Non-Payments to Families and the Risk of Homelessness - Case Study Example

Introduction

Every year, more than 2 million families in the US face the risk of eviction. More renters are reporting the risk of homelessness through eviction than homeowners reporting foreclosure risk (McDonald, 2011). Evictions are traumatic experiences for those evicted because the process involves high costs and sometimes loss of other property through auctions. When families have not been able to pay their rent for several months, then they risk losing the property to the landlord through being auctioned. Preventing evictions is vital and should be included in state and national policy. To develop and implement policies and practices to prevent evictions in a community, it is essential to know the most suitable interventions for the target population. Different population groups require different intervention measures that will work for them. Since most evictions are a result of rent arrears, this should be one of the main targets of the interventions.

The risk of eviction has not spared working families despite having an income. Often, tenants who were faithfully paying their rent will be knocked off-track and easily find that they are facing non-payment eviction. Such evictions are not limited to people who have lost their jobs because certain factors affect ability to pay rent. One of the notable issues has been the increasing rent rates when the people's income is not increasing in the same rate (Gerull, 2014). This distorts the budget in the family and as more responsibilities kick in, a family will easily find that they cannot keep up with the rent payments. This is a difficult situation to be in because the process of relocating is expensive. Further, moving to a cheaper neighborhood may result in moving further away from one’s place of work which increases the transport costs. Through the Tenancy Assist Department Tenacity, Tenancy Agency is helping working families that are faced with evictions due to non-payment of rent but are struggling to afford the market rent rate.

Theoretical Framework

The scarcity of affordable housing is a major challenge for many families in the country and other developed economies. According to a report by the United Nations Committee of Economic, Social and Cultural Rights, homelessness, and inadequate housing are becoming national emergencies in developing economies (McDonald, 2011). Scholarship on eviction has been placing the phenomenon on the increase in social and economic precariousness and inadequacy of affordable housing. The current rate of non-payment evictions exposes what has often be regarded as the hidden housing problem. This points to how easily even working families find themselves facing evictions and consequent homelessness. However, only focusing on this precariousness takes away the attention from frameworks like gentrification, political economy and the land-rent theory. For instance, eviction scholars have found that gentrification-related evictions is significantly affecting working families in both middle-class and poor neighborhoods. The rate of evictions is however, slightly higher in developing city neighborhoods than in rural areas. The affected families are working families who cannot afford to pay the increasing rent rates in these neighborhoods. To understand this better, it is important to look into the land-rent theory.

The land-rent theory is based on three important concepts. The first concept is rent which is defined as the surplus from advantages like capitalization and accessibility (Park, 2014). Rent represents the ability of a household to pay and function within an economy. Rent for retail spaces is highest because it depends on accessibility to generate income for the renter. As a result, for higher accessibility of resources then people pay higher rent. The second concept is the rent gradient. This is a representation of the changes in rent with change in distance from a certain point. The central business district (CBD) is often used as the point of reference in which case the rent reduces as one moves away from the CBD (Thrall, 2017). Rent gradient is closely related to the marginal cost of distance for an activity. This is an explanation of how distance influences rent. However, there is also the influence of the friction of distance which impacts rent gradient. According to friction of distance, overcoming the distance differences requires a certain level of effort, energy, time etc. For instance, living further from the CBD will take more time and costs in transportation to access resources in the CBD. Otherwise, all locations would be perfect locations.

The final concept in this theory is the bid rent curve function. This refers to the combination of prices and distances where the individual is indifferent. It is a representation of the amount of rent that an individual will be willing to pay in different locations at optimal utility and satisfaction. According to the land-rent theory, the CBD represents the most desirable location due to the higher level of accessibility (Park, 2014). The rent within a 1km radius of the CBD is influenced by the availability of land but as one moves further away from this point the rent drops because the amount of available land is also increasing. From the concept of supply and demand, as the supply of land increases, the price decreases. This theory explains why urban working families face the highest risk of non-payment evictions especially with urban expansion and gentrification.

Tenacity Tenancy Agency

Mission statement

The mission of Tenacity Tenancy Agency is to help families have access to practical support and services that will help you to avoid eviction and homelessness.

Homelessness is a major problem facing many working families in the US. Tenacity Tenancy Agency was established in 2010 with a view of helping families to get access to affordable housing and support in areas that were most convenient to them. The mission of Tenacity is based on the understanding that working families cannot relocate to the rural areas because the city is their source of livelihood. As a result, the agency comes in to ensure that they live within the areas of accessibility while being able to affording the cost of living in such areas. The agency is working in partnership with 1000 real estate agents in Los Angeles, California to identify working families that are struggling with affording the market rent. To achieve this, the Tenancy Assist Department is providing five important services to the affected families.

One is crisis payment arrangements for outstanding rent. Families face eviction after failing to pay rent for a number of months. This means that they will be facing auction on top of the eviction. The letting agencies have to do this because they are in business. Tenacity Tenancy started the Tenancy Assist Program in 2012 to offer payment arrangements for these kinds of families. In these payment arrangements, the agency offers to pay the outstanding rent for the families at no interest. However, the family will agree to a repayment arrangement over a longer period of time. For instance, the agency can pay two-month rent for a family which will be repaid in two years without interest. However, the families can as well pay in lump sum if they are in a position to do so within the given period of repayment.

The second service offered by the agency is location of cheaper housing for the client. Different neighborhoods within the same proximity to the CBD have different rent rates. The agency is involved in spotting neighborhoods that are cheaper for the client because affordability of housing is key in avoiding evictions. The level of income of the family will be used to determine the most comfortable housing even if it means moving slightly further from accessibility. The impact of friction of distance is determined before such arrangements are made.

The third service is financial counselling. Financial counselling is important for such families because they are undergoing financial difficulties. In financial counseling, professionals from the agency listen to the financial issues affecting the families and provide guidelines on better management of finances to avoid some of the issues. For instance, the professionals may offer guidelines on ways to cut costs within the family so that the most important basic needs such as rent and food are met.

The fourth service offered is family support services. The agency provides support services to families facing eviction such as temporary shelter before they are moved to a new location. This is usually important because some of the families cannot access their residencies after failing to pay. Helping the families in the transition and movement is important for their wellbeing.

Lastly, the agency has professional psychologists who offer mental health services to the clients. The period of eviction and subsequent homelessness takes a toll on the mental wellbeing of the family members which even affects their productivity in other areas of life. Through the mental health services given by the agency, the families are able to get in the right state of mind to get their homes in order.

Employees

Tenacity Tenancy Agency offers tenancy assistance through the Tenancy Assist Department. The department offers different programs to assist tenants in different parts of Los Angeles. One of the main programs by the department focuses on working families facing non-payment eviction. This department is made up of 30 full-time employees and 70 part-time employees who handle the different services provided by the company. The employees are professionals in different fields required by the agency to perform its operations. The CEO of the agency is Mr. Landers Russel; a man known for his passion for social justice and compassion. He has helped the agency to build a strong reputation especially in advocating for issues on homelessness, high rent rates, financial crisis, and addressing the needs of vulnerable families.

Organizational chart

Job descriptions

The CEO is responsible for making major corporate decisions in the company. This includes creating a vision for the agency that will be the guiding framework for the operations in the agency. The CEO is also responsible for the overall management of agency operations and resources. Below the CEO are three officers; the strategic director, the operations officer and the chief finance officer.

The chief strategic officer with representatives across the business from tenants, real estate agents and landlords to ensure that families have secure living arrangements. To do his tasks, he is assisted by the partnerships manager who ensures that the agency has working partnerships with real estate agents to give clients affordable housing. The asset manager on the other hand is responsible for ensuring that the payment loans given to clients have a payment period which is convenient to the client and the agency. This is an important role because it ensures that the crisis payment arrangement is done effectively. He also manages other assets belonging to the agency.

The chief operations officer is responsible for the daily activities by the agency. He works with the assistance of the logistics officer, the head of financial consultancy and the chief psychologist. The logistics officer is mandated with addressing the issues involving the movement of clients from one house to another. This is a process that requires the assistance of movers to help families move conveniently to their new locations. The head of financial consultancy on the other hand, works with financial counsellors to help these families through the financial crisis they are going through. They offer financial counseling services to the clients. Lastly, the chief psychologist works with 15 psychologists who give mental health services to the families such as therapy. The chief finance officer works with two accountants in the agency and are responsible for maintaining books of account within the agency.

Budget

The agency runs the as a non-profit organization. As such, the organization does mot aim to make profit and any money that remains after expenditure is plowed back into the business. This is important given that the agency relies heavily on donations from well-wishers as well as government subsidies among other sources of financing. The current budget for the next year is based on the projections and actual figures in the least year’s budget. The financial year begins on the first of July and ends on 30th June the next year.

Revenue

Projected for 2019/20

Actual for 2019/20

Projected for 2020/21

Carried forward

$40,000

$40,000

$548,000

General donations

$2,000,000

$2,100,000

$3,000,000

Appeals

$1,500,000

$1,500,000

$1,500,000

Monthly contributions

$600,000

$600,000

$600,000

Program fees

$210,000

$250,000

$300,000

In-kind donations

$200,000

$110,000

$200,000

Government subsidies

$200,000

$200,000

$200,000

Investment income

$15,000

$20,000

$30,000

Total

$4,765,000

$4,720,000

$6,378,000

Expenses

Amount

Salaries/ wages

$1,500,000

$1,200,000

$2,000,000

Payroll tax

$100,000

$100,000

$100,000

Insurance payments

$15,000

$15,000

$15,000

Office supplies

$3,000

$5,000

$5,000

Postage and Printing

$1,500

$2,000

$2,000

Rent

$15,000

$15,000

$20,000

Utilities

$10,000

$10,000

$15,000

Moving families

$20,000

$25,000

$30,000

Crisis payment arrangements

$2,800,000

$2,500,000

$3,000,000

Engaging with real estate agents

$300,500

$300,000

$300,000

Total expenditure

$4,765,000

$4,172,000

$5,487,000

Net

0

$548,000

$891,000

The monthly contributions refer to the payments that will be made by the families under the program after crisis payments have been done for them. This will help them to avoid eviction but still be able to pay for the soft-loan given for crisis payments. The program fees are the subscription fees for the families to continue receiving services from the agency from financial counseling to mental health counseling in the long-run. It is important to have these fees as they add to the source of funds for the agency. Sustainability is important so that the agency can continue transforming the lives of residents and families in Los Angeles.

To reach out to the agency for the above services call: +1(561)356 658

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This points to how easily even working families find themselves facing evictions and consequent homelessness. However, only focusing on this precariousness takes away the attention from frameworks like gentrification, political economy and the land-rent theory. For instance, eviction scholars have found that gentrification-related evictions is significantly affecting working families in both middle-class and poor neighborhoods. The rate of evictions is however, slightly higher in developing city neighborhoods than in rural areas. The affected families are working families who cannot afford to pay the increasing rent rates in these neighborhoods. To understand this better, it is important to look into the land-rent theory.

The land-rent theory is based on three important concepts. The first concept is rent which is defined as the surplus from advantages like capitalization and accessibility (Park, 2014). Rent represents the ability of a household to pay and function within an economy. Rent for retail spaces is highest because it depends on accessibility to generate income for the renter. As a result, for higher accessibility of resources then people pay higher rent. The second concept is the rent gradient. This is a representation of the changes in rent with change in distance from a certain point. The central business district (CBD) is often used as the point of reference in which case the rent reduces as one moves away from the CBD (Thrall, 2017). Rent gradient is closely related to the marginal cost of distance for an activity. This is an explanation of how distance influences rent. However, there is also the influence of the friction of distance which impacts rent gradient. According to friction of distance, overcoming the distance differences requires a certain level of effort, energy, time etc. For instance, living further from the CBD will take more time and costs in transportation to access resources in the CBD. Otherwise, all locations would be perfect locations.

The final concept in this theory is the bid rent curve function. This refers to the combination of prices and distances where the individual is indifferent. It is a representation of the amount of rent that an individual will be willing to pay in different locations at optimal utility and satisfaction. According to the land-rent theory, the CBD represents the most desirable location due to the higher level of accessibility (Park, 2014). The rent within a 1km radius of the CBD is influenced by the availability of land but as one moves further away from this point the rent drops because the amount of available land is also increasing. From the concept of supply and demand, as the supply of land increases, the price decreases. This theory explains why urban working families face the highest risk of non-payment evictions especially with urban expansion and gentrification.

Tenacity Tenancy Agency

Mission statement

The mission of Tenacity Tenancy Agency is to help families have access to practical support and services that will help you to avoid eviction and homelessness.

Homelessness is a major problem facing many working families in the US. Tenacity Tenancy Agency was established in 2010 with a view of helping families to get access to affordable housing and support in areas that were most convenient to them. The mission of Tenacity is based on the understanding that working families cannot relocate to the rural areas because the city is their source of livelihood. As a result, the agency comes in to ensure that they live within the areas of accessibility while being able to affording the cost of living in such areas. The agency is working in partnership with 1000 real estate agents in Los Angeles, California to identify working families that are struggling with affording the market rent. To achieve this, the Tenancy Assist Department is providing five important services to the affected families.

One is crisis payment arrangements for outstanding rent. Read More