Life is uncertain and unfair. We didn’t choose our gifts, or the century we were born, or our parents or our IQ.
Now we are all caught in the coronavirus pandemic. Last week I wrote about fear, Factfulness, and love. This post is about a misguided attempt to smooth wealth inequality under the guise of compassion for renters whose income dropped because of the virus.
San Diego City Council President Georgette Gomez shared a giant wish list of how she wanted the federal, state, and county governments and rental owners to absorb costs to partially offset the pandemic distress to San Diego renters. She favored standing together and she claimed to oppose discrimination. But her proposal discriminates against less than 5% of San Diego City citizens, the ones who own rental property.
Ms. Gomez wants various levels of government to suspend rights of only one class of citizens, rental owners. Her written request was that the courts not even hear eviction cases and the sheriffs not finish evictions that are in process. This means that renters can live rent-free for as long as it takes for the crisis to pass. She wants local government to mandate that San Diego’s rental owners carry an interest-free loan to distressed renters.
She didn’t seek an ordinance compelling:
* gas station owners to make six-month interest-free loans to distressed renters, or
* Amazon stockholders to grant interest-free, personal loans without any note to San Diego renters, or
* convenience store owners make interest-free loans to San Diego renters for their purchases.
Instead, she asked the City Attorney to develop an ordinance that forces rental owners to bear the risk and liquidity squeeze of this international disaster. There’s a better way to stand together and help distressed renters. It’s discrimination-free.
Have City of San Diego bear the credit risk and absorb the liquidity float. The City of San Diego could write checks to landlords, post-dated for six months for any rent that a distressed resident can’t pay. Each set of renters can sign a promissory note to City.
The City of San Diego’s credit is better than any single renter household. No landlord will sue the City if they get a check from City. Tenants are more likely to repay the City than a landlord. The credit and liquidity risk is spread over 1,400,000 people, not borne solely by rental owner households.
Those households are not faceless corporations with giant budgets. They are disproportionally retired people.
This morning Ed, a retired man, called me. He was horrified that his tenants won’t pay. He needs the rent checks, his main source of income for his food, medicine and mortgage. This afternoon I talked with Ann, a single mom, who has fed and clothed her family for 24 years with rentals. She does not have other income.
Terry Moore, CCIM, is the author of Building Legacy Wealth: How to Build Wealth and Live a Life Worth Imitating. Read his “Welcome to My Blog.”