Landlords bitten by program intended to feed them
Aid has run dry, but nonpaying tenants remain shielded from eviction.
When New York’s rent relief program launched early last summer, landlords saw a light at the end of the tunnel.
For owners June and Lance Margolin, it had been eight months since they’d received a payment from the tenant renting an apartment in their Long Island home.
The program, flush with $2.4 billion, promised to cover the tens of thousands of dollars their renter owed.
A year later, those hopes have turned to despair.
The couple claims their tenant’s application has sat in the “pending review” category for more than six months. Under the rules, a pending application protects a tenant from eviction even if the landlord never gets paid.
So tenants keep applying, even though the program’s funding ran dry in November and might not be adequately replenished to pay the claims. Landlords have had no choice but to house tenants who haven’t paid rent in months or even years.
Stymied by a state law that was supposed to save them, the Margolins created a survey to poll other landlords on their experience with the Emergency Rental Assistance Program.
They aim to gather enough anecdotes from landlords to motivate the legislature to do something. As of late June, 59 had submitted responses. But Albany’s next regular legislative session is not until January.
Doomed from the start
Some 340,347 ERAP applications had been filed as of June 28. The state has paid fewer than half of them, according to the Office of Temporary and Disability Assistance, the agency that runs the program.
Part of the problem is the program didn’t have enough money to begin with. When Congress passed a bill in late 2020 that included $25 billion in rental assistance — an amount it would later match with a second allotment — it based states’ shares on total population, rather than on their number of tenants.
New York, which has an extremely high percentage of tenants, was destined to be short-changed.
Last August, just two months after the portal opened, state Assembly member Linda Rosenthal told The Real Deal, “It’s probably not enough money.”
By November, Gov. Kathy Hochul shuttered the program, saying the $2.4 billion was exhausted, though only 60 percent of applicants had been approved.
But weeks later a judge ordered New York to reopen the portal, reasoning that the state’s eviction moratorium was set to expire Jan. 15 and the federal government would soon replenish the program with unspent funds from other states.
An interminable wait
Seven months later, that promise has largely gone unfulfilled. State figures show the amount allocated remains $2.4 billion.
Since the application portal reopened, governments have twice allocated funding. In mid-March, the U.S. Treasury Department said it would send New York another $119 million — a small fraction of the estimated $2 billion that landlords were still owed. (Hochul had asked for $1.6 billion.)
The next month, New York set aside around $800 million in the state budget for ERAP. But that money has yet to be made available. An OTDA spokesperson said the funds would be used to pay some of the existing applications in the coming weeks.
There is more federal funding that New York could tap. As of April, the Treasury reported that states had earmarked or distributed over $30 billion of the $46 billion pot, leaving around $15 billion to redistribute to states in need.
But no one knows how much New York will get, or when.
Federal rent relief dollars are split into two tranches. In March, the Treasury said it would soon release an application for the final round of reallocation of the first tranche of funds and that by the end of the month, would begin dispersing unspent money from the second.
But the first-round process is still underway, a Treasury official said Friday. An OTDA spokesperson said the agency had applied for more money from that tranche, but did not say how much. Given that Hochul got just 7 percent of what she requested last time, landlords have little reason for optimism.
The second-round process is moving just as slowly. The Treasury Department has yet to release a form for the state to apply for that funding.
Landlords in purgatory
With the fate of the portal’s total funding stream uncertain, the program is still accepting new applicants — and shielding those tenants from eviction.
A recent update from OTDA stated it will not be able to review the most recent applications, raising the possibility that tenants who don’t qualify will still be unevictable. An OTDA spokesperson said the agency screens applications for basic eligibility and flags those deemed ineligible.
As of June 24, the agency said it would review and process eligible applications submitted through March 31 of this year and would announce if it received any funding to pay those submitted after that date.
Since April 1, according to OTDA, 16,667 applications have been filed. Like earlier filers, those tenants will be able to stay in their homes indefinitely without paying rent.
Even landlords whose tenants applied before the March cut-off say they are unsure if those filings are being reviewed.
Holly Meyer, an upstate owner who leases an apartment in her single-family home, said her tenant applied for ERAP on March 7, after she’d filed an eviction action. The tenant, though employed and not in financial straits, had stopped paying rent two months earlier, after Meyer informed her she planned to sell the house and would not be renewing the lease.
The tenant has since moved to a new address in Poughkeepsie. Meyer said she had told her story to ERAP’s fraud department. The response, she said, was, “Oh, that does sound like fraud; we’re going to have to look into that.”