Millions of Californians could lose affordable housing in recession, advocates warn
With rent due for another new month in the coronavirus outbreak, affordable housing advocates warn that the new recession could trigger a domino effect wiping out protections for millions of lower-income California tenants.
They worry not only about tenants who will be unable to pay rent because they’ve lost jobs and income.
More tenants — even ones who keep jobs and make rent — could lose their subsidized housing if enough of their neighbors fall behind and a complex goes out of business, allowing new landlords to hike rents to market prices.
Affordable housing advocates say as much as 79 percent of California’s existing affordable housing is at risk.
So far, most tenants are keeping up with their bills. They’ve been helped with rent due to increased unemployment payments and the $1,200 stimulus checks passed by the federal government earlier this year, according to Matt Schwartz, President and CEO of California Housing Partnership.
But that won’t last when the benefits run out, he said.
“Here’s an indicator of what may be coming: A housing provider surveyed residents and reported that 57 percent of the households have lost jobs and 84 percent have lost significant income,” he said.
About 380,000 homes located in 4,372 developments in California are designated as affordable housing, which cost the federal and state government about $100 billion to build over the years, according to the California Housing Partnership. Their tenants benefit from restrictions, while builders can incentives like tax credits.
A recent UC Berkeley Terner Center for Housing Innovation study found that of the 2.3 million renting households in California affected by the coronavirus, 50 percent were already rent-burdened. With the state’s current 15 percent unemployment rate expected to rise, advocates have asked the federal government to keep these tenants from collapsing into homelessness.
“Although these developments are rent-restricted for up to 55 more years, default and foreclosure will generally erase all affordability requirements,” reads a report by California Housing Partnership. “As a result, 79 percent of California’s precious affordable rental homes are at imminent risk of loss, absent public intervention.”
Many of the people living in those units would then become homeless, Schwartz said. Another study by Columbia University economics professor Brendan O’Flaherty estimated 30,000 more Californians could become homeless because of the novel coronavirus.
Without further help from Congress, Schwartz believes that number will be higher.
“We hope this is all the worst case, but if there’s no further federal assistance we could be there in six months,” he said.
California’s building plans
The California Legislature is also considering its own strategies to continue building affordable homes.
One bill would allow religious or nonprofit organizations and hospitals to build affordable housing projects on land traditionally zoned for single-family homes. Another would let cities and counties convert empty or underused malls and retail stores into affordable housing, and use commercial lots for new projects.
A third proposal would allocate $2 billion per year for California’s homeless crisis and mandate that 40 percent of the funds go toward rental assistance and helping cities transition hotels into housing.
Gov. Gavin Newsom’s budget commits for another year a $500 million expansion of the state’s Low-Income Housing Tax Credit program, and estimates another $739 million to come from real estate fees and California’s cap-and-trade program. Voters also approved in 2018 a law to free up $4 billion in bonds for affordable housing.
Marina Wiant, lobbyist for the advocacy group California Housing Consortium, said the state’s affordable housing market is well-positioned to weather the pandemic-induced recession, given recent efforts to bolster its supply.
“We’ve had a couple of pretty good years,” Wiant said.
Newsom placed a 90-day eviction moratorium on renters, but Schwartz said that isn’t enough on its own to protect those who can’t afford to pay for housing. As soon as that expires — at the end of June unless Newsom extends it — those people could still become homeless. And in the meantime, the rent they can’t currently pay just becomes debt they can’t afford later, either.
Instead, Wiant said, what the state needs now is federal dollars to protect low-income renters from eviction.
“It’s critical to help the people that are being impacted, and I think in light of some of California’s budget issues as a result of (the coronavirus), federal dollars are that much more critical,” Wiant said. “A lot of people are not able to pay rent because of this economic crisis.”
Federal government stalled
Congress passed a $2 trillion aid bill for individuals and businesses impacted by coronavirus in March, known as the Cares Act, which included the $1,200 stimulus payments for most Americans, an extra $600 in weekly unemployment benefits and about $15 billion in funding to California.
That aid was “critical” to protecting those in affordable housing and the homeless, Schwartz said.
However, more aid is needed, Schwartz said.
The House of Representatives passed another $3 trillion aid bill in May that would have provided another stimulus payment to most Americans and would have extended the extra unemployment until January 2021. It provided more than $1 trillion to state and local governments and almost $200 billion in additional funding for housing and homelessness programs.
The housing funding includes $100 billion in emergency rental assistance, $11.5 billion to prevent and respond to outbreaks among homeless people and a national moratorium on evictions for all renters.
But Senate Majority Leader Mitch McConnell, R-Kentucky, has made it clear he has no plans to bring that bill to a vote in the Senate. Democrats have characterized it as their starting point on negotiations more than something that actually had a chance at becoming law.
McConnell has indicated he thinks another aid bill is needed, but has been coy about timing. Congressional leadership has said negotiations between Democrats and Republicans on such an aid bill have not begun, and House Speaker Nancy Pelosi, D-San Francisco, has frequently pointed to McConnell as the reason for the delay.
McConnell’s office did not respond to multiple requests for comment.
Pelosi has said there are no red lines from her perspective on negotiations. Drew Hammill, Pelosi’s deputy chief of staff, declined to give many specifics on her priorities, saying they didn’t want to negotiate via the press.
“All those things are priorities, but the centerpiece is state and local funding,” Hammill said.
This story was originally published June 1, 2020 at 5:00 AM with the headline "Millions of Californians could lose affordable housing in recession, advocates warn."
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