Hawaii lawmakers are considering spending millions to support landlord-tenant mediation services in an effort to prevent a flood of post-moratorium eviction proceedings from overwhelming the courts and driving up homelessness in the state.

House Bill 1376 and its companion Senate Bill 1388 would require landlords to wait 15 days instead of five between issuing an eviction notice and filing a summary possession case in court.

The measures also would require landlords to attend mediation if requested by a tenant, and establish a tiered system to determine when landlords could evict tenants based on how much back rent is due.

The proposal is intended to establish an off-ramp to allow the state to lift its pandemic-inspired eviction moratorium that prevents landlords from removing tenants who don’t pay their rent.

While the bills are focused on helping landlords and tenants compromise on unpaid rent through mediation, economists caution that ensuring adequate rental subsidies is important because landlords with unpaid mortgages could end up in foreclosure.

Rep Troy Hashimoto on house floor during recess.
Rep. Troy Hashimoto introduced a bill to require landlord-tenant mediation. Cory Lum/Civil Beat

Carl Bonham, executive director of the University of Hawaii Economic Research Organization, said the state needs a plan to deal with the backlog of unpaid rent.

“There’s a rent backlog and if that doesn’t get paid, what are those landlords going to do when the eviction moratorium ends?” Bonham asked Thursday during an interview with the Civil Beat Editorial Board. “We could end up seeing a chunk of our rental stock end up in the for-sale market.”

Gov. David Ige imposed the moratorium last April to prevent a huge increase in homelessness in the face of widespread unemployment. Landlords can still kick out tenants for other reasons, and state sheriffs have conducted 23 evictions since the pandemic started, according to the Department of Public Safety.

Even prior to the pandemic, Hawaii had the second highest homelessness rate per capita, second only to New York, with Native Hawaiians and other Pacific Islanders experiencing disproportionately high rates.

Rep. Troy Hashimoto, who introduced HB 1376, said the proposal came out of a working group made up of various stakeholders representing landlords and tenants. The idea, he said, is to allow evictions for non-payment of rent to resume without flooding the courts.

“We knew there were some bad actors out there who were taking advantage of not having to pay rent,” Hashimoto said. “It’s a compromise. It’s a step in the right direction.”

‘Reasonable Payment Plan’

He noted that even if the state rental moratorium is removed, Hawaii has $200 million in federal rental subsidies through Dec. 31 that will support low-income residents who have experienced a financial hardship. A federal eviction moratorium also has been extended until the end of March, but it is much narrower and protects fewer renters.

The state moratorium technically has an April 13 deadline, but the governor has been extending it on a monthly or bimonthly basis. The Hawaii Appleseed Center for Law and Economic Justice said in testimony the group generally supports the bill but doesn’t want it to set a firm date for the moratorium to be lifted.

Both HB 1376 and SB 1388 are on their way to House and Senate floor votes, respectively. If approved, each bill will cross over to the other chamber and be heard in committees there. Both chambers will need to agree on the details of the measure before it can become law.

“At some point, the moratorium will have to end,” Ken Hiraki, lobbyist for the Hawaii Association of Realtors, wrote in his testimony. “HAR believes this measure is a workable solution that provides a balanced approach by encouraging communication between both the renter and housing provider.”

The proposals wouldn’t allow all landlords to proceed with evictions if the moratorium is lifted. At first, only people who owe at least four months of rent will be eligible for eviction. A month later, that would expand to people who are more than three months behind on rent. About two months after that, people who are more than two months behind on rent would be eligible for eviction.

Only 153 days after the eviction moratorium expires would tenants who are behind one month’s rent be eligible for eviction.

“This bill will, in essence, put all tenants in the entire State of Hawaii on a reasonable payment plan and allow tenants to avoid eviction,” David Chee, a longtime landlord attorney, said in his testimony. “Evictions will be reserved for only those tenants who are causing the most financial damage to their landlords.”

Contact Key Lawmakers

The measure relies heavily on the potential for mediation to diffuse landlord-tenant tensions. For the first year after the moratorium expires, landlords would be required to attend mediation if a tenant requests it.

Tracey Wiltgen, who leads the Mediation Center of the Pacific, said eviction cases mediated at court had a 52% rate of agreement, with about 22% of tenants allowed to stay housed and others getting more time to leave, she said. 

She estimated it would cost more than $3.5 million to provide 1.5-hour mediation sessions to 10,000 renters between March 25, 2021 and March 30, 2022.

Drawbacks

Eric Dunn, an attorney at the National Housing Law Project, said that the bills don’t go far enough to protect tenants since landlords would have no incentive to reach agreement in mediation without a moratorium.

“There’s a role for mediation, but the idea that we should have mediation instead of a moratorium doesn’t make any sense,” he told Civil Beat in a telephone interview.

One option would be to require the landlords not only to participate, but to participate in good faith, Dunn said, noting that’s something banks had to do during the foreclosure crisis a decade ago.

Senator Sharon Moriwaki listens to tesimony in a housing hearing at the Capitol.
Sen. Sharon Moriwaki represents neighborhoods including Kakaako and parts of Waikiki and says many in her district have been affected by the pandemic. Cory Lum/Civil Beat

Sen. Sharon Moriwaki, who introduced SB 1388, expressed hope that landlords would be willing to work out deals in mediation.

“Of course you’re going to have abuses on either end,” she said. “Hopefully both sides are coming in good faith and working out a plan where you’re not immediately made whole but over time you’re made whole.”

The way HB 1376 and SB 1388 are currently written, landlords who don’t want to come to an agreement during mediation could proceed with an eviction once the moratorium is lifted.

But Chee believes that landlords will be motivated to cut deals in mediation to avoid a lengthy court process. He noted Honolulu courts normally process 1,600 to 1,800 eviction cases per year, with 90% of them involving non-payment of rent.

“The landlord already has incentive to get things done because if they don’t reach an agreement they’re looking at a months-long process before they get their place back,” he said. “I’m going to imagine that initially right off the bat you’re probably looking at several hundred cases being filed immediately which is not what the court system is used to doing.”

Eviction Notices

Jack Slater, who leads the Honolulu Tenants Union, is skeptical about the ability for mediation to prevent evictions when many tenants aren’t able to pay back rent, which is the ultimate goal of the landlords.

“There will be a wave of evictions even if mediation is involved because tenants aren’t going to have enough money coming in to pay back a year or more of accrued rent,” he said.

Deja Ostrowski, attorney at the Medical-Legal Partnership for Children in Hawaii, said that renters have struggled to access federal subsidies.

“Our clients overwhelmingly have not found assistance through city and state rental assistance programs,” she said. “The trigger for when evictions start should be tied to when those rental assistance funds have been given out and been exhausted.”

Both Ostrowski and Chee said it’s important that the law include sample eviction notice language for landlords. Chee said the current law governing eviction notices has very few requirements and still, many landlords who are representing themselves in court make mistakes.

“The likelihood of them getting it wrong is very, very high,” he said. “Even if it’s redundant we should give everyone an example of what the notice should say.”

Ostrowski thinks that’s important for tenants as well, and noted she’s particularly concerned about renters who don’t speak English fluently and often struggle to get interpretation services.

HB 1376 and SB 1388 don’t require landlords to translate eviction notices or mandate interpretation if needed during mediation. But the Mediation Center of the Pacific does provide interpreters at no cost upon request.

Ostrowski also called for the state to administratively expunge records of all pandemic-era evictions.

“That is often the worst consequence of an eviction, is that people can’t go on to find new housing,” she said.

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