National Apartment Association Sues Federal Government to Recover Industry’s Losses Under Nationwide
The National Apartment Association (NAA) has taken legal action to recover damages housing providers suffered under the Centers for Disease Control and Prevention (CDC) eviction moratorium and ensure that similar measures can never again be enacted. NAA filed the lawsuit on July 27, 2021, in the U.S. Court of Federal Claims to recover damages on behalf of rental housing providers that have suffered severe economic losses under the CDC’s overreaching federal eviction moratorium.
As NAA members and the broader industry understand all too well, the CDC’s prolonged order directly harms those who provide critically needed rental homes, jeopardizes the long-term viability of housing infrastructure, and sets a dangerous precedent for future disaster-response measures. NAA is the first to take legal action seeking compensation for the CDC’s policy and to ensure that similar “emergency measures” cannot be enacted again. The lawsuit, “NAA et al. v. The United States of America,” is open to all rental housing providers who have been damaged by and are operating in a state or locality under the federal eviction moratorium. It argues that the CDC order has curbed several rights under the U.S. Constitution including: The right to access the courts, the freedom to contract with others absent government interference, the right to demand compensation when property is taken by government action and the limits of federal government power. NAA is confident that the CDC will be found to have acted illegally based on court rulings to date, including the most recent decision from the Sixth Circuit Court of Appeals affirming that the CDC’s order was unlawful.
Apartment owners and operators have continued good-faith operations throughout the public health and economic crises of the COVID-19 pandemic and are now left to shoulder $26.6 billion in debt not covered by federal rental assistance. As a low-margin industry where just 10 cents of each rental dollar is considered “profit,” this debt is unsustainable and could devastate countless small businesses while simultaneously damaging housing affordability. Though NAA is proud of the unprecedented adaptability and flexibility of our members and the broader industry, we firmly believe that it is time to make rental housing providers and their residents whole again.
Relief efforts to date have fallen short of fully supporting the rental housing industry and its residents. While the federal government has allocated roughly $47 billion in federal rent relief, it took more than nine months for Congress to do so. Further, that amount also does not cover the full and continuously growing amount of rent debt – current estimates indicate an additional $26.6 billion on top of Congress’ $47 billion rental assistance funding. The government’s prolonged inaction, paired with a sluggish rollout and the CDC eviction moratorium, has only allowed unfunded rent debt to continue to balloon.
Since the onset of the pandemic, NAA has aggressively advocated to protect the interests of the rental housing industry. NAA has called out the dangers and short-sightedness of eviction moratoria and asked for its sunset to both the 116th and 117th Congresses, in meetings with both the recent and current White House administrations and across all levels of media. NAA was among the first to take legal action challenging the CDC’s authority last September by joining the National Civil Liberties Alliance lawsuit, Richard Lee Brown, et al. v. Secretary Alex Azar, et al.
The COVID-19 pandemic was devastating, and if we do not act, the housing affordability crisis may grow into a catastrophe where the government could invoke more “emergency” remedies. With the meter on rent debt still running, political will waning and Congress moving past COVID-relief measures, NAA is putting up the greatest fight yet and asking the courts for two things: Fair compensation for damages suffered under the unlawful CDC order and an assurance that the federal government can never do this again. The rental housing industry cannot be held solely responsible for an unfunded rent debt while the federal government trades one crisis for another. Ultimately, making housing providers and their residents whole again will help secure the long-term health of the rental housing industry and ensures households across the income spectrum have continued access to rental housing.
(Editor’s Note: All members of the Apartment Association of Greater Los Angeles are automatically members of the National Apartment Association for no extra cost.)
Experts analyzing the situation in San Francisco have said that the large buyouts are a natural result of San Francisco’s system of rent control that enables renters to remain housed despite market forces that would otherwise drive them out. These large buyout amounts have typically gone to longtime renters of upscale units whose monthly rents have remained well below market value after decades of residency. According to experts familiar with the market, this buyout was an “outlier,” and that buyouts of $10,000 to $50,000 are more the norm.