Gavin Newsom has announced that California will pay off all unpaid rent accrued during the pandemic using a $5.2 billion federal pot 'on a scale never seen before in the US.'
The Governor, who is facing a recall election expected in the fall, is also likely to extend a ban on evictions for unpaid rent beyond June 30 - a pandemic-related order that was meant to be temporary but is proving difficult to undo.
'California is planning rent forgiveness on a scale never seen before in the United States,' Newsom wrote on Twitter Monday night, quoting a New York Times article.
The 53-year-old Democrat, who finds his state flush with unused federal Covid relief cash and surplus tax income, is also going to splash another $2 billion to cover the costs of electricity and water for lower income households.
Announcing the measures last week, Newsom said: 'Anybody that's been impacted by this pandemic that can't pay their rent, we will pay 100 percent of your rent going back to April of last year.
'Anybody that's impacted by this pandemic that can't pay their rent and can't afford their water bill or their utility, California will pay those bills.'
Announcing the measures last week, Newsom said: 'Anybody that's been impacted by this pandemic that can't pay their rent, we will pay 100 percent of your rent going back to April of last year. Anybody that's impacted by this pandemic that can't pay their rent and can't afford their water bill or their utility, California will pay those bills.'
'California is planning rent forgiveness on a scale never seen before in the United States,' Newsom wrote on Twitter Monday night, quoting a New York Times article
California had anticipated dire budget shortfalls when Newsom announced lockdowns last year.
But the state, like many others, finds itself with more money than expected after Congress bailed out local governments from federal coffers.
California is poised to cover not just unpaid rent, but also another $12 billion back to taxpayers through stimulus checks worth $600 to millions of middle-class citizens.
Such is the abundance in funds sloshing around, Republican lawmakers in D.C. have argued that the Biden administration should recoup some of the surplus for its planned infrastructure upgrades.
California's budget has also been buoyed by the tech boom amid the pandemic, with some of the state's top earners helping to pump the treasury full by selling their stocks and mansions.
The state relies heavily on the incomes of the wealthy and achieves surpluses in years when the market does well - which it did, particularly for Silicon Valley, throughout 2020.
The rental relief programme is going to be available to residents who earn no more than 80 percent the median income in their area and who can prove financial hardship amid the pandemic.
In San Francisco, a family of four would have to earn less than $146,350 to qualify.
Newsom has been meeting with legislative leaders privately to negotiate the allocation of the state's $260 billion operating budget, with a raft of generous measures on the table including a brand new education bill, buying hotels and apartments for the homeless and to waive traffic violation fines for poor people.
The Governor and the executive branch are fine tuning their rental scheme, but it promises to be a colossally generous programme.
'Nationwide this is certainly the largest rent relief there's ever been,' Russ Heimerich, a spokesman for the California Business, Consumer Services and Housing Agency, told The New York Times. 'The big question is can we spend it all.'
California has $5.2 billion to pay off people's rent, money from multiple aid packages approved by Congress.
That appears to be more than enough to cover all of the unpaid rent in the state, according to Jason Elliott, senior counselor to Newsom on housing and homelessness.
But the state has been slow to distribute that money, and it's unlikely it can spend it all by June 30.
A report from the California Department Housing and Community Development showed that of the $490 million in requests for rental assistance through May 31, just $32 million has been paid. That doesn't include the 12 cities and 10 counties that run their own rental assistance programs.
Gavin Newsom talks during a news conference at Universal Studios in Universal City, California on June 15
A For Rent sign is posted in Sacramento, California (stock image)
'It's challenging to set up a new, big program overnight,' said Assemblyman David Chiu, a Democrat from San Francisco and chair of the Assembly Housing and Community Development Committee. 'It has been challenging to educate millions of struggling tenants and landlords on what the law is.'
Landlords point to the state's rapid economic recovery as a reason not to extend the eviction moratorium much longer. California has added 495,000 new jobs since February. In April alone, California accounted for 38% of all new jobs in the U.S. This week, Newsom lifted all restrictions on businesses, heralding it as the state's grand reopening.
'We're getting back to normal,' Carlton said. 'It's time to go back to work. It's time to pay the rent.'
While employment among middle- and high-wage jobs has exceeded pre-pandemic levels, employment rates for people earning less than $27,000 a year are down more than 38% since January 2020, according to Opportunity Insights, an economic tracker based at Harvard University.
'The stock market may be fine, we may be technically reopened, but people in low-wage jobs - which are disproportionately people of color - are not back yet,' said Madeline Howard, senior attorney for the Western Center on Law and Poverty.
Some housing advocates are asking the state to keep the eviction ban in place until the unemployment rate among low-wage workers has dropped to pre-pandemic levels. It's similar to how state officials would impose restrictions on businesses in counties where COVID-19 infection rates were higher while those with lower infection rates could reopen more quickly.
Advocates say they were encouraged when Newsom told Univision earlier this month that he 'definitively' wants to extend the eviction protections beyond June 30.
'We're cautiously optimistic,' said Francisco Duenas, executive director of Housing Now California. 'We definitely need these protections as part of our recovery.'
Kelli Lloyd, a 43-year-old single mother who says she has not worked consistently since the pandemic began in March 2020, says it's not fair to expect rent payments from July.
'The expectation for people to be up and at 'em and ready to pay rent on July 1 is wholeheartedly unfair,' said Lloyd.
Lloyd - a member of the advocacy group Alliance of Californians for Community Empowerment - is supposed to pay $1,924 a month for a two-bedroom, two-bathroom rent-controlled apartment in the Crenshaw district of south Los Angeles.
But she says she's $30,000 behind after not working for most of the last year to care for her two children as day care centers closed and schools halted in-person learning.
That debt will likely be covered by the government. But Lloyd said she recently lost a job at a real estate brokerage and hasn't found another one yet. She's worried she could be evicted if the protections expire.
'Simply because the state has opened back up doesn't mean people have access to their jobs,' she said.
Meanwhile, in the wine country area of Sonoma County, property manager Keith Becker says 14 tenants are more than $100,000 behind in rent payments. It's put financial pressure on the owners, who Becker says have 'resigned themselves to it.'
But they have grown weary of the seemingly endless protections, which he noted were aimed at addressing a public health emergency and not meant to be permanent.
'We should do our best to get back to the starting point where we were in December of 2019. Anything other than that is taking advantage of a crisis,' he said.
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