Public Policy Response to the COVID-19 Outbreak in Michigan: HOUSING

Updated December 9, 2020

Where we are:

At the state level, a series of executive orders prohibited the eviction of tenants of leased residential property through July 15, 2020.The Michigan Supreme Court has issued an administrative order to guide local courts post-moratorium in prioritizing and establishing new procedures for eviction cases. Additionally, the Centers for Disease Control and Prevention (CDC) issued a more limited eviction moratorium (described below) effective from September 4, 2020, through December 31, 2020. In October, the Michigan Supreme Court struck down the law under which Governor Whitmer had issued the previous executive orders prohibiting evictions, so she will not have the same authority to protect renters when the CDC’s eviction moratorium expires.

The Michigan Department of Health and Human Services (MDHHS) has suspended the 90-day limit on reimbursement to homeless shelter providers for an individual’s stay in order to minimize exposure risk from guests moving between shelters.

Additionally, the Federal Emergency Management Administration has agreed to reimburse 75% of the cost of placing in hotel/motel rooms homeless individuals who are diagnosed with, exposed to, or at high risk for coronavirus.

State legislation dedicates $60 million of Michigan’s share of federal coronavirus relief funds to an Eviction Diversion Program (EDP). Under the EDP, the state can make full or partial rent assistance payments to landlords on behalf of tenants up to 100% of area median income who have fallen behind on rent since March 1, 2020. If the tenant fulfills all program conditions, the eviction filing is dismissed, the landlord receives payment in a timely fashion and the tenant avoids a negative mark on their credit history. Under the CARES Act, this money will be available only through 2020.

The Michigan Department of Health and Human Services has streamlined the application process for State Emergency Relief, which provides assistance with utility bills and other needs for families in financial crisis. Gas and electric providers throughout the state have implemented shutoff moratoria and service restoration efforts, but the duration and eligibility criteria vary by provider. In April the Michigan Public Service Commission (MPSC) had issued an order requiring investor-owned natural gas and electric providers to affirm that they have minimum protections in place, including the following:

Suspending disconnections for Michigan’s most vulnerable populations, low-income and senior customers, through June 1, and waiving late fees for eligible low-income customers receiving energy assistance.
Allowing for customers exposed to, infected by or quarantined because of COVID-19 to be eligible for a 30-day medical hold to avoid a disconnection of service.
Waiving deposits and reconnection fees for low-income customers, seniors and customers experiencing financial hardship related to COVID-19 and seeking restoration of electric or gas service.
Extending access to and availability of flexible payment plans to customers financially impacted by COVID-19, and providing customer assistance personnel with the resources necessary to connect customers to available financial assistance and social service agencies.

The affected utilities agreed to extend these protections through June 12.

Energy cooperatives had to affirm similar shutoff protections. Since the protections expired, utility providers have resumed shutoffs but continue to connect struggling customers who contact them to available assistance programs and alternative payment arrangements. The MPSC issued another order in July encouraging continued collaboration between staff and utility providers and directing regulated utilities to report on their efforts to better align residential energy waste reduction programs with other assistance programs.

The April order also required investor-owned utilities to report to the MPSC every two weeks on the current number of disconnected customers, the identification of occupied homes without electric or natural gas service, and the utility’s efforts to reconnect service to occupied homes. The July order requires them to file monthly reports detailing data on disconnected service to occupied and unoccupied residences in their territories, with data on unpaid utility bills.

Governor Whitmer’s executive orders prohibited water suppliers from shutting off service through December 31 and required them to try to identify and reconnect disconnected households. These orders, however, were among those invalidated by the Michigan Supreme Court.

The state used federal CARES Act money to create a $25 million Water Repair Assistance Program to assist with water bills and essential plumbing repairs. Customers, however, could benefit from these funds only if their water supplier opted in to the program; only 132 of the approximately 1,400 community water systems in the state have done so.

At the federal level, action by several housing agencies and coronavirus relief legislation provided temporary protection against foreclosure and eviction for homeowners and landlords with federally backed mortgages, as well as their tenants and residents of federally subsidized housing. Additionally, those with federally backed mortgages could request a temporary penalty-free forbearance. These protections, however, expired on July 25.

The CDC then issued a nationwide moratorium on evictions for nonpayment of rent effective from September 4, 2020, through December 31, 2020. This protection applies to tenants who sign a declaration affirming that they:

Have “used best efforts to obtain all available government assistance for rent or housing;”
Expect to earn no more than $99,000 annually in 2020 (or no more than $198,000 jointly), or were not required to report income in 2019 to the IRS, or received an Economic Impact Payment;
Are unable to pay rent in full or make full housing payments due to loss of household income, loss of compensable hours of work or wages, lay-offs, or extraordinary out-of-pocket medical costs;
Are making their best efforts to make timely partial payments as close to the full rental/housing payment as possible; and
Would likely become homeless, need to live in a shelter, or need to move in with another person (aka live doubled-up) because they have no other housing options.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides more than $12 billion dollars to states for programs of the U.S. Department of Housing and Urban Development (HUD), including the Community Development Block Grant (CDBG) (which may be used for rental assistance in the short term as well as other community development purposes) and Emergency Solutions Grants (ESG) (which fund shelters and other services to meet emergency housing needs).

The CARES Act also provided $35.1 million in additional funds for Michigan under the Low Income Home Energy Assistance Program to help meet increased need for utility bill payment assistance.

Our recommendations:

Establish a state-level moratorium on foreclosures. The federal measures to suspend foreclosures applied only to federally backed mortgages, and those measures have expired even though households are still struggling. Recessions over the past 20 years hit Michigan particularly hard compared to the rest of the nation, demonstrating a need for protections beyond those provided at the federal level. A state-level moratorium could cover all mortgages and, if enacted via legislation, could remain in effect as long as is necessary for families to regain their stability.

Reinstate the state-level moratorium on renter evictions until the economy has recovered substantially. It is unknown how long the health risks and financial hardship of COVID-19 will persist. Furthermore, only 28% of renters live in buildings that were covered by the first round of federal eviction protections. The CDC’s current eviction moratorium comes with income limits and other criteria that restrict eligibility, and renters wishing to assert protections under it face substantial red tape and potential challenges from their landlords. As with a foreclosure moratorium, it could be wise to institute these measures legislatively.

Establish a state-level moratorium on water and energy shutoffs. The MPSC’s customer protections and data reporting requirements do not apply to all utility providers or cover all customers of those subject to the MPSC’s authority. Similarly, most water suppliers chose not to participate in the Water Repair Assistance Program, leaving nearly 273,000 eligible households without any assistance with arrearages. Furthermore, the onus is largely on energy customers to notify their providers if they experience or anticipate hardship that affects their ability to pay their bills. This just compounds the burden on people whose bandwidth is already consumed with trying to meet all of their other basic needs during a public health and economic crisis. All families, regardless of their utility provider, need assurance that their access to critical heat, electricity and water won’t be cut off before they’ve recovered financially from the crisis.

Expand funding for eviction diversion and rental assistance and ensure manageable provisions for the repayment of rent arrearages to avoid a wave of evictions. None of the various eviction moratoriums have relieved tenants of their obligation to pay rent, and federal relief dollars to date will last through the end of 2020. The state should prioritize rental assistance to the greatest extent possible in spending Michigan’s federal aid and dedicate additional resources to ensuring families don’t lose their housing before they get back on their feet.

Continue to prioritize emergency housing needs in funding decisions. MDHHS will need additional resources to support local housing and homeless service providers in providing deposit and rental assistance, hotel/motel stays and maintaining adequate staffing levels. Continued federal and state support is critical to meet the ongoing need, especially as enhanced unemployment benefits have expired and eviction protections to date have been limited in scope and duration.

Ensure that homeless service providers have access to necessary medical and sanitary measures, as well as facilities for quarantining people who contract or are being tested for coronavirus. Shelter, outreach and street medicine staff are on the frontlines of the pandemic and should be prioritized along with healthcare providers to receive supplies such as gloves, masks, thermometers and sanitizers. Also, as shelters may have to increase the distance between beds and isolate individuals who present a health risk to others, resources to create more space, fund hotel/motel stays, and repurpose other facilities will be critical.

Enact a statewide ban on landlord discrimination against renters based on their source of income. Many landlords will not rent to families with non-wage sources of income, such as housing vouchers or Social Security. COVID-19 has economically devastated Michigan families through mass job loss, as well as potentially long-term disabilities that could affect future earning potential and healthcare costs. Thus, the pool of households turning to public assistance to meet their basic needs, including housing, has expanded significantly. It is critical that the state ensures that landlords don’t punish them for using all available resources to stay alive.

Identify a dedicated revenue stream for Michigan’s housing trust fund. The Michigan Housing and Community Development Fund (MHCDF) was created in 2008 to promote the development of affordable housing in the state, but has received only two rounds of one-time, limited funding since then. Identifying a robust, sustainable revenue stream would help to address not only COVID-related housing needs, but also the severe housing shortage that existed even before the pandemic. This would promote a long-term solution that could help stabilize families and communities all over the state.

Why Michigan must act now:

To stem the spread of COVID-19, Michiganders were ordered to “stay home.” Safe, stable housing is critical to individual and public health at this time. The state was already experiencing a crisis-level shortage of affordable housing prior to the emergence of COVID-19 and more than 65,000 people in our state experienced literal homelessness in 2018. People of color, people with disabilities, older adults and families with children are disproportionately affected by rising housing prices and unhealthy home conditions. As COVID-19 surges once again in Michigan and eviction protections are limited by eligibility criteria and time, the state must look ahead to ensure that people are safely housed.

People experiencing homelessness are twice as likely to be hospitalized, two to four times as likely to require critical care, and two to three times as likely to die from coronavirus as those who are housed.
Social distancing is critical to minimizing the spread of COVID-19, but unaffordable housing costs may force people to double up with friends or extended family to avoid literal homelessness.
People facing some of the greatest housing challenges, such as older adults and those with disabilities, also face the highest risk from coronavirus exposure.
Housing instability is a form of trauma that affects children’s mental health, academic success and earning potential later in life, and could compound the extraordinary disruption Michigan children are already experiencing due to school closures and illness and death in their families.
Renters spend a much higher share of their income on housing than homeowners do and tend to be more vulnerable to housing instability. Undocumented immigrants in particular are vulnerable to threats of eviction and exploitation by landlords.
Michigan renter households are expected to face a collective rent shortfall of $2 billion every year without further assistance.
Utilities are critical to maintaining a healthy temperature and air quality in the home, which is essential during a threat of respiratory disease, but they can present a huge cost burden to families with low incomes. As of December 6, 2020, electric bill payment is the third most common non-testing reason Michiganders have sought COVID-related assistance from 2-1-1, a free service that connects state residents to local resources for a variety of basic needs.