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Only a Quarter of the $9 Billion HUD Got to Combat COVID Impacts Has Been Spent

Cities and states have been overwhelmed by capacity issues and focused on spending other funding with tighter deadlines.

Demonstrators attend a rally calling for an extension of the state's eviction ban until 2022 and the cancellation of rent, in lower Manhattan, New York city, on August 11, 2021.

Tucked in the massive pandemic relief act in March 2020 was about $9 billion for the U.S. Department of Housing and Urban Development to divvy up between cities and states for housing-related coronavirus fallout.

The funds could be used on rental assistance for tenants struggling to pay their landlords, housing homeless people in safe, sanitary rooms rather than in crowded shelters and the creation of pop-up COVID-19 testing sites and hospital overflow facilities, among many other uses.

Twenty months later, states and cities have spent only about a quarter of that money.

The funds were split between two programs that existed long before COVID-19 began spreading: the Emergency Solutions Grant and Community Development Block Grant programs.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act infused the ESG program, which helps the homeless population, with an additional $4 billion to combat coronavirus. CDBG received an extra $5 billion for an array of programs, including the conversion of temporary shelters into permanent affordable housing and shoring up public facilities, homeless shelters and senior centers to handle airborne viruses.

Just over $1 billion of the ESG money and $1.2 billion of the CDBG money has been spent.

ESG and CDBG funds, which are supposed to be spent by 2022 and 2026, respectively, were put on the back burner in some communities because housing agencies were trying to spend other federal money with tighter deadlines first, several agency administrators told the Center for Public Integrity.

“They should be going faster,” said Nan Roman, CEO of the National Alliance to End Homelessness, which monitors ESG spending. “The loss of income and the inability to pay rent have led to greater and greater housing instability and — despite the significant measures taken to prevent it — to possible evictions and fears of increasing homelessness in the future.”

The United States was already facing an affordable housing crisis before the pandemic began, with fewer than four homes available for every 10 of the lowest-income renters. According to the National Endowment for Financial Education, 36% of working adults could not cover a significant unexpected expense, such as car repairs or medical bills.

Low-income communities of color have been bearing the brunt of the housing crisis — before and during the pandemic. People of color face the greatest risk of having an eviction notice filed against them, according to a Public Integrity analysis published last year.

The ESG funds are supposed to be used primarily to help homeless people find temporary housing or people at risk of homelessness by paying rent owed to their landlords. CDBG funds can be used on a wide range of programs, including rental assistance, legal support for tenants facing eviction, the purchase of hotels or motels for permanent affordable housing, and pop-up vaccine clinics, testing sites and overflow centers for hospitals.

Eviction courts in some parts of the country have been grinding back into action as federal, state and local eviction moratoriums expire.

There isn’t a national dataset that paints a picture of what’s happening in every city and state, but the Eviction Lab at Princeton estimates more than 619,000 households have been displaced since the beginning of the pandemic in the six states and 31 cities they track.

“There’s not really a scenario at this point where I’d say we’re good now,” said Anne Kat Alexander, a project manager with the Eviction Lab. “I’m always going to say, ‘This could be more efficient. This could get to people better.’”

Richard Cho, senior advisor for housing services to HUD Secretary Marcia Fudge, said many communities were able to use other sources of funding for their more immediate needs, so they’ve shifted to using CDBG and ESG funds from the CARES Act on longer-term projects that take time to complete, such as redeveloping old properties into permanent shelters.

However, “there are some communities where they need to rethink their use of those funds,” Cho explained. “The way they’ve obligated the funds puts them at risk of not spending it all by the deadline.”

HUD has invited governors and mayors to join a group designed to set clear goals on how to invest the funds effectively.

“We expect to see, with the communities that joined the initiative, the spending rate will increase,” Cho said.

More Than Speed?

How fast a department spends its money shouldn’t be “the only measure of success,” said Geoffrey Ross, deputy director of the federal financial assistance division with the California Department of Housing and Community Development.

“It should be how are we using these funds, what outcomes are we trying to achieve, what is the highest and best use of these dollars, and doing that quickly and efficiently,” Ross said. “It’s not just the pace itself. We’re not trying to manage homelessness. We’re trying to end it.”

To date, California agencies have spent about 3% of the state’s $151 million CDBG allocation from the CARES Act and about 37% of its $315 million in ESG money. The initiatives receiving funding include the conversion of hotels and motels into permanent affordable housing, economic development for small businesses, support for migrant workers and tribal communities and funding for food banks, COVID-19 clinics and vaccine clinics.

The amount of funding California received to combat the coronavirus is 25 times its usual allocations, Ross said.

“The challenge is being able to scale up and being able to respond quickly,” Ross said. “This amount of funding, while absolutely needed, is more than communities and organizations are used to receiving, so it takes time to build the capacity.”

Abby Ng, policy and communications coordinator with the New York-based nonprofit advocacy organization Tenants & Neighbors, is on the front lines of the housing crisis and said agencies need to spend the pandemic recovery money faster.

“I talk with tenants every day and they have a sense of urgency to get these [rental assistance] applications in because this is their lives,” Ng said. “It’s really disappointing that people running these agencies don’t have the same sense of urgency.”

Spending Delays, Coast to Coast

Linda Jenkins, director of the Community and Economic Development division of the Los Angeles County Development Authority, said her agency knew ESG and CDBG funds from the CARES Act “had a longer runway,” so it slowed down the spending of that money.

Through October, her agency spent about 17% of the ESG money it received from the CARES Act and about 37% of the CDBG money.

Across the country, housing agencies have been dealing with a “capacity issue,” Jenkins said. “There’s just a lot more money out there than what people are used to working with.”

The Office of Temporary and Disability Assistance in New York has spent about 20% of the $50 million it was allocated in ESG money from the CARES Act.

“The agency remains committed to working with its local partners to ensure that the remaining funds are utilized expeditiously to assist vulnerable fellow New Yorkers at risk of, or experiencing, homelessness and housing instability,” said Anthony Farmer, director of public information for the Office of Temporary and Disability Assistance.

The New York Homes and Community Renewal division has committed $40 million out of its $127 million allocation in CDBG funds from the CARES Act. Projects that have been funded include small business assistance, improving air quality in public facilities, conversion of underutilized buildings for affordable housing and vaccine outreach and awareness, among others.

Homes and Community Renewal “is working closely with local governments, community nonprofits, and stakeholders to swiftly address shifting pandemic priorities, as the unpredictable nature of the pandemic impacts communities and their needs in real-time,” said Charni Sochet, spokesperson for the division.

In Michigan, about 33% of its ESG money from the CARES Act has been spent by groups contracting with the Michigan State Housing Development Authority. Some of that money has gone to rental assistance, but the state is relying heavily on the Emergency Rental Assistance program through the U.S. Department of the Treasury for families that need help paying rent. (Michigan had only spent 44% of that money by Sept. 30, according to Treasury data.)

“I think it’s just having all of these other resources at the same time,” said Kelly Rose, chief housing solutions officer for the Michigan State Housing Development Authority. “It’s a blessing and a curse. It’s kind of feast or famine with these nonprofits, and we’re asking them to deal with a budget that’s three times what they’re used to having to deal with.”

In Illinois, none of the $70 million allocated in CDBG money from the CARES Act had been spent by mid-November. The first programs funded with the money will be launched in the first quarter of 2022, said Lauren Huffman, deputy director of media relations and communications with the Illinois Department of Commerce & Economic Opportunity.

“Much like a number of other economic recovery programs launched to date, our goal is to maximize the impact of CDBG-CV funds to aid our most vulnerable communities in Illinois and to assist them with rebuilding in the wake of the pandemic,” Huffman said, declining to go into more detail about why the program hasn’t spent any of its allocation to date.

Other Housing Funding Distributed Slowly

Slow distribution has bedeviled other forms of COVID-19 aid, too, failing to quickly reach the people who need it.

Public Integrity and The Associated Press reported earlier this year that $425 million set aside for rental assistance from the Coronavirus Relief Fund had either been reallocated to other programs or remained unspent a year after the CARES Act passed.

Another pot of money, the Emergency Rental Assistance program, included $45 billion that Congress set aside specifically to help tenants struggling to pay their landlords. But that money has been slow to be delivered, too. As of Sept. 30, only 24% had been spent.

That’s widespread: The National Low Income Housing Coalition, which tracks ERA spending, found that 32 states and 80 local governments have spent less than 30% of their rental assistance allocations. The Treasury Department might move some of those funds — $1.2 billion — to other agencies.

All of these programs have spending deadlines attached to them, as is customary with federal money. The Coronavirus Relief Fund dollars were supposed to be spent by Dec. 30, 2020, but three days before the deadline, Congress extended it another year.

Because states and cities were staring down the barrel of the Coronavirus Relief Fund deadline for most of 2020, administrators of these programs put more of their effort into spending those funds first.

“They’re really overwhelmed,” Roman said. “Jurisdictions don’t have the bandwidth.”

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