During a Special Legislative Session convened by Gov. Polis, Colorado legislators approved Senate Bill 20B-002. The bill signed by the governor on Dec. 7 transfers $54 million to the Housing Development Grant Fund to provide rental assistance and residential mortgage assistance to those that have experienced financial need due to the COVID-19 pandemic or second-order effects of the COVID-19 pandemic. The bill includes the creation of the Emergency Direct Assistance Grant Fund that provides grants through nonprofit organizations for individuals that may not be eligible for certain other types of assistance as well as allocates $1 million for the Eviction Legal Defense Fund.
Members of the Colorado Landlord Legislative Coalition (CLLC) applaud legislators for focusing on rental assistance and hope it will take the place of the current eviction moratorium. Rental assistance is a superior solution for landlords because it allows tenants to continue to pay the rent, which in turn provides landlords with the income needed to pay expenses such as mortgage, insurance, utilities, maintenance, and general upkeep of the rental properties. Providing rental assistance also prevents tenants from getting overwhelmed by accumulating unpaid rent and other debts that can be impossible to catch up on as the debts increase over time.
Most Colorado landlords are not without sympathy for those who have lost income due to the pandemic. In fact, many landlords are a part of the workforce and have personally experienced job loss as well. CLLC Members believe that working with tenants to make achievable payment arrangements is the best solution and view eviction as a last resort.
What the eviction moratorium does is remove incentive for some tenants to make efforts to pay the rent. It becomes a “free pass” for those that want to abuse the system. Landlords are reporting that many of those electing not to pay the rent are not those who are most in need of such assistance, but often those who have the benefit of accumulated financial resources or who have chosen to use their finances for other priorities while now being able to treat their rental expense as their lowest priority. To make matters worse, landlords are also reporting that tenants choosing to take advantage of the eviction moratorium are leaving their rental properties with more damage than just unpaid rent.
One Colorado Springs landlord reports that one tenant went from April through October without paying rent. This tenant was still employed and continually avoided discussions with the landlord. The tenant did finally agree to move out of the property but left not only owing thousands in rent but also another $3,000 worth of damage to the home. Like many other single-family and small multi-family housing providers, this landlord relied on the rent payments for household income. After seven months with no income, the landlord’s savings were considerably depleted. When the home was finally returned, the landlord then had to come out of pocket for the costs to perform all necessary repairs to make the property livable again. This has been a common story among Colorado landlords and property managers throughout the pandemic, with some landlords reporting losses upwards of $10,000.
There are limited resources available to those in this type of situation. If a landlord has no mortgage but utilizes the rent to pay for a family members long-term care or a child’s tuition, then mortgage forbearance/assistance does nothing for this landlord and the loss sustained. CLLC Members are reporting that landlords are still being forced into foreclosure due to not having a means to collect rent or retrieve their homes from non-paying tenants, as the mortgage is only one piece of the expenses related to providing housing and mortgage forbearance cannot cover everything.
Most single-family housing providers own from one to three rental properties and are typically retirees, deployed military members, or small investors. These landlords have chosen to invest their hard-earned money in the Colorado housing market with a dream of retirement or a better future for their children. These are not the kind of landlords that can afford to take losses in the thousands while also experiencing unemployment and medical expenses related to the COVID-19 pandemic in their personal lives.
Legislators need to look at the full scope of how the COVID-19 pandemic is affecting both tenants and landlords. The CLLC recognizes that the long-term effects of the eviction moratorium are negative for both groups. CLLC members are reporting a significant uptick in housing providers looking to sell their investment properties. The market for home sales in Colorado is still very strong and many landlords are looking to get out of the volatile rental market. The eviction moratorium removes a safety net for landlords and for many it is no longer worth the risk to provide housing to others under these conditions.
Colorado has been struggling with affordable housing issues for the last several years. Continued eviction moratoriums will certainly lead to a decrease in available housing. The shortage in supply will drive the rental rates up and will set Colorado back years in the affordable housing crisis.
Colorado legislators need to support landlords and provide incentives to encourage individuals to continue or begin providing housing to others. These efforts will help both landlords and tenants alike. Senate Bill 20B-002 is a step in the right direction and the Colorado Landlord Legislative Coalition stands behind legislators and their recent efforts to provide rental assistance. The Colorado Landlord Legislative Coalition argues that eviction moratoriums are protecting one group to the detriment of another and while the intentions of the moratorium were for good it is having a disparate impact on landlords.
Danielle Rogers MPM®, RMP® is the comptroller for All Seasons, LLC CRMC® in Colorado Springs.