Corporate Landlords Have Gotten Government Aid. Tenants Haven’t.
Some corporate landlords who received federal PPP loans are notorious for mistreating tenants.
The federal government has given millions of dollars to corporate landlords accused of inhumane eviction practices, poor maintenance of their buildings, and unfair rent increases.
These landlords received loans through the Paycheck Protection Program, billed as a means to help small businesses stay afloat during the pandemic. Borrowers don’t have to pay back the loan if it is used for payroll, interest on mortgages, rent, and utilities.
But some of those companies were corporate landlords accused of mistreating their tenants. Chestnut Holdings of New York, Inc., Fairstead Management, LLC, and Langsam Property Services Corp. received PPP loans totaling between $3.35 million and $8 million, according to a ProPublica database of loan recipients. Landlords with the three companies were included on a list of New York City’s 20 most prolific evictors for 2019, compiled by the Right to Counsel NYC Coalition. The companies did not respond to requests for comment.
In February, New York State Attorney General Letitia James sued one of those companies—Chestnut Holdings—for failing to comply with the New York City Childhood Lead Poisoning Prevention Act. A spokesperson for Chestnut Holdings defended its safety record, according to a report in The Real Deal. “Chestnut exceeds any reasonable standards in inspecting its units and trying to address all safety concerns, especially the presence of lead,” the spokesperson said.
San Francisco-based landlord Mosser Companies, Inc. received a PPP loan worth between $2 and $5 million, according to the ProPublica database. Mosser has over $1.5 billion in apartment assets, according to the company website. Mosser, its website reads, is a “leading investor, acquirer, and operator of value-add rent-stabilized urban workforce housing” that “efficiently upgrade[s] apartments to drive rent growth.”
Tenants have accused the company of exploiting a loophole in Oakland’s rent control law to raise rents and push out low-income tenants. The Oakland Rent Adjustment Ordinance allows landlords to impose an annual rent increase based on the regional Consumer Price Index, typically between 2 percent and 3.5 percent. However, a landlord can petition the city’s Rent Adjustment Program to raise rents higher if capital improvements are made.
Unlike their corporate landlords, tenants have received little, if any, help from the government. Between 19 million and 23 million people who live in rental households are at risk of eviction by Sept. 30, according to the COVID-19 Eviction Defense Project.
“The government is bailing out corporate landlords, but there is still no bailout for tenants facing eviction with a massive rent bill looming over their head,” said Jason Wu, a staff attorney with the Legal Aid Society, in a statement to The Appeal. “Where are the government subsidies for millions of tenants who are suffering under crushing rental arrears?”
As part of the federal stimulus package, the government provided approximately $1,200 to some U.S. residents. Many people were excluded from receiving the one-time payment, such as people without a social security number, which can include undocumented immigrants. (Senators Kamala Harris, Ed Markey, and Bernie Sanders introduced legislation in May to offer more sustained assistance; their bill provides a $2,000 monthly payment for people earning up to $120,000 a year.)
“A lot of us ended up choosing to forgo paying rent so that we could save money for food and groceries and healthcare, medical expenses,” said Terra Thomas, who lives in a Mosser building.
In July, there were 16.3 million people unemployed in the United States, according to the U.S. Bureau of Labor Statistics—an increase of 10.6 million since February. The economic devastation wrought by the federal government’s response to the pandemic has fallen hardest on people of color. The unemployment rate among Black workers is 15 percent and 9.4 percent for white workers, according to the bureau.
As a result of, in part, decades of housing discrimination—both de jure and de facto—Black and Latinx people are particularly vulnerable to losing their homes. The U.S. Census Bureau estimated that about 23 percent of Latinx renters, about 7 percent of white renters, and almost 15 percent of Black renters had no confidence they could pay next month’s rent, according to the bureau’s Household Pulse Survey for the week of July 16 to July 21.
“You can never talk about housing policy in the United States without talking about racism,” said Maurice BP-Weeks, co-executive director of the Action Center on Race & the Economy. “The folks on the bottom in housing policy, which is always Black and Latino folks in the U.S., are getting kicked even harder than everyone else right now.”
Eviction moratoriums, where they do exist, vary from city to city and state to state. Few statewide protections exist in California. In April, the Judicial Council, which sets policy for the state court system, halted eviction proceedings for nonpayment of rent. But the council is voting this week on lifting these protections in September.
“The solution is actually really simple and it’s to cancel rent and mortgages for the duration of the pandemic,” said BP-Weeks. “Instead of putting the onus on big banks, big corporations, and the federal government, we’re doing the opposite and putting the onus on the most vulnerable people in the system. We’re forcing them to come up with, scrape together as much as they can for rent and mortgages so money keeps flowing up.”
In February, Assembly member David Chiu introduced AB 1436 in the California state legislature. His bill would forbid landlords from evicting tenants who have been financially affected by COVID-19 for failure to pay rent for the duration of the state of emergency order and for 90 days following the lifting of the order, or until April 21, 2021, whichever comes first. Landlords must wait 12 months after the covered time period before pursuing legal action against tenants, but those actions cannot include eviction for unpaid rent during the covered time period.
“While the federal government is bailing out corporate landlords, tenants are struggling to stay in their homes,” said Chiu in a statement to The Appeal. “We need to pass AB 1436 to avoid a mass wave of evictions.”
Thomas supports Chiu’s bill, but adds that it is the bare minimum of what should be provided to renters. If AB 1436 is enacted, renters would still be liable for potentially thousands of dollars in unpaid rent.
“When this state of emergency is lifted, pandemic is over, people aren’t going to suddenly have you know five, six, seven, eight months of rent that they can pay,” said Thomas. “We really need to get rent forgiven and canceled so that people are able to survive after this.”