rental assistance applications, though it’s unclear from MHA data how many foreign nationals or asylum seekers have been receiving taxpayer assistance for rental payments.
In anticipation of the fraud attempts, the MHA hired one fraud investigator to oversee more than $250 million in spending. Attempts to defraud the program have increased significantly in frequency and magnitude since Sept. 2021.
The MHA has investigated 997 allegations of fraud related to the program, confirming that 872 of those suspect applications were in fact fraudulent. Fraud attempts amounted to $17.34 million dollars in potential ERA money; however, MHA says only 2.4 percent of actual payments were fraudulent due to their enforcement methods.