BE IT RESOLVED, that the Hennepin County Board of Commissioners hereby allocates $5,000,000 of its federal funding from the Coronavirus Relief Fund available under section 601(a) of the Social Security Act, as added by section 5001 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide emergency financial assistance to affordable rental housing property owners impacted by tenants who could not pay rent due to the economic impacts of the COVID-19 pandemic, during the period March 1, 2020 through December 30, 2020; and

BE IT FURTHER RESOLVED, that the County Administrator be authorized to negotiate one or more agreements with organizations selected via a competitive solicitation process to provide program administration and emergency funding grants to eligible applicants, with a total combined not to exceed amount of $5,000,000 (including up to $500,000 for vendor administration); that following review and approval by the County Attorney's Office, the Chair be authorized to sign the award agreements on behalf of the county; and that the Controller be authorized to disburse funds as directed; and

BE IT FURTHER RESOLVED, that any funding amounts not utilized will be returned to the CARES Act fund at Hennepin County for future distribution.

History: Section 601(a) of the Social Security Act, as added by section 5001 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), established the Coronavirus Relief Fund (Fund) and appropriated $150 billion to the Fund. Under the CARES Act, the Fund is to be used to make payments for specified uses to states and certain local governments; the District of Columbia and U.S. Territories; and Tribal governments. Hennepin County received a direct payment out of the Fund from the U.S. Treasury.

The CARES Act provides that money from the Fund may only be used to cover costs that:

1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19);
2.  were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and
3.  were incurred during the period that begins on March 1, 2020 and ends on December 30, 2020.

Allowable expenditures include those incurred to respond to second-­order effects of the emergency, such as providing economic support to those suffering from employment or business interruptions due to COVID-19-related business closures, as well as assisting individuals with payment of overdue rent or mortgage to avoid eviction or foreclosure.

In May 2020, the Hennepin County Board of Commissioners allocated $15,000,000 from its CARES Act Coronavirus Relief Fund to establish the Emergency Housing Assistance fund (BAR 20-0169). Funds are targeted to renters with incomes at or below 50% of Area Median Income (AMI) and at the highest risk for COVID-19 related economic loss. Priority is given to residents with incomes below 30% AMI, and those who live in regions with highest overcrowding, poverty, and eviction rates.

Applications for assistance have been slowed due to the State of Minnesota’s eviction moratorium during the declared peacetime emergency (Governor Walz’s Emergency Executive Orders 20-14, 20-73, and 20-79). This moratorium remains in effect during the State of Minnesota’s peacetime emergency related to COVID-19. In addition, Hennepin County tenants are protected from eviction for non-payment of rent by a nationwide eviction moratorium ordered by the Centers for Disease Control and Prevention, effective September 4 through December 31, 2020.

Inability or unwillingness to pay rent due to economic loss caused by COVID-19 is having a compounding financial impact on owners and landlords of rental housing – who are still required to pay the full costs associated with rental property operations while receiving less than necessary rental revenue.

Staff recommends re-allocating $5 million from the $15 million that was allocated to the Emergency Housing Assistance fund to establish a rental property support program providing emergency financial assistance to affordable housing property owners impacted by tenants that could not pay rent due to the COVID-19 public health emergency (fund 10/acct 55300/deptid 124001/project 1007980). Rental property support funds will stabilize renters, owners, and the overall rental market:

• reduce evictions and prevent homelessness large numbers of current and delinquent tenants,
• reduce rental property foreclosures, sales, and rent increases stemming from inability to keep up properties, and   
• stabilize owners at a time they need to be planning for new costs to implement public health measures for both employees and tenants.

Eligible applications will be considered for property owners who:

• document uncollected rent from March 1 through the application date,
• demonstrate that those units are affordable to households with incomes below 80% AMI, and
• provide tenant attestations of inability to pay rent due to COVID-19

Award letters sent to both the owners and tenants; owners will apply funds to identified tenants’ balances and will refer tenants to Legal Aid if remaining rent balances are not forgiven.

For modeling purposes, staff estimates that a 100-unit affordable housing project experiencing non-payment of rent for 20% of occupied units would be eligible to receive approximately $25,000 in support per month.

Impact/Outcomes: Authorization will support the ongoing viability of affordable housing providers experiencing significant rent loss during the COVID-19 pandemic, while preserving affordability and stability for coming years.