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When the COVID-19 pandemic first paralyzed the country and its economy 18 months ago, local, state and federal governments delivered unprecedented relief to Philadelphia renters at risk of eviction. While key aid programs are finally ending, City Council and the local courts are holding fast in their commitment to renters’ protection – and leaving both renter and landlord advocates to wonder about the future of the housing market in Philadelphia.

Over the last several weeks, several layers of federal financial safety nets were pulled out from under Philadelphians. The federal unemployment insurance programs, which put a $300 bonus on top of state unemployment aid, relaxed eligibility requirements, and allowed people to collect aid indefinitely, expired Sept. 5. The week before, the U.S. Supreme Court functionally overturned the last federal eviction moratorium that had been instituted by the Centers of Disease Control and Prevention.

Some local protections have ended too – including provisions of the city’s landmark Emergency Housing Protection Act, which was passed in the summer of 2020 and crucial court orders. The EHPA ban on late fees for Philadelphia renters who have declared a COVID-19 hardship expired on Sept 1. And the Philadelphia Court of Common Pleas decided to let many landlord-tenant hearings resume in July.

Despite these developments, Philadelphia is exceptional in the strength of renter protections that remain in place. Per an order from the Philadelphia Municipal Court, landlords must enter into the city’s Eviction Diversion Program before they file for eviction. Created by the EHPA and modeled off the city’s foreclosure diversion program created in the wake of the 2008-2009 financial crisis, the Eviction Diversion Program has landlord and tenants go through mediation with a housing counselor. The program has won national acclaim, and City Council has voted to fund the program through August 2022.

The Municipal Court order also requires that landlords apply for any rental assistance available to their tenants at least 45 days before filing for an eviction. To be eligible for assistance, tenants must meet certain income requirements and declare that they have experienced difficulty paying rent due to COVID-19. The courts have also kept landlords from locking out any tenant who has filed an application for rental aid, even if that aid has not yet been delivered.

These requirements have enabled Philadelphia to distribute more than $170 million of the aid that it has received from the state, the federal CARES Act passed in March 2020, and the American Rescue Plan passed in March 2021. Thus far, more than 30,000 Philadelphia households have received aid. The city stands out from the many municipalities and states from across the country that have struggled mightily to deliver aid to renters and property owners and have left large sums of their federal aid funds unspent.

The Pennsylvania Supreme Court has extended the Municipal Court order multiple times at the request of Municipal President Judge Patrick Dugan. In his requests, Dugan cited the need to distribute federal aid and prevent the court from being overwhelmed by thousands of simultaneous eviction filings.

Landlords may petition for an exemption from the aid and mediation requirements. They must be able to demonstrate that a tenant has already vacated a property; that they own fewer than five residential units and are in financial distress; or that a tenant is in breach of the lease for a reason other than non-payment or late payment of rent. Landlords can also file a petition based on other, unspecified extenuating circumstances that they believe might warrant an exemption.

Community Legal Services, an organization that provides civil legal services to low-income Philadelphians, has voiced support for the steps that the city and the courts have taken. CLS attorney Rachel Garland praised Philadelphia and its partners on the state and federal levels for their action. While acknowledging that some renters were still struggling, Garland said that the local actors have provided a basis of support for those most in need.

“The end of the CDC [eviction] moratorium was not as much of a cost to Philadelphia because the court had taken such leadership in Philadelphia to put in place stronger protections,” Garland said. “It’s not perfect, it’s not like we’ve been able to stop evictions, but considering the level of potential crisis, this was pretty impressive.”

Garland credited the success of the city’s program to the proactive role it has taken in connecting renters and landlords with opportunities for aid. She noted that prior to the Municipal Court order, it had been the responsibility of tenants to opt into the city’s rental protection programs, ultimately leaving many eligible renters without aid. A model in which landlords have to petition for an exemption, she said, is more effective in preventing eviction.

“If a tenant knew about the protection, and knew that they needed to sign a form, and knew that they needed to give it to the landlord, then they got the benefit of these protections, but what we learned is that most tenants don’t,” Garland said. “It’s too much information which changes too quickly and it’s too hard to disperse that information in an efficient manner.”

“What really works is not the opt-in protections but the opt-out protections,” Garland added. “The protections are much, much more effective.”  

The actions of the city and the court has not been met with universal praise. Hapco Philadelphia, an advocacy group for Philadelphia landlords, sued the city in federal court last year to overturn most provisions of the Emergency Housing Protection Act, including the part of the law that created the Eviction Diversion Program.

Hapco Philadelphia President, Greg Wertman, said that new rent policies have decimated Philadelphia landlords. In an interview with the UC Review and Philadelphia Free Press held after this story was first published, Wertman cited an August study from the University of Pennsylvania and Harvard University which evidenced increased distress among Philadelphia rental-property owners. The study said that the share of Philadelphia landlords who put property up for sale in the last year was more than five-times higher than it was the year before – rising from 3.5% in 2019 to 20.9% in 2020; and the share of city landlords who deferred maintenance was more than six-times higher in 2020 compared to 2019, rising from 5.4% to 35.7%.

Wertman said that these changes indicated a dramatic loss in revenue for landlords stemming from the obstacles landlords face in evicting delinquent tenants. He said the strain was especially acute for small landlords that own relatively few units but make up a large share of the city’s rental market.

Wertman noted that Hapco Philadelphia had lost 400 of its nearly 2,000 members over the course of the pandemic. While the organization is beginning to see its membership recover, with more landlords needing help in navigating new policies, Wertman said that the initial drop was indicative of the pressure that the city had placed on small landlords.

“I keep telling everybody, anybody who will listen, the little people have got to get out, you drove them out of business,” Wertman said. “And the people you didn’t drive out of business, but are losing money, are now selling.”  

Wertman said that he would like to see the Eviction Diversion Program be continued – but only on a voluntary basis. He warned that if renter-protection policies like the diversion program remain in place, it could discourage property owners from investing in Philadelphia, or make necessary maintenance unaffordable – ultimately, he said, depleting the city’s stock of much needed affordable housing.

“The pendulum has swung too far,” Wertman said. “Yes, at one time, the landlords ruled the roost, [now] it’s gone the other way.”

“So, here’s the biggest question you want to ask any politician in Philadelphia – ‘would you invest in low-to-moderate-income housing in Philadelphia?’” Wertman added.  “For anybody who is a renter, low-to-moderate-income housing is only going to become more difficult [to find] – and it wasn’t easy before this all went down.”

Garland acknowledged that some landlords might be frustrated by the new process – especially now that mortgage forbearances may be expiring and sheriff sales are getting set to resume. Garland nevertheless noted that the process reopened lines of communications with tenants and offered landlords the possibility of recouping the rent they are owed.

“I think there was an understandable level of skepticism last summer before the Eviction Diversion Program was started about whether or not it would be helpful or whether it would be another stall tactic, and I think landlords who got through have found it really helpful,” Garland said. “With that being said, I think there are still a lot of frustrated landlords out there who haven’t been able to navigate the system, who haven’t understood what their options are, or are still waiting for their rental assistance application to be processed, [because] it’s really hard to wait when you have bills due and a mortgage to pay.”

“I do think that the focus needs to be on how to resolve these issues, but nothing is solved for landlords only by eviction,” Garland added.

The threat of a wave of evictions still looms over the city. The Penn and Harvard study showed that, even with an assortment of eviction moratoriums in place, the share of Philadelphia landlords who filed to evict tenants rose from 17.8% in 2019 to 25.6% in 2020. The share of landlords who granted rent extensions to delinquent tenants increased from 19% to 68.6%.

Wertman praised the work the city has done to distribute rental aid to combat eviction – but said that the federal and state government have to be more forthcoming with additional aid to avoid further havoc in the city housing market.

Garland said that more aid to the city may be forthcoming – especially if the state chooses to re-allocate rental aid from counties which are not distributing high shares of the funds they have received, to counties that are, such as Philadelphia.

The city’s renter protections were first implemented last year to prevent people from becoming homeless and put out on the street – where they would be more vulnerable to COVID-19. The original EHPA passed in May 2020 required that landlords offer a nine-month payment plan to pay off back rent; prohibited certain late fees; provided guidance to the courts to forestall evictions; and created the Eviction Diversion Program.

Garland, from CLS, said that the rental protections in place now were not only important to keep the COVID-19 death toll from climbing even higher, but also presented an opportunity to make long-term reforms to the Philadelphia housing market.

Even more changes to the city housing market might be on the way.

In the election scheduled for Nov. 2, Philadelphians will vote whether to permanently mandate funding for the city’s Housing Trust Fund, which subsidizes affordable housing development and preservation.

And before it recessed for the summer, City Council was exploring a bill to create a Mixed-Income Neighborhood Overlay for University City and some sections of North Philadelphia. The legislation would require new residential developments in selected tracts to designate a fifth of their units as affordable housing where rents would be capped at a rate based on 40% of Philadelphia’s Area Median Income – which would amount to about $725 per month for a single-bedroom apartment.

When the bill was proposed in the spring, it was met with opposition from several development groups and support from some affordable-housing advocates. City Council will likely reexamine the bill in its next legislative session, which started Friday.

This article has been reprinted with permission from the University City Review, Inc.

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