EXCLUSIVE: Federal Regulations May Mean Midwinter Evictions For Agriprocessors Workers

Details:

In early December, Lt. Governor Patty Judge went to Postville and announced a $698,000 program of short term relief meant to help displaced Agriprocessors workers get through the winter without being evicted or having their utilities shut off.

It now appears $400,000 of that grant money will go unused.

In December, landlords agreed to stop evictions in return for state promises of rent reimbursements. In many cases, those promises were made in writing, with specific amounts promised by the state for individual each displaced worker, based on the market rate rent of the unit the worker lives in. 

But, as I exclusively reported last month, the rental agreements made by the state and its proxies with local landlords were unilaterally broken by the state. Reimbursements were cut by 33%. Landlords – who had allowed tenants to remain in their homes and apartments without paying rent because of those state promises – balked.

Evictions were set to resume. The city and state were at first unresponsive.

But, after pending evictions were publicized, state and city forced landlords to hold off on those evictions until after a meeting they scheduled for the first week of January. It was unilaterally canceled by the state and rescheduled for the second week of January. That meeting also was canceled unilaterally, and rescheduled for Tuesday, January 20.

Yesterday's meeting was not canceled.

But what landlords heard is not good news. Here is what they were told:

1. No displaced worker can remain on the program for more than three months or receive more than $3000 in total benefits, whichever comes first.
2. Most of these displaced workers owe rent from October onward. If the state money is applied to October, November and December rent, workers would now be off the program.
3. The state says the source of the money is from a federal grant, and restrictions on the use of that money prohibit allowing workers to remain on the program for more than three months, or to receive more than $3000 in total benefits.
4. When landlords, bankers the mayor and others pointed out this could very well mean evictions would resume during winter, when eviction poses a real danger to life, the state's response was, in essence, If the displaced workers cannot pay their rent, then evict them.
5. What this means is these workers are now subject to eviction and could be evicted as soon as next week, although most evictions won't start until early to mid February. 
6. It also means the "$698,000" grant will go mostly unspent. 

Landlords are now in the position of having to evict tenants in the middle of a frigid winter with no social services in place to help those tenants.

Trevor Siebert, who has his own properties and now manages Nevel properties, as well, said this issue was raised several times in yesterday's meeting, without any real response.

Siebert pointed out the state has effectively housed indigent workers for four months at the landlords' expense.

Gabay Menachem of GAL Investments told me that, for the next 10 days he will try to work with tenants. He will accept a lesser amount than owed if paid immediately, or will accept a payment plan for the full amount.

But Menachem said that anyone who does not take one of those two options or make other arrangements with him by the first of February will be evicted.

I'm also told that several Jewish families have refused to pay Nevel Properties because they are owed back pay by Nevel's owner, Sholom M. Rubashkin.

I understand those families may be evicted in February.

Even if landlords get three months rent from the block grant, it leaves them effectively two months (or more) behind, and every day they put off evictions is another day they lose money.

So even Agriprocessors workers who have been called back to work and whose rent is paid by the block grant will still be behind one or more months in rent payments.

Even these workers are at risk of eviction.

Part of the problem for is that Postville's rental real estate is overpriced, in part due to bidding wars for properties instigated primarily by and between Nevel Properties and GAL Investments.

If banks renegotiated the loans for these properties to more accurately reflect the true value of the properties at their time of sale, that would make landlords' short term losses less, but would not eliminate those losses entirely, because Postville's real estate was more valuable than real estate in neighboring towns even without bidding wars.

Because of the nature of its workforce, Agriprocessors can have 700 or more workers renting properties in town, something uncommon in most of the region. Even though many workers doubled up, hundreds of units were still needed.

This demand drives up the cost of those properties and makes Postville's real estate more expensive than what it would otherwise be.

Banks appear reluctant to renegotiate these loans because they expect Agriprocessors to be sold in the near future. Workers for the new company will also need rental housing. Therefore, Postville's rental market will go back to close to what it was pre-immigration raid.

Renegotiating the loans now would cost banks for many years. Renegotiating may also call into question the soundness of their lending practice at a time when banks are skittish – and banks investors even more so.

I spoke with Hank Manning of the Iowa Department of Economic Development a few minutes ago. He told me this grant was a unique situation. "We've never done anything like this before, " he said.

The funds are a Community Development Block Grant and the program's regulations are very clear: No one on the program for more than three months;  no one individual or household gets more than $3000 in assistance; rents are determined by HUDs "fair market rate" – not the actual market rate for the area in question, in this case, Postville.

Manning said the city is the actual block grant recipient and the program was administered by Northeast Iowa Community Action.

David Boss of Northeast Iowa Community Action was in yesterday's meeting. He was unavailable for comment today.

The City of Postville and the block grant's administrator, Northeast Iowa Community Action are responsible for the original promises made to the landlords and displaced workers.
  
Manning did not remember when he told Boss and the city about the program's restrictions but noted the same restrictions were in place for flood relief, and the federal government refused to alter them.

I asked Manning what was being done to prepare for what could be mass evictions during a bitterly cold winter in a town without a homeless shelter.

Manning referred me to Ralph Rosenberg, the director of Iowa's Civil Rights Commission, who is the state's point man for Postville relief. Manning cited him as the state official responsible for the larger picture, as opposed to this specific block grant.

I've spoken with Rosenberg several times. Whatever good Postville got from the state these past 2 1/2 months has come through his hard work.

Rosenberg was not in yesterday's meeting, and I was unable to reach him today for comment..