As August approaches, so does another rent due date for millions of renters in Southern California. After months of unemployment, many have fallen far behind on rent, but for now, evictions in California are on hold.
Cities and counties have enacted temporary moratoriums, and the state’s court system has basically halted all eviction proceedings until 90 days after the emergency is over.
But it’s not a permanent answer. The reality is many thousands of households won’t be able to keep up when the rent, eventually, comes due.
There’s fear of a so-called “eviction tsunami,” which some say the government is not meaningfully attempting to prevent.
In Los Angeles County more than 31% of the overall labor force has applied for state unemployment insurance since February, according to the California Policy Lab.
“It’s like a ticking timebomb,” said Ananya Roy, a UCLA professor who directs the Luskin Institute on Inequality and Democracy. She worries we’re on a path to mass housing insecurity on a scale not seen since the Great Depression.
“The point of the Great Depression was a generalized condition of precarity and suffering. Even those who were well-to-do were suddenly facing eviction, suddenly living in a Hooverville,” said Roy.
Recent research produced by the Institute estimates that as many as 365,000 households could face eviction, based on how many people applied for unemployment insurance and how many undocumented laborers not eligible for UI live in L.A. County.
That doesn’t necessarily mean they will become homeless. Many people, when they lose housing, double up with another family or find some other option. But the research still suggests that 120,000 households in Los Angeles County could be on the streets — including up to 184,000 children.
(Another report, published by the UCLA Luskin Institute in late July, resignedly provides policy guidance for dealing with a huge surge in urban shantytowns and encampments should predictions about impending homelessness come true.)
RENT CANCELLATION IS NOW A POLITICAL DEMAND
The solution being put forth by tenants and their advocates is this: just cancel the rent, and make landlords apply for government assistance instead of tenants.
Cries of “cancel the rent” can be heard everywhere, from social media, to public comment at government meetings, to regular protests targeting elected officials at their personal homes. Some of those elected officials, like former L.A. City Council President Herb Wesson, have signaled they agree.
Roy, of UCLA, says bluntly that, in the age of coronavirus, cancelling the rent has become an explicit political demand on elected officials.
“The question is, whose demands and needs are met through our political system. And while tenants have been gaining power, we have not seen significant tenants’ protection policies,” said Roy.
“We have very powerful property interests which constantly undermine the political demands of tenants.”
A vote to ban all evictions in the city of Los Angeles during the pandemic failed by one vote earlier this year.
At the same time, as Roy notes, tenants are better organized and increasingly more powerful now than compared to years past, and have pushed politicians to acknowledge the scale of the problem in public meetings.
LOST CONTROL, LOST INCOME
For property owners, the perspective is very different.
Dan Yukelson, the executive director of the Apartment Association of Greater Los Angeles, disagrees with the idea that property owners wield disproportionate power in politics. He says the rules put in place around eviction during the pandemic are biased towards tenants.
“We’ve basically lost control of our properties,” said Yukelson. “Right now we have no control. We can’t say who we want to live in our properties. And we can’t do anything about collecting the income that’s owed to us under our contracts.”
Long term, Yukelson worries about small property owners being put out of business and selling their properties to larger corporate managers. Many, he says, don’t have a financial safety net that allows them to accommodate months of non-payment from their tenants. He says that even when evictions do resume, it’s not an immediate option for property owners.
“If owners do want to evict, there’s going to be a major backlog in the courts and people are going to be in place for at least another 12 months [after evictions resume] without paying rent. That’s going to bankrupt a lot of these apartment owners, and I’m really concerned you’re going to see a huge wave of foreclosures.”
Yukelson added that he attempted to refinance one of his rental properties recently, and was told by his bank that they wouldn’t consider his rental income as an asset.
“They don’t trust it anymore, because the government can literally come in and alter contracts, and I may not be able to collect rent for my property. So I wasn’t able to refinance my property, even though I have great credit,” said Yukelson.
WHO WOULD PAY?
Practically, ‘cancelling rent’ or offering tenants forgiveness for missed rent would ultimately require public assistance for property owners who lose rental income. That leaves the question of how such a program would be funded, and how it would work.
The clearest option would be for the federal government to step in. Congressional Rep. Ilhan Omar has introduced a bill that would cancel rent for tenants (and mortgage payments for many property owners) for the duration of the pandemic, and create a “Landlord Relief Fund” for affected owners to seek assistance from the federal government.
Unlike state and local governments, which have a finite amount of funds, the federal government is more flexible. However, it’s unlikely that Omar’s bill will become law.
Other proposals suggest locally managed reimbursements for property owners, and even providing tax credits for larger owners.
Aside from rent forgiveness, there are several proposals floating around the statehouse right now intended to shore up the patchwork of temporary eviction moratoriums put in place by local governments, mayors, and even the governor.
Among them are AB 1436, which proposes barring landlords from evicting tenants due to any unpaid rent during the State of Emergency, and for at least 12 months after the emergency is over. (Currently you must show you have been impacted by the coronavirus).
AB 1436 is currently pending in the state Senate Judiciary Committee, set to meet next in early August.
LOCAL RENTAL ASSISTANCE
In July, the City of Los Angeles launched a program to offer some households, at least, help with the rent.
Its $103 million rental assistance program, paid for with federal COVID-19 relief funds, aims to provide about 50,000 renting households up to $2,000 in rental assistance.
That money will be paid directly to property owners, so long as they agree to not evict a tenant until at least six months after the emergency is over.
“I think it’s a step in the right direction, and it’s what our association has been pushing for for months now to provide some kind of rental relief so we can keep property owners afloat,” said Yukelson, the head of the Apartment Association of Greater Los Angeles.
Yukelson referred to the provision that landlords not evict a tenant for at least six months after receiving payment as one of the program’s “hooks in the cheese.”
Over 200,000 households applied to the program, according to the Los Angeles Housing and Community Investment Department. Households will be selected by lottery for the $2,000 in public assistance.
FEDERAL AND STATE SUBSIDIES
Ultimately, Yukelson wants to see something similar to the city’s rental assistance program — direct payments to property owners — at the state or federal level.
“Their budget, due to the pandemic, [is] very challenged. But there needs to be some federal money and subsidies that come in. And you know, quite frankly, the state does have more emergency funds left. They need to dig deep, and they need to help people stay housed and they need to keep rental property owners afloat,” said Yukelson.
Roy, the UCLA professor, says that any attempt to keep tenants housed will ultimately save money in the long run. Homelessness, distinct from the staggering human toll, ultimately proves enormously expensive to manage for the government.
“If you think about what it would take [for] a program that cancels rents during the time of this pandemic, and recognizes that this requires public resources, that would be so much cheaper than allowing basically thousands and thousands of people to get evicted, become homeless, and then a few years down the line, come up with really expensive housing solutions that don’t really work to get them back into housing.”
The post Hundreds Of Thousands Are Behind On Rent. Why Won’t Politicians Cancel It? appeared first on AAOA.
Original Source: american-apartment-owners-association.org
June 22, 2020,
Dear Governor Newsom,
I write to beseech you to reject Mr. Hertzberg’s outrageous proposal to require landlords to wait 10 years until all back rent has been repaid due to the Corona virus shut down.
The small housing providers in California are comprised primarily of family or individuals who depend upon the rental income for their livelihoods. Providing housing is like any other small business such as a nail shop or restaurant. We provide a product– an apartment unit–in exchange for payment of that product in the form of rent.
Like all small businesses, we have expenses: property taxes, mortgage payment, utilities, city ordinance fees (rent stabilization, code enforcement) maintenance, insurance and repairs-anticipated and unanticipated and legal fees.
Also, like small businesses, in order to stay in business and eke out a living, we must take in at least a little more than we pay out. For businesses, large and small, when a customer does not pay for their product, the business does not sell to them anymore and attempts to collect any lost amounts.
For landlords, when a tenant does not pay for their product (the apartment unit), the landlord is entitled to evict the tenant and rent to someone who will pay the rent and proceed in court to recover lost rent and costs to restore the unit to rentable condition.
Due to the Corona virus shutdown, half of all property owners were prohibited from collecting rent and from renting their unpaid for units to paying tenants. In fact, landlords lost more than other small businesses because we were forced to provide our product and services and incur debts without payment. No other small business we forced to stay in business and incur debts while prohibited from receiving any compensation.
Every other business was allowed to shut down and cut their losses. But landlords up and down the state were forced to take on mounting debt while prohibited from pursuing compensation. Even restaurants were allowed to shut down. The State didn’t force them to provide food for free.
And those business which were permitted to stay open were able to charge for their services and products. Only landlords were made indentured servants.
Now, on top of the losses already incurred and in addition to the months of lost rent we will still incur until the emergency orders are lifted, Mr. Hertzberg wants landlords to wait an additional 10 years for payment!
Who can sustain such losses before becoming homeless themselves? Does he want all landlords to lose not only their source of income but also the homes they live in?
Does Mr. Hertzberg want to devalue all residential real estate in California, too? Does he want to cause a loss of tax basis up and down the state as well?
Maybe what he ultimately wants is these two things:
1. To so deeply devalue the real estate that developers can swoop in and buy for cheap and he can get a nice big bonus under the table from those developers; and
2. To garner all the renters’ votes so that he will be reelected in his district.
That sounds like Bobby Axelrod the hedge fund manipulator and Chuck Rhodes the unscrupulous State Attorney of Showtime’s Billions all rolled up into one heartless politician.
I can only speak for my building from personal knowledge, but my tenants only stay a maximum of 5 years, if that, in one place. After an average of 3-5 years, they move to another city, they get a different job, they want to upgrade to a bigger place, they want to move in with a significant other and need another bedroom and countless other reasons. No tenant stays 10 years in the same apartment anymore.
So after the tenant leaves, Mr. Hertzberg proposes we get our rent back how?? Or does he just assume that we can continue living on negative income for 10 years– on the streets of course because we will already have lost our buildings and the places we ourselves once lived?
Perhaps he thinks we should also go on welfare for food and clothing?
Without launching into the unconstitutionality of government interference with contractual relations, the idea of making landlords wait 10 years for money owed is simply ludicrous! None of us are banks, nor did we sign up to be long-term creditors. They get 24% interest while every other landlord is now prohibited from increasing the rent more than 5%, if that. In Los Angeles it’s only 3% and not during the emergency orders!
First let Mr. Hertzberg go without his congressional pay for 10 years and then foist such a punishment on housing providers.
First obligate all other business to give away their products and services for free for 10 years. If that works, then he can come back to the landlords to make them do the same.
The economy is imploding and all Mr. Hertzberg can come up with is more deprivation?
Rather, since the shut down and loss of work came from the directive of the State, the State should make sure all tenants’ rent is paid so that landlords can continue to provide the maintenance, pay the insurance premiums, make the repairs pay the property taxes for all the tenants that we kept sheltered in place while the pandemic raged through the hospitals and we were locked in because there were not enough masks to keep us from spreading it in case we became infected.
Let the State pay the tenants’ rent with rent vouchers or other monetary currency so that everyone can stay put and the economy can finally recover.
Governor Newsom, you have many interests to balance as a result of this unprecedented pandemic. Please make it a priority to consider only those solutions that add to the economy, spur public private partnerships, encourage economic growth. Please reject out of hand those measures that will only inflict further harm to one group or another. That is not a balance, that is poor governance. Thus far, you have a much different reputation. Please do not sully it by bending to a 10 year deprivation plan.
The post Landlord Writes to CA Governor: “A 10-Year Rent Deferment Bill is Outrageous” appeared first on AAOA.
Original Source: american-apartment-owners-association.org
America’s renters are rapidly approaching a cliff. The federal eviction protections put in place in response to massive pandemic-related job losses are set to expire at the end of August and some state and local protections are already expiring, with eviction proceedings resuming in several states. In addition, the temporary CARES Act boost to unemployment insurance benefits ends by July 31 even though millions of people are still out of work and struggling to pay rent.
The United States is heading rapidly toward an eviction crisis. More federal funding — coupled with state and local policy action — are needed to ensure renters can keep their homes in the months ahead.
An eviction crisis isn’t new for the United States. Even before the pandemic, there wasn’t a single county in the nation that had enough affordable housing to meet the needs of households living close to the poverty line. Landlords were filing more than two million eviction notices each year. Renters of color were already more likely than white renters to have high rent burdens, to be threatened with eviction and to experience homelessness. And now they are more likely to experience housing hardships due to Covid-19. The existing rental assistance safety net — a web of programs provided at the state and local levels with a mix of public and philanthropic funds — is not equipped to support a massive influx of families in crisis because of Covid-19.
Congress acted quickly at the start of the pandemic, but the CARES Act was designed for a short-term crisis. It did not provide funding that matches the scale of need. Nor did it create long-term housing counseling resources to help renters and landlords avoid evictions when payments are missed.
With time running out, a cash infusion from the federal government for direct housing assistance is urgently needed to help low- and moderate-income renters. Federal action could include expanded access to Housing Choice Vouchers — which are currently funded to support only about one in five households eligible for them — to help renters pay landlords and keep their rent amounts manageable. Or it could include expanded funding for local rental assistance programs through Emergency Solutions Grants to help renters pay back rent and stay solvent. Renters are disproportionately in industries hit hard by job loss, and extended unemployment benefits could help them stay afloat.
Whatever the mechanism, the level of funding should match the scale of need. An Urban Institute estimate suggests that, based on current unemployment levels, up to $16 billion per month is needed to make sure all renters have reasonable rent burdens (spending less than 30% of their income on rent) once the extended unemployment insurance benefits end. The HEROES Act, which was passed by the House of Representatives but has stalled in the Senate, includes over $100 billion for direct rental assistance, and estimates suggest at least as much will be needed to make housing vouchers available to all who qualify.
States and cities can also act now to strengthen housing protections and create alternatives to eviction before the crisis worsens. Policy steps that state and local governments should take include:
Extending state and local eviction moratoria to delay the crisis and avoid confusion in the courts as states and cities stand up new policies, laws and emergency assistance models. The federal moratorium covers only certain federally subsidized properties, and local moratoria are vital to protecting renters in other properties.
Keeping housing and utilities costs down. Several states and cities have passed legislation to minimize housing-related costs. California has suspended utilities shut-offs. Austin, Texas reduced residential water and electricity rates. And Montgomery County, Maryland capped rent increases.
Requiring or incentivizing negotiated repayment plans with landlords, as Washington DC recently did, which could take the place of eviction battles progressing through courts.
Expanding housing counseling for renters, similar to the homeowner counseling innovations that launched in 2008 during the foreclosure crisis.
Increasing renters’ access to legal services, including a right to legal counsel, as New York City did even before the pandemic began.
Eviction risks are rising and, as the pandemic wears on and temporary supports end, this crisis calls for swift and decisive action at the federal, state and local levels to help America’s renters survive with their homes and credit intact.
The post Time is running out for America’s most vulnerable renters appeared first on AAOA.
Original Source: american-apartment-owners-association.org
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Original Source: am-online.com