Thousands of Arizonans struggling to pay rent because of the COVID-19 pandemic could lose their homes this summer when Gov. Doug Ducey’s executive order delaying evictions expires, government data suggests.
Renters who were sick with the virus, lost jobs or had to stop working because schools were closed have had a reprieve since late March.
At that time, Ducey launched a $5 million fund to help renters and temporarily delayed eviction enforcement through July 22. Congress also banned evictions until July 25 on rentals with federally backed mortgages.
But with unemployment claims rising and slow distribution of state rental aid, many tenants could be on the brink of losing their rental homes if assistance doesn’t come faster or the governor doesn’t extend his order.
Additional tenants could fall into rental debt by August if they remain out of work and see their weekly unemployment checks drop to $240 or less, after the weekly $600 federal benefit runs out.
‘A huge economic cliff’
Once Arizona’s eviction moratoriums end in July, renters who can’t pay their landlords accumulated rent and late fees will be eligible to be kicked out of their homes within days.
Mark Stapp, director of the Master of Real Estate Development program at Arizona State University, said too many renters are in danger of being evicted and something needs to be done to help them and their landlords.
“We are on a huge economic cliff and being kept from falling off with stimulus money,” Stapp said. “We can’t have record unemployment and think our economy will come roaring back in a few months … It’s going to take (additional) stimulus money to prevent many Arizona renters from becoming homeless and landlords going under.”
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Thirty-three Democratic lawmakers recently called on Ducey to extend the eviction moratorium until January, noting that rising homelessness in the middle of the pandemic and triple-digit temperatures is a recipe for disaster.
But a landlord association and a Republican lawmaker say a six-month extension is going too far and could put landlords out of business.
“(Landlords) are struggling in the same ways Arizona families are struggling,” Arizona Multihousing Association CEO Courtney Gilstrap LeVinus said. “They have to pay the bills: payrolls, mortgages, utilities, insurance, property taxes. Should another six months be added to the 120-day eviction moratorium, that’s 10 months without payment for many of these folks. That’s not sustainable, and it could create serious ramifications for the state’s economy and the housing sector.”
What tenant and renter advocates agree on is state and local governments need to dole out financial assistance faster. Such assistance benefits renters and landlords.
“Aid that doesn’t reach the people who need it is not aid — it’s a waste,” Gilstrap LeVinus said.
Ducey doesn’t appear keen on extending the eviction moratorium.
Arizona has given out millions in unemployment, housing and food aid and support for local governments, Ducey spokesman Patrick Ptak said.
“We understand the importance of keeping people in their homes,” he added. “We want to see landlords and tenants be able to continue to come to resolutions that minimize disruptions, avoid any surge in evictions, and continue to protect public health.”
The expiration remains in place, Ptak said, and the governor is focused on determining “any additional actions that may be needed following the order’s expiration.”https://e.infogram.com/83d29cad-228b-4513-b5cc-edca615b0d93?src=embed#async_embed
Renters living on the edge
Cynthia Molina, a Mesa single mother of seven, lost her job at an auto-glass company when the stay-at-home order went into effect, she said.
When Molina, 35, couldn’t pay April rent, her landlord filed to evict her and her children from their rental home, she said. They range from 18 months to 16 years old.
Molina provided paperwork to her landlord showing she had been affected by COVID-19 and was eligible under the governor’s order to stay, she said. But after a constable visited her door, Molina said she felt she had no other choice but to move out.
A fellow ward-member of The Church of Jesus Christ of Latter-day Saints helped Molina find temporary housing in a two-bedroom motel room run by a nonprofit, where she cooks using a microwave and hot plate and washes clothes in the sink, she said.
Molina applied to various state agencies and charities for help, she said. She received a one-time, $1,200 unemployment check, which was used up fast, and is waiting to be approved for rental aid from the Arizona Department of Housing’s Rental Eviction Prevention Assistance fund, Molina said.
About 6% of nearly 17,000 renters who have requested help from the eviction prevention program since March have been approved for money, data through June 26 shows.
“I understand there are so many other people that probably were going through the process at the same time, and I was probably that percentage that didn’t get any help at all,” Molina said. “I was thankful for the blessing (from) our church member. If it wasn’t for that, we probably wouldn’t be here.”
Molina doesn’t know when her situation will turn around. She said the company where she previously worked subsequently closed.
“I’m hoping, waiting for something to happen,” she said.
The looming problem
It’s difficult to determine exactly how many Arizonans could lose their homes this summer, but it’s likely thousands.
Arizona had an affordable housing crisis even before COVID-19 crippled the economy. Evictions in Maricopa County climbed rapidly in 2018 and 2019, and the Phoenix area led the U.S. in record rent increases during most of 2019.
After the pandemic hit, the county’s eviction filings fell sharply.
But the drop of nearly 10,000 filings from March to mid-June this year compared with the same period last year probably didn’t occur because more tenants were paying rent. It’s likely because landlords have held off filing during the governor’s moratorium.
National estimates of how many tenants have paid on time initially looked promising, but those estimates left out large swaths of people.
The National Multifamily Housing Council and RealPage reported in June that 87% of sampled Arizona apartment tenants paid rent at the beginning of the month, similar to last year.
However, the data failed to include students, small apartment complexes, room renters, budget-hotel residents, and single-family homes and condos owned by investors.
And the unemployment crisis is far from over, despite the state officially reopening its economy.
More than 250,000 Arizonans received unemployment benefits recently and another 30,000 filed initial claims to begin receiving benefits. The new claims earlier this month were nearly at the pre-pandemic record set in 2009, during the Great Recession.
A landlord group estimated property owners could file as many as 5,000 more eviction cases during the weeks after the moratorium ends.
Of the evictions that landlords have filed since March, judges granted more than 1,700 in Maricopa County and 527 in Pima County. Many were placed on hold by constables because of the moratorium. Those would moved forward once it expires.
In a normal year, another 2,300 or so eviction orders in Maricopa County and about 600 in Pima County probably would have been issued during that time, based on 2019 data.
More evictions on hold due to the federal CARES Act could crest Aug. 23, after a 30-day notice period from complexes that have Section 8 or federally backed mortgages such as those from Fannie Mae, Freddie Mac, Veterans Affairs or HUD.
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The affordable housing shortage may exacerbate the challenge of finding another place to live after tenants are evicted.
The state is at least 200,000 affordable units short.
“We had a growing affordable housing and homeless crisis before COVID. It could get a lot worse fast,” said Sheila Harris, former director of the Arizona Department of Housing.
Possible ‘tidal wave’ of evictions
County justice courts are preparing to be swamped if evictions spike in late July and August, North Valley Justice of the Peace Gerald Williams said.
“There’s no way for us to know if we’re going to get a tidal wave of evictions or if landlords and tenants have worked out partial payment agreements on a lot of cases,” he said. “Unfortunately, we have to prepare for the worst-case scenario where we would all of a sudden get thousands of eviction cases.”
By law, eviction hearings are supposed to take place within five to 10 days of filing.The Arizona Supreme Court gave courts authorization in March to suspend mandatory timelines on eviction hearings.
Further measures to deal with an increased workload, such as putting non-eviction cases on hold or bringing in substitute judges, are under consideration at Maricopa County justice courts, Williams said.
Homeless despite moratorium
Aaron Nadel and Sierra Nielsen temporarily found protection under Ducey’s executive order.
When Nadel, 32, lost his construction job due to the pandemic, they notified their landlord, attended their eviction hearing and a constable allowed them to stay in their Phoenix efficiency apartment.
But the couple had trouble getting unemployment and rental assistance from the state. And the landlord contacted the couple daily about their late rent, making them feel uneasy, Nadel said.
He and Nielsen decided to leave and now are effectively homeless, bouncing from motel to motel.
“I don’t want to end up back in a homeless shelter,” where Nadel fears catching the novel coronavirus, he said. “I wish they would focus on people’s safety and well-being right now. We’re in an emergency.”
State assistance sputters
Arizona’s housing advocates say they already are inundated with requests for help from a growing number of renters losing their homes and are worried about handling more.
“I am very concerned we are not providing enough help to renters fast enough, and deadlines are looming,” said Joan Serviss, executive director of the Arizona Housing Coalition.
After The Arizona Republic reported the state’s rental assistance program was giving out money at a trickle and narrow requirements were excluding people in need, the Arizona Department of Housing made changes.
“To provide needed rental assistance to those affected by COVID-19 as expeditiously as possible, the Arizona Department of Housing has changed a number of policies to the Rental Eviction Prevention Assistance Program,” agency spokesperson Janelle Johnsen said.
Renters applying for financial help now must provide less documentation, aren’t disqualified for having savings and can receive more than one month in rent aid at once. And the program has added temporary employees to process applications.
But barriers remain, such as proving that a renter’s income has dropped by at least 10% and the state’s slow pace of reviewing applications. Nearly half haven’t been looked at, recent data shows.
Democratic lawmakers and the Arizona Multihousing Association have called on the state to make the program easier.
If a resident qualifies for the governor’s eviction delay, they should automatically qualify for financial relief, Gilstrap LeVinus, of the rental association, said.
“That would end the red tape and bureaucracy that continues to hurt struggling renters and struggling property owners,” she said.
Millions of aid dollars are unused
As renters wonder how they’ll make up months of rent before the eviction delay expires, tens of millions of dollars that could help are sitting unused.
Nearly $4 million remains unspent in the Arizona eviction prevention fund. And nearly $37 million approved by the Legislature for coronavirus relief in late March is still available. Housing aid is one of the ways it can be spent.
Some local governments are stepping into the breach.
Maricopa County, Phoenix and Mesa have started their own rental assistance programs using CARES Act funding:
- Maricopa County set aside $30 million for rent and mortgage aid, while spending another $10 million on homelessness.
- Phoenix plans to spend about $30 million in federal aid to help residents pay rents, mortgages and utilities.
- Mesa set aside $1.5 million toward helping residents pay utilities and aid for homeless people.
But the programs are still getting up and running, making it unclear if the money will be distributed in time to avoid evictions by the July 22 deadline.
And residents of smaller counties and cities may be out of luck.
Small local governments across Arizona say they’re missing out on $395 million in CARES Act funding that the governor held back in the state’s general fund.
Next: A wave of landlord foreclosures?
Landlords say they can’t afford for the eviction delay to be extended. If the governor were to do so, a wave of rental-property foreclosures could be next.
“I am beside myself with the decision by the governor to allow tenants free rent,” said Frank Russo, a Valley real estate agent and landlord.
“So now I can’t make my mortgage payments and will lose the rental to foreclosure when the time comes and have no cash flow to make my own residence payment,” he said. “I’ll be homeless while my tenants are warm and safe.”
The millions of dollars in government aid available means tenants and landlords should get the help they need, said state Rep. Ben Toma, R-Peoria, a former landlord.
When a renter is approved for the state’s eviction prevention program, the money goes straight to the landlord.
“I would think, based on the various programs out there, that those tenants that really need the help in order to not get evicted will get it,” he said. “Where you’re not going to see a lot of sympathy is for the tenants that have not communicated with their landlords and have refused to pay, when it is not clear there truly is a hardship due to COVID.”
Some landlords have received mortgage forbearance from the federal government or participating banks.
But not all mortgage companies gave breaks. Other landlords who have paid off their loans haven’t gotten help with their expenses. And small investors, who are common in Arizona, may not have much financial wiggle room.
“Most of the landlords I’ve spoken with have continued to make those mortgage payments,” Toma said. “If we do extend (the moratorium), the hard costs become reality and landlords have to think about maybe losing their properties to foreclosure.”
‘What are people going to do?’
Peoria couple Kaitlyn and Josh Wall applied for Arizona rental aid as soon as applications opened March 30 after their jobs were impacted by shutdowns.
The couple with an infant daughter waited months for word, borrowing money from family members to scrape by.
In June, their rental assistance request was denied, but the Walls appealed and won help for May, June and July after The Republic inquired about their case.
Kaitlyn is worried other families could fall off the eviction cliff if they don’t get financial aid soon.
“What are people going to do then?” she asked. “It’s stressful to think you know something is coming and you can’t do anything about it.”
AUTHORS: Catherine Reagor and Rebekah L. Sanders