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How California may begin the most ambitious rent forgiveness program — ever

At $5.2 billion, this program aims to fully forgive unpaid rent for low-income tenants. Here’s how

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A For Rent sign is posted in Sacramento, Calif.

In this Jan. 27, 2021, file photo, a For Rent sign is posted in Sacramento, Calif.

Associated Press

California is currently debating the nation’s largest rent forgiveness program — ever. The program would fully forgive the unpaid rent of low-income tenants accumulated during the COVID-19 pandemic, reports The New York Times.

  • Final negotiations in the State Legislature will determine the last details, says The New York Times. The bill is expected to pass.
  • The state’s eviction moratorium is currently set to expire June 30, says KTLA. Legislators are discussing an extension to allow time for the new rent forgiveness program.

The ambitious program would cost the California government $5.2 billion as part of a larger $100 billion pandemic-recovery package, reports Fox News.

How will California’s rent forgiveness program work?

The new program will forgive 100% of unpaid rent incurred by low-income Californians during the pandemic. The program will help landlords break even while giving renters a clean slate says Fox News.

  • Tenants will qualify for the new program if they make no more than 80% of the median income in their area and can show a pandemic-related financial difficulty, per The New York Times.

California's current rent relief program is plagued with slowness and some worry that this new program will not come fast enough for tenants facing eviction when the June 30 ban lifts, says KTLA.

How expensive is rent in California?

Housing and homelessness remain longtime issues among Californians. The state has more than half of the country’s homeless population, says The New York Times.

  • The median home value in California is $700,000.
  • About 27% of renters pay more than half of their pre-tax income in rent, reports The New York Times.

How is California paying for this program?

California found itself with an unexpected budget surplus this year. The state expected extreme budget shortfalls when it first announced the economic shutdown at the start of the pandemic, says The New York Times.

Instead, the surging wealth among the state’s tech entrepreneurs and Hollywood entertainers increased the state’s tax income, The New York Times reports. Combined with federal relief funds, California found itself with a substantial surplus.

  • Other states, like Utah, Washington, Idaho and Oklahoma, also had unexpected budget surpluses this year.
  • A total of 22 states had budget surpluses.

California has decided to use the surprise cash to aid in pandemic recovery, such as the rent forgiveness program, says KTLA.