New York State Senator Michael Gianaris is unveiling a plan that will offer 90 days of rent forgiveness to residential and commercial tenants if they lose work or are forced to close due to the coronavirus. State Sen. Gianaris joins Yahoo Finance’s Zack Guzman to break down the details.
ZACK GUZMAN: But for now, though, I want to dig into the stimulus measures at hand in regards to helping Americans hit hard as business is shut down, and a lot of people brace for a wave of job losses here across the country. In New York, a lot is being made with the new plan to potentially waive rent in the state. And I want to bring on the mind behind that, a friend of the show. He's been on before-- Senator Michael Gianaris from Queens.
Senator Gianaris, we heard Governor Andrew Cuomo talking about how little stimulus is actually going to be given, even in this $2 trillion package, to the state of New York, one of the hardest-hit states out there right now. Why do you think that you need to go even further to help Americans, New Yorkers have some help here on the rent front?
MICHAEL GIANARIS: Well, I think the scope and magnitude of what we're about to face economically is unprecedented. And I don't think we are catching up nearly quickly enough to what's about to happen. Next week is April 1, when most rent bills come due. We now have tens of thousands, if not hundreds of thousands of New Yorkers who live paycheck-to-paycheck who've just been denied their paycheck through no fault of their own. The government has shut down their work, shut down their businesses.
And so we are going to face this housing crisis sooner or later. And if we could put a regulatory structure around it, we could manage it a lot better than just allowing the rents not to be paid. Because if there's no money, those rents are not getting paid anyway. Let's be clear.
And then what's going to happen is mortgage payments are going to fall behind. You're gonna have a wave of evictions and foreclosures in a couple of months time that if not managed properly will lead to even more disaster than we're already looking at. I think the smart thing to do is let's just a p-- we put a pause on the economy in New York. Let's just put a pause on the financial obligations that people have, and rent is often the biggest one.
Let's say for 90 days, no rent payments. For 90 days, for landlords that need that rent to make their payments, no mortgage payments. And then let's figure out what kind of aid we need to structure around that to help everyone get back on their feet as quickly as possible.
ZACK GUZMAN: How might that be different? Because we did hear Governor Cuomo talking about some of those measures to you, giving property owners a 90-day waiver for paying mortgages, and a three-month suspension for commercial and residential evictions as well. But how would-- how would your plan go a step further in regards to that, too? Because a lot of people, as you said, are not sure where they're going to be making money here if their businesses remain closed.
MICHAEL GIANARIS: Yeah, well, that's exactly right. Those measures were important and necessary, but all they do is kick the can down the road three months. If you don't have money to pay your rent this month, you're not going to have three months' worth of rent to pay in three months.
And so allowing those obligations to accrue is only going to lead to a wave of housing actions in three months time, unless we suspend the obligation to pay those-- those rents at all. Then people can start recovering once things get to the point where we can reopen those businesses and get those jobs flowing again. But if all we're saying is you still owe rent, you just don't have to pay it now, or you still owe your mortgage, you just don't have to pay it now-- what's going to happen in three months when that money is not going to materialize out of thin air?
They're still going to owe three months' worth. They can't pay one months' worth right now. So I don't think that's the ultimate answer.
BRIAN CHEUNG: Hey, it's Brian Cheung here. I wanted to ask about the financing at the municipal level. So there's been a lot of concern that with all these businesses closed, there's no tax receipts. So the local municipalities, whether that's in New York-- New York City or New York state at large will not be able to collect on things.
How do you keep the lights on from the municipal standpoint? Is there a concern about muni debt, and the ability of localities to finance through the next few-- few months?
MICHAEL GIANARIS: I think we'll be fine in terms of staving off any bankruptcy or failure to meet our obligations. It's just going to mean some very terrible decision making in terms of cuts we're going to have to make. I was in the state assembly over a decade ago when the great recession hit. And we had a stimulus package back then.
That pales in comparison to the numbers we're projecting right now, that they're going to affect our city and state budgets. And so my understanding from our budget experts is we're not in danger of failing to meet our obligations, but we are going to have to cut to the bone and make some very difficult choices about where the state's spending its resources.
ZACK GUZMAN: And as we heard from Governor Andrew Cuomo, a likely $10, potentially $15 billion shortfall this year as the costs to respond to coronavirus continue to soar. But for now, Senator Gianaris, thank you so much for joining us to bring more on that plan to our viewers. Appreciate it.
MICHAEL GIANARIS: Thanks very much.