Would an Eviction-Diversion Program Help or Hurt?

Renters-rights defenders and landlord advocates may be reaching common ground on how to reduce the rate of evictions in Richmond: Create an eviction diversion program. Reports Ned Oliver in the inaugural edition of the Virginia Mercury:

Planning is still in its early stages, said [Martin Wegbreit, director of litigation at the Central Virginia Legal Aid Society], but it would likely be modeled on similar efforts in other states, like Michigan, where Kalamazoo County established a program in 2007 as part of an initiative to reduce homelessness. In the Richmond area, more than 30 percent of homeless residents surveyed last year said they had been served with an eviction lawsuit, according to a recent survey by Homeward, a nonprofit that coordinates services for homeless people. …

The one-time program is geared toward low-income families and individuals who can afford their rent but fell behind after an unexpected financial emergency such as a car crash or medical problem. To qualify, they must demonstrate that they are no more than three months behind in rent and show that they will be able to afford their rent once the assistance ends.

Renters-rights proponents like the idea because it reduces the number of renters evicted from their apartments. The program in Kalamazoo assisted 412 households last year, providing $138,000 in rental assistance, an average of $300 to $350 per family.

Landlords like the idea because it provides funding to ensure that they get paid rent on time.

A big question, unaddressed in the article, is where money would come from for an eviction diversion program. NAlso, n one pretends that such a program would settle all the issues between renters and landlords.

Bacon’s bottom line: The eviction-reduction movement is no more than a palliative for underlying social and economic problems: (1) the tightening shortage of affordable housing in the Richmond region, (2) the inability of poor people to find and sustain living-wage employment, and (3) the inability of some people to manage their personal finances responsibly. Until we address the underlying issues, the problem of evictions will always be with us.

Still, I’m a big believer in conducting small-scale experiments, which, if successful, can be replicated and scaled, and, if unsuccessful, can be shut down. The key in an eviction-diversion program is not to measure the number of families assisted but to measure the number of evictions. If a program creates a moral hazard in which renters, knowing that assistance is available, become more lax about husbanding their money, it would be counterproductive. If experience shows that moral hazard turns out not to be an issue, and if the number of evictions demonstrably decline, then the program could prove its worth.

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5 responses to “Would an Eviction-Diversion Program Help or Hurt?

  1. Welcome, Virginia Mercury. Just signed up for future editions.

    This sounds like a good program, which will not solve the problem but which will help many families where a quick and fairly low cost intervention can stay an eviction. I also agree that the worst problem with the process is that too often the tenant either has no lawyer or didn’t get good advice in the early stages, when negotiation was possible. But the main problem is the mismatch between working class income and rising rents, and the dozens of ways people and their money are parted leaving less for the basics (see nearby story about surprise medical bills not covered by insurance.)

    Gee, is the Legal Aid program still funded by IOLTA, the interest on lawyer trust accounts? How much interest is earned on landlord security deposits? Could money from unclaimed property sales find its way to funding this diversion program? How about revenue from more aggressive sales of blighted property? Plenty of money – just somebody else is using it. Could this become a revolving fund for some tenants on the edge, to be paid back when on more stable footing?

  2. Yes, “the main problem is the mismatch between working class income and rising rents, and the dozens of ways people and their money are parted leaving less for the basics.” So this program wouldn’t pay the rent but would pay for the inevitable “unexpected financial emergency such as a car crash or medical problem” so the tenant could pay the rent. Pure and simple, that’s financial assistance to those in need.

    It seems to me, the real benefit here would be to avoid the disruption and financial cost of eviction itself being added to the cash shortfall that already confronts the tenant. Getting evicted means taking time off from work and impairs finding a new place to rent and may also result in loss of furnishings and personal belongings while they are out on the street — these in addition to, but at the same time as, the underlying car repair or medical emergency. Eviction compounds the problems facing the tenant trying to recover from a temporary setback.

    Yes there will be people who abuse the system simply to get a handout; yes there will be people who cannot manage their finances; yes there will be people who have the best of intentions but due to a cascade of problems (particularly medical) will not get back on their feet — the question is, will this kind of targeted aid intercept the eviction process more often and more successfully and at lower program cost than, say, direct handouts to those unable “to find and sustain living-wage employment.” Direct government handouts based solely on income insufficiency (“income supplements”) certainly don’t appeal to me but that might be the most cost-effective end-game.

  3. Acbar’s comment is insightful, and useful. I would add that:

    This proposal, if properly implemented, works to protect property rights, insuring rental payments of defaulting tenants while defaulting tenants are allowed to remain in possession of their homes. These payments are critical important if we are to encourage the production and maintenance of affordable housing, and protect the rights of the landlord. At the same time the program also gives the tenant the ability to recover from unexpected set-backs. The theory behind the program is excellent. The question is how it will work in practice after implementation. This will require integrity on the part of those who manage the program. Too often such integrity is lacking.

    • Another question: Where is the money coming from for this program?

      • Yes, good question.

        But, if properly administered, this program might have chance to save taxpayer money in the long run. But, if not properly administered (as most typically happens), we are just looking at another boondoggle, a government program that makes matters worse by funding the bad, counter productive , destructive, and often corrupt habits of our fellow citizens, instead of helping them get back on their feet and short circuiting their downward spiral.

        Given the collapse of our government ethics and of ethics throughout our society, I would hope for the best for this program, but fear the worst which too often is the norm.

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