Much Ado About Evictions

In crafting eviction legislation during the pandemic, State Sen. Anna Caballero worked to help both tenants and landlords who could face foreclosure. AB 3088 requires tenants pay at least 25 percent, but she advises them to pay more if they can: “It’s important to have a good working relationship with your landlord.”

BEFORE MONTEREY COUNTY HAD A SHELTER-IN-PLACE ORDER, IT HAD AN EVICTIONS BAN. The Board of Supervisors voted unanimously in favor of a moratorium on March 17, just a few hours before Health Officer Edward Moreno stepped up to a podium to announce nonessential businesses would have to close and their workers would have to stay home. No one knew how long the pandemic would last, so any end dates were guesses. Monterey County officials set one for May 31.

The supervisors acted less than 24 hours after Gov. Gavin Newsom signed an executive order allowing counties and cities to control evictions and foreclosures. Several days earlier – a week before Newsom’s stay-at-home order was issued on March 19 – Newsom had banned gatherings of 250 or more, essentially shutting down the hospitality industry and putting tens of thousands of people out of work. In Monterey County, an estimated 12,000 to 14,000 hospitality workers were laid off in March.

No one knew what would happen when the rent came due for those workers, and for those in retail and other industries that faced layoffs or reduced work hours. About 50 percent of the county’s household units are rental units. About 63 percent of all households are what is known as cost-burdened, meaning they pay more than 30 percent of their income toward housing. Some pay more than 50 percent.

With sudden mass layoffs, elected officials everywhere were asking themselves: If those renters suddenly had zero income, would they all be out on the streets at once?

Fearing a major public health crisis of both disease and homelessness, most cities in Monterey County rushed to put bans in place within a couple of weeks. (Only one out of 12, Greenfield, did not.) Most of those moratoriums had a May 31 end date.

That date came and went and the moratorium was not extended in Monterey. City Councilmember Tyller Williamson, a founder of the Monterey Peninsula Housing Coalition, says there were so many other pressing health, safety and financial issues to attend to that he missed the end date, otherwise he would have asked to extend it.

Although by then, it was more or less a moot point: The California Judicial Council, the governing body of the state court system, voted in April to temporarily suspend eviction proceedings. A political back-and-forth followed in Sacramento, with cities and counties looking to the state for a fix.

That fix finally came on Aug. 31, the last day of the legislative session. But it does not fix many of the underlying issues behind California’s and Monterey County’s housing crisis.

ALL SUMMER, AS DEADLINES ON EVICTION MORATORIUMS LOOMED AND THE ECONOMIC DOWNTURN LINGERED, THE TERM “EVICTION CLIFF” WAS BANDIED ABOUT. The cliff refers to how many renters face eviction if all bans expired and courts allowed eviction proceedings to move forward. The number is unknown, but The Aspen Institute, a Washington, D.C. think tank, estimated in August it could be 40 million people in the U.S., with 4.1 million to 5.4 million of those in California.

How many renters would fall off the cliff, and when? Machinations in Sacramento continued as political leaders attempted to negotiate solutions and lobbyists for landlords applied pressure to end bans sooner rather than later. The Judicial Council voted on Aug. 13 to end its temporary suspension on hearing eviction cases come Sept. 1 – that set a hard deadline for the California Legislature and the governor to come up with a solution by Aug. 31, the end of the legislative session. Without one, renters could, in theory, start falling off the cliff Sept. 2.

Assembly Bill 3088, the Tenant, Homeowner and Small Landlord Relief and Stabilization Act of 2020, passed in the final hours of the session. It pushed the so-called cliff back to Feb. 1, but a longer-term solution for both renters and landlords – who have mortgages and other expenses to pay, and fear losing properties to foreclosure – is still to be worked out.

While there may be an eviction cliff coming, in reality the more apt metaphor is an iceberg. The issue is at the tip of a much bigger societal challenge, one symptom of a slow-moving public health emergency that’s been amassing for years. The real issue is that the cost of housing has risen consistently higher and higher while wages have been mostly stagnant over the last 40 years. The housing cost burden has become so heavy that the system is breaking under the weight.

As with many underlying social and economic challenges, Covid-19 is not the root cause, but the revealer of what ails the country. In this case, a massive housing imbalance.

IF THERE’S ANY GOOD NEWS, IT’S THAT A MAJORITY OF RENTERS HAVE BEEN ABLE TO PAY ALL OR AT LEAST SOME OF THEIR RENT DURING THE PANDEMIC. The National Multifamily Housing Council based in Washington, D.C. has been tracking the data by polling apartment landlords representing 11.4 million units, and reports that in May and June, 80 percent of renters paid their rents, down by about 1 percent from the same time in 2019. That declined for September, with 76 percent paid up as of Sept. 6.

William Sterling, owner of Sterling Property Management based in Monterey, manages units throughout the county. He’s seen only 1 to 2 percent of tenants who are not paying rent, out of about 500, representing various price points.

Sterling is also president of the Monterey County chapter of the National Association of Property Managers and has been talking to other companies in the area. “What I’m seeing with my small 1 percent is that’s pretty standard here,” he says. “None of these other companies are rushing out to file evictions.”

That a majority of renters have been able to keep up, at least in part, is in large part due to unemployment benefits, federal CARES Act checks and other help that arrived on the scene, including food distributions and donated items and services to ease the burden of lost wages. There’s been help for undocumented residents who don’t qualify for federal assistance, through the state and agencies like Catholic Charities.

Sterling and his company, which represents both tenants and landlords, took a proactive approach at the start of the pandemic. The company immediately stopped filing late charges and sent a form for people to fill out documenting hardship and asked renters to offer what they could pay. About 5 to 6 percent of the renters returned forms detailing the jobs or hours they had lost.

Sterling, who started out as an accountant for a property management company at age 21 and started his company in 2006, is taking a pragmatic approach. “We don’t have any intention of evicting anyone,” he says. “Evicting people right now isn’t going to get us anywhere and there’s not going to be any benefit to us, because we have a tenant in place who we know can pay when times are good.”

Evicting tenants at the first sign of trouble paying – or to remove renters solely to charge more rent to new tenants – is not a good business plan, Sterling says, given the cost of turning over a rental unit includes things like new carpet and painting, plus marketing to find new tenants. It could cost over $2,000 per turnover, which goes up if the unit sits on the market empty.

“Good tenants you might as well keep,” Sterling reasons.

Since 2006, he estimates his company has only formally evicted 0.5 percent of the total number of tenants they’ve placed.

On the landlord side, it’s most likely the smaller “mom and pop” landlords or “accidental landlords” that are experiencing the most difficulty right now with tenants unable to pay, Sterling says. Larger companies, or “investment landlords” that own large numbers of rental units, have an economy of scale: “[They] are doing OK and will find a way to cover their costs.”

STATE SEN. ANNA CABALLERO, D-SALINAS, IS SEARCHING FOR A WORD AS SHE’S TALKING TO A REPORTER. She pauses to apologize for her tiredness. “I haven’t fully recovered,” she says on Sept. 4, four days after the marathon legislative session of three 16-hour days in a row that lawmakers endured before an Aug. 31 deadline for passing new legislation.

Caballero was in the thick of the negotiations over creating an evictions bill before that deadline, having been part of the committee of legislators working on housing issues, as well as how to solve the challenge of keeping renters in their homes for as long as possible through the pandemic and beyond – all while giving landlords a way to financially handle loss of income. One of the main questions they asked themselves, Caballero says, was how to ensure that people “will be economically successful,” as the pandemic impacts lift over time.

Earlier this year, she introduced Senate Bill 1410, designed to keep renters in their homes for up to 10 years while giving landlords economic relief. The rental debt would be transferred to the state, meaning renters would have to pay back the state over the 10 years. The landlord would be awarded tax credits that could then be sold to a third party for cash.

A second bill, Assembly Bill 1436, authored by Rep. David Chiu, D-San Francisco, also allowed renters to remain in their homes and asked mortgage companies to give landlords more time to make payments or even forgive some debt.

Housing advocates watching the progress of the two bills expected there would be some sort of combination of the two or a compromise bill, and that’s what happened with the passage of AB 3088 on Aug. 31; Gov. Newsom signed it into law almost immediately.

Under the law, which took effect immediately and lasts through Jan. 1, tenants are liable for repaying the full amount of their rent, but for now only have to pay 25 percent of it through Jan. 31, 2021, to avoid eviction proceedings that could start Feb. 1. They must fill out a form provided by the landlord and state under penalty of perjury that they have an economic hardship due to Covid-19. Landlords may take them to small claims court beginning in March to attempt to collect any unpaid rent.

Caballero sees it as a positive that it takes the situation out of the eviction court process and into small claims court, which requires no attorneys on either side. But debt can be hard to collect, especially from a tenant who doesn’t have money. “We almost don’t even bother about civil debt,” Sterling says. “We turn it over to a collection agency instead.”

Caballero also sees a positive in the bill’s expansion of the state’s Homeowner’s Bill of Rights, which will extend some protection against foreclosures for landlords.

Caballero fully expects that come January 2021, there will be a reassessment of the situation and if need be, the Legislature and Newsom will agree to an extension of the law.

The struggle to come up with some sort of housing solution – even a temporary one – is one in a long series of efforts Caballero has been involved in since her days on Salinas City Council.

“It became very clear that particularly in our region, where housing is always at a premium and the rents are so high, people were under tremendous pressure,” she says. Living in a safe, uncrowded home with no fear of being evicted, she says, “is one of the cornerstones of creating a safe and secure community.”

EVICTIONS ARE A RELATIVELY NEW PHENOMENON IN THE HISTORY OF HOUSING, AND USED TO BE QUITE RARE. If an eviction did take place, crowds would show up, sometimes in the thousands, to watch or even confront authorities, sometimes sitting on the evicted family’s furniture so it couldn’t be carted out, according to sociologist Matthew Desmond, author of the Pulitzer Prize-winning 2016 book Evicted: Poverty and Profit in the American City. Evictions in the Great Depression were only a fraction of what they are in the modern era, he writes.

Desmond writes that the main culprit for why evictions are now commonplace lies with stagnating or decreasing incomes while housing costs have dramatically increased. His data shows that nationally, a majority of poor renting families spend over half of their income on housing, while at least 1 in 4 spend more than 70 percent on rent and utilities with corresponding negative impacts on health, education and community stability.

The number of people impacted by eviction notices is much higher than those actually evicted, Desmond writes. Many renters leave out of fear upon being served a notice. Some are illegally locked out by landlords. Sometimes landlords pay out what’s known as “cash for keys,” giving tenants a few hundred dollars to disappear without taking them to court.

Desmond is now the lead investigator for the Eviction Lab at Princeton University. During Covid-19, the site is tracking evictions in specific cities where data is readily available. In California, that data is not very accessible – something that for renters can be a good thing, because it can protect them from being denied future rentals by potential landlords. Housing advocates say the practice of denying rentals based on background checks only pushes people into riskier neighborhoods, overcrowded living situations and homelessness.

California rates a 0.9 out of 5 on a pandemic scorecard developed by the Lab. While the state gets credit for things like landlords not being able to file an eviction notice if the renter has a hardship due to Covid, as well as extended eviction deadlines and sealing of court records in certain circumstances to protect tenant privacy, California is marked down on 14 other issues that the Lab designates as important for protecting people’s housing status. It was 16th in the nation. Massachusetts received the highest score, 4.15. Eight states, including Alabama, Louisiana, Nebraska and Texas, received zeroes.

A press release from the governor’s office about AB 3088 boasted that the “legislation builds on the state’s strongest-in-the-nation rent cap and eviction protections passed by the Legislature and signed into law by the governor last year,” referring to AB 1492, the Tenant Protection Act of 2019, which capped annual rent increases and protects renters from “no-fault” evictions. Housing advocates say that bill helps, but the reality is that the eviction process has always favored property owners.

“California has one of the shortest processes of evicting people with the least legal rights,” says Mike Herald, director of policy advocacy for the Western Center on Law & Poverty. “If you get a three-day notice and you don’t respond in 72 hours, it’s game-set-match,” he says. Landlords are often represented by attorneys in the courtroom, creating an imbalance for renters who don’t have the money for an attorney and don’t know the law, leaving them on the losing end of such cases, he adds.

“It’s kind of like throwing tenants to the wolves,” Herald says.

PRE-COVID, AND PRE-EVICTION MORATORIUMS, THE EVICTION PROCESS BEGINS WHEN THE LANDLORD SERVES A TENANT WITH A NOTICE TO PAY THE RENT WITHIN A SET NUMBER OF DAYS OR TO FIX A CONTRACT ISSUE (see sidebar, below). The next step is the landlord filing what’s called an unlawful detainer complaint. In Monterey County, there’s another way for renters and landlords to seek resolution outside of the court system.

The Mandell Gisnet Center for Conflict Management has been operating since 2012 in connection with the Monterey School of Law, and according to Executive Director Jacqueline Pierce, on average they’ve been able to resolve 80 percent of disputes, without a judge’s involvement. Pierce recommends renters and landlords approach the center before starting the legal process, but once in the Monterey County Superior Court system, judges often direct opponents to mediators first.

Pre-Covid, judges would tell people to step out into the hall outside of the courtroom where mediators would help people navigate the process of reaching agreement. Pierce and her team have been working to move everything to Zoom. For the past month, they’ve been testing it in small claims court and it’s working, she says.

Mediation empowers people to create their own solutions, including solutions a judge can’t order, Pierce says. For example, judges can’t require payment plans, but in mediation a landlord and renter can hash one out.

“Mediation is very beneficial, especially when people are unrepresented [by attorneys],” Pierce says. “It gives people a voice.”

IN LATE AUGUST, SHERRY SMITH WAS SCARED. She found herself in a position she’d never faced in her 50-some years and after three years in the same Monterey apartment. Always a responsible tenant who paid her rent on time or even early, she didn’t have enough money for September rent. (The Weekly is using a pseudonym to protect her living situation.)

Smith didn’t lose a job or hours when the pandemic hit, because she didn’t have one. She’d suffered a serious head injury at work in 2017 and received workers compensation until 2019, at which point she filed a lawsuit against her former employer and reached a settlement. That money ran out this year. Because she had no job, she wasn’t able to apply for unemployment or receive the $600 extra weekly that people received thanks to the CARES Act.

“I’m physically not the same person after the injury,” Smith says.

It limits what she can do to earn money. She tried looking for remote work, but jobs were scarce early in the pandemic. “I wish I never had an injury. I loved my job. I was good at it.”

She ran into issues with her landlord over providing a new written lease and increased rent, which, to Smith’s disappointment, she discovered was within legal limits under AB 1492. The landlord eventually gave her a new lease, but now she had no income and she knew her savings would run out.

In April, Smith began experiencing Covid-19 symptoms but she had no health insurance so she stayed inside her apartment and rode it out alone. “There was one week I couldn’t even drink water without throwing up,” she says.

Her savings finally dwindled below the $2,000 mark, the threshold required to apply for state disability, and in mid-July she applied for and now has Medi-Cal and other benefits. But days before the September rent of just over $1,600 was due, she had less than $1,000 in the bank. Someone told her to hang on – if she got a notice of eviction the court date probably won’t be for another few weeks. In the meantime, the Legislature was working on something and protection might come at the 11th hour.

PROTECTION DID COME AT THE 11TH HOUR WHEN NEWSOM SIGNED AB 3088, although Smith has to come up with just over $400 a month, 25 percent of the rent. If she can’t, she could face eviction at a later date. She could also wind up in small claims court if her landlord pursues it.

For now she remains housed, and there’s some time to figure out a solution. She remains like so many others living on the margins, anxious about the future and what could happen if she can’t keep her current apartment.

Legislators bought a little more time with AB 3088 but the work continues, Caballero says. She and other legislators will watch how the law holds and what changes will be needed.

(The U.S. Centers for Disease Control also announced a nationwide eviction moratorium through Dec. 31. Legal experts believe California’s law will supercede the CDC moratorium.)

It might help renters for the time being, but it doesn’t address the bigger issues. Desmond argues politicians have gotten it backwards over the decades. They legislate rules to protect tenants while missing the underlying problems of growing poverty and lack of affordable housing. Until those issues are resolved, more and more people will live on the margins, facing the risk of falling completely off.

“America is supposed to be a place where you can better yourself, your family and your community,” Desmond writes in Evicted. “But this is only possible if you have a stable home.”

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