Toward reducing homelessness when Covid-19 related eviction moratoriums expire and beyond

This blog is not the most compelling of reads.  I'm acutely aware of that.  For the most part, the posts center on one basic theme: how to reduce the wealth dichotomy in America, before the wealth dichotomy reduces America to basket-case status. 

It's been ten years since I first began posting thoughts on this blog.  Those essays involved hundreds of hours of work, which, for all the good it’s done in the world, were probably wasted.  Though the truth of it is impossible to gauge, in retrospect, I wish I had spent them doing things for which some more tangible result could have been delivered.  Everything I sought to mitigate against has now fallen upon our society like a great crushing weight - tens of millions who rent their homes now facing imminent eviction at the hand of landlords who, up to the point that Covid-19 entered our collective reality, had been allowed by Greater Society to claim every last dollar remaining to renters after their critical needs had barely been met.

If the experts are right, up to thirty million renters in the nation will be evicted the moment currently operating moratoriums in each state expire.  If the number were only a fifth of that figure, it would still be enough of a body blow to society and the general economy to merit description as a national disaster.  

Before dawn, this morning, after having been woken up by a really bad dream, I lay in bed thinking about what the coming months might hold for us, in light of all these people being on the verge of not having a safe place to sleep or simply be.  In the predawn dark, such thoughts can run away with your mind.  There was nothing for it; I couldn’t just lie there letting that mental weight gather, so I got up, grabbed the initiative and made a pot of tea.

Fatalism, in the face of impending disaster, helps no one.  Surely, those many hours of contemplating on how the impact of rent on average Americans could be engineered to be smaller had given me ideas that might prove useful at this time, now that many of the negative effects that I predicted in that earlier writing were beginning to come to pass, at a scale even larger than I suggested might occur, if proactive measures were not implemented (which they weren't, at least not to any degree that might have averted what is shaping up to occur in the latter half of 2020).

At this point, it is too little, too late, to boost the transitioning of younger Americans out of renting into home ownership, though efforts on that score are indeed useful to the longer-term challenge of reducing the demand for rental housing that is behind the rapid rise in rent, for same occupancy value, experienced all over the country, far surpassing increases in average earnings for the demographic sector most in need of such housing.

Far more drastic action is needed, and moratoriums are NOT the answer.  In fact, moratoriums, if not quickly followed up by concerted action to massively increase the supply of below-market-rate rental housing, may actually make the situation far worse than if no such moratoriums had been imposed, because the scale of negative social effects is greatly amplified by everyone being placed at risk of being evicted on the same day a moratorium expires.

 Let's be clear on one thing: there is no absolute cure to this, only mitigative action.  Nevertheless, with the awful consequences of homelessness so clearly before us already, any degree by which the number of new homeless can be reduced may rightfully be termed a significant victory in the grand quest to keep American society from declining any more than is absolutely unavoidable.

It was never a just thing that so many fellow citizens were forfeiting such a large percentage of what they could earn to rent.  Most people work damn hard for whatever they manage to take home with them after payroll taxes have been deducted.  Landlords across the nation have been justifying their take from what earners manage to bring home on the basis that anything the market will bear is rightfully theirs to lay claim to and, by and large, government has meekly being going along with that justification, without ever asking itself whether it's obliged to, or even whether going along with whatever landlords want is consonant with the broad pledge people in government make to serve the greater interests of the public.  Just about every facet of life in the country is in some way regulated in the interests of serving the public good in the best way possible.  The world of rental relationships, however, is something that legislators are loath to meddle with.  It's a thorny thicket of deeply rooted powerful interests.  You could find yourself fighting a coalition of hostile people with very deep pockets - more often than not, a career-ending scenario.  Ironically, even proposals that stand to bring greater security and professionalism to the world of renting are shied away from, lest some can of worms be opened.  

Refusing to become engaged with a problem and just hoping that the private sector will do like Elon Musk and come up with a money-making fix is one way of dealing with the persistent problem of a lack of affordable housing and quite congruent with Libertarian philosophy, but as we can see by comparing the response of China to Covid-19, versus the poorer results produced by the U.S., not always the best one, particularly when it is highly dubious that private sector investors can realistically expect to make a profit worth the predicted effort involved.  When it is likely that that requirement cannot be realistically met, and the problem needing to be addressed will have serious negative social consequences, government is bound by oath to step in and do whatever it can, and spend whatever it must, to improve things in a manner that is both timely and efficacious.

This truth neatly highlights why, in times of crisis, having a business person in charge of an organ of government, as opposed to a career bureaucrat, can be a very bad thing.  The two career paths see social challenges from fundamentally different perspectives.  Business has to create a monetary profit, or fail; government has to create social benefit and protect people from harm, or fail.

Given the scale and scope of what is shaping up to happen when these eviction moratoriums start expiring,   I believe strongly that now is not the time to be watching government pennies, or for being overly deferential toward private sector interests in the nation's rental industry, which is inherently resistant to any form of change, even when change is critically needed to avert massive harm befalling the fabric of American society.

Mandates from government, imposed upon the private sector, in the form of limits on rent and conditions that owners must abide by are the most commonly floated ideas directed at improving the lot of renters.  Less often put forward are ideas using clever incentives to get owners of rental property to get on board with government programs aimed at lowering the rent bar for those who cannot buy and are, thus, obliged to rent.

In the past, I have put forward a number of incentive-based proposals in posts on this site.  I'm not going to revisit those ideas in this post.  It will be devoted solely to the idea of increasing the number of rental units that fall within the general guideline issued by HUD that rent not consume more than one third of a renter's take-home pay.

It is imperative that executive action, at the federal level, be planned right now and implemented as soon as possible, otherwise we can look forward to massive social dislocation and all its attendant spiritual and economic knock-on effects.

To that end, I propose two programs that would work together on the goal of increasing the supply of rental housing that met HUD's income-to-rent advisory.

The first would invest federal money in the construction of stackable, wood-frame construction, housing modules that are scalable as multi-storey apartment complexes.     So as to conserve the carbon sequestration in the structures, they would be constructed with good “bones” that would serve as a solid basis for subsequent upgrading at such time as they could be sold off to entities in the private sector (in much the same way that obsolete military buildings often are), thereby recovering some portion of the public funds invested.

A number of designs already exist and some remarkably tall buildings have been made this way.  The advantage of this form of construction - apart from indefinite carbon sequestration - is the speed at which construction can be made to go, owing to the fact that it does not have to occur in a vertically linear fashion, except during the stacking process, during which, the modules selected are simply bolted together.  It might help the reader to imagine the way containers are loaded onto a ship, only in a more sophisticated fashion that lines up apertures and mechanical conduits.  Another point to digest is the ease with which young computer whizzes can plan and assemble such modules in the virtual reality formats now available to them on computer in 3d.

A key point, here:  this portion of the combined approach I'm floating is not for old hacks steeped in traditional methodologies.  It's for savvy, dedicated young go-getters who can work long hours without grumbling and get stuff done.

Anyway, the housing created in this manner would be of sufficient quality to be a huge step up from being on the street, but much more basic than that offered in the private sector under current government construction mandates.  It would guarantee only four things - solid construction, safety of occupancy, a sufficiency of utilities and rent economy - but still be eminently helpful as transitional housing, either short-term, or long.  Initially, such complexes would either be government owned or owned by activist foundations, for as long as that situation proved beneficial to the public, and the need for the living units in them existed, both as places to live cheaply, and also as a market counterweight to the presence of rent gouging in the private sector.

Critical to this initiative would be strong executive leadership, of the variety that says to the functionaries upon whom responsibility for discharging the mission has been placed, “Get it done, or look forward to being replaced by someone who says they 

can.”

The companion program to the above would be a rewards program, based on a formula that increases the deductibility of rental income conforming to the HUD price standard.  Under the controlling formula of the program, the lower the ratio between the rent charged, per occupant, when compared to household income, per occupant (eligibility increases in accordance with age), the more of the rent received would be tax free.  This tax reduction is conditioned further by the gross income of the lessor/owner.  The higher the gross income of the owner, the lower the formula makes the tax exemption. 

The thrust of this program, which would use IRS data, with both renters and owners reporting independently (in much the same way that businesses and independent contractors are required to use 1099 reporting protocol as a check on tax fraud) is as much a demonstration of social appreciation as as it is a substantive give back to qualifying participants.  People who rent out to their fellow citizens at very economical rates need to see something positive and substantive from a government that says it desperately wants to see more affordable rental housing for those who need it and could use private sector assistance in actually providing it.

The potential, HUD-conforming housing stock is already there.  It falls under the following headings:

1. Currently overpriced rental dwellings of every kind
2. Currently idled structures and units being held solely as investment property
3. Vacant accessory units on, and in, residential property
4. Usable rooms in private homes
5. Empty bedrooms in shared homes
6. Unused spaces suitable for vehicles that people use to sleep or live in

So, let's cut to the chase.  Here's at least ONE formula that would definitely make genuinely affordable rent more ubiquitous, allowing many thousands of renters, down on their financial luck, to get into a new home at a far lower price, while tempering the number of Americans progressing on into homelessness, and bringing a measure of tax relief to those who stepped up to the noble challenge of providing rental housing at that price.

The formula calculates the portion of the rent that is federal income tax free.  The information needed by the IRS is the following:

1. The owner's gross income
2. The combined occupancy allotment of those in the dwelling, based on the age of each occupant (over 18 counts as one unit, 12 to 18 counts as 3/4 unit, 6 to 12 counts as 1/2 unit, 1 to 6 counts as 1/3 unit)
3. The combined household income of those residing in the dwelling
4. The rent charged for the dwelling

Using those items of information,  the first preparatory calculation involves dividing the rent on the dwelling by the gross occupancy allotment to find the monthly rent per unit of occupancy  (let that be r). The second divides total household income, PER MONTH, over however long the dwelling was rented, by the gross occupancy allotment to find the monthly income per unit of occupancy (let that be i).  The third divides the owner's annual income by 12 (let that be I).  You now have the figures needed to plug into the formula, which goes as follows:

6,400/(I+1,600) X (i-3r)/(.5i+200) X (rent per month on the dwelling) = amount of rental received, per month, that is tax free

Now, I'm not so naive as to imagine that anyone is actually going to invest the time to see whether this formula produces results that could actually be used (been there before and know the score).  But I want it to at least be on record that a formula does indeed exist, and that it could be of HUGE help. Whether it could use tweaking of the control values, is now up to others with better resources than I have.  At the very least, let it be known that it was produced and looked promising to me, even if nobody else ends up caring enough to investigate its potential to be useful at this time.

What I AM expecting rather more, however, is that nothing that has long term benefit will be hatched by a congress more concerned with the outcome of the next presidential election than with critical legislation and, as a result, life for millions of people across the nation will literally fall off a cliff for them in the very near future.

I've been homeless, decades in the past, and, though I now own my own home, free and clear, I still have nightmares where I am once more in that dread state.  The shadow it cast over my outlook on life has never left.  Every time I see a fellow human being, homeless, by the side of the street, I feel that cold shadow darkening. I know that it will only be lifted when, at last, I live in a country where involuntary homelessness, occasioned by misfortune, has been done away with by the public and the government that serves them.  

As things stand, it is not likely to be this country, America, at least not before I die.  I would pay a princely sum, if I had it, to finally be on soil where homelessness has been relegated to the dustbin of history, where no one is forced to experience the sense of utter abandonment by society that I did, and the march toward progress, enlightenment and a genuinely useful understanding of collective security has continued unimpeded to the level of coexistence that this country has long had the resources to realize, but lacked the comity and the will to actually manifest.

I would be overjoyed to be proven wrong in this prognosis.