This story by Faith Miller appeared on Colorado Newsline on October 25, 2021.
Approximately 5% of the COVID-19 relief funds that Colorado’s Division of Housing sent to landlords was potentially paid in error, according to audit results published Monday.
The state auditor’s office reviewed 62 relief payments to property owners and local governments, all of which were made during the audit period, from July 2020 through March 2021. Of those, 10 payments included higher amounts of money than allowed under the Property Owner Preservation, or POP, program guidelines. The overpayments totaled $15,960.
A total of 23,181 payments, worth $47.1 million, were paid to landlords through the POP program during the audit period. Based on statistical projections, auditors estimated that 5% of those funds, totaling $2.39 million, was paid in error.
State lawmakers established the Property Owner Preservation program through House Bill 20-1410. Sponsored by four Democrats — Reps. Serena Gonzales-Gutierrez of Denver and Tony Exum of Colorado Springs, along with Sens. Julie Gonzales of Denver and Rachel Zenzinger of Arvada — the legislation initially directed $20 million in federal coronavirus relief funds toward keeping people in their homes during the pandemic. Gov. Jared Polis signed the bill into law in June 2020.
“The bill allowed the Division (of Housing) to develop policies and procedures for property owners to request rental assistance for their tenants and prohibited property owners from initiating eviction proceedings against tenants if the program covered their unpaid rent,” the audit report said. “The POP program was unique and considered to be on the forefront of efficient housing assistance distribution and was well-received by housing advocates and property owners.”
The emergency housing assistance programs created through HB-1410, including the Property Owner Preservation program, later received millions more in additional state and federal funding. The POP program was available for landlords requesting money on behalf of their tenants, while the state’s other relief programs sent money to tenants and homeowners.
In total, the Division of Housing sent more than $50 million in relief payments to 1,600 landlords through the POP program, which ended in June. Approximately half of that money was federal coronavirus relief, while the remaining half came from the state’s general fund, which mostly consists of income and sales tax revenue. The money was supposed to cover rent for tenants who could not pay due to COVID-19.
Besides overpayments, the audit report identified the following issues with the Property Owner Preservation program:
- In four of 60 POP files that auditors sampled, the Division of Housing did not obtain a signed rental agreement. The program rules required signed agreements for each payment, so that the Division of Housing could verify tenant information, the lease duration and amounts owed to the landlord.
- For more than a quarter of sampled POP payments, auditors found the Division of Housing did not send notification letters to tenants in a timely manner. The letters were planned to help ensure the money actually went to cover tenants’ rent.
- For nearly half of all POP payments made during the audit period, the Division of Housing did not send any notification letters at all. The division sent the letters after the state auditor’s office brought the problem to its attention.
Auditors recommended that for future housing assistance, the Division of Housing should implement detailed procedures for reviewing payments. They also said the division should request that the overpaid funds be returned, ensure staff obtain signed rental agreements, and clarify staff responsibilities for sending notification letters to tenants.
The audit report noted that the Division of Housing stood up the Property Owner Preservation program within just one month. That included developing eligibility requirements and application procedures, working with the state’s Office of Information Technology to build an online portal, and hiring and training staff to review applications.
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