Gov. Phil Murphy’s executive order to allow renters to use their security deposits to help pay their rent should ensure that a greater number of tenants in many of the state’s 1.2 million rental units will be able to pay their rent — which, for many, comes due Friday.
Dave Brogan, the executive director of the New Jersey Apartment Association, recognizes the value of making those funds available and salutes the administration for finding another way to keep rent payments going rather than attempting to institute a blanket forgiveness policy.
Brogan, however, remains concerned about the future. He not only fears the collection of rent in June will be harder than May — he’s concerned too many people in the state don’t understand the relationship landlords have with their tenants and, more importantly, with the economy.
“This is not an adversarial relationship,” he said. “And, I think too many people try to make it seem that way, to fit their agenda. It’s not. In fact, for most people, it’s a transactional relationship — the tenant pays the rent and the landlord provides services. And, for some, this relationship has lasted decades.”
The bigger issue is the industry’s relationship with the economy, Brogan said.
“The multifamily ecosystem is extremely important to the state,” he said. “We are an industry that is about more than putting money in a landlord’s pocket, we’re putting money into the economy — whether it be salaries to people on staff, property taxes paid, money toward vendors and money toward those who are making repairs and renovations.
“Look at the recent storms; a lot of units needed repairs. That is money we are putting back into the economy.”
Murphy has stressed that he wants landlords to pay forward any mortgage relief they may be getting — and he has repeatedly made clear that no one can be evicted during this crisis.
Brogan said the industry agrees on both points — and agrees with the idea that no extra fees should be added at this time.
The worry is finding another solution. The security deposit ruling will only be good for one month.
Brogan said the industry was short on rent by 10-13% in April.
“The impact of COVID on April rents was not terrible,” he said. “My fear is that May is going to be worse than April, and June is going to be worse than May.”
And Brogan said it’s important to recognize that each landlord has a unique challenge — issues that could be based on factors from the number of tenants they have to the size of the bills that come with their properties.
“Some landlords are going to have more flexibility than others,” he said. “There’s no one-size-fits-all solution for this industry — or any industry. A loss of revenue of 10% has a totally different impact if you are highly leveraged.”
Brogan again called for federal assistance — something the National Apartment Association has been lobbying for and that is outlined in a state Senate bill sponsored by Senate President Steve Sweeney (D-West Deptford) and Sen. Brian Stack (D-Jersey City).
“We really need the multifamily industry to stay strong,” he said. “If property tax payments don’t get made, it can have a domino effect for municipalities. The multifamily industry is extremely important in a state where, as the governor says, we’re out of money.”
Finding a way to keep money flowing is important for the entire economy, not just landlords, Brogan said.
“I really appreciate the governor saying, ‘If you can pay rent, you should pay rent,’ because that rent revenue that comes in from people who are lucky enough not to be financially affected by COVID helps the landlord work with the people who are affected by COVID,” he said.
“Just as the impact of COVID is unique for each person, it’s unique for each landlord.”
That’s why there are no perfect solutions, Brogan said. The only good news: This should not be a long-term problem:
“This crisis will end,” he said. “It’s not like we’re just kicking the can down the road or something will be around forever.
“In these difficult times, we need to be creative in finding solutions.”
The state has done that for May. June soon will be on the clock.