Just a Landlord

News on Milwaukee’s Rental Housing Resource Center collaboration to help renters and housing providers. This was project was envisioned and started a couple of years ago. It became more relevant with the COVID economic crisis that has impacted the ability for folks to pay rent and avoid eviction.

The partners are a very diverse group: Community Advocates, Legal Aid, Legal Action, IMPACT, Mediate Milwaukee, Hope House, the City of Milwaukee, County of Milwaukee, and the Apartment Association.

The inclusion of the housing industry makes Milwaukee rather unique from other communities. Here we realize that housing and renters are two sides of a single coin. Both need the other to succeed so that they can succeed.

Here is yesterday’s news:

• Milwaukee renters and landlords will have a central spot to get assistance with rent, part of an effort to reduce evictions.https://www.jsonline.com/story/news/local/milwaukee/2020/11/30/milwaukee-rental-housing-resource-center-launches-site-plans-location/6437459002/
• Milwaukee Rental Housing Resource Center Hopes To Reduce Evictionshttps://www.wuwm.com/post/milwaukee-rental-housing-resource-center-hopes-reduce-evictions#stream/0
• Milwaukee Rental Housing Resource Center to launch Dec 1. 1https://www.tmj4.com/rebound/milwaukee-rental-housing-resource-center-to-launch-dec-1
• Keeping the roof over your head: collaborative website helping those facing pandemic induced evictionhttps://www.tmj4.com/rebound/keeping-the-roof-over-your-head-collaborative-website-helping-those-facing-pandemic-induced-eviction

There are those who see rental housing as a zero-sum game — the only answer to the COVID rental economic crises is to have the property owners absorb all the lost rent.  

What we learned from looking at the September 2015 and May 2019 Milwaukee County eviction data that less than 2.4% of eviction judgments are paid even after five years, with less than seven tenths of a percent paid within six months.  

So when you read of $50-120B in rent debt due before the economy returns, that means someone is expecting $47.5B to $117B will be borne by housing.  

The right answer is for renter advocates and housing advocates to work in unison to get the funding necessary to prevent evictions and stabilize rental housing .

If the rent is paid, people will not need to worry about eviction, nor will they have to worry that rental housing will fail, also leaving them homeless and facing higher rents in the future. And let’s not forget the cost of housing foreclosures on municipal budgets.

The Apartment Association is collaborating with Community Advocates, Legal Action, Legal Aid, Mediate Milwaukee, Impact, Hope House and others, working towards finding resources that help renters, and therefore property owners, succeed.

Here is the kick off video that I participated on:

Milwaukee Rental Housing Resource Center Info Session

Maybe that’s why experts who specialize in housing policy have begun to talk with increasing excitement about a third way that President-elect Joe Biden put forward in his campaign platform. Under his proposal, every cost-burdened, low-income family would receive a check to bridge the gap between their actual rent and the rent they can afford. The impact would be immediate.

“It would be like food stamps, but for housing,” explained Anne Fadullon, who directs Philadelphia’s Department of Planning and Development, and is a fan of the proposal. “If you qualify, you get it.”

https://fusion.inquirer.com/columnists/philadelphia-affordable-housing-rental-assistance-section-8-vouchers-biden-policy-parkway-encampment-trump-20201124.html

If you want to share this or any other housing concerns with your elected officials, go to democracy.io and enter your address.  The site allows you to write to both your US Senators and your Congressperson at the same time without searching for their emails or finding who represents you.

We should be asking for housing assistance to prevent the failure of both renters and housing.

If you do write – I’d appreciate if you send me a copy to Tim@ApartmentsMilwaukee.com

Notes on housing, supported by reliable sources such as Census.gov

74.4 % of rental properties owned by individual investors. Source: https://www.census.gov/newsroom/press-releases/2017/rental-housing.html and in an easier to read format in this report from Harvard: https://www.jchs.harvard.edu/blog/who-owns-rental-properties-and-is-it-changing

55% of rental units as owned by part-time landlords: https://www.avail.co/education/articles/state-independent-landlords-2017

Rent debt will be $25-34B by January 1st. https://www.ncsha.org/resource/current-and-expected-rental-shortfall-and-potential-eviction-filings/ 

roughly 10 – 14 million renter households — home to 23 – 34 million renters — were behind on their rent by a total of roughly $12 – $17 billion as of September 14, 2020.

These renters will owe $25 – $34 billion by January 2021,
(from a chart just below the P1 fold)

More State-Specific info at: https://assets.aspeninstitute.org/content/uploads/2020/08/chart3_fsp.png

Local economic multiplier of rent payments from a report by Brookings Inst.
 

RENT HAS IMPORTANT MULTIPLIER EFFECTS IN THE LOCAL ECONOMYRent checks don’t just line the pockets of fat cat landlords—they also contribute to essential government services and other workers’ wages. If many households are simultaneously unable to pay rent, the economic impacts will be felt throughout the local economy.

The first entity that gets paid by a monthly rent check isn’t the landlord—it’s the local government. Property taxes have a higher priority even than mortgages; if a landlord falls behind on both property taxes and mortgage payments, the local government’s claim supersedes the lender’s.

Cities and counties rely on property taxes from all their constituents—individual homeowners as well as owners of apartments, offices, and other nonresidential properties—to cover the cost of providing public services. Although local governments could defer property tax payments during the current crisis, the pandemic is already stressing local government budgets. Cities are front-line providers of health care and emergency services, and also need money right now to feed children whose public schools are shut down and care for older adults and vulnerable populations.

https://www.brookings.edu/blog/the-avenue/2020/03/25/halting-evictions-during-the-coronavirus-crisis-isnt-as-good-as-it-sounds/ 

Census reports that the average rental unit generates $1,198 per unit per year in wages.
https://www.census.gov/data-tools/demo/rhfs/#/?s_byGroup1=12&s_tableName=TABLE4&s_type=2
Mean Payroll Costs for Employees Per Housing Unit 1,198

We can fix evictions for what it costs to allow the problem to continue
https://assets.aspeninstitute.org/content/uploads/2020/08/Evictions-Data-Update-August.pdf

Providing shelter and services to a family experiencing homelessness can cost local governments $10,000,[1] which is more than the $9,120 average annual cost of one housing voucher to the federal government[2] 

[1] Evans, William, James Sullivan, and Melanie Wallskog. “The Impact of Homelessness Prevention on Homelessness.” Science, 333:6300 694–6999, 2016. https://science.sciencemag.org/ content/353/6300/694.full.

[2] U.S. Department of Housing and Urban Development. “Snapshot of Housing Choice Vouchers, 2016,” June 2018, https://www.huduser.gov/portal/elist/2018-june_08.html. 

Impact of the 2008 housing crises on Milwaukee

The following is from a letter we wrote to Milwaukee’s mayor.  It outlines some of the economic factors of rental housing and the harm that will come if there is a mass failure.  In 2008 smart money could see prices rising over a two and a half year period at a rate not sustainable by wages.   In 2020 the economy was screaming, then two weeks later it stopped. The suddenness of the event is a recipe for disaster.

If action is not taken to avert this, the aftermath of 2008 will look like a walk in the park on a sunny day.

A December 2019 Milwaukee Dept of City Development report  stated “The economic impact of the Great Recession and mortgage foreclosure crisis has had a significant, detrimental, and ongoing effect on City households.” DCD 12/2019.[ii]  Foreclosure filings in Milwaukee County were three times higher in 2009 than last year.[iii] From 2008 through 2010,16,000 Milwaukee properties were in some stage of foreclosure by lenders and the city.[iv] In those two years, the tax base lost almost $2 billion in value, with a resulting $16.7 million loss of tax revenue.  The resulting demolitions had a large impact on the City’s budget due to the cost of razing along with the impact on the property tax and municipal services collections.[v] The neighborhoods where those properties were located suffered long-term damage.  We continue to feel that impact even today, and we certainly hope to avoid a similar outcome in the future.

[ii]Section 2: Housing Needs and Demand Housing Affordability Report Department of City Development  |  December 2019 https://storymaps.arcgis.com/stories/eb043b089173407aa469eba948dd9601

[iii] State’s Foreclosure Rates Have Plummeted » Urban Milwaukeehttps://urbanmilwaukee.com/2019/07/11/states-foreclosure-rates-have-plummeted/

[iv] www.sewrpc.org/SEWRPCFiles/HousingPlan/Files/foreclosure-in-milw-progress-and-challenges.pdf

[v] Tom Barrett wants to spend $2.4 million on home demolition, rehabarchive.jsonline.com/news/milwaukee/barrett-wants-to-spend-24-million-on-home-demolition-rehab-b9933176z1-211401301.html/

https://www.greaterohio.org/publications/2020/11/4/local-interventions-for-eviction-prevention-and-why-they-are-needed

The Greater Ohio Policy Center (GOPC) has released Local Interventions for Eviction Prevention and Why They Are Needed, a guide for laying the groundwork to support Ohio renters and prevent evictions related to the COVID-19 crisis. 

Experts anticipate a tsunami of evictions to begin in January 2021. Given the limited state dollars available and the uncertainty of additional federal dollars, local governments must take the lead to protect their residents. This Working Paper profiles interventions from around the state in order to provide ideas and templates for communities that need housing stabilization programming.

https://static1.squarespace.com/static/59396fee59cc6877bacf5ab5/t/5fa3267c92abc63d53774755/1604527743492/Local+Rent+Assistance+Working+Paper.pdf

Some interesting concepts.  One is Pay and Stay, which I would support:

Community Spotlight: Pay to Stay Ordinance, Village of Yellow Springs Under “Pay to Stay,” a landlord is obligated to accept back rent (including reasonable late fees and court costs) up to the point where the bailiff is knocking on the door to begin physically removing tenants’ belongings. Pay to stay prevents a landlord from evicting a tenant where the tenant can pay back rent and reasonable late fees prior to the eviction judgment. If the eviction has been granted, the tenant can stop the eviction by paying back rent, reasonable late fees and court costs.

An important piece from DSnews

In an opinion piece published on the Informed Comment website, John Buell, a former professor at the College of the Atlantic, observed that an after-effect of the COVID-19 pandemic’s economic trauma will weigh on the housing market as homeowners and renters struggle to keep up with housing costs.

“If foreclosures and evictions are standing in the way of recovery, it is also safe to say that the draconian cuts in budgets of state and local governments translate into wage reductions and/or unemployment for public sector workers and thus more pressures on the housing market,” Buell wrote. “If homeowners and government workers are not able to create sufficient demand to restore economic growth the federal government must step in. State governments are constitutionally prohibited from borrowing for daily expenses.”

WI evictions are down statewide by 28% year to date through September 30th. In Milwaukee, that percentage is slightly higher, at just under 31% reduction.

A telling part is that August evictions were much lower than last year, despite the state’s moratorium being lifted.

This drop in evictions occurred even while reported collections are down by 12-16%. In talking to property owners, I’ve been told by many they have pulled back on maintenance, some suffering the impact to the point they have forgone insurance, utility and mortgage payments.

The impact on the other side will be higher housing costs for all as owners fail, or try to make up for losses in the future.

The Massachusetts Governor puts $171 Million into emergency housing funding. Advocates call it “a drop in the bucket”

The story is in Boston Magazine

Michigan’s EDP
https://www.michigan.gov/mshda/0,4641,7-141-5555-533463–,00.html

An interesting program, but I’m not sure how well it is received by housing providers as they must forgive 10% of the back rent. If anyone has a contact with apartment associations there we should ask, otherwise I’ll cold email them.

A “must read” the diversion pilot final report:
https://nationalcenterforstatecourts.app.box.com/s/n7w8zu89tbayfjr0qz6h7mn6nrg0x6qh/file/679673021905

The National Center for State Courts has a bunch of info on EDPs. The link below is a starting point.

Generally speaking, an eviction diversion program offers tenants with legal assistance largely supplied by Legal Aid services and financial assistance provided by local governments and nonprofit organizations. Some programs also include financial literacy education for tenants. Programs require the voluntary participation of both landlords and tenants. The focus of these programs is to help tenants and landlords avoid evictions where possible.

https://www.ncsc.org/information-and-resources/info-and-res-page-card-navigation/trending-topics/trending-topics-landing-pg/eviction-diversion-programs

The one common flaw in many of the existing EDP programs is they require an eviction to be filed. There are advantages to both renter and housing provider if diversion occurs prior to filing. Perhaps they feel requiring a filing would reduce fraud, or maybe it is because they were initiated in the courts and therefore are from the courts’ perspective. But requiring an eviction to be filed also reduces benefit. (costs, conflict, court resources)

Looking at pages 7-9 of the diversion pilot final report linked above, the heading should not be “You have been sued by your landlord.” but “Are you behind on your rent?”

Ultimately though the goal needs to be portable housing vouchers, i.e. FodShare for Housing, as the need has existing long before COVID.