Month over month collections are falling and tenants experiencing COVID related hardships continue to rise throughout California. Housing Now estimates that 1,100,000 of the more than 3,000,000 renter households in California are behind on rent and those renters owe $3,600,000,000 to landlords since April 1st, 2020.
Recently passed SB-91 offers some hope for recovery but it wasn’t designed to make landlords whole. In addition to excluding owners for paperwork violations the funds are only available to landlords whose tenants make below Average Median Incomes. Additionally, as of this writing the state is already falling behind their timeline of implementation. Furthering an already challenging time for tenants and landlords.
While delays are mounting the State of California Housing and Community Development Department, which will administrate the program is hopefully putting in measures to avoid abuse of the program. Issues they face include; applications from tenants who don’t meet the 50% AMI or 80% AMI thresholds, owners who have collected cash but collude with tenants to collect additional monies, and fictitious owners and tenants who steal from the program.
The monies, approved since December 2020 as part of $900B Coronavirus Relief Bill, will be a welcome relief to owners, Edan Gross, Regional VP of Investments for Centennial Advisers says, “For longer than expected tenants did what ever they could to pay rent, but the longer our economy is closed, tenants are out of work and can no longer pay rent.”
Once the SB-91 application process gets worked out it’s hoped that the $1.9T package stalled in Washington will provide a 2nd round of relief and cover all tenants and owners. Justin White, Managing Partner at Centennial Advisers commented “I feel for the owners who worked hard their entire lives and bought the buildings they could afford. Over the years places like NOHO or Alamitos Beach, and others have improved and now tenants in those buildings make more than limits in SB-91. Those owners, many of which are in retirement and their only source of income is their building, are left out in the cold, they need help too.”