DC leaders lag in finding funds to keep STAY DC afloat

After spending $352 million in federal funding, the District has stopped accepting applicants for its rental relief program established during the pandemic.

STAY DC, which was funded by the Consolidated Appropriations Act 2021 and the American Rescue Plan Act of 2021, was a major success. Each week, officials distributed $10 million in rental relief funding to landlords and tenants, aiding more than 23,000 households that were impacted by the pandemic. With 83% of households bringing in less than 30% of the area median income (approximately $38,700 for a family of four), the funds overwhelmingly went to the residents who needed them the most. DC was also significantly ahead of Virginia, Maryland, and almost all other states, in dispersing the funds.

While DC is not the only jurisdiction to exhaust its funds, the closure of the program has caused many district residents to lose access to critical support. As of October 11, 39,000 renters, making up 13% of total renters in the city, were not caught up on their rent and 29% of those renters stated they were either very likely or somewhat likely to be evicted within the next two months. These numbers are higher for Black renters: 33% of Black renters in the district were not caught up on their rent as of October 11, while only 0.6% of renters of all other races reported similar challenges.

Now, the DC Council, housing advocacy groups, and Mayor Muriel Bowser are scrambling to find new funding for the program.

DC could pull local funds from multiple sources

On October 28, 10 DC councilmembers — Brianne Nadeau, Janeese Lewis George, Brooke Pino, Mary Cheh, Kenyan McDuffie, Charles Allen, Trayon White, Anita Bonds, Christina Henderson, and Robert White — introduced Resolution 24068, which calls on Mayor Bowser to reopen STAY DC with the assistance of local funding. The resolution stated that the mayor was able to use resources such as “contingency cash reserves, unallocated Fiscal Year 2022 revenue, and other funds available within the district’s operating budget” to fund the continuation of the program.

Echoing the council on November 10, 33 local organizations submitted a letter to Mayor Bowser’s office that requested the continuation of the program by using funds from the Fiscal Year 2021 surplus and agency underspending to continue to support it.

While the district had $1.48 billion placed in reserved funds at the end of Fiscal Year 2020, most of this money is either not well-suited for the purpose of continuing STAY DC or has already been used up.

Of the district’s four reserve funds, the Contingency Cash Reserve fund and the Fiscal Stabilization Reserve are almost completely exhausted, with their balances falling from $311.3 million to $8.1 million and $218.2 million to $5.7 million, respectively, at the end of Fiscal Year 2020. The Cash Flow Reserve fund holds $795 million, but since it must be repaid in the same fiscal year, it can’t be effectively used to make up for long-term shortfalls in federal funding.

Emergency Cash Reserve fund has a remaining balance of $155.9 million, which is available for use when there is a declared State of Emergency. The district’s state of emergency has been extended to January 7, 2022, which provides an opportunity for these funds to be used for the continuation of STAY DC. Money taken from the emergency fund must be fully replenished within two years, with 50% repaid within the first year. This requirement is no different from the limitations on the use of the Contingency Cash Reserve fund and has not stopped that fund from being fully used during the pandemic.

In addition to using the Emergency Cash Reserve, the district also has the option of redirecting its existing surplus towards continuing STAY DC. The November 10 coalition letter details how the district could redirect half of the Fiscal Year 2021 budget surplus, which is projected to be at least $311 million, from the district’s Pay-As-You-Go-Capital account toward eviction prevention. This is bolstered by the large amount of underspending in many of the district’s agencies, such as the Department of Human Services’ underspending of $38 million for the Fiscal Year 2020 budget.

Any costs for local spending on rental assistance could potentially be reimbursed by the federal government if the district receives federal rental assistance funding again in the future.

The mayor is holding out for federal funding

Any reprogramming of district funds must be initiated by Mayor Bowser, but she has instead been primarily focused on acquiring more federal funds to revive STAY DC.

On October 14, she called on the Department of the Treasury to expedite the reallocation of rental assistance funds from municipalities, counties, and states that were not fully using them, which would allow DC’s program to stay afloat. She could not be reached for comment on potentially using local funding to support STAY DC.

According to a letter from the Department of the Treasury on September 24, reallocation of funds is expected to occur in the Spring of 2022, but Treasury officials have contradicted those reports, saying that it could happen after the end of November 2021.

Regardless of when federal rental assistance can be expected, DC’s renters should not go without assistance especially as the pandemic continues to be a threat. Local leaders should collaborate to revitalize the program as soon as possible.

Correction: A previous version of this article said 83% of STAY DC recipients made less than 80% of the area median income. The correct number is less than 30% of AMI.