The COVID-19 pandemic has caused widespread personal and economic devastation. Unfortunately, this has resulted in immeasurable adverse impact on vulnerable renters and their rental housing owners.
Without immediate direct financial help from the state government, the resulting catastrophic chain of events will, directly or indirectly, affect all Californians. The state government must act to provide immediate holistically targeted financial help to meet our state’s rental housing needs.
The state Legislature is considering Senate Bill 1410 as a solution that helps renters—regardless of economic need—defer paying rent until 2024 and offers a tax credit to rental housing owners beginning in 2024. Providing future tax credits does not cover rental housing owners’ bills that need to be paid today. Failure to recognize and address the fact that everyone has immediate and ongoing bills will unquestionably increase homelessness, bankruptcies, and foreclosures.
The California Rental Housing Association recognizes that vulnerable renters adversely financially affected by the pandemic need help.
Renters and rental housing owners rely on one another for housing stability, forming a partnership that makes up the foundation of an industry that supports countless small businesses and jobs.
For most small and medium-sized rental housing owners, the pandemic, and governments’ responses, has made it more difficult to sustain a business which requires rental income to pay the expenses that keep Californians sheltered.
Rental housing providers pay their employees, contractors, and utilities to maintain rental housing. The majority must pay mortgage payments and all have to pay for insurance and property taxes. The National Apartment Association reports that ninety-one cents of every rental dollar are used to pay expenses to maintain rental housing. Rental housing owners rely on the balance, nine cents, to support themselves and pay their own bills.
The need for direct assistance must be solved now, not tomorrow. If SB 1410 becomes law, it will cost Californians tens of billions of dollars and increase bankruptcies and foreclosures. The supply of rental housing will decrease as more rental housing owners, particularly small mom-and-pop owners, go out of business. Is this what our legislators want? Is this what we want from our legislators?
California’s governments (state and local) need to holistically address our shared economic disaster now. What is required to avoid the economic catastrophe facing vulnerable renters and their housing providers is not SB 1410, but immediate financial and other relief that focuses on the core problems.
The state government needs to recognize that even though it has a budget shortfall, the failure to fund immediate financial relief to rental housing owners will cost California’s taxpayers even more money in the future. Failing to act now with immediate targeted assistance will also likely increase homelessness, further burden social service agencies, and cause all of us to take an extraordinary amount of time (years, not months) and money to recover from the pandemic.
CalRHA has long advocated for a statewide renter’s assistance program that financially supports renters impacted by COVID-19. In this time of need, it is critical to support both vulnerable renters and their rental housing providers who may not have the means to subsidize rental payments for months on end. Providing direct financial assistance now will help revive the economy, keep people employed, increase sales and property tax receipts to the state and local governments, and avoid foreclosures, lawsuits, and homelessness.
We believe that SB 1410 should be amended to balance the solution. Other over-broad proposals currently before the Legislature, such as extensive eviction limitations, should also be narrowed accordingly to focus on the core needs of vulnerable renters and rental housing owners.
The choices are clear: Take immediate action to meaningfully address the economic and emotional havoc arising out of the pandemic, or spend multiple times more money cleaning up a train wreck that could have been avoided or minimized.
Jack Schwartz is a real estate attorney and legislative chair of the California Rental Housing Association.