Minnesota leaders are urging tenants who have sunk into debt during the pandemic to apply for hundreds of millions of dollars in rental help.

Gov. Tim Walz and housing officials on Friday called on people to file for federal aid, which the state is rolling out as the Legislature contemplates how to end an eviction moratorium.

"We cannot have a cascade of evictions that both decimate families, community," Walz said, adding that it "economically would be catastrophic."

The state, local and tribal governments got about $400 million from the package Congress signed off on in December, and Minnesota officials expect they could get another $200  million in the coming weeks from President Joe Biden's American Rescue Plan.

Walz said he would not end the halt on evictions without a plan to phase it out and prevent homelessness, and said the federal aid is a key piece of that work.

The state started accepting applications for rental and utilities help last week, although the exact date the dollars will land in bank accounts remains uncertain. Minnesota Housing Commissioner Jennifer Ho had previously said the state would have a new system to distribute federal money in place by the end of March. While the timeline is slower than originally expected, she praised the rollout and said, "The worst thing to do is put speed over quality."

However, the Minnesota Multi-Housing Association, an organization representing landlords, condemned the state's slow distribution of the dollars and the launch of the new system. "There was no collaboration with the people it was intended to serve. Now renters and property owners are having a painful experience that only compounds the effects of the pandemic further," the group said in a statement.

Christina Harding, who owns a small property management company on St. Paul's East Side, spoke at the news conference with Walz and state and local leaders Friday.

"We're very excited for this program and hopefully it starts paying quickly so that we can get these owners' mortgages paid again, and they don't have to worry about when the rent is going to come," Harding said, noting that a number of renters are up to 10 months behind.

The federal dollars can provide up to 15 months of assistance, Ho said.

Harding said she fears property owners who aren't getting income will sell their housing units, shrinking the state's already tight rental market.

Legislators expressed similar concerns during a debate Thursday, when the Minnesota House passed a plan to phase out the eviction moratorium. The DFL-led House bill says landlords cannot evict someone for nonpayment for a year after Minnesota's state of peacetime emergency ends if they can collect the rent their tenant owes through an assistance program.

The measure also states that during that year, landlords must provide a 60-day notice to renters before evicting them.

"There's a light at the end of the tunnel, but we're currently still in the tunnel. We don't want to replace a health crisis with an eviction crisis," the bill's sponsor, Rep. Alice Hausman, DFL-St. Paul, told her colleagues.

Republican legislators countered that the Democrats' proposal could create long-term issues and reduce the affordable housing stock as small property owners give up on the business.

"By extending this off-ramp for 12 whole months, we're going to need an off-ramp for the off-ramp," said Rep. Peggy Scott, R-Andover. She said tenants' back rent could keep adding up from the more than yearlong eviction moratorium and the additional year of leeway Democrats are proposing. "My concern is that one person is not going to be able to get two years of rent to pay back to their landlord, which by the way, it may be too late by the time the money gets there for that landlord," Scott said.

GOP House members instead pushed for a version of the moratorium phaseout that the Republican-led Senate previously passed with some Democratic support. The Senate version would allow landlords to evict people who have not paid rent and are ineligible for rental assistance starting 60 days after the bill becomes law. If someone is seeking the federal help, a landlord would not be able to evict them for failure to pay through June 1, 2022.

Legislators will aim to reach a compromise in a conference committee over the next couple of weeks before the end of session. Walz expressed confidence Friday that they could reach a deal on the phaseout.

Those seeking help to pay for rent or utility bills can apply at renthelpmn.org.

Jessie Van Berkel • 651-925-5044