Editor’s note: This commentary is by John McCormick, of Bristol, who has a 30-year background working with NGOs in Washington, D.C., where he also volunteered for homelessness organizations.
More than 75,000 Vermonters live in rental properties or lease business space. When a residential or commercial tenant cannot pay rent from his income, savings, credit or family support, the landlord becomes their financial risk if he has the option to evict or not renew the lease. No one prepared for this pandemic.
Before the pandemic, Vermont’s unemployment rate was 2.2%, one of the lowest in the nation. On April 24, the labor commissioner estimated it is between 20% and 23%. By mid-March, more than 70,000 unemployment claims were filed in Vermont. More filings are coming now that self-employed people with no work are allowed benefits. High and continued unemployment foreshadow a new crisis slowly moving towards a possible tidal wave of homeless.
This novel virus infected its first American victim on Jan. 21. One hundred days later, there are 1,064,485 victims. Epidemiologists project a second wave could trigger a second economic shutdown if the public refuses to work in an office or factory, dine out or shop the malls not knowing if the person next to them is infected.
Vermont respects the right to shelter, food and clothing. Housing is a critical sector of our economy. Employment, health, well-being and child nurturing require a safe living space. People living in shelters and tents cannot contribute much to the economy. We will face decisions that create solutions or chaos as the pandemic continues into 2021, Congress and Vermont must coordinate efforts to prevent tenants and landlords collapsing into homelessness or bankruptcy.
Consider typical renters who filed for unemployment benefits or small business grants or loans. Processing delays mean benefits will be weeks away or not approved. Their income once covered rent, food, health insurance, transportation, maybe utilities and not much to put aside. According to a housing industry analysis, 16.73% fewer Vermont tenants (year-on-year) paid rent compared to April 2019 data. Credit cards and family or public aid will be mainstays to managing day-to-day needs. Unemployment benefits for 40 weeks will include a short-term federal $600 weekly payment expiring on July 31. A commercial tenant might not qualify.
What will tenant families do when their unemployment benefits expire and remain jobless? Their needs eventually exceed cash flow. Americans’ private debt exceeds $14 trillion.
Fortunately, Vermont courts have banned evictions during the governor’s state of emergency order on March 13 and it extends another 30 days after the order’s termination on May 15. What protection will unemployed tenants, with no benefits, have in October and in 2021?
The congressional CARES Act signed into law March 25 provided the federal Small Business Administration a $349 billion emergency effort to get money into the hands of small businesses. Those SBA loans will eventually have to be paid back by the borrowing landlords, even as rents remain unpaid. Most non-corporate landlords have marginal incomes.
You can access Sen. Patrick Leahy’s detailed description of federal financial aid for foreclosure and eviction protection; homeless support; rental assistance; mortgage payment forbearance and living expenses support.
A tenant (some with children) unable to pay rent might see the lease agreement expire. The landlord is not legally obligated to renew it, thus it is not an eviction. With likely no security deposit returned, owing back rent and no income or address, the former tenant will struggle to find a shelter.
Gov. Phil Scott can establish a social safety net to protect tenants with a direct renter assistance program to prevent a homelessness wave. The executive order can be amended to designate landlords as providing essential public services. It can also instruct the Vermont State Housing Authority to require landlords to notify it 30 days prior to taking any action related to terminating a tenant’s status. Tenants would have an option to appeal to the state for relief; thus creating a registry of vulnerable Vermonters and providing an opportunity for mediation. Remedies and proposals to protect both tenants and landlords abound.
Chris Donnelly, director of Community Relations at Champlain Housing Trust, presented a blueprint, with a budget, to the House Committee on General, Housing and Military Affairs on April 28.
The National Apartment Association is urging Congress and governors to:
— Create an emergency rental assistance program.
— Redesign the CARES Act eviction moratorium to manage the rental crisis long-term.
— Allow landlords access to mortgage forbearance.
— Provide financial assistance for property taxes and extend credit to multi-family mortgage servicers.
— Expand the Small Business Administration Paycheck Protection Program to include all multi-family businesses.
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