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Quijano & Chaparro Bill to Create Pilot Program to Assist Certain Low Income Renters with Security Deposits Approved by Assembly Panel

(TRENTON) – Legislation sponsored by Assemblywomen Annette Quijano (D-Union) and Annette Chaparro (D-Hudson) to create a pilot program in select counties to help low-income renters with their security deposits was released Monday by an Assembly panel.

By law the amount of a security deposit on a residential lease may not exceed 150 percent of the amount of the monthly rent, but this initial payment is still cost-prohibitive for many residents.

The bill (A-4202) would establish the “Security Deposit Assistance Pilot Program” in Union, Essex, Hudson, and Gloucester counties to help households of modest income address the need to pay a security deposit prior to entering a residential lease. These counties were chosen for the pilot because they represent a generally dense, but demographically diverse microcosm of the state.

Under the bill, renters who qualify for the pilot would be able to pay for their security deposits in monthly installments.

“Paying the initial month’s rent, plus the security deposit, can make moving into a new apartment cost-prohibitive for residents who live paycheck to paycheck,” said Quijano. “This allows residents to spread out their security deposit payment instead of paying for it upfront.”

“Moving can be expensive. There’s the first month’s rent, the security deposit and other moving-related expenses like truck rentals. For a family of limited means, this can really add up,” said Chaparro. “By allowing these families to pay for their security deposits in monthly installments, we can help lessen the financial burden and make an already stressful situation less aggravating.”

The bill would direct the Commissioner of Community Affairs to operate the pilot program for a minimum of three years. Under the bill, the commissioner would begin taking applications for the pilot program on the first day of the sixth month following enactment.

The commissioner would notify an applicant if their application has been approved or denied within two weeks of getting the application. If the applicant is approved, the commissioner would issue a letter of security deposit commitment, which would be presented to the landlord in lieu of a full security deposit payment. A landlord who refuses to lease to an applicant because of their participation in the program would be in violation of the “Law Against Discrimination.”

Under the bill, the pilot program would 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 program would 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 would 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 payment to the landlord from the fund, an amount equal to the amount paid from the fund would subsequently be owed by the tenant to the commissioner.

The commissioner would have to 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 would 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 the state.

The bill would appropriate $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.

The bill was released by the Assembly Housing and Community Development Committee.