David Brogan is the executive director of the New Jersey Apartment Association. — Photo by Mary Iuvone for Real Estate NJ
By Real Estate NJ
The New Jersey Apartment Association is renewing calls for additional assistance to both renters and landlords, as highlighted by the recent national eviction moratorium by the federal government and continued discussions among state policymakers.
Earlier this week, Real Estate NJ caught up with the NJAA’s David Brogan on the continued challenges and legislative concerns facing multifamily owners. Below is the second part of two-part Q&A with the organization’s executive director.
One of the most recent developments was a national moratorium by the Centers for Disease Control on evictions through the end of the year. What are your thoughts?
The eviction moratorium issued by the CDC places the rest of the country on the same playing field as New Jersey. It also highlights the need for federal rental assistance, which is something the NJAA has been advocating for since March. At the end of the day, we are all in this together. Both landlords and tenants need assistance.
My hope is that, given the timing of the order, it will spur serious conversations on a critical issue that, up until now, has been placed on the back burner. If the federal government believes that the trillions of dollars in stimulus money was beneficial not only to those who received it directly, but also to the economy as a whole, that same logic holds true for rental assistance. Over 40 million people rent in this country. Rental assistance would help tenants, landlords, employees, businesses, municipalities and state governments, or what I call the multifamily ecosystem. Correspondingly, because of that multiplier effect, it would provide a significant shot in the arm to not only local, state and federal economies, it would help people stay in their homes. It is a win-win on a colossal scale. It is truly puzzling as to why this type of federal assistance hasn’t been provided yet. NJAA urges the Congress to enact meaningful rental assistance now.
Any thoughts on the governor’s proposed budget?
I won’t go into too many details other than to say that I wish government operated more like New Jersey businesses are being required to operate. For most businesses, they have had to deal with massive revenue shortfalls; they have had to reallocate resources; and they were forced to reconsider their priorities in order to stay afloat. Government should do the same.
Two things struck me in reading the proposal. One was the expansion of pre-kindergarten, or pre-K, and the other was the ‘baby bonds.’ The governor’s budget expands pre-K at an additional cost of approximately $68 million annually. This is happening when there is a tremendous amount of uncertainty about whether children will actually be in school or in pre-K. Expanding such a program in a year with that much uncertainty is perplexing. As it pertains to the baby bonds, this proposal would provide babies born in the state with a $1,000 bond that would mature in 18 years, at a cost of $72 million annually. While the programs may be laudable, if the state were a business there is no way they would spend that money on those programs right now. They may do so in the future when we have some level of certainty, but now doesn’t seem to be the right time.
As the calls for legislation to help renters echo across New Jersey and the country, if the state was to put that same $140 million into a rent relief program for middle class New Jerseyans, it could provide 23,333 renters with $1,000 a month for six months or 11,666 renters $1,000 a month for an entire year. Given the fear and the rhetoric about eviction tsunamis, wouldn’t that be a better use of those funds? Once again, the benefit of helping renters is that it has a positive domino effect that helps the entire multifamily ecosystem, including the state. There is a multiplier effect here that seems to get lost in the ether.
To be clear, I am not saying the creation or expansion of programs aren’t worthy causes. What I am saying is that during a global pandemic, in this time of uncertainty, where New Jerseyans and New Jersey businesses are having to reallocate, reprioritize and adapt to this new normal, I think government should do the same.
Any last thoughts?
The apartment industry has been on the front lines of this crisis from the beginning, yet there is little recognition of this fact. Having said that, landlords don’t want a ‘thank you’ from government — they want policies that will help them stay afloat. They don’t want policies that would exacerbate an already devastating problem. At the end of the day, the business of residential real estate relies on rent revenue to be viable. Rent revenue is the lifeblood of our industry. If policies are implemented in a manner that unnecessarily restricts or eliminates that revenue, the ramifications will go well beyond just those owners. I may sound like a broken record on this, but policymakers must recognize that landlords are not isolated from tenants, employees, other businesses or governmental entities. What I mean by that is that if the state decides on a policy that restricts or virtually eliminates rent revenue, there will be many more entities and people hurt by that decision.
The discussions up until now seem to indicate that some legislators still believe that helping tenants at the expense of landlords, without providing financial assistance, is the answer to the potential eviction crisis. However, they fail or refuse to recognize the downstream impacts that will not only hurt government itself (by eliminating tax revenue), but also that it will have negative effects on the tenants they are trying to help. I will admit that the negative effects on tenants may be months or years down the road with the eviction moratoriums in place, but they are coming if government takes this shortsighted approach.
Furthermore, the collateral damage of such policies will unnecessarily increase one of the most ubiquitous and onerous taxes New Jersey has to offer, our property taxes. Every election cycle includes one or both parties talking about what they will do for homeowners as it pertains to property taxes. If you want to mitigate the increase in property taxes, provide financial assistance to tenants. It is that simple.
In short, policies that help tenants in the near term without any assistance or compensation for landlords will trigger a negative domino effect that will hurt millions of New Jerseyans and the state itself. We have been saying this from the beginning of the crisis, and my only hope is that policymakers recognize that we not only have to look at what is happening today or tomorrow, but also months and years down the road.