Why Iowa has only given out 2% of $195 million federal rent aid — and won't apply for more

Lee Rood
Des Moines Register

Iowa Finance Authority Director Debi Durham says she takes full responsibility for what she described as the premature launch of a program that was supposed to provide immediate emergency rental and utility assistance to Iowans affected by the pandemic.

Rushed into effect and hampered by what Durham said were technical and regulatory problems, the program so far has delivered only a fraction of the $195 million the federal government allocated for Iowa.

She told the Iowa Finance Authority board this week the funds, which the state received in January, came with few explicit rules or regulations. The finance authority waited weeks for direction from the federal government on how it should administer the program, and still probably needed another month to get it up and running when Gov. Kim Reynolds announced it March 29, she said. 

At the time, Durham said, "I think people were hurting, The problem is, we weren't ready for it and we probably should have waited. ... We just weren't ready to launch the program."

Durham said the agency contacted with more than 100 community action organizations across the state to process applications, a task that has proven difficult because of "burdensome" reporting requirements the federal government.

"I would tell you the majority of it is not our fault," Durham said.

She said she doesn't expect the state will apply for a second round of federal rental assistance approved this year as part of the Emergency Rescue Plan Act. Those funds could have meant another $120 million for needy Iowans who qualify and the landlords statewide to whom they owe money. 

Contradicting comments earlier this month from advocates for low-income Iowans, she said the state doesn't need the second round of funding.

“Why would we draw down $120 million if there’s no way we’re going to go through $195 million?” she said. “That would also require long-term engagement, and I don’t think we need long-term engagement.”

More than 7,400 applicants for rental assistance, less than 2% of funds distributed

An exclusive Watchdog probe published July 1 showed the state had distributed less than 2% of the $195 million emergency rent and utility allotment from the federal government by July 1.

The story quoted tenants, a landlord and advocates who were alarmed by the slow distribution. Some applicants had waited four months with no word on whether their back rent would be paid, and many could face being kicked out of their homes when a federal moratorium on evictions, imposed during the COVID-19 pandemic, lifts at the end  of July.

Durham and some who work for housing nonprofits disagree about whether the federal rental assistance money should be used as a salve for an immediate crisis or to help Iowa's neediest families regain longer-term stability they lost during the pandemic.

Wayne Davis and his daughter Martianna live in a rented home in Mason City. Wayne Davis has had trouble finding work and says he applied months ago for federal rental assistance from the Iowa Finance Authority, but has yet to get aid. “I’m not making it,” he said. “I don’t get any unemployment. There’s never enough to pay all the bills. But everybody just thinks you’ll just figure it out.”

As announced this spring by Reynolds, Iowa's Rent and Utility Assistance Program was supposed to address that need by covering not only past-due rent payments and utility bills, but providing up to three months of advance rental assistance.

The rules the Iowa Finance Authority ultimately came up with, however, don't allow for advance rent payments. 

“We’re not doing that,” Durham said. “That was a governor call, and I agree with that.”

The governor's office declined to comment.

A separate program for Des Moines and Polk County has more lenient rules and had distributed almost twice as much aid as the entire state had by July 1, Watchdog found.

Iowa has more than 100,000 renters with annual household incomes of less than $25,000, according to the National Low Income Housing Coalition. Of those lowest-income households, 85% pay more than 30% of their income for housing, a threshold that puts them on the financial brink. 

Durham, however, said Wednesday it’s getting harder to prove families are still suffering COVID-19-related hardships, “particularly when we have more jobs than the people to fill them.”

IFA spent almost $1.9 million on overhead to get the Iowa Rent and Utility Assistance Program up and running. The spending included more than $880,000 on software from a New York company, which Durham said was not up to the task.

Thus far, Iowa's program has drawn more than 7,400 applicants but only $4.1 million had been distributed as of Wednesday.

How are other states distributing their federal aid?

Housing advocates say getting the money out quickly is important, as thousands face possible eviction when the federal moratorium expires.

But the money Congress approved in December in an extension of the Coronavirus Aid, Relief, and Economic Security Act came with no actual mandate that it be spent on rental assistance, and some states have been using the dollars in other ways.

The Pennsylvania Housing Finance Agency received $150 million to help renters but returned about $96 million to the state treasury, which used it to plug holes in the state’s public safety budget, the Associated Press and Center for Public Integrity found in a recent joint investigation.

Florida spent 60% of its allotment and Montana less than 20% before sending the remainder to their treasuries. New York reported allocating just under half.

Debi Durham

Iowa may join them. Durham acknowledged Wednesday she’s been discussing with the governor’s office other ways of using some of the $195 million allotment, but she did not give specifics.

Why is it taking so long to distribute the funds?

Meanwhile, state legislators, the staffs of Iowa’s congressional delegation and others have contacted finance authority officials, with questions about why it's taken months to get the money to those who need it.

Other states also have been slow to distribute the funds, the investigation by the Center for Public Integrity and the Associated Press found, and politics appears to be playing a role. In many of Republican-led states with a history of weak tenant-protection laws, authorities opted to offer little to no assistance, the AP and Center for Public Integrity reported.

Among them, West Virginia and Tennessee, both run by Republican governors, chose not to set up statewide rent relief programs, despite having higher-than-average historic rates for evictions. 

Also handicapping the programs have been onerous application processes, time-consuming bidding requirements for contractors and, in Iowa, the software that failed to live up to expectations.

“They promised us the sun, moon and stars … but they couldn’t deliver," Durham said of the New York contractor, Unqork Inc. However, Durham did say the company has been good about making necessary changes as the program has taken shape.

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The state is allowed to charge the federal government a 10% fee to recoup the cost of administering the federal rental assistance program. Durham said it's still unclear whether some of the overhead costs will have to be repaid to the U.S. Treasury. 

After consulting with officials in other states, the finance authority contracted with Witt O’Brien, a Washington, D.C., firm specializing in emergency and crisis management, to help with the backlog of applications.

With help from the community action groups that also are reviewing applications, Durham said she's hoping the backlog can be addressed by the end of July.

The finance authority also is rolling out a homeowner rescue plan with $50 million in federal funding. Durham said she wants to get that program to the federal government for review by August.

Mike Van Milligen, city manager in Dubuque and a finance authority board member, said he hopes something can be done soon to help more Iowans qualify.

As of this week, he said, more than 1,000 city utility accounts had past-due balances, about triple what Dubuque would see in normal times. But so far, only 20 households among 119 applicants have qualified for the program started this year with federal money.

"Especially as the eviction moratorium comes off, water is going to be shut off, and (people) will lose their dwelling if they don’t pay their bills," he said.

Lee Rood's Reader's Watchdog column helps Iowans get answers and accountability from public officials, the justice system, businesses and nonprofits. Reach her at lrood@registermedia.com, at 515-284-8549, on Twitter at @leerood or on Facebook at Facebook.com/readerswatchdog.