Analysis of Housing Relief Provided Under the American Rescue Plan Act

Written by Apartment Management Magazine on . Posted in Blog

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARPA).  First and foremost, ARPA includes $21.55 billion in dedicated emergency rental assistance funding, which continues federal support of state and local rental assistance programs across the country. Combined with the $25 billion in rental assistance funding allocated in the Consolidated Appropriations Act of 2021, these funds are a significant step forward in closing the growing “gap” of tens of billions of dollars of outstanding rental debt that have accumulated during the pandemic. Simply put, the funds are a lifesaver for both renters and housing providers who have been hardest hit.

Additionally, the new law does not extend the federal eviction moratorium that remains in place until March 31, 2021. The following summarizes the “key” aspects of the ARPA with regard to housing relief:

How To Create a Diversified Delaware Statutory Trust (DST) Portfolio

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By Jason Salmon, Senior Vice President, Kay Properties & Investments, LLC

Diversification is one of the basic building blocks to any investment portfolio strategy. It is the simple concept of not wanting to put all your eggs in one basket.  Diversification across asset types helps to avoid concentration risk – and potentially a basket full of broken eggs. Diversification also has the potential to create other positives, such as achieving a potentially higher overall blended return for a portfolio and smoothing out the natural cyclical ups and down that can occur within sectors.

A Short History on Emotional Support and Service Animals

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By Ari Chazanas, Founder and Chief Executive Officer, Lotus West Properties

You have probably seen service dogs in public assisting their owners with tasks and making their lives easier. You have also likely heard of amusing stories of unusual animals riding along with their owners on airplanes as emotional support animals or “ESAs.”  This article will give you short history of service and emotional support animals, describe the differences between the two, and provide advice on what you should do when you receive an accommodation request from a tenant.

Solving the Homeless Crisis Should Be a Public-Private Partnership

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By Roderick Wright, California State Senator (Retired)

We can all agree homelessness or being unhoused is a social, economic and health problem.  The breakdown occurs when we try to solve the problem.  Nothing, particularly homelessness, is an easy issue to tackle, and if it were, it would have already been solved. 

Let us also all agree, people sleeping on the street is unhealthy, unsightly, and inhumane.  So now how do we solve this crisis?  U.S. District Judge David O. Carter ordered the City of Los Angeles to do something about the homelessness situation faced by the City following a lawsuit brought by the Los Angeles Alliance for Human Rights. In Los Angeles County and most others, the Public Guardian is responsible for people unable to care for themselves, and this obligates our government to act.  However, many of the homeless on our streets and in temporary shelters today have not attempted to obtain assistance. 

The Earthquake Insurance Quandary: Is It Affordable?

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By Newfront Insurance

Many property owners today do not bother purchasing earthquake insurance due to perceived high costs and limited coverage.  Often, we are asked: “Is earthquake insurance affordable?”  The answer is, “Yes, it is.”

California considers Earthquake Insurance another type of “CAT” (catastrophic) coverage that is underwritten by several domestic and international carriers and has been the last of the CAT coverages to start experiencing rate increases, albeit moderate, due to the presently strained state of the Property Insurance marketplace.

Assistance Animals Revisited – Recent Guidance & Recent Regulations

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By David Levy, Programs Specialist, Fair Housing Council of Orange County

April is Fair Housing Month, during which we will mark the 53rd anniversary of the passage of the federal Fair Housing Act (FHA).  The law being over a half-century old does not mean that its interpretation and application does not continue to evolve.

The FHA has been amended twice; once in 1974 and again in 1988.  Later this year will come the 33rd anniversary of those 1988 amendments to the FHA that added provisions to ensure equal, or at least improved, access to housing for people with disabilities.  Just as with other aspects of law, when it comes to the FHA’s disability-specific provisions, their interpretation and application are not static.  Evidence of that fact is shown by the U.S. Department of Housing and Urban Development’s Office of Fair Housing and Equal Opportunity’s (FHEO) issuance of updated guidance on assistance animals on January 28, 2020.  That update came just 4 weeks after the introduction of California’s first fair housing regulations, which can be found in Title 2 of the California Code of Regulations (CCR), starting at section 12005.  That January 2020 introduction of regulations was the first phase of developing comprehensive regulations that will eventually address most aspects of fair housing law.  Among the topics addressed in the first phase is that of assistance animals.

Opportunity Zones – A 1031 Exchange Alternative?

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By Christopher Miller, MBA

As a tax-advantaged investment and 1031 Exchange expert, I was intrigued when I first heard of Opportunity Zones.  This is a program created by the federal government that is designed to encourage investing in certain areas of the country.  It was initially described to me as a “1031 Exchange Alternative.”  After much research, I concluded that; while it does work to somewhat ease the pain of capital gains taxes, the Opportunity Zone is a poor alternative to a 1031 Exchange.  This month, I will talk about why.

What Opportunity Zones Are

Opportunity Zones were created to offer tax incentives that would encourage investment in certain areas of the country.  Based on that description, one would expect eligible properties to be unattractive; flooded areas of New Orleans, the former Packard factory in Detroit that has been vacant for 60 years, etc.   It turns out that this is far from the truth.  Opportunity Zones were created by elected officials, so every politician in the country had their hand out to create zones in “their” neighborhoods.  The state of California alone has 879 Opportunity Zones and include areas in Beverly Hills and along Fraternity Row at the University of Southern California.

So; if I invest in an Opportunity Zone, I’m not stuck investing somewhere that I need to wait 10 years for growth?  I can invest somewhere with the potential to grow now?  I was interested.  What are the tax benefits?

San Francisco Cannot Foist the Pandemic’s Economic Burden Onto Landlords

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By Oliver J. Dunford, Pacific Legal Foundation

In response to the COVID-19 pandemic, governments across the country have tried to limit the economic damage caused by the unprecedented lockdowns. That is certainly a worthy goal. But far too often, rather than providing assistance across the board — which might require unpopular tax hikes on everyone — governments stick only some people with the bill.

San Francisco, for example, recently adopted an ordinance that prohibits landlords from evicting certain business tenants that cannot pay rent because of COVID-related impacts. The ordinance allows these tenants, upon a showing of financial hardship, to stop paying rent immediately and grants them a forbearance period to repay, during which time landlords cannot recover possession of their property. Businesses with less than 10 full-time employees are even permitted to cancel their leases altogether and avoid early-termination fees, regardless of what their leases say. The ordinance provides one meager sop to smaller landlords (those that own less than 25,000 square feet of rental space), who may proceed with eviction against non-paying tenants, but only if the landlords can prove that the inability to evict would cause them a “significant” financial hardship.

Where Are We Headed

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My father was a Protestant minister. In our services we had a segment for testimonies. This was an opportunity for people to stand and discuss anything regarding their walk of faith.

My dad told the story of a woman who once said during her testimony, “Brother Wellman, sometimes I think…-well…and then again I don’t know”.

I think we can all relate today to her ambivalence as we ponder where we are headed. I see us heading into 4 concurrent eras.

Emergency Era

We are nearing the one-year anniversary of Covid-19 emergency declarations under which government at all levels assumed unfettered authoritarian control over virtually every aspects of our lives.

What is remarkable is how quickly and comprehensively this occurred amid only isolated pockets of resistance. Apartment owners’ rights, about which I will discuss more later, were a notable casualty.

What is most troubling is the addictive nature of emergency control. Government leaders love power and once in possession of it rarely surrender it willingly. So we can expect, not a reduction of emergency rules, but a continual extension of declared emergencies.

The Covid-19 emergency can be succeeded or be accompanied by  a housing emergency, a climate change emergency, or other emergency de jure as needed to perpetuate the need for government control.

Shock and Anger Over the L.A. City Waste Haulers’ 6.15% Increase

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By Albert Mass

I was shocked and angered that the City of Los Angeles’ City Council has allowed the City’s waste haulers to increase trash removal fees by 6.15% effective in January while rent increases are frozen, late fees and interest are banned, and evictions are prohibited.  Because I am unable to increase rent at my building (let alone collect it from tenants now living for free under the disguise of a COVID impact) during this global pandemic, the City should require its monopolistic waste haulers to freeze prices.  This is especially so, and the City should take responsibility, because is was the City that established its anti-competitive monopoly arrangement known as “RecycLA” that set and imposes upon me and thousands of other property owners ever-increasing waste hauling fees.  It was the City that has negotiated the waste hauling rates and that has chosen my waste hauler, not me.

All this started back in 2017 when property owners were shocked and dismayed by the huge fee increases rolled out along with horrible service levels so that the City could extort a $25 million to $35 million franchise fee from property owners based upon a “10% take” of the waste haulers’ gross receipts.  Gone were 100’s of waste haulers competing for our business leaving us with just 7 each granted exclusive rights to service designated territories within the City.  For the City, there’s no skin of its back – the more property owners pay, the more the City earns.  But there is no doubt about it.  A 10% franchise fee is no more than a tax on property owners.