The Tip of the Iceberg
Local solutions to support the multifamily industry this coming fall
Last week we were joined by:
City Council Member Cindy Bass-Philadelphia,PA
City Council Member Andria McClellan- Norfolk, VA
City Council Member Matt Westmoreland-Atlanta, GA
for a discussion about developing a clear understanding of the impact of the COVID-19 pandemic on the near future of multifamily housing. Through this dialogue we learned more about the specific pain points of these three cities as well as initiatives being carried out to provide support to the entire multifamily ecosystem — even during the wait for further federal pandemic relief. Here’s what we learned:
Survey data is making it difficult to understand the full impact of the pandemic, but many signs are troubling.
Taking into account various factors that include stimulus checks and other types of intervention, it’s proven difficult for some cities to understand exactly if or when rates of rent collection will see a sharp decrease. The data that cities have received from national housing organizations demonstrates that while it’s difficult to get a comprehensive, nationwide picture, it’s also clear that rates of rent collection by property class reinforce the idea that the impact of COVID is felt most in communities that were already facing other challenges, and that the pandemic has served to exacerbate many pre-existing issues in housing.
In an NMHC survey of 11.4 million units of professionally managed apartments, it was reported that rates of rent collection in August 2020 only saw a 1.9% decrease when compared to rates in August 2019. In response to this, our guests spoke about the hidden realities that may not be represented by this statistic, realities such as the continuous drop-off of rates of rent collection in Class C properties specifically, a stat surfaced by Council Member Matt Westmoreland.
Percentage of rent payments received in 2020 within the first 15 days of the month at Class C properties nationwide
Council Member Cindy Bass also brought up the fact that renters may still be paying their rent on time, but that doing so might require them to part with their last dollar, citing the growing lines at food drives in her city of Philadelphia as the pandemic has gone on. Council Member McClellan echoed this sentiment, highlighting the difficulty of choosing between paying rent and paying for other necessary goods/services.
Additionally, a topic was resurfaced in this conversation that we’d heard in several of our previous roundtables: the end of eviction moratoriums in cities across the United States looms like a storm cloud over the entire multifamily industry and quite frankly, over the economy as a whole.
When the courts reopen and begin processing evictions, renters everywhere will be forced to scramble to make up months of back rent. Without the introduction of significant aid and relief infrastructures, our industry and our economy are in for countless challenging ripple effects in 2021 and beyond.
It’s going to take more than just the CARES Act to make sure both renters and owners are supported
All three of our guests stated that they’ve been able to leverage the assistance they received from the CARES Act, but admitted that to date these funds have mainly been used to support renters. Our guests agreed that there is a dire need for increased urgency around finding solutions that support owners as well.
Some city-specific uses of CARES Act money that we heard:
Norfolk, VA covering up to 6 month’s rent+utilities for some renters
Atlanta, GA allocating $22 million to rental assistance to help ~7000 families cover at least 3 months of rent
Much of the frustration on the part of owners is rooted in the fact that without equal assistance to both renters and owners, there is a growing perception that federal and local governments are interfering with the conditions of a contractual agreement between the two parties.
Council Member McLellan then detailed some of Norfolk’s efforts to keep money flowing from renters to owners in hopes to ease some of this lopsidedness, including:
The “Open Norfolk” program, designed to help businesses reopen safely and as quickly as possible based on pandemic health guidelines, in hopes that more people can resume their jobs and be able to pay rent again.
The work of Norfolk’s Chief Resilience Officer, a position created within their government 10 years ago that has yielded large success in recovery efforts from both environmental and financial events. Specifically, the office of the CRO has spearheaded the city’s involvement in the “Bank On” program, which helps citizens understand strategies around building savings to stay prepared for adverse life events
To that end, Council Member McClellan also encouraged banks across the country to step up and come to the table to talk about mortgage forbearance options for owners
Renters Choice Legislation is a proven way to ease strain across the ecosystem
All of our guests voiced their support of Renters Choice Legislation and Rhino’s commitment to convening leaders across sectors as a solution with real ability to decrease financial strain for renters everywhere, as demonstrated by the success of the legislation’s passage in Cincinnati. The replacement of cash deposits with an insurance alternative has quickly been realized as a tried and tested way to bring down the costs of renting. Addressing these costs is a way to soften the blow for the entire multifamily ecosystem during these times of unprecedented economic challenge. This effort in Cincinnati — headed up by NewDEAL leader Council Member PG Sittenfeld in collaboration with Rhino — inspired Council Member Westmoreland to actually send a link to the announcement of the legislation’s passage to his colleagues, stating “this is something we have to do,” to address the current challenges. This legislation will move forward to the full council in Atlanta by the end of this month, and Council Member Westmoreland expressed excitement around working with Rhino to bring this change to his city in a time of such dire need. Similarly, cities in Virginia such as Richmond and Norfolk are exploring renters choice legislation for the near future as well.