L.A. councilman seeks federal assistance forgiving residents' COVID-19 debt

LOS ANGELES - Councilman David Ryu introduced a motion Tuesday to create a program to forgive residents' rent and utility debt caused by the COVID-19 pandemic by seeking federal assistance.

"Since the early days of this pandemic, I have warned of an impending debt crisis among renters," Ryu said. "If we don't deal with this crisis now, it will create an avalanche of homelessness and a generation of people buried in debt, and Los Angeles will pay the price for decades to come."

The motion asks the city to explore lending options with the Federal Reserve's Municipal Liquidity Facility program, part of the CARES Act, to fund the debt relief proposal.

The MLF can purchase short-term notes from state and local governments to help them manage cash flow shortfalls resulting from decreased revenue, continue normal government operations or fund obligations, Ryu said.

The MLF has not been tapped to fund rent or debt relief programs in Los Angeles thus far.

In March, Mayor Eric Garcetti ordered a moratorium on evictions as well as water and power shutoffs for households financially affected by COVID-19, and Ryu introduced a motion to freeze all rent and utility bill increases and called for federal rent and mortgage forgiveness.

According to Ryu, there have been 1.2 million unemployment claims filed in Los Angeles County since the start of the COVID-19 emergency, per the California Policy Lab, a level not seen since the Great Depression.

Before the pandemic, Los Angeles was one of the most rent-burdened cities in the nation, with more than half of renters spending over 30% of their paycheck on rent, Ryu said. In 2019, about 600,000 Los Angeles County households reportedly spent 90% of their income on rent.

It was not immediately clear which City Council committee would first hear Ryu's motion.

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