Did Congress Give the Multifamily Community Enough Aid?

Congress passed a $900 billion stimulus package this week, which contained some— but not all—of the measures that the commercial real estate industry had been seeking. 

Among the measures is a $25 billion rental assistance program to be distributed by state and local governments with populations of 200,000 or more, with each state receiving $200 million. 

Given that this bill almost didn’t happen—and there is some question now as to whether President Trump will sign it—it is difficult not to be grateful for even something to tide over renters in the interim. But it is equally difficult to ignore the deep hole that so many renters are in currently. Depending on who is doing the counting, renters owe a collective $70 billion or $6,000 per renter in overdue rent. And depending on the state, this money could be due on Jan. 1, 2021. 

GlobeSt.com caught up with Stephen Bertonaschi, senior managing director of Real Estate Solutions at FTI Consulting, to parse the impact this funding will have on the multifamily sector. Following are excerpts from that conversation. 

A short-term boost. On its face, the renter assistance funding provided by the stimulus bill falls short of overall need in the apartment industry—the deferred or back rent far exceeds the $25 billion provided by the bill.  However, at least in the short term, the assistance will certainly give a much needed jolt to the industry, and perhaps, is just the start of a bigger stimulus down the road.  This alone, will not be enough.

More helpful to landlords. While tenants may want to make a dent into unpaid rent balances, the likelihood that the assistance will be any more than a band-aid over a gaping hole is remote.  Tenants that are behind on their rent are more concerned with finding employment and/or other means of consistent income.  The assistance is more critical for landlords and thus they will be incentivized to educate themselves on the rules and application process and work with the tenants to secure funds.  

The plight of smaller landlords. [The rental assistance] could be a cause for concern among mom and pop and other small apartment landlords.  Larger companies will have more resources to move the process along, possibly leaving the small owner/operators out in the cold while they struggle to make needed repairs and mortgage and real estate tax payments.  Hopefully the money gets in the hands of those that need it the most.

About the moratorium extension. It is not the huge victory for renters that one may assume.  For one, even with the original moratorium in place since September, there are loopholes and enough ambiguity in the rule that still allows landlords to start the eviction process.  Additionally, there was largely a lack of cooperation by local authorities in enforcing the moratorium.  Ultimately, the landlords that were and historically have been aggressive with evictions will continue in the same manner.  Other landlords that have been amenable to amending rental agreements and working with tenants, will continue to do the same regardless of an extension of the moratorium.  Remember, in a lot of areas, if landlords evict tenants, there is no one else to actually rent to.   Second, a one month moratorium is only kicking the can down the road. Perhaps a longer and more stringent moratorium put in place by the next administration will have a bigger impact.

What else? There are obviously other aspects of the stimulus bill that will hopefully give a boost to the economy, and thus, increase the ability for tenants to pay rents.