Louisville Metro proposes using federal COVID-19 relief funds for eviction prevention, small business assistance

June 15, 2020

Louisville Metro Government has proposed allocating $42.4 million in federal CARES (Coronavirus Aid, Relief, & Economic Security) Act money toward small business assistance and eviction prevention.

“The COVID-19 pandemic has affected every part of our lives, from our homes to our workplaces,” said Louisville Mayor Greg Fischer.  “That’s why I propose we use part of the federal CARES funding to mitigate some of the worst impacts of the pandemic – the increased threat of evictions and economic uncertainty among our small businesses.”

“Housing is a basic human right, and we must increase our support for our fellow residents who are housing-unstable, to prevent them from becoming homeless,” he continued. “At the same time, it is critical that we support the small businesses that are the backbone of our local economy, providing much needed jobs and revenue.”

Louisville has received $133.8 million in funds through the CARES Act to date, and according to federal guidelines, all funds must be spent by Dec. 30, 2020.

“I think it’s important, as we prepare to distribute federal COVID-19 funding, that we focus on small businesses and housing, including renters,” said Council President David James.

The Louisville Metro Council Budget Committee learned more about the city’s plan during a special meeting held today. Both committee chair, Councilman Bill Hollander, and vice chair, Councilman Kevin Kramer, expressed support for using CARES funding to help residents.

“The federal Coronavirus Relief Fund is designed for use by local governments to deal with the public health emergency and the economic effects of the restrictions to deal with it,” said Councilman Hollander, District 9. “Small businesses in Louisville have suffered greatly and we should do all we can to assist them and help them survive. Keeping people in their homes and apartments, and preventing homelessness is also critical. Both small business support and housing assistance are good investments in Louisville and its people.”

“We’re grateful that the CARES funding is more flexible than we first thought. We look forward to continuing budget discussions to determine the best ways to assist our constituents to the recover from shutdown created by COVID,” Councilman Kramer, District 11.

Eviction prevention

The current rental delinquency rate in Louisville is estimated at between 20 and 30 percent, compared to the average rate of five to 10 percent, according to the Louisville Apartment Association, which represents half of the approximately 121,000 rental units in the city.

In late March, Gov. Andy Beshear suspended eviction filing until July 1. As that date approaches, households that cannot afford to pay their rent because of loss or reduction of income, as a result of the pandemic, face possible eviction.

Louisville Metro is proposing to use $21.2 million in CARES dollars to help households who are behind on rent payment as a result of the COVID-19 pandemic. That amount would serve at least 6,075 households for three months (with additional funds proposed for either serving them for more months and/or reaching more households).

Under the proposed plan, individuals or families earning at or below 60 percent of the area median income ($45,840 annually for a family of four) would be eligible to receive three months in rental assistance. The median gross rent in Louisville is $770.  Rental assistance would be provided through both a tenant-based application and a new process where landlords of federally subsidized units could apply directly on behalf of their tenants, streamlining the application process by eliminating the need for income verification and allowing the landlord to seek funding for multiple tenants at one time.

Louisville Metro Housing Authority, the Office of Resilience and Community Services and the Office of Housing will coordinate the efforts.

Small business assistance

Small businesses in our city help keep Louisville funky, fun and unique. During the COVID-19 pandemic, many of them were forced to shut their doors temporarily, creating hardship for both the business owners and their employees. Some remain closed or can only operate on a limited basis.

To assist small business that are still struggling from the pandemic’s economic fallout, Louisville Metro proposes to allocate $21.2 million in federal CARES funds toward a new small business grant program that could help as many as 400 small businesses. The program will focus on retail, food service, arts and entertainment, recreation and childcare businesses.

The grants would provide up to $50,000 to businesses with 20 fulltime employees or fewer that were negatively impacted by COVID-19. Non-retail businesses with up to 50 fulltime employees that have remained closed or have been severely impacted by state COVID-19 guidelines may also be eligible.

At least 50 percent of the program funds would be dedicated to businesses in low- to moderate-income census tracts, and the program will seek to exceed Metro’s goals of allocating more than 15 percent of its dollars to businesses owned by minorities, women and disabled individuals.

Eligible expenses include payroll, utilities, mortgage/rent, fixed costs, such as interest on debt service and insurance, and the integration of a new web-based platform for online sales.

Existing aid to households, small businesses

The newly proposed programs would augment existing efforts by Louisville Metro Government to assist households facing eviction and small businesses.

On March 31, 2020, Louisville Metro announced creation of the Small Business Continuity Loan Program, a fund that has provided very small businesses with zero-interest loans of up to $25,000 to cover operating expense. Community Development Financial Institution (CDFI) LHOME, in partnership with Louisville Forward, has distributed 68 loans to date.

Louisville Forward also deferred payments for METCO loan holders for up to three months, and its economic development team has connected more than 800 business of all sizes to COVID-19 resources, including providing technical assistance for the Paycheck Protection and Emergency Injury Disaster Loan programs offered through the U.S. Small Business Administration. Funds through METCO, the city’s small business loan fund, are still available.

For the past three months, Louisville Metro has combatted rent delinquencies from a tenant-based approach. To date, the Office of Resilience and Community Services (RCS) has distributed more than $1.7 million raised through the One Louisville: COVID-19 Response Fund to landlords and/or utility companies on behalf of 2,122 households.

Another 63 applications, totaling $22,820, are currently being processed.

Louisville Metro has received an additional $12.1 million from the U.S. Department of Housing and Urban Development (HUD), a portion of which the city expects to use for eviction prevention and housing stabilization for low-income and homeless persons pending approvals from HUD.

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