Small businesses in Santa Clara County can breathe a small sigh of relief and relax their shoulders a bit — for a few months, anyway.
In the latest update to its eviction protections, the county has extended its moratorium through March 31, 2021, for small businesses that qualify for protection. Under the county’s rules, they have another six months after that to pay at least 50% of the back rent owed to landlords, and up to 12 months to pay the debt in full.
According to San Jose Inside, the action is the result of Santa Clara County taking advantage of a piece of legislation that Gov. Gavin Newsom signed in August. In it, he extended protections to residential renters through May 31, but left it up to local governments as to whether they wanted to extend a moratorium to small businesses through March.
To qualify for eviction protection, Santa Clara County’s rules state that small business tenants must show that they are unable to pay rent because of “substantial income loss and/or substantial out-of-pocket medical expenses” related to the Covid-19 pandemic. Evictions can still happen for reasons unrelated to the pandemic.
The rules also state that landlords must provide a written notice of why a small business tenant is being evicted, and provide resources for rental assistance programs. Landlords who don’t follow the county’s laws or who retaliate against a tenant can be subject to penalties like “civil fines and penalties, monetary damages and injunctive relief.”
News is more grim, however, for residential landlords and tenants across the state: According to the Federal Reserve, back rent in California could reach $1.7 billion by the end of December, with 240,000 renter households in the state having fallen behind on rent, owing an average debt of $6,953.
That total is almost a fourth of what could be $7.2 billion of renter debt nationwide, with about 1.34 million households owing an average of $5,400 each.
The Mercury News reports that the numbers came up during an online University of California rental housing conference on Thursday.
“If there’s no additional federal assistance and the economy doesn’t come back, that (debt is) going to grow by over $1 billion a month,” Ingrid Gould Ellen, director of New York University’s Furman Center for Real Estate and Urban Policy, warned during the conference.
Another issue of note was the effect of that debt on renters’ credit scores — while households cannot be evicted due to moratoriums, their debts are still being recorded.
“Their FICO scores are going to take a hit,” said Richard Green, director of USC’s Lusk Center for Real Estate, which hosted the conference. “How are you going to be able to evaluate people’s credit as you think about underwriting them as tenants? Are you going to look at FICO they way you’ve looked at it before? (Or) are you going to be looking at other things?”
The original article can be found here.