By Eric Gelber
On Monday (January 25th) Governor Newsom and legislative leaders announced a deal that would extend COVID-19-related eviction protections for renters that were enacted in September and were due to expire on January 31st. The bill passed in September (AB 3088) protects renters as long as they are paying 25% of their rent starting in September 2020 and can prove pandemic-related adversity (e.g., job or salary loss). Using $2.6 billion in federal relief as rental subsidies, the proposal would pay landlords 80% of unpaid back rent incurred between April 2020 and March 2021 if landlords agree to forgive the remaining 20% in back rent and agree not to pursue evictions.
The deal also provides for a unified statewide eviction moratorium that preempts any local efforts to establish a longer moratorium. This provision addressed a demand made by the California Apartment Association.
The deal will be enacted as part of what is being referred to as an Early Action Budget, to take effect immediately, and will extend the AB 3088 eviction protections through the end of June 2021. It will distribute the $2.6 billion in rental assistance quickly. The Early Action Budget items, although passed now, will become part of the main 2021-2022 Budget. The bill (SB 91) can be heard on Thursday, January 28th, and be passed by the Legislature and signed by the Governor before the expiration of the AB 3088 eviction moratorium.
Senate President Pro Tem Toni Atkins issued the following statement on the agreement reached today extending eviction protections for renters:
“One of the worst aspects of the COVID-19 pandemic has been the growing number of Californians at risk of losing their homes. Last year, the Legislature and the Governor built a bridge to help those tenants and small landlords. Today we are making that bridge longer and stronger. We are extending the eviction moratorium to June 30 and distributing the federal stimulus funds quickly and equitably across the state. We are also providing additional safeguards to protect Californians from landlords and creditors acting in bad faith. This agreement, which is the strongest in the nation, works within the framework required by federal law regarding eligibility, prioritizing rent payments past due, and providing a timeframe in which the funds must be used.
“Today’s actions to protect tenants and small landlords does not mean our work is over. We are actively pursuing early budget actions that will address the most pressing needs caused by the pandemic, and the decisions we make are being viewed through the lens of how they can make life better for those among us struggling the most. We will also be assessing what may need to happen after June 30th. Challenges rising from the pandemic have been constant. So will our attention and our action.
“I appreciate the partnership of Speaker Rendon and Governor Newsom in reaching this agreement that helps Californians keep a roof over their heads and keep their heads above water while we continue to tackle the challenges presented by this pandemic. I am also grateful to Senate Majority Leader Hertzberg and Senators Caballero, Bradford, Skinner, and Umberg, for their leadership in making these important protections become reality.”
Governor Newsom also issued a press release announcing the budget deal.
Tenant groups raised concerns with the provision of the deal allowing landlords to decline the federal rental relief. If a landlord does not agree to accept the rental relief dollars, the deal instructs courts to reduce damages owed the landlord, assuming the tenant met the eligibility requirements. The executive director of the Alliance of Californians for Community Empowerment said, “If federal tenant protection policies are mandatory because of the decades of evidence that landlords discriminate, such as fair housing, why would we allow landlords to opt out of a tenant protection program where the cost to society and human life could be catastrophic.” But, as Assembly Member David Chiu, the author of the original moratorium bill said, the proposal is “necessary but far from perfect.” “I expect there will be a need to revisit this legislation to address gaps and provide relief to additional tenants,” he added.
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Wow — this is actually really impressive. The legislature and the governor got together, compromised, and came up with a workable piece of legislation that addressed an urgent need.
Just hope that small landlords get the same deferrals as to mortgage payments and taxes… without penalties, like added fees, interest… I have 0% problem with the deferrals, as long as best efforts are made (25% is a reasonable test), and that it is demonstrably related to the pandemic… and if it applies ‘up the food chain’…
When we were landlords, we had been in a ‘world of hurt’ if our cash flow was reduced 25%… as it was, we cleared maybe 7%, after costs, not counting the State and Fed taxes as to income… so more like 5.5%… still positive, but without deferral of our costs (mortgage, taxes, city utilities, maintenance, etc.), a 75% reduction of rental income would have be disatrous. 99.95% chance we’ll never own a rental property again…
That does appear to be an impressive approach that may meet the needs of both tenants and landlords. Usually these sorts of actions aren’t balanced, but I think here the leg may have done a good job.