Dec 20

How do landlords think unemployed people will pay rent?:

…an average of 8% of renters don’t pay rent in normal times. During the coronavirus crisis to date, that share has gone up to 15 to 20% of renters not paying.

“But generally, I think we need a better approach instead of just pitting owners versus tenants,” he says. Both the tenants and landlords need some larger, holistic fix from the government that acknowledges that there just isn’t as much money flowing through the system as there should be.

Nearly 12 million renters will owe an average of $5,850 in back rent and utilities by January, Moody’s Analytics warns. Last month, 9 million renters said they were behind on rent, according to a Census Bureau survey.   

The over $70 Billion in unpaid rent, as reported by Moody’s will cripple many housing providers and will cause a housing crisis that will impact both tenants and municipalities for years, if not decades.  In May of 2020 Milwaukee property values finally recovered from the 2008 Great Recession. 

Less than 2.5% of rent judgments are paid in Milwaukee County five years after the eviction.  And eviction judgments represent only a small fraction of the unpaid rent.  In surveying owners, we see on a high end 42% of their lost rent is included in eviction judgments, with most owners reporting less than 10%.  Some owners never pursue money judgments. So the million dollars a month in eviction judgments represent somewhere between $28.5 million to $100 million a year in money that should go into housing but does not.  I peg the number at least to be $48 Million a year in lost rent in one county.  This is just insane. 

The right answer is for the government to step up to the plate and create a portable housing voucher to cover a portion, to all, of the rent /housing costs for people below a certain income, similar to food stamps.

Instead, the government pits tenants against landlords in a zero-sum game where one must lose for the other to win. In the end, this makes housing more expensive or limits choices.

This has been a problem long before COVID. In 1991 I was interviewed by the New York Times on evictions. I asked the reporter, “On $574 a month, how do you buy tennis shoes for the kids, clean shirts for school, and still pay your rent?” Nothing has changed much since then. $574 was the AFDC (now W2) payment amount. Twenty years later in an NYT interview, my comment was basically the same:

“On $673 a month, how do you buy tennis shoes for the kids, clean shirts for school and still pay your rent?” Mr. Ballering said.” 
https://www.nytimes.com/2010/02/19/us/19evict.html 

Some suggest canceling mortgages and rents, thinking that this equivalent and will prevent the economic failure of housing.  Sadly, it will not.

The average mortgage payment is 36-39% of gross income. The average owner earns 7-9% of gross income for their investment of capital, financial risks, and physical efforts.  If you stop mortgage and rent payments, as well as prevent owners from being paid for their investment and efforts, there is still 52-57% of gross rent that is needed to cover other operating costs such as sewer, water, property taxes, maintenance, insurance, etc.

In Milwaukee, for most properties, the City takes a far bigger cut of the rent in property taxes, and sewer/water bills, than the owner gets to keep.

If you read the Brookings report, you will see this plus the “local economic multiplier” effect of wages and other monies expended by owners.

The Census Bureau reported in 2018 that, on average, every unit generates almost $1,200 in wages. Those wages, the property tax money, etc, circulate throughout the community many times over.

Here’s what scholars believe will happen if there is a moratorium without rental assistance; https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3641859 It goes into the economic impact on housing and the cost borne by other current and future tenants. It is an informative read.

Dec 08

Before the COVID crisis, I was unaware that pre-filing eviction mediation was an option and only vaguely aware that mediation was an option during an eviction case. Many of our evictions resulted in stipulated dismissals, as do 46% of the evictions in Milwaukee County.

We learned of Mediate Milwaukee simultaneously through the Apartment Association’s collaborative work with Community Advocates, Legal Aid, and Legal Action; as well as my staff researching information for our tenant resource page at apartmentsmilwaukee.com/r/

Near the end of the moratorium, my company tried Mediate Milwaukee with two tenants that were three or more months behind in rent.

The resulting agreements were similar to what we would have accepted in a stipulated dismissal, with the added benefit of someone knowledgeable being there to help the tenant navigate funding options and assistance applications.

Based on our initial positive results, Affordable Rental Associates implemented a new internal policy. Before filing an eviction for non-payment, we refer the tenants to Mediate Milwaukee. Mediation first is now a standard business practice and will continue beyond the COVID crisis and moratoriums.

Pre-filing mediation benefits everyone. 

  • Tenants avoid having an eviction on their record, often with similar or more extended payment agreements than they would receive in a stipulated dismissal. 
  • Landlords benefit as they avoid the cost of eviction, and tenants who work with Mediate can better navigate funding options that allow them to stay in the unit, avoiding vacancies and rerenting costs to owners. 
  • The Court benefits by a reduction in caseload, many of which are ultimately settled by stipulation.
  • We all benefit from the reduction in conflict. It was pleasantly surprising that some previously rude tenants became polite to my staff during mediation.
  • Plus, tenants and owners who enter into mediation will avoid the need to debate in Court whether a CDC declaration is factual.
  • Where needed, we have utilized Mediate Milwaukee to re-engage with tenants when issues arise with compliance with an agreement, often stabilizing the situation.

If mediation is explored early in the delinquency, there is little to no downside for the property owner. There are also, albeit lesser, benefits to both parties with post-filing mediation. Nonetheless, it can often result in a continued tenancy or at least a more agreeable move-out. While court-connected mediation will continue to be of value to all parties, the real opportunity for change is to promote pre-filing mediation as the first option to eviction for the Milwaukee rental owner community. It could cause a paradigm shift for the benefit of all. 

The Apartment Association of Southeastern WI, which I’ve been a board member of for over three decades, has become a strong proponent of mediation benefits. We had a general membership meeting on October 1st to encourage owners to try mediation as an alternative to eviction.

There have also been many recent articles on the use of mediation for eviction prevention in other communities. One that I found interesting was https://citymonitor.ai/housing/what-is-eviction-mediation

Nov 07

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.

Nov 06

Featuring: How To Navigate Eviction Moratoriums

We are excited to announce Attorney Tristan Pettit’s Landlord Boot Camp will be held on November 14th, 2020. 

Due to recent changes impacting the CDC National Eviction Moratorium, we delayed the event to include the most timely information on navigating the current Moratoriums. 

The Saturday, November 14th event will be held as a live-streamed webinar from 8:30 AM -5:00 PM with live Q & A from 5-6 PM. 

Enjoy these advantages of the new virtual format:

  • Attendees will receive a searchable PDF Boot Camp manual, making it easier to search and reference items in the future.
  • A recording will be available to attendees for 14 days after the event to re-watch portions that you want a deeper understanding of.
  • Attend the event from the comfort and safety of your home. 
  • As in prior Boot Camps, the live Q & A session is part of this event.
  • You will receive all of the same information normally presented in Landlord Boot Camp PLUS the latest information on navigating the CDC and CARES Act eviction moratoriums. 

For pricing and registration click here:  

https://aasew.org/event-4043452

www.aasew.org

Oct 07

These are the reasons we need to unify as an industry.  Read the full, well-written piece at:

https://www.nydailynews.com/opinion/ny-oped-landlords-are-people-too-20201007-zqsmvkptgjcyjkzbmwojhh7r7y-story.html

“Landlords are the devil incarnate. “F–k landlords.” “Cancel rent.” “Kill the landlords. “Landlord (sic) are a disease.” These inflammatory words come from social media postings, but it is not unusual to hear them at the protests and riots that have become routine in recent months. In addition, there have been marches specifically crafted to promote the rent-strike movement — a movement that suggests a tenant, even when she has the ability to pay, may choose instead to withhold the money and place the funds in a shared escrow account. Small business owner, Roni von Henschen says, “I know people who aren’t paying even though they can afford it. I don’t know why. Maybe they figure they can live month after month for free since evictions are banned.”

Oct 05
Office of Governor Tony EversFOR IMMEDIATE RELEASE: October 5, 2020Contact: GovPress@wisconsin.gov or 608-219-7443 Gov. Evers Announces nearly $50 million in COVID-19 Support for Wisconsinites  $47 million includes support for child care, healthcare navigators, food security, and energy and rental assistance MADISON — Gov. Tony Evers announced today an additional $47 million investment in COVID-19 support for child care, healthcare navigators, and energy and rental assistance to Wisconsinites across the state. The effort is funded through the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act Coronavirus Relief Fund (CRF) and will be infused into existing CRF-funded programs and used for new programs as the pandemic continues to affect Wisconsinites.   “As we continue to fight this pandemic across our state, we need to make sure folks have the support they need from housing and food security, to making sure they have access to quality, affordable healthcare,” said Gov. Evers. “The investment announced today will provide critically important assistance for Wisconsinites as we continue to encourage folks to stay home as much as possible.”  $10 million will be directed towards the COVID-19 Out-of-School Support Grant Program aimed at assisting Wisconsin organizations who are providing care to school-aged kids during the pandemic. Administered by the Wisconsin Department of Administration (DOA), the program provides eligible organizations grant awards to cover pandemic-related impacts such as lost revenue, increased staffing costs, cleaning and sanitization, and additional costs to ensure high-quality programming otherwise impacted by COVID-19.  “Our out-of-school support providers are a critical part of the team of entities ensuring Wisconsin kids are getting what they need, whether their traditional school setting is in-person or virtual this year,” Gov. Evers continued. “What’s best for our kids it what’s best for our state, and these organizations are stepping up in a big way to make sure our kids have a safe place to go during this unprecedented pandemic.”  With winter on the horizon and as temperatures drop, making sure Wisconsinites have access to safe, warm housing is critical. $10 million will be invested in the successful Wisconsin Rental Assistance Program (WRAP), in addition to the $25 million previously announced. To date, WRAP has helped nearly 10,000 households across the state as of October 5th. Additionally, $10 million will go toward the Food Security Initiative in recognition of the role the program has played in combatting hunger. This investment is on top of the $15 million previously allocated to this program. 

To ensure Wisconsinites not only have access to housing but can pay their utility bills as we head into the winter months, $15 million of the funds will be invested in Wisconsin’s Low Income Home Energy Assistance Program (LIHEAP), a program that is currently federally-funded and helps Wisconsinites with their heating costs. Interested individuals can visit homeenergyplus.wi.gov/ or call 1-866-HEATWIS for application and program details. An additional $1 million investment will be directed towards the Keep Wisconsin Warm/Cool Fund (KWW/CF), a non-profit that provides a statewide safety net to individuals facing energy-related emergencies. Interested individuals can visit kwwf.org/apply to learn more about the KWW/CF application and process.  

Finally, ensuring everyone has access to quality, affordable healthcare continues to be a top priority, especially as COVID-19 surges across our state. Given the increasing number of Wisconsinites facing unemployment and the loss of employer-sponsored health insurance during the pandemic, $1 million will be invested in the statewide health insurance navigator organization to help residents purchase health insurance on the federal marketplace or to enroll in BadgerCare. For many Wisconsinites, this may be their first time selecting a plan on the exchange, which can be a complicated process. This funding will help increase consumer education and access to healthcare navigators who can walk individuals through the process of selecting and purchasing an individual or family plan or in enrolling for BadgerCare if they are eligible. Wisconsinites can learn more about their health insurance options at WisCovered.com.   ###Gold Horizontal LineOffice of the Governor ♦ 115 East Capitol, Madison, WI 53702Press Office: (608) 219-7443 ♦ Email: GovPress@wisconsin.govhttps://evers.wi.gov ♦ 
Oct 04


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
Sep 23

I will respectfully submit that it is in the tenants’ best interest to allow Small Claims Court to hear disputes regarding potentially improperly filed CDC Declarations.

If owners are deprived of their right to challenge the validity of the declaration in civil court, the alternative is the use of the criminal justice system to pursue perjury charges, as contained in the CDC order. Remembering that the Declaration signed by the tenant begins and ends with an acknowledgment of criminal penalties:

I certify under penalty of perjury, pursuant to 28 U.S.C. 1746, that the foregoing are true and correct:

I understand that any false or misleading statements or omissions may result in criminal and civil actions for fines, penalties, damages, or imprisonment.

While on the surface it may appear unlikely law enforcement will get involved,  Wisconsin Statutes Chapter 781 and 783 provide for extraordinary remedies to compel officeholders to comply with the law.

So far my company has received one CDC declaration.  It is from a tenant on SSI (no job to lose or medical expenses to pay).  We have not received a WRAP or Community Advocates assistance application to sign.  So clearly this is at a minimum, defective and likely fraudulent. 

The Law of Unintended Consequences.

Back 20 years ago or so (I show it as April 2001)  Legal Action of Milwaukee successfully argued that properties held in LLCs had to be represented by an attorney in eviction actions.  This was successful at stalling a number of evictions the month or so surrounding the court’s decision, as owners scrambled to hire attorneys.  

Owners did not want attorneys.  This was an added cost to cases that there was little chance of recovering the unpaid rent, in a fairly low margin industry.

Tenants were harmed by this as the dynamic shifted from unrepresented landlords facing tenants with Legal Aid/Legal Action attorneys, to many landlords being required to have attorneys.  The added cost to the evictions made it harder for owners to work out deals with tenants and ultimately more expensive for the tenant.  

It also often resulted in the owner not being at the hearing, why spend half a day in court if I’m paying a guy in a suit and tie to do it for me, making it less likely a deal would be struck.  In the years prior to the ruling, most owners looked like Monty Hall filling stips and negotiating with tenants.  http://emmyonline.com/the-master-deal-maker-monty-hall

MHDealPromo5x7-300x243.jpg

Even though the law changed a couple of years ago, most impacted owners still use attorneys because this shifted their standard operating procedure to use attorneys. 

Of course, the best course for owners and occupants alike, is for additional rental assistance funding.

Sep 12


https://shepherdexpress.com/news/features/the-new-eviction-moratorium-is-half-the-solution-but-is-it-e/#/questions

This issue will affect both parties. Heiner Giese, an attorney with Apartment Association of Southeastern Wisconsin (AASEW) says, “The question is, how are these people going to get paid? Will people lose their housing? What will landlords do in the meantime about municipal water bills, taxes, insurance or maintenance.”

Sep 12

https://oklahoman.com/article/5671376/analysis-eviction-moratorium-will-compound-problems-housing-industry-leaders-say

It’s hard to hear it above the din, but the renter eviction moratorium has housing trade groups and nonprofits sounding an alarm.

“Rental assistance is necessary to pull the country back from the brink of a housing and financial crisis,” according to groups calling on Congress to step in that include the National Association of Realtors, National Association of Home Builders, Mortgage Bankers Association, National Affordable Housing Management Association, National Multifamily Housing Council, National Association of Housing Cooperatives, National Apartment Association and others.

The devil is in the details of this road paved with good intentions.

“This is fluid right now and seems to be changing frequently. It sounds great to keep people in their homes, but making the total rents due Jan. 1, and allowing fees and interest (if it is in the lease) is setting people up to fail. That combined with the people (landlords) not able to pay the mortgage without the rent and being foreclosed on is going to end up putting people on the street in spite of these good intentions,” — Kathy Fowler, secretary-treasurer of the Oklahoma City Metro Association of Realtors and managing broker at McGraw Realtors.

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