While the governor has declared a 90-day moratorium on evictions, some on the political left want to cancel rent completely. “Rent freezes are good,” state Sen. Julia Salazar argued in a Monday tweet. “But what you want during a crisis when people are laid off en masse indefinitely is a *rent suspension.*”
Of course, that raises the inevitable question of exactly who would pay for such a bailout.
State lawmakers want to stick mortgage holders with most of the costs, but landlords could take a hit as well. It all depends on how their overhead costs and other expenses factor into a formula included within a new bill before the state Senate and Assembly that would cancel rent for residential and commercial tenants across the state.
State Senate Deputy Majority Leader Michael Gianaris discussed the details of the bill, which he sponsors, on The Capitol Pressroom Wednesday. The basic idea is that any person who faces a financial hardship because of the coronavirus would not have to pay their landlords, who could then write off the amount of the lost rent from the mortgages they owe. The banks that hold mortgages would presumably then take the bulk of the financial hit. However, landlords could also stand to lose, according to the legislative language.
Let’s say rent for an apartment is $1,000 per month. The mortgage paid by the landlord on that apartment is $800. The landlord would not have to pay the $800, but would not be able to charge the $200 either. It could be said that a time of national emergency and with unemployment on the rise, losing some profits is just the price that landlords have to pay to help keep society functioning. However, landlords could hypothetically be on the hook for covering some costs that normally would have been covered by tenants’ rent payments, such as upkeep, water, building supervision and repairs, the legislative language suggests.
The equation in the bill that calculates what the landlord could write off is as follows: Take the (total of rent forgiven) and divide by the (total of rent usually owed to the landlord) and then multiply that by the (mortgage payment) to find what the landlord can save up to the total of the mortgage on an apartment or building.
So in the end, residential and commercial tenants would win so long as they can show that they have faced financial hardship because of the pandemic. Banks would end up being the biggest loser, but landlords will have to do some number crunching to see whether or not state lawmakers are asking them to dig deeper into their pockets as well.
Assemblywoman Yuh Line Niou, who is sponsoring the bill in the Assembly, said that the bill will be amended Wednesday. The measure has 18 co-sponsors in the state Senate.