King County acknowledges millions of dollars spent on 'inappropriate' rental assistant payments

When the COVID-19 pandemic initially hit in March 2020, King County shelled out $350 million in rental assistance to tenants and landlords. 

In order to make the process of distributing funds easier, the county inadvertently spent millions on funds that are being investigated as "inappropriate" payments. 

Applicants had to fill out a one-page declaration that included a checkbox for applicants to affirm that they would lose their housing if they did not get rental assistance. 

Then all they had to do was fill out a name, number of people in the household, and income total and a signature. 

The form says King County ‘may’ verify the income and repayment would be required if the information is falsified.  There is also a signature line for a caseworker to make the form complete.

Nearly 35,000 people filled out the form and got some financial assistance, according to Leo Flor, the Director of the Department of Community and Health Services (DCHS) for the county.

The majority of the money was COVID-19 relief funding and all federal handouts required a paper trail by the local governments who receive it.

When King County started looking at the money it was handing out, it discovered many ‘inappropriate’ payments, Flor said. 

"The vast majority of these payments, 99.99% have gone directly to the landlord," he said. 

The average rental assistance payment was $10,900, according to Flor. 

However, he said the county has uncovered at least 130 cases where payments ranged from $20,000 to $45,000. 

Flor said he wouldn't characterize the payments as fraud. 

'Nobody should be asked to pay back one cent,' advocates fight for blanket waiver on ESD overpayments

Since the pandemic started, there have been tens of thousands of people who received notices of overpayment from the Employment Security Department (ESD).

"We are still investigating," Flor said. "In some cases, a landlord might have claimed money on behalf of a tenant, and the tenant was not aware of that they were being claimed."

He says some people stated receiving a 1099-Miscellaneous income statement from the county because the relief money can be taxable.

"We are getting people who are reporting back and saying that's not me, you sent this to me, I did not receive this money, I did not apply for this funding, I believe there might have been identity theft," said Flor.

A statement from DCHS says the inappropriate payments total less than one percent of the $318.5 million distributed so far.  

Of the 130 cases, 30 were caught prior to the funds being distributed and the remaining cases range from identity theft (14%), misrepresenting leasing documents (60%), or were flagged by a financial institution’s fraud department or third-party report (26%).

The county has now hired a third-party auditor to investigate.

"We do expect to find more and we'll do what we can to recover that funding and get it back into the hands that need it," Flor said. 

One group that says it could use more rental assistance funding is the Housing Justice Project.  It’s a group of attorneys with an office inside the King County Courthouse that advocates for people facing eviction before they appear before a judge.

"We are starting to see a lot of families who are being evicted for small amounts of money," said Edmund Witter, the senior managing attorney with the Housing Justice Project. "The other day, we had a case of $460, which was a third of the rent." 

The Project also hands out emergency rental assistance and could run out of funds when federal funds are expected to run dry this summer.   It also is looking for a new contract with the county to continue its work.

"My big concern right now is what's going to happen when this money is not there," says Witter. "What’s the effort that the county is going to make, the city is going to make, that the state is going to make to provide that support because this not just a tenant issue, it’s a landlord issue as well."

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