Additional Legislation Could Come After Session Break
After prioritizing relief for tenants financially affected by COVID-19 (Coronavirus), State Legislators departed Albany without providing any immediate assistance for rental property owners.
Throughout the spring, pro-tenant Senators and Assembly Members focused on passing various forms of legislation that would provide rental relief to struggling tenants. Perhaps the most critical piece of legislation was sponsored by Senator Brad Hoylman (S.8192-B), which prohibits the court from issuing a warrant of eviction or judgment of possession against a residential tenant who has suffered a financial hardship for the non-payment of rent that accrues or becomes due during the COVID-19 “covered period.”
As we went to press, the bill, also known as the New York State Tenant Safe Harbor Act, which was passed and sent to Governor Andrew Cuomo, had not yet been signed. If it does become law, the bill will have enormous implications for the rental housing industry. For example, the “covered period” is defined as the period between March 7, 2020 and the date that the “none of the provisions that closed or otherwise restricted public or private businesses or cancellation of all non-essential gatherings of any size for any reason … continue to apply in the county of the tenant’s or lawful occupant’s residence.” The so-called “covered period” seems to last until the time that large sporting events are allowed to occur, which has zero relevance with a tenant’s ability to pay rent, and which will take months for that to happen.
The bill establishes a financial hardship defense that may be raised in a non-payment proceeding and provides that the court can consider various factors, including but not limited to: the tenant’s income prior to the covered period, the tenant’s income during the covered period, the tenant’s liquid assets, and the tenant’s “eligibility for and receipt of” public assistance provided by various government programs.
The legislation also provides that the law does not prohibit the housing court from awarding a money judgment against the tenant for rent due and owing. However, the ability to obtain a money judgment is meaningless given that in most cases, the housing court case has been brought precisely because the tenant does not have the money to pay the rent. Further complicating this discussion is the fact that the Governor’s executive order which limits housing court cases to non-COVID-impacted tenants until August 20th, and Chief Judge Lawrence Marks’ recent order effectively closing the housing courts until that same date (see page 11 of the July/August RSA Repoter), remain in effect. If you are concerned about how this new law applies to you and your building, you should contact your attorney or RSA.
Additionally, the Senate unanimously approved a bill sponsored by Senator Brian Kavanagh (S.8419), which would provide rent relief for tenants who were paying more than 30 percent of their income in rent, had lost income between April 1st and July 31st of this year due to COVID-19, and made less than 80 percent of Area Median Income (AMI). The money would be paid out in the form of rental vouchers to the property owner.
Although the bill was signed into law by Governor Cuomo, it is entirely dependent on approximately $100 million in federal funding that had not been guaranteed as we went to press. Because of immense budget shortfalls caused by the pandemic, the State is in no position to fund tenant relief on their own. Should federal funding be allocated, it would be a tremendous boost not only to tenants who meet the thresholds, but for building owners who have lost rent payments from tenants who lost their jobs or were furloughed during the economic shutdown.
President Donald Trump and U.S. Secretary of Treasury Steve Mnuchin have gone on the record about additional federal stimulus packages that could be secured in July. However, consistent bi-partisan disagreements in Congress, as well as other legislative priorities, have stalled any conversations about additional federal funding for those affected by COVID-19.
As a result of Statewide primary races that took place on June 23rd, as well as the Fourth of July holiday, it is unclear as to if or when the Senate and Assembly will call on special sessions throughout the summer to consider additional COVID-related relief. Nevertheless, property owners are once again taking it on the chin. Perhaps when the widespread abandonment and foreclosures that the City experienced only a few decades ago begin to return will our government officials wake up to the financial realities faced by owners each and every day.
Since this is our last issue of the Reporter until September, we will keep our members apprised of any upcoming developments with regard to these bills and other legislative items via email blast and social media.