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Editorial: Speed up spending of rent relief funds

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Long before the COVID-19 pandemic rattled Hawaii’s economy, a large portion of households here were living paycheck-to-paycheck. A report released by Aloha United Way earlier this year indicates no improvement over the last decade in the number of working residents situated just above the poverty line and unable to keep up with the cost of living.

The report — built on data compiled before the coronavirus surfaced — estimates that 33% of Hawaii’s households live at the ALICE level, an acronym for Asset Limited, Income Constrained, Employed; and 9% live in poverty.

Many households in these brackets have now been hit with furloughs, layoffs and other financial hardship. So it is distressing — though not surprising — that when the state launched its Rent Relief &Housing Assistance Program in September, underwritten by federal CARES Act funds, the volume of applications quickly outstripped processing capacity.

As of this week, the program, through which tenants and homeowners apply for grants to cover residential rents, mortgage payments and homeowners association fees, has disbursed $47 million in payments. And stepped-up application processing is now delivering averages of $1 million to $1.5 million a day in approvals.

To its credit, the housing-aid program – operated by Aloha United Way and Catholic Charities Hawaii — has so far succeeded in providing assistance to more than 11,000 cash-strapped households.

However, with the program slated to wrap up this month due to the federal funding cut-off, and Gov. David Ige’s emergency proclamation banning residential eviction expiring on Dec. 31, more must be done to further its reach.

So far, most of the assisted households are renters who apply for grants, with the state paying grant awards to landlords. But in some cases, landlords have rejected direct payments. Among the reasons: landlords operating without general excise tax licenses and not paying taxes on their rental income, so accepting payment would expose them.

This snag has left an estimated $8 million in limbo. Given that the program’s objective is to help those struggling to hold onto housing, the state should endeavor to make an exception to the program’s setup by allowing payment to go directly to approved renters.

Another way to untangle the problem could involve offering this set of landlords a limited window of amnesty, through which they can secure the grant money while also coming clean by securing state tax licenses.

In place for eight months now, the moratorium on evictions requires those affected to ultimately pay their overdue rent, mortgage or homeowner’s dues. When this ban is lifted, Hawaii courts are expected to fill up with legal disputes about rent delinquency. In cases in which a renter proved need for assistance but was unable to secure it due to a landlord refusing payment, a judge or mediator should be sympathetic to the renter’s plight.

Due to COVID-19’s economic fallout, the percentage of ALICE-and-below households could climb much higher without continued intervention. For several months now, unemployment benefits and federal relief funds have kept many of these households afloat.

It’s worrisome that Hawaii is nearing year’s end with the nation’s highest unemployment rate — 14.3% in October — and much of the relief money drying up.

In the case of the housing-aid program, funding not distributed before the fast-approaching year-end deadline will be funneled into Hawaii’s unemployment insurance trust fund. There it would help repay a $1 billion federal loan the state secured to pay unemployment benefits to sidelined workers.

But it would be far preferable to see this federal money spent on its intended purpose: providing rent and housing assistance now to households at risk of slipping into poverty and homelessness.

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