Gov. Newsom signs bill with $2.6 billion in federal funds for unpaid rent

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Gov. Gavin Newsom today signed a bill that will use $2.6 billion in federal funds to pay landlords up to 80% of rent owed by qualifying tenants with COVID-19 financial hardships. 

The legislation, SB 91, won overwhelming bipartisan approval Thursday in both houses of the Legislature.

SB 91 will use federal funds to pay up to 80% of a tenant’s back rent accumulated between April 1 of last year and March 31, 2021. A landlord who accepts the money will have to forgive the remaining unpaid rent for that period. If the landlord refuses this arrangement, the maximum subsidy drops to 25%.

Additional federal dollars may be available to help cover unpaid rent through June of this year.

“Getting dollars to landlords is imperative,” said Debra Carlton, the California Apartment Association’s executive vice president of state public affairs. “Many landlords have not received rent in over a year, and some owners are on the brink of losing their homes. The administration must work quickly to get the dollars to landlords at the rate promised: 80 percent of the past rent owed by the tenant.”

Debra Carlton

To qualify for the federal dollars, the unpaid rent must be owed by a tenant with a household income at or below 80% of the area median income in 2020 or at the time of application. The state must first prioritize dollars for lower-income tenants — those earning up to 50% of AMI. According to the Business, Consumer Services, and Housing Agency, landlords and tenants would be allowed to apply for those dollars beginning in March 2021.  SB 91 also sets a Feb. 28 deadline for landlords to provide a specific informational notice to tenants who are behind on rent as of Feb. 1, 2020.

The state’s distribution of federal funds to cover unpaid rent is limited by the federal rules. Legislators are now considering additional state funding for rental assistance.  Those dollars would go to those populations that either are not eligible or who may require additional rental support, above and beyond that which is provided here.

SB 91 replaces California’s COVID-19 Tenant Relief Act of 2020, or AB 3088, which expires this Sunday.

Under AB 3088, COVID-19 affected tenants were given until Jan. 31, to pay 25% of back rent accrued since Sept. 1, 2020, or be subject to eviction. SB 91 extends that deadline to June 30.

In addition to providing up to 80% of back rent owed, SB 91 will provide additional dollars as an incentive to local governments that agree to follow the state rules established through SB 91. CAA argued that a consistent standard will help with compliance for both landlords and tenants. Local governments that implement their own rules for distribution of money will not receive additional dollars from the state.

Carlton said it is vital that renters understand they still must pay 25% of the rent owed by June 30, whether they pay out-of-pocket or with federal funds under SB 91. Tenants can pay the amount month-by-month or in one lump sum by the deadline. Failure to do so can lead to eviction.

“What is not covered in the legislation are those situations where the tenants do not cooperate,” she said. “The legislation does not help in those situations where the tenant has not paid, makes more than 80 percent AMI, and/or has not communicated with the landlord. We are asking the state to help owners in those situations with both policy and dollars.”

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