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Gov. turned to consultants as evictions loomed

Dan Atkinson

When Gov. Charlie Baker let Massachusetts’ eviction moratorium expire last October, he said he had a plan to keep residents from being thrown out of their homes. His Eviction Diversion Initiative would spend nearly $200 million on relief for tenants and landlords and fund legal assistance during eviction proceedings, as opposed to maintaining a ban that simply kept the courts from processing eviction filings.

While the moratorium’s expiration date was known, housing advocates were taken by surprise by Baker’s plan. They saw it as returning tenants to the eviction pipeline where they could maybe get aid, instead of continuing to keep that pipeline closed, and they wondered why local advocacy groups had not been a part of planning the state’s eviction policy.

Instead, one of Baker’s favorite outside consultants — McKinsey & Company — was part of the planning process that led to the EDI, which advocates say has led to confusion and renters not getting resources, with only 10% of the 38,000 applications for two major rental aid programs in 2021 being approved so far. And according to documents obtained by the Boston Institute for Nonprofit Journalism and DigBoston, McKinsey’s planning conceded thousands of residents would be at risk for eviction or foreclosure once Baker let the moratorium expire.

“Given McKinsey’s work to help Purdue market opioids, for which they were sued by AG Healey and almost all the other state AGs, and their questionable work for — among others — Boston Public Schools, I am concerned that they seem to continue to be the preferred contractor for no-bid, expensive contracts,” said State Sen. Pat Jehlen, who is sponsoring a bill that would add eviction protections.

“These reports show us the administration knew full well tens of thousands of Massachusetts residents were at risk of eviction yet moved ahead anyway,” said Andrea Park of the Mass Law Reform Institute, adding that state lawmakers need to adopt a bill that would re-focus on stopping the eviction process. “Unfortunately, the experts on the ground were largely ignored and today we still need legislation, the COVID-19 Housing Equity Bill, to address the ongoing crisis.”

Subcontract for eviction

McKinsey & Company does billions of dollars of business with governments and private companies, and has come under fire for some of its work — earlier this year, the firm agreed to pay $600 million in a settlement after 49 states accused consultants of working to “turbocharge” drug sales and contributing to the opioid epidemic. The Baker administration hired McKinsey for COVID-19 consulting at the very beginning of the pandemic in March 2020. That contract through the Executive Office of Health and Human Services has been amended several times in the past 15 months, with contractors paid to staff the state’s COVID-19 “war room” and to create “playbooks” for high-risk communities.

In October 2020, the contract was amended twice, adding $2 million in work and another $800,000 in settlements for work done before the amendments were approved. Some of that work was for the state’s COVID-19 Enforcement and Intervention Task Force and on plans for vaccine distribution. But it also required McKinsey to work with the state Department of Housing and Community Development and the court system to “Provide support in modeling the impact of various programs under consideration by the state in response to the lifting of the moratorium on evictions in the Commonwealth; and analyze capacity of existing programs and services and assist in identifying potential changes to increase efficiency of serving target populations.”

That work began on Sept 7, a month before Baker announced the EDI. A later amendment charged McKinsey with designing “metrics and dashboards to monitor key program activities and system performance” and preparing “data collection methodologies to allow for collection and visualization of data.”

Fact packs and perspectives

According to documents obtained through a public records request, McKinsey created two “fact packs” in late September and early October describing other states’ eviction moratoriums and looking at predictions in Mass. The reports predict that unemployment is not expected to return to pre-COVID levels until 2023, and recognize, “Minority renter households and front-line roles face disproportionate eviction risk relative to the total population.” One McKinsey summary notes, “Nearly half of renters have been able to negotiate a plan with their landlords in MA thus far.”

The Fact Packs basically summarize reports from various advocates and agencies that estimated how many households would be at risk of eviction if the moratorium was lifted. While the Metropolitan Area Planning Council predicted 61,000 households would be at risk, three other groups — City Life Vida Urbana, the National Council on State Housing Agencies, and the National Low Income Housing Coalition — all predicted more than 200,000.

A presentation from Oct 24 called “Initial perspectives on potential eviction filings in Q1 2021” shows revisions downward, referring to a range of 60,000 to 260,000 at-risk households from a Sept 30 presentation and then claiming that between 96,000 and 123,000 may already have been at risk prior to the pandemic. While an Oct 8 presentation says some people who have lost unemployment benefits may have found work by January, it still predicts 50,000 to 70,000 households unable to pay rent in full.

City Life spokesperson Homefries Matthews said McKinsey’s number crunching and its focus on the economy ignores the larger issues at play.

“One assumption you can see in the McKinsey report and across the nation is that all [pandemic] evictions were driven by nonpayment of rent due to the economic fallout from COVID. The majority we are seeing are nonpayment, but there are also a lot of evictions of those who are current on rent,” Matthews said. “If you believe eviction for non-payment of rent should not happen because it’s avoidable, then what is the justification for eviction because of no problem at all? That is something that the EDI fails to address and McKinsey didn’t look at.”

“We all read the same reports, McKinsey is responding to a data problem … and everyone has imprecise estimates,” said Ben Walker, who has researched evictions for City Life. “They’re looking at factors related to eviction, not eviction itself, and these are used to justify a means-tested program to deliver aid to the fewest people possible in the name of efficient governing. I think that’s where this data is pointing toward.”

McKinsey makes several assumptions about how evictions could be slowed down by proactive landlords and via courthouse bureaucracy. Another Oct 8 draft describes how a family might not face eviction until the third month of unemployment, with the first month’s rent covered by savings and the second month’s rent missed but allowed by “a grace period from landlord.” And it says that due to “constraints in the number of cases that can be processed by the Court system,” eviction cases filed against households in January might last into the next quarter. Ultimately, “Pre-eviction programs could potentially divert thousands of at-risk households through Q1 but could leave many (~30k) still at risk,” McKinsey concludes.

“The state saying it’s OK to put 30,000 households at risk, to put them in this process and have a permanent eviction record even if they fully pay arrears … is unacceptable, we shouldn’t have a single person falling through the cracks,” Park said. “And court is not the appropriate place to do this.”

“Like so many other businesses, McKinsey is committed to helping our clients with their response to the COVID-19 health and economic crisis,” a McKinsey spokesperson said in a statement. “McKinsey began working with the Commonwealth in the Fall of 2020 on housing data and analytics to help inform their decisions and help the Commonwealth navigate the unprecedented situation of the pandemic. Given the complexity of this topic, multiple approaches were explored to understand and analyze the data.”

A DHCD spokesperson said the agency used McKinsey through the existing HHS contract, and that the agency did not ask for their analysis with the goal of lifting the eviction moratorium but instead to understand the rental crisis. The spokesperson said DHCD collaborated with local groups as well to look at offering new services.

Re-opening the pipeline

McKinsey also produced a “Road Map of New & Expanded Program Intercepts Along the Process of Eviction,” a flow chart showing existing aid programs like Residential Assistance for Families in Transition and Emergency Rental and Mortgage Assistance and suggested new measures, like streamlined applications for those aid programs and new housing court specialists. But trying to get aid is still a difficult process, Park said. State statistics show that 34,017 of the 37,826 applications for rental assistance aid from the RAFT and ERMA programs through May 2021 have been denied or have timed out of the application period. While timing out doesn’t send applicants back to the beginning of the process, it shows how difficult that process can be to navigate, advocates said.

A DHCD spokesperson said the state worked to streamline applications and increased eligibility to rental assistance programs and initially committed $171 million to the EDI, and has distributed $153 million in rental aid since the start of the pandemic to more than 28,000 households. DHCD also funded the Covid Eviction Legal Help Project to provide free legal services to low-income renters facing eviction and is working with community groups to spread awareness of EDI programs, the spokesperson said.

According to state statistics, 5,484 eviction cases were filed between Baker lifting the moratorium in October and the end of 2020. Since the start of 2021, 9,692 eviction cases that are not for cause or on commercial properties have been filed.

“Look at the vast majority of applications for rental assistance being denied, the vast majority of tenants who need help are not getting it,” said Isaac Simon Hodes of Lynn United for Change. “Many are not even able to get the formal application in because the process is so hard. Huge numbers of homeowners are going to be facing foreclosure in the coming months when protections expire.”

And the bigger issue, advocates said, is that the EDI still lets landlords start the eviction process and shuffles tenants through a confusing court system. Landlords can send notices to quit, which are not formal eviction notices but still intimidate tenants into leaving, Hodes said. And tenants who don’t speak English or don’t have the money to pay for an attorney — 93.4% of eviction case defendants are pro se, or acting as their own attorney, according to state statistics — are at a disadvantage in court.

“Property owners are reverting to the mean and falling back into the process and way of doing things that has been established for decades, which is if someone falls behind on rent, send a notice to vacate that scares a lot of people out of their home. If they don’t leave, file in court and that scares more people,” Hodes said. “It seems so obvious that funneling those people into the pipeline for eviction and foreclosure is fundamentally unfair, bad policy, a waste of resources and going to exacerbate racial injustice. It’s just so obvious but it’s exactly what the governor’s policies are doing.”

“Once a landlord files an eviction and the tenant is in the eviction machine, the odds are really stacked against that tenant. The way to stop evictions is to stop the process at its inception, stop notices from going out that scare people out of their homes,” Matthews said. “Once you open the doors to the eviction machine, like Baker did in October, you will see families forced out.”

Legislative action?

The Biden administration has continued the Trump administration’s moratorium on evictions through the Center for Disease Prevention and Control through the end of July, saying it is the final time the moratorium will be extended. That order prevents evictions for non-payment for tenants who send a declaration of their qualifications to court, and allows eviction cases to be heard but pauses actual orders of eviction. But that pause means the eviction has already been ordered, and can be executed when the CDC order expires in less than a month.

Last year, the Legislature required landlords sending tenants notices to quit to also send information about rental assistance, and let DHCD know about their filings, Park said. If a tenant filed a motion saying they have a pending rental assistance application, that is supposed to stop proceedings. But legislators are considering the COVID-19 Housing Equity Bill, which would slow the pipeline into housing court in the first place.

The bill requires landlords to sign an affidavit that they’ve tried to get rental assistance and have notified residents of assistance before they file evictions, and would stop evictions for no fault or no cause until March 2022. And households being evicted for non-payment due to COVID-19 have a defense to eviction if it is likely to lead to homelessness or if the household includes a person at higher risk for COVID-19 infection. It also pauses all no-fault evictions until next March.

A DHCD spokesperson said the administration doesn’t comment on specific legislation but will review any bills that reach Baker’s desk. But the state needs to act on the bill now to prevent more evictions when the CDC moratorium expires at the end of July, Park said.

“We need the housing committee to set a hearing on the bill and hear it immediately,” Park said. “The timing is crucial, we’ll see things get really bad if we put this off to September or October. People are in crisis every day.”

And there was another way the state could have helped those at risk of eviction directly, according to Walker.

“How many people could’ve been kept in their homes with McKinsey’s million-dollar handouts?” Walker asked. “Those state dollars could’ve gone right to renters.”

This article was published in DigBoston.