Renters across the state and nation are in for a very unpleasant experience as the Federal freeze on most evictions, enacted last year at the direction of the Centers for Disease Control and Prevention (CDC), are scheduled to end July 31. Now, with only one month to go, the Biden administration has begun to fret over the impacts of this moratorium and the potential political fallout that will result.
Bryan Anderson of the Associated Press reported recently that according to U.S. Census Bureau’s Household Pulse survey “roughly 3.2 million people in the U.S. said they face eviction” once the moratorium is lifted.
Just as millions of renters are delinquent, so too is the administration delinquent but in this case with a game plan for recovery that works for both the landlord and the tenant.
The CDC moratorium was established to protect residents by assuring they could stay in their residence during the mandated quarantines and to avoid an additional calamity of hundreds of thousands of people being made homeless without adequate or safe shelter.
The federal government set aside $45 billion to assist the landlords and property owners who have been denied any income while simultaneously being responsible for tax and property maintenance.
Governor Cooper climbed on the bandwagon with his own moratorium, enacted in September of last year. North Carolina has dedicated $1.3 billion for the Housing Opportunities and Prevention of Evictions (HOPE) to help tenants cover rental and utility expenses. According to Mr. Anderson’s story, “the state estimates it has awarded a total of $171 million to over 47 thousand households.”
After two extensions the moratorium is currently scheduled to end June 30 but may be extended for one additional month now that the CDC has moved its end date to July 31.
According to the N.C. Realtors Association, a group that provides property management for landlords, the program has not been equitable or overly functional for the property owners.
The state’s HOPE program allows only a maximum of nine months of delinquent rent to be collected and allows for only payments forward of three month increments without any guarantee that those payments will continue. The program requires a signed contract with the tenants which makes any eviction efforts more complicated should the tenant fail to fulfill their end of the contract.
Adding to the challenges for the landlords is the formula used for determining the rental payments, which is the median rental rate for a two-bedroom apartment in each market. This formula penalizes the property owners of single family, multi-bedroom houses that are far more valuable, usually more expensive to maintain and carry a higher tax assessment than a standard 2-bedroom apartment.
A representative of the N.C. Realtors Association has noted that because of these inequities many landlords distrust the government program. They are refusing to sign rental agreements since there is no indication that delinquent payments will be recovered and out of fear of other government strings that will penalize the property owners going forward.
N.C. Rep. Patrick McHenry, a Republican from western N.C., has joined Rep. French Hill, (R- Ark.) asking for an accounting of the $45 billion in the rental aid program. With only a month left in the moratorium there is little information about how much aid has been provided to either tenants or landlords.
David Dworkin, president of the National Housing Conference, told a reporter for the Washington D.C. publication, The Hill, that “Initially we were particularly concerned about an eviction cliff. What we’re watching now is a slow-motion car crash, and we really need to engage very deliberately in avoiding it.” He went on to identify two primary reasons: confusion caused by overlapping state programs and the inability to reach people who can benefit from the program.
So far the focus on this program is the condition of the tenants and not the landlords or property owners. Cathy Robertson, chairwoman of the property management division of the N.C. Association of Realtors noted in a recent radio interview that the vast majority of the property owners she represents are “mom and pop” operations that cannot go long periods of financial stress from unpaid rent.
She said that unless something is done quickly to ease the financial burden for the property owners many rental units will either be absorbed by large investment firms or the owners will sell their properties for permanent housing, getting out of the rental business altogether. In either case she noted the result will be further drop in affordable rental housing which is already in short supply.
As is typical of government programs, the first answer to any problem is to throw money at the problem and then seek real solutions. Considering the $45 billion in federal funds and the $1.3 billion in state funds available there should be more productive solutions. But they obviously are not. Now the solutions and issues will be ironed out in eviction court and the losers will be both the landlords and the tenants.