The Rent is (Past) Due: A Look Ahead to January 2021

The eviction moratorium enacted by the U.S. Centers for Disease Control and Prevention (CDC) is set to expire on December 31, 2020. While the moratorium has helped postpone evictions from occurring, it offers no protection against either back rent owed or the accumulation of legal fees. Come January 1, 2021, communities across the United States may face a tsunami of evictions, which threaten to overwhelm an already strained emergency shelter capacity. Without widescale intervention, this poses a significant economic and public health crisis.

This is not new news. There has been evidence of these waves on the horizon since the onset of the COVID-19 pandemic. In response, many communities, including Charlotte-Mecklenburg, have taken measures to brace for impact while also trying to reduce the surge. In addition, proposed federal changes to housing policy and funding provide a glimmer of hope for the new year. This week’s blog post will share an overview of new and prospective efforts underway in the federal government to address housing instability and homelessness; and provide an update on the latest estimates of associated costs if nothing changes by the end of the year.

THE (PUBLIC) COST OF (PRIVATE) EVICTIONS

Housing instability and homelessness are pre-existing conditions, with systemic and structural causes, that pre-date the pandemic. Contributing factors include rising housing costs; wages failing to keep pace; and vestiges of systemic and structural racism that persist to this day. Even before the pandemic, almost 11 million renter households in the United States were spending more than half of their income on rent. Before the increase in need resulting from COVID-19, only 1 in 4 households who are eligible for federal housing assistance were able to access it.

The National Low Income Housing Coalition (NLIHC) and the Innovation for Justice (I4J) Program at the University of Arizona released new research, “Costs of COVID-19 Evictions.” This attempts to quantify the public costs of eviction-related homelessness in the United States when emergency rental assistance is not provided. The research estimates that, in addition to the personal cost of evictions that families must bear, as well as the economic hardships that landlords face from nonpayment of rent, the public costs to communities in the U.S. could range between $62 billion and $129 billion. The totals are based upon the I4J Program Cost of Eviction Calculator; the calculator includes estimated costs for emergency shelter, inpatient medical care, emergency medical care, foster care, and juvenile delinquency for evicted renters. The totals do not include the shortfall in rent already owed to landlords this year ($29 billion). Nor does it enumerate the long-term costs of providing housing assistance or other public costs associated with court proceedings.

Applying the calculator to Mecklenburg County, and using local estimates for the total number of households most at risk of eviction computed by the UNC Charlotte Urban Institute, the total projected public cost of evictions to Charlotte-Mecklenburg is $75M. This includes $20M in emergency shelter costs. The local balance is similarly allocated to services like foster care and juvenile justice noted in the national research.

Looking upstream at prevention, UNC Charlotte Urban Institute projects the cost to cover rent for the same number of households (10,535) ranges from $2.8 million (covering 30% of rent) to $9.3 million (covering 100% of rent) each month. This means that spending between $34 million and $112 million each year would keep struggling (but already housed) households in Charlotte-Mecklenburg from falling into homelessness.

GLIMMERS OF HOPE (ALBEIT SLIGHT)

In addition to the potential extension of the eviction moratorium beyond December 31, 2021, House and Senate appropriators are seeking to reach consensus on a bipartisan spending agreement for FY2021 by December 11, 2020. This action may include coronavirus-related aid, such as additional unemployment insurance benefits.

After January 20, 2021, it is likely that communities will see a sea change in housing policy and funding. Many of these have the potential to alter the trajectory of housing instability and homelessness. President-elect Biden has shared proposals for housing that include a significant increase in federal housing investment; ending redlining and other discriminatory practices; fully funding federal rental assistance; increasing the supply of permanent affordable housing; and pursuing a comprehensive approach to ending homelessness.

Between now and January 20, 2021, communities are working to plug holes wherever possible. In Charlotte-Mecklenburg, these efforts include creative solutions, like leveraging underutilized hotels to temporarily (or even permanently) house individuals facing homelessness. Charlotte-Mecklenburg has also revised housing prioritization policies to account for COVID-19 health vulnerabilities; and allocated COVID-19-related funding to assist with homelessness prevention. And, as communities continue to patch leaks, they are also outlining long-term plans to address the pre-existing conditions that have been exacerbated. The Home4Good Framework, (linked here) was adopted by the Charlotte-Mecklenburg Continuum of Care (CoC) in May 2020; and outlines short-term and long-term recommendations. Workgroups connected to each of the six impact areas meet regularly to implement and modify these recommendations.

According to the publication “Costs of COVID-19 Evictions,” approximately 3 in 10 rental assistance programs that were created or expanded in response to COVID-19 have since been discontinued. Communities are fast approaching a spending deadline for CARES Act funding. With dollars running out and protections expiring, communities are trying everything conceivable to keep as many households from falling into homelessness for as long as possible.

For example, Wake County (North Carolina) implemented the “House Wake! COVID-19 Eviction Prevention Program” to keep more than 3,000 households from being evicted. The program, which is funded with $17 million from the Coronavirus Relief Fund (CRF), has three components: prevention; mediation; and relocation assistance, should prevention or mediation prove ineffective for a particular household. Financial assistance is given to both tenants and landlords to cover rental shortfalls from loss of income. The program paid a portion of the rent (from March 2020 through December 2020) in exchange for landlords agreeing to forgive the remainder; discount rent from January 2021 through March 2021; and forego eviction.

SO, WHAT

It is estimated that $100 billion is needed in federal rental assistance to cover all of the households facing housing instability and homelessness. Unless and until there is more assistance available, who can/should/must pick up the tab? Whose problem is it, really?

The CDC eviction moratorium order includes a suggestion from the U.S. Department of Housing & Urban Development (HUD) that philanthropy should provide funds to fill the gaps in rental assistance. According to analysis completed by the national Urban Institute, foundations gave $75 billion to all causes in 2019; this amount was a record high. Even if all $75 billion was allocated to rental assistance, there is still a gap.

What about the private-for-profit sector? What responsibility do businesses have to address housing instability and homelessness? How can companies help their employees to close the gap between housing cost and household income?

The reality is that every aspect of a community, however community is defined, both owns a piece of the problem and is responsible for the solutions. A problem as complex as housing instability and homelessness will never be eradicated by a single person, organization, charity, or governmental agency. Everyone is in the same boat.  Only when everyone is rowing in the same direction will our communities realize comprehensive, sustainable solutions. This shared effort, then, becomes the real source of hope for arriving at real change.