In Seattle and across the country, nonprofits that operate low-income housing face a skyrocketing balance of unpaid rent.
In the Seattle area, the total rent debt across all tenants is estimated at $170 million, according to the National Equity Atlas, the vast majority of it belonging to low-income households. Across the country, the total is almost $10 billion.
Many housing providers say the amount of overdue rent has grown dramatically since before the pandemic and is hurting their ability to maintain and build more affordable housing in a region and nation that is starved for it.
These organizations, whose missions include bringing and keeping people off the street, have begun to evict nonpaying tenants to bring in paying ones.
Some fear more evictions are on the way.
Housing providers have been meeting with local, state and federal officials to come up with solutions, and in some cases, asking to make it easier to evict tenants.
The increase in unpaid rents can be traced to the pandemic, which was a hurricane of economic disruptions, especially at the lowest rungs of the ladder.
But housing providers and tenant advocates differ in how much blame they assign to people for either choosing or being unable to pay rent. That narrative may affect how comfortable organizations and governments feel in allowing evictions to be the release valve for this financial problem.
How bad is it?
The Seattle Housing Authority, a public housing agency, saw a threefold increase in tenants with overdue rent over the last four years, going from 554 tenants at the start of 2019 to 1,784 at the beginning of this year. Currently, about 23% of tenants are behind on rent.
The Low Income Housing Institute, one of the largest homelessness services and low-income housing providers in the state, said the number of tenants with more than $500 in overdue rent increased nearly sixfold over the last four years, going from 66 to 369.
Even before unpaid rents reached these levels, low-income housing providers had been sounding the alarm on rising costs for insurance, security, staffing and overhead outpacing their funding.
Low Income Housing Institute Executive Director Sharon Lee said the pandemic squeezed providers further, requiring them to install air purifiers and windows in offices and community rooms. And maintenance and repairs that were deferred are coming due now.
Lee said rents amounted to about 60% of her organization’s income in 2019, the rest coming from government subsidies, public contracts and private donations.
“Excessive rent loss will decimate Seattle’s community of nonprofit housing providers,” Lee said. “We will not have the financial resources to maintain the housing, make mortgage payments or meet the obligations of our lenders.”
The shortfalls are also making it more difficult to add new affordable housing, said Lisa Vatske, a director at the Washington State Housing Finance Commission, a state agency that oversees public funding and programs for housing.
Banks are increasing requirements for organizations to receive loans for new affordable housing projects, according to Vatske, because they see the unpaid rent balances as high risk, which ultimately decreases the number of units being built.
It’s not just a Seattle problem.
According to the Public Housing Authorities Directors Association, the percentage of rent that public housing agencies across the country were unable to collect from tenants grew threefold between 2019 and 2022. Rents comprise more than 30% of public housing authorities’ funding.
“This is the first time that I have ever seen such high percentages of nonpayment of rent,” said Denise Muha, executive director of the National Leased Housing Association, which represents low-income housing organizations across the country that receive federal funding, where she’s worked for almost four decades.
Choosing or unable to pay?
Much of the low-income housing industry believes that government programs designed to shield renters from the economic impacts of the pandemic created a habit of not paying rent.
In 2020, an eviction moratorium was enacted, where landlords were prohibited from kicking out tenants, with few exceptions.
If a tenant stopped paying rent, their balance of unpaid rent would grow, but they could stay in their home for as long as the moratorium was in effect. Then, pandemic relief funds provided one-time rental assistance that wiped the slate clean for many tenants.
Housing providers said a significant number of tenants are still not paying because they got used to spending their income on other needs or may be hoping for more rental assistance.
“It’s kind of conditioned people not to pay,” said Michael Bailey, executive director of Compass Housing Alliance, a homelessness services and affordable housing provider. “We see people receiving income and not putting that to rent.”
The Seattle Office of Housing doesn’t buy it.
“They’re just unable, actually, to pay rent because the rents have been increasing so quickly,” said Maiko Winkler-Chin, director of the Seattle Office of Housing.
For people living in permanent supportive housing, public housing and housing subsidized by government vouchers, rent can be free to the tenant or set at a percentage of their income, with the government subsidizing the rest.
But for a significant number of low-income housing units, rents soared during the pandemic due to their wealthier neighbors earning more.
For affordable housing built using federal tax credits — there are about 45,000 units in King County — the federal government sets the maximum amount of rent that can be charged using a formula tied to an area’s median income.
In Seattle and King County, the median income spiked during the pandemic due to “very high wage earners skewing the top,” said Nona Raybern, communications manager at Seattle’s Office of Housing. That resulted in maximum rents increasing by about 36% in the last five years.
Earlier this year, the U.S. Department of Housing and Urban Development capped yearly rent increases for affordable housing units built using federal tax credits to 10%. A state bill to cap yearly rent increases to 7% passed the House this year, but ultimately died in the Senate.
“I don’t really see the case where the tenant stopped paying for no reason,” said Edmund Witter, senior managing attorney for the Housing Justice Project in King County, which provides free legal assistance to renters facing eviction.
Witter said the most common reasons people stop paying rent are job loss, injury, death in their family or child care issues. Reviewing cases in February, he said the average unpaid rent balance of his clients was about $4,100.
One of his clients, Stephanie Austin, 45, who used to sneak into Sea-Tac Airport to sleep when she was homeless, moved into a permanent supportive housing unit operated by Plymouth Housing at the end of 2022. At the time, she had a temporary, part-time job as a cashier and cook primarily at the stadiums downtown, through Uplift Northwest, a Seattle nonprofit temporary staffing organization.
Based on that income, Plymouth determined she could pay $64 in rent per month. But within a few months of moving in, Austin’s hours at her job fell off, and she fell behind on rent.
Selena Tan, a senior associate at PolicyLink who studies rent debt, said month-to-month fluctuations in income are common among low-income households, and that the economic shock of the pandemic made them more likely.
Earlier this year, Plymouth filed an eviction case against Austin for the $626 in overdue rent she owed.
Plymouth said it could not discuss any specific tenant’s case, but said it decided last month it would not evict any tenants with zero income even if they had unpaid rent. Austin said that she could have spent the energy and time fighting the eviction to find a job.
How it ends
As of the end of March, Plymouth had evicted four tenants for nonpayment of rent since the end of the eviction moratorium and was in the process of evicting 71 others.
Chief Operations Officer Andrea Carnes said that Plymouth needs to maintain fairness among tenants.
“It is really hard if you’re watching your next-door neighbor not pay rent at all, and every month you’re writing a check,” Carnes said.
She added that before Plymouth evicts any tenants, it works with tenants to get them on a payment plan or other methods to pay off their debt. Plymouth has stopped processing 189 evictions this way since the moratorium ended.
The Low Income Housing Institute similarly said it evicted tenants only as a last resort but was in the process of evicting 83 tenants who weren’t paying rent as of last week, more than 70% of whom live in housing where rents are tied to median income.
Some organizations are pushing officials to roll back some recently added tenant protections and make it easier to evict, which would allow them to bring in rent-paying tenants and balance their finances.
The Public Housing Authorities Directors Association has spoken out against a CARES Act provision that requires landlords to provide 30 days notice before starting the eviction process.
“During that time period, the tenant isn’t paying rent, and the rent balance keeps going up,” said Michael Webb, senior policy analyst at the association.
Lee at the Low-Income Housing Institute said Seattle’s winter and school year eviction moratoriums should be amended so they don’t apply to tenants who receive income but don’t pay rent.
After meetings with local low-income housing providers, the city of Seattle Office of Housing made available $14 million in one-time funding from the payroll expense tax in part to pay for unpaid rent of very low income tenants.
Winkler-Chin at the Office of Housing said she believes more subsidies are needed across the board “and probably at the federal level is the best place for that.”
The U.S. Department of Housing and Urban Development said that recent economic improvements could help the situation for both renters and landlords, but did not offer specific ways the agency could address the problem of unpaid rents.
Muha, at the National Leased Housing Association, said the unsustainable levels of unpaid rent are a temporary problem that will subside one way or another.
“Unless we can get residents with large rental arrears some financial help from the states or localities via federal assistance or nonprofits, then eventually they’re going to be evicted,” Muha said.