California Has a $5.2 Billion Plan to Pay Off Unpaid Rent Accrued During the Pandemic

By Sam Levin, Guardian UK

27 June 21

The rent forgiveness program would pay landlords all of what they are owed while simultaneously giving tenants a clean slate

alifornia is pursuing an ambitious plan to pay off the entirety of unpaid rent from low-income tenants who fell behind during the pandemic, in what could constitute the largest ever rent relief program in the US.

The state’s governor, Gavin Newsom, is negotiating with legislators and said the $5.2bn plan would pay landlords all of what they were owed while giving renters a clean slate.

If successful, the rent forgiveness plan would amount to an extraordinary form of aid in the largest state in the US, which has suffered from a major housing crisis and severe economic inequality since long before Covid-19.

An estimated 900,000 renters in California owe an average of $4,600 in back rent, according to a recent analysis. Without aggressive protections and relief, experts say the state would experience a tsunami of evictions and a dramatic worsening of its homelessness crisis. Even with restrictions on evictions in place since March 2020, vulnerable renters have continued to be pushed out of their homes while out of work and unable to pay the high costs of rent in the state.

Federal eviction protections are due to expire at the end of June, as are California’s regulations, which applied to more renters. Lawmakers, who are currently negotiating over the state’s roughly $260bn operating budget, are debating whether to extend the restrictions on evictions beyond June. The vast majority of people who have applied for relief have not yet received funds, according to state officials, which is why tenant groups are pushing for protections to remain in place.

“The expectation for people to be up and at ’em and ready to pay rent on 1 July is wholeheartedly unfair,” Kelli Lloyd, a 43-year-old single mother, told the Associated Press. She said she had not worked consistently since the pandemic began in March 2020.

Lloyd, a member of the advocacy group Alliance of Californians for Community Empowerment, is supposed to pay $1,924 a month for a two-bedroom, two-bathroom rent-controlled apartment in the Crenshaw district of south Los Angeles. But she said she was $30,000 behind after not working for most of the last year to care for her two children as daycare centers closed and schools halted in-person learning.

That debt will probably be covered by the government. But Lloyd said she had recently lost a job at a real estate brokerage and had yet to find another. She is worried she could be evicted if the protections expire.

“Simply because the state has opened back up doesn’t mean people have access to their jobs,” she said.

Meanwhile, in the wine country area of Sonoma county, Keith Becker, a property manager, told the AP that 14 tenants were more than $100,000 behind in rent payments. It had put financial pressure on the owners, who Becker said had “resigned themselves to it”. He argued that the eviction protections should end.

The $5.2bn fund to pay off people’s rent comes from multiple federal aid packages approved by Congress. Jason Elliott, a senior counselor to Newsom on housing and homelessness, said that figure appeared to be more than enough to cover all rent debts in the state.

But the state has been slow to distribute that money, and it is unlikely it can spend it all by 30 June. A report from the California department of housing and community development showed that of the $490m in requests for rental assistance through 31 May, just $32m had been paid. That did not include the 12 cities and 10 counties that run their own rental assistance programs.

“It’s challenging to set up a new, big program overnight,” said the assemblyman David Chiu, a Democrat from San Francisco and chair of the assembly housing and community development committee. “It has been challenging to educate millions of struggling tenants and landlords on what the law is.”

Some officials have also questioned whether the program in its current form will reach all of the renters in debt. One San Francisco county official said the amount of aid allotted for his region was not nearly enough to cover the debts claimed by tenants, and applications were continuing to pour in. And the LA Times reported that the current funding formula was projected to leave 43% of LA applicants with no financial assistance.

While employment among middle- and high-wage jobs has exceeded pre-pandemic levels, employment rates for Californians earning less than $27,000 a year are down more than 38% since January 2020, according to Opportunity Insights, an economic tracker based at Harvard University.

“The stock market may be fine, we may be technically reopened, but people in low-wage jobs, which are disproportionately people of color, are not back yet,” said Madeline Howard, senior attorney for the Western Center on Law and Poverty.

Some housing advocates are asking the state to keep the eviction ban in place until the unemployment rate among low-wage workers has dropped to pre-pandemic levels. The idea is similar to how state officials would impose restrictions on businesses in counties where Covid-19 infection rates were higher while those with lower infection rates could reopen more quickly.