State housing director says she welcomes audit of rental aid

By PETER WONG/Oregon Capital Bureau — The director of the state housing agency says she would welcome a full audit of how money was spent on federal and state emergency rental assistance programs — but only after tenants submit their applications and landlords receive their money.

Margaret Salazar says the Oregon Department of Housing and Community Services will report to lawmakers in the 2022 session, which starts Feb. 1, about the measures they passed during a Dec. 13 special session.

But she also said that some of the same staff that would be involved in an audit, which the secretary of state would conduct with the agency, also are busy processing and paying out rental assistance. Oregon has paid about 27,000 households, but the agency also has an equal number of applications pending — and more are expected to come in when the agency lifts a six-week pause in mid-January.

Salazar spoke to reporters on a conference call after lawmakers approved $100 million more from the state budget for rental assistance — on top of about $100 million remaining in federal funds — and extended the time for tenants to apply for and await rental assistance without fear of eviction proceedings for nonpayment of rent. The new deadline is June 30, 2022.

“Our assessment is that this is time they (staff) need to spend ensuring that checks are processed and being cut, and that we can meet the time frame set by the Oregon Legislature,” she said. “For that reason, we are asking that this audit be completed after we expend these rental assistance dollars, so that we can honor the commitments we made to legislative leaders and to the public.”

In addition to the Legislature’s addition of $100 million from the state budget — and another $100 million for state and local efforts to prevent evictions after rental assistance programs end — Oregon has requested another $198 million from the U.S. Treasury, which will redistribute unspent federal rental assistance funds. But it will be several months before Oregon receives any of that money — if it does.

During the one-day session, Republicans critical of the agency and even some Democrats called for a full audit by Secretary of State Shemia Fagan, whose office includes the state Audits Division. Among the Democrats were Nick Kristof, a candidate for governor, and the leaders of the Senate and House committees on housing.

Record for rental aid

So far in 2021, the agency and various partners — community action agencies in the counties and Public Partnerships LLC, an outside vendor — have paid out more than $187 million of the $289 million Oregon received in federal rental assistance from the U.S. Treasury as part of President Joe Biden’s pandemic recovery plan known as the American Rescue Plan Act. The national total for assistance was $46.55 billion.

According to a database maintained by the National Low-Income Housing Coalition, only three other states were ahead of Oregon in the shares of federal assistance paid out or obligated. The coalition notes that while Oregon has paused accepting applications, five counties and five tribes that got their shares directly from the U.S. Treasury were still accepting them.

Oregon’s share is on top of the $200 million that lawmakers approved from the state budget about a year ago, when prospects for federal aid were uncertain. Some aid was contained in legislation that Donald Trump signed less than a month before Trump left the presidency.

The $387 million stands in contrast with the $80 million the agency paid out in rental assistance in 2020, before the state and federal programs got underway, and just $19 million in 2019, before the coronavirus pandemic and the resulting economic downturn.

“We know there is always room for improvement,” Salazar said. “We have a lot to learn from participating in an audit. We know you are eager for that information as well. We need to understand what has worked and what hasn’t worked.”

During the one-day session, Republicans such as Rep. Christine Drazan of Canby, also planning to run for governor, and Rep. Vikki Breese-Iverson of Prineville, her successor as House GOP leader, called on Gov. Kate Brown to fire Salazar. Brown rebuffed the calls.

Salazar said she and agency staff listened carefully as the special-session committee heard daylong testimony about the money and a related bill two days before the session itself.

“We heard heart-wrenching stories from tenants who are waiting for an update on their application status. We know that landlords are anxious as well. We understand that anxiety. We are working to address the concerns raised by renters and landlords in that public hearing session,” she said.

“The anxiety of a 60-day clock hanging over the heads of tenants in need has taken a toll. We are thrilled we now have a new day with this legislative package that has been signed into law.”

Deadline reset

Related legislation (Senate Bill 891), which drew negative votes from Republicans in both chambers, reset the “grace period” for tenants before they face eviction proceedings for nonpayment of rent. Legislation during the 2021 regular session, which ended June 26, set the period at 60 days. Ordinances in Multnomah and Washington counties, and Beaverton, set it at 90 days.

But the backlog for rental assistance resulted in thousands of applications past those deadlines. Estimates vary. Eric McClendon of the Oregon State Bar said it was 8,000; housing advocates pegged it at 13,000 to 14,000.

“We were taken somewhat off guard by the huge demand that was struck by opening this program,” Salazar said.

Under the new law, which Brown signed hours after the session ended, tenants now have a deadline of June 30, 2022, to apply for rental assistance and inform their landlords they have done so. Eviction proceedings cannot start until payment is completed or Oct. 1, 2022, whichever comes first. (This provision does not apply to eviction proceedings for reasons other than nonpayment of rents, such as property damage by tenants.)

Neither the new law nor past legislation forgives any past-due rents.

Salazar said the economic downturn resulting from the pandemic made a bad situation worse. According to the 2020 Census, Oregon population growth outpaced new housing during the past decade, and housing prices and rents soared.

“We’ve heard from Oregonians across the state about what a lifeline this spending has been for them, how much stability and peace of mind it gave to their families when the check arrived — and when those rental arrearages and forward rent were paid,” she said.

“We know there are thousands requesting historic levels of assistance who are still in need. We are doing everything in our power to process their applications as quickly as possible.”