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South Dakota returns millions in unused housing assistance funds to federal government


Last updated 3/8/2022 at 4:09pm

By: Bart Pfankuch

January 12, 2022 South Dakota has sent millions of dollars of unused COVID-19 housing assistance funds —allocated to help low-income renters — back to the federal government, mainly because not enough people applied for help. As of early January 2022, the state had received about $271 million in federal funding to pay rent and utilities of low-income residents who fell behind during the pandemic. But so far, the state has distributed only about $24.9 million to needy residents, or about 9.2% of the total available funding.

In September, South Dakota and otherstates that did not spend the money fast enough were required to return some of the money to the federal Treasury. That month, South Dakota returned about $22 million in unused housing assistance funds to the federal government, which is reallocating the excess money to states that are using it faster. Several other states, especially those in rural areas or with smaller populations, have had to return unused housing-assistance funds. Overall, the federal government said disbursing the money to low-income renters has gone more slowly than expected across the country. The program will continue to offer assistance at least until 2025. The federal government rejected requests by South Dakota officials to use the excess funds for other housing initiatives.

South Dakota received $271 million in federal funding to help renters remain in housing and keep landlords viable, but has given out only $25 million so far. Renters in Minnehaha County and Pennington County, where this home is located, have applied in high numbers for help. Photo: News Watch file Lorraine Polak, executive director of the South Dakota Housing Development Authority, which is administering the housing assistance program for the state, said the state had to return fundsm for several reasons. One was that Congress gave too much assistance money to the state; another that less rental assistance was needed because South Dakota did not shut down its economy as some other states did early in the pandemic.

“South Dakota has been successful in getting ERA funding to the residents in need,” Polak wrote to News Watch in an email, referring to the federal Emergency Rental Assistance program. “Because our state didn’t shut down or require businesses to close, we had fewer requests for assistance than other states that took away people’s ability to provide for themselves.

In addition, many of our residents are homeowners, and this program only applies to renters.” Polak pointed out that with a population of under 1 million, and the assistance program limited to renters who qualify as low-income, there was no way the state could spend all $271 million from the program, part of which extends into 2025. Lorraine Polak “We had more funds than necessary to meet the needs in our state,” Polak wrote. “It was best to return those taxpayer dollars to the Treasury.”

To help implement the program in a fast and functional way, the housing authority enlisted local agencies across the state to aid in the application process and allocation of funds that were ultimately paid directly to landlords and owners of rental properties. Officials with two of those agencies said that while the program could have done more to help, especially for homeowners, they said Polak did a good job managing the program and that the state continues to help renters and landlords who are being hurt by the pandemic. “The state and all the partners have been wonderful to work with, and we’ve all gone to great lengths to help a lot of people,” said Peter Smith, executive director of the Rural Office of Community Services in Wagner, which provides a variety of aid to residents throughout eastern South Dakota.

“There’s a lot of stuff going on here that is beautiful, things that you don’t see.” Smith said his team has sometimes driven long distances to hand deliver assistance checks to landlords so renters could avoid eviction. He said the partnerships among local aid agencies and with the state housing authority have been strengthened as a result of the collaborative effort to run the housing program. While those involved in administering the program see room for improvement — mostly by encouraging more people to apply and potentially expanding it to homeowners —many state housing officials view the program as largely successful in helping people maintain housing. Polak said the state program has provided aid to about 4,000 households statewide, and Smith said his agency has aided about 1,350 families in 22 South Dakota counties. “I would say the efficacy of the program has been excellent,” Smith said. Some housing advocates and members of Congress have expressed concerns that some renters in the U.S. who need help due to the pandemic are not getting it, and that states need to do more to allocate the aid where needed.

The program’s challenges underscore the difficulty that federal, state and local governments have faced in distributing pandemic-assistance funds to those who need help in a timely, well-managed way that limits fraud and abuse. State data show that in 21 of the 66 counties in South Dakota, fewer than 10 housing authority assistance applications have been filed, mostly in rural areas. The most populous counties, Minnehaha and Pennington, led the way in overall applications filed. Tribal communities were able to access federal housing assistance funds through other government programs.

“At the end of the day, hopefully everyone that needs assistance is able to get that, and I think $25 million is a lot of money,” Polak said in an interview with News Watch. “It has been quite a process, but it’s been a great opportunity to provide the assistance to households that need it, and it’s been a great opportunity with our partner agencies to work on this with each other in a statewide effort.”

HOW TO APPLY FOR RENTAL ASSISTANCE The rental assistance program is still offering help for renters and landlords who are facing financial challenges. Here are some resources to learn more about the program or apply.

Contact the South Dakota Housing Development Authority by phone at 605-773-3181 or go online to https://www.sdhda.org and click on SD Cares Housing Assistance.

These local agencies can also help potential applicants:

East River Legal Services – erlservices.org; 605-336-9230 or 1-800-952-3015

Minnehaha County Human Services — http://www.minnehahacounty.org 605-367-4217

Helpline Center, Statewide –https://www.helplinecenter.org

Codington County Welfare, Watertown – https://www.codington.org/welfare/

GROW SD, Sisseton – https://www.growsd.org

Interlakes Community Action Program, Madison https://www.interlakescap.com

Lutheran Social Services – https://lsssd.org

Pennington County Health and Human Services, Rapid City – https://www.pennco.org/hhs

Rural Office of Community Services, Wagner – https://www.rocsinc.org

Western South Dakota Community Action, Rapid City – https://www.wsdca.org

Federal funds form basis of programs South Dakota has used three separate federal funding programs to assist with housing costs for low-income residents during the pandemic. Legislators in 2020 used a special session to approve using $10 million in federal Cares Act funds to provide money for rent, mortgage payments and utility bills to renters and homeowners affected by the coronavirus pandemic. Congress then approved two rounds of funding in 2020 and 2021 through the Emergency Rental Assistance program that set aside almost $47 billion to aid renters in states, large cities, U.S. territories and on reservations. Homeowners were not included in the ERA program and tribes were excluded from the second round of ERA funding. The money was given to states to distribute to landlords and owners of rental properties to support low-income residents with rent and utility payments. The goal was to help renters stay housed and assist landlords who operated under a federal eviction moratorium from September 2020 to

August 2021. In January 2021, the federal government estimated that U.S. renters overall were in arrears by at least $20 billion and as much as $57 billion, potentially putting millions of American renters—particularly in minority communities—at risk of eviction. The eviction moratorium and economic slowdown during the pandemic caused many landlords and building owners to suffer significant financial losses as renters struggled. South Dakota received $200 million in ERA-1 funds and $61 million in ERA-2 funding. When added to the $10 million appropriated by the Legislature in 2020, the state has received a total of $271 million in Cares Act funding in housing assistance, the large bulk targeted at renters. Six months into the ERA-1 program, the U.S. Treasury reported that only $1.5 billion of the $25 billion allocated, or about 5.8%, had been provided as rental and utility assistancen across the country. Two months later, the amount had jumped to $7.5 billion, or 30% of the total, still far below what Congress had intended. In a report in May 2021, the Treasury noted that “while some state and local programs are increasingly reaching households in need, others lag far behind.”

In an October 2021 report, the Congressional Research Service noted that the low rate of expenditure of ERA-1 funds “has caused some to raise concerns about the effectiveness of the program in preventing evictions as eviction moratoriums end, and in addressing the backlog of rent and utility debt.” Members of Congress have watched the program progress and some have expressed concern that the assistance is not being distributed in a timely fashion. “There’s no question that the funds aren’t reaching landlords and renters quickly enough,” U.S. Rep. Maxine Waters, D-Calif., said during an House committee meeting on the ERA program in September 2021. Some states were slow to implement systems to distribute the assistance, and some renters complained the paperwork requirements were too extensive or required computers and online proficiency.


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