A Case for Rent Relief
From eviction moratoriums to increases in delinquency rates, Florida’s multifamily industry has been presented with a uniquely difficult set of challenges during the COVID-19 pandemic. For example, according to a research tool provided by the National Apartment Association, Florida’s multifamily properties experienced an estimated collective loss of more than $33 million per month in income when roughly 1% of apartment residents have been unable to pay rent. While focusing on the housing market's durability is a natural response during these challenging times, it is important to keep in mind that COVID-19’s impact has broader effects on the community, the State of Florida, and the nation at large.
The Florida apartment industry's impact on property tax collections cannot be overlooked because the revenue losses brought on by the COVID-19 pandemic could translate into damaging impacts for local governments. In many cases, apartment communities are some of the largest contributors to the property tax rolls in Florida communities. An apartment community's assessed value, which is based on market data, is established by the county property appraiser by January 1 of each year. The assessed value of the property is typically based on what the property would sell for at market value.
In light of the challenges and sudden unemployment spurred by the COVID-19 pandemic, some apartment communities are experiencing revenue losses due to increased delinquency rates as a result of many residents being unable to pay rent. This increase in delinquency can ultimately lower an apartment community's market value, which could translate into property tax revenue losses in the long-term.
For example, the NAA research tool indicates that if roughly 1% of apartment residents are unable to pay rent, the City of Los Angeles could experience a property value loss of roughly $2.46 billion over a six month period. Similarly, when applying the same formula to New York City, there’s a $6 billion projected loss in property value. These significant property value losses will ultimately translate into reductions in property tax revenue for states and local governments, which depend on this revenue to fund critical services like law enforcement, fire departments, education services, and much more.
As policymakers prepare to convene for the 2021 Florida legislative session, these concerning numbers should serve as a call to action. The need for rent relief must be recognized at both the state and federal level to ensure the housing market and residents are protected. At this time, the U.S. Congress continues to debate the possibility of another round of COVID-19 relief, but disagreements between the House and Senate threaten to stymie the passage of legislation. The Florida Apartment Association urges federal policymakers to forgo partisan politics and enact a second round of comprehensive rent relief before Congress adjourns for the year. The fabric of Florida's vibrant communities depends on it.