Any Rent Is Too Damn High: A Proposal for the Coronavirus Economy

Michael Gianaris has a plan to address New York’s coronavirus-induced rent crisis, and he wants it implemented two weeks ago — not tomorrow.

Gianaris, a state Senator from Queens, wants to cancel rent for 90 days, aiming to keep tenants safe and secure in their homes while COVID-19 has frozen large sections of the economy. New York, via a March 20th executive order from Gov. Andrew Cuomo (D), has already effectively frozen rent payments for three months, but Gianaris says that doesn’t do nearly enough. Under the existing freeze order, no tenant can be evicted for failing to pay rent through June. But come summer those three months of back rent will still be due, with no guidelines to stop landlords from demanding rent for all three months at once.

Hundreds of thousands of people have lost work in New York State in the past weeks, and most of the newly jobless will struggle to access the state’s overwhelmed unemployment aid site. (A top aide for Cuomo has said the state received roughly 78,000 claims in just one early April day.) The New York Times estimated that as many as four out of ten New York City residents would not be able to pay rent this month. With the coronavirus epidemic still in full swing, millions could face financial ruin. Unless, of course, those obligations are simply wiped off the books.

That’s exactly what Gianaris is pitching: a simple, understandable proposal to fix that crisis in real time — rather than after the damage is done.

“It’s an out-of-the-box problem and it needs an out-of-the-box solution,” says Gianaris.

Gianaris is the Senate’s Deputy Majority Leader and the chamber’s highest-ranking member from New York City, and you may remember him best as the politician most unafraid to take a powerful swing at Amazon’s sweetheart deal on behalf of Queens last year.

He’s calling less than an hour after wrapping up the senate portion of the state’s budget negotiations, while en route from Albany to sheltering-in-place in Queens. The future of the rest of the legislative session is now in question. (New York Governor Andrew Cuomo has basically said it is done for the year, though normally there would be an entire second period left. Senate Majority Leader Andrea Stewart-Cousins has sworn her chamber will continue to legislate as needed.) Even the session that just wrapped up was strange. Gianaris was there, but many members voted remotely. And the building was, of course, closed to the public, leading activists to assemble by videoconference.

Rolling Stone spoke to the Senator by phone on Thursday, April 2nd. This interview has been edited for length and clarity, and some follow-up questions were handled via e-mail.

Tell me more about your rent relief proposal.
We’re dealing with a catastrophe the likes of which we haven’t seen. And government’s first response to the health crisis was to shut down the economy. That was necessary to keep people from congregating. But there hasn’t been enough support for the thousands upon thousands of people who just had their jobs pulled out from under them and yet are still expected to fulfill financial obligations. And those are the renters, the workers who live paycheck to paycheck and who no longer have a paycheck, by order of the government. It’s a gross dereliction of duty for the government to tell someone they can’t work but they still have to pay their bills. So I’ve suggested that we should forgive rent for three months, and if there are some homeowners who need that rental payment to survive, then we should grant them relief on their mortgages as well.

Let’s talk for a minute about some of the different kinds of help that are already available in New York state. Through a series of executive orders Governor Cuomo issued in late March, there is a 90-day eviction freeze and a 90-day mortgage deferment in the state. The federal government even followed New York’s lead and included a similar mortgage measure nationally in March 27th’s CARES Act. But at the end of the 90-day time period, those mortgage payments are still due. And at the end of the 90-day period, which expires in late June, those three months of back rent will still be due. 

That’s right. But here’s why those two things are not similar. The mortgage deferment effectively takes these three months of mortgage payments and tacks them to the back end of the mortgage. That could be many, many years from now, before that has to get paid. Whereas the eviction moratorium takes these three months of rent payments and makes them due in three months. If someone can’t pay rent for the month of April, they certainly are not going to be able to pay rent for April, May and June when July rolls around, if they can’t work because we continue to be shut down in reaction to the coronavirus.

Your proposal also applies to commercial rents. What impact do you foresee a rent freeze having on small business owners who are struggling? 

Well the reason renters have lost their jobs is because the small businesses they worked for have shut down. And the entities that are most likely to survive this kind of dramatic upheaval tend to be the Big Boys, either big corporations or industries that get bailed out by the government, not the Mom-and-Pops and the workers. And that’s why I’m trying to start at the bottom of the economic ladder. Let’s deal with the workers and the renters first. And then the small business owners and small homeowners who need help. There’s going to be pain as a result of what’s happening right now; what we need to do is spread that pain equitably. And higher up the food chain are the ones best positioned to survive it and end up succeeding. But typically it’s the ordinary person who gets left behind. The state should protect those people, and let the Big Boys go find help the way they usually do.

And many of these entities have already gotten a bailout, no? In late March, for example, the federal government pledged to spend more than $200 billion buying up mortgage-backed securities to stabilize the markets — moving quickly to bolster up the large financial entities likely to lose money if individuals default on their mortgages.  

That’s our experience watching the federal government work, whether it’s the airline industry, the auto industry, the banking industry. These are the entities that get bailed out. It’s a very trickle down approach, and it sucks. What we’re trying to do here is start from the bottom up and protect the people who most need protection. A good read of the economy will tell you that the best way to inject money into the system is to allow those who are most likely to spend it on goods and necessities to do so. So we want those businesses to have support and to thrive. We want workers to have a stable footprint with which to find work again when this is all over. It doesn’t help anyone to have a mass wave of evictions and foreclosures in three months, and that’s where we’re headed right now unless we do something to keep that from happening.

So how would the plan work? Would everyone in the state qualify, or only those who lost work due to the crisis? How would one need to show that one had lost work?

One would need to demonstrate substantial loss of income due to government-ordered shutdowns. Specifics of how to do that would be left to agency regulation, as is currently the case for hardship demonstrations under the Governor’s mortgage moratorium.

I imagine there would be a system put in place for people to be able to do that, but right now, for instance, many people are having trouble accessing the state’s unemployment website, due to unprecedentedly high demand. Do you have any ideas that might help with that, for your proposal, and perhaps for unemployment as well? 

I’m currently working on this. It appears much of the current delay is due to a call-in requirement before benefits are approved, and I’m trying to see if that can be waived.

Do you think down the line there could be any help for those smaller owners on property taxes? 

The solution to this problem ultimately is going to be federal. The state budget deficit is going to be eleven figures, the city is not far behind. So I personally believe we should raise revenue from the wealthy to start fulfilling our needs at the local government level. But even with that you won’t completely fill the hole. The federal government is best positioned and it’s their job, just like President Obama created a stimulus package to keep states afloat after the Great Recession, the federal government needs to step in and provide the vast quantity of resources that are necessary to get everybody through this. That’s a long way of saying cutting property taxes takes even more money out of the coffers of local governments, which would require federal support to allow.

This proposal has broad support from elected officials both local and national. From NYC Public Advocate Jumaane Williams and NYC Comptroller Scott Stringer to the Democratic Presidential candidates. Joe Biden said “Freeze it and forgive it,” when asked about the coming rent crisis at a CNN Town Hall four days after Gianaris announced his plan. Bernie Sanders called you out by name in expressing his support for your proposal. What is your biggest obstacle to getting this passed right now? 

Well it’s an outside the box idea that requires people to think differently. And time is not on our side. We just finished the state budget and I’m calling you on my way out of Albany back to Queens. So obviously we didn’t pass anything this week, which was our best chance legislatively. Right now the best strategy for us to implement this is to have the governor do it by executive order. He has implemented the eviction moratorium and, at least so far, has not moved forward on additional measures. So I’m going to continue to advocate that he does that. Granted he’s got a very full plate: He’s dealing with the health crisis first and foremost, as he should. But part two of this problem is a humanitarian and an economic crisis, and it has started crashing down on us as of April 1st, when bills came due. So now that the budget’s concluded, I’m going to redouble my efforts to encourage him to do something by executive order.

You represent parts of Queens, a borough that has come to be called the epicenter of the epicenter of this outbreak in the U.S. What effects are you seeing there, where you live, that might have informed this idea? 

This came to me from affected residents, tens of thousands of people, who are in this position of not having money to pay rent. This bill nearly crashed the Senate website, because we had over 60,000 people log on to show support for it. Nothing even remotely close to that has ever happened before.

All eyes are obviously on New York right now. Could something like this be a template for other municipalities, if or when they have to face the same kind of crisis in the coming weeks?

I hope so. I know the Seattle city council passed a resolution encouraging their state legislature to take action. New York unfortunately is the tip of the spear in this country in terms of being the most dramatically affected in the early stages of the pandemic. I think the rest of the country is looking to us to see how we handle it, and take lessons from that. And I want this to be a positive lesson of what we did right that they can emulate — as opposed to a negative lesson, a missed opportunity that made things worse.

[Rolling Stone reached out for comment on this piece last week to Governor Cuomo, and his office forwarded us the statement he made on the subject on April 2nd, the same day  Senator Gianaris spoke with RS. According to the statement mailed to us by his spokesperson, the Governor said:

“Let’s see where we are after those 90 days. You know, a lot of these situations, what do we do about rent after 90 days, what do we do about income after 90 days, what do we do about infrastructure after 90 days, you know. So much of this is changing and fluid. I don’t think anyone can sit here and tell you what the right plan is for any of these areas 90 days from now. I just want to get to 90 days from now. And get there healthy. And then we’ll handle whatever we have to handle.​” 

RS then asked Gianaris separately to respond to the statement of the Governor.]

This statement from the governor, which is from Thursday, April 2nd, seems sort of agnostic, but is also in sharp contrast to his statement just three days earlier, in which he said that the eviction moratorium already in place (which yet leaves three months’ back rent due in summer) “solves all of the above” problems. It does seem like three days later he’s beginning to agree that more needs to be done. 

I agree with your take. The Governor does appear to be recognizing that the 90-day eviction moratorium is insufficient to deal with the rent crisis. We need to move faster though, as people are already wondering what to do about their rent payments for the month of April. We can’t wait until the end of this 90-day period to figure it out.

Featured via: Rollingstone