Majorities of the Minneapolis, St. Paul and Richfield city councils have signed a letter to Gov. Tim Walz calling for an executive order suspending rent payments and mortgage payments for the duration of the economic crisis caused by COVID-19.
Led locally by Minneapolis City Council Member Jeremiah Ellison and part of a national effort by city councilmembers from larger cities across the U.S., the rent cancellation would follow on the current moratorium on evictions that Walz signed March 23.
That executive order runs for the duration of the peacetime emergency, which Walz has now extended until May 13. The order also requests — but does not order — banks and other mortgage holders to suspend foreclosures and late payment penalties. The Walz Administration has been warning tenants, however, that rent will not be forgiven and will need to be repaid. To head off a wave of evictions after the order ends, Walz is supporting the move in the Legislature for a state fund to cover rent and mortgage payments for low-income Minnesotans.
That bill has some bipartisan support and has been endorsed by both tenant rights groups and the state association of apartment owners, but it won’t be considered when the Legislature convenes Tuesday.
The proposal supported by the local government officials does not seek government money to pay rents. Instead, it asks that rents not be paid and that landlords and mortgage holders cover the lost payments. “This global pandemic has put a strain on every aspect of life in the U.S., and around the world, and I believe it’s only a matter of time before it deeply strains our ability to keep people housed,” Ellison wrote. “I urge you to support the suspension of rent and mortgage payments, as well as enact a moratorium on commercial evictions, to mitigate the financial devastation families, residents, and local businesses, are facing across the state.”
Ellison said the eviction moratorium and expanded unemployment benefits are helpful, but won’t be enough to keep many residents from losing their homes.
“We know that without housing, families will be fundamentally destabilized — directly affecting their health and safety, producing an even greater need for assistance, and creating a recipe that will amplify crimes of necessity,” the letter stated. “Therefore, it is crucial that we continue to be proactive through supporting the suspension of rent and mortgage payments during the COVID-19 crisis.”
Attorney General Keith Ellison, Council Member Ellison’s father, is charged with enforcing Walz’s no eviction order and has already brought two actions against landlords in Minnesota.
Signing the letter are eight of the 13 Minneapolis council members, including Council President Lisa Bender, and five of the seven St. Paul council members, including Council President Amy Brendmoen. Three of the five Richfield council members along with Mayor Maria Regan Gonzalez, have also signed, as have elected officials from Hennepin County, Brooklyn Center, Duluth, Minnetonka and New London.
Rep. Mike Howard, a DFLer from Richfield, is the lead in the House on the push to create a rental assistance fund for low-income Minnesotans. The current approach for that bill to use an existing Family Homelessness Prevention and Assistance Program to take applications and make rent payments directly to landlords. He said that while talks are ongoing, the bill was not yet ready for the Tuesday session of the Legislature.
“It would be my hope we pick up negotiations again after Tuesday,” Howard said. “In discussions with landlords, they saw a drop in April on renters ability to pay and they are anticipating a much larger drop for May 1.”
One point of debate is how large the appropriation should be. Tenant advocates requested $100 million but there have also been suggestions of lower amounts, in the $10 million to $30 million range.
But Howard said the rent suspension proposed by the local government officials is not the approach being taken by the House. “I don’t believe rent suspension is a viable solution at the state level,” he said. “ Theoretically, the federal government could take that kind of action, but it would need to include a substantial influx of resources to cover rents and mortgages.
“I believe we need solutions that work for both homeowners, renters and landlords, which is the virtue of the housing assistance we are proposing at the state level,” Howard said.
The Minnesota Multi Housing Association, a trade group of apartment owners and managers, has supported the rental assistance plan. The group surveyed its members on the level of non-payments on or around April 1, compared to March 1.
“All property classes saw an increase in nonpayment rates, but the most notable increases were found in Class B and Class C rental properties,” wrote the association’s president Cecil Smith. Class B and Class C properties are those that are older and less expensive. The data representing around 28,000 housing units was collected as of the 6th of April.
For Class B properties, non-payment and late-payments of rent between March 2020 and April 2020 increased from 7% to 15%, Smith wrote. For Class C properties, nonpayment and late payments between March 2020 to and April 2020 increased from 9% to 15%.
“This is just a snapshot, but we hope it provides insight into the challenges for renters and property owners on immediate economic impact in the housing market,” Smith wrote.
Market rate rental housing in Minnesota collects roughly $640 million in monthly rent for roughly 490,000 units. A typical month would see about $48 million in normal late payments, he wrote.
“As of our survey, we estimate an additional $33 million non-payment based on average outstanding balances. This is a noticeable increase but not dire as we believe much of that rent will still arrive.” Smith wrote in the memo. May and June collections, however, “could end up being very challenging for renters and the multi-family industry.”
Correction: This story has been corrected to show that the moratorium on evictions has been extended to May 13 and will last as long as Minnesota is under a peacetime emergency.