Renters still left out in the cold despite temporary coronavirus protection

by Kirk McClure, University of Kansas and Alex Schwartz, The New School

Emergency relief for renters across America may protect them from the threat of eviction during the coronavirus crisis – but it won’t last for long.

The economic shutdown necessitated by COVID-19 has undermined the ability of millions of families and individuals to pay their landlords. But current measures to alleviate their hardship will not last through the summer, leaving the country at risk of a surge of evictions and homelessness within months.

Protesters demanding a freeze on rents in Minneapolis.

 

The current crisis also hits landlords, small ones especially, who may now struggle to meet mortgage payments, property taxes and other essential expenses. Again, the measures offered by Congress provide only limited relief.

As scholars of housing policy, we know that for any measure to have real impact, it will need to address problems facing both tenants and landlords. Such a solution may already exist in the Housing Choice Voucher program, a 40-year-old program which enables low-income households to afford rental housing in the private market.

Rental crisis

The coronavirus worsens an already severe housing affordability crisis. The most recent data shows that 10.7 million households, one-quarter of all renters, spend more than half of their income on rent, including 56% of all renters earning less than US$30,000 per year. More than 2.3 million renters are evicted annually. On any given night, more than 500,000 people are homeless, and nearly three times as many went homeless during the course of a single year.

More than 20 million people have filed for unemployment benefits since the shutdown began, and this number is likely to climb higher in the weeks ahead.

The people most at risk of losing their jobs are those who work in low-paying service industries such as restaurants, hotels, personal services and the retail sector. They are also disproportionately likely to rent their homes.

Many of these workers will struggle to pay landlords in the coming months. As of 2019, the Federal Reserve reported that about 40% of all households could not cover an unexpected $400 expense without borrowing funds or selling a possession.

In an effort to provide relief to families and business hit by the economic meltdown, President Trump signed the $2.2 trillion CARES Act on March 27.

Stay of eviction

The legislation provides considerable support to homeowners but much less to renters. Homeowners with government-supported mortgages such as those that are guaranteed by Fannie Mae or Freddie Mac, accounting for 70% of all outstanding mortgages, can skip mortgage payments for up to 12 months without risk of foreclosure. Missed payments will instead by added to their mortgage balances.

Renters are afforded some protection. The legislation forbids private and public owners of rental housing financed with government assistanceabout 28% of all rentals – from evicting tenants for nonpayment of rent over a period of six months. In addition to the CARES Act, 15 states and 24 cities have temporarily suspended evictions for nearly all renters in their jurisdictions.

The CARES Act also provides relief in the shape of expanded unemployment benefits as well as a one-off payment of $1,200 to eligible adults and an extra $500 per child.

But rental protection is unlikely to last more than a few months – less if stays on eviction are not enforced, as has been the case in a number of states.

Moreover, when renters skip their rent, they still owe it – it will need to be repaid at a later date.

These emergency measures do little to help landlords cover their expenses. It does prohibit lenders from foreclosing on landlords with federally backed mortgages, should they fail to make payment. But it does nothing to help them pay employees, utility bills or their property taxes. And when landlords cannot pay property taxes, it becomes even more difficult for hard-pressed cities, towns and school districts to provide essential services.

Room for improvement?

One alternative would be for the government to pay landlords directly to cover the loss of rental income. Rep. Ilhan Omar, for example, is proposing that all renters have their rents canceled, with landlords applying for compensation from the federal government.

A downside of this approach is the potential for providing assistance to landlords and tenants who do not need it. It would also require a new apparatus to administer the program, which could delay implementation.

Advocates and policymakers have suggested other ways government could address the looming rental housing crisis.

The approach partially adopted by the CARES Act is to compensate displaced workers for their loss of income. This could be expanded through repeated cash payments to households. Alternatively, unemployment benefits could be increased. But there is also no guarantee that recipients will use the funds for housing or that funds would be targeted at low-income households that require assistance.

The government could pay employers to keep workers on their payroll and hire back those they have let go. It has already adopted this approach to an extent, but not anywhere close to the scale that would be necessary. Scaling up these efforts would probably take months and may not be politically feasible.

Vouchers for success

We believe a more viable option would be expanding the government’s Housing Choice Voucher program. Established in 1974, it enables low-income households to rent housing in the private market, paying no more than 30% of their income on rent, with the government paying the rest.

It is available to all low-income households and currently serves 2.2 million households – although as many as 10 million were eligible for the program before the COVID crisis.

The program already has the administrative apparatus needed to handle an increase in participants: a nationwide network of over 3,300 housing authorities with decades of experience. Many have already demonstrated their capacity to dramatically expand operations to accommodate new households in the event of natural disasters, such as hurricanes and floods.

If expanded to meet the demands of the current crisis, the Housing Choice Voucher program could act as a shock absorber for the rental housing market. For tenants, it would provide some stability where there now is uncertainty and reduce the risk of displacement, eviction and homelessness. For landlords, it would provide a steady stream of income to help pay the mortgage, property taxes and other expenses.


Republished with permission under license from The Conversation

Birthed by HBCU students, this organization offers important lessons for today’s student activists

by Jelani Favors, Clayton State University

April 15, 2020 marks 60 years since the founding of the Student Nonviolent Coordinating Committee, perhaps better known as SNCC, and usually pronounced as “snick.” SNCC became one of the most important organizations to engage in grassroots organizing during the modern civil rights movement and radically transformed youth culture during the decade. Jelani Favors, an associate professor of history and author of a book on how historically black colleges and universities ushered in a new era of activism and leadership, discusses SNCC’s legacy and what lessons it can offer today’s activists.

What role did SNCC play in the civil rights movement?

The founding of SNCC in April 1960 represented an important paradigm shift within the modern civil rights movement. SNCC encouraged black youth to defiantly enter spaces that they had been told to avoid all of their lives. The founding in 1960 resulted in a wave of SNCC activists being sent into the most hostile environments to register voters and mobilize African Americans for change. In doing so, SNCC ushered in the direct action phase of the movement.

Previous generations of activists had embraced lawsuits, such as the 1944 Smith v. Allwright against racial discrimination in voting, and the 1954 Brown v. Board of Education case against racial segregation in public schools. Previous generations also embraced non-direct protest tactics, such as boycotts, to bring slow change. But the sit-ins – popularized by black college students who would later form SNCC – placed black bodies on the line in ways that other tactics had not. They clogged “five and dime” stores across the South, effectively shutting them down, dramatizing the movement for black liberation as the entire world looked on through television and media coverage.

Black youth courageously courted the danger that often accompanied breaking the color line in the racially segregated South. Their actions resulted in violent clashes that fully displayed the immorality of white segregationists and simultaneously captured the nobility and courage of black youth. Perhaps most importantly, SNCC radically transformed youth culture in America. The organization took a generation of youth that Time magazine had previously labeled in 1951 as the “silent generation,” and ushered in a decade – the 1960s – that would be widely characterized and defined by the militancy and dissent of young Americans.

How did historically black colleges and universities help form SNCC and its agenda?

Black colleges served as the incubators for this militancy. For generations, historically black colleges and universities – also known as HBCUs – exposed students to a “second curriculum” that was defined by race consciousness, idealism and cultural nationalism. These concepts not only blunted the toxic effects of white supremacy, but they also empowered youth and deliberately fitted them with a mission to serve as change agents within their respective communities and professional fields. It was not happenstance that the origins of SNCC were rooted within the crucial intellectual and social spaces that were carved out within HBCUs.

The overwhelming majority of students who convened in Raleigh, North Carolina, on April 15, 1960 were from southern black colleges where the sit-ins had unfolded. And it was also no mistake that they met at Shaw University, an HBCU located in Raleigh. After all, the woman who had the vision to bring those students together – Ella Baker – was a 1927 graduate of Shaw.

For generations, black college alumni like Baker worked within religious institutions, civil rights organizations, labor unions and special interests groups. Their work within these spaces was largely informed by the “second curriculum” they had been exposed to as HBCU students. SNCC was therefore part of a long tradition of radicalism that was cultivated and produced within black colleges. This exposure equipped them with the necessary intellectual and political tools they would use to take on white supremacy and Jim Crow – the system of legalized segregation in the South.

What is SNCC’s legacy?

SNCC had a relatively short lifespan compared to other civil rights organizations. By the end of the decade their operations were defunct. Much of this was due to both external and internal pressures. Nevertheless, SNCC distinguished itself as “the most powerful energy machine” for the freedom struggle. I argue that SNCC was the most important and effective civil rights organization of the 1960s.

Unlike most other organizations, SNCC eschewed “top-down” operations that fostered elitism and “helicopter” tactics in which organizers would swoop in to inspire local folks and then leave them to manage local struggles on their own. SNCC’s objectives were completely opposite. They entered into the most dangerous, racially hostile and violent regions of the country, such as Albany, Georgia, the Delta region of Mississippi, and Lowndes County, Alabama. Once there, they set up operations that listened to and empowered local people, such as Fannie Lou Hamer, Amzie Moore, Unita Blackwell and countless others.

The relationship between SNCC and local people was reciprocal. SNCC activists learned and lived among the black proletariat – sharecroppers, farmers and day laborers. These people’s wisdom, shrewdness and practical knowledge of how to survive and navigate the worst of the Jim Crow South proved invaluable as SNCC took the fight for black liberation into the rural communities and remote areas of the South. Their blueprint became the template for local organizing for the Black Power Movement and beyond. Perhaps most importantly, their actions played a crucial role in expanding the ballot to millions of Americans who had been marginalized by racist policies and violence.

What lessons can today’s student activists learn from SNCC?

Both SNCC’s victories and defeats are very informative on the history of black social movements. Internal debates are both necessary and healthy for activist organizations. However, by 1964 SNCC’s ability to function as a cohesive unit was under serious threat. Disagreements concerning the infusion of young white activists in the organization and field operations, arguments concerning the use of non-violence as a tactic, and debate over other competing ideological tenets, such as Marxism and Black Nationalism, greatly impaired the organization’s ability to keep a unified front.

Perhaps most challenging were the external threats to SNCC’s existence. The potency of SNCC drew the attention of federal and state agencies that wanted to curb its influence and power. SNCC activists were constantly under surveillance. They lived their lives under the looming shadow of intimidation from law enforcement and the threat of being infiltrated. Today’s student activists can and should be wary of arguments that are unproductive and those who seek to derail their organizations with their own toxic agendas.

In spite of these challenges, SNCC presented a model that empowered local communities and radically transformed American democracy. By listening to and learning from aggrieved populations and empowering local folks to carry out their own agendas, today’s student activists can extend the radical tradition established by SNCC.

We'll Never Turn Back (1963) | SNCC Film feat. Fannie Lou Hamer


Republished with permission under license from The Conversation.

Breaking contracts over coronavirus: Can you argue it’s an ‘act of God’?

by Andrew Schwartz, University of Colorado Boulder

The coronavirus pandemic has prevented countless people from fulfilling their contracts, from basketball players to babysitters.

The NBA suspended its season on March 11, citing the coronavirus risk. A force majeure clause in the NBA contract means players could lose money with each canceled game. 

 

Could all of these people be sued for breach of contract, or are they excused due to this extraordinary event? What about payments made in advance, such as tickets bought for a concert that has now been canceled or a dorm room leased at a college that is now closed?

Wars, floods and other pandemics have undermined innumerable contracts over the years. In response, U.S. courts have established a fairly clear set of legal rules to answer these questions.

As a contracts law professor, I help future lawyers think through how these rules apply in a wide range of situations. That includes what the law says about contracts that are impossible to meet during pandemics.

The rules of impossibility and restitution

A promise given in exchange for money becomes an enforceable contract, and it remains enforceable even if living up to its terms turns out to be more challenging than expected.

If a babysitter promises to look after your children once a week for US$50, she is bound to the contract regardless of car trouble, the kids misbehaving or other hardships. If the babysitter gives up, that is a breach of contract and she is legally liable to you. This is what makes a contract a contract and not an idle promise to give it a try.

But what if the babysitter failed to show up because a coronavirus outbreak made it physically dangerous for her to enter your house or because the government issued an order to remain home to avoid spreading the virus?

Because this type of extraordinary and unanticipated event, often called an “act of God,” is so radically different from the ordinary risks and challenges of babysitting, and because it makes her performance so much more difficult and dangerous than expected, the courts will excuse her from the contract. Through no fault of her own, her performance has become effectively impossible, and so her failure to babysit does not count as a breach of contract.

That is not the end of the story, though. Under the legal doctrine of restitution, which prohibits unjust enrichment at the expense of another, the babysitter would have to return any money you paid her in advance. She has not breached the contract, but neither has she fulfilled it, so it would be unjust for her to keep that money.

When universities closed their dorms during the coronavirus outbreak, it meant breaking contracts with students. Many schools, including Howard University, shown here, have agreed to pay partial refunds. 

This basic framework – impossibility and restitution – applies generally to contracts that have been upended by the coronavirus pandemic and government orders to combat the virus’s spread.

It does not apply to every expense, however.

If you bought a $100 ticket for a Lady Gaga concert and the event has been canceled, there is no breach of contract, although Lady Gaga would have to refund your $100 as a matter of restitution. But if you bought a nonrefundable $50 train ticket to travel to the concert, Lady Gaga is not liable for that loss. Since that money was never paid to Lady Gaga, she can’t be held responsible for it.

Force majeure: The escape clause

In some cases, an escape clause is written into the contract specifically for situations like this. It’s called “force majeure,” which translates to “superior force” and is often referred to as the “act of God” clause.

Force majeure clauses are common in corporate contracts. They dictate which types of unexpected events will excuse performance and how to deal with payments already made or other losses. The precise wording of these clauses is key. Some might expressly mention pandemics or government orders, while others might not. Similarly, some clauses might call for full restitution, while others might provide for 50% refunds or no refund at all. Whatever the force majeure clause says will displace the ordinary rules of impossibility and restitution.

The contract between the NBA and its players, for example, includes a force majeure clause that specifically covers epidemics. It states that basketball teams can withhold part of their players’ salaries for each canceled game, and ESPN reported that the league was considering it.

Pepperdine University students who have been evicted from their dorms are also bound to a force majeure clause that specifies no refunds if the dorms are closed in the event of an emergency. This overrides the general rule of restitution.

All that said, parties to a contract are always free to waive their rights under a force majeure clause and provide refunds anyway. Pepperdine officials have promised to do exactly that.


Republished with permission under license from The Conversation.