Monday, April 6, 2020

HFO Multifamily Marketwatch Podcast - April 6, 2020

Renter and landlord anxiety abound after business closures due to COVID-19; CityLab reports that rent strikes may significantly impact the pension funds of first responders, and governor Mike Inslee of Washington clarifies rules for in-person interactions for real estate transactions.

Listen to our latest podcast.

Read the podcast here:

As the first of the month approached last week, a large number of renters across the country knew they could not afford to pay their rent. Workers in the service industry and the arts have been hit particularly hard by mass business closures, but all industries have been impacted to varying degrees. A significant number of renters are hourly workers, many of whom have seen their hours cut without the benefit of paid time off. According to the Seattle Times, some landlords expect 50% of their tenants to miss payments this month, and according to the Labor Department, 6.6 million Americans applied for unemployment assistance in the last week of March. In light of this, local newspapers, including the Seattle Times and the Portland Mercury, have published advice columns for renters who may need to work with their landlords to get through this unusual event. The Seattle Times advises those who can pay their rent in full to do so to avoid a more massive bill in the future. The Times also advises tenants to contact their landlords in writing, work together to draft a payment plan if possible, and stay in touch throughout the month to set expectations for May. Late last month, the Washington Multifamily Housing Association urged its members to waive late fees and month to month fees and to work with tenants to create payment plans. The group has also been advocating for an increase in funding for rental assistance programs, and mortgage forbearance for property owners. In Portland, city leaders are calling for financial assistance for renters and homeowners grappling with a substantial decrease in income. Mayor Wheeler and Commissioners Eudaly, Fritz, and Hardesty wrote a letter to state and federal officials demanding, quote, “forgiveness of all residential and commercial rent and mortgage payments for the duration of this emergency.” Governor Brown issued a 90-day eviction moratorium for commercial tenants, but like the residential eviction moratorium, rent will continue to accrue for businesses that are unable to pay. Seattle Times – As Rent and Mortgage Payments Come Due, Washingtonians Wonder How They’ll Afford Survival During Coronavirus; Seattle Times – How to Talk to Your Landlord about Rent if Coronavirus Closures Have Affected Your Paycheck; Oregonian – Portland Officials Call for Waiving Rent, Mortgage Payments Due to Coronavirus

The Oregon State Legislature had planned to convene a special session the week of March 31st to address the impacts of the COVID-19 pandemic, but on Monday lawmakers from both parties agreed to hold off. Senate President Peter Courtney argued that it was the Governor’s job to call a special session. Governor Brown has indicated she is waiting to learn more about the impacts of the recently passed federal stimulus package. Courtney believes Brown may also be waiting for the May 20th state tax revenue forecast to be published. Governor Brown expects the state to receive around $1.2 billion in federal aid from the $2 trillion stimulus bill. Oregon House Republican Leader Christine Drazan believes that the federal funds may be enough to cover the needs of Oregonians in the near term, allowing the legislature time to assess whether additional spending will be necessary. Senate Republican Leader Herman Beartschiger believes Governor Brown has been able to address the emergency adequately with executive orders, eliminating the need for the legislature to act quickly. The choice to delay the session may also be related to the age of the state lawmakers – many are older or in high risk categories, and Brown has not indicated she plans to use a disaster declaration to allow legislators to vote remotely. Oregonian – Senate President: Oregon Legislature Won’t Hold Special Session on Coronavirus This Week

In response to questions generated by his lengthy stay at home order, Governor Inslee of Washington has issued guidance for the real estate industry clarifying rules for face to face interaction. The Governor issued a one-page memorandum on March 27th allowing real estate and mortgage activity to continue but prohibits in-person meetings with a handful of exceptions. While the memorandum states that, quote, “most transactions are for residential properties,” the rules appear to apply to commercial transactions as well. Under the new guidance, in-person meetings are only allowed when necessary for a client to view a property or sign documents; real estate open houses are prohibited; on-site activities like viewings, appraisals, and final walk-throughs must be organized by appointment, and no more than two people may be on-site at a time, with social distancing maintained throughout the appointment; all other aspects of the transaction must be performed remotely. The offices of real estate agents, appraisers, escrow officers, property inspectors, and other related professionals may remain open but social distancing measures must be taken, and work should be done remotely when possible. State of Washington – Memorandum: Real Estate and Mortgage Guidance
The City of Portland announced new details for its cash assistance programs for businesses and low-income families. The city voted to establish a $2 million grant and loan program for small businesses impacted by COVID-19 two weeks ago, and last week opened up the application system for these businesses. An estimated 200 businesses could receive grants between $2,000 and $10,000, amounting to a total of $1 million. An additional $1 million in no-interest loans will be awarded, though an application period has not yet been set for these loans. The city also plans to give 2,000 low income households up to $500 in cash assistance. These cash payments are intended to be a stop gap for families who are awaiting money from the federal stimulus package. The Portland Housing Bureau will be administering the assistance program for families, and she urges interested residents to call 2-1-1 for more information. Housing Bureau Director Shannon Callahan expects the cash assistance to go toward urgent household needs including rent, food, and medication.  Oregonian – Portland Announces Coronavirus Aid Programs for Small Businesses, Low-Income Families 

In the run up to April 1st, when the first rent payments were due since the pandemic-related closures and layoffs began, tenant and low income housing advocates were calling on the HUD to make tenant income adjustments to ensure voucher recipients could still make on-time rent payments. Under the recently passed stimulus bill known as the CARES Act, HUD programs were awarded $12 billion, including $1.25 billion for the Housing Choice Voucher Program, $1 billion for project-based rental assistance, and $685 million for public housing agencies. But tenants relying on income-based programs may not be helped by this additional funding unless the HUD lowers the amount they are expected to pay out of pocket for rent each month. The National Alliance of HUD Tenants, National Housing Law Project, and National Low Income Housing Coalition are asking the HUD to recalibrate what tenants are required to pay in light of mass layoffs. These groups are also advocating for the HUD to set the minimum rent tenants could be expected to pay to $0. While the groups still believe tenants should be required to document increased needs, due to the urgency of the situation they are asking that the HUD recalibrate rents first and seek for documentation later. The HUD did not act in time to meet the April 1st deadline, and it is not clear whether the department plans to recalibrate before rents are due in May. Shelterforce – HUD Urged to Make Tenant Income Adjustments Automatic by April 1

At a Mayoral debate on March 31st, challengers to Mayor Ted Wheeler argued that city officials should be doing more to help residents in the midst of a global pandemic. The debate was held virtually and hosted by the City Club of Portland. Candidate Ozzie Gonzalez argued that the city is not doing enough to reach residents whose primary language is not English. Meanwhile, Teressa Raiford believes that giving $500 to 2,000 low income families across the city is just a drop in the bucket compared to what is needed. She advocates for the city to give $1,000 to all residents making under $75,000 per year. She also cautions that the eviction moratorium will not help renters in the long term, especially when the back rent comes due in six months. To this end, Sarah Iannarone proposed a rent amnesty program that would keep back rents from piling up during the emergency. Wheeler acknowledged that the city may not be doing enough to help every Portlander, but he is proud of recently passed programs for small businesses and believes that the aid from the federal government will help the city do more in the future. But while Wheeler argues that the city should stay the course and continue building on work that has already been done, his challengers believe that larger scale change is needed.  Oregonian – Portland Community Needs More Support amid Coronavirus Outbreak, Mayoral Challengers Say

As construction work continues in Oregon despite a statewide stay at home order, the Oregon Occupational Safety & Health Agency has received a staggering number of safety complaints from workers alleging that social distancing practices are not being followed. The week of March 23rd, OSHA received 1,152 COVID-19 related complaints. In the first three weeks of March OSHA received just 67 complaints, and in a typical year the agency generally sees around 2,000 complaints. Many of those received at the end of March were from workers in the construction industry. While the industry was not shut down by the Governor’s order, construction companies are required to follow social distancing rules. But workers in the industry argue that there are a number of tasks on job sites that require closer contact. These activities range from lifting heavy objects to reading blueprints. One complaint pointed out that when workers eat lunch, they are frequently crowded into shacks. A supervisor on an apartment project said that there is only one hand washing station on the site, and the hand sanitizer in the portable toilets was not replaced when they were last serviced. The supervisor raised his concerns with a senior manager, who verbally acknowledged that social distancing was all but impossible on construction sites. Ben Basom, spokesman for the Pacific Northwest Regional Council of Carpenters, argues that much of the work being done currently is not essential, especially the work being done on offices where all of the employees are currently operating remotely. Willamette Week – Oregon’s Construction Industry Is Chugging Along Like It’s Still 2019. Some Workers Say That’s Dangerous

Finally, CityLab published an article by reporter Kriston Capps arguing that while rent strikes and debt jubilees may sound like a good idea during a global pandemic, they may do more harm than good in the long term. Capps points out that it is not just fringe or anti-capitalist groups calling for rent strikes as millions of Americans find themselves out of work – larger organizations like ParentsTogether have joined the call for Congress to suspend rent, utility, and mortgage payments until the crisis subsides. While some groups believe landlords should see the loss of rent as the flip side of their investment gamble, others like ParentsTogether believe if the federal government forgives mortgages as well as rent it could be a win-win for everyone. But Carol Galante of the Terner Center for Housing Innovation at UC Berkeley points out that this is an oversimplification of the problem. Commercial mortgages are frequently securitized and packaged into bonds, which are sold to investors like pension funds for teachers, first responders, and other public servants. Capps also points out that a debt jubilee may not be legal – banks and investors would likely argue that it amounts to an unconstitutional “taking” of private property under the 5th Amendment. Capps argues that in light of this, the best option for the federal government would be to put money directly in the hands of renters to ensure that rent continues to be paid. Kathleen Engel of Suffolk University acknowledges that giving money to renters that will ultimately go straight to landlords and investors may not be the most appealing option, but the solution to this systemic problem is more and better federally subsidized housing, which would require larger-scale and longer-term changes than could be accomplished in time to help vulnerable renters. CityLab – The Problem with a Coronavirus Rent Strike

No comments:

Post a Comment

Thanks for your comment!

Note: Only a member of this blog may post a comment.