Tenants who have been unable to pay rent during the COVID-19 pandemic would have up to 2 1/2 years to repay their arrears without fear of eviction under a controversial bill now before the New Jersey Senate.
The so-called People’s Bill would give renters 6 months to repay each month of unpaid rent and require all arrears to be paid within 30 months. It’s part of a package of measures designed to prevent a flood of evictions whenever Gov. Phil Murphy’s current ban on evictions ends. On March 19, Murphy ordered a moratorium on evictions during the public health crisis, to remain in effect up to two months after that ends.
Landlords warned that passage of the bill would ruin some property owners and lead to higher tax bills for homeowners. They have been fighting the bill (A-4034/S-2340) since it was introduced in July, saying property owners should not have to wait so long for full repayment of back rent, especially since many have already been unable to collect rent from unemployed tenants during the pandemic and have no early prospect of relief.
By giving people more time to pay arrears and setting penalties for landlords who don’t comply, the bill’s supporters hope that would make it easier for renters and homeowners to catch up with their payments and stay in their homes.
“What this bill tries to do is establish a fair repayment schedule for the tenant and the landlord,” said Nina Rainiero, a spokeswoman for the Housing and Community Development Network of New Jersey, one of the housing advocacy groups that organized an online rally on Thursday to press the Senate to act. “You can’t just say, ‘OK the moratorium is up, I need five months of rent by tomorrow.’”
The bill’s lead sponsor in the Senate, Sen. Troy Singleton (D-Burlington), has worked to meet the interests of both sides, and is hoping Senate President Steve Sweeney will put the bill up for a vote in December, said his policy coordinator, David Smith. “The consequences of further inaction will be devastating for New Jersey,” he said.
Earlier attempt stalled in Senate
An earlier version of the bill was passed by the Senate and Assembly. It is now being reconsidered by the Senate because of amendments during its passage in the lower house but appears to have “stalled” in the Senate, Rainiero said.
If there’s a dispute over how much a tenant owes, a court could require a landlord to pay a penalty of 20% of the difference between the amount the landlord seeks and the amount actually owed, the bill says.
Homeowners who can prove they have suffered a “negative financial impact” from the pandemic would be entitled to obtain a forbearance from mortgage payments for at least 90 days. They would have to show that their gross household income does not exceed $150,000 a year and that they have less than six months’ worth of cash reserves in the bank.
Brian Kulas, who rents his home from a private landlord, said during the online rally that he temporarily lost his job because of the pandemic and now has a past-due rent balance as well as a zero balance in his bank account.
“There’s the fear of the uncertainty that can’t be erased,” he said. “You take it with you when you go to bed at night and it’s right there when you wake up in the morning. That fear is being evicted, or for a homeowner, not being able to pay their mortgage.”
Kulas, who receives Pandemic Unemployment Assistance, said he and his landlord are equally affected by the pandemic. “We impact one another,” he said. He called on the Senate to approve the bill.
Biden pandemic relief package
But David Brogan, executive director of the New Jersey Apartment Association, which represents larger landlords, said there’s no reason to pass the bill now because renters and homeowners are protected from eviction by the governor’s moratorium, and because he expects federal rental assistance to come from the Biden administration as part of a new pandemic relief package.
“Why don’t we wait to see what the Biden administration does?” Brogan said. “What we need is meaningful rental assistance that helps landlords and tenants. Nobody wants to see mass evictions. We don’t want to get rid of our tenants — they are our customers.”
By extending the protections currently provided by Murphy’s order, the Legislature would be encouraging the nonpayment of rent, a provision that’s already being exploited by some tenants who are working and able to pay their rent but choose not to because they know they can’t be evicted during the pandemic, Brogan said.
He said he got a call on Thursday from a landlord who was in tears because her tenant was not paying rent despite still working, forcing the landlord to take out a second mortgage on her own home because of her reduced income.
Brogan argued that the apartment industry is the only one in New Jersey that is required to provide a good or service without knowing when it will get paid. “If this is the direction they are going in, what they should do is tell people that they can go into grocery stores, fill up a cart, and then they tell the grocery store, ‘We’re going to pay you back in two-and-a-half years,’” he said.
Increase in property taxes?
If the bill becomes law, landlords’ property-tax payments will drop because they are calculated on net operating income, and a sharp drop in that would force the state to raise property taxes on homeowners instead, he said.
Brogan estimated that his members’ rental income has dropped by 15%-30% during the pandemic so far.
A study for the National Council of State Housing Agencies, published in September, estimated that 330,000 to 480,000 New Jerseyans were unable to pay rent and were at risk of eviction because of the pandemic. By January next year, the aggregate rent shortfall will likely be between $1.1 billion and $1.3 billion, the study found.
Smaller property owners would be especially hard-hit if the bill becomes law, said Derek Reed, a board member and spokesman for the Property Owners Association of New Jersey, which represents mostly smaller landlords.
He said other states including Virginia and California have responded to the same problem with laws that do more to balance the interests of both sides, for example by allowing much less time for the repayment of rent arrears than planned in the New Jersey bill.
“Other states have thought about it more holistically, by asking how to help keep tenants in the property without devastating an entire multifamily housing industry,” he said.