Eviction Moratoria – Update
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There have been a lot of twists and turns in the saga of the many eviction moratoria that have been imposed on housing providers, and that seem to never go away. But there are cracks in the wall. As I write this article, the federal ban on evictions, put out by The Centers for Disease Control and Prevention (CDC), appears to be dead after a 6-3 ruling by the US Supreme Court decided that the CDC had exceeded its authority. But it’s another story in Illinois where it’s Lucy, Charlie Brown and the football – over and over again. This little drama stars Governor Pritzker as Lucy, and housing providers in the role of the ever-gullible and hapless Charlie Brown.
This is a fast-moving topic, and the odds are good that by the time anyone reads this, things will have changed again. But for what it’s worth, here’s a quick overview of where we’ve been, where we are now, and what may be coming.
But it’s another story in Illinois where it’s Lucy, Charlie Brown and the football – over and over again.
Many states imposed eviction moratoria quickly after the pandemic first surged in March 2020, citing the health emergency as their rationale for doing so. Illinois and California were two early and prominent adopters of these measures. The Centers for Disease Control and Prevention (CDC) did not immediately follow suit, but imposed a federal eviction moratorium on September 4, 2020. The CDC moratorium was extended several times, most recently through the end of July 2021.
It’s not a stretch to argue that, early in the pandemic, an eviction moratorium was both justified and sensible. Stay-at-home orders were implemented across the country and millions of people were suddenly thrown out of work for no fault of their own. Many renters who, even before the pandemic, were far more likely to be living paycheck to paycheck, were suddenly unemployed with scant savings and few places to turn for help as rent and other bills started piling up. It was an unprecedented situation that called for unprecedented action.
Despite all the economic support and employment recovery; despite the development and dissemination of vaccines; and despite the billions of dollars allocated to rent relief; the moratoria have persisted during these many months since March 2020.
But the initial panic gradually subsided as infection rates came back down and stay-at-home orders were lifted. Since then, infection rates have oscillated between several peaks and valleys, including the most recent Delta-variant spikes we are now experiencing across the country. Despite the continuous cycles of infection, employment has steadily rebounded with nearly 1,000,000 jobs added in July alone.
Nationally, total jobs peaked at 152,523,000 in February 2020, falling to a jaw-dropping 130,161,000 just two months later – a loss of 22,362,000 jobs, or just under 15% of all US jobs! Yet, since that April wipe-out, employment has steadily risen and now stands at 146,821,000 jobs (preliminary July 2021 estimate), just 3.7% below the February 2020 high. Put differently, 75% of the jobs lost have now been regained.
In a “here we go again” moment, Governor Pritzker quickly extended [the moratorium] again, first until Sept. 18 and, most recently until October 3.
You’d have to be living under a rock not to know that several COVID-19 vaccines were developed at lightning speed after the pandemic hit. These vaccines have now been widely distributed across the US population – if admittedly not as widely as many of us expected and hoped.
Many of us also know that Congress has allocated literally trillions of dollars in several economic packages to shore up the US economy, including billions specifically intended for rent relief.
Despite all the economic support and employment recovery; despite the development and dissemination of vaccines; and despite the billions of dollars allocated to rent relief; the moratoria have persisted during these many months since March 2020.
The real question is not whether harm has been done, but who should pay to remedy it? As is so often the case, the consensus, at least in Illinois, seems to be – the housing providers.
The CDC moratorium finally expired at the end of July, but was quickly extended again on August 3 for renters living in communities experience a surge in COIVD-19 cases. Due to the virulence of the Delta variant and the recent spike in infections, this included virtually every major urban area in the country and most of the US population. A recent review of the CDC COVID data tracker map shows that almost all US counties are now shaded red for high transmission.
But, in a widely expected ruling, the Court struck down the CDC ban on evictions, stating in a 6-3 decision that they had exceeded their authority and that Congress would have to reinstate an eviction ban. Needless to say, given the nearly evenly divided Congress and the ability of the Republican minority in the Senate to block legislation that does not get 60 or more votes, there is almost no chance an eviction moratorium will be reinstated by Congress.
Meanwhile, in Illinois, the state had extended its moratorium to August 31. In a “here we go again” moment, Governor Pritzker quickly extended it again, first until Sept. 18 and, most recently until October 3. No one will be shocked if further extensions are forthcoming. The Governor has shown no interest in allowing evictions to resume, listening only to the tenant activists who clearly have his ear.
The damage to our industry has been unprecedented with many small housing providers on the brink of insolvency.
If there is one silver lining, it is that the state did start allowing eviction hearings as of August 1, and enforcement of evictions to begin, well, whenever the Governor finally decides to lift the state moratorium, or is otherwise forced to do so. Given the rapid increase in infections due to the Delta variant of the COVID-19 virus, it is clear the Governor has all the cover he needs to continue extending the state-wide moratorium for as long as he decides he wants to.
Even after the state moratorium is finally ended, the City Evictions Protection Ordinance, passed last year, will delay evictions in the City of Chicago for an additional 60-day period. The ordinance also requires good faith negotiations between tenants and housing providers after a five-day notice has been filed, and requires housing providers to offer an extended repayment period equal to two months for every month of missed rent. Given that some tenants have now accrued up to a year and a half of unpaid rent, this could translate to a repayment period of three years and counting.
Few would argue that we are not experiencing a true health emergency that had reverberated across the economy. Millions of people remain out of work, many still owing substantial back rent with no way to pay it.
But the real question is not whether harm has been done, but who should pay to remedy it? As is so often the case, the consensus, at least in Illinois, seems to be – the housing providers.
Once again, the economic fall-out from a problem that impacts the entire country is being laid squarely at the feet of housing providers. Sure, governments at all levels have allocation billions of dollars for rent relief. But how much of that money has actually gotten distributed, and how many exceptions are there to who qualifies for these funds? The short answers are, not very much, and too many!
The reality is that housing providers are being asked to pick up most of the financial burden created by the pandemic. Rent relief from federal and state programs may appear to be substantial at first glance. But the reality is that most of this relief money has not filtered down to the tenants and housing providers who need it the most. Distribution of these funds has been fragmented across numerous local governmental agencies. These agencies have largely failed in their efforts to distribute these funds in a timely and efficient manner.
A recent report by WBEZ states that just 36% of the $834 billion approved under the Emergency Rental Assistance Program (ERAP) has actually been funded. IHDA reports distributing about $228 million as of late August, well below half of their allocation. For an update on the IHDA statistics, click here. Even assuming this money does eventually get distributed, the program will not cover lost rent from tenants who have moved out of their apartments, and will not provide assistance to housing providers dealing with uncooperative tenants. These two loopholes are huge, and will limit the benefit of any money that does eventually get sent out.
It remains to be seen if the Supreme Court action striking down the CDC ban will have any impact here in Illinois. We can always hope. What is obvious to all of us in the housing industry is that the state moratorium needs to go. The damage to our industry has been unprecedented with many small housing providers on the brink of insolvency. Even those who are able to survive the financial burden are less equipped to invest capital in their properties for long-term upkeep, or weather any future storms.
One of these days, the eviction moratoria will all be behind us. But the damage has been done and will be long-lasting.
