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August 17, 2020

AZRE

Arizona landlords file Supreme Court action to overturn eviction moratorium

Frustrated by nearly five months of bureaucratic inefficiency, trickling coronavirus eviction relief funds and tens of millions of dollars in unpaid rent, the Arizona Multihousing Association (AMA), the Manufactured Housing Communities of Arizona (MHCA) and several struggling rental housing owners today filed a special action with Arizona Supreme Court seeking to invalidate as unconstitutional the state’s eviction moratorium, imposed in March by the Governor’s unilateral executive order.

The special action contends that the Governor’s eviction moratorium – which effectively forces many of the state’s rental property owners to provide free housing for at least 221 days  –violates the separation of powers imposed by the Arizona Constitution. The plaintiffs also contend that the eviction moratorium violates the Constitution’s contract clause.

“Our members are in the housing business. No one wants to see anyone evicted, especially during a pandemic,” said Courtney Gilstrap LeVinus, the President and CEO of the AMA. “Property owners statewide, from mom and pops to large rental communities, have done everything they can to work with residents. They’ve made payment arrangements, waived fees, helped renters fill out relief applications and worked with every agency that will listen on what’s necessary to avoid evictions.

“But after five months of the state doing almost nothing to help property owners, we are at a breaking point. The eviction moratorium has created a rent holiday for thousands of renters, while property owners still have a mortgage and taxes and bills to pay – including utility bills for many residents who are paying no rent. This isn’t about greed or profit. This is about a serious crisis that needs to be fixed immediately, because providing free housing while receiving no relief for seven months is not sustainable and not fair.”

The Governor signed the eviction moratorium executive order without legislative input on March 24, 2020. He has since extended the moratorium to last until at least October 31, 2020.

To date, elected leaders and housing officials have been unable to meet the financial needs of renters and property owners statewide. Since April, the state has received over 20,000 requests for nearly $11 million in assistance, yet only 7% of those applications have been approved. Thus far, less than $2 million has been deployed.

“The rule of law matters most in a crisis,” said Kory Langhofer, lead attorney for the plaintiffs and managing partner with the Statecraft law firm. “This case is based on the premise that contracts and property rights are enforceable in Arizona, even now, during a pandemic.”

An economic impact study of the eviction moratorium by economist Elliott D. Pollack underscores the impact of the potential seven-month rent holiday on property owners – everyone from retirees who own a duplex to luxury rental communities with hundreds of units and dozens of employees. The Pollack study shows that:

• If only one percent of Arizona’s 920,000 rental households do not pay their rent for the seven-month eviction moratorium, that would create about $67 million in lost income. The costs of the eviction process and finding a new tenant drives that total to about $87 million in lost income.

• If 15 percent of renters do not pay their rent for the seven-month eviction moratorium, that would create about $1.3 billion in lost income including working through the eviction process and finding new tenants.

• If 30 percent of renters do not pay their rent for the seven-month eviction moratorium, that would create about $2.6 billion in lost income including working through the eviction process and finding new tenants.

“When the pandemic hit, the state didn’t order grocery stores and restaurants to give away free food, or gas stations to give away free fuel,“ said Gilstrap LeVinus. “Rental housing is the only area of the state economy that has been compelled to provide a product or service free of charge during the pandemic. And no other area of the economy has suddenly seen more than 920,000 legally binding private contracts made null and void by a stroke of the Governor’s pen.”

For information on the special action, visit https://www.azmultihousing.org/.