Illinois’ federal rental assistance dollars have run out. As the state prepares its new program, tenants and landlords are left with less support.

Rufus Reed, 60, has owned rental properties in Chicago since 1998. Among his seven units on the South and West sides, he’s had to evict 15 to 20 tenants, never once being able to recoup the lost rent.

But that changed in May, when Reed was matched with a legal aid attorney and learned he could collect roughly $6,750 in federal rental assistance, enough to cover losses tied to a tenant who had stopped paying rent in October and ultimately had to leave.

“I was excited to hear about being able to get paid for those seven months — the past five months and two future months (of rent). … That was the best thing since bread,” Reed said.

Reed was among over 10,500 landlords and renters who were assisted through the state’s rental assistance program.

The program — which began in October 2022 and was funded through the 2021 federal American Rescue Plan Act — was originally launched to help tenants experiencing COVID-19-related hardships and at risk of eviction. At its height, the program provided up to $25,000 in rental assistance to cover up to 15 months of past-due rent and up to three months of future rent.

But the program, which doled out nearly $82 million in federal funds between its inception and July 21, stopped accepting new applications on May 31. A new state program is in the works, with $75 million in state funding having been allocated to the effort for fiscal year 2025 , which began on July 1. But state housing authority representatives say they won’t be able to get the new program off the ground until after Labor Day, leaving more tenants at risk of becoming homeless and more landlords at risk of not getting paid this summer.

The Illinois Housing Development Authority, which manages the rental assistance program, has been stretching the federal funds for several months. In March, the maximum grant amount decreased to $10,000 and up to two months of future rent in an attempt to prolong the program, according to the state housing authority. As of July 25, there were about 200 outstanding applications that had been received by May 31 and were still awaiting review, with some expected to be denied.

“For applicants who are denied due to funding being exhausted, we will be providing outreach when the program reopens later this year with the hope they will be able to reapply, get funded, and stay in their homes,” said Andrew Field, an Illinois Housing Development Authority spokesperson.

The court-based rental assistance program is just one aspect of the state’s eviction diversion program, known formally as the Early Resolution Program, so while tenants and landlords are unable to access financial support, they can still receive legal aid to help settle eviction cases before they go to trial.

Michelle Gilbert, law and policy director at the Law Center for Better Housing — one of the legal aid groups that is a part of the eviction diversion program — said because of the lack of rental assistance, attorneys are focusing on helping tenants come up with payment plans or move-out agreements with their landlords, instead of letting the process drag out to a formal eviction order by the sheriff’s office. If the process does get to a formal eviction order, attorneys are helping tenants try to get their eviction records sealed, so it does not show up permanently on their records, she said.

Gilbert said while she knows the state housing authority is working hard to get the new rental assistance program up and running, it makes her sad to see people unable to access the funds.

“We would like to see it working as soon as possible because we know people are going to be (and are being) evicted because they can’t use the court-based rental assistance,” Gilbert said.

On a recent Neighborhood Building Owners Alliance call, Roxanna Guerrero and Peter Sellke, two representatives from the Illinois Housing Development Authority, said under the new state-funded rental assistance program, households facing eviction could receive up to $15,000 in rental assistance, which could pay past-due rent, up to $500 in court costs and up to two months of future rent.

Eligible tenants will have to make 80% or less of the area median income and would not have to be facing a COVID-19-related hardship. For a household of four, the area median income in Chicago is $89,700, according to the Chicago Department of Housing.  Renters will not have to prove their citizenship status and must have an active eviction case due to nonpayment of rent to qualify, Guerrero said. Housing providers will not be allowed to evict tenants during the grant’s coverage period.

And for tenants whose landlords are unwilling to participate in the program, the state will offer up to two months of future rent payments to help them find a new place to live, she said.

Renters in Chicago and Cook County will have the right to stay in their homes if they pay their debts in full to their landlord at any time before an official eviction order is filed, Field said.

Guerrero said the housing authority’s goal is to assist 8,900 households through the new program. She and Selke also emphasized that the guidelines are subject to change before the program’s launch later this year.

When asked about the delay in getting the new program up and running, Field cited adjustments on the operational side that were needed because of the shift from federal to state funding.

“We are taking the time to design this program best for Illinois. It would have been nice to turn on the applications July 1, but it just wasn’t feasible,” Field said.

The $75 million in state funding is expected to be enough to assist eligible renters participating in the court-based rental assistance program this fiscal year, Field said.

The Illinois Department of Human Services also has a smaller pool of funds available, over $27 million, that can be used as rental assistance this fiscal year. These funds are not automatically tied into the court-based eviction diversion program.

Through June, there were approximately 3,623 enforced evictions — those carried out by the sheriff’s office under a court order — at residential rental properties in Cook County, around 275 fewer evictions than through June of last year, according to data analyzed by the Tribune from the Cook County sheriff’s office.

While the number of eviction filings have been at pre-pandemic levels since 2022, 2023 was the first year the number of actual enforced evictions at residential rental properties in Cook County caught up to 2019.

Most evictions in the city took place on the South and West sides in majority Black and Latino communities, trends that match years past and line up with national data showing racial minorities are more likely to face eviction. The pandemic disproportionately affected racial minorities, who were more likely to experience hardships such as job loss and illness.

Dana Harbaugh, the Center for Disability and Elder Law’s supervising attorney for the state’s eviction diversion program, said the clients she works with who need rental assistance are facing many different life circumstances, including some who had a family member die from COVID-19 and needed extra cash to pay for the funeral.

“Life comes at you sometimes,” Harbaugh said. “And rental assistance is just a tool to help people get out of some of the hardest times of their life. … It helps both landlords and tenants. The landlords get a big chunk of change in their pocket, and they get to keep a longtime tenant who will then remain current on their rent moving forward.”

Harbaugh said her firm rushed its clients to submit rental assistance applications before the program’s deadline, but a lot of people still missed out. She’s hoping that some of her clients can hang on until the new rental assistance program opens; otherwise, the only option is for tenants to move out, Harbaugh said.

“We have some people who are lucky enough that they can move out before trial,” prior to when an eviction judgment could be entered on their permanent record, Harbaugh said. “But that’s often not the ideal resolution for people. They want to remain in their homes; these are places they have lived for a really long time so it’s hard to conceptualize having to get up and go really quickly.”

Charles Zivin, an attorney at Wolf Solovy and Zivin who represents property management companies through the eviction process, said he hasn’t seen the settlement agreements between landlords and tenants change that much since assistance funds ceased.

His clients continue to reach a range of agreements with tenants, such as payment plans to stay in the property and move-out agreements, he said. When rental assistance was available, some of his clients would agree to payment plans with their tenants to try to chip away at their past-due rent before rental assistance kicked in.

“It lets tenants get off scot-free in a way — give them the assistance that they need — and give the landlords the money that they want,” Zivin said. “But it’s not really fixing the problem, just putting a Band-Aid on it,” added Zivin, who noted that many of his clients end up filing an eviction against the same tenant in the future.

Illinois is not alone in its journey to solidifying its eviction diversion program now that federal COVID-19 aid is nearly depleted.

Samira Nazem, who leads the eviction diversion initiative at the National Center for State Courts and previously worked at the Chicago Bar Foundation as the group set up Cook County’s eviction diversion program, said most of the courts she works with are “experiencing the same growing pains.” And while some jurisdictions have allocated more funds — including the state of Colorado and Lawrence, Kansas — many have not, Nazem said.

“The dollar (amount) that is allocated in Illinois is a really impressive number,” Nazem said. “I haven’t seen anything on that scale.”

Reed, the landlord who received rental assistance for the first time in May, said he thinks it is great that the state is going to continue funding the program.

“Some landlords, like myself, we depend on that income. So when we miss it, it’s bad. It hurts,” Reed said. “But it is a good thing that there is a state-funded program that is going to be implemented in order to help us retrieve some of the monies that we lose.”

ekane@chicagotribune.com