With a sense of balance that a ballerina would envy, the American Bar Association’s Task Force on Legal Needs Arising Out of the 2020 Pandemic (the Pandemic Task Force), the King County (WA) Bar Association, and the RPTE Section were instrumental in the rapid crafting of an ABA resolution urging protections for affordable housing. The House of Delegates overwhelmingly passed ABA Resolution 10H at the ABA Annual Meeting in early August 2020. ABA, Resolution 10H, available at https://bit.ly/37RMGs7.
Before the ABA can advocate for legislation, there must be ABA policy in place. The ABA adopts policies by resolution passed by the ABA House of Delegates, the ABA’s only policy-making body; that ABA body meets at the ABA Annual and Midyear Meetings.
When it became obvious that the pandemic was causing massive payment issues with the affordable housing industry and only eviction and foreclosure moratoria were being discussed, RPTE argued that public funds needed to be allocated to protect the country’s affordable housing stock. Resolution 10H seeks to protect both tenants and landlords of affordable housing. The Pandemic Task Force brought together tenant advocates, legal services attorneys, public attorneys, and civil rights attorneys with RPTE representatives to listen to and understand the needs of the many parts of the affordable housing industry and craft a resolution that balances the interests of all such groups.
The resolution urges financial support of landlords so they can “pay their mortgage, property taxes, operational costs, and other expenses necessary to maintain the housing units and avoid foreclosure and bankruptcy, without increasing rent . . . .” Resolution 10H. Conjointly, the resolution seeks tenant protection by “precluding the use of nonpayment of rent or eviction records in tenant screening practices, where nonpayment is due solely to economic loss resulting from the pandemic . . . during, or in the 90 days immediately following, the COVID-19 pandemic state of emergency in a particular jurisdiction.” Id.
Since the pandemic began, job loss, diminished or lost wages, and illness and death have devastated US citizens. According to a May 2020 press release by the Federal Reserve Board, fifty million renters live in households that suffered COVID-19-related job or income loss, with almost 40 percent of job or income loss occurring in low-income households. ABA, Report Accompanying Resolution 10H, at 2 [hereinafter Resolution 10-H Report], https://bit.ly/2TBvv5G. The data are grim. “In July 2020, 1 in 5 renters used unemployment benefits to pay their bills (including rent), 1 in 4 used the one-time stimulus payment, and 1 in 3 renters relied on money other than regular income, such as savings, credit cards, family loans, or federal aid.” Id. at 3 (citing U.S. Census Bureau, Week 10 Household Pulse Survey: July 2 – July 7, (July 15, 2020), https://bit.ly/3e8DZef).
When tenants cannot pay rent, the consequences to landlords and communities are far-reaching. Almost half the landlords in this country are individual investors, who, like their tenants, are struggling with the myriad costs of the pandemic. Id. at 7. Few of these landlords have a financial cushion to help them cover their costs when rent is not paid. Those costs include insurance, taxes, maintenance, and operating costs.
The resolution notes the likely domino effect, in particular, of a landlord’s inability to pay taxes. Id. at 10. Local communities depend on real property taxes to fund schools and state and local government. A 2017 Urban-Brookings Tax Policy Center report notes that property taxes are the largest own-source of revenue for counties, cities, and townships. Tax Policy Center, The State of State (and Local) Tax Policy: What Are Sources of Revenue for Local Governments? (2017), available at https://tpc.io/2HIEgIw. Further, property taxes are 83 percent of school districts’ own-source revenue. Tax Policy Center, The State of State (and Local) Tax Policy: How Do State and Local Property Taxes Work? (2017), available at https://tpc.io/3kGXrRt. One can argue that a sustained environment of reduced property tax collections will affect schools and students for many years after the end of the pandemic.
Landlord Difficulties Affect Their Communities
Landlords whose property is subject to a mortgage and owners who are unable meet their own debt payments or reach a compromise with their lenders face some difficult decisions. Some may try to raise rents, which will further squeeze low-income tenants. As further discussed below, this will likely disproportionately affect diverse renters. Other landlords may decide to leave the market entirely. “Small property owners provide more than half of the housing stock that rents for $750 or less. When rents are raised or these properties are removed from the nation’s affordable housing stock it will further deplete the United States’ affordable housing supply.” Resolution 10H Report, supra, at 9. Again, the effects of reduced affordable housing will be felt more acutely by diverse populations. If the landlord is unable to pay its mortgage, insurance premiums, or real estate taxes for some period, the mortgagee may feel compelled to initiate foreclosure proceedings. The foreclosure process varies by state, but many states have adopted nonjudicial foreclosure procedures, which can be a relatively quick process. We could see the resurgence of the foreclosure “mills” that surfaced in the Great Recession. Once a landlord has experienced a foreclosure, the landlord likely will find his or her credit rating impaired, at the very least. The Resolution 10H report cites a study presented to the IMF that found that homeowners with prime and subprime mortgages are 28 times and 22 times, respectively, as likely to file for bankruptcy if lenders began foreclosure within the previous three months. Id. at 10.
Further, when properties are foreclosed, they are more likely to be abandoned. Abandoned properties attract crime, straining already-stretched police forces, and may contribute to a deterioration in public health as properties are used by squatters who may be unable or unwilling to seek medical care. Obviously, the value of nearby properties declines, and a vicious circle of nonpayment of rent, foreclosure, and property abandonment continues.
Communities of Color Are Disproportionately Affected
Called “the great unequalizer” in a Wall Street Journal article, the pandemic is affecting communities of color disproportionately. Gwynn Guilford & Luis Melgar, Coronavirus Heightens Housing Insecurity for Black and Hispanic Populations, The Wall Street J. (Aug. 9, 2020). Black and Hispanic people account for a fifth and a third, respectively, of coronavirus cases, rates higher than their representation in the general population. The Centers for Disease Control and Prevention tracked COVID-19 hospitalization rates per 100,000 population by race from March 1 through July 25, 2020. The hardest-hit population is Native American, with 299 per 100,000, followed by non-Latino Black at 265, Latino at 267, Asian/Pacific Islander at 73, and non-Latino White at 57. Centers for Disease Control and Prevention, COVIDView Summary Ending on July 25, 2020, available at https://bit.ly/3e6SCP3. In part, these discrepancies reflect the fact that minorities are likely to work in essential service jobs that put them at risk of coronavirus exposure on a regular basis.
Job loss affects communities of color at much higher rates than white communities. In April 2020, 61 percent of Hispanic Americans and 44 percent of Black Americans said that they or someone in their household had experienced a job or wage loss due to the coronavirus outbreak, compared with 38 percent of white adults. Kim Parker, Juliana Horowitz & Anna Brown, About Half of Lower-Income Americans Report Household Job or Wage Loss Due to COVID-19, Pew Research Center at 7 (Apr. 21, 2020). Hispanic women, in particular, face very high unemployment. Not surprisingly, Hispanics overall favor providing financial aid both to businesses and to individuals. In that, they agree with the general population. When Pew surveyed US adults overall, 88 percent said they favor prevention of evictions and foreclosures above other proposals, including extending the $600-per-week unemployment benefits, which only 60 percent of US adults favored. Jens Manual Krogstad & Mark Hugo Lopez, Coronavirus Economic Downturn Has Hit Latinos Especially Hard, Pew Research Center (Aug. 4, 2020). Ninety percent of Hispanics favor prevention of evictions and foreclosures, followed closely by providing financial assistance to state and local governments. Id.
In a letter to congressional leaders, ABA President Judy Perry Martinez warned of future loss, especially to the nation’s diverse and disadvantaged populations:
Without a national economic strategy to help slow down this housing crisis and appropriate investments from Congress, low-income Americans—including seniors, people with disabilities and families with young children, low-wage workers and others who were already struggling to remain housed before the current pandemic—and people of color will be at significantly higher risk of eviction and homelessness once current unemployment, housing and other economic relief expire at the end of the month. According to the U.S. Office of Disease Prevention and Health Promotion, such housing instability is associated with significant health consequences, loss of employment, poor education performance and development in children, and this does not include increased burdens and costs to local government.
Letter from Judy Perry Martinez, ABA President, to Hon. Nancy Pelosi, Speaker of the House of Representatives, Hon. Mitch McConnell, Majority Leader U.S. Senate, Hon. Kevin McCarthy, Minority Leader of U.S. House of Representatives, and Hon. Charles Schumer, Minority Leader of U.S. Senate (July 21, 2020), available at https://bit.ly/2TBuRFq.
Strategies to Lessen the Housing Crisis
The Resolution 10H report provides several recommendations to lessen the impact of the coronavirus on the housing market, especially the affordable housing market. Resolution 10H Report, supra, at 10-13.The first step is to provide federal, state, and county financial assistance to landlords who have been unable to collect rent from low-income renters. “The Urban Institute estimates that the cost of rental housing assistance for six months ranges from $48 to $96 billion and would assist between 8.8 and 17.6 million households respectively.” Id. at 11. Landlords eligible to receive this assistance would be those who own properties where tenants fall within certain standards, which could include a ceiling based on a percentage of Area Median Income to assure that funds address the needs of the low-income renter families. These funds are needed to supplement the often-inadequate relief programs to date. In one example, the report notes that “[i]n some states, emergency rental assistance funds have been depleted in as little time as 90 minutes to a business day in many cases.” Id. at 12. These data underscore the need for additional funding.
The next step is to mandate that evictions filed during and immediately following the pandemic should be exempted from tenant screening processes. The CARES Act placed a 120-day moratorium on nonpayment evictions from properties with federal mortgage loans or that participate in federal programs on March 27, 2020. See Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136 § 4024 (2020). That moratorium has expired. Subsequently, the Centers for Disease Control (CDC) issued a residential eviction moratorium that as of this writing expires December 31, 2020. Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19, 85 Fed. Reg. 55, 292 (Sept. 4, 2020). There are income qualifications for this moratorium to apply, and the CDC has clarified that the moratorium only prevents execution, the final step in the eviction process.
States and local governments have instituted a patchwork of relief programs that do not address the public need to support renters hit hard by the pandemic. When renters might wish to challenge an eviction, and their jurisdiction provides that protection, there may be no venue open and operational in which to bring a defense. With many courts closed and pivoting to electronic proceedings, low-income tenants without reliable Internet access may be denied any access to justice.
To provide insight into the scope of the eviction crisis, the investment firm Stout Risius Ross has compiled resources that highlight the extent of the crisis, the costs of eviction, and legal resources to tenants facing eviction. Eviction Right to Counsel, https://bit.ly/3mA110p. As of July 29, 2020, it estimates, based on Census Bureau data, that there are approximately 17,330,000 households unable to pay rent and at risk of eviction, which equates to 42.56 percent of total renter households. It estimates there could be as many as 11,697,000 potential eviction filings over the following four months.
A number of states have taken steps to seal eviction records universally or under certain circumstances to prevent a landlord from considering the tenant’s prior rental history. Resolution 10H Report, at 12-13. In other jurisdictions, new legislation bars landlords from considering a tenant’s rental or credit history after a certain time period. Id. at 13. The Report documents the many detrimental effects that eviction causes, including such obvious issues as disruption of employment and education and several health and social issues including a negative impact on long-term health, depression, and increased mortality. Id. at 5. These long-term effects are felt most keenly by children, who may suffer residual health and social impediments for many years after the event. The Report states: “Eviction is a legal record that permanently scars a tenant’s rental history, plummets credit scores, and prevents families from relocating to safe and healthy housing.” Id. at 7. Evictions can even result in exclusion from federally assisted housing. Id. Some states, like New York, have banned the practice of refusing to rent to someone based on his or her rental or eviction history, but many states have not taken that step by legislative action.
The Resolution 10H report concludes with a powerful summary of the benefits the drafters expect from the adoption of the resolution and the supportive ABA lobbying work that can take place once a resolution has been adopted by the ABA House of Delegates. It states:
This resolution, if adopted, will help prevent eviction and its collateral negative outcomes during the COVID-19 state of emergency and preserve affordable housing at a time of extraordinary risk to tenants and small property owners. In addition to stabilizing renters and rental property owners, public funds for rent will support credit unions, community banks, and local governments, who rely on property tax for revenue and school budgets. Precluding the use of nonpayment of rent and eviction records to screen tenants for housing will mitigate long-term hardship for renters who suffered instability due to pandemic circumstances outside their control. These interventions will also help to address increased racial disparity in eviction during the COVID-19 pandemic.
Id. at 14.
Effect of Resolution 10H
It is difficult to quantify the effect of the resolution. Shortly after its adoption, however, a rash of articles and news stories appeared that advocated the approach it suggests, and several states such as Maryland, Massachusetts, and Texas implemented rent payment relief programs. The National Low Income Housing Coalition has assembled a spreadsheet of rent relief programs in response to COVID-19. See https:/docs.google.com/spreadsheets/d/1hLfybfo9NydIptQu5wghUpKXecimh3gaoqT7LU1JGc8/edit#gid=79194074.
The Section and the ABA are indebted to the work of immediate-past Section Chair Jo-Ann Marzullo, on the Pandemic Task Force, in marshalling the support of both divisions of the RPTE Section to co-sponsor the resolution. The resolution, as passed, reflects a reasonably balanced approach that seeks to address the various competing interests among tenants, landlords, lenders, and mortgage investors. It shows what can be accomplished, even in a very short period of time, when people are willing to listen to each other and work with each other in a cooperative way to address a shared goal.
Resolution Road: How a Resolution Becomes ABA Policy
By Orlando Lucero
The process by which a resolution is adopted can look like an enigma from the outside, but there is a method to the madness. The ABA House of Delegates comprises nearly 600 members representing numerous state and local bar associations from across the country. It also includes representatives from the ABA sections and divisions and various at-large members. RPTE has three members in the House of Delegates: Jo Ann Engelhardt, Orlando Lucero, and Dennis Horn. The House of Delegates meets for two days during the Annual and Midyear Meetings.
A resolution starts as an idea and then must jump through the House of Delegates’s hoops before it is adopted and becomes official ABA policy. Only an authorized entity can bring a resolution forward, typically one with representation in the House of Delegates. In the case of Resolution 10H, the idea came from the Pandemic Task Force. As a threshold matter, there had to be a determination of whether the Pandemic Task Force, an ad hoc task force, qualified to bring forth a resolution. The Rules and Calendar Committee of the House is the ultimate arbiter of matters that come before the House. That committee determined that the Pandemic Task Force could sponsor a resolution.
The next hoop was timing. The resolution was not ready in time for the standard deadline to submit resolutions, but the promoters wanted it heard at the 2020 Annual Meeting. State and local bar associations are the only entities allowed to file “late” resolutions. Once the deadline passed for regular resolutions, the Pandemic Task Force and RPTE had to find a state or local bar association to be a co-sponsor. Luckily, the King County Bar Association stepped up to the plate and agreed to co-sponsor, which permitted the resolution to be calendared.
The final three sponsors were the Pandemic Task Force, the King County Bar Association, and RPTE. The co-sponsors control the text of the resolution and report. All co-sponsors must agree to amendments to the resolution or report. If there are too many co-sponsors, the process of changing the text of the resolution or report can become quite cumbersome.
Before RPTE became an official co-sponsor, it had to obtain the approval of the RPTE Council. The resolution was initially presented to the RPTE Executive Committee, which raised specific questions and concerns. The resolution was tweaked, and the Executive Committee voted to recommend approval to the full Council. Three days before the House of Delegates began its meeting, the RPTE Council formally approved RPTE’s co-sponsorship of the resolution.
Once the three co-sponsors were set, the process of preparing for the presentation before the House began in earnest. Our floor manager, Don Bivins, coordinated the process, which included identifying the speakers and harmonizing their remarks, as well as constant communication during the weekend with the resolution’s handler from Rules and Calendar. It also included soliciting support from other ABA entities and keeping a close ear to the ground to identify any opposition to the resolution. Thankfully, no opposition surfaced.
When the resolution came to be heard, the resolution was moved by James Sandman of the Pandemic Task Force. John McKay of the King County Bar Association then made remarks, followed by comments by Orlando Lucero. The resolution passed overwhelmingly and is now an official ABA policy.