S3357 —

      e.    The department shall prepare all application forms, application guidelines, and informational materials necessary for landlords to complete an application, and shall post materials on its 1Internet1 website at least 30 days prior to the date on which applications shall be accepted.

       4.    a.  A program application shall state the total amount of rent due from the landlord’s residential tenants established in the corresponding leases, the amount paid by the tenants or third parties, if any, the amount unpaid, 1[the landlord’s housing costs,]1 the amount of security deposit funding that the landlord’s tenants have applied against rent pursuant to Executive Order 128 of 2020, and any other information required by the department for determining financial need.

     b.    An application shall be accompanied by a form completed by the tenant of each of the landlord’s rental units 1[for which the landlord is seeking assistance] who has failed to satisfy a rent payment,1 endorsing the application, which shall include (1) the number of occupants of the unit, (2) a sworn statement of the tenant household’s income, and (3) any additional information required by the department.

      c.   If the tenant of a rental unit is unwilling to complete the form required in subsection b.

of this section notwithstanding diligent effort by the landlord, the landlord may attach to the application a certification in such form as shall be determined by the department setting forth (1) the landlord’s efforts to obtain tenant endorsement;

(2) the household income of the tenant, to the best of the landlord’s knowledge;

(3) the number of occupants in the rental unit, and (4) any additional information required by the department.

     5.    a.  An assistance payment, once accepted by a landlord, shall be a full settlement of rent due for all of the landlord’s residential tenants in the building or development 1[for which the assistance has been requested] who have failed to satisfy a rent payment1 during the period that is both within the assistance period and prior to submission of the program application.  By accepting an assistance payment, the landlord shall also waive any late or other fees charged to residential tenants as a result of the nonpayment of rent during the period that is both within the assistance period and prior to submission of the program application.  The acceptance of the assistance payment shall constitute a settlement of these costs even though they may not be fully compensated through the assistance payment.       b.    Upon the provision of an assistance payment, the commissioner shall notify the landlord’s tenants of the protections provided to them as a consequence of the landlord’s receipt of assistance.

     c.     A landlord shall not accept a delinquent rent payment from a residential tenant if the rent payment has been covered by an assistance payment.       d.    A landlord receiving assistance or awaiting the department’s response to a program application, shall not initiate an eviction proceeding, or complete a previously-initiated eviction proceeding, for any unpaid rent balances, or late or other fees, owed by a residential tenant for rent due during the period that is both within the assistance period and prior to submission of the program application.  This subsection shall protect such tenants from an eviction action for nonpayment or habitually late payment of rent during this period.

      e.   A landlord initiating an eviction action shall provide documentation on a form to be prepared and adopted by the Administrative Director of the Courts that the landlord is not prohibited from initiating the action by any provision of this act.

       26.

 a.  A taxpayer who is a landlord for one or more residential units occupied by a tenant with a household income of less than 80 percent of the median gross household income for households of the same size within the housing region in which the housing is located, shall be allowed a credit against the tax otherwise due for the taxable year under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., in an amount equal to the amount of rent that one or more tenants do not pay in a taxable year during the assistance period minus the amount of assistance provided to the landlord for the same property otherwise received by the taxpayer pursuant to P.L.    , c.    (C.     ) (pending before the Legislature as this bill).  A landlord shall not be awarded a tax credit pursuant to this section unless the landlord has already applied for assistance, and has either been denied the assistance, or has obtained assistance in an amount insufficient to fully compensate the landlord for rent unpaid by the landlord’s residential tenants during the assistance period.  A landlord awarded an income tax credit pursuant to this subsection shall:

     (1)   refrain from evicting or otherwise dispossessing a tenant of a property on behalf of which the credit was requested for nonpayment or habitually late payment of rent due during the assistance period;

     (2)   permanently forgive the tenant or tenants from paying the same percentage of unpaid rent owed by the tenant or tenants during the assistance period as the percentage of unpaid rent owed to the landlord’s during the assistance period, for the same property, that is not accommodated by assistance payments, and income tax credits issued pursuant to this subsection, combined.  The landlord shall retain the ability to obtain the unpaid rent not covered by the income tax credit or by assistance payments, and owed by the tenant or tenants during the assistance period, through a monetary judgment action.

     b.    Upon obtaining an award of a tax credit pursuant to subsection a.

of this section, the landlord shall notify the landlord’s tenants of the protections provided to the tenants as a consequence of the landlord’s receipt of the tax credit.       c.     The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed pursuant to the “New Jersey Gross Income Tax Act” N.J.S.54A:1-1 et seq.

for a taxable year shall be as prescribed by the Director of the Division of Taxation in the Department of the Treasury.

The amount of the credit applied under this section against the tax imposed for a taxable year, together with any other credits allowed by law, shall not reduce the tax liability to an amount less than zero.  The amount of unused credit allowable under this section may be carried forward, if necessary, to the three taxable years following the taxable year for which the tax credit is allowed.

     d.    A business entity that is classified as a partnership for federal income tax purposes shall not be allowed the credit directly, but the amount of credit of a taxpayer in respect of a distributive share of partnership income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the partnership that is equal to the taxpayer’s share, whether or not distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer’s taxable year.  A taxpayer that is a New Jersey S corporation shall not be allowed the credit directly, but the amount of credit of a taxpayer in respect of a pro rata share of S corporation income shall be determined by allocating to the taxpayer that proportion of the credit acquired by the New Jersey S corporation that is equal to the taxpayer’s share, whether or not distributed, of the total pro-rata share of S corporation income of the New Jersey S corporation for its privilege period ending within or with the taxpayer’s taxable year.

     e.     The Director of the Division of Taxation in the Department of the Treasury is authorized to adopt rules and regulations in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) and prescribe forms as necessary to implement this section.  These forms may include, but shall not be limited to, forms necessary to certify that a tenant meets the income limitations established pursuant to subsection a.

of this section.2        27.   Each landlord that is eligible to receive assistance pursuant to P.L.    , c.     (C.     ) (pending before the Legislature as this bill), with the exception of a property owner who is the landlord of only one owner-occupied premises with not more than two rental units, shall be required to apply for, and pursue in good faith, compensation in all forms permitted by P.L.    , c.     (C.     ) (pending before the Legislature as this bill), to the extent necessary to account for unpaid rent owed to the landlord on residential property during the assistance period.  All such applications shall cover and include all tenants of the eligible landlord who reside in any and all rental dwellings owned or operated by that landlord and who are in arrears or have been unable to pay the rent on time during the assistance period.  An eligible landlord who fails to apply for compensation as required pursuant to this section, who fails to pursue such application in good faith, or who refuses to accept any or all compensation for which said landlord is eligible, shall not be permitted to initiate eviction proceedings, or proceed with pending eviction proceedings, based solely upon habitually late payment of rent or upon non-payment of rental arrearages accruing solely during the assistance period, and shall immediately withdraw any and all such pending eviction matters, provided, however, that such landlords shall remain entitled to pursue recovery of the unpaid rent by filing an action in Superior Court for entry of a monetary judgment with applicable interest, except as otherwise prohibited by the provisions of P.L.    , c.    (C.        ) (pending before the Legislature as this bill).2        2[6.] 8.2     a.  The Department of Community Affairs shall, as soon as practicable following the enactment of this act, prepare and make available, on its Internet website, information for landlords on (1) when assistance applications shall be available, (2) the necessary steps for application submission, (3) how to obtain help in application completion, and (4) other matters related to assistance applications deemed necessary by the commissioner.  This information shall be made available in English, Spanish, and any other languages determined necessary by the commissioner.       b.    The department shall engage in a substantial effort to enhance awareness among the State’s landlords of the ability to apply for assistance.  Once assistance applications are made available, the department shall provide for the establishment and maintenance of a toll-free telephone hotline available, at a minimum, weekdays between 8:30 a.m.

through which a landlord may ask questions and obtain help in application completion. completion. The department shall maintain the telephone hotline for the entire period that the department continues to accept assistance applications.

           An 2[7.]intentional 9.2    misrepresentation Ifby a landlord hasof submittedany ainformation program application to theobtain department, but has not yet obtained an assistance payment,payment orwould constitute a denialcrime of an assistance payment, the landlordfourth maydegree assertunder anthe affirmativebill, defensein addition to aother foreclosureapplicable actionpenalties.  initiatedA againstcrime anyof residential rental property owned by the landlord. fourth Thisdegree sectionis shallordinarily exclusivelypunishable applyby to a landlordterm whoseof principalimprisonment residenceof isup into the18 Statemonths andor who,a togetherfine withof immediateup familyto members,$10,000, partners, or otherboth. related entities, owns no more than 50 rental units in the State.

           The 2[8.]bill 10.2  would Analso intentionalprohibit misrepresentationa bylandlord from furnishing rental payment data to a landlorddebt ofcollection anyor informationcredit reporting agency related to obtainthe annon-payment of rent for a residential unit during the assistance paymentperiod, shallunless constitutethe afurnished crimedata ofonly reports the fourthrental degreepayments inas additioncurrent.  toThis otherprohibition, applicablehowever, penalties.would not:

 apply      to 2[19.]a 11.2tenant’s  a.rent payments that remain due as the result of a payment missed prior to the effective date of Executive Order No.

 (1)  A landlord shall not furnish rental payment data to a debt collection or credit reporting agency related to the non-payment of rent for a residential unit during the assistance period, or shall report the rental payment as current.  This paragraph shall not:

     (a)  apply to a tenant’s rent payments that remain due as the result of a payment missed prior to the effective date of Executive Order No.

or     limit (b)  limit the ability of a landlord to share information with the landlord’s attorney or property management company, or to noticenotify the tenant in compliance with the Anti-EvictionState Act,law. P.L.1974, c.49 (C.2A:18-61.1 et seq.).

          (2) If Asdone as a result of any record or information reflecting a tenant’s non-payment of rent during the assistance period, the bill would prohibit a landlord shallfrom: not:

    refusing (a)   refuse to rent to a tenant;

or     placing, (b)   place, or disseminatedisseminating a tenant’s information for the purpose of placing, a tenant on a list for the use of other landlords.

          b.    In response to a complaint to the Attorney General from a tenant, or on the Attorney General’s independent initiative, the bill authorizes the Attorney General mayto bring an action alleging that a landlord has violated the provisions of subsectionthe a.bill concerning the furnishing of information to a collection or credit reporting agency.  Regarding a first violation, the court would provide the landlord with an opportunity to correct prior to imposing a penalty.  Following the provision of this opportunity to correct any first violation, upon a finding that non-compliance by a landlord has occurred, a court would be authorized to:

of      this(1)  sectionorder concerning the furnishingnon-compliant of information to a collection or credit reporting agency.  Regarding a first violation, the court shall provide the landlord with an opportunity to correctretract prior to imposing a penalty.  Following the provisionreport of thisdebt; opportunity to correct any first violation, upon a finding that non-compliance by a landlord with subsection a.

of      this(2)  sectionimpose hasa occurred,fine on the non-compliant landlord, not to exceed $500 for a courtfirst ofviolation, competent$1,000 jurisdictionfor may:a second violation, and $2,500 for each subsequent violation;

          (1)  (3)  order the non-compliant landlord to retractpay thea reportreasonable ofcounsel debtfee providedin toconnection thewith collectiona ortenant creditwhose reportingdebt agency,has bureau,been orreported; data collection facility;

          (2)  (4)  imposeprovide a finecopy onof the non-compliantorder landlord,immediately notupon tothe exceedrequest $500of forthe atenant first violation, $1,000 for a second violation, and $2,500at forno eachcost subsequentto violation;the tenant;

          (3)  (5)  order the non-compliant landlord to paytake asuch reasonablesteps counselas feeare innecessary, connectionwithin with30 adays tenantof whosethe debtorder, hasto beenrehabilitate reportedthe tocredit record of a collectiontenant, orwith creditan reportingexact agency,copy bureau,provided orto datathe collectiontenant facility;at no cost;

    and (4)        provide(6)  if the tenant is able to show actual damages that have resulted from a copyviolation of thethis section, order immediatelythe uponnon-compliant thelandlord requestto pay an award of damages to the tenant andnot atto noexceed cost25 percent of the debt attempted to be collected or reported by the tenant;non-compliant landlord to the collection or credit reporting agency, bureau, or data collection facility, the minimum award being $350.

          (5)  If ordera thelandlord non-compliantfurnishes landlordrental payment data to takea suchcollection stepsor ascredit arereporting necessary,agency withinrelated 30to daysthe non-payment of rent during the order,assistance toperiod, rehabilitatebut before the creditenactment record of athis tenant,bill, withthe anlandlord exactwould copynot providedbe subject to thethese tenantpenalty atprovisions, noexcept cost,for ofan theorder effortsto maderetract inthe thatreport. regard;

and          Additionally, (6)   if the tenantbill iswould ableprovide tothe showDCA actualwith damagesauthority thatto havepromulgate resultedregulations fromto aeffectuate violation of this section, order the non-compliantrequirements landlord to pay an award of damagesthe tobill, theand tenantwith notauthority to exceedlimit 25application percent of the debtprogram attemptedas necessary to becomply collectedwith or reported by the non-compliantCoronavirus landlordAid, toRelief, theand collectionEconomic orSecurity credit(CARES) reportingAct agency,and bureau,other orfederal datalaw. collection facility, the minimum award being $350.

      c.  The Ifbill also provides a taxpayer who is a landlord furnishesfor rentalone paymentor datamore toresidential units occupied by a collectiontenant orwith a household income of less than 80 percent of the median gross household income a credit reportingagainst agencygross relatedincome taxes otherwise due for the taxable year in an amount equal to the non-paymentamount of rent that one or more tenants do not pay in a taxable year during the assistance period, butminus before the enactmentamount of thisassistance act,provided to the landlord shallfor notthe besame subjectproperty tootherwise received by the penaltytaxpayer provisionspursuant ofto thisthe section,bill.  exceptA forlandlord awarded an orderincome totax retractcredit thewould reportbe pursuantrequired to paragraphrefrain (1)from evicting a tenant and permanently forgive the same amount of subsectionunpaid b.rent owed by a tenant that the landlord received in assistance payments or income tax credits.

of      thisThe section.1tax  credit      may 1[9.]not 2[10.]reduce 12.2the  a.1 tax Thereliability isto appropriatedan fromamount fundsless providedthan zero, but any unused credit may be carried forward, if necessary, to the Statethree bytaxable years following the Unitedtaxable Statesyear governmentfor underwhich the “Coronavirustax Aid,credit Relief,is allowed.  Business entities classified as partnerships for federal income tax purposes and EconomicNew SecurityJersey Act,”S 1[Pub.corporations are not eligible for the tax credit directly, however, a taxpayer may receive a credit based on the taxpayer’s distributive or pro-rata share of income from the partnership or corporation.  The Director of the Division of Taxation in the Department of the Treasury would be authorized to prescribe forms as necessary to certify that a tenant meets the income limitations.

Law      116-136]Finally, Pub.L.116-1361,the tobill would appropriate $350 million from the Departmentfunds ofprovided Communityto Affairsthe State by the sumfederal ofgovernment 1[$300,000,000]under $350,000,0001the CARES Act for assistance under thisthe program,program established by the bill, of which no more than $1,500,000 maywould be used by the departmentDCA to defray the administrative costs of the program.  IfHowever, 1[$300,000,000]in $350,000,0001the event that the $350 million is not available through the “CoronavirusCARES Aid,Act, Relief,then the remainder would be appropriated from other federal funding available for coronavirus relief as it becomes available.  If federal funding is not available to satisfy the full amount of this appropriation, then the bill would authorize the DCA to request that a portion of the remainder be appropriated from State funding sources.  The DCA would be required to report to the Governor and Economicthe SecurityLegislature Act,”on 1[Pub.a bi-annual basis on the spending of program funding.

LawFISCAL 116-136]ANALYSIS Pub.L.116-1361,  thenEXECUTIVE theBRANCH remainder  of      thisNone amountreceived. shall be appropriated from other federal funding authorized for coronavirus relief as it becomes available.  If federal funding is not available to satisfy the full amount of this appropriation, then the Commissioner of Community Affairs may notify the State Treasurer and the Joint Budget Oversight Committee of the Legislature of the deficiency and may request that the Legislature appropriate a portion of the remainder from the General Fund, or other available State funding sources, for the purposes of the program.

       1b. OFFICE OnOF aLEGISLATIVE bi-annualSERVICES basis,  the      commissionerThe shallOLS provideconcludes a report to the Legislature, in accordance with section 2 of P.L.1991, c.164 (C.52:14-19.1), and to the Governor, which report shall detail the amount of funding spent pursuant to the program, the amount of program funding that is spent to assist residential rental units in each municipality, and other information that the commissionerbill deemsmay: necessary.  The commissioner shall provide a final report pursuant to this subsection no later than six months following the complete expenditure of funds appropriated pursuant to subsection a.

of(1) thispotentially section.1increase  State      expenditures 2[111.]attributable 13.2    Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to theincreased contrary,administrative thecosts commissionerfor may adopt, immediately upon filing with the OfficeDCA, of Administrative Law, regulations that the commissionerAttorney deemsGeneral, necessaryand to implement the provisionsDepartment of this act.  The regulations adopted by the commissionerTreasury; may, among other purposes, be used to limit the availability of the program as the commissioner deems necessary to comply with the “Coronavirus Aid, Relief, and Economic Security Act,” Pub.L.116-136, and other federal law.1        1[10.] 2[12.1] 14.2    This act shall take effect immediately.

(2) increase State expenditures attributable to a new gross income tax credit for landlords forgiving unpaid rent;

(3) potentially increase State revenues attributable to a court imposing fines on certain non-compliant landlords;

and (4) potentially increase local revenues due to certain local units serving as a local housing authority, and thereby a landlord eligible for assistance from the Landlord Emergency Compensation Program established under the bill.

  State Impact Administrative Costs       The bill requires the DCA to make information available on its Internet website to assist landlords with the application process, “engage in substantial effort to enhance awareness among the State’s landlords of the ability to apply for assistance,” and establish a telephone hotline to help landlords with application completion.

      Additionally, the bill permits the Attorney General in response to a complaint from a tenant, or on the Attorney General’s independent initiative, to bring an action alleging a landlord has violated the provisions of the bill concerning the furnishing of information to a collection or credit reporting agency.  The bill authorizes a court to impose a fine on the non-compliant landlord, not to exceed $500 for a first violation, $1,000 for a second violation, and $2,500 for each subsequent violation, which would lead to an indeterminate increase in State revenues.

      The bill may also increase administrative costs for the Director of the Division of Taxation in the Department of the Treasury due to the bill’s authorization to prescribe forms as necessary to certify that a tenant meets the income limitations.  Similarly, the division would ultimately be responsible for processing the tax credits when income taxes are filed.

      While the bill may potentially increase State expenditures in the form of administrative costs, language in the bill specifically allows for up to $1.5 million of the $350 million appropriation from the federal government to defray the administrative costs of the program.  If $350 million is not available through the CARES Act, then the remainder of this amount would be appropriated from other federal or State funding sources, or both, authorized for coronavirus relief.

  Gross Income Tax Credits            The bill grants landlords a gross income tax credit for forgiving the unpaid rent of tenants with a household income of less than percent of the median gross household income of the same size in the region, minus the amount of assistance otherwise received for the unpaid rent.  According to U.S.

Census Bureau data from 2019, the median household income in New Jersey was $82,545 – 80 percent of which would be $66,036.  U.S.

Census Bureau data also states that the median gross rent in New Jersey is $1,336 per month for the State’s 1,137,834 renter-occupied housing units paying rent.  According to a recent estimate by the National Council of State Housing Agencies, between 192,000 and 419,000 renter households in New Jersey are at risk of eviction due to inability to pay rent and the estimated rent shortfall by January 2021 was between $427 million and $832 million.

      Without knowing how many of the 192,000 to 419,000 renter households are 80 percent of their regional median gross household income, the OLS is unable to provide a more exact estimate.  However, one could assume that renters behind on rent in January 2021 would tend to have a lower taxable year income – which the tax credit is based from.  After subtracting the bill’s $350 million appropriation from the total unpaid rent, and an additional $1.5 million that is permitted by the bill to defray administrative costs, the remaining rent shortfall based on January 2021 figures would be between $78.5 million and $483.5 million.

      However, this is based on January 2021 figures and does not account for future months of unpaid rent under the “assistance period,” which is defined as period beginning April 1, 2020 and ending two months following the end of the public health emergency declared pursuant to Executive Order No.

103 of 2020.  The unpaid rent figures also do not account for future rental assistance payments on behalf of tenants from other programs.

 For example, on January 22, 2021, the State received a supplemental appropriation of $344 million for the COVID-19 Emergency Rental Assistance Program from the federal Coronavirus Response and Relief Supplemental Appropriations Act of 2021.

      After subtracting these monies, the remaining rent shortfall based on January 2021 figures would be approximately $139.5 million or less.  If one assumes that half of this shortfall in rent is attributable to renters at or below 80 percent of the regional median gross household income, the State would be responsible for providing up to $70 million in tax credits to landlords over the three taxable years following the taxable year for which the tax credit is allowed, based off unpaid rent figures from January 2021.  The OLS further cautions that this figure assumes nearly every eligible landlord in the State will utilize the tax credit, which is not a utilization rate the OLS can predict.

      The OLS also notes that the gross income tax credit for rent forgiveness could potentially reduce evictions and similar legal actions, thereby reducing court fees paid to the New Jersey Courts.  The landlord must refrain from evicting or otherwise dispossessing a tenant to obtain the tax credit for unpaid rent.  Because this could potentially reduce evictions, eviction filings, and similar legal actions, the bill may reduce court fees paid to the New Jersey Courts.  This process of landlords obtaining a gross income tax credit for unpaid rent could also be logistically preferable over the alternative of seeking a legal action as a remedy for unpaid rent.

      Additionally, the OLS notes that according to an April 16, 2020 press release by the Executive, 36,000 rental units across the State are within the New Jersey Housing and Mortgage Finance Agency’s (NJHMFA) portfolio.  It is not immediately clear to the OLS how the tax credit for forgiveness of unpaid rent will interact with NJHMFA’s revenue from those rental units.

  Local Impact       Finally, according to information on the federal Department of Housing and Urban Development website, approximately 82 municipalities in the State serve as the local housing authority.  Under the bill, eligible housing authorities serving as landlords would be eligible to receive assistance from the program.  The OLS is unable to estimate how much unpaid rent is owed to local housing authorities and eligible for compensation under the program.

  Section:

Local Government Analyst:

Benjamin A.

Levy Assistant Fiscal Analyst Approved:

Thomas Koenig Legislative Budget and Finance Officer   This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

  This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).