Citing the continuing public health emergency and the need to ensure economic stability, Albany legislators are expected to vote Monday to extend the state’s eviction moratorium until August 31st for residential and commercial tenants experiencing financial hardships due to the COVID-19 pandemic. Governor Andrew Cuomo hasn’t said whether he’ll sign the bill, but lawmakers expect he will because he signed the last one in March.
The moratorium was set to expire on May 1st. If approved on Monday as expected, the new retroactive legislation will extend two separate laws: one that applies to small businesses, and the other a pause on residential tenant evictions and foreclosure proceedings. Bronx Assemblyman Jeffrey Dinowitz and Manhattan/Brooklyn Senator Brian Kavanagh, who sponsored the legislation, said it’s needed because $2.3 billion in the state’s new budget won’t start flowing to residential landlords until May or June.
“This is money that is going to go to landlords to pay back rent,” said Dinowitz, adding that it will not go to the tenants. “But we need time for that money to get out. The state is just setting up the mechanism to do that. And that hasn’t been done yet, it won’t be done in the next four days. We need time for that to work.”
Another $800 million in the new budget was set aside for small businesses, to be administered by Empire State Development, the state’s economic development corporation. That money is to be used for rent and utilities.
Tenant advocates are thrilled with the prospect of getting another extension. But landlords say this will mean a full 16 months in which they aren’t able to begin the court process for evicting tenants, because Cuomo’s first eviction moratorium went into effect in March of 2020.
For commercial landlords, the back-owed rent could be worth hundreds of thousands of dollars, or more.
“If the tenant’s not doing well, then neither am I,” said Eric Gural, co-CEO of GFP Real Estate, which owns and manages space in more than 50 Manhattan office buildings. These include the Flatiron Building and other locations with high rents that are piling up.
Gural said he’s cut deals to keep some tenants by reducing rent because “we didn’t want to leave anyone behind.” But he said a few have taken advantage of the situation. For example, he claimed he’s owed millions of dollars from a Cafe Europa, a Pax and a Roast Kitchen — all in midtown — that stopped paying rent in March of last year. He said they share the same owner. “They’re open, operating and selling sandwiches,” he said.
A call to the owner by Gothamist/WNYC was not returned.
Gural said there’s no need to extend the moratorium because the eviction process isn’t fast. “The time it would take for any of the evictions to take place would be past August 31st,” he explained, adding, “the idea that there’s going to be some mass eviction process that’s going to be handled by the commercial owners, that doesn’t make any sense because we don’t have people to replace them so fast.”
Real estate attorney Alexander Lycoyannis said postponing evictions also hasn’t helped the city’s economy.
“Had owners been able to bring proceedings over the last 13 months, you could have had businesses in already,” he said, referring to new retailers who might have taken advantage of declining rents in Manhattan to replace those that could be evicted.
“If we’re not allowed to do that, we’re just kicking the can down the road and extending the agony.”
Michael Salzhauer, a principal in Benjamin Partners — which owns seven buildings in SoHo and Lower Manhattan — said he’s reduced the rent for some ailing tenants. But others “have been kind of abusive,” he said, citing a doctor’s office that refused to pay, even though he said it’s still serving clients through telemedicine.
Basha Gerhards, senior vice president of planning at the Real Estate Board of New York, said there have been a lot of “well capitalized tenants” refusing to pay their landlords. Icon Parking and Hugo Boss both went to court, for example, for owing rent. The state’s moratorium does not apply to chain stores, but Lycoyannis said the definition isn’t so clear when it’s a franchise or a subsidiary of a chain.
Small business owners believe the moratorium is still necessary while they wait for government funds. The New York City Hospitality Alliance noted that restaurants were forced to shut down last year and are still affected by capacity limitations, making it difficult to catch up and pay what they owe.
In the Bronx, the 161st Street Business Improvement District has a combination of small law firms and bail bonds that service the courts as well as restaurants and souvenir shops catering to Yankees fans. All of these businesses were affected by a slowdown in customers. The BID’s executive director, Cary Goodman, said tenants were “terrified” about the eviction moratorium expiring on May 1st because he estimates 90 percent fell behind on their rent.
The same story can be heard throughout the boroughs. In Bedford Stuyvesant, Emmanuel DeJesus was inspired by his grandmother’s coffee plantation in the Dominican Republic to open Furman’s Coffee in 2017. He was hoping his business would finally turn a profit in 2020. But the pandemic drastically reduced the number of customers buying breakfast on their way to the nearby subway stations.
“People are not commuting the way that they were in the past,” he said.
DeJesus claimed he wasn’t approved for the federal Paycheck Protection Program because his business had never been profitable before. While the loans are based on a loss of revenue, the federal Small Business Administration confirmed that a borrower must “self-certify to their lender that they have a necessity of the funds,” which could explain why DeJesus wouldn’t qualify.
The coffee shop owner now owes about $40,000 in rent and has a ten-year lease he’s worried his landlord will want to break.
“I’m not really sure how long it would take, but I’m sure that eviction proceedings will start,” he said. He added that he’s offering more small take-out meals and even springtime plants to try to increase his sales.
But his landlord, Marcia Melendez, said she doesn’t want to kick him out. “He’s been trying,” she said, adding that they’ve been in regular contact.
By contrast, she said four of her eight residential tenants in three Brooklyn buildings simply stopped paying their rent after the eviction moratorium went into effect last year. She said some are still working and she’d like to start the court process with them because she and her husband counted on rental income to fund their retirement.
“Whatever little savings we had we maxed out,” she said. “My two credits cards maxed out. It’s rough. My taxes, I haven’t paid my taxes. I owe the city about $30,000 in taxes.“
For now, residential landlords likely will have to wait on the new state aid to help them recover what they’re owed. To qualify, tenants must meet certain income criteria and landlords must agree not to raise the rent for another year.
On the commercial side, Mayor Bill de Blasio’s administration recently announced new legal assistance and a $100 million grant program for small businesses.