NC must act with speed and transparency to distribute rental, utility relief

Last December, as an eviction tsunami was rushing toward North Carolina, a diverse group of stakeholders met to brainstorm policy interventions. Thankfully, a crisis was temporarily averted when Congress passed a second COVID-19 relief bill in late December that provided the states with $25 billion in rental assistance and extended the nationwide eviction moratorium.

The Emergency Rental Assistance program and its companion North Carolina legislation, SB 36, signed by Gov. Roy Cooper Feb. 10, provides needed aid to individuals with substantial portions of their savings invested in small portfolios of rental housing. These small-businesspersons provide 30% to 40% of the affordable housing in North Carolina.

Rental and utility payment relief is also crucial to many renters facing unemployment or loss of income because of the pandemic. Many households facing utility cutoffs are not protected by the eviction moratoria, and these cutoffs and past due bills cause substantial problems for renters, as well as rural cooperatives and municipal electric companies. Rental assistance also plays a valuable public health role by keeping North Carolinians in their homes, thereby preventing further spread of COVID-19.

Our initial group recognized that the amount of relief available under the recent federal authorization wasn’t sufficient and that more needed to be done to protect vulnerable renters and landlords. We renamed ourselves as the Eviction Prevention Working Group and continued to share information and discuss policy options. While we acknowledge the immense managerial, logistical and financial challenges involved in assisting the estimated 435,00 North Carolinians who are behind on rent, we also believe the following principles should guide our state’s response:

• Speed Matters

Funds allocated under the recently enacted federal and state legislation should be distributed as soon as possible. Pandemic-related job losses and moratoria on evictions have put substantial financial strain on property owners, who are not receiving rent necessary to maintain their property and pay their mortgages; and on renters, who are facing substantial and growing rental obligations in arrears and the impending expiration of moratoria preventing most evictions.

• Simplicity Matters

We understand the importance of assuring that support payments go to those most in need, but requiring extensive documentation to obtain relief will complicate the administration of the program and delay the provision of critical aid to landlords and renters.

• Consistency Matters

We are concerned that the federal enabling legislation’s allocation of rental support funds to a number of local governments, as well as to the State of North Carolina, will result in an inconsistent quality of relief to those in need, based on the location and type of rental properties involved.  Coordination to achieve comparable and consistent treatment for property owners and renters across North Carolina is necessary.

• Transparency Matters

For policymakers to determine whether and how to continue rental support, periodic public reports of progress in relief distribution crucial. Measuring performance and highlighting shortfalls in resources will assist policymakers and provide a basis for public trust in the process.

• Market Acceptance will be Critical

To serve the maximum number of property owners and renters, the program rules should tie payments to actual rental rates by location and number of bedrooms provided.

While Working Group members do not agree on every issue, there is uniform agreement that policymakers should not “reinvent the wheel.” Therefore, we believe that with some policy and programmatic oversight, the North Carolina Office of Recovery and Resiliency has the capacity, experience, and infrastructure necessary to achieve the objectives noted above and to coordinate with counties that received their own distribution of dollars to achieve a more consistent result across North Carolina.

Joseph A. Smith, Jr. is a Senior Fellow at the Duke Law Global Financial Markets Center and the former North Carolina Commissioner of Banks. Lee Reiners, Executive Director of Duke Law’s Global Financial Markets Center, and Jesse Hamilton McCoy II, Senior Lecturing Fellow and Supervising Attorney at Duke Law’s Civil Justice Clinic, co-authored this essay.