AP Photo/Rich Pedroncelli
- A California program to pay off all back rent for low-income residents is in its final negotiations.
- The $5.2 billion program is entirely funded by the state's budget surplus and unused stimulus money.
- The state is also considering extending its eviction ban past the nationwide expiration on June 30.
- See more stories on Insider's business page.
Millions of Americans are behind on rent payments and will soon have to confront their back rent once the nationwide eviction ban expires at the end of June. But for low-income Californians, financial rental relief could be on the horizon.
Last month, California Gov. Gavin Newsom announced plans to pay off 100% of low-income residents' back rent as part of his $100 billion economic recovery plan. Insider reported that the state's unexpected $75 billion budget surplus, coupled with $26 billion from President Joe Biden's stimulus plan, would contribute to Newsom's recovery plan that would give residents additional stimulus payments, along with a $5.2 billion program to wipe out the back rent of low-income Californians.
Jason Elliott, senior counselor to Newsom on housing and homelessness, told the AP that $5.2 billion should be more than enough to cover all the unpaid rent in the state. The program is now in final negotiations within the State Legislature, along with a proposal to pay off electric and utility bills.
To be eligible, residents must prove they earn no more than 80% of the median income in their area and can show pandemic-related hardships. Russ Heimerich, a spokesman for the California Business, Consumer Services and Housing Agency, told The New York Times that it would the most generous rental assistance program in the country.
"Nationwide this is certainly the largest rent relief there's ever been," Heimerich said. "The big question is can we spend it all."
Heimerich noted that distributing financial relief can be a slow process, and he said that only around 8% of the $619 million in rental relief applications have been paid so far as of Monday.
While other states have implemented programs to pay off back rent for residents, unlike California, they are doing so with financial and time-related restrictions. For example, Georgia limits rent relief to $15,000 per household, and Oregon covers a maximum of 12 months of back rent regardless of cost.
This rental assistance comes at a time when the Centers for Disease Control and Prevention (CDC)'s federal eviction ban is lifting at the end of June. Newsom is weighing whether to extend the ban in California, and he told Univision this month that he "definitively" wants to extend eviction protections past June 30.
New York has already extended its eviction ban until August, but some courts have overruled the ban and called it unconstitutional, so a nationwide extension is unlikely.
Other housing programs are also in the works in California. The state's Senate Democrats proposed a program that would pay for - and own - up to 45% of a home for a first-time homebuyer, cutting the purchase price nearly in half.
They wrote: "The first step to reaching the California dream of thriving in the middle class and building family wealth starts with homeownership."