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A LETTER FROM EBRHA CEO DEREK BARNES

n the iconic film Willy Wonka & The Chocolate Factory, Violet Beauregarde eagerly tries experimental chewing gum. Wonka advises against it. No one tested the treat, and he told her it could have unpredictable and dangerous consequences. Violet thinks she knows more than the confectioner. So, she grabs the gum anyway, chews it, and rapidly expands to turn into a giant blueberry that needs to be immediately juiced by Oompa-Loompas before she explodes.

In many ways, this timeless allegory is an essential lesson for us all. It reminds us to think about consequences and heed the advice of those wiser before we act. We can apply this lesson to the decisions and policies developed by lawmakers. For example, legislators quickly enacted a health emergency mandate (eviction moratorium) in response to Covid-19 that provided blanket renter protections (no proof of impact required) for rent nonpayment. There was little consideration for the far-reaching implications of rental debt that households would accumulate and not be able to pay back without significant financial support. The harm to property owners was largely dismissed and discounted. Owners would ultimately be stuck with hundreds of millions of dollars in unpaid rent.

Sources like The Urban Institute, National Low Income Housing Coalition and Bay Area Renters Coalition believe the current Bay Area (nine counties) unpaid rental debt is between $2.5 and $3.5 billion. Of this, Alameda County’s portion is $700 million to $1.1 billion. Oakland has approximately $360 to $640 million of the county’s number. Unfortunately, the mandates municipalities ratified in March

Iof 2020 have created ballooning rental debt that needs to be settled. Today, approximately one-in-four renters cannot pay the total balance of rent owed, which is about 180,000 Bay Area households. Some rental property owners have been providing income subsidies and shouldering the burden of relief for three (3) years – also driving massive wealth transference.

Since 2021, property owners and housing experts have warned and opined about the dire conditions the extended mandates created for owners and in the market. Small rental property owners lost income they desperately depended on for retirement, others were forced to sell their properties at decreased values, and some defaulted and lost their homes due to the loss of income since March 2020. The most vulnerable were elderly, BIPOC and immigrant housing providers.

Meanwhile, a massive unpaid rent debt bubble (our modern-day Violet) grew with no programmatic outlets to reconcile the crisis. Like the Wonka movie, we must find ways to deflate the ballooning debt before it grows, bursts and causes more irreparable damage to the Bay Area housing market and property owners.

For months, EBRHA has written to and has had discussions with County Supervisors, City Councilmembers and HCD staff to end and present alternatives to the eviction moratorium. We shared member survey summaries and communicated the stories and plight of many members impacted by nonpaying and noncomplying renters – primarily due to blanket protections the moratorium allowed. By the time this issue of Rental Housing Magazine is received, lawmakers will have either ended, amended or extended their local health emergency mandates. We are also likely to see some or all of EBRHA’s proposed amendments and provisions:

· Solely focus on renters who are genuinely and adversely affected by COVID-19 and have applied for ERAP without denial or ineligibility. Those not impacted must be accountable for the rental debt they accumulated due to nonpayment.

· Require renters to show proof of impact – to qualify for past or continued protections.

· Create more assistance programs that provide immediate spot grants for renters who need assistance paying back rent owed and help small rental property owners, who are in default/foreclosure, keep their rental homes or support those who need assistance with repairs.

· Increase small claims court limits to cover the tens of thousands of dollars in back rent accumulated. Open the courts and educate judges on these laws so property owners may proceed with unlawful detainers for noncompliant renters who never applied or have no proof of applying for ERAP funds.

The moral of impulsive Violet in the movie is important – be humble enough to accept advice and to think about consequences before you act. There is also a more covert story about accountability in this debt catastrophe that will undoubtedly go unrealized as legislators and politicians quickly elude responsibility for the damage manufactured on their watch and by their policy decisions. Very few people are discussing or covering this debt crisis — not municipal leaders, lawmakers or media. Who should be held accountable for the damages incurred and for resolving these drastic consequences?

Prevailing wisdom suggests that those who created the problem and advised legislators in the first place should be responsible for creating the solutions to get us out of this mess. However, we shouldn’t just trust that they have the competence and expertise to develop the remedies we need to get us out of this crisis.

There’s strong evidence that housing staff and legislators were ill-advised and influenced by lobbying attorney organizations and tenant activists — people who have little experience investing in, developing, building, operating, and maintaining rental housing. At a minimum, they should be barred from creating or developing any future housing policies without rigorous oversight and proper stakeholder input. EBRHA and its members (1,500 strong) will continue demanding accountability and equitable solutions that strengthen our housing communities.