Ilanna Ball isn’t exactly a real estate tycoon – she owns two triple-deckers, a few other multifamily houses and manages another 45 rental properties for other landlords, mostly in the Woonsocket area.
She learned after the real estate collapse in the 2008 recession to be prepared for the worst, saving as much as she could for more than a decade to protect herself against the next economic downturn.
But she wasn’t prepared for a pandemic. Neither were many of her tenants.
Two of them owed $8,000 each in rent at the start of July, some of which dated from before the arrival of COVID-19. One of the tenants is due to move out by October, but Ball figured that with the cost of cleaning the one-bedroom unit, repairing damages and buying new appliances – on top of the lost rent – she’ll be $17,000 to $20,000 in the hole.
And that’s just one apartment.
All told, Ball said, the tenants in the properties she owns owe more than $25,000 in unpaid rent, and she’s still got mortgage payments to make.
Ball’s situation and that of her tenants illustrate two sides of the potentially devastating effects of the pandemic and the economic slowdown that came with it on lower-income sectors of the residential rental market.
Affordable-housing advocates are forecasting a flood of evictions in the coming weeks and months as some people who were barely making ends meet before the economy shutdown in March are slipping further behind, particularly now that Rhode Island’s moratorium on evictions expired in June and bonus federal unemployment benefits disappeared at the end of July.
And there are also small landlords such as Ball who are faced with a problem of their own: Force people who can’t pay their rent onto the street during a massive public health crisis or risk losing their properties to foreclosure or tax sales because of evaporating rental income.
“It’s incredibly frustrating for owners,” Ball said.
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TAKING ADVANTAGE? Murray Gereboff, an attorney at Gereboff & Gelade in Providence who represents mostly smaller landlords in eviction proceedings, says in many of his cases, it appears tenants were taking advantage of the monthslong moratorium on evictions and refusing to pay landlords, instead prioritizing things such as the cable TV bill over rent. / PBN PHOTO/ELIZABETH GRAHAM[/caption]
ISSUES ‘AMPLIFIED’
So far, evictions mostly haven’t materialized yet in Rhode Island. That’s in part because District Court stopped accepting new cases after the state shut down in mid-March to slow the spread of COVID-19. Even after the court resumed taking new cases on June 2, there were only 660 new eviction cases filed through July 30, according to R.I. Judiciary spokesman Craig Berke. That’s little more than half of the 1,254 cases filed in the same period a year ago.
Nevertheless, many are bracing for things to get much worse.
A recent National Low Income Housing Coalition report said between 44,000 and 62,000 households in Rhode Island are in danger of eviction because of the coronavirus pandemic – between 28% and 42% of all renter households in the state. That amounts to 100,000 to 143,000 people, the report said.
In Massachusetts, Gov. Charlie Baker already has extended that state’s moratorium on evictions until Oct. 17. Gov. Gina M. Raimondo said earlier this month that she is also considering reinstituting a moratorium for Rhode Island, if Congress isn’t able to pass another stimulus package.
“If I have 1,000, 2,000 or 3,000 who are homeless, that’s a real problem,” she said.
In the meantime, state officials and advocates for the needy have launched several rental assistance programs.
One initiative, a partnership between the state and United Way of Rhode Island called Safe Harbor Housing, uses $7 million in federal stimulus money to help tenants and landlords resolve disputes over rent payments. Another program, Housing Help RI, is administered by Crossroads Rhode Island and provides a $5,000 grant to eligible renters. The latter program has been flooded with so much interest, it was forced to stop taking new applications while it processed existing requests.
But affordable-housing advocates say these efforts will barely make a dent in a widespread problem.
Brenda Clement, director of HousingWorks RI at Roger Williams University, said Rhode Island was facing a housing crisis long before COVID-19 arrived. Now with the joblessness rate at 12.4% as of July and the extra $600 in weekly unemployment benefits gone, Clement said she is seeing Rhode Islanders deplete their savings to keep up on rent payments.
“We are not producing enough housing, and people are forced to spend 50% or more of their income on their rent,” said Clement, who expects multiple waves of evictions in the next several months. “COVID has just amplified the issues of housing stability across our state.”
‘YOU’LL GET PAID’
Elizabeth Bentley is one of those renters on the edge.
The single mother of three children rents a ground-floor apartment in a house in Jamestown, not far from where she works as a server at the Conanicut Yacht Club in town. Bentley works at Besos Kitchen & Cocktails in East Greenwich, too, and she typically holds down a third job in home health care, but she’s been told by her manager not to come back because she’s at high risk of exposure to COVID-19 at restaurants.
It’s been a struggle during the pandemic – first with the closure of restaurants, and now even after things have reopened.
“I worked eight hours today and made $20 [in tips]. I had two tables come in and one didn’t even tip,” Bentley said recently.
She had been making more than $900 a week before the pandemic and was able to cover her $1,650 monthly rent. Then during the shutdown, she collected unemployment. But without the additional $600 in benefits each week, she could only receive $426, before taxes.
Within 12 days of returning to work, she was exposed to the coronavirus by a co-worker and forced to self-quarantine. A test eventually showed she hadn’t been infected, and she returned to work.
“I potentially have a deadly disease my first week off unemployment. Not worth risking the lives of my loved ones, or myself, just to make a few bucks,” Bentley said before getting her test results.
She has been clear with her landlord, who lives above her, since the beginning of the pandemic: “I may be late, but you’ll get paid,” Bentley told her of the $3,300 she owes.
Steven Flores, managing attorney and director of the Housing Law Center at Rhode Island Legal Services Inc., said there are many in Bentley’s predicament.
“Most of these people have always found a way to pay their bills and want to in the future,” said Flores, whose organization advocates for low-income tenants.
At-risk renters aren’t office workers or professionals who have the option of working remotely from home, Flores said; they are hourly workers with low incomes and living from one paycheck to the next because they just don’t have a choice.
Flores said if no further bonus unemployment assistance is made available or protections aren’t extended, he has no doubt that there will be a deluge of eviction filings in the coming months.
The courts are preparing for it.
District Court Chief Judge Jeanne LaFazia has launched a volunteer lawyer program to help assist the court in upcoming eviction cases. The goal of the program is to provide tenants facing eviction with legal advice at the courthouse to negotiate payment plans, move-out dates and other renting matters.
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PAST DUE:
Property owner Ilanna Ball says she’s owed more than $25,000 in unpaid rent. / PBN FILE PHOTO/MICHAEL SALERNO[/caption]
SHORT NOTICE
There is little wonder why anxiety has been building among many renters.
At Prospect Heights, a subsidized, 300-unit housing development in Pawtucket, 107 families recently received legal notices that eviction action may be taken against them if they didn’t pay their late rent within 10 days.
According to property co-owner WinnCompanies, a Boston-based landlord with properties nationwide, the unpaid rent totaled $168,000, with some households owing as little as $8 and as much as $9,823.
But many tenants claimed they received the threatening notices even though they didn’t owe rent or had already worked out a payment plan. The company issued apology letters to those tenants after Providence Business News inquired about the situation.
The incident touched off a petition drive within the housing complex calling for WinnCompanies to delay evictions during the pandemic. Prospect Heights resident Gaudi Mejia signed it, and she said many others did, too.
Mejia, who lives with her disabled husband and her child, says she owed $138 of unpaid rent when she received her 10-day notice. A fundraiser on social media helped raise more than $70, but she’s not sure where the other $62 will come from, considering she’s out of work and ineligible to collect unemployment benefits. She remained hopeful.
“I always make it through,” Mejia said. “And I always will.”
WinnCompanies spokesman Ed Cafasso said the 10-day notice mailed to tenants with unpaid rent would allow the company to begin eviction proceedings, but the move would also help those renters access emergency rental assistance such as the Safe Harbor Housing Program.
Cafasso said that the company is willing to work with tenants to preserve the leases, but some tenants have been asked for months to make an effort to work out some type of payment plan.
“We just need further communication,” said Cafasso.
FORECLOSURE FLOOD?
Murray Gereboff is less diplomatic.
The attorney at Providence-based Gereboff & Gelade represents mostly smaller landlords in eviction proceedings and said in many of his cases it appears tenants were taking advantage of the monthslong moratorium on evictions and refusing to pay landlords, instead prioritizing things such as the cable TV bill over the rent.
‘Most of these people have always found a way to pay their bills and want to in the future.’
STEVEN FLORES, Housing Law Center director and managing attorney
“You’re dealing with people who spend 100% of their income,” Gereboff said. “They just don’t save.”
Since District Court started accepting eviction cases again, Gereboff said he has filed more than 100 cases. Considering the court costs, short- and long-term vacancies, and costs of preparing units to lease again, Gereboff predicted financial trouble for some landlords.
“Expect a flood of foreclosures this time next year,” he said.
The National Low Income Housing Coalition noted the difficulties faced by “mom and pop” landlords, who own about 22.7 million out of 48.5 million rental units nationwide. The coalition’s report said 58% of those landlords do not have access to lines of credit that might help them in an emergency.
“In the short term, lack of rental income may result in unanticipated costs, and an inability to pay mortgages, pay property taxes and maintain the property,” the report said. “In the long term, it places small-property owners at greater risk of foreclosure and bankruptcy.”
Keith Fernandes, president of the landlord organization Providence Apartment Association, said many tenants who have been impacted by COVID-19 are working out deals with landlords and are paying their rent.
However, those who have rent debts from before the pandemic aren’t experiencing repercussions because the courts are limited to how many cases they’re hearing.
“But the pot isn’t unlimited,” Fernandes said of the loss of bonus unemployment benefits and renters-assistance programs that are only scratching the surface. The smallest landlords, which make up 80% of Providence Apartment Association’s memberships, are taking big hits, he said. “And it’s a problem.”
Clement said she understands that small landlords are relying on their tenants’ payments to make their own payments, but added there are not enough rental-assistance programs to keep up with the demand or flexibility on how to use existing money from the Coronavirus Aid, Relief, and Economic Security Act.
“There’s no easy answer or fix,” said Clement, who added HousingWorks RI is pushing the Rhode Island congressional delegation for further rental assistance.
Raimondo recently announced the “Housing Now!” challenge, in which she looked for landlords to pledge to rent 100 vacant units to housing-insecure residents. The landlords who come on board would receive a $2,000 signing bonus for one unit and then a $500 bonus for every additional unit.
The incentives provided by the state were meant to bring the unit up to current code and make minor improvements.
Ball said she laughed when she heard about the challenge, calling $2,000 nothing more than a “drop in the bucket.”
“The people legislating this stuff just don’t understand,” she said, noting that she manages rental properties for teachers, nurses and small-business owners who own properties to make some extra money. “[These landlords] are not these millionaires that they’re assumed to be. And we’re not going to be able to sustain these losses.”
Rent assistance program swamped
After Gov. Gina M. Raimondo announced a new eviction diversion initiative last month called Safe Harbor Housing to help curb potential homelessness during the coronavirus pandemic, it was quickly inundated with applications.
The initiative, a partnership with the United Way of Rhode Island, is using $7 million of the state’s $1.25 billion share of the Coronavirus Aid, Relief, and Economic Security Act funds to help assist renters with the legal process leading up to an eviction and to work out a payment plan with landlords to keep residents in their apartment. Both the landlord and tenant have to be on board to work with the program.
However, after the announcement on July 10, many renters who applied for the assistance hadn’t heard back for weeks.
Courtney Nicolato, the CEO of United Way, said that in the first 72 hours that the program was open, the agency received more than 1,000 applications and sorted through the paperwork to ensure that the applicants weren’t receiving assistance from Housing Help RI, operated by Crossroads Rhode Island.
About 500 applicants should expect to hear back throughout August about the next steps of the program. Some will be allotted up to $5,000 to help with overdue rent. The payments will go directly to the landlords.
“We see the tsunami ahead,” Nicolato said of those losing the additional $600 of weekly unemployment benefits and of eviction protections stopped in the state. “These are not long-term solutions.”
Many landlords and their advocates say Safe Harbor Housing is the only initiative that is also helping landlords throughout the crisis.
“We know Safe Harbor is important, but we also know it’s scratching the surface,” said Nicolato.
Alexa Gagosz is a PBN staff writer. Contact her at Gagosz@PBN.com.
