Nonprofit Housing Providers Struggle to Pay Bills In COVID Crisis

This is an excerpt from a piece that originally appeared at Sightline.org, where you can read the entire story.

It’s the first of May. As another rent day arrives, tenants aren’t the only ones seeking relief from the financial fallout of COVID-19, which has led to widespread job loss in nearly every economic sector, and the highest unemployment rate since the Great Depression.

Cascadian affordable housing providers that receive funding through the federal Low Income Housing Tax Credit (LIHTC) program, which helps to fund about 90 percent of all new affordable housing in the US, have also been hit hard by the crisis. Nonprofit providers of subsidized housing for low- and moderate-income wage earners report unpaid rent rates of 20 percent or more, a shortfall that has left many struggling to balance their books.

“Our delinquency rate shot way up, and we are now accepting partial payment for rent and doing some payment plans,” said Sharon Lee, the director of the Low Income Housing Institute, which serves communities throughout the Seattle metro area and in Olympia, Washington. “We’re working with tenants and doing partial payment plans for people who’ve recently become unemployed.”

In Oregon, about half the tenants in buildings owned by REACH Community Development earn income from wages. Anthony Petchel, REACH’s philanthropy and public relations director, says about 10 percent of their tenants had asked for rent forbearance as of late April, but he expected that number to go up as people continue to weather the economic collapse. “[The issue] is having the cash to manage the cash flow disruption” from missed rents, and “how long can all the organizations manage that,” Petchel says.

Daniel Delfino, the program and planning development director for the Alaska Housing Finance Corporation, said that once the 60-day rent and mortgage freeze ordered by Gov. Mike Dunleavy ends, there are few protections for struggling tenants or for nonprofit housing owners with mortgages to pay.

Currently, nonprofit landlords are working out arrangements with tenants on a “case by case basis,” he said, but with more than 40,000 Alaskans unemployed, it’s unclear when or whether rent payments will get back to normal. “There are usually reserves that are put in place to handle four to six months of operating expenses and debt payments. Those aren’t set up to handle something like COVID-19, when the economic occupancy”—the percentage of people who pay their rent—”goes down from 93 percent to 40 percent.”

Enterprise Community Partners, a national low-income housing advocacy and funding group, estimates that a 10 percent income loss among renters could add up to $238 million per month in losses to groups like these that run LIHTC-funded buildings across the US. That’s based on an average loss of $792 in monthly rent from the three million tenants in LIHTC buildings that Enterprise estimates could miss rent payments if they don’t get assistance.

Susan Boyd, the executive director of Seattle nonprofit provider Bellwether Housing, said wage earners had a delinquency rate of about 21 percent as of mid-April, up from 2 to 3 percent in a typical month, as “about 30 percent of the people who were wage earners have lost all or a part of their income.” Likewise, Chris Persons, the director of Seattle’s Capitol Hill Housing, said April rents are falling about 22 percent short.

It’s easy to see why. With a patchy social safety net, hourly wage earners were already on the precipice of financial disaster before a nationwide economic shutdown led to mass unemployment.

A full-time worker making minimum wage in Oregon earns just over $23,000 a year; in Washington, that number is just over $28,000. According to the Urban Institute, the median income for US renters in low-income tax credit buildings was $17,470 before COVID, and about four in ten of these renters spent more than 30 percent of their income on housing.

In King County, which includes Seattle, about 77,000 people making less than $40,000 a year had lost their jobs as of April 16; in Multnomah County, which includes Portland, about 38,000 low-income jobs had vanished. The pandemic puts the US housing crisis on steroids. Low-income renters often live paycheck to paycheck, and if they lose their jobs they simply can’t pay rent. The eviction moratoriums enacted in many jurisdictions throughout the US only grant a reprieve.

Even organizations whose revenues don’t rely primarily on renter incomes—groups like Plymouth Housing and the Downtown Emergency Service Center in Seattle, whose tenants pay their rents using federal vouchers and stable income sources like Social Security Insurance (SSI)—are struggling.

“We rely a lot on local dollars, most of which come from specific local taxes and fees like the [state] document recording fee for housing and homelessness, and of course those could go down if real estate transactions slow down, which seems likely,” DESC director Daniel Malone said. “And as local government taxation goes down, there certainly could be some squeeze on what they choose to fund and what they choose to cut.”

On April 21, Seattle’s City Budget Office released a worst-case revenue forecast that predicts a 2020 funding shortfall of up to $300 million, with some of the biggest revenue losses coming from the construction, retail, and food service sectors. In Portland, a smaller city, the shortfall could be as much as $100 million.

Read the entire story here.

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