On January 28th, California lawmakers agreed to use $2.6 billion in federal stimulus money to pay off up to 80% of some tenants’ unpaid rent — on the condition that landlords forgive the rest of it. California is currently the only state that is using federal stimulus money to help tenants.
The legislation, which Gov. Gavin Newsom will likely sign into law, is the state’s strategy to deal with millions of people unable to pay their rent because of government-ordered business closures. No one is sure how much unpaid rent is outstanding. Estimates range from a high of $3.6 billion to a low of $400 million. Last year, Newsom signed a law that banned tenants from being evicted for not paying their rent during the coronavirus, but only if they paid at least 25% of what they owed after Sept. 1.
“COVID-19 continues to devastate communities across our state and too many Californians remain one paycheck away from losing their apartments or homes. These families need protection and relief now,” -Gavin Newsom.
The federal money includes $1.5 billion sent to the state, and another $1.1 billion sent to some cities and counties.
The money could also be used to pay for unpaid utility bills. A survey by the State Water Resources Control Board found 1.6 residential water customers, or 12% of all households, have unpaid bills amounting to $1 billion.
Those eligible for the rental assistance must qualify as low-income residents based on a formula involving area median income, have financial hardships such as unemployment and demonstrate a “risk of homelessness or housing instability,” according to the legislation.