CONCORD, CA—Working with Diablo Valley Federal Credit Union, the City Council approved a tenant loan program on Oct. 27 to help renters who fell behind on rent because of the COVID-19 pandemic.
“This program is really designed for those who have gotten their act together and are just trying to get off this debt from behind them,” said Councilman Edi Birsan, who proposed the concept earlier this year and worked with the credit union to develop it.
Under the Easy Does It Rental Repayment Program, the credit union will make loans of up to $6,000 to tenants who missed rent payments before August 31 and can provide proof of a COVID-19 impact. Applicants also must show the credit union that they have the means to make current rent payments plus the loan payments and agree to the payback terms monthly over five years at 1 percent interest.
Payment will be made directly from the credit union to the landlord, who must confirm that the funds will only be used to offset lease rent. Each landlord must agree to waive all late fees and penalties and must certify a past due amount in agreement with the renter to avoid any disputes.
The city will guarantee up to $500,000 to the credit union for any loans that fall more than 90 days into arrears. The council directed that $100,000 of the city’s reserves be allocated to the program now.
Councilwoman Laura Hoffmeister wondered why city taxpayers should bear the risk of the program, rather than the credit union’s members.
“If the city doesn’t want to be involved, we would look at a rate of anywhere from 9.9 to 15.9 percent, which I don’t think is going to be as helpful,” credit union CEO John Pamer responded during the virtual meeting.
Concord finance director Karen Reid expects it to take 30-90 days to get the program established.
“In the short term, it’s going to be pretty unlikely that we’ll see high default rates,” she said. “Now when we start getting further out in the program – three years, four years, five years – that’s probably when we’ll start to see the defaults. And we do have collection methods that we could employ if they were to default to work with them to get the money repaid.”
City Manager Valerie Barone said she would bring a progress report back to the council in six months – or sooner if there were relevant issues.
George Fulmore of the Monument Democratic Club questions whether the loan program is realistic, noting that few renters will meet the criteria and that the undocumented population would likely not be eligible.
Resident Kristi Laughlin applauded the program’s “creativity” but urged the addition of eviction control measures such as those in Assembly Bill 3088.
Barone said staff would look at including some eviction provisions in the Memorandum of Understanding with the credit union. “But I don’t know how feasible that will be, because it may complicate the actual loan-making,” she added.