There is a coming crisis in the rental housing market, particularly among those tenants who are not receiving any public subsidy but who were, before the crisis, already financially insecure.
Thanks to the 90-day eviction moratorium here in NY, which the Governor signed on May 20th, we have a little breathing room, but not much. We need to design, launch, and communicate a bold equitable solution in the next 30 days—and implement it before June 20.
To be clear, the ideal solution to this coming rental crisis is for the federal government to urgently pass a Phase 4 Relief Bill that centers people, and prioritizes the most vulnerable. Such a bill would inject cash into every entry point in the rental housing system, from issuing more generous and recurring monthly payments to all households during this pandemic to delivering more money to Public Housing Authorities and the critical shelters and providers serving homeless individuals and families.
But I think we’re more likely to see Thanos invade Earth than the GOP and President support an equitable relief plan that centers people.
So it is essential that local governments and their community partners start to plan NOW to minimize the harms of this coming rental crisis. Here is one possible scenario for cities, using my hometown of Binghamton, New York, as an example.
Step 1. Better understand the rental inventory, identify the most vulnerable renter, and estimate the need.
[Author’s note: The numbers cited throughout this essay were pulled from a variety of different datasets, including the U.S. Census and online HUD data, or from interviews with local residents. I round them to the nearest hundred for convenience.]
If we’re going to think about a City of Binghamton program that (1) minimizes eviction of vulnerable tenants as soon as the moratorium is lifted, and (2) provides some financial relief to responsible landlords, then we need to mine the data as much as possible and narrow our target of the most vulnerable renters.
There are about 11,300 rental units/households in the City of Binghamton (8,000 of which are in 1BR or 2BR homes).
First, let’s estimate how many are student rentals. Based on online information from Binghamton University and conversations with local student rental managers, there are about 1,200 student rental units in Binghamton. These rental units appear to be relatively stable over the next few months. As local property managers have told me, most student rentals won’t see any loss the next couple of months, since the students either paid upfront at the start of the semester or paid first, last, and security at the time of signing a lease. Besides, let’s be honest: these student rental units have generated significant profits for landlords over the years (double digit annual returns), thanks largely to our outdated assessment system. As we brainstorm an EQUITABLE response with limited resources, these landlords and students simply don’t register high enough on the priority list.
Let’s also look at those rental units that already receive some public subsidy from the Binghamton Housing Authority (BHA) or HUD directly. BHA owns and operates about 374 units, and administers about 680 Section 8 Housing Vouchers. HUD also supports another 600 units through project-based vouchers, like the low-income senior-housing building at Woodburn Court (Exchange Street).
The federal CARES Act injected significant emergency funding into each one of these programs so Housing Authorities can help stabilize and support the residents they serve. For that reason, we’re going to exclude these 1,650 rental units from our equation of which renters will need immediate relief from a City of Binghamton program. For sure, the City should still be in constant communication with BHA and monitor how well its meeting the needs of its residents—many of whom are very low-income families and individuals—and adjust its priorities and resources as needed. But for now, we should again keep our focus on the renters who will be must vulnerable when the eviction moratorium lifts on June 20.
Finally, I’m going to estimate that about half of the remaining rental households (about 4,200 of the remaining 8,400 units) will manage the situation without needing to tap an emergency rental assistance program administered locally. Maybe the federal check will help, or maybe these renters will be able to access personal savings or financial support from family. Maybe they are still working, or maybe the landlord voluntarily reduced the rent enough to make it manageable—whatever it is, I think this is a reasonable estimate. It doesn’t mean they won’t experience some hardship—they will, and we need to be respectful of that. However, we can assume these more financially secure renters won’t be subject to eviction as soon as the moratorium is lifted. Recall, the purpose of this piece is not to discuss ways to solve the needs of all people, but how to solve for those vulnerable renters who will soon be most in need.
To recap, of the 11,300 rental units in Binghamton:
- 1,200 are student rentals
- 1,650 are HUD-subsidized units
- 4,200 are financially- and housing-secure
That leaves about 4,300 units of vulnerable tenants likely in need of help to avoid eviction and possible homelessness.
This is still a large number of rental units, and the recovery and relief dollars are nowhere near the need. But that shouldn’t paralyze local officials from designing something like a Rental Relief and Eviction Prevention Program that helps some or most of our most vulnerable rental households.
Step 2. Thinking through Program Design
HUD announced emergency allocations on Monday (April 6), and the City of Binghamton will be receiving $1.1 million in Community Development Block Grant (CDBG) funds, and more than half a million in Emergency Shelter Grant funds. The City is one of about 1,200 communities across the country that receive annual CDBG and ESG allocations. These emergency funds, provided through the CARES Act, are above and beyond what the City has already budgeted and programmed for this year.
Let’s focus on the CDBG funds, since an eligible activity is rental payments (up to three months to prevent eviction).
The average rent in Binghamton is $720, according to the 2014-2018 ACS. Let’s go with $800 for this exercise.
Suppose the goal was to get the participating landlord 50% of the rent due in cash during the time of the moratorium, with another 30-40% compensated in time through other means (participating landlords, like most others, will have to accept some slight reduction in revenue during this unprecedented crisis).
What would a program look like?
For May, June and July, suppose the renter agrees to pay 25% of the rent ($200 in this example of $800 rent/month). The City commits to cover another 25% of the rent ($200 in this example). The landlord agrees not to initiate evictions for at least 2 months after the moratorium is lifted, so long as the tenant pays 100% of the rent in August. I recognize this won’t solve the crisis entirely, but it protects many and delays harm for the most vulnerable beyond the eviction moratorium, giving us precious more time to think through additional interventions needed in the mid-term.
For three months (May, June, and July), that’s $600 per rental household assisted with public dollars.
With the CDBG emergency award alone, that could assist about 1,800 households.
If the City were to commit another $500,000 from its general fund piggy bank—and it is flush with reserves—we could bring the total to 2,500 rental households.
If the assumptions above are close, it’s fair to say that at least half of all the rental households most vulnerable to eviction in July could be served by this program. It’s not ideal, but it’s a success.
[Author’s Note: I admit, there is a serious flaw in the above assumption, in that it commits every penny of the City’s $1.1 million CARES CDBG award to this emergency rental assistance program, which is unlikely given the tremendous needs among nonprofit providers who are also on the front-lines triaging crises and who are also in need of additional resources. If anything, this only goes to show how inadequate the federal response has been, and how its priorities are twisted and immoral. Half a trillion ($500,000,000,000) was allocated for a business and corporate “slush fund,” but Binghamton’s CDBG award was based on a paltry $2 billion allocation shared among more than 1,200 entitlement communities across the Country who desperately need this kind of flexible funding. And yes, it’s proportional, such that if $20 billion in CDBG funding was distributed to the entitlement communities, Binghamton would now have $11 million ($1.1 million x 10) at its disposal to invest flexibly to meet the needs of people, small businesses, and neighborhoods.]
I want to acknowledge and repeat, an emergency rental assistance program like this will be complicated to design, launch, and implement in the next couple of months—and that’s only the initial phase, which aims to deliver 50% of the rental revenue expected. But it’s a start.
A second element of the program would be agreeing on some relief to responsible landlords within one year of the lifting of the moratorium in exchange for some meaningful benefit.
For example, perhaps participating landlords could be eligible to access a repair grant to bring the rental unit into full compliance with health and safety codes. Maybe the repair grant could be substantial if the owner agreed to keep one or two of the rental units permanently affordable. Or, for those property owners that already have compliant rental units (verified by interior inspections), some of the deferred rent could be repaid through a local property tax credit stretched over five years. In areas served by a Land Bank, perhaps these responsible landlords could be granted “first right of refusal” to tax-foreclosed rental properties, and receive a discount on the sales price equal to the amount of rent deferred and owed.
Again, using the example above with a rental unit that is at $800/unit, and acknowledging that our goal was to make the landlord about 80% whole, we’re looking at another $1,000 per unit that is owed in time. Assuming the maximum of 2,500 rental units were helped, that’s about $2,500,000 owed to participating landlords, which is a very manageable amount to repay through a variety of creative mechanisms.
While the City of Binghamton could, over the next few years, commit substantial portions of the annual CDBG grant to participating landlords for repair grants and/or issue local property tax credits, it would be MUCH easier to address this outstanding debt/liability if the federal government included a major increase in CDBG funds in a “Phase 4” COVID-19 relief bill. A $50 billion allocation to the CDBG program would solve this problem—and provide Binghamton and all other entitlement communities a significant pot of resources to address any outstanding unmet needs generated by this pandemic.
This proposal is not perfect. It’s meant both as a brainstorming exercise and to highlight a serious need (among many others), for which we better start planning.
[Author’s Note: for the real wonky technocrats, I think an even better solution to the above could be creating a local housing choice voucher, and transferring the CDBG monies over to the local Housing Authority to manage and administer. Since Housing Authorities already administer Section 8 Voucher Programs, they have much of the organizational infrastructure (and the landlord relationships), that will be needed to run a program like above. And if we ever want to advocate for a universal housing voucher program, such that no household in America is spending more than 30% of their monthly income on rent, then situating this “temporary” rental relief program with Housing Authorities could serve as a strategic bridge to that policy win. If interested in exploring or discussion, please see below for my email.]
Step 3. Consider the Outcomes and Acknowledge that Local Governments Have to Act
Moving forward with the above Rental Relief and Eviction Prevention Program, or something similar, would be difficult, but certainly not impossible. What would be the likely outcomes of such a bold and determined plan? We’d have healthier, safer rental units owned by responsible landlords that partnered with government to protect vulnerable tenants in a time of urgent need.
Those are almost unthinkable positive outcomes during an unprecedented crisis, in that we (1) prevented vulnerable individuals and families from facing real harm and possible homelessness; (2) changed the dynamic between government, tenants, and landlords to be more collaborative and outcome-driven; and (3) improved the rental housing stock in a community.
If local governments aren’t seriously exploring these proactive measures right now, the alternative outcomes are ominous and troubling. Make no mistake: a crisis in the rental housing market is coming.
Think of it this way. The 90-day eviction moratorium is simply a temporary dam to hold back a river of harm and damage. The Governor will open the dam’s floodgate on June 20. We must drain the reservoir of harm now. If we don’t, too many of our vulnerable neighbors are going to drown.
Author’s Note: I will be sending this commentary and proposal to Binghamton Mayor Rich David and Binghamton City Council Members, with a commitment to volunteer my time to serve as a resource and thought partner to City officials and staff in designing this or a similar initiative. If others are interested in discussing the above, please feel free to reach me at email@example.com.