SACRAMENTO, Calif. – California lawmakers on Thursday agreed to use $2.6 billion in federal stimulus money to pay off up to 80% of some tenants' unpaid rent — but only if landlords agree to forgive the rest of their debt.
The legislation, which Gov. Gavin Newsom helped negotiate and is expected to sign into law, is the state's first major attempt to clear unpaid rents that have piled up during the pandemic as millions of people lost their jobs because of government-ordered business closures.
“The pandemic has created a mountain of unpaid rental debt, which has caused instability and financial hardships for both tenants and landlords,” said Democratic Assemblywoman Eloise Gomez Reyes, the majority floor leader. The legislation provides “urgent assistance to renters and for the first time to struggling mom and pop landlords across California.”
But the move is risky because of two big unknowns: Is $2.6 billion enough to cover all of the unpaid rent in the state, and how many landlords will take the deal?
No one knows for sure how much unpaid rent is in California, the nation's most populous state with nearly 40 million people. Estimates range from a high of $3.6 billion by the advocacy group Housing NOW! California to a low of $400 million by the nonpartisan Legislative Analyst's Office.
Last year, Newsom signed a law that banned tenants from being evicted for not paying their rent during the coronavirus, but only if they paid at least 25% of what they owed after Sept. 1. The move prevented what many feared would be an “eviction tsunami," but still required tenants to repay their debts, empowering landlords to take them to court to recoup their money.
Those protections would have expired on Monday. The bill lawmakers approved on Thursday extends those protections through at least June 30 while also giving landlords and tenants the opportunity for a clean slate.
“Today we help Californians keep a roof over their head and keep their heads above water,” said Democratic Senate President Pro Tem Toni Atkins, promising that work on the issue will continue in coming months.