This week, I heard from an affordable housing developer who is increasingly worried about the federal government shutdown — food stamps and rental vouchers, in particular.
Not only has the shutdown gone on longer than is typical, but the Trump administration has taken some seemingly discretionary actions to pressure Democrats to make a deal.
Usually, the federal government tries to minimize the impact of shutdowns. But Donald Trump is not your usual president. He is always looking for leverage and is not a slave to political norms. As such, he has spoken openly about the shutdown giving him an opportunity to cut Democrats’ favorite programs.
That’s a problem for landlords who rely on Section 8 or whose tenants receive SNAP benefits, aka food stamps. I asked this developer about the expression, “the rent eats first.”
The developer replied: “People will definitely pay for food first before they pay rent. Wouldn’t you?”
Yes. Hunger is immediate; rent is not. And I have learned — as many tenants did during the Covid moratoriums — that not paying rent doesn’t mean you will be evicted anytime soon, if ever. Even without a lawyer, you can squat for two years without paying.
Not only that, but rent arrears are necessary to get a one-shot deal from the city, just as they were to get help from the state’s Covid-era Emergency Rental Assistance Program.
That seems like an incentive not to pay, but other social programs work the same way. I recently helped a couple who’d lost everything (except their house) pay the electric and gas bill — PSEG was threatening to cut off their service. But when I inquired about the utility’s hardship program, I was told only customers in arrears are eligible.
The couple then applied for welfare but were rejected by New Jersey — because I had paid their bills. The lesson is clear: To get help from the safety net, you must be a deadbeat.
But I digress. Back to the developer, who had just read a Department of Housing and Urban Development press release in which HUD Secretary Scott Turner said, “For nearly one month, the Left has held our government hostage. Rather than ending this shutdown and putting our government back to work for the American people, they continue to shamelessly exploit Americans’ pain for political gain.”
Once upon a time — meaning 10 months ago — such a statement from an agency head would have been unthinkable.
The developer was disturbed.
“If HUD stops paying, first repairs and maintenance will drastically suffer, then violations will pile up, then you will trip your debt covenants either by A) not maintaining the property or B) not servicing your loan. Or A and B.”
What we’re thinking about: Nissequogue River State Park is marred by dozens of abandoned buildings from the old Kings Park Psychiatric Center, which closed 30 years ago. The 521-acre site was deemed parkland five years later, but the buildings remain because the state has higher priorities than to demolish them and execute a plan calling for playgrounds, concession stands, a farmers market, botanical garden and a museum. Should the state consider a public-private partnership instead? Send thoughts to eengquist@therealdeal.com.
A thing we’ve learned: Insurance companies now pay more for sidewalk liability claims than for fire- and water-related damages — the traditional top two insurance payouts. In response, carriers are issuing cancellation notices for properties with sidewalks they deem risky. At one time, the city was liable for mishaps caused by sidewalks it owns, but it was paying out so much money for alleged trip-and-falls that it made it the sidewalk owners’ responsibility. It carved out an exception for owner-occupied residential properties of one to three units.
Elsewhere…
I don’t wish ill on anyone. At the same time, I don’t feel especially sorry for people who complain about The Real Deal’s accurate coverage of their problems.
A common sequence:
- They love TRD when we cover the early successes that mark their arrival as real estate players.
- Something goes wrong, and they complain when we cover it. A typical complaint is that it’s not newsworthy and will be fixed immediately, so we should not run the story, or at least hold it until the problem is fixed.
- The problem isn’t fixed immediately.
- Similar problems start popping up at the complainer’s other properties. We cover them, triggering more arguments that we are unfairly picking on this person.
- The complainer begins to endure a wave of defaults, foreclosures, lawsuits and sometimes indictments.
- The complaints to TRD stop, as the embattled businessperson realizes there are bigger issues to deal with than negative media coverage.
What made me think of this? Could it have been the latest news about Toby Moskovits?
Closing time
Because of the election, there is no data to report today. Check back tomorrow to see the city’s top closings and listings.
