Can Paying for the Poor to Have Lawyers Actually Save a City Money?

Lawyers in Philadelphia think so. They want the city, which is suffering from an eviction crisis, to spend more on helping people fight landlords in court.
by | November 19, 2018
An eviction notice.
(TNS/Dan Honda)

SPEED READ:

  • In 2016, Philadelphia's eviction rate was 150 percent more than the national average.
  • The Philadelphia Bar Association wants the city to spend $3.5 million a year on legal services for low-income renters facing eviction.
  • It argues that such an investment would save the city $45.2 million a year.
 

Can spending more to help low-income residents fight evictions actually save a city money in the long run?

That's the argument being made by lawyers in Philadelphia, who are encouraging the city to increase the funds it allocates to legal services for tenants.

In fact, the city could save $45.2 million each year with an annual investment of $3.5 million in services for low-income renters, according to a recent report commissioned by the Philadelphia Bar Association. Right now the city spends $800,000 to pay for legal services for people facing eviction as well as financial counseling for low-income tenants. That money also funds tenants' rights education and outreach, plus a legal center that helps resolve landlord-tenant disputes.

It's a pilot program in its second year. Ramping up the program to $3.5 million would allow Philadelphia to assist more than 14,000 residents, compared to 4,400 now.

“The city’s funding to date, while a good start, is not at a scale that would make a dramatic impact," says Ethan Fogel, a local attorney and member of the Philadelphia Bar Association. "One of the goals of the study was to quantify the cost-savings the city would enjoy if it funded legal representation. We hoped that would give the city the support to justify scaling up the pilot project to provide a lawyer for all low-income tenants facing eviction.”

Across the nation, rental prices have increased 9 percent since 2000, while the median income for renters has declined 11 percent when adjusted for inflation. The 2008 housing collapse made matters worse. Following the downturn, lenders increased their scrutiny on mortgages, which in turn kept more people from purchasing homes. Vacancy rates in rental units are now at historic lows, according to the U.S. Census Bureau. It's only reasonable, according to Dan Immergluck, professor of urban studies at Georgia State University, to expect that evictions are on the rise.

“We have had basically a lot of demand for rental, and tight credit markets have pushed up that demand by people who would normally own homes,” Immergluck told Governing earlier this year.

The downward pressure on the rental market made things especially bad for low-income renters, according to the 2017 State of the Nation’s Housing report from the Joint Center for Housing Studies at Harvard University. By last year, 3.7 million Americans had been evicted, up from 1.1 million in 2000, according to Apartment List, an online rental property search firm that collects data on the rental market.

For a city like Philadelphia, where more than one in four residents lives in poverty, the result has been an epidemic of evictions. From 2010 to 2015, 1 in 14 renters had an eviction complaint filed against them. In 2016, the city’s eviction rate was 150 percent more than the national average.

In the face of such a crisis, the city was forced to act.

“Funding legal representation is not something that would normally be done to address this kind of crisis,” says Philadelphia City Councilwoman Helen Gym. “But we recognize this is a serious issue where we shouldn’t wait on federal funds or state approval.”

Low-income tenants are often outgunned when they land in court for an eviction. In Philadelphia, which has fewer than seven full-time legal aid attorneys working for it, only about 7 percent of tenants in eviction cases had representation from 2007 to 2016, according to the bar association's report. Meanwhile, landlords were represented by a lawyer in about 80 percent of cases.

Legal representation matters. Three-quarters of tenants who don't have an attorney in court find themselves in a "disruptive displacement" -- they are forced out of their home and must turn to social services provided by the city. In contrast, tenants who are represented by lawyers are able to avoid such a displacement 95 percent of the time, according to the report. Lawyers can also often negotiate the avoidance of a formal eviction, which keeps the tenant's credit report from being hurt.

Evictions are connected with poor school performance among children, an increased need for short-term housing in shelters and heavier burdens on courts, according to research by Matthew Desmond, the author of Evicted: Poverty and Profit in the American City. The Philadelphia report suggests the city would receive a $12.74 return on investment for every $1 it spends.

“Eviction has been seen as a private contractual dispute between a tenant and landlord," Gym says, "but I think what Desmond’s work has done is to look at the profound impact on women, children and families. That has allowed us to recognize this as a municipal problem."