Why a program to help struggling small landlords through the COVID pandemic has been a dud
Tenants and advocates fear what could happen when the emergency COVID eviction protection expires, with a bill designed to provide a cushion stalled. NorthJersey.com
New Jersey set aside $25 million this summer to help struggling small landlords and their tenants impacted by the COVID pandemic — if certain property owners forgave missed rent payments, the state would cover what their tenants couldn’t afford to make.
But after two rounds of the “Small Landlord Emergency Grant Program,” fewer landlords applied for the aid than expected, the state slashed the amount of money allocated by 60%, and only a fraction of applicants have so far been approved for the grants.
“The program is extremely complicated and cumbersome almost to the point where folks have given up trying to get the money,” said Derek Reed, former president of the Property Owners Association of New Jersey, which represents small to medium-sized landlords. “I’ve been made aware of landlords having issues with denials and trying to get in touch with somebody, and can’t get anybody on the phone.”
The entity that runs the program, the New Jersey Housing and Mortgage Finance Agency, said it has expanded the grant so more people would be eligible, giving landlords time to correct mistakes on their applications, and setting staff aside to guide applicants through the process.
As of Nov. 23, the state approved 745 applications for a total of $3.8 million, though so far only $960,000 has been paid out. The average grant amount was about $5,000.
New Jersey spent another $500,000 in operational expenses to set up the program.
That leaves 57% of the allotted program funds unspent or unallocated, in a climate where tens of thousands of tenants face eviction filings for not paying rent, though they currently cannot be kicked out of their homes because of an eviction moratorium in place. If New Jersey doesn't spend the program funds by the end of the year, the money disappears.
“Small landlords are getting crushed, having to pay property taxes, insurance, utilities and maintaining the property — all while not getting rent,” Reed said.
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Leonard Rosenberg, 67, spent up to three hours filling out a grant application for three tenants who owed him rent, after he received a postcard in the mail from New Jersey with information on the program.
Rosenberg, who lives in Livingston, has been a landlord of homes across Hudson County, mostly in Kearny, for 40 years. He dug into his savings, let two employees go, and took on more maintenance work to make up for the missed rent payments.
He left for a trip and didn’t check his email for a few days. He came home to a series of emails that he said were unclear, and which gave him little time to respond. He couldn’t reach a person to tell him what they needed.
“The emails I clicked said ‘expired,’ I call a number and it says ‘the program is closed,’” Rosenberg said. “I felt disenfranchised, like this was big government at its worst. I did not end up getting anything from it.”
Amy Palmer, program outreach manager for the HMFA, said she was sorry "some of our applicants were confused by the email instructions" and that the agency encouraged people with concerns to email firstname.lastname@example.org.
She said the call center was never intended to assist folks with follow-up questions for their submitted application, but rather to help applicants through the application process, to answer questions about required documents needed to be eligible for the program and how to get those documents to the HMFA within the required time frame.
Rosenberg said the administrators of the program seemed to “have no understanding of landlord-tenant matters” because of the documents they requested.
“They asked me for bank records to show I wasn’t getting rent,” Rosenberg said. “Well what does that mean? I can show them my personal bank records but that wouldn’t show whether someone paid or not...A signed affidavit would make more sense.”
The HMFA also asked him for signed leases. Rosenberg said many of his tenants have been living in his properties for years, and once a year’s lease is up, a tenant isn’t required to sign a new lease. They are on a de facto month-to-month lease, agreeing to the terms of the original document. Rosenberg didn’t know what to do in those situations.
"The bank statements demonstrate a loss during COVID-19 emergency," Palmer said. "The signed leases proved that the units were still occupied and not previously vacant or empty as the result of an illegal eviction."
Two rounds of relief
The state received just under 4,400 applications for the small landlord emergency grants.
All applications are technically still in the “review process” because New Jersey is offering a cure period to let people clarify information in their submissions.
“The majority of denied applications failed to meet threshold or categorical eligibility requirements,” Palmer said.
On Aug. 7, Gov. Phil Murphy launched the $25 million program, paid for with federal stimulus CARES Act money. Landlords would have one week to apply for grants that would cover the rent payments their tenants missed between April and July 2020 — as long as the landlords forgave those payments.
The landlords must have buildings of three to 10 units, the properties must offer low- to moderate-income rent prices, they must be registered with the Department of Community Affairs, and the units cannot be seasonal or vacation rentals. There was no award cap.
About 30% of New Jersey renters and 27% of low- and moderate-income renters live in three- to 10-unit buildings, said Lt. Gov. Sheila Oliver, who heads the Department of Community Affairs.
The HMFA sent out postcards translated into 12 languages to every eligible property owner, hired outside marketing firms to advertise, launched a call center staffed by 20 people, and ran webinars and outreach to get landlords to apply.
“We did not have near the demand we thought we would in round one,” said Katie Brennan, chief of staff for the HMFA, during a conference presentation at the National Council of State Housing Agencies in October. “We thought out of the 46,000 known universe, we would have maybe 10% prescribed.”
But the state received only 2,600 applications.
Brennan said even though it’s the law, many smaller properties didn’t know they had to be registered with the Department of Community Affairs, which was a requirement. And there were quirks with the system, such as properties that didn’t have an updated landlord name attached.
New Jersey reopened the application on Oct. 2 and expanded the criteria — buildings could now have between three and 30 units. The HMFA made improvements to the registration system and call center, and added an email address landlords could contact, Brennan said.
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“We have made some small but significant adjustments to the program to increase both eligibility and accessibility,” said Charles Richman, executive director of the HMFA, when the second round was announced. “Not only will we reach more renters in need, but we have also removed some of the barriers for landlords to apply.”
But the pool of money became smaller: The grant program would be given $15 million for the two rounds, as the state moved $10 million of the original $25 million allocated for the grants to the Department of Community Affairs’ tenant rental assistance programs.
More than a month later, the HMFA cut the program further to $10 million, and there's a looming deadline to spend it.
"We have been told if we do not use the CARES funds by Dec. 30, the money must be returned to the federal government," Palmer said. "Despite pleas from leaders throughout the country, a bipartisan bill to extend the deadline has been stuck in a Senate committee since August."
Rosenberg, the landlord who applied in the second round of the project, said New Jersey should have done more to help applicants navigate the process.
“The system they set up was unwieldy, with no communication available, and complex,” Rosenberg said. “I’ve got an Ivy League MBA. I think I have a good understanding of information collection, analysis and coming to conclusions. I don’t think they did.”
Dustin Racioppi contributed reporting.
Ashley Balcerzak is a reporter in the New Jersey Statehouse. For unlimited access to her work covering New Jersey’s legislature and political power structure, please subscribe or activate your digital account today.