Louisiana cities are doing what they can to both save small businesses and keep people in their homes

Monroe's city hall Photo courtesy The News Star

Why should we care what other cities do? Because we share common problems. A look at different paths can put what appear to intractable challenges into a better perspective. That’s why we chose to publish a look at how other communities in Louisiana are dealing with the serious economic challenges presented by coronavirus and compare it with our own. This story was made possible by support from the Solutions Journalism Network and the help of the kind people at The News Star in Monroe. This story was updated to reflect changes

Note: This story was updated May 20.

Coronavirus hit at the worst possible time for Quincy Powell. His 33-year-old wife is on the winning side of a bout with an aggressive cancer, but it cost her one breast and a regimen of radiation and chemotherapy to get her cancer-free, weakening her immune system ahead of the pandemic. The bills ate the Powells’ savings, and that was before Powell had to close up his barber shop in Monroe’s Pecanland Mall. 

“We’ve been going on three months with no income” from the shop, Powell says. Drawing on a regional clientele, Headz Up Barbershop had built a steady business of walk-ins from the mall’s regular crowd, which pulls people from townships around Ouachita Parish. Through the downturn, the Powells have struggled to keep up with costs. Even with Louisiana’s expanded unemployment, he takes in less than half of his normal income. Powell at one point stopped paying rent, working out the hardship with his landlord, who’s become a friend over the years. Just recently, he was able to send her $1,000 to help her stay current on her mortgage. She hasn’t been able to access unemployment in Florida where she lives now. Lenience from her mortgage company will help her keep the house, but rent money is her sole income.

About the only run of good fortune for Powell, a minister and a man of deep faith, was dodging by a couple of miles three tornadoes that touched down on Easter, blowing up homes in the area and forcing 300 people into emergency hotel shelters. 

Powell’s financial predicament is relatively common in Monroe. And it’s that fragility the city’s government is trying to address with a line of flexible emergency dollars distributed by the federal government through the CARES Act. Monroe, like several other major Louisiana cities, is pooling housing dollars to keep people in their homes. 

Monroe is relatively impoverished with more than 60% of its residents living in rented housing and 30% of them living below the poverty threshold. The median income there is $30,000, according to data from the U.S. Census Bureau. That nexus of poverty and a rampant outbreak of COVID-19 has put residents in this north Louisiana city at elevated risk in the pandemic and decimated the city’s budget. Early this month, the mayor began donating his salary and announced a round of budget reductions and furloughs to help stabilize the city’s budget; the city’s still waiting on federal aid to prop up the finances, and that’s not guaranteed to materialize. 

Monroe housing advocates say approximately 1,900 people become homeless in the area each year, and they expect to be “inundated” once evictions resume in June. Sarah Johnson, director of Monroe’s HOME Coalition, projects the city’s homelessness will skyrocket above the 45% increase widely expected by national researchers, potentially reaching 2,700.

Despite the constraints and uncertainty, Monroe is putting housing first and finding room to help businesses. Taking advantage of emergency block grant dollars from the U.S. Department of Housing and Urban Development, Monroe’s city council voted unanimously to fund a program that helps people pay rent or their mortgage, or sustain their businesses.

That’s how several major Louisiana cities are using emergency funds from HUD. As part of the CARES Act, Congress sent $45.6 million in HUD dollars to Louisiana cities, including Shreveport, New Orleans, Baton Rouge, Monroe, Lafayette and several others. Each of those five cities, except Lafayette, is working to balance the needs of businesses and housing in how they use the outlay and are in the midst of public application processes to get the money flowing. 

By contrast, Lafayette’s Mayor-President Josh Guillory has proposed using all of the money on small businesses, arguing it’s the best way to shore up the city’s flailing economy and save those companies from failure. In turn, he says, that will help stabilize people poised to lose their homes. The plan has drawn ardent criticism from housing advocates who warn they don’t have the resources to catch families that may yet fall into homelessness. The conflict arises from a potentially tragic reality facing communities everywhere: They don’t have the resources to tackle the problems they face.

On Tuesday, Lafayette’s city and parish councils approved Guillory’s plan. The mayor-president committed to rerouting at least $200,000 from Lafayette’s annual HUD housing appropriation toward rent and utility assistance. Lafayette Economic Development Authority was tapped to administer the small business fund and will put up a $200,000 match to expand that program’s reach.

There isn’t enough money to tackle it all, says Brett Theodos, a senior fellow at the Urban Institute, of the dilemma before governments. “Communities are comprised of many parts. One part is their homes and one part is their businesses. They all make up a fabric of the community; they all matter. They all need the support right now.” 

HUD delivers these funds through three basic channels — Community Development Block Grants (CDGB), Emergency Solutions Grants (ESG) and Housing Opportunities for Persons with AIDS (HOPWA) — not all of which are available to every jurisdiction. In Monroe’s case, as in Lafayette, only new CDBG money was made available. 

Ellen Hill, Monroe’s director of planning and urban development, designed a plan to take advantage of the city’s emergency CDBG allocation. To stretch the fund further, Monroe would allot $250,000 out of its annual HOME allocation — another channel of routine HUD funds that can be used on housing — and combine it with the coronavirus CDBG award, pooling $686,000 altogether for its relief program. 

To help businesses, Monroe’s program allocated $100,000 out of that fund for operating grants for “microbusinesses.” 

Hill moved Monroe to push most of its CARES Act funding into direct housing assistance, a pivot from its typical approach that emphasizes homeownership and keeping up its housing stock. (Lafayette takes a similar approach.)

So why? To keep people safe during a pandemic. 

“If you become homeless, how are you going to become safe,” Hill says. Ouachita Parish is a hot spot, she says. Indeed, as of May 18, it’s reported 956 cases and 31 deaths so far during the pandemic.

Adding more flexibility to its most flexible line of funding, HUD waived the typical 15% cap on “public service” expenditures, which includes programming like rent, utility and mortgage assistance. That means the CDBG dollars could go much further in attacking housing instability.

And that’s crucial for Monroe. Most of its residents are renters. Even with a small pool of money available from the new CDBG funds, Hill knew that preventing a wave of homelessness was paramount. But housing instability doesn’t just affect renters. Hill says Monroe’s homeowners market is struggling, too, noting that sustained losses at work could cause many families to lose houses they own. 

Monroe carved $439,000 out of its combined funds to pay for direct housing expenses: rent, utilities, mortgages. Applicants must show leases, and the city works with landlords to cover the rent for three months — the maximum period allowed by HUD. With the added HOME funds, Monroe has a little bit more flexibility to help people stay in rental homes for longer, if need be. 

Monroe’s government has never tried tenant-based rental assistance — the term of art for subsidies that travel with a renter rather than a landlord, like in the case of low-income housing tax credits. The Easter tornadoes changed the way policymakers thought about housing assistance, says Monroe City Council Vice-Chair Gretchen Ezernack. Funds were already going to house a few families whose homes were destroyed by the tornadoes when the time came to figure out what to do with the new HUD allocation. Policymakers were primed to see the need to help renters directly. 

“I think we probably would have thought a little bit different if we had not had the tornado. Being able to use [the funds] for some of the needs of the people, as well as the small business aspect of it, we felt like that was the best of both worlds,” Ezernack says.  

A woman stands inside her home after it was destroyed by tornadoes that struck Monroe on Easter Sunday.

Putting housing first is how most American cities and towns are using the coronavirus funds so far, according to disaster recovery consultant Adrienne Duncan with GCR Inc., a national firm that contracts with jurisdictions to help administer and develop programs often funded through HUD. Duncan says that has a lot to do with the urgency of a mounting housing crisis fueled by the pandemic. State and local programs are estimated to face 14 times the normal volume of demand for housing services, according to data from the National Low Income Housing Coalition, as low-income renters inch closer and closer to what housing advocates call the “rent cliff.”  

“Rental assistance is what we’re seeing. It’s the big one,” Duncan says. “There were waivers on evictions for the last two months. As their community is back open, their landlord is going to expect that backpay. That’s what we’re hearing everywhere. HUD gets it too. … The waivers that come from HUD on the HOME program clearly indicate that.” Stays on evictions will end in Louisiana on June 5 for homes not subsidized by the federal government. For housing backed by the U.S. government, evictions are effectively suspended through July 25. 

HUD is not “prescriptive” in issuing its dollars, Duncan says, noting the department created a path of least resistance toward housing assistance, in contrast with typical disaster recovery funding. On top of the changes to CDBG, HUD also waived matching requirements for rental assistance funded through the HOME program and allowed funding to flow without the typical paperwork assessing and stipulating need. 

In short, HUD made it quick and easy to use all of the CDBG money to keep people in their homes. And cities like Monroe, Shreveport, Baton Rouge and New Orleans are taking advantage of that flexibility. 

Addressing housing alone wouldn’t be enough, however. More than $8 billion in federal stimulus dollars have flooded into Louisiana, including to operations in Monroe, but not everyone could tap into those programs, particularly the flagship forgivable loan tool included in the CARES Act — the Payroll Protection Program. 

Designed to incentivize employers to keep their employees paid, the PPP was often out of reach or a bad fit for some independent contractors or operators. Other programs that target the workplace and workforce — expanded unemployment insurance or Economic Injury Disaster Loans — are taking too long to process. Delays have plagued the state’s unemployment program, too. 

Awareness, or a lack thereof, appears to be a big part of the gap. Despite outreach efforts from economic development agencies, many business owners simply didn’t apply. Heidi Melancon of the Small Business Development Center at UL Lafayette chalks a lot of that up to fear or a lack of awareness. Her office has counseled hundreds of small business owners since the pandemic struck. And while very few if any were ineligible, many are still waiting for money to come through, even as $1,000 EIDL checks — essentially optional advanced grants on the loan — appear in applicants’ bank accounts. Still, that’s just the tip of the iceberg of need among businesses, which Melancon notes likely need help with rent and utilities and are nevertheless struggling to get it. 

That was more or less the case for Quincy Powell. It took weeks for the Monroe barber to get his unemployment checks. He applied for an EIDL loan but has yet to receive anything more than a confirmation number. No $1,000 mystery check has appeared in his account to date. 

“We knew that some of those small businesses might not have gotten that PPP money — people with a barber shop and a couple of chairs, beauticians, some small mom and pops,” says Hill, Monroe’s community development director. “How do we help those businesses that have low- to moderate-income employees trying to hang on?” 

In sum, the full $686,000 package covered, as best it could, all of the basic needs policymakers saw. What was left over will go to operating costs, and $10,000 was chipped off to pay for personal protective equipment for area nonprofits. 

The administration’s plan garnered unanimous support from the city council, without a single objection registered in public comment. On May 12, Monroe opened applications, and they flooded in. So far, 600 people have filed, including 400 renters, 75 homeowners and 125 businesses. Applicants from elsewhere in Ouachita Parish filed, and even outside of Louisiana: Miami and Pensacola, Fla.; Houston, Texas; and Jersey City, N.J. (The funds can only be used in Monroe). 

The long-distance calls for help underscore the ubiquity and scale of the problem Monroe is trying to tackle. And indeed, Monroe’s applications alone outstrip what the city can afford to provide. They’re processing requests on a first-come, first-served basis with a basic screening on the small-business side, checking that applicants have all the necessary permitting and licensing — in other words, that they’re legitimate businesses.

“We’re going to run out of money probably by next week,” says Hill.

Many municipalities are still wrangling with what, exactly, to do with the money as the situation evolves. And the flexibility allows them to be nimble. Duncan and her colleagues at GCR anticipate that over the coming months jurisdictions may pivot to other allowable uses: funding to ramp up local virus testing operations, medical clinics, supplies and transportation needs. Some are already doing that. Shreveport, for instance, wants to fund internet access and virtual learning in poor neighborhoods, create an advocacy to help families knocked into financial stability by the pandemic, and spin up local manufacturing of personal protective equipment. But for now, most hone in on housing.  

“Housing is our priority, but we also know that business activity needs to resume to help our economy and community thrive,” Hill says. 

Looking forward, the landscape is striking in its uncertainty: The money likely won’t be enough, and that’s if the people who need it know about it. Locally or nationally, people are bound to fall through the cracks. 

Powell was unaware of Monroe’s program when interviewed, saying a lot of what he heard about the federal government’s programs sounded like a scam. He now says he’ll look into the city’s relief plan. His shop will open Thursday by appointment only.

Like a lot of barber shops and salon owners, he will have to stock up on protective equipment to comply with the state board of cosmetology’s regulations. He’s already shelled out $100 for a forehead thermometer, an expense he says was worth it to protect his wife. Next he plans to buy a protective surgical suit to wear over his clothes; he’ll wash it at his shop before going home, keeping his potentially contaminated clothing out of the house. 

“I’d use it to take care of my family,” Powell says of any money he’d get out of the city of Monroe. Whatever’s left, he says, he’d use on the business.

Additional reporting by Ashley Mott of The News Star