Five Ways State and Local Governments Can Strengthen Their Capacity to Meet Growing Rental Assistance Needs

As part of the Urban Institute’s exploration of policies to protect people and places from the impacts of COVID-19, researchers are examining how state and local governments can respond to the tremendous rental housing challenges presented by COVID-19. In this Housing Matters blog series, we present evidence-based ideas for how state and local leaders can stabilize housing for renters affected by the pandemic and job loss. You can find the framing post with links to each post in the series here.

As vulnerable renters head toward a “rent cliff,” the nation’s network of existing housing programs now faces the challenge of scaling up quickly. This position is not completely new for state and local governments, which, despite declining resources and increasing need, have worked hard to provide housing for millions of low-income residents, people experiencing homelessness, and those at risk of being homeless nationwide. Yet decades of declining funding has left state and local administrators with reduced capacity and infrastructure, just as their responsibility is growing to address additional housing need caused by the COVID-19 crisis. With new funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and potentially more federal aid packages, these program administrators will need to mobilize new resources while building organizational capacity.

COVID-19 funds provide an opportunity to build long-needed state and local housing infrastructure

The CARES Act added $12 billion to the 2020 federal housing budget, suddenly expanding many programs that have experienced decades of funding cuts, cuts that whittled away administrative capacity, even as operating costs increased.

Public Housing Authorities (PHAs) are one such government entity. More than 3,300 PHAs own and operate about 1.2 million public housing units, and about 2,181 administer rental assistance programs, such as the Housing Choice Voucher (HCV) Program and others, that pay rent to landlords on behalf of tenants and keep more than 3.2 million households stably housed. But federal reductions in their administrative fees and operating funding have led some PHAs to reduce staffing levels and hours, and sometimes, eliminate positions. In 2016, the Philadelphia Housing Authority cut their workforce by 16 percent because of reduced funding. Others couldn’t afford to issue new vouchers, even as the need for the vouchers grossly exceeded the amount available.

A similarly large network of state and local agencies administer Community Development Block Grants (CDBG) (1,231 agencies), the HOME Investments Partnership Program (HOME) (652 agencies), and Emergency Solutions Grants (ESG) (413 agencies). Since 2000, CDBG and HOME budgets have been cut more than 50 percent (in inflation-adjusted dollars), which has meant staffing reductions and lack of investment in organizational infrastructure or the staffing, structures, and partnerships needed to most effectively administer these resources. Yet the number of grantees for the CDBG (PDF) has more than doubled since 1975 (from 594 to 1,268 in 2019).

COVID-19 presents an extraordinary test for this vast national rental assistance system, whose organizational capacity varies widely from program to program. For example, the CARES Act provides $4 billion in ESG funding to provide housing for individuals and families who are homeless or at risk of homelessness. State and local programs that currently support around $280 million in ESG funding annually are now handling more than 14 times the normal volume. CDBG administrators must handle almost 2.5 times the normal annual volume.

Without bolstering existing infrastructure, many state and local governments will struggle to get new resources out quickly and effectively.

How can state and local entities maximize new federal funding and opportunities?

To tackle expansion challenges, state and local government entities must be adaptable and creative to best leverage all available funding. We highlight five opportunities to maximize new resources effectively:

1. Take full advantage of US Department of Housing and Urban Development (HUD) waivers. In addition to more funding, HUD has begun to put waivers in place for rental assistance programs (PDF) and grant administration (PDF), designed to temporarily waive existing rules to make it easier for organizations to disperse funds efficiently. These include allowing higher rents to be paid so administering entities have greater flexibility in tight rental markets to get people housed more quickly. Other waivers will help keep existing renters in homes, including allowing tenants greater flexibility in reporting incomes and maintaining legal occupancy. Agencies should maximize the flexibility these waivers provide to speed service delivery and build capacity to support new expansion.
2. Identify opportunities across the program spectrum to provide rental assistance. Because they’re established rental assistance programs, the HCV Program and the ESG are  “go to” vehicles as existing rental assistance programs, but there are opportunities with both HOME and the CDBG to provide rental assistance. Local agencies need to look at the regulations closely to identify nontraditional opportunities to meet their communities’ needs.
3. Maximize resources to house people experiencing unsheltered homelessness. The ESG is a powerful resource for addressing homelessness. It and other rental assistance programs can be used to rapidly place people experiencing unsheltered homelessness into rental units. State and local agencies can also leverage the CDBG to assist with creative ways to immediately provide safe, temporary shelter through acquiring and rehabilitating facilities like motels and hotels while permanent housing options are identified.
4. Think holistically about all funding sources with an emphasis on need. Rather than focusing on the source of funds, state and local entities should focus on needs, prioritize them, and then layer on different funding sources and their eligible uses. Whereas some sources, like HCV can only be used for rental assistance, others, like the CDBG, have a variety of eligible uses, so administrators could use the CDBG for needs outside of rental assistance. PHAs could use the CDBG to undertake necessary maintenance and repair projects within their public housing stock, such as roof repairs and mold remediation, to ensure residents stay housed and that housing is safe.
5. Be flexible and act quickly. Waiver use still requires notifying HUD. For efficiency, PHAs and entities administering state and local grants should consider submitting an “all-inclusive” set of emergency policies and procedures. They should also amend their Consolidated Plans governing their CDBG, HOME, and ESG programs, among others, to ensure they can act quickly and don’t have to continuously return to HUD for approvals.

Rent cannot get paid without boosting state and local capacity

These are challenging times for stretched state and local housing programs. More waivers and funding undoubtedly will be needed for the system to meet dramatically increased need. State and local governments will also need to take a systems-thinking approach, emphasizing community needs and exploring all eligible activities, even nontraditional ones. By maximizing regulatory waivers, leveraging funds, and increasing coordination across programs, state and local entities can build capacity to respond to this crisis.

Martha Galvez and Samantha Batko provided substantive contributions to this blog post; Jorge Morales-Burnett provided research assistance.

Photo by Valerie Johnson/Shutterstock