Latest Round Of Rent Relief In LA Allows Landlords To Apply For Their Tenants
After more than a year of coronavirus pandemic life and its repercussions, a looming threat has been the growing amount of rent debt. The exact amount of back rent owed statewide is not known, but estimates have ranged from $400M to $1.7B.
The city of Los Angeles is accepting applications through April 30 for up to $235.5M of rent relief provided as part of the December federal stimulus bill. The funding will be awarded to qualified applicants via a lottery-style system, with preference given to applicants who make less than 30% of the area median income, or $33,800 a year for a family of four. Unlike the previous round of rent relief, this time landlords are able to apply on behalf of their tenants.
In order to get the rent relief, landlords must agree to accept payment for 80% of back rent accumulated from April 1, 2020, through March 31, 2021, and forgive the remaining 20%. Landlords that spoke with Bisnow said that they were eager to apply for the program, in large part because of the potential for receiving such a substantial amount of back rent quickly. But they also understood that for some landlords, the prospect of only collecting a portion of the back rent owed wasn't enough.
The trade-off of forgiving 20% of a tenant's owed rent in exchange for receiving 80% of what is owed was an easy decision for Ruth Hayles.
“I think that’s a minimal disadvantage,” said Hayles, who is the executive director of the Minority Apartment Owners Association and the general manager of International Realty & Investments, a property management company.
Hayles, who is a landlord, said she will be applying on behalf of at least one of her tenants, who has paid rent only sporadically throughout the pandemic and last paid in September.
“The money is going to go very, very fast because there are so many people in need,” Hayles said.
To be eligible for the rent relief program, tenants must be LA residents who qualified for unemployment benefits or whose ability to pay rent was impacted by the pandemic. Because the funding is aimed at eliminating the rent debt of low-income tenants, eligible tenants must also have a household income at or below 50% of the area median income, roughly $56,300 a year for a family of four, according to the city’s housing and community investment department.
The Apartment Association of Greater Los Angeles has seen a lot of interest in the program from its members, AAGLA Executive Director Daniel Yukelson said. The organization put on a webinar about the program that had almost 500 attendees and has seen traffic on its website shoot up since adding information about the rent relief initiative.
Yukelson says he believes that receiving back rent through this program is a best-case scenario for many landlords who are owed rent.
“This is money that could be paid to them more immediately and they’d get 80 cents on the dollar without having to go to court,” Yukelson said.
Yukelson was dismayed, though, that 80% was the best the program could promise. All the property owners Bisnow spoke with said they had heard from other landlords who were unhappy that was the most they could hope for in this case.
“It’s unfortunate that the government thinks that we can live with a 20% haircut on the amount of rental debt that’s owed to us,” Yukelson said.
But the prospect of recovering the majority of back rent owed for the roughly yearlong period without having to go through an eviction process or attempting to collect the owed rent through other means was attractive to some landlords, not only because it seemed easier but because the potential yields seemed greater.
“In doing our analysis of the people that owe us money, we feel that we would probably recover about 50% of the money that is currently outstanding from those people who have not been paying long-term,” Universe Holdings Chief Operating Officer Jonathan Cohen said. Universe is encouraging its tenants who owe back rent to apply to the program, and they are assisting them with the process and providing information to complete the application, Cohen said.
Many of Universe Holdings’ tenants are hourly workers, tradespeople, people in the film industry and supporting businesses and service workers, Cohen said.
“We think that many of them have reached the end of their ability to pay and this lifeline from the government is going to allow them to stay in their homes,” Cohen said.
Ralph Jean, director of communications for advocacy group Strategic Actions for a Just Economy, agreed.
“Folks who don’t have the money to pay for rent now — who are choosing between food and rent or medicine and rent — we don’t suspect that they’ll have that money in the months to come,” Jean said.
Jean emphasized, as many tenant advocates do, that many LA renters were already struggling before the pandemic and that those renters are the ones who he and his organization continue to see needing the most help. Jean said that is why SAJE and other members of the Healthy LA Coalition continue to campaign for a full cancellation of rents.
Landlords who apply for their tenants will still need their tenants’ participation to complete the process. Tenants will have to complete the application once the landlord starts it for them, an FAQ on the city’s housing department website for the program notes.
In addition to agreeing to accept 80% of the total rent owed, the city’s housing department indicates that landlords must also agree to comply with federal, state and local laws “regarding non-payment of rent, evictions proceedings, and rental increases.”
In other words, “landlords just have to keep following the [federal, state, local] laws that are already on the books,” Housing Rights Center Deputy Director Javier Beltran said. That would include state and local eviction protections, commonly referred to as moratoriums.
If a landlord does not agree to take the 80% payment and forgive the remaining 20% back rent, the tenant will receive an amount equal to 25% of the back rent, which they would then need to pay to the landlord by June 30.
Doing so would prevent that tenant from being evicted for nonpayment of the remaining owed rent under state law, according to the Los Angeles City Attorney’s Office.