Over two years of the COVID-19 pandemic, the Oregon Housing and Community Services department distributed $426 million in dollars in emergency rent assistance, providing aid to thousands of Oregonians behind on payments or facing eviction.
But an audit released Thursday by the Oregon Secretary of State’s Office says the agency’s handling of the emergency rent assistance program was full of flaws, chief among them a failure to track the money and make sure the funds went to eligible landlords and tenants.
Among 61 randomly selected payments made to landlords and renters, auditors found errors with 17 payments, close to a 30% error rate. In one of those cases, the state paid $2,700 to the wrong landlord. At that error rate, auditors estimate that the state may have overpaid $11 million in the 2022 fiscal year alone.
The audit echoed comments from landlords and tenants since the program’s inception — while the program did provide desperately needed funds to Oregonians and likely kept many in their homes, it was marred by misdirected funds, a faulty software system and poor communication between state housing staff and local agencies that helped distribute the funds.
While the pandemic-era program has since wound down for good, auditors speculated that the agency would be unprepared to handle another crisis of the same or greater scale. It found that the state housing agency is more than a decade behind on its disaster housing strategy.
“OHCS leadership has told us on multiple occasions they view the program and any challenges it had as a one-time, emergency-only related occurrence. We disagree with this perspective,” auditors wrote. “The Governor’s plans to address homelessness continue to add pressure on OHCS to ensure outcomes in a short amount of time.”
The housing department is supposed to play a key role in the state’s emergency plan during events like natural disasters or pandemics, but auditors found that the department wasn’t prepared to handle the COVID-19 pandemic or the 2020 wildfires, both of which displaced or threatened the housing of thousands of Oregonians.
The department must prepare for other potential emergencies, the audit said, such as Oregon’s ongoing homelessness crisis and other potential disasters such as earthquakes.
The audit included 16 recommendations for the agency, including:
- a thorough review of the emergency rent assistance program, improving internal oversight of rent assistance programs;
- better systems for identifying and preventing fraud;
- collecting more data to understand Oregon’s housing needs;
- better preparation for future emergencies;
- and that the state should make permanent the position of an ombudsperson hired in November 2022 to handle complaints from applicants.
Oregon Housing and Community Services Director Andrea Bell acknowledged that the agency was unprepared for the impact of the pandemic.
But she said the program’s flaws stemmed from the agency’s desire to keep the program “low barrier,” which in some cases meant less stringent controls.
“This approach prioritized humanity ahead of traditional program development rigor, such as pre-establishing robust internal controls, thoroughly testing new IT systems and prolonged decision-making when initial delivery systems didn’t achieve the required outcomes,” Bell wrote in a Dec. 29 letter to audits director Kip Memmott.
Bell did agree, or partially agree, with most of the audit’s recommendations.
She rejected the notion that her agency needs a full-time investigator to deal with complaints. Bell also said her agency was committed to a review of the emergency rent assistance program but that it does not need a more sweeping review of its information technology systems. She said such a review would be “out of scope” with an evaluation of the specific emergency rent assistance program, since the agency acted faster than it normally would have in implementing that system.
In a statement Thursday morning, Oregon Housing and Community Services spokesperson Delia Hernández said the agency had begun implementing some of the audit’s findings and remained focused on ways to keep Oregonians stably housed. She also said that despite the challenges with the program, the agency had distributed more rent assistance in two years than in the previous decade.
“These are not numbers and abstracts. These are the real lives of our neighbors and beloved communities,” Hernández said.
The rent assistance program distributed emergency funds between May 2021 and June 2023. The state scrambled to distribute money as the federal government pushed for states to act faster, threatening to take back unspent funds.
The state initially contracted with local nonprofits to distribute the funds.
According to the audit, the state housing department relied on those other agencies to develop fraud controls and keep track of applicants’ eligibility — but it didn’t oversee the other agencies’ practices.
About five months into the program, facing a massive backlog of applications, the state hired an out-of-state contractor, Public Partnerships LLC, to take over processing the applications.
The state paid Public Partnerships more money to approve applications than to deny them, auditors said, which may have created a financial incentive for the company to approve as many applications as possible — regardless of eligibility.
The agency also didn’t comply with federal reporting requirements, at one point submitting inaccurate reports to the U.S. Treasury about how much money it was spending on administrative costs.
The agency’s failure to track funds may have run counter to its goal to get funds to groups with particularly acute need.
State housing staff said they would prioritize larger households, applicants living in lower-income areas and people displaced by the 2020 wildfires. But the state did not account for how much of the emergency funds actually went to renters who met those criteria.
The rent assistance program also had a faulty software system that hindered distribution of the funds. Early in the program, staff created a centralized portal where people could apply for rent assistance, community action agencies could process applications and state housing staff could collect data and use it to make decisions.
The state paid nearly $400,000 to a software vendor, Allita 360, to implement that application portal. But rather than make applying for rent assistance easier, the program was full of hiccups, some of which auditors said were tied to a rushed rollout of the software. Glitches in the software led to delayed payments, and in some cases sent payments to the wrong landlords.
The Secretary of State’s office first announced that it would audit the rent assistance program in February 2022, after legislators called for scrutiny into the program. Its release was delayed amid a tumultuous year in the office that saw its elected leader, Shemia Fagan, resign as a scandal emerged over her side work for a marijuana company.
Officials for the office — now led by former Portland City Auditor LaVonne Griffin-Valade, appointed Secretary of State by Gov. Tina Kotek in June — said audit timelines are routinely subject to change, and that this one was particularly complex.
—Jayati Ramakrishnan; jramakrishnan@oregonian.com