Meeting tenants’ legal needs in looming eviction cases could cost billions

As Indiana’s moratorium on evictions is set to end in a week, legal aid providers are estimating the national price tag for helping tenants facing the prospect of losing their places to live will top $2.5 billion.

Gov. Eric Holcomb is holding firm that he will allow the state’s eviction ban put in place due to the COVID-19 pandemic to expire Aug. 14. In anticipation of a flood of eviction petitions being filed, the Indiana Supreme Court is preparing to launch a statewide settlement facilitation program to help landlords and tenants work out agreements. Also, the governor is appropriating another $15 million to the state’s rental assistance program, which will bring the total amount available to $40 million.

However, that number is dwarfed by the estimated cost of helping low-income Americans at risk of eviction. The Legal Services Corporation, which provides financial support to legal aid organizations across the country including Indiana Legal Services, has calculated that nearly $2.57 billion will be needed to meet the legal needs of individuals and families who are facing the possibility of becoming homeless.

On Capitol Hill, Rep. Joe Kennedy III, D-Massachusetts, is calling on Congressional leaders to provide $2.5 billion in funding for the LSC and civil legal aid organizations in the next COVID-19 emergency funding package.

“Any additional spending package from Congress must take into account support for legal aid and LSC,” Kennedy wrote in a letter to Senate Majority Leader Mitch McConnell, R-Kentucky, and House Speaker Rep. Nancy Pelosi, D-California. “Without assistance of counsel, low income families will continue to suffer long after the immediate health threat from COVID-19 ends. An additional $2.5 billion will go a long way to helping all Americans in this recovery.”

A federal prohibition against evictions was part of the $2 trillion CARES Act that Congress passed as the pandemic was shuttering the American economy in March. The moratorium expired July 25 but, according to Politico, Republicans on Capitol Hill are pushing for the eviction protection to be reinstated and for rental assistance to be included in the next economic relief package.

Sen. Todd Young, R-Indiana, confirmed to Politico that reviving the moratorium was being discussed within the Republican conference.

“There are Republicans like myself that understand that this is going to be a real challenge going forward, and we need to at once make sure that people are able to stay in their houses, for businesses to stay in their particular locations, but we also need to be sensitive to the business needs of the landlords,” Young told Politico.

“So if we can get the two groups together, I think we can come up with a responsible package that will be satisfactory, at least for the next couple of months, for all the stakeholders involved,” he added.

The LSC arrived at its cost estimate using the analysis by investment banking company Stout Risius Ross, which found 5.13 million low-income households are at risk for evictions. Calculating an experienced legal aid attorney’s median annual salary at $101,935, which includes benefits and 20% of the local office’s overhead, and estimating the caseload at 200 cases per year, the LSC determined the average cost for each eviction-related case reached $500.

Indiana Legal Services said its payroll is lower than LSC’s median figure. An ILS attorney with three years of experience would have a compensation equivalent to $85,000 to $90,000 per year.

As for the kinds of legal assistance that will be provided to tenants, ILS said full representation, including court appearances, is preferred to get the best results. An attorney at the courthouse can negotiate with the landlord and, if necessary, make an argument to the judge.

“We are making plans to provide that kind of representation in as many cases as we can,” said Jon Laramore, executive director of Indiana Legal Services. “I have no doubt that because of resource limitations, we will not be able to provide that level of services in all the cases that come to us.”

How many evictions will come in Indiana when the state’s moratorium ends is unknown, but there are some indicators small claims and trial courts could be overrun with eviction cases.

The analysis by Stout Risius Ross estimates 44% of Indiana households are unable to pay rent and are at risk of eviction.

Also, more than 24,000 Hoosiers have applied for the state’s COVID-19 Rental Assistance Program, according to Jake Sipe, executive director of the Indiana Housing and Community Development Authority. When the program opened July 13, just over 8,000 applied, but the rate has declined steadily since, with about 400 applications being submitted daily.

Five counties account for 45% of the total number of applications the state has received for rental assistance, Sipe said. Lake County represented 17.9% of the requests for assistance, St. Joseph 10.5%, Allen 8.4%, Tippecanoe 4.1% and Vanderburgh 3.9%.

Marion County has its own rental assistance program and is, therefore, not included in the state statistics.

The prohibition on evictions and foreclosures was instituted by Gov. Eric Holcomb in an executive order issued March 19 and has been extended since then. Allen and Delaware county courts have been taking steps to mitigate the number of evictions and the Supreme Court’s new settlement program is anticipated to help bring relief.

Joe Heerens, general counsel for the governor, provided an overview of the program during Holcomb’s weekly pandemic press conference Aug. 5. A trained professional will meet with landlords and tenants to help them resolve their disputes voluntarily. If the parties are able to come to an agreement, that will bring an end to the judicial action.

“This can be an effective and frankly less onerous way to resolve disputes and it oftentimes has the added benefit of preserving the existing relationship between the two parties,” Heerens said. “This is another program that will help preserve housing stability in our state.”

The program is being developed by the Indiana Office of Judicial Administration. Funding is being provided by the Indiana Supreme Court, the Indiana Bar Foundation and the state through CARES Act money.

“Since 2009 the Indiana Supreme Court’s mortgage foreclosure trial court assistance project has helped avert foreclosures by facilitating settlement conferences between homeowners and lenders,” Chief Justice Loretta Rush said in a statement read by Heerens. “We are expanding this vital program given the pandemic. Similarily, we are working hard to develop and implement a fair and reasonable program to help courts manage the backlog of eviction cases and we thank the Indiana Bar Foundation and Gov. Holcomb for partnering with us on this project.”

  The Associated Press contributed to this report.