Bill > S3038

Introduced Session

Paying the initial month's rent, plus the security deposit, can make moving into a new apartment cost-prohibitive to many State residents who live paycheck to paycheck. Although the amount of a security deposit on a residential lease currently may not exceed 150 percent of the amount of the monthly rent, pursuant to section 4 of P.L.1971, c.223 (C.46:8-21.2), this initial payment is still cost-prohibitive for many State residents. Union, Essex, Hudson, and Gloucester counties represent a generally dense, but demographically diverse microcosm of the State as a whole, making ideal locations for the "Security Deposit Assistance Pilot Program." In order to assist households of modest income in addressing the need to pay a security deposit prior to entering a residential lease, this bill establishes the "Security Deposit Assistance Pilot Program" in Union, Essex, Hudson, and Gloucester counties. The bill directs the Commissioner of Community Affairs to operate the pilot program for a minimum of three years. By the first day of the sixth month next following enactment, the commissioner shall commence the operation of the pilot program by beginning to accept applications. The commissioner must notify an applicant of the approval or denial of their application within two weeks following the commissioner's receipt of the application. Under the bill, the commissioner would issue a letter of security deposit commitment to an approved household, allowing the household to enter into a lease under the parameters of the pilot program at any time within six months of the household's receipt of the letter. Upon entrance into a lease, the tenant would offer the letter of security deposit commitment to the landlord in lieu of a full security deposit payment. Any landlord who refuses to lease to a household because of their participation in the pilot program will be in violation of section 11 of the "Law Against Discrimination," P.L.1945, c.169 (C.10:5-12). Under the bill, the pilot program will only be open to a household with an income level low enough to qualify for "very low income housing," as defined under subsection m. of section 4 of the "Fair Housing Act," P.L.1985, c.222 (C.52:27D-304). Security deposit assistance may only be applied to a lease in which the monthly rent does not exceed 40 percent of the maximum eligible monthly income necessary for a very low income household of the same size within the housing region. A household approved for the pilot program will be responsible for the payment of one-twelfth of its security deposit as an added payment due each month, for the initial 12 months of the lease. If the tenant violates the lease any time prior to the landlord's receipt of the full security deposit payment from the tenant, then the commissioner shall reimburse the landlord for the amount owed from the tenant for the particular violation, but only up to the amount of the security deposit not yet paid by the tenant. Following a payment to the landlord from the fund, an amount equal to the amount paid from the fund will subsequently be owed by the tenant to the commissioner. The commissioner may prohibit a tenant who has violated a lease while under the pilot program from entering into another lease under the parameters of the pilot program for the following three years. The commissioner shall submit a report to the Governor and the Legislature evaluating the effectiveness of the pilot program by the first day of the thirty-sixth month next following the beginning of the pilot program's operation. The report shall recommend whether the pilot program should be continued in Union, Essex, Hudson, and Gloucester counties, and if so, whether it should be expanded to other counties in this State. Finally, this bill appropriates $210,000 from the General Fund into the "security deposit assistance fund." In order to gradually expand the pilot program, the sponsor's eventual intent is to also appropriate an additional $210,000 in each of the next two ensuing fiscal years.

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Sandra Cunningham (D)*, 

Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee (on 02/27/2017)