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Commentary By Michael Hendrix

Evicting Our Future

Cities Housing

President Joe Biden had “double, triple, quadruple checked” whether the federal government had the authority to ban housing evictions, said advisor Gene Sperling in a press briefing this August. But, according to Sperling, the president had been “unable to find the legal authority.” That was a Monday, just days after the July 31st expiration of the Centers for Disease Control’s (CDC’s) eviction moratorium in the wake of the Covid-19 pandemic. The very next day the Biden Administration completely reversed its position, extending the CDC’s eviction ban another three months.

In announcing his reversal, the president was honest: there was no newfound legal justification for the CDC’s actions. But, “by the time it gets litigated,” said Biden, “it will probably give some additional time” for financial aid to reach renters. His policy reversal came on the heels of immense political pressure from fellow Democrats. Congresswoman Cori Bush, once homeless herself, slept outside the U.S. Capitol in protest of the administration’s original refusal to extend the anti-eviction policy. Fellow House member Maxine Waters even dared the CDC to act with or without a legal justification: “Who is going to stop them? Who is going to penalize them?”

Continue reading the entire piece here at Law & Liberty

That’s a good question. The CDC’s latest extension of its eviction moratorium was almost certainly illegal. Tenants continue to rack up tens of billions of dollars in rent debt while property owners have their rights taken away simply for being in the business of providing shelter. The nation’s public health agency is exceeding its authority by conducting housing policy to make up for the failures of government to get billions of aid dollars into the hands of renters. The problems with the Biden Administration’s extension of the CDC’s eviction moratorium are, in short, financial, legal, and bureaucratic in nature. Ultimately, America cannot solve its evictions challenges without fixing its housing crisis.

An Eviction Tsunami?

In 2017, Princeton’s Matthew Desmond won the Pulitzer Prize for his “deeply researched expose” showing evictions to be “less a consequence than a cause of poverty.” Desmond’s book, Evicted, revealed housing instability as a long-lasting misfortune for America’s poor. Landlords expel renters from property they own roughly a million times a year. To Desmond and others, these evictions, already too high in number, are a crisis of housing and socioeconomic well-being. And in early 2020, losing shelter meant a higher chance of catching a deadly virus, making eviction a public health issue as well.

This was why Congress enacted a limited, temporary eviction moratorium at the outset of the Covid-19 pandemic as did some 48 states and many big cities. And why in July 2020, after Congress’s ban lapsed, President Donald Trump ordered the CDC to act. A little more than a month later, the public health agency complied with a more sweeping order than Congress’s, imposing six-figure penalties and possible jail time on any landlord in the country who evicted tenants failing to pay rent. “Evictions,” argued the CDC, “force people to move, often into close quarters in new shared housing settings with friends or family, or congregate settings such as homeless shelters.” The CDC’s eviction moratorium, originally set to expire on December 31, 2020, has now been extended five times. 

With each extension of the CDC’s eviction moratorium, more rent went unpaid and the financial burdens on tenants and landlords grew. Nearly 6.4 million tenants are behind on rent today to the tune of $3,300 per household, or more than $21 billion in all. The greatest rent debts are found in the priciest and the poorest places in America; the average tenant behind on their rent in San Mateo, near Silicon Valley, owes $7,113, while in Georgia some 94% of households who are in arrears fall into the low-income category, making less than $50,000 a year. (It must be said that total debts due to rent may be much higher; 30% of adults report borrowing to pay their expenses, including rent.) While Congress authorized $46 billion in emergency rental assistance, only 6.5% of these dollars have reached renters due to red tape, bureaucratic snafus, and a lack of awareness.

Ask landlords about rent debt and the numbers they quote are far higher: more than $70 billion and counting in unpaid rent. Landlord groups claim that the “total effect of the CDC’s overreach may reach up to $200 billion if it remains in effect for a year.” Such a total, if true, would far exceed Congress’s allocation of rental aid, even assuming that someone on the verge of homelessness would be willing to sign over all their rental aid to a landlord. Surprisingly, neither the CDC nor any other branch of the federal government has shown just how many evictions the moratorium has prevented or whether its benefits outweigh its costs.

In a sense, America has shifted the financial burden of rental aid during the past year to property owners. No wonder that in a recent Urban Institute survey nearly three in ten landlords deferred maintenance during the pandemic, mostly due to financial woes. Small and minority property owners, who make up a majority of landlords in America, suffer the greatest burdens from foregone rent. As the U.S. Treasury acknowledged, “Countless middle class landlords who rely on rental income to support their families have also faced deep financial distress [due] to the COVID-19 crisis,” and the DC Circuit Court recognized the eviction moratorium “will no doubt result in continued financial losses to landlords,” which remain “severe.”

Rent debts accumulate because we fear evictions more. Tenant advocates have been warning of an “eviction tsunami” on the horizon due to the financial burdens brought on by the pandemic. Thirty to forty million renters were said to be on the verge of homelessness. So far, according to the Eviction Lab, roughly 470,000 eviction filings have occurred since March 2020, an historic low, and some 1.6 million households now self-report that they are “very likely” to be evicted in the next two months.

In truth, it’s not at all clear whether America is facing an eviction tsunami. Renters are far more confident in their housing security today than when the eviction ban was first put into place, while economic hardship nationwide has declined in the face of generous government aid and the briefest recession on record. Yet for those million-plus households racking up rent debt, the end to the eviction ban becomes costlier now—we’ve perhaps only succeeded in worsening their housing woes. And for those small property owners for whom rental income is their main source of personal income, having nonpaying tenants makes it more likely that they will sell to larger firms likelier to haul renters to court, and less likely to provide more affordable housing stock in the future.

America has failed to build more new housing, failed at restraining its bureaucrats from regulatory overreach, and failed at helping those in need during the pandemic of Covid-19. And we should not continue failing our housing renters and owners through an illegal eviction moratorium.

Borrowing Property

It turns out the CDC’s eviction ban wasn’t even constitutional. Federal courts had expressed legal misgivings in earlier opinions. When Justice Brett Kavanaugh sided in June with the 5-4 majority to keep the eviction ban in place, he explained that he did so in the belief that the CDC planned “to end the moratorium in only a few weeks,” and that this did not negate the fact that the CDC already “exceeded its existing statutory authority by issuing a nationwide eviction moratorium.” Continuing the ban past July 31 would require “clear and specific congressional authorization (via new legislation),” he said, which the Biden Administration ultimately did not receive. And now this August, in an eight-page majority opinion, the Supreme Court agreed that the CDC had exceeded its authority.

“The courts made it clear that the existing moratorium was not constitutional,” said President Biden on August 3. “It wouldn’t stand.” Now that the Supreme Court has formally opined on the matter, it’s clear why the president would challenge the constitutionality of the very rule he ultimately renewed. The agency took an obscure statute from 1944—the Public Health Services Act—and interpreted its Section 361 dealing with quarantines and inspections to grant the “CDC a breathtaking amount of authority,” according to the Supreme Court majority. Put another way, under the broadest interpretation ever given to Section 361, the CDC has claimed sweeping authority to pursue nearly any measure it deems necessary to reduce the spread of a contagious disease, including the criminalization of evictions. It is “hard to see what measures this interpretation would place outside the CDC’s reach,” noted the Court.

The Supreme Court has long looked askance at bureaucrats suddenly discovering enormous powers under long-existing statutes, especially when they concern questions of “deep economic and political significance.” Such significance surely comes with an eviction ban affecting a multi-billion-dollar market serving 44 million renter households traditionally governed by states and localities, and when Congress has already shown a willingness to use its legislative authority. To get around these legal challenges, the CDC targeted the latest version of its eviction ban to counties “experiencing heightened coronavirus transmission.” But is a rule covering 90% of America’s counties not functionally the same as a nationwide ban on evictions?

The CDC has not just been usurping its legal authority, but likely doing so at the expense of basic property rights. Though the Supreme Court’s ruling focused on the separation of powers, the issues at stake are even broader. The eviction ban, argues landlords, is an uncompensated taking of their property. Having the government force landlords to allow delinquent renters to unlawfully occupy their property in lieu of paying tenants represents the sort of seizure of private property forbidden by the Fifth Amendment’s Takings Clause. Put another way, the CDC’s eviction moratorium represents not just a transfer of wealth from owner to renter, but of property too. When, or if, the CDC’s eviction moratorium is lifted, you can expect landlords to file suit in search of compensation.

To which the government’s reply has been, in short, we’re not taking, we’re borrowing. The eviction moratorium is “purely temporary,” they argue, though you hear that line less the longer the ban lasts. But even a temporary invasion of private property is still unlawful, according to a Supreme Court ruling this past June against a California law mandating employers allow unions to use their property to organize. More significantly, the government will point to the tens of billions of dollars set aside in aid for renters and property owners during the pandemic. But is falling billions of dollars short in covering the real losses to property owners truly just compensation? And what of the strings attached to renter aid in some states, as described by the Wall Street Journal recently, such as limits on “removing problematic tenants” or mandates to turn over “sensitive financial information to government agencies or contractors”? As my colleague Eric Kober notes, “The difficulty with enacting ‘temporary, emergency’ moratoriums…is not starting them, but ending them.”

Perhaps even more troubling than the legality of the eviction moratorium is the nonchalance around the question. “Sometimes you have to do an illegal thing,” shrugged The Nation, calling Biden’s renewal of the eviction ban a form of civil disobedience.

Distributing the Money

To housing activists, the legality of the eviction moratorium is background noise to the real show of getting aid to renters—an admirable goal, surely. Except the largest rental assistance effort ever launched by the U.S. government has so far been an abject failure. Only a fraction of the funds appropriated by Congress have reached renters; just 49,000 renter households nationwide have applied for and received aid out of the 1.6 million fearing eviction in the next two months.

States and localities deserve their share of blame: while Texas has so far managed to disburse half of its federal rental aid dollars, South Carolina has spent a grand total of $37,000. New York State distributed zero dollars to renters in need during the first month of its rent relief program at the height of the pandemic. It turns out that having 450 separate state, county, and local entities administer the disbursal of rental aid was a recipe for inconsistency and incompetency. But the federal government is also to blame for encouraging states and localities to be risk averse with applicants at the outset of the relief program rather than focusing on simply getting needed cash out the door, as occurred with both rounds of the government’s stimulus checks. Instead, some applicants were asked to fill out lengthy applications on glitchy platforms or show six months of income to qualify while requiring their landlord to also apply. As recently as March of this year, New York City required applicants to already be in eviction proceedings in order to qualify for aid meant to prevent eviction—a Catch-22 worsened by the closure of eviction courts during the pandemic.

Meanwhile, the pandemic of Covid-19 hasn’t gone away. Cases are surging again, as Justice Breyer’s dissenting opinion noted, giving tenant activists reasons for pushing the eviction ban to continue in the name of public health. But surely it matters that 72% of Americans over the age of 18 have already received their first dose of the Covid vaccine compared to having no vaccine at all when the eviction ban was first put in place. In other words, the public health rationale has changed; most state public health agencies today are no longer pushing an eviction ban as a necessary measure for fighting the pandemic. And even if such a measure were necessary nationwide today to prevent the spread of a virus by losing shelter, then why are there no similar protections for those displaced by foreclosed mortgages or who have been living long-term in hotels and motels? The CDC appears to care more about pushing certain housing policies than on maintaining any consistency in health policy.

If, as housing advocates suggest, eviction bans should continue until a significant share of rental assistance is disbursed and populations are vaccinated at a level sufficient to protect them from Covid-19, then America may well have an eviction ban in place for months, if not years to come. At which point the level of rental debt accumulated by tenants would be so large as to ensure a devastating eviction tsunami should a ban ever be lifted. Landlords too would face growing financial burdens that could only be covered by government assistance—an outcome that would likely not disappoint those advocating for socializing America’s private housing stock or cancelling rent.

Building a Better Future

Facing eviction is an awful—even traumatic—experience for any renter to endure. And more Americans than ever struggle to make rent. Nearly 25% of households were severely rent-burdened in 2019, paying more than half their incomes on housing. There are severe disparities by income and race in who can make rent, and even middle-income households now are showing signs of financial struggle in paying for a roof over their heads. While rents in cities like New York and San Francisco fell during the pandemic, most places across America have seen the cost of housing bounce back, even to prices higher than before the pandemic. In 93% of American counties a full-time minimum wage worker cannot afford a one-bedroom apartment.

America’s evictions crisis is a housing crisis rooted in a decades-long mismatch between supply and demand. This country is 6.8 million homes short of what we need to keep up with demand and decay. Regulatory restrictions on what you can build and where, from strict zoning codes to parking mandates, artificially limit the supply of housing. As a result, rents are rising faster than incomes across every nearly state in America. And a lack of housing means fewer options for renters facing eviction. Worse yet, the longer eviction moratoria last the likelier it is that landlords hike rents to recoup losses and we make new affordable housing riskier to develop.

We cannot solve for evictions without solving for supply in housing. And we can make it easier for property owners to negotiate with tenants short of eviction, such as through model repayment agreements and specialized arbitration. What we should not do is force private property owners to provide free housing. Our fear of an evictions tsunami has left many Americans drowning in debt. America has failed to build more new housing, failed at restraining its bureaucrats from regulatory overreach, and failed at helping those in need during the pandemic of Covid-19. The Supreme Court was right: we should not continue failing our housing renters and owners through an illegal eviction moratorium.

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Michael Hendrix is the director of state & local policy at the Manhattan Institute

This piece originally appeared in Law & Liberty