Another pivotal moment for affordable and public housing

The Coronavirus pandemic offers a stark reminder – no matter how much we plan, unexpected and life-altering events are inevitable. Unforeseen change can be healthy. It can pave the way for personal growth and help us realize opportunities once considered unimaginable.

Alternatively, change can cause long-term disruption especially for people who lack the resources and networks needed to navigate a crisis. The low-income housing industry in America faced a variety of headwinds before the pandemic including housing cost-burden, severe lack of supply and unmet capital needs in aging portfolios. The outbreak and ensuing economic downturn brought greater uncertainty to already vulnerable populations. Few of us predicted the timing and magnitude of the pandemic, however, timely collective action has helped to stem the tide.

During the early weeks of COVID-19, countless owner-operators and housing authorities, policymakers across all levels of government, housing advocates, non-profit organizations and other stakeholders worked together to keep residents safe and housed. As the economy continues to crawl and the prospect of sustained federal financial assistance grows murkier, the housing industry finds itself in another pivotal moment. Is the length of the crisis finally wearing out our patience and ability to work together? Or, can we stay on the path of united and resolute action?

Where we are now

Six months after the first reported case of COVID-19 in the United States, the health and economic impacts of the virus are not letting up. As of July 29, more than 4.4 million people in our country have been infected and more than 150,000 have died. The disease has more deeply impacted our most vulnerable populations including our public housing communities. For example, the New York City Housing Authority, which houses approximately 400,000 residents including over 160,000 residents over the age of 62, has experienced almost 1,000 confirmed and 300 probable deaths related to the virus and 8,000 confirmed cases.

While some of the hardest-hit states during the early part of the pandemic have flattened the curve, infections have continued to surge among the first states to reopen their economies. Many out of work, low-income families are making the painful trade-off between paying for rent (and other bills) or eating healthy. These communities are experiencing severe food insecurity. Since February, 26% of Americans report they or a member of their household have gone without meals or relied on public assistance or private charity to obtain food, according to the Kaiser Family Foundation’s May health tracking poll. The toll on our national economy has also been staggering – through July 23, about 1 in 5 American workers (approx. 30 million people) were receiving unemployment benefits and 20 million renters were at risk of eviction.

What industry data tells us

MRI Software Market Insights: The Impact of COVID-19 on the Affordable and Public Housing markets, a data-driven look at the impact of the pandemic on property operations, provides a glimmer of hope. The report examines key property management metrics including rent collection, applications, new admissions certifications, move-outs and work orders from February through June 2020 and makes year-over-year comparisons with the same period in 2019. Findings from June reveal the continuation of tenants staying in place as compared to 2019 in addition to an ongoing decline in applications and move-out certifications with new admission certifications starting to increase across June.

As landlords and operators enforce social distancing practices to keep residents and staff safe, routine work order volumes are trending below 2019 levels. One of the most promising metrics has been rent payments, which have not materially changed since pre-pandemic levels. Despite the financial challenges, low-income families have been afforded the resources to stay in their homes. The MRI Market Insights data paint a picture of stability made possible by the cross-sector collaboration the housing ecosystem required to stay afloat. However, the future remains unclear as the extra $600 per week in coronavirus unemployment benefits approach expiration at the end of this week and a Congress that is far from reaching an agreement on what will replace it.

Possible uncertainties ahead

The MRI Market Insights report shows that renters have been keeping up with payments, however, at what cost and for how much longer if the emergency federal benefits expire? It’s likely that households are relying on scare funds from unstable sources that may not be available in the immediate future. The increased unemployment insurance has helped many households continue to pay their bills, but even at its current level it’s not enough to ensure housing stability during and after the pandemic. Millions of workers who have experienced pay cuts or reduction in hours or other loss of income may not be eligible for unemployment benefits and will struggle to afford rent.

In addition to the impending expiration of the coronavirus unemployment benefits, on July 24, the eviction moratorium put in place by the CAREs Act expired (some cities and states have implemented their own bans). Knowing it’s only a matter of time before many low-income households are unable to continue paying rent, housing advocates have called for $100 billion in rental assistance in addition to a uniform nationwide eviction moratorium to prevent a tsunami of evictions. This proposal made its way into the U.S. House-passed coronavirus bill (HEROES Act) in May. However, the House will need to negotiate with the Senate in order to pass another relief package.

What comes next?

On July 27, the Senate Majority Leader began releasing a series of bills (HEALS Act) which represent a $1 trillion proposal for the next relief package. The HEALS Act does not extend the eviction moratorium, but it provides the following (among other funding initiatives):

• Extension of federal unemployment benefits at a rate of $200 per week, as opposed to the $600 per week provided under the CAREs Act, for 60 days until states are able to reconfigure their systems to allow unemployment benefits to be tailored to individual recipients in an amount that equals 70 percent of their previous wages.
• Another round of direct $1,200 payments.
• $2.2 billion for Section 8 tenant-based rental assistance to maintain current voucher assistance for low-income families experiencing a loss of income due attributable to the pandemic.
• $1 billion for the Public Housing Operating Fund to help public housing agencies maintain programs, supplement reduced tenant rent payments and contain the virus’s spread in public housing.
• $113.4 million for the Section 521 rural rental assistance program to help current residents who have experience a loss of income.

The Republican leaders in the Senate now turn their negotiations to the Democratic-controlled House. The House bill includes $75 billion for homeowner assistance, $100 billion for rental assistance and $951 billion in flexible funding to state and local governments, as well as significant funding for other HUD and USDA housing programs. The HEROES Act also seeks to increase the supply of affordable rental units with measures to strengthen the low-income housing tax credit (LIHTC) such as implementing a 4 percent minimum floor and lowering the private activity bond financing percentage.

The Senate is scheduled to leave Capitol Hill for the August recess in less than two weeks and is not expected to return until after Labor Day. Throughout the COVID-19 era, owner-operators of affordable housing and local housing authorities nationwide have been heroic in stretching the available resources, keeping their residents safe and housed and operating portfolios in the black. With no end in sight to the pandemic, the economic health of our low-income residents and the properties in which they reside hang in the balance.

The major segments of our industry collectively rose to the challenge during the early stages of the pandemic. Nevertheless, the prolonged nature of the crisis might be testing our ability to remain steadfast and united. This is another pivotal moment for affordable and public housing. Let’s hope that all key players act swiftly and remain unified in helping our most vulnerable populations.