Can California Pay Off Its Rent Debt Before Evictions Begin?

During the May 1 march in Los Angeles.
Photo: David McNew / AFP via Getty Images

For the past few weeks, California Governor Gavin Newsom has played host to a game show, spin a giant wheel and take out lotto balls from a distributor to award millions of dollars in prizes to a handful of lucky vaccinated Californians. This week Newsom seemed to happily reprise his role, but this time he had a lot more prizes to hand out: a $ 5.2 billion plan to write off all unpaid rents for the state’s most modest tenants.

As first announced in mid-May, Newsom would be oversee final negotiations on a proposal that would use $ 5.2 billion in federal funds to write off all of the state’s rent debt, plus an additional $ 2 billion to solve unpaid utility bills. Renters make up about half of all California households, and because homes here are so expensive – the median selling price hit $ 700,000 during the pandemic – the state has a much lower than average home ownership rate. “California is not the hardest hit, but with our very high housing prices, we are one of the states with the most precariousness as tenants accumulate a very large amount of debt,” explains Carolina Reid, Associate Professor in the Department. of urban and regional planning at the University of California at Berkeley and advisor for the Terner Center for Housing Innovation. “When they’re behind on rent payments, it can quickly run into the thousands of dollars.” A data tracking tool shows that approximately 758,000 households in the state are behind on rent, who owes an average of $ 4,700.

President Joe Biden has extended the federal moratorium on evictions until July 31, giving Newsom time to finalize his plan. But while this gives tenants a bit of a breather, the federal moratorium is more difficult to enforce than state or local protections, and advocates fear 30 days is still not enough to distribute the funds, which is the biggest. challenge facing the state. California already has programs where tenants can apply for help and landlords can be paid up to 80% of the rent debt owed, but both require arduous application processes and have so far distributed more. money to owners. Reid supports an increased effort to give money directly to tenants instead. “It’s really important that the money arrives quickly and that there is a strategy in place to reach the hard-to-reach households,” she says. “Just giving it to landlords might not settle all informal rental contracts and does not monitor power asymmetries between tenants and landlords.”

California and many other states are considering what to do with large budget surpluses, which in most cases were created by cost-cutting austerity measures during the pandemic and complemented by a federal relief. Many states direct these additional dollars to help residents pay off any rent debt, even if it is not explicitly. New York, for example, set up a $ 2 billion fund for excluded workers, which will provide direct financial assistance to undocumented residents not eligible for federal programs. Although many states, counties and cities set up rental assistance programs during a pandemic, no other state is trying to erase the slate. However, California’s push to write off the rent is driven by an unexpected windfall that may help cover other pressing needs anyway – which both revenues and investments have typically increased over the past year. Even if about half is allocated by law in certain areas, such as education, Newsom and the legislature will lead much of the rest towards pandemic relief. (He already used some of that money to send direct cash payments up to $ 1,100 to low- and middle-income Californians.) Of course, political rivals are canceling any comprehensive aid package as a way for Newsom to gain support from his recall the election, which is scheduled for this fall. Former San Diego Mayor Kevin Faulconer, a Republican running against Newsom, called the rent reduction plan a “one-time gimmick.”

The cancellation of billions in rent debts will likely be a one-time event, but this is the third time in 16 months that state protections for tenants have been negotiated in a flurry of last-minute closed-door sessions that have put undue stress on tenants as the end of the month approaches. Without a plan in place soon, even with the federal moratorium extended by a month, tenant advocates for the No tenant left behind by the coalition, which includes more than 100 California organizations, say they need more time and more specific policies to make sure people stay housed. They would like the moratorium to be extended until at least September – like it was in New York, and in many cities and counties in California – and ideally until the end of the year.

But owner lobbyists, who hold a stranglehold on the state legislature, are seeking to end the moratorium as soon as possible. Like Manuela Tobias reports to CalMatters, the California Apartment Association (CAA), which represents the owners and owners of 2 million rental units statewide, publish your own report this week, arguing that the financial burden on California tenants has been significantly reduced in recent months due to stimulus payments and assistance programs. Tom Bannon, CEO of CAA, went further, insinuating that the moratorium requires tenants to withhold payments from landlords. “The money is there, but it is not getting into the hands of the people who need it quickly enough,” he said in a statement. “For over a year, too many tenants who can afford to pay have withheld their rent simply because they could do it without consequences. (Data shows renters don’t do this, Reid explains. “When you give people money, they pay rent, they buy food; they do things that make them financially safer and better. health, regardless of the method by which they are relayed. ”)

If the plan is structured around giving money directly to landlords – as the CAA advocates – it means landlords could hypothetically claim back the arrears of rent even if they end up evicting their tenants. This is why the state must put in place additional provisions to protect tenants, even after the end of the moratorium, says Shanti Singh, legislative director of Tenants together, one of the flagship organizations of No Renter Left Behind. “The big concern with Newsom’s proposal is that there is no consequence for who takes this money and continues to harass or evict tenants.” (The city of Los Angeles, for example, just had a tenant anti-harassment order for this very reason.) Nor should the moratorium expiration necessarily be labeled an arbitrary date in a month’s time, Singh says, but rather an economic indicator like unemployment rates, as job losses in the State disproportionately affected black and Latin American women. who are also more likely to be renters. “Every dollar we don’t spend protecting tenants and keeping them in their homes now, we’ll pay for it through our roaming expenses for years to come,” she says. “I really hope Newsom stands up to the bullies. It’s just a matter of political will.