Tenant group calls for “debt strike” against one of San Francisco’s biggest property managers

With evictions now back on the table in California, a San Francisco housing advocates’ group is taking the risky strategy of calling for a “debt strike” against Veritas Investments, one of the city’s biggest property managers, advising tenants behind on their rent to refuse government aid.

The state’s rent relief funds should be going to pay back the city’s small landlords and not big corporations like Veritas, argued Lenea Maibaum of the Veritas Tenants Association, which represents tenants in Veritas’ approximately 7,000 rental units, the vast majority of which are under rent control in San Francisco. It’s asking these residents to go on a “debt strike” by refusing to fill out the forms Veritas needs to access the state money.

“They don’t need those funds. They keep taking the money while even the small mom and pop landlords and merchants are suffering and shutting shop,” Maibaum said. “I don’t think that’s fair.”

For Veritas COO Jeff Jerden, the strategy is “head-scratching” at best and at worst could force the company into evictions that could otherwise be avoided.

“I can’t wrap my brain around it,” he said. “People have accrued massive, massive rental debt. Eventually, there are going to be evictions.”

Cities around the nation are grappling with how to distribute government aid to balance the needs of tenants who lost jobs or worse during the pandemic against landlords who have already lost rent for almost two years while not being able to evict non-paying tenants.

Veritas first became aware of the debt strike tactic back in March, Jerden said, when staff started receiving form letters from tenants telling Veritas to stop pursuing the rent relief process, which requires both landlord and tenant participation in California. The letters told Veritas to withdraw applications for state funds on their behalf and that the tenant did not authorize that action. Jerden said that some residents who sent these letters in the spring ended up rescinding them later and requesting rent relief as the end of the eviction moratorium drew near.

The state has set aside $152 million of $2.6 billion in federal rent relief funds for San Francisco tenants who are behind on their rent payments, earn less than 80 percent of the area median income and can show that they were financially hurt by the pandemic.

The state’s own figures show that of the nearly $3 billion in rent relief requested statewide, only $650 million had been paid out as of September 27. In San Francisco, of the $122 million requested thus far, only about a quarter had been paid out. In July, the city’s Budget and Legislative Analyst Office estimated that tenants may owe up to $355 million in back rent, a number that would dwarf the available funds, even with an additional $32 million recently added from the city’s own coffers.

The tenants’ association said Veritas should “do the right thing” and negotiate a substantial percentage of debt forgiveness with tenants before trying to access these limited funds. Until Veritas agrees to come to the bargaining table, it will continue to advise its members that withholding the materials the company needs in order to access millions in state funds is an option, Maibaum said.

The company has been concentrating its efforts on communicating to tenants that rent relief is their best path forward, said Jerden, and has not passed on a rent increase since the start of the pandemic. Even though the state moratorium ended Sept. 30, there will be minimal evictions filed at Veritas properties until at least 2022. The company announced in August that it would not commence nonpayment eviction proceedings against tenants who fit the state’s definition of financial hardship through the end of this year.

Jerden says Veritas is the only major housing provider in the city to make such a pronouncement. The company created its own moratorium extension because it became clear early on that there was no way a substantial portion of debt relief would be paid out by September 30, he said. As of mid-September, the company had received just over 20 percent of the funds from about 330 petitions it filed in March, when the program began.

It has submitted about 500 applications in all, including some for residents who no longer live in a Veritas property but still have substantial rent debt, Jerden said, adding that the company has been hit by the same higher vacancy rates and lower market-rate rents that have been seen throughout the city during the pandemic.

One thing on which Veritas and the tenants agree: delays from the state program have been problematic for everyone. They may also have been compounded in San Francisco by additional confusion surrounding a short-lived local relief effort that ended up recently being handed back to the state. These delays are one of the main reasons tenant rights groups had been asking the governor to delay the end of the moratorium, said Brad Hirn of the Housing Rights Coalition of San Francisco.

“It doesn’t make sense to let something expire that you have the power to extend when the rent relief program is not working that well,” Hirn said.

Instead of an arbitrary date, he said, the end of the eviction moratorium should be tied to the end of the state’s declaration of a public health emergency or when unemployment figures dip below a certain threshold.

The HRC, which helped organize the Veritas tenants group a few years ago, is a supporter of the debt strike efforts. But its staff is also informing the residents it works with throughout the city on behalf of the Department of Building Inspection’s Code Enforcement Outreach Program of the rent relief “option,” Hern said.

“It’s framed as a choice,” Hirn said.

As far as whether this debt strike strategy could ultimately lead to more tenant evictions, that’s a choice for Veritas to make, he said.

“Is Veritas going to evict dozens of households when they have access to capital and wealth to forgive debt?” Hirn asked.

For Jerden, any attempts to hamper the company’s efforts to “keep our residents securely housed,” especially when even willing tenants are having a difficult time navigating the rent relief system, is unconscionable.

“This is people’s housing,” he said. “This isn’t something we roll the dice with in pursuit of some political agenda.”

He said many other tenant groups in the city have been happy to work with Veritas to get the word out to tenants about the rent relief program. It recently partnered with the Mission Economic Development Agency to hold a seminar on how to apply in both English and Spanish.

Charley Goss of the San Francisco Apartment Association, which represents landlords in the city, agreed that tenant groups as a whole are not advocating a debt strike. He said SFAA is working alongside many of them as part of the COEP program, fielding calls from tenants who would like to take part in the program and are “ecstatic” to get a call back from anyone to help walk them through the application process, even someone from a landlord group.

He pointed out that, even though the eviction moratorium has ended, landlords cannot begin an eviction proceeding until March of 2022 if they do not apply for the rent relief program. Most landlords would much rather get their tenants’ longstanding debts repaid than begin the onerous eviction process, he said.

“The rent relief program is something that we see as mutually beneficial,” he said. “Many tenants have racked up debt through no fault of their own and many owners have had no income because of that.”