D.C.’s COVID-Era Eviction Policies Come Back To Bite
Happy Tuesday, and welcome to another edition of Rent Free. This week, we cover:
- Massachusetts NIMBYs fighting state-mandated upzoning get their day in court.
- Pittsburgh, Pennsylvania, considers a suite of liberalizing zoning reforms that could increase housing production, plus one poison pill that could ruin it all.
- A surprisingly housing-heavy VP debate.
But first, a look at the slow-burning damage COVID-era eviction restrictions have done to the affordable housing market in Washington, D.C.
D.C. Attempts To Dig Its Way Out of a Rent Delinquency CrisisÂ
This past week, the Washington, D.C. City Council unanimously passed an emergency repeal of COVID-era changes to the district’s eviction process that landlords and city officials say was causing a rent delinquency crisis across the district’s affordable housing properties.
The council’s action repeals a rule it had enacted in 2021 that required judges to stay eviction cases while a tenant had a pending application with the city’s Emergency Rental Assistance Program (ERAP).
Because ERAP applications take several months to process, tenants could file multiple applications, and tenants could self-certify that they were eligible for the program, that 2021 rule allowed people to continually delay their eviction cases for months or even years.
And since ERAP only covered five months of back rent, even successful applications could still leave tenants in the red and landlords unpaid.
“We had examples of renters who hadn’t paid in three years,” says Alexander Rossello, director of policy communications at the Apartment and Office Building Association of Metropolitan Washington (AOBA).
The result has been rising rental delinquency rates and a deterioration of the financial position of affordable housing owners.
“What we are seeing is, on an aggregate basis, these affordable housing providers are carrying tens of millions of dollars in uncollected rent, and that is not sustainable,” said D.C. City Council Chairman Phil Mendelson, who sponsored the emergency repeal of automatic ERAP stays, at a council meeting last week.
Overdue Rent
Michael Huke’s company, CIH Properties, owns over 2,000 units in Wards 7 and 8 in Washington D.C.
In 2019, the last year before the pandemic, his company suffered $700,000 in rent delinquency losses. Over the pandemic that number started to rise. To date in 2024, Huke says CIH has lost $8 million in unpaid rent.
About a quarter of CIH’s tenants have unpaid rent balances of at least $1,000. When combined with rising operating costs, he says CIH Properties’ net operating revenue has halved.
It’s an industry-wide problem.
The city estimates that 15-20 percent of tenants in occupied affordable units are not paying rent. That’s up from a 5 percent nonpayment rate before the pandemic. AOBA reports a six-fold increase in rent delinquency losses among its members between 2019 and 2024, which it says is primarily a result of a small number of nonpaying tenants accumulating many months of back rent.
These losses are concentrated at lower-rent and affordable properties where rental payment rates are usually lower.
At a press conference last week, Mayor Muriel Bowser said that the affordable housing industry is owed a collective backlog of $100 million in unpaid rent, reports BisNow. That’s up from $11 million in 2020.
“There was moral hazard inflicted on the residents,” says Huke. “I think they rationally thought that the District wanted no one evicted and paying rent wasn’t necessarily a part of not being evicted.”
Bowser said something similar at an April City Council hearing, where she defended her plan to cut funding to the ERAP program. “We haven’t gotten back in the city, in the rhythm, of everyone paying their rent and utilities,” she said, per WUSA9. “I believe that there are people that are using ERAP that can pay their rent.”
The widespread fear among landlords and city officials is that if delinquency losses force properties into foreclosure, tenants will be forced to vacate their units. A bankruptcy can also dissolve properties’ affordability covenants which hold rents at below-market rates.
Next Steps/Bigger Picture
The emergency repeal of mandatory ERAP stays is temporary. Bowser has said it’s a first step toward permanent, comprehensive reform of D.C.’s affordable housing system.
The city has also diverted $80
Article from Reason.com
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