LA Rent Strikes Worry Small-Scale Property Owners

May 22, 2020 Updated: May 27, 2020

Property owners in Los Angeles are concerned about calls for a June rent strike. 

The Los Angeles Tenants Union (LATU) has been posting fliers on the streets “urging residents not to pay rent and to demand a rent strike,” one concerned property manager told The Epoch Times. The fliers were posted in close proximity to her property.

“A tenant advocacy group like this only sees the immediate relief for the tenant,” said Kari Negri, CEO of SKY Properties—not “the long-term financial impact to housing providers.”

LATU is an “autonomous, member-funded union which fights for the human right to housing,” according to its website. The group launched a “Food Not Rent” campaign shortly after the COVID-19 pandemic began. It called for all renters to join a rent strike with the motto: “Those who can’t pay, won’t; those who can pay, don’t.”

The strike has been fueled by growing unemployment—over 4 million in the state and rising—caused by the shutdowns and stay-at-home orders brought about by the CCP (Chinese Communist Party) virus, commonly known as the novel coronavirus.

According to Dan Yukelson, executive director of the Apartment Association of Greater Los Angeles (AAGLA), the “majority of rental housing providers in California are mom-and-pop small owners”—and a rent strike could destroy them financially.

AAGLA has 10,000 members. Eighty percent own 25 or fewer units, Yukelson told The Epoch Times. And 74 percent own five units or fewer. Their membership base is “typical of the rest of California,” he said.

 

Epoch Times Photo
Graffiti calling for a rent strike is seen on a wall on La Brea Avenue in Los Angeles, Calif., on May 1, 2020. (Valerie Macon/AFP via Getty Images)

‘Throw landlords under the bus’

“It is crazy to me how misinformed people are,” Negri said. Eighty percent of California property owners bought to support their retirement, she said.

“I even read an article that said, ‘Throw landlords under the bus,’” she said, referring to an April 30 editorial in the online publication CounterPunch.

“We can save the economy,” the editorial stated. “We have to throw the landlords under the bus to do it.”

This sentiment is echoed in LATU’s “Food Not Rent” guide. Tenants are instructed to fill out a letter informing the landlord that they cannot pay rent, then encouraged to share photos of their rent strike signs on social media.

“We win when we are many,” the LATU website says, encouraging tenants to reach out to others and save their money for basic necessities. “You can’t eat the rent,” it adds.

Yukelson calls these efforts a “travesty.”

“These tenant rights groups always try to make housing providers out to be the bad guys,” he said. “Most of these tenant groups calling for free rent—a benefit renters once received in the former Soviet Union—are typically aligned with various socialist groups.”

He added, “It is a shame what is happening in America today, when someone risks their retirement savings to invest in a rental property to house people in their community, and for doing so, they are made out to be a pariah.”

LATU did not respond to several interview requests from The Epoch Times.

In Negri’s personal experience, the perceived caricature of independent landlords does not align with reality.

“My father-in-law came here with $20 in his pocket and a second-grade education,” she recalled. He “worked on the General Motors line in Van Nuys [and] lived in a rented room in someone else’s home until he was 40 to build his apartment building—the American dream. He made huge sacrifices to have the 10-unit building.

“No one should step on his neck to further their agenda,” she added.

Carrie Appling, president of CAL Property Management, told The Epoch Times that most owners “are not sitting on a pile of money.”

“They have mortgages and expenses, and many depend on the rent for their income,” she said. A rent strike “puts a great financial burden on them.”

“There is no mortgage forgiveness for owners, only deferment to pay at a later date,” she added. “No discounts are being given.”

Epoch Times Photo
Building tenants hang signs from their roof in the Crown Heights neighborhood during a rent strike in New York City on May 1, 2020. (Angela Weiss/AFP via Getty Images)

‘Freight Train Bearing Down’

On March 25, Gov. Gavin Newsom announced that financial institutions will provide relief for the vast majority of Californians, including a 90-day grace period on mortgage payments. But most property owners don’t qualify, because their properties are considered commercial, not residential.

“Many will lose their properties to foreclosure,” Yukelson said. “That freight train is bearing down on rental property owners right now.”

Matt Williams, president of Williams Real Estate Advisors, told The Epoch Times that property owners will not have “legal recourse for any unpaid rent for at least 12 months.”

Williams said owners aren’t eligible for the Paycheck Protection Program (PPP), because income from rental property is classified as Schedule E, or “investment income,” as opposed to personal income. And Economic Injury Disaster Loans are very difficult to receive.

“Since they don’t pay payroll taxes on that Schedule E income, they can’t apply for PPP,” he said. “There’s no government help available.”

The Legal Perspective

Shanti Singh is the communications coordinator for Tenants Together, a group “dedicated to defending and advancing the rights of California tenants to safe, decent and affordable housing.”

“The situation is very fluid,” she told The Epoch Times. “We are letting different groups do what they feel is right for them, while supporting struggling renters and housing justice groups with the tools to organize collectively as they see fit.”

Singh declined to comment on any present plans for a rent strike, but made it clear that Tenants Together is campaigning to cancel not only rents, but also “mortgages for small property owners who depend on rental income.”

“These are concurrent demands for the housing justice movement,” she said.

Several other tenant groups declined to comment on the strikes.

Frances Campbell, an L.A. attorney specializing in housing law and tenants’ rights, said these demands are more of a political statement than a legal dispute. The government doesn’t have the power to cancel a contract, she told The Epoch Times.

“If [we] have a contract, [and] I sell you a bushel of apples for $5, the government can’t just say, ‘No, you’re just gonna give them the bushel of apples for free.’ You can’t do that,” she said.

She added that she would not recommend a client to participate in a rent strike. She also said it is not legal for a landlord to ask a tenant for any stimulus money they receive.

“If the tenant is unable to pay rent due to circumstances related to COVID-19, that’s going to create a defense to a later eviction,” she said. But “they’re going to have to prove that they lost money and couldn’t pay the rent due to COVID-19.”

Tenant Fears

Newsom passed an executive order on March 27 prohibiting the eviction of tenants affected by the COVID-19 crisis. The order states, however, “the tenant would remain obligated to repay full rent in a timely manner and could still face eviction after the enforcement moratorium is lifted.”

That moratorium ends May 31. Newsom may extend the moratorium, but had not as of May 22. The California Judicial Council has said courts will not hear any eviction cases for 90 days after the moratorium expires.

Many tenants who have been unable to pay rent could face a mass of debt having to pay back months of rent—plus worry about eviction—in the end.

A Los Angeles tenant and rent-strike organizer named Kenia Alcocer told NBC News she has to choose between paying rent or food and medical bills. She gave birth to her second child earlier this year and he has health problems. Her husband was recently laid off.

“Rent is the last thing I want to think about during this crisis, and being evicted is the last thing I want to worry about,” she said.

Landlords and Tenants Working Together

Kendra Bork, president of the Southern California Rental Housing Association, told The Epoch Times that she hears about rent strikes “every time we get close to the first of the month.”

She hopes that people recognize that rent does not go straight into their landlord’s pocket. “It’s being used to pay for other small businesses that their landlord is using—the painters, the electricians, the people that do repairs, the landscapers,” she said.

If people don’t pay their rent, these people don’t get paid, she said, creating a “domino effect.”

Bork worked with tenants individually to develop payment plans, waive late fees, instate deferments, and refer residents to helpful resources.

“So far, it hasn’t been as bad as we thought it was going to be,” she said. “Everybody’s working together—both on the resident and the landlord side. [They’re] finding ways to make it work.”

“The trajectory of a union tenant rent strike is just the worst trajectory,” Williams said. “Everybody loses. It’s a no-win situation.” He called the process “super-stressful.”

“At the end of the day, you’re going to still be responsible for the rent,” he added.

Williams made it a point to be proactive with affected tenants who reside in the 500 units he manages. Of 28 tenants impacted by the pandemic in April, 16 of them were able to offer partial payment.

“I told my entire staff, if anybody calls, tell them we’re ready to help in a heartbeat, and we’re happy to do it,” he said. “Tenants who are honest and genuine, no owner wants to hurt.”

He mentioned one tenant who came to him and explained she couldn’t pay rent because she was unemployed.

“This tenant had a real issue,” Williams recalled. “I told her that we were going to work with her no matter what. If she couldn’t pay anything, that was okay.”

With tears in her eyes, all she could say was “Thank you.”