Tens of thousands of Arizonans are still behind on bills that stacked up during the COVID-19 pandemic, from rent to utilities to water.
That debt totals in the hundreds of millions of dollars at least, though exact figures aren’t yet known.
These debts hinder people’s abilities to find safe, stable housing, threaten their access to water and power and could make it difficult to qualify for loans in the future.
As the country continues to reopen, there are many whose financial freedom remains hindered by the events of the last 16 months.
A Phoenix renter who moved to the Valley two weeks before the pandemic took hold of the country in March 2020 lived off a small inheritance left by her recently deceased parents because she was unable to find a job for the first several months.
She eventually ran out of money and used the eviction moratorium to stay in her rental home. She recently found a job, but she’s still struggling to pay off the debt that piled up.
“I’m basically earning my paycheck and handing it all over to my current (landlord) for payment of my current rent and paying towards my past-due rent balance,” she said.
Diane Brown, executive director of Arizona PIRG, a public-interest advocacy group, said eviction moratoriums and utility shut-offs provided temporary reprieves for many households.
“However, it also means that many households are now facing very large bills that may be challenging to pay for quite some time,” she said.
Some face evictions, and a looming federal eviction moratorium end date of June 30. If evicted, their rental options moving forward will be severely limited.
Some owe many hundreds of dollars to electric utility companies or city water, and could face disconnections.
“The reason people don’t pay their bills is because they can’t afford them. And then if a crisis like the pandemic hits, they’re struggling to catch up. And if they don’t have to pay, they will often use whatever discretionary money they have on other, more pressing needs,” said Cynthia Zwick, executive director of Wildfire, a community action group focused on ending poverty.
Aid sent to states, counties, cities and nonprofits designed to help people with rent and other bills during the pandemic hasn’t always made it into the hands of those in need. Sometimes, processes were cumbersome and slow. Other times, people didn’t realize help was available or how to access it.
And sometimes, as was the case with Kim McKellar, people knew about pandemic aid, tried to access it and ran into unforeseen roadblocks.
How unpaid rent affects a household
In February 2020, doctors told McKellar she likely had a coronavirus they couldn’t yet test for because it was so rare in the United States. A few weeks later, her husband received a similar diagnosis, she said.
Soon after, that coronavirus was spreading rapidly across the country and shutting down the nation’s economy. Both McKellar and her husband lost their jobs. By the end of the year, McKellar’s elderly father was diagnosed with and succumbed to COVID-19. And to this day, McKellar has been unable to access any unemployment funds, she said.
The pandemic had a severe emotional and financial impact on McKellar and her husband’s lives, she said. Her husband has experienced an array of medical issues since his diagnosis; she is struggling with panic attacks and had to file for bankruptcy late last year.
They’ve been able to stay in their Tempe rental home despite only paying a fraction of their rent each month because they qualified for the Centers for Disease Control and Prevention’s eviction moratorium.
McKellar was granted six months of rental assistance last year and was told she’d receive an additional six months to get her through June. But her landlords won’t accept the funds, she said.
The landlords and the attorney representing them did not respond to requests for comment.
The eviction moratorium is likely coming to an end, and McKellar and her husband could soon be on the hook for about $20,000 — and without a place to live.
“We are miserable here. Like, we don’t even have a life here anymore,” McKellar said. “But it’s not so easy, because how are you going to move if you’re going to have an eviction on your record? And you’re in bankruptcy? And it’s a tight market?”
McKellar claimed the CDC protection multiple times over the past year, according to court filings. Earlier this year, her landlord told her he planned to sell the house and has since tried to evict her. So far, McKellar has fought off the eviction in court, but a hearingthis weekcould bring a different outcome.
The CDC moratorium is set to expire on June 30, though it has been extended at the last minute before. If it does end as expected, McKellar will have just weeks to move.
McKellar said she’s tried to move for the past few months but has yet to find a place. Rental homes are flying off the market, and prices continue to climb. The rental assistance she was told she’d get in Tempe can’t go directly to her if the landlords won’t accept it, she was told. And it doesn’t transfer to other cities,she said.
If she is evicted, the eviction record will make it even more difficult to find a suitable place to live with her ailing husband and two service dogs.
“This is a shame because it doesn’t look like it’s going to end well,” McKellar said. “It’s going to be bad, a real bad thing, limiting our housing options.”
Eviction moratorium end looms
Tens of thousands of Arizonans have taken advantage of state and federal emergency measures that protected them from eviction if they couldn’t pay their rent during the pandemic.
The CDC moratorium is the only remaining pandemic protection for renters.
It’s unknown just how much debt is owed to landlords across the state.
The eviction moratoriums did not prevent landlords from getting a judgment against tenants who owed rent — they only stopped landlords from physically removing tenants.
In Maricopa County, justices of the peace entered more than 19,000 eviction judgments for landlords totaling more than $65 million between March 24, 2020, the day the first eviction moratorium began, and the end of February 2021.
This does not represent the totality of debt owed, however. For instance, some tenants may have cleared the debt since the judgments were entered. Others’ debts likely have grown.
Additionally, many landlords did not seek eviction during the moratoriums, even if their renters were behind. Eviction filings decreased by more than 50% during the pandemic compared the same months one year prior.
The Arizona Multifamily Association, the industry group representing property owners, estimates tenants across the state owe about $400 million in rental debt.
About 81,000 renters in Arizona are behind on their payments, according to the latest Zillow analysis of Census Pulse data.
About 11% of those renters think they are “very likely” to be evicted during the next two months.
The good news: Arizona has received almost $850 million for emergency rental and utility assistance through two federal stimulus programs passed in December 2020 and March 2021.
The bad news: The state, counties, cities and agencies responsible for deploying these funds are not getting it to renters and landlords quick enough, and it seems unlikely that the aid will get out in time to prevent the expected avalanche of evictions when the CDC moratorium expires June 30.
At the beginning of June, Arizona agencies had disbursed less than $50 million of the $850 million of rental assistance received this year.
Mortgage forbearances flattening
Like renters, some homeowners also struggled to make their housing payments during the pandemic, though recent data indicates most owners recovered more quickly than renters.
The number of U.S. homeowners who have permission to skip mortgage payments has dropped or flattened the past few months, signaling more people can make or afford their monthly loan payments.
Forbearance programs for borrowers with loans backed by Fannie Mae, Freddie Mac and HUD’s Federal Housing Administration, were launched in March 2020 to help homeowners struggling due to the pandemic. The plans allowed borrowers to skip up to 18 months of loan payments.
The latest data shows about 71,000 fewer homeowners across the country needed to defer their home loan payments during the last week of May, according to mortgage analysis firm Black Knight.
Now, about 2.12 million homeowners, or about 4% of people with mortgages, are missing monthly payments through the federally backed programs.
Metro Phoenix’s mortgage delinquency rate — the percentage of mortgages that borrowers missed payments on — has dropped to 3.85%, compared to 6% last summer.
The U.S. mortgage delinquency rate is higher, at 4.6%.
Forbearances aren’t typically tracked as delinquent mortgages, and Arizona-specific forbearance data isn’t available.
Past-due APS bills total tens of millions
Most electric utilities in the state suspended shut-offs for unpaid bills for a period of time during the pandemic. And now, some once again can’t shut off electricity because of a moratorium on disconnections during the hottest months of the year.
That means some utility customers could still be paying down debts from a COVID-19 moratorium while accruing more during the summer moratorium.
Arizona Public Service, the state’s largest electric utility, didn’t disconnect accounts for nonpayment from March 13 through Dec. 31, 2020.
After disconnections resumed, debts remained. The utility company had about $70 million in delinquent residential bills at the end of January, which decreased to about $50 million by the end of March, according to a report filed in April with the Arizona Corporation Commission. The number of delinquent residential accounts went from about 125,000 to 111,000 during that time period. The average delinquent amount fell from $556 to $445 from January to March.
Updated numbers aren’t yet available, but the utility confirmed both individual overdue…
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