There are many ways of going forward, but only one way of standing still. ~ Franklin D. Roosevelt
Rent checks are still not in the
mail. But they might be at some point, thanks to President Biden’s coerced, last-minute
agreement on August 3 to again have the CDC extend the covid-based rent payment
moratorium for low-income tenants through October 3. One recent guestimate of
how much renters owe their landlords surpasses $20 billion; with more than 5.8
million renters in arrears (other estimates say there are 11 million in arrears).
That works out to an average back rent of about $3,350 per tenant, which seems
small given the length of time some rents haven’t been paid.
Our popular finger-pointing-at-others
pastime means hardly anyone beyond the potential recipients is content with this
latest, temporary extension. But because these extensions concern a subsidy that
many low-income renters clearly have needed, such allowances shouldn’t be surprising
at all. Why?
First, subsidies are always
needs-based in the eyes of their proponents and recipients, no matter who’s
getting the benefit. And second, subsidies are forever. Existing
publicly-financed subsidies are rarely annulled. The chart below provides examples
of major subsidies – including the biggest, Health Care – that have become
institutionalized over many decades. Approximate recent expenditures for each
subsidy are also provided. Some folks have argued that several now have diminishing
justification.
|
Subsidy |
Year Started /
Approximate Annual Amount |
|
Home mortgage |
1913. $150B |
|
Energy |
1916. $3B (fossil), $11B (renewables), $2.7B (energy efficiency) |
|
Agriculture |
1929. $22-$46B |
|
Health Care |
1965. $1.5T Medicare-Medicaid & ACA |
The US housing market consists of
about 141 million total housing units. Growth in the number of housing units
has diminished over time as the number of households has levelled off. There were
roughly 43 million housing units occupied by renters last year, 30.5% of
the total.
In December 2020, Congress passed
a pandemic relief package that included $25 billion (B) designed to prevent
evictions because of rent non-payment – the Emergency Rental Assistance (ERA) program.
Since then, another rental aid package was added this year in March. To date, $46.5B
has been available for assistance to low-income renters. The ERA program has
been effective. Effectiveness is doing the right thing; providing rental relief
is justifiably right.
But the fiscal wheels of government
turn very slowly, even when lubricated with subsidies. As of July 31, a meager
7% of this rental assistance aid has been distributed in the US to real renters
and their landlords by federal and state agencies. California’s Housing is Key rental
relief program has provided only a miniscule 1.2% of the available $5.2B
through June.
The ERA program has not been efficient,
meaning doing an activity right. It’s been woefully inefficient, to the
detriment of all parties. Furious finger-pointing and demonstrations have
resulted, including one Congressperson sleeping on the Capitol’s steps.
Should we be upset at this
stunningly low program efficiency? Absolutely. Nevertheless, the nature of
large, multi-level bureaucracies makes it challenging to operate quickly and
efficiently.
The word “bureaucracy” is taken
from the French bureaucratie – a verbal blending of “bureau” or desk and
“cratie,” conveying a type of government. Agencies filled with desk-bound,
mostly well-meaning bureaucrats – French or otherwise – have long been critiqued
for their powers that can at times thwart virtuous goals and valued procedures.
Bureaucrats also include our elected representatives, who turn out voluminous,
inconsistent legislation, sometimes thousands of pages long.[1]
Federal and State agencies too
often have been unable to provide prompt responses to many covid-related
challenges. Efficiency is simply not a practical bureaucratic goal. It’s hard
to imagine how it could be, given the unending challenges that agencies face
from authorizing legislation’s specifics and subsequent, overly-complex
regulations, let alone needed coordination among the many agencies that have
responsibilities for individual facets of an issue like rent relief. The result
is confusion for everyone involved with the residential rental market – bureaucrats,
renters and landlords.
Federal, state and local government
agencies are not quarter horses able to turn quickly on the proverbial legislative/regulatory
dime, but more oxen-like. They plod along more or less reasonably and
powerfully on established procedural paths they already know. Agencies are
usually not able to jump rapidly onto another path that’s not been trod on
before (like supplementary covid-based benefits or creating brand-new rent
vouchers or reimbursement procedures) that involve only a specified portion of
the populous. Rental relief applies only to those folk who are designated as “low-income.”
But the definition of low-income for
rental relief is confusingly defined differently than other types of government
assistance, which adds to the administrative complications of providing rent aid.
“Low-income” renters are folks whose income is equal or less than 80% of the
local area median income (AMI). In the beginning, the qualifications-
requirements for rent relief also compelled the individual landlord’s
compliance. That’s no longer true.
California’s rent relief, like
other states, is based on specific AMI levels, not the same as those of Affordable
Housing assistance. Affordable Housing’s “low income” is defined separately for
each of the state’s 58 counties and by household size.
For Alameda County, where I live,
a 3-person household’s income level cannot exceed $94,000, 87.6% of the county’s
AMI, to qualify for Affordable Housing. However, to qualify for rent relief in
Alameda County, this 3-person household’s income level cannot exceed $85,480,
80% of the AMI. In addition, rent relief requires certification that at least
one the household’s tenants must also have lost a job or income during the pandemic
and can show they are at risk of homelessness. Many jurisdictions have
first been assisting “very low income” renters before helping others.
Many applicants have complained
of a clunky, cumbersome system and the lack of translation for non-English speakers
as factors inhibiting people from applying for rental aid. Landlords are
similarly frustrated with the quickly cobbled together rent relief system. One
person who represents landlords of all sizes stated, “You couldn’t create a
worse system if you tried.”
Smaller landlords have fared
worse than larger, corporate ones. From the Biden administration’s apparent perspective,
there are no consequences to repeatedly extending the rent-eviction moratoria. Reality’s
consequences include smaller, cash-constrained landlords now selling their
properties to larger owners and evictions swelling despite the CDC’s ukases.
Rent relief is another type of
subsidy, where qualified tenants are relieved of paying their monthly rent via
the government program’s disbursements. There is little doubt that very few
low-income renters ultimately will be able to fully pay all of their past-due
rent debts. In some states only 12 months of rent debt can be forgiven.
There was a strong case for
temporary rent relief in the beginning of the pandemic when millions of people
were thrown out of work and the coronavirus was spreading unimpeded, creating a
national emergency. The first moratorium began in September 2020. But the economy has since revived to a significant though
not complete extent.
Making emergency measures like eviction
moratoria permanent is less creditable. This despite progressive Dems arguments
that rent assistance should be enduring because overall rents are too high and
there’s insufficient affordable housing. Such a long-term eviction moratorium could
lead to perverse, unintended consequences like reducing the supply of
already-inadequate affordable housing as developers and landlords decide they may
not want to rent to folks who could become non-payers.
Here’s hoping we turn the eviction
moratorium corner as soon as possible.
[1] The
December 2020 Consolidated Appropriations Act was 5,593 pages long, the lengthiest
to date. It combined stimulus relief for the covid pandemic and the federal government’s
omnibus spending bill for FY2021. The bipartisan Infrastructure Investment and
Jobs Act, that the Senate passed on August 10, is a mere 2,702 pages long. Because
they’re rapidly assembled piecemeal, no single person has any clear idea what these
laws actually cover.
