A Congressional housing subcommittee hearing reinforces the need for the $100-billion rental … [+]
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The $100-billion rental assistance contained in the HEROES Act, which the U.S. House of Representatives recently adopted, is crucial for both renters and landlords, who will continue to grapple with the coronavirus-triggered financial downfalls even if the economy begins to recover.
This was the overarching message that emerged during the two-hour long virtual hearing held by the U.S. House Subcommittee on Housing, Community Development, and Insurance today.
The $100 billion rental aid program made its way into the omnibus HEROES Act, which House Democrats champion, through a bill introduced by Reps. Maxine Waters (D-CA) and Denny Heck (D-WA). Waters chairs the Committee on Financial Services, under which the housing subcommittee exists.
“We were already dealing with a rental crisis long before the pandemic,” Waters said in her opening remarks today. “This pandemic has only made matters worse.”
While the CARES Act, signed by President Trump in late March, introduced only an eviction moratorium, the HEROES Act aims to provide direct financial help to struggling renters.
If the package is passed into law, the $100 billion would be administered by the Department of Housing and Urban Development to local governments. The latter would allocate the funds to rental households, prioritizing those whose current income is below the area median income. Households making up to 120% of the area median income would be eligible for assistance through the HEROES Act.
While the National Multifamily Housing Council’s rent payment tracker shows that the majority of apartment tenants have continued to pay rent at least partially through the pandemic, the U.S. Census reports that one third of renters have little to no confidence they will be able to cover their housing costs this month.
“Failure to address the looming rent crisis will have dire consequences for millions of Americans and for the housing ecosystem that underpins out economy,” Mike Kingsella, executive director of Up for Growth, told the subcommittee members. “We believe emergency rental assistance is the most important and urgent action Congress can take.”
Another witness, Jenny Schuetz, who is a Brookings Institute fellow, said that prior to the coronavirus pandemic, some 10 million households spent half of their income on rent. That burden has likely grown as scores of low-income renters have lost their jobs due to the pandemic.
While those residents may now be shielded under the federal ban on evictions (and in many cases, local moratoriums), once such protections expire, experts fear a wave of evictions as it is improbable that renters would be able to immediately pay any past-due obligations.
“Replacing income loss by direct payments to households is likely to be the most effective,” means of preventing displacements, said Schuetz. “This trend of people picking up their payments as the stimulus checks and unemployment insurance rolled out suggests that they’ve actually been very effective ways of helping people stay current.
“The stimulus was a one-time check. Unemployment insurance has a timeline. There is a concern that when those run out that households are likely to be in trouble if they have not gone back to work. We don’t know when the larger labor market recovers, how many of those people will be able to go back to work and will be able to resume their full number of hours.”
Black and Hispanic renters face disproportionate housing hardships
While the overall U.S. unemployment rate fell to 13.3% in May from 14.7%, it remained largely unchanged – and above the national figure – for black (at 16.8%) and Latino (17.6%) workers.
“History shows us the labor market can remain weak far longer for black workers,” said Ann Oliva, visiting senior fellow with the Center on Budget and Policy Priorities. “Many black households will struggle longer with low or no earnings. If additional rental assistance isn’t made available communities across the country will struggle to address the impact of Covid-19. […] And black, Latinx, American-Indian and Alaskan Native communities will suffer the most.”
Cashauna Hill, executive director with the Louisiana Fair Housing Action Center, said that even before the coronavirus crisis, renters of color disproportionately felt the effects of the country’s shortage of affordable housing.
“African American and Hispanic renter household are much more likely to be cost burdened than their white neighbors,” Hill said.
Moreover, black and Hispanic Americans, who separately make up less than 20% of the country’s populace, account for 40% and 22%, respectively, of the U.S. homeless population, said Oliva.
What further assistance is needed for renters
Rep. Rashida Tlaib (D-MI) said that eviction halts and one-time payments are “Band-Aids,” pushing for recurring payments to struggling renters.
“Why aren’t we talking about reoccurring payments,” Tlaib said. “It’s not only rent. It’s utility, it’s water. That’s why you got to give people human dignity, and give them the resources they need and let them choose what is a priority for their families.”
Meanwhile, Hill said that the rental assistance should come with tenant protections. “[This is] an opportunity to actually tie that rental assistance to some tenant protections,” she said. “The proposed rental assistance is really landlord assistance that goes to landlords to help them cover the cost of the rents that they’re missing.”
She said such provisions would be especially helpful in Louisiana, where the current laws recognize fewer renter rights compared to most other states.
What small-time landlords need
Rep. Waters expressed her concern for small mom-and-pop landlords, who own about a half of the country’s roughly 45 million rental units but lack the resources of their corporate counterparts to deal with the economic shortfalls triggered by the Covid-19 crisis.
“Even with the HEROES Act, if we’re successful, and I think we can be, in getting those $100 billion that we have been working on, I don’t know how long it will take to get the system up by which we could get that rental assistance [out],” Waters said, asking what would happen to mom-and-pop rental property owners in a scenario when the money is not immediately available.
One likely outcome is that landlords would continue to strain to remit their mortgages, utility bills and property taxes. Some of them might even have to sell their properties, said Schuetz.
“There may actually be a number of these small properties that wind up going on the market,” Schuetz said. “Many of these are relatively low rent properties. If they get bought either by homeowners who take them out of the rental stock or by investors who choose to raise the rent, this could be a permanent loss for affordable housing.”
Criticism of the $100 billion rental aid program
Rep. John Rose (R-TN) called the $100-billion rental assistance a “bloated promise” of financial aid that may never come.
“We need smarter, more innovative localized solutions and the ones we’re largely discussing today,” Rose said, adding that most of the intended funds would stream to renters in high-cost cities not rural areas.
Meanwhile, Rep. Bill Posey (R-FL) questioned the need for the currently proposed program, saying that a limited extension of Section 8, which provides housing vouchers to low-income renters, would serve an already established framework to help renters impacted by Covid-19.
“We should refrain from the temptation to enact broad expansions of existing problems or even new programs to respond to the crisis,” Posey said.