COVID-19 Impact: Letter to State and Seattle Leaders

I’ve been hearing from housing providers large and small about the impact of the state and local eviction bans. The damage has been uneven with some providers reporting only a few people with issues paying rent to entire buildings trying to hold a provider hostage with demands unrelated to hardships created by the COVID-19 response. Today, after talking with a housing provider who’s seeing his delinquencies rise by almost 60 percent with some of his residents unable to collect unemployment benefits due to them, I decided I needed to appeal to state leaders as well as local ones. I use the term “leader” in the general sense. They have to prove they deserve that eponym. Here’s a letter and the attachment, some survey results completed by Commercial Analytics.

Let’s Work Together from Roger Valdez

Attachment: Commercial Analytics One Pager from Roger Valdez

On the Ban: Another Housing Provider Tells Their Story

Councilmember Gonzalez is asking for renters to contribute their COVID-19 stories about dealing with housing providers. I wrote to her to ask that she broaden her appeal and reach out to housing providers for those stories too. 

On that note, I want to contribute my own story as a small landlord. People often think property owners can just tap our “massive” equity to tide us through the tough times and they have little sympathy because we own property. Well, this week my husband and I were turned down for a HELOC on one of our properties despite both of us having secure, essential personnel government jobs, very good credit scores and long term stable tenants. We wanted it in case we needed to draw from it to pay our bills in a crisis like this but were told that we don’t have enough cash on hand to qualify even though the loan to value ratio was very low. 

This is exactly what I was worried about when the city council passed the Winter Eviction Moratorium. I was worried that banks would change their underwriting standards to require larger cash reserves to cover up to 6-8 months of lost rent and utilities due to non-paying tenants and that would in turn hurt small landlords who don’t have a large cushion of cash. We would be denied refinancing, HELOCs, construction loans and property purchases. That’s a major problem for small landlords who thought they had equity to pull from but are now shut out from accessing it. 

This is just after the winter eviction was passed and now the statewide & city COVID-19 eviction moratoriums are hitting. It will become more acute if the council pursues CM Gonzalez’s proposal to extend the eviction moratorium in Seattle to 6 months past the city’s emergency declaration and forces landlords to accept payment plans for another year or more – IF the tenant can even pay. This action will change the entire basis of our investment and mortgage underwriting will in turn become a barrier to new small landlords AND force existing small housing providers out of the market if they cannot access more favorable financing. 

I was worried that banks would change their underwriting standards to require larger cash reserves to cover up to 6-8 months of lost rent and utilities due to non-paying tenants and that would in turn hurt small landlords who don’t have a large cushion of cash.

Seattle Housing Provider

Is it reasonable to expect a small housing provider to have a year or more in the bank to cover a no-rent scenario for 12-18 months, in addition to the cash we need to cover operating costs, repairs, larger long term maintenance, damages, etc.? In a normal economy, we would pursue options to stop that bleeding and get a solid tenant long before that. At minimum, an extended eviction moratorium incentivizes small housing providers to maximize rents to build that cash cushion that banks are expecting now. It says we’re suckers for having kept our rents more affordable all this time. For anyone who wants to point the finger and call us terrible businesspeople – You really have to ask yourself where you think housing providers are supposed to come up with that cash and why anyone would want to be a housing provider under those circumstances. In the end, it always hurts vulnerable residents. 

I want you to hear my story because if two securely employed people with stellar credit like us would get denied a standard loan, what chance does the elderly lady with meager SSI have whose primary income is her rent? What about housing providers who lost their jobs due to COVID and are now on unemployment themselves? 

I’m asking the Seattle City Council to please consider the devastating effect your policies are having on small housing providers, and I especially ask the pragmatic members of the council DO NOT PASS this deeply flawed legislation. There are no amendments you could possibly offer to fix it. Please do not enact an eviction moratorium beyond the actual emergency. There is no good justification to deprive a property owner of the economic value of their property for 12-18 months.

Instead, the city should be providing emergency rental assistance. You can then make sure it is need-based rather than giving tech bros a rent holiday while they code at home. If the city cannot afford it, you can’t expect a small housing provider to afford it either. 

COVID-19: Calls Grow to Cancel Rent, and We Respond

After we issued our statement reminding everyone that in spite of all that is going on with COVID-19, rent is still due, we got a call from KIRO doing a story on efforts to cancel rent. This is what happens when politicians try to exploit a crisis; confusion gets added to fear and anxiety about the future. The housing provider who posted a rent increase? I’d tell him or her that was a huge mistake. Now is not the time to be posting rent increases. Still, if a resident can pay they should, and if not, everyone needs to work together. Watch the story below.

ksjdf

No Fooling: Rent is Still Due Today

We sent this statement today to the media and business leaders in the city.

Elected Officials Must Show Some Leadership On COVID-19 Impacts and HousingContact: Roger Valdez, 206-427-7707
Many people and families are reeling from the impacts of the response to COVID-19, a response that is critical to save lives. Nothing like this has ever happened. People are scared, hurting, and looking for reassurance and help. Housing providers across the city are responding, and here’s an example. 

However, now is not the time to ignore financial responsibilities, especially people who DO have resources to pay their bills including rent. 

Eviction bans do nothing to help hard hit people to do this; in fact, the proposal by Councilmember Lorena Gonzalez to extend the ban 6 months beyond the end of the emergency and force housing providers to make interest and penalty free loans to people who can’t pay, is irresponsible. The impacts of COVID-19 have nothing to do with eviction, this is about deep and wide losses of income by hard working people.

We’ve explained in the attached letter that losses of rent revenue will create hardship and even foreclosure for some housing providers. The uncertainty created by the ban will impact housing finance and supply for months if not years. And finally, Gonzalez’ legislation and the posturing by Councilmember Sawant has stoked a “rent strike,” something not unlike looting. The rent strike advocates are using City issued moratorium as encouragement to not pay rent.  

Elected leaders need to take a responsible approach during this time of crisis, not stoke animus and hostility toward housing providers. We urge state and local leaders to stop extending eviction bans and free loans from housing providers and concentrate instead on the following:

• Encourage communication between residents and housing providers in writing, over the phone, or via email. Providers will work with residents if they know there is an issue;
• Get banks and lenders together with residents and housing providers and encourage their forbearance on mortgages and loans and to develop low or no interest loans for 90 days for hard hit families;
• Require verification of loss of income for residents who have lost their job or seen their income fall; 
• Require verification that residents are seeking assistance and making adjustments when they get that assistance; and 
• Create sanctions for abuse by residents and providers when support is made available. 

People have been coming together, helping each other, offering assistance, and even cheering each other on during this crisis. Now is the time to work together, not look for villains. We’ve seen housing providers offering help to their residents, including offering them alternative ways of keeping up with rent. 

We urge elected officials to make a strong statement about the dangers of trying to make a statement by not paying rent. The Governor of Minnesota has issued a good model of how to communicate about these kinds of orders.

COVID-19 Relief: Help From King County on Property Tax

This is pretty straightforward and helpful news from King County just released today.

Individual residential and commercial taxpayers who pay property taxes themselves, rather than through their mortgage lender, can delay payment until June 1, 2020 due to the COVID-19 (coronavirus) outbreak. Banks and other financial institutions that pay property taxes on behalf of their lending customers will still need to meet the original April 30 deadline.

King County Press Release

If you have questions about property taxes or this order you can contact the King County Treasury at propertytax.customerservice@kingcounty.gov or call 206-263-2890.