Newsom moves to further cancel landlords

At the end of last week, California Governor Gavin Newsom signed off on another eviction moratorium stretching through the end of June. It’s not a 100% blank check like many other states have employed, but the complicated order winds up serving the same purpose while shifting much of the financial burden to federal government aid. (All of you should be expecting a thank you note from Newsom at some point.) What it completely fails to do is to provide any sort of relief to small business landlords, many of whom have not received any rent payments for the better part of a year. (MSN)

California Gov. Gavin Newsom signed a law on Friday that extends eviction protections through the end of June.

Last year, Newsom signed a law that banned evictions for unpaid rent for tenants who paid at least 25% of their rent owed after Sept. 1. That law was set to expire on Monday. But the law Newsom signed on Thursday extends those protections through June 30.

Tenants who qualify for the protections will still owe their rent, they just can’t be evicted for not paying all of it.

This is a bit complicated, so let’s take a quick look at the basics. Under Newsom’s original order, tenants couldn’t be evicted if they paid at least 25% of the rent for the month. (An option that many of them immediately took advantage of.) They would still owe the rent when the moratorium ends, but they were able to remain in their apartments for a much cheaper cost. The problem with that plan for landlords was that they would be taking in far less revenue than what it takes to keep the bills paid. And when the moratorium ends, the majority of the tenants will almost certainly move out instead of trying to cough up 75% of more than a year’s worth of rental payments, leaving the landlords holding the bag.

Under the new order that Newsom just signed, the Governor offers the landlords a “deal.” The state will use federal grant money to pay 80% of the rent if the tenant is allowed to remain in the dwelling, but the landlord has to agree to “forgive” the other 20%. If the landlord doesn’t agree, then the state will pay 25% of the rent and the tenant can’t be evicted until the moratorium expires. So essentially, Newsom is letting the landlords pick between losing 20% of their projected revenue permanently and losing 75% of it for an unknown period of time into the future.

For all but a few cases among lower-income renters, there is no ideal solution on the horizon. All the state is doing is kicking the can down the road. Eventually, they will have to put an end to the moratorium and the renters will owe a tremendous amount of money that they won’t be able to pay if they were put out of work. At that point, the eviction moratorium will turn into an eviction crisis. At the same time, landlords of smaller properties who only have a few rental units they use for retirement income will have been wiped out because they still have to pay taxes and maintenance costs on their properties while the state allows renters to remain while paying little of their rent.

There is no solution to this puzzle unless it involves the federal government essentially coming in and paying everyone’s rent for well over a year. Of course, that would involve Congress setting another couple of trillion dollars of magical money on fire yet again. But who cares, right? It’s not as if our entire monetary system is going to collapse under the weight of this mountain of debt or anything. (/sarcasm)