the rent is too damn high

Can California Pay Off Everyone’s Rent Debt Before Evictions Begin?

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

For the last few weeks, California Governor Gavin Newsom has been playing game-show host, spinning a giant wheel and plucking lotto balls out of a dispenser to award millions of dollars in prizes to a handful of lucky vaccinated Californians. This week, Newsom seemed to be gleefully reprising his role, but this time he had a lot more prizes to give out: a $5.2 billion plan to forgive all unpaid rent for the state’s lowest-income tenants.

As first announced in mid-May, Newsom is reportedly overseeing final negotiations on a proposal that would use $5.2 billion of federal money to cancel all the state’s rent debt, plus an additional $2 billion to resolve unpaid utility bills. Renters make up about half of all California households, and because homes here are so expensive — the median sales price hit $700,000 during the pandemic — the state has a much lower ownership rate than average. “California isn’t the hardest hit, but with our very high housing prices, we are one of the states that have the highest precarity in that renters are accumulating a very large amount of debt,” says Carolina Reid, associate professor in the Department of City and Regional Planning at the University of California at Berkeley and advisor for the Terner Center for Housing Innovation. “When they are behind in rental payments, it can quickly become thousands of dollars.” One data tracker shows that approximately 758,000 households in the state are behind on rent, owing an average of $4,700.

President Joe Biden has extended the federal eviction moratorium to July 31, buying time for Newsom to finalize his plan. But while that gives tenants some breathing room, the federal moratorium is more difficult to enforce than state or local protections, and advocates worry that 30 days is still not enough time to distribute the funds, which is the biggest challenge facing the state. California already offers programs where renters can apply for assistance and landlords can be paid up to 80 percent of rent debt owed, but both require arduous application processes and have so far disproportionately distributed more money to landlords. Reid supports a stepped-up effort to give money directly to renters instead. “It’s really important that the money hits the ground quickly and that there’s a strategy in place to get to hard-to-reach households,” she says. “Just giving it to landlords might not address all the informal rental agreements out there, and doesn’t provide oversight for the power asymmetries between renters and landlords.”

California and quite a few 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 supplemented by federal relief. Many states are directing those extra dollars in ways that will likely help residents pay down any rent debt, even if not explicitly. New York, for example, put together a $2 billion excluded worker fund, which will provide direct financial aid to undocumented residents not eligible for federal programs. Although many states, counties, and cities have pandemic-era rental assistance programs in place, no other state is attempting to wipe the slate clean. However, California’s push to forgive rent is driven by an unexpected economic windfall that can help cover other urgent needs: Last month, Newsom announced that the state was running a $75.7 billion surplus, largely generated by taxing the state’s richest residents — those who stayed, anyway — whose income and investments generally rose last year. Although about half of it is allocated by law in certain areas, like education, Newsom and the legislature will be directing a lot of the rest to pandemic relief. (He has already used some of that money to send direct cash payments of up to $1,100 to lower- and middle-income Californians.) Of course, political rivals are writing off any comprehensive aid program as a way for Newsom to curry support in his recall election, which is scheduled for this fall. Former San Diego Mayor Kevin Faulconer, a Republican who is running against Newsom, called the rent forgiveness plan a “one-time gimmick.”

Canceling billions in rent debt will probably be a one-time event, but this is the third time in 16 months that the state’s protections of renters have been negotiated in a flurry of last-minute, closed-door sessions that have placed undue stress on tenants as the end of the month looms. Without a plan in place soon, even with the federal moratorium extended one month, tenant advocates from the No Renter Left Behind coalition, which includes over 100 California organizations, say they need more time and more specific policies to make sure people stay housed. They would like to see the moratorium extended to at least until September — as it has been in New York, and in many California cities and counties — and ideally through the end of the year.

But lobbyists for landlords, who hold a talon-tipped grip on the state legislature, are angling to end the moratorium as soon as possible. As Manuela Tobías reports at CalMatters, the California Apartment Association (CAA), which represents the landlords and property owners of 2 million rental units statewide, put out its own report this week arguing that the financial burden on California’s renters has been greatly reduced in recent months due to stimulus payments and assistance programs. Tom Bannon, CEO of CAA, went a step further, insinuating that the moratorium is causing renters to withhold payments from landlords. “The money is there, but it’s not getting into the hands of the people who need it quickly enough,” he said in a statement. “For more than a year, too many tenants with the means to pay have withheld their rent simply because they could do so without consequences.” (The data shows that renters do not do this, says Reid. “When you give money to people, they pay rent, they buy food; they do things that make them financially secure and healthier, regardless of the method with which it’s relayed.”)

If the plan is structured around giving money directly to landlords — as CAA is advocating for — it means landlords could hypothetically apply to be reimbursed for back rent even if they end up evicting their renters. That’s why the state needs to put additional provisions in place to protect tenants, even after the moratorium ends, says Shanti Singh, legislative director of Tenants Together, one of the anchor organizations of No Renter Left Behind. “The big concern with the Newsom proposal is there’s no consequences for who takes that money and still goes on to harass or evict tenants.” (The city of Los Angeles, for example, just passed a tenant anti-harassment ordinance for this very reason.) The moratorium’s expiration should also not necessarily be tagged to an arbitrary date a month from now, Singh says, but rather to an economic indicator like unemployment rates, as job losses in the state have disproportionately affected Black and Latino women who are also more likely to be renters. “Every dollar we don’t spend protecting tenants and keeping them in their home now, we’ll be paying for it through our spending on homelessness for years to come,” she says. “I really hope that Newsom will stand up to bullies. It’s just a matter of political will.”

Can California Pay Off Its Rent Debt Before Evictions Begin?