California Rent Relief Plan Would Give Tenants Until 2034 to Make Up Late Payments
Monday, June 22, 2020
A Democratic plan to give struggling California tenants 10 years to make up rent gone unpaid during the coronavirus is taking shape in the state Senate.
The proposal, backed by Senate President Pro Tem Toni Atkins, D-San Diego, and Senate Majority Leader Bob Hertzberg, D-Van Nuys, would send immediate relief, once it’s passed, to renters who’ve faced job loss or wage cuts amid the COVID-19 pandemic.
Senate Bill 1410 would encourage landlords and tenants to make a deal under a “rent stabilization agreement” before a homeowner could throw someone out for failing to make rent.
Through a process called “gut and amend,” lawmakers replaced a previous COVID-19 rental-assistance bill with the legislation’s current language. The original measure was scheduled for a vote in Senate Appropriations for June 18, but because it was changed, has been sent back to the Rules Committee for approval.
The agreement would allow the tenant to defer rent during the coronavirus emergency without fear of being evicted. If the renter declines to make a deal, the landlord would have to secure a signature-verified document proving he or she attempted negotiations with the tenant.
The state would then assume the financial burden, and allow renters 10 years beginning in 2024 to pay back unpaid rent accumulated during COVID-19. Tenants could make payments incrementally or, if they can’t afford the installments, could receive loan forgiveness.
In return, landlords would get 10 years of tax credits equal to the amount of unpaid rent. Property owners could also sell the tax credits to investors for immediate cash flow.
The bill does not have a cost estimate.
“This innovative approach acknowledges the economic challenges faced by both renters and property owners,” said Sen. Anna Caballero, D-Salinas, “keeps people housed during a statewide emergency even if they cannot pay rent due to the impact of the pandemic, and helps prevent property owners from facing insurmountable loss and foreclosure those lost rents.”
The bill still has to be voted on by the entire Senate, and then the Assembly, before it could be signed by Gov. Gavin Newsom.
California’s unemployment rate has climbed above 15% since March, when Newsom handed down an executive order to slow the coronavirus outbreak that urged people to stay home.
So far, most tenants are making rent despite the financial distress. The National Multifamily Housing Council reported that 89% of 11.4 million professionally managed apartment units in the United States had made full or partial rent payments by June 13.
Among nearly 30 million adult Californians, 24% are facing housing insecurity during the pandemic, according to United States Census Bureau data.
State Sen. Steven Bradford, D-Gardena, one of the authors of SB 1410, said when the measure was introduced that the assistance was not a “free ride,” but rather a way to stabilize families affected by COVID-19’s economic destruction.
“SB 1410 is designed to keep people housed and keep homes out of foreclosure during this economic crisis,” he said Wednesday. “This equity-driven bill is responsible, in part because it keeps people housed now while spreading the cost to do so over 10 fiscal years starting in 2024.”
The measure is part of Senate Democrats’ broader plan to assist Californians in the thick of fiscal uncertainty and a way to keep the economy afloat during a recession that analysts predict could last for several years. They’re also working to shield social services from spending cuts and create a $25 billion economic recovery fund that they want to use to spur job creation.
Category: COVID-19, Employment News, Government Affairs