What is the Means-Tested Housing Assistance Program?

Beverly Hills rent-stabilized households recently received in the mail a notice that City Council will be discussing ‘CPI Index and Means Tested Housing Assistance Program’ at the Tuesday June 21st evening meeting. In a prior post we explained the ‘CPI Index’ discussion item. The housing assistance refers to a proposed program to provide limited financial assistance to tenants and landlords. Most households won’t understand this aspect of the notice. Let Renters Alliance explain….

The housing assistance program referenced in the notice was proposed by Beverly Hills Councilmember Bob Wunderlich earlier this year and discussed more fully at the April 26th Council meeting. The housing assistance program was proposed in order to cushion the impact on rent-stabilized households of higher-than-usual rent increases which are expected in coming years. To put some shape to the proposed program, the Mayor appointed two councilmembers to an Housing Assistance Ad Hoc committee which met once earlier this month.

Why a housing assistance program? Higher rent increases are expected for two reasons: lingering high inflation will likely mean a maximum allowable annual rent increase of 5% or above. Then City Council proposes to allow an additional several percentage points to help landlords recover ‘missed’ rent increases denied during the moratorium. Add it up and we can expect a rent increase that approaches double-digits in the 2–3 years ahead.

Tenant Housing Assistance

Wunderlich proposed the housing assistance program to shave a few percentage points off those potential high rent increases. This would not be cash-on-the-barrel help with paying the rent; instead it would be a more modest monthly payment, direct to the landlord, that would defray some of the additional monthly dollar cost of a high rent increase.

By definition this is help at the margin. Consider a tenant who rents an apartment at the city’s average rent of $2,400. If the allowed rent increase is 8% then the cost of rent would rise by $192 monthly. Were this program to shave-off three percentage points of that increase, the average household would pay $72 less each month. As currently proposed this program may last one year — a very limited program.

The housing assistance program would benefit only eligible households. It is a means-tested program so tenants would have to qualify. Criteria may include an income threshold (say a maximum of 80% of area median income) or perhaps have to show continuing COVID-related economic impact. Certain types of households could be prioritized (which would put the rent of us behind in line) and there may even be a rent-threshold ($2,000 monthly for example): over that amount assistance would not be available. None of the eligibility criteria have been established yet.

Landlord Housing Assistance

The program was envisioned as much a landlord assistance program as a tenant program. Certain landlords who are owed rent could find some of the rent arrears rent paid by the city on behalf of the tenant. This aspect of the proposed program is even less defined, including how much assistance may be available and whether it would be limited to ‘mom-and-pop’ landlords (which has no precise definition).

The June 21, 2022 housing assistance staff report proposes two potential definitions for ‘mom-and-pop’: owner owns no more than four units and in addition to a single family dwelling; or owns no more than six units but resides at the rental property. This criterion could make a difference to tenants because landlords excluded from assistance means the tenant’s rent debt won’t be covered. Why would a tenant living at a seven-unit rental property not have their rent arrears covered by this program?

The broader problem is that councilmembers often invoke the mythical ’mom-and-pop’ landlord as a means to distinguish between suporting smaller owners deemed deserving of assistance from larger owners (like corporate landlords) who are not deserving. But it does not work that way! There are plenty of corporate landlords who are more professional and responsible than some of our ‘mom-and-pop’ landlords who deny maintenance in order to pad the profit. Are the latter landlords more deserving?

In any case, the details of this aspect proposed program are not yet established. Nor is the funding: Council has talked about throwing as much money at the problem as necessary, but staff now maintains that the $700,000 is enough. “It is anticipated that this amount will roughly align with the actual costs of implementing the program.” That money was left over from the prior rent relief program because eligibility was too tightly restricted. It looks like that mistake will hamper this implementation of the program too.

When this item comes to the June 21st City Council afternoon study session agenda it will be an information item: only a brief report on the Monday, June 13th Housing Assistance Ad Hoc Committee meeting. Council will not make any decision about the program and may not even discuss it.