California proposal aims to pay all overdue rent for low-income tenants impacted by the pandemic

The initiative comes as the federal eviction moratorium nears expiration.

June 22, 2021, 4:49 PM

Lawmakers in California are working on finalizing legislation that would pay 100% of overdue rent for eligible tenants who have taken a financial hit amid the COVID-19 pandemic.

The $5.2 billion effort comes as the federal eviction moratorium from the Centers for Disease Control and Prevention and state eviction protections are set to expire at the end of the month, giving lawmakers a looming deadline to hammer out the new rent relief program that has been backed by Gov. Gavin Newsom.

The proposal for the state to pay off 100% of overdue rent is part of revisions to an existing pandemic-era rent relief program which promises to pay off 80% of past-due rent for eligible tenants, according to Russ Heimerich, a spokesperson for the state's Business, Consumer Services and Housing Agency, which is overseeing the initiative.

"Under the current program, landlords would get 80% of the rent that they are owed in exchange for forgiving 20% of the rent and clearing the rental debt from the tenant," Heimerich told ABC News. "What the governor proposed in May, and what they're working on right now, is raising the reimbursement rate to 100%."

Heimerich said he expects the revised bill to be agreed upon by the state legislature "any minute now."

PHOTO: California Governor Gavin Newsom speaks at a news conference at Universal Studios Hollywood in Universal City, Los Angeles, June 15, 2021.
California Governor Gavin Newsom speaks at a news conference at Universal Studios Hollywood in Universal City, Los Angeles, June 15, 2021.
Mario Anzuoni/Reuters

The back rent will be paid for with federal funds left over from pandemic relief packages and aid, according to Heimerich, who said this surplus federal money earmarked for rental assistance totals $5.2 billion.

Tenants who earn less than 80% of the Area Median Income (AMI) in their area and have faced pandemic-related financial hardship are eligible to apply for assistance from the state program. The Department of Housing and Urban Development sets the AMI each year.

Newsom signaled his support for the program on Twitter, sharing a news article about it and captioning, "California is planning rent forgiveness on a scale never seen before in the United States."

Heimerich confirmed it was the largest rent-relief program in the nation, but added, "Only because we're the largest state in the nation population-wise."

Even before the pandemic walloped the economy, swaths of California were already dealing with an affordable housing crisis that was only exacerbated by the economic downturn caused by the pandemic.

Last week, a team of researchers at the Harvard Joint Center for Housing Studies warned of an "impending wave of evictions" this summer as the federal moratorium and other state and local protections expire at the end of the month. The Harvard report said a looming housing crisis would disproportionately impact people of color and low-income tenants, further dividing the haves from the have-nots as the wealthy are simultaneously fueling a hot housing market and driving home prices up.

"Even as the U.S. economy continues to recover, the inequalities amplified by the COVID-19 pandemic remain front and center," the Harvard researchers stated.

Meanwhile, some 4.2 million Americans across the nation report that it is "very likely or somewhat likely" that they will face an eviction or foreclosure in the next two months, according to a Census survey conducted between May 26 and June 7 that was released last week.