Kelley Martin spends a lot of her time thinking about RentHelpMN, talking about RentHelpMN, talking to RentHelpMN — and wondering when she might get paid by RentHelpMN.
RentHelpMN is what the state of Minnesota calls the program it quickly put together to distribute more than $600 million in federal dollars to help renters who owe money to landlords due to the COVID-19 pandemic. Like similar programs around the U.S., RentHelpMN and the Minnesota Housing Finance Agency have been struggling to get payments in the hands of landlords, some of whom haven’t received money for back rent since the pandemic began.
Martin is a St. Paul woman who wears two hats in housing: as an employee of a for-profit property management company and as the founder of a small nonprofit that finds housing for hard-to-place renters. Neither side of her work has had adequate success with RentHelpMN.
“I don’t understand some days how we do what we do,” she said from her office on Payne Avenue in St. Paul. “I just know our hearts stay right and we stay focused on the mission and somehow it’s been able to work out over the last couple of years.”
Martin started her nonprofit, Steps of Strategy, in 2012, initially as a way to help young adults who needed their own place to live. “I saw a need for young adults who were either needing to move on from home, maybe foster care, maybe bad situations at home,” Martin said.
She began by renting the upstairs of a duplex to three residents. The nonprofit now serves as a master lessor — meaning it holds a lease and then subleases to tenants — at 47 housing locations in the Twin Cities, renting to 178 people who need a place to live. She helped place 35 people who lost housing on Christmas 2019 when the Drake Hotel caught fire in Minneapolis. She has also placed 25 people who had been living in tent villages.
Landlords work with Steps of Strategy, Martin said, because she and the staff find tenants, make sure those tenants agree to treatment, if needed, and keep tabs on the residents with mentors and counselors. While it has only happened 10 times in nine years, Martin has had to evict residents who damage property or are endangering themselves or neighbors. “I didn’t get into this to evict people,” Martin said.
Of the building owners she works with: “They love it. We make sure the rents are paid. We work with people in the community around whatever the hardship is to make sure housing stability isn’t put at risk.”
But because Steps of Strategy is the lessee of the units, the organization is on the hook when rent goes unpaid, which happened frequently during the recession caused by COVID-19.
Even so, Martin wasn’t happy when she learned that federal money could be paid to landlords who had tenants behind on rent. Having worked in state and county social services agencies, she said she knows how poorly low-income people are treated. “I wasn’t excited. But the one thing I am is resourceful, and I get in there and I figure it out.”
She estimated that she helped process between $350,000 and $425,000 in back rent payments from an earlier program set up by the Housing Finance Agency in 2020 using federal CARES Act money. RentHelpMN replaced that program with money that Congress passed in December 2020 and March 2021.
Of the first $300 million received from the federal government, RentHelpMN has distributed $81 million. Of the 45,727 requests for help, 16,870 have been fulfilled.
Jill Mazullo, a spokesperson for the Minnesota Housing Finance Agency, said the state has contracted with Witt O’Brien’s to process applications. The contract is for $18.5 million and the company has 400 people working on RentHelpMN. In addition, the state agency has hired eight people “to provide program management and other services complementary to the work of the vendor processors.”
Martin funds Steps of Strategy through donations and with her own money, but she also took out a loan recently to get through the pandemic because the organization owes the rent on the master leases if her tenants don’t pay. “I took a huge loan out to take care of our tenants in hopes that some of this money would come back by now,” Martin said. “And it hasn’t.”
Martin’s private employer owns and rents housing units, many of which would be considered to be naturally occurring affordable housing, or NOAH: low-cost housing that isn’t publicly owned or subsidized, though some renters of such units might receive some government assistance.
When RentHelpMN started in April, Martin said she was cautious. She wanted to let the new program work its kinks out before she jumped in with the tenants from Steps of Strategy and her for-profit employer. Yet even though she waited until late in the month, Martin experienced the same problems many private landlords had — an inaccessible website that prevented them from providing the documents with their tenants that the state required to prove income eligibility.
Then, once applications could be submitted into the software, Martin said she continued to have problems with the vendor hired by the state to process applications. At one point, she spent two and a half hours on the phone sorting through 25-to-30 different applications. Many of those applications — as well as several dozen more — were initially approved and then moved into a category called “supervisory review.”
“They put 60-something applications in supervisory review back in June and early July and three of them have moved since then,” Martin said.
All totaled, she said she has $392,918 worth of back rent payments under review by the state’s vendor from applications made from April to July.
Martin said she has noticed some changes in the system of late, and she is now getting two-to-three emails a day from RentHelp staffers with questions about applications that seem aimed at moving them toward approval. But even those are for more-recent applications. “I had one that was approved in seven days, but yet people from April are still waiting,” she said.
States were given strict criteria for who was eligible for assistance, which could cover up to 12 months of back rent and even three months of future rent. The primary requirement was that applicants meet income requirements: 80 percent or less of area median income. For a household of four, that’s $59,600 in Crow Wing County and $79,900 in Hennepin County.
One factor has been a concern with fraud by the Minnesota Housing Finance Agency and counterparts in other states — as well as a fear that the federal government would hold them responsible for any unauthorized payments. But the scrutiny given applicants may have led to the long delays in approvals, which led the U.S. Treasury to loosen requirements and even encouraging states to let applicants “self-attest” to eligibility if documents can’t be easily provided.
“I have a social services background, so I want to say I have a lot of compassion for what they’re going through,” Martin said of the workers processing applications. “You never know what it’s going to be until it actually physically launches.”
There are also issues with federal rules, which initially said that tenants must still be in the units for back rent to be paid. The purpose was to give landlords a financial reason to not evict tenants, since the rule would prevent them from getting back rent paid. But there were instances where Martin said she had to get people out of bad situations, and the federal government has since relaxed that rule.
States received direct payments from the federal government, but larger cities and counties also received their own allocations. Hennepin, Ramsey and Dakota counties — along with Minneapolis and St. Paul — created the Zero Balance Project, which is distributing $33.2 million in assistance.
Martin said she now uses that program instead of RentHelpMN because the web interface is easier to use and payments are made in weeks. Zero Balance is also set up to allow landlords, rather than tenants, to lead the application process. “In mid-June I said, ‘No more RentHelp,’” she said.
She continues to monitor some of the RentHelpMN applications still in process, even some of those were shifted to Zero Balance. “The counties work like clockwork.”
If there is a silver lining to the backlogged applications, it’s that Minnesota’s so-called eviction ban offramp, passed earlier this this year, says that any tenant with an active application for help cannot be evicted until June of 2022.
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