A philanthropic organization is working with a credit union to front millions of dollars to a Detroit housing agency as it waits for the Legislature and governor to agree on how to administer emergency COVID-19 federal aid, including hundreds of millions of dollars earmarked to help renters pay back rent and avoid eviction.
Lake Trust Credit Union in Brighton is providing the Detroit-based United Community Housing Coalition with a $5 million loan and Troy-based Kresge Foundation has issued a $4.5 million guarantee on the loan. The loan is intended to give the nonprofit an additional funding source to help tenants in need while the legislative process in Lansing unfolds, said Aaron Seybert, managing director of social investment practice at Kresge.
“We can’t wait for this haggling to happen so we are stepping in to create this credit facility, so that (UCHC) can draw down money from the credit union so they can start working with families today, and start putting this money out the door while the political process works its way out,” Seybert said.
For weeks, Republicans in the House and Senate each had their own proposals for incrementally doling out federal aid. Gov. Gretchen Whitmer has proposed her own plan and called for a full rollout of federal aid.
A GOP compromise bill that passed the state Senate on Tuesday allocates $220 million of more than $600 million in federal rent and utility aid. The Legislature must allocate the money through legislation signed by the governor before it can be distributed to housing agencies across the state.
Meanwhile, a federal moratorium on evictions is slated to expire at the end of the month. Leaders of housing nonprofits have said they’re scrambling to put together funds to help renters in need after the last round of federal dollars was exhausted.
Ted Phillips, executive director of UCHC, said the line of credit provides dollars for the nonprofit to fall back on as the organization waits for the start of a new federal rent aid program.
“If there’s delays in reimbursement and things of that nature and we have to stop until we get money from the government, then that’s going to be a big problem,” Phillips said. “So this should enable us to just continue on with a seamless flow. … This is huge, and we’re so grateful that they’ve guaranteed the loan to enable us to be able to get it if needed.”
In mid-February,Phillips estimated a backlog of 2,000 renters in Detroit who are waiting for help. Phillips on Tuesday said the backlog of tenants in need is growing.
“We’ll be able to pay more timely on the rental payments and be better able to spend all the money,” he said. “What that means is that we won’t be as big of a risk of not spending the money and ending up sending it back to Washington.”
The state has to distribute 65% of federal rental funds by Sept. 30 or the federal government can claw it back.
Seybert said Kresge Foundation is doing “a little bit of Band-Aiding,” but that policy makers must consider what it takes for nonprofits to implement programs to reach vulnerable people.
“We as a city, as a region are very very reliant on the nonprofit sector to deliver these essential goods and services, particularly to low-income families,” Seybert said. “And very often, they’re not given the tools or the resources needed to distribute them effectively, and then we wonder why low-income people suffer so badly.”
United Community Housing Coalition also got another boost this week with $14,000 from Rent Party Detroit, an organization raising money to prevent evictions through virtual fundraising events.
More than 150 people donated to the group’s efforts, which will go toward helping people who face eviction, homelessness or are living in an unsafe environment.
“Even though the causes of the eviction crisis are systemic, we often force families to face eviction alone. I wanted people to know that eviction is a community problem that requires a community solution,” said Linda Jordan, founder of Rent Party Detroit , in a news release.
Phillips said funds from Rent Party Detroit are welcome, especially for individuals who don’t normally qualify for most federal COVID-19 rental aid, such as land contract homeowners.
“These are funds that would be used for filling gaps,” he said.
Nushrat Rahman covers issues related to economic mobility for the Detroit Free Press and BridgeDetroit as a corps member with Report for America, an initiative of The GroundTruth Project. Make a tax-deductible contribution to support her work at bit.ly/freepRFA.