Will rental assistance be enough?
Missing from the relief fund is a way to help many with shadow debt
More than a year after the pandemic idled millions of workers and slashed household incomes, help at long last is coming to lowincome Californians facing a mountain of back rent.
The solution until now has been to freeze evictions. That kept millions of stressed renters in their homes, but it didn’t free them from paying all that rent down the road.
Now some may be getting their rent debt wiped off the books.
California is getting $2.6 billion from the December stimulus package to help tenants with pandemic hardships pay off unpaid rent from April 1, 2020, through March 31 — provided their landlords agree to accept 80% of the amount owed and forgive the rest. Assistance also is available for unpaid utilities.
If the landlords don’t agree, renters still can get assistance covering 25% of their rent from last April through next June, guaranteeing they can’t be evicted for any missed rent during that period.
Assistance is available to tenants earning less than 80% of their area’s median income — and only to those earning less than 50% of the median income in the city of Los Angeles to ensure there’s enough aid to help those most at risk of losing their homes. The money is paid directly to landlords.
California expects to get an additional $2.2 billion from the American Rescue Plan signed March 11 by President Joe Biden.
The state housing department began accepting applications for rental assistance March 15, and local cities and counties administering their own programs also are beginning to receive applications.
We spoke with Geoffrey Ross, a deputy director at the California Department of Housing and Community Development, about its efforts to keep low-income renters in their homes. His comments have been edited for space.
QAs many as 15% of California tenants have accumulated rent debt. Estimates of the amount owed range from $400 million to $4 billion. Will this program be enough to wipe out that debt?
AWe hope this is more money than we need, but we worry that this won’t be enough.
There are a lot of estimates, a lot of well-informed guesses. But we just don’t know how big that need is. And quite honestly, even the funds that we have in this moment can only get to very specific pieces of that need.
There has been shadow debt. Folks have taken personal loans, loans from family members,
they’ve charged their credit cards in different ways. It’s created additional debt that either tenants or landlords have accrued that are not yet being addressed.
Q Any idea how many households will be assisted with this program?
A At this point, I don’t know. We anticipated potentially 1 million folks applying. So this is going to be the proof of concept where we’ll get a sense of how many folks are coming through the program and really what that need is.
Q Will landlords agree to waive 20% of what their tenants owe them?
A It’s an 80-20 partnership between us and the landlords.
That starts to look and feel a lot more like what a lot of landlords would have typically expected
(to lose) if they had some vacancy or turnover in a year. And so those volumes start to be more in line with what a landlord, a property manager would be cash flowing at any particular time.
Q How challenging was it for the state to create this program from scratch?
A Rental assistance is not something new. But trying to launch a statewide program in an emergency environment to address the need, that was the new part.
We had to stand this up in record time and go from no such program existing previously to the largest program in the history of the country. We did that in less than five weeks.
We know that other states have been doing this or were trying to do it, just like we were. So we coordinated and partnered with them. We tried to take the best information, making sure that we were accounting for how to keep the barriers low to come in and seek assistance, but also to make sure that all the security and the fraud protections and (preventing) the duplication of benefits were there.
Q Will the $2.2 billion from the American Rescue Plan feed into this?
A There will likely be some legislation because it’s a very large allocation, and the Legislature and the governor will weigh in on it. But I would imagine that they’re going to feed it into our current program.
Q What kind of response have you gotten through the application portal?
A We have more than 120,000 active applications (as of Wednesday), 43,000 of which are fully complete, and it’s about $367 million worth of assistance being sought. And that’s just over two weeks.
Q What proportion of these applications are by landlords and how
A We’re looking at roughly 40% coming through landlords, and 60% are coming though tenants. Folks are eager for assistance. many are by tenants?
Q Some tenants won’t be able to get their landlords to participate and will only get 25% of their rent. Though that protects them from eviction through June, what happens if they can’t pay the rent in July, August or September?
A With the American Rescue Plan and the next allocation — I think some of that is what the governor and the Legislature are going to weigh in on. So the eviction moratorium and some of that language will most likely be addressed with this next tranche of funds.
Second, if I’m a landlord, maybe I was holding out, trying to understand what was maybe going to be available, what wasn’t going to be available. We now know what’s going to be available. And you’ve got a chance to get cash in your hand now.
So if you’ve been struggling for a year, this is your chance to get paid. So there should be no hesitation.
Q What happens to those with incomes of 80% and above their area median income?
A The rental assistance program as it stands today cannot serve folks 81% AMI and higher.
We are trying to make sure we take care of the most vulnerable, but we understand, folks in general who are behind on their payments are vulnerable.
It is not a perfect solution. … But in this moment, that’s how we have to operate.