A recent report published by the Apartment and Office Building Association of Metropolitan Washington (AOBA), which represents real estate developers and property owners in D.C., says the affordable housing market is facing a “looming crisis” as mounting financial pressure on providers may force them to sell off their properties, or even risk bankruptcy.
In a press conference on June 10, representatives from AOBA discussed the report’s findings and the challenges they say are placing a burden on owners of affordable rental properties. The AOBA report focuses on affordable housing properties subsidized by the District as well as privately owned units considered market-rate or rent-controlled affordable homes for low- and middle-income renters.
“We may be facing a catastrophic failure of our rental housing providers catering to that critical market segment,” Brian Gordon, senior vice president of government affairs for AOBA, said at the press conference.
AOBA says policies enacted during the pandemic, like eviction moratoria and trial stays, which allow tenants to delay an upcoming eviction proceeding if they have a pending Emergency Rental Assistance Program (ERAP) application, have allowed renters to go extended periods of time without paying their rents. Because of this, renters are racking up long term debts that are putting a financial strain on both tenants and owners of affordable housing units. Combined with increased operating costs for expenses like gas and electricity, the report says this burden is now placing landlords of affordable homes “on the verge of financial insolvency,” or bankruptcy.
“They’re being squeezed on both ends of the balance sheet,” said Gordon.
AOBA collected data on total rent delinquencies across five member corporations that own more than 13,000 affordable housing units across D.C. The corporations reported having lost over $12 million in rental delinquencies thus far in 2024. AOBA wrote in the report these debts might push affordable housing providers to take out new loans with worse terms to pay off the mortgages on their units or “shut down operations” entirely.
When asked during the press conference, Gordon said he was “not aware” if any AOBA members had yet filed for bankruptcy.
The report also focuses on a law that enables tenants to stay, or hold off, an upcoming eviction case if they have a pending ERAP application when they receive the eviction notice. The Tenant Safe Harbor Temporary Amendment Act, passed in October 2021, was meant to protect tenants from evictions during the pandemic as they waited for essential funds that would allow them to pay their rent.
AOBA claims these ERAP stays have delayed the court timelines for eviction proceedings, which the report says are the main cause of the long periods landlords go without collecting rent payments from tenants.
“Policies that we saw that were well intended and even practical during the early stages of the pandemic to protect against a mass wave of resident displacement in the midst of a global public health emergency are now producing harmful outcomes under today’s very different circumstances,” said Gordon. “The result is an accumulation of debt that can’t reasonably be redeemed.”
Molly Catchen, supervising attorney in the Housing Law Unit at Legal Aid DC, says ERAP stays are meant to determine if tenants will have an opportunity to pay their rent before they enter legal proceedings for an eviction.
“Non-payment of rent cases in D.C. are redeemable, meaning if the tenant pays the full balance of what’s owed, the case is resolved. Essentially, the ERAP stay allows for an opportunity to see if the money is going to get paid before the parties engage in litigation,” said Catchen.
Because timelines for ERAP applications can vary, Catchen added that these stays are important measures for keeping tenants in their homes. In 2024 thus far, 12,000 people have applied for ERAP, and just over 3,000 households were granted rental assistance, according to NBC 4. Applications are processed on a first-come, first-served basis, and in some cases there have been delays because DHS has misplaced applicants’ documents or not processed them quickly enough for them to receive their benefits.
“Once the tenant applies for ERAP, the processing times and when the funds get paid out are entirely outside of the tenant’s control,” Catchen said. “If the stay wasn’t in place, it’s entirely possible for a tenant to be evicted before their application is processed.”
According to the AOBA report, “housing providers have seen savvy tenants exploit this loophole, filing application after application to remain in a unit without paying rent,” but the report does not include any evidence of the number of times this has happened to the property owners surveyed. Catchen says most tenants use ERAP stays as a means to remain in their homes.
“In our experience [at Legal Aid], the majority of the tenants we’re seeing are using the system in good faith. The ERAP payment is often able to resolve the case and prevent families from becoming homeless,” said Catchen.
The AOBA report also says court timelines can become lengthy when tenants decide to pursue jury trials for their nonpayment of rent cases, which Catchen said is a route people choose when their other tenants’ rights are being violated, such as when landlords are not complying with housing codes.
“Many of the cases we see, tenants are being sued for nonpayment of rent, but they’re living in these deplorable conditions where the housing provider is not in compliance with the housing code, and they’re asserting those housing code violations,” Catchen said. “The tenants are entitled to — and should be asserting — all of their rights that are available under D.C. law, and so that litigation in those instances can take some time.”
AOBA suggests several solutions to the problems described in the report, namely, that the District eliminate the “loophole” of automatic ERAP stays and instead allow judges to decide whether to stay a case after reviewing a tenant’s circumstances. The paper also recommends the District loosen certain regulations such as Building Energy Performance Standards, which AOBA says are costly for older rent-controlled properties to implement.
Catchen says solutions should focus on making sure residents are able to afford their rent and can avoid being removed from their homes, and tenants are aware of the rights they have to remain in their units.
“The overall goal here should be preventing evictions and keeping families housed,” Catchen said. “We need to focus on making D.C. an affordable city for families to live in and ensuring that tenants have access to the information they need to assert their rights in court.”
