N.C. fails to spend more than $1 billion in rental assistance, while Gov. Cooper protests evictions

Out of $1.5 billion sent to North Carolina, only $300 million has been spent at most

More than a year after the first COVID-19 cases were identified, weeks after most restrictions were lifted statewide, and as employers desperately struggled to hire workers, the Council of State finally decided to end a ban on evictions in North Carolina at the end of June.

Gov. Roy Cooper immediately blasted them for doing so, firing off a strongly worded press release criticizing Republican elected officials. “Many North Carolinians still need help,” Cooper said.

As it turns out, that help was available — and had been for months. The Cooper administration had simply failed to deliver it.

North Carolina has received some $1.5 billion in federal money to help tenants pay their rent. As the state’s chief executive, Cooper is responsible for making sure it gets to the right hand.

But by the most generous reports, only $300 million has made its way to renters or landlords. That best-case scenario represents only 20% of the total amount available, even as Cooper and housing advocates declare a dire need for it.

For Cooper, the failure to spend rental assistance money is just the latest administrative fiasco for an administration that has been full of them. Cooper also failed to administer unemployment benefits during the pandemic, failed to deliver hurricane recovery money before that, and mismanaged the Department of Transportation’s budget.

But in this case, the Cooper administration’s failure will have a direct impact on tens of thousands of renters who face losing their homes. The unfulfilled promise of relief and the ban on evictions has created a backlog in the rental market that will have repercussions for years to come. Renters are in limbo, landlords are in debt, and unwinding the system will cause pain for everyone.

The same scenario is playing out in states across the country. President Joe Biden directed the Centers for Disease Control to extend an eviction moratorium despite admitting doing so was likely unconstitutional. Biden said he hoped the move would buy time to get more rental assistance money distributed to people who need it.

Seventeen months later

These hundreds of millions of dollars remain unspent despite it now being 17 months since the first eviction moratoriums and rental assistance programs went into effect.

North Carolina’s efforts to forestall evictions date back to the early days of the pandemic. The state identified its first case of COVID-19 on March 3, 2020. Ten days later, then-Chief Justice Cheri Beasley declared a ban on eviction proceedings, and by the end of the month, this eviction moratorium had been worked into Gov. Roy Cooper’s executive orders.

The U.S. Congress included an eviction moratorium as well as rental assistance in its earliest pandemic response bill, the CARES Act, which was signed into law in late March 2020. Roughly $175 million in rental assistance money was allocated to North Carolina in that bill.

However, Gov. Cooper did not set up the N.C. HOPE Program (Housing Opportunity and Prevention of Evictions) until the fall. The program did not accept applications until October 15, seven months after the bill was passed. And it shut down after just a few weeks, claiming on Nov. 10 that it had run out of money.

Despite these claims, by February less than $60 million had actually made it to landlords.

Since that initial, smaller allocation, emergency rental assistance money has come from the federal government in two huge buckets. The first was passed last December, and the second in March.

North Carolina received $547 million in the first batch, and $489 million in the second — for a total of just over $1 billion more, according to a report to Congress. On top of that, local governments in the state got $294 million between the two relief packages.

Put together, that represents $1.5 billion in total rental assistance sent to North Carolina.

Even with all that new money, the state did not reopen the HOPE program until May 2021, and the first $1 million in checks didn’t go out until June.

Huge budgets, dismal percentages

Reporting on how rental assistance money has been spent has been spotty. But the data we do have shows only a dismal percentage of rental assistance has actually made its way to renters and landlords.

Just 11% of the first $547 million allocated to North Carolina had been spent by the end of June, according to data released by the U.S. Treasury. That equates to just $62.4 million.

This puts North Carolina well behind our neighbor to the north, Virginia, which had allocated nearly 43% of its $524.6 million. The state of Texas had distributed 34% of its more than $1.3 billion. North Carolina also fell behind Massachusetts, Alaska, New Jersey, Maine, Illinois, Pennsylvania, New Hampshire and Michigan.

Local governments in North Carolina fared better than the state as a whole, but results were mixed. Collectively, cities and counties had distributed 26% of the $156.4 million they received.

In an email at the end of July, Gov. Cooper’s office claimed $300 million in rental assistance had been distributed. It’s unclear how the administration arrived at that number, and which rounds of funding are accounted for.

A later email from the governor’s office said that $328 million had been awarded, and $234 million had been paid.

Either way, North Carolina has spent at most 20% of the total rental assistance money it has received, even as the state reports a dire need. Most likely, it is at 15% or below.

It’s also unclear why it has taken so long to distribute the rental assistance money. Cooper has never been asked to explain why. He has painted the issue as not having enough money, not a failure to spend it. “We knew that demand outstripped resources,” Cooper said in June.

Durham has cited “software issues” for its slow start, and both Wake and Durham then blamed overwhelming numbers of applications and small staffs for delays in distributing aid.

In many cases, both tenants and landlords have to agree to the terms of the program. Tenants must also document their income, financial hardship, and delinquency in rent. Only families with incomes below 80% of the area median qualify.

Perverse incentives

In an ideal situation, North Carolina wouldn’t have had to ban evictions at all. With millions available since the early days of the pandemic, a perfectly administered program would have helped the North Carolinians who lost their jobs to pay their rent until they could get back on their feet.

In turn, landlords would have been able to keep paying their mortgages, and the housing system would be able to recover quickly as the pandemic wanes.

Of course, that’s not what happened. Because of the failure to distribute financial assistance, North Carolina has had to rely more heavily on the eviction moratorium to keep people in their homes. This creates perverse incentives that threaten to undercut the housing system in North Carolina and the United States as a whole.

Without the threat of eviction, thousands of renters have racked up huge unpaid rent balances. Landlords have had no recourse, and have not been able to apply for rental assistance programs despite facing the most immediate financial consequences.

This means that at some point, there are only two ways the home rental market can go: Either millions of renters will go into eviction proceedings all at once, or millions of rental homes will go into foreclosure. Dragging out the problem has only made it worse.

4 Things of Note

1) Redistricting data coming this week. After months of delay, the U.S. Census Breau will deliver the data needed to draw new electoral maps this Thursday, August 12. With the General Assembly still focused on the budget, don’t expect much movement right away. But maybe we’ll have a chance to draw our own versions on Dave’s Redistricting real soon.

2) One of North Carolina’s last conservative Democrats leaves the party. Gaston County Sheriff Alan Cloninger said this week that he’ll leave the Democratic Party and not run for re-election next year. He represents one of the last of the conservative Democrats who once dominated state politics but have all but disappeared since the turn of the new millennium. Cloninger says he will become unaffiliated. “It saddens me that the same Democrat party that I grew up in, no longer exists,” he wrote in the announcement. “Some of the new Democrats in Washington attack and degrade all law enforcement officers who risk their lives every day to protect the people and in return, are given no respect. This is wrong and unjustified. … The present Democratic Party has left me and there is no home for a conservative Democrat in today’s Democratic Party.”

3) Mark Robinson has raised more than $500,000 this year. This is an impressive haul for a newly elected lieutenant governor who won’t face another campaign for three years. He’ll be a force in the Republican primary for governor in 2024, and I’d guess the odds-on favorite. Unfortunately, Attorney General Josh Stein, the presumptive next Democrat nominee for governor, raised more than $800,000. He’ll almost certainly be better funded in 2024 than his Republican opponent, but just barely squeaked out his re-election last year and is nowhere near the statewide institution Gov. Roy Cooper was in 2016.

4) Cheri Beasley might not be inevitable in the Democrat Senate primary. A report from the liberal Daily Kos says that former N.C. Chief Justice Cheri Beasley has lost several key people in her campaign for U.S. Senate. According to the report, Beasley’s campaign manager and much of her finance team quit. Her campaign for the U.S. Senate has been fairly low-profile, but there certainly appears to be more drama beneath the surface. Beasley has been racking up the lion’s share of endorsements and posted a stronger second quarter of fundraising than her chief opponent, State Sen. Jeff Jackson. But campaign turmoil in Beasley’s camp could spook PACs and open the door for Jackson.