Proposed California Tenant Relief and Coronavirus Update

Dear Clients and Friends:

I keep saying: “I’ve never seen anything like this before!”…and then there is more!

June 17, 2:35 p.m. A proposed California Senate bill could give out-of-work tenants in the state 10 years to pay back unpaid rent due to loss of income related to the coronavirus pandemic. The Democrat-backed proposal, Senate Bill 1410, was put forth by Senate President Pro Tem Toni Atkins, D-San Diego and Senate Majority Leader Bob Hertzberg, D-Van Nuys.

In effect, it would force a landlord to make a deal with tenants, or a “rent stabilization agreement,” before evicting them due to unpaid rent during the pandemic. It would then give renters until 2034 to make up the unpaid payments, in increments if needed. They could also be eligible for loan forgiveness. The state would assume the financial burden, and in exchange, landlords would receive 10 years of tax credits equal to the amount of rent unpaid by the tenant.

Should the tenant decide to pass on the deal, the landlord will need to get a signature-verified document to prove that he or she made an attempt to come to an agreement. The bill goes to a vote Thursday.

Link to full article: https://www.sfgate.com/news/editorspicks/article/California-coronavirus-hospitalizations-increase-15346535.php

Link to Senate Bill: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB1410

Proposed Rent Stabilization Agreement:

NOTICE: BEFORE YOU ENTER INTO A COVID-19 PANDEMIC TENANT-OWNER RENT STABILIZATION AGREEMENT

California state law requires that you get this important notice before you decide whether to sign an agreement with your landlord to address your unpaid rent during the COVID-19 pandemic.

If you sign this agreement, your landlord agrees not to evict you for the unpaid rent specified in this agreement, and agrees not to evict you during a state of emergency relating to COVID-19, unless your lease expires or you do something to destroy property or that threatens public health and safety.

The State of California will pay your unpaid rent to your landlord in the form of a tax credit.

You will be required to repay the State of California the amount of unpaid rent listed in this agreement, in annual equal installment payments over the span of ten years beginning in 2024. The State of California will not charge you interest for this amount owed as long as the payment is made timely. If you cannot make your installment payments beginning in 2024, you may be eligible for a reduction or cancellation of that payment at that time. For more information, visit the Franchise Tax Board’s web page at ____________________.

IMPORTANT THINGS YOU SHOULD KNOW

If you sign this agreement with your landlord, the agreement only protects you against an eviction from your current residence during a declared state of emergency relating to COVID-19 and for _____ days thereafter. In other words, when the COVID-19 state of emergency is over, you will be fully responsible for paying your rent and complying with the terms of your lease. If you sign this agreement, you should keep a copy of it for your records.

TENANT-OWNER RENT STABILIZATION AGREEMENT

Pursuant to Section 1947.20 of the California Civil Code, ____(Name of Owner of Real Property)____ agrees to defer the rent of ____(Name of Tenant/Lessee)____ for the property located at ____(Property Address)____ in the amount of $____(Unpaid rent accrued)____, covering the time period from ______ to ______ .

____(Name of Tenant/Lessee)____ agrees to repay the amount of $____(Same amount as unpaid rent accrued)____ to the State of California, starting in 2024, over a span of ten annual installments, interest-free.

IF YOU WANT THIS AGREEMENT, SIGN HERE, NEXT TO YOUR LANDLORD:

____(Date)____ ____(Date)____

____Name of Owner of Real Property____ ____(Name of Tenant/Lessee)____

____(Address)____ ___(Property Address)____

__(Tax ID or SSN of Owner of Real Property)__ __(Tax ID or SSN of Tenant)__

IF YOU DO NOT WANT TO ENTER INTO THIS AGREEMENT, PLEASE READ AND SIGN BELOW:

ACKNOWLEDGMENT OF RECEIPT OF OFFER TO SIGN RENT STABILIZATION AGREEMENT

I, ____(Name of Tenant/Lessee)____ acknowledge that, on ____(Date of Receipt)____, my landlord ____(Name of Owner of Real Property)____ offered me to sign a Rent Stabilization Agreement for ____(Property Address)____ for unpaid rent during ____(Month(s) & Year)____ .

I have read the Rent Stabilization Agreement and I DO NOT want to sign the Rent Stabilization Agreement.

I understand that if I DO NOT sign the Rent Stabilization Agreement, I am still obligated to pay for any unpaid rent past due according to my lease. Accordingly, my landlord may seek a court order for my eviction.

____(Date)____ ____(Date)____

____Name of Owner of Real Property____ ____(Name of Tenant/Lessee)____

____(Address)____ ___(Property Address)____

IMPORTANT THINGS YOU SHOULD KNOW

If you DO NOT sign the Rent Stabilization Agreement or DO NOT RESPOND to this Acknowledgment of Receipt within 30 days of receiving it, your landlord will assume that you have REJECTED the Rent Stabilization Agreement.

 

by Ron Cohen, CPA sent 06 07 2020

Dear Clients and Friends:

 

While not a tax issue, I’ve been trying to figure out the metrics, as to when our employees can come back to the office to work!

 

Excellent “tracker” by the L.A. Times of objective information about when we can REOPEN, by county, updated each day.

https://www.latimes.com/projects/california-coronavirus-cases-tracking-outbreak/alameda-county/

 

Zero COVID-19 deaths in Alameda and Santa Clara Counties for 6 days.  https://update.covid19.ca.gov/#top

92.5% of deaths yesterday in CA were in L.A. (55) and San Bernardino (7). (See chart, below).

 

The rules to reopen, are, as you’d expect, a multi-variable math problem, which also allows a great amount of judgement to the County Health Officials.

 

1) “One metric is whether counties have kept the number of new cases reported over the last 14 days to less than 25 per 100,000 residents.

Alameda County currently fails that test. Over the last two weeks, officials have confirmed 1,038 new cases, which amounts to 63.2 per 100,000.”  Santa Clara county just passed this test!!!

A medical official said, it should be hospitalizations, not cases, that matter.

2) “In order to reopen, counties must show that hospitalizations have stabilized, meaning that daily increases have averaged less than 5% over a seven-day period, or that a county can’t have more than 20 hospitalizations on any single day over a 14-day period. Currently, 49 of the state’s 58 counties pass the test.” Alameda County passes this test.

Santa Clara county’s hospitalizations are climbing. 75, up from 57…yet, no deaths in 6 days AND 65% are right in downtown San Jose. So, they may stay closed until that goes down.

My worry is that when the seven-day average gets very low, and then in one day, there are over 20 hospitalizations (a completely immaterial amount for Alameda County); Dr. Pan could order a shut down. Some say this is a criteria to reopen; not to shut-down again; but, some are fearing a “second wave” so, hopefully, they would do something reasonable.

 

Cases:

 

WHY ALAMEDA COUNTY IS STILL generally in a Shelter-In Place order, subject to the judgement of Dr. Pan:

In the last 14 days
Cases Per 100k Status Today Deaths Per 100k Today
Los Angeles » 18,268 180.9 Failing 532 5.3
Riverside » 2,313 97.1 Failing 65 2.7
Orange » 2,164 68.4 Failing 46 1.5
San Diego » 1,786 54.1 Failing 47 1.4
San Bernardino » 1,725 80.8 Failing 48 2.2
Imperial » 1,423 789.6 Failing 10 5.5
Alameda » 1,038 63.2 Failing 9 0.5
Kings » 975 649.7 Failing 4 2.7
Kern » 893 101.1 Failing 16 1.8
Fresno » 674 68.9 Failing 21 2.1
Santa Clara » 349 18.2 Passing 4 0.2

 

Note: Only 174,000 people live in Imperial County.

Alameda County currently meets the standard….on hospitalizations, as the number of cases have stabilized, and ICU cases are declining.

Date ICU Other Total Status
Jun 6 41 114 155 Stable
Jun 5 40 110 150 Declining
Jun 4 41 133 174 Stable
Jun 3 38 131 169 Stable
Jun 2 38 122 160 Declining
Jun 1 46 102 148 Declining
May 31 45 87 132 Declining
May 30 50 96 146 Declining
May 29 54 125 179 Stable
May 28 57 96 153 Declining

 

Oakland and Hayward are 62% of the cumulative cases. 2,373 cases out of a total of 3,801.

This is a chart of deaths, yesterday, for your consideration. It certainly gives some perspective.

I sure hope this virus burns out soon, ending the suffering, and all the math, above, becomes irrelevant.

For more information about tax implications of Covid-19, PPP loans or tax services for family offices or the ultra-affluent, please contact your GROCO tax advisor or visit GROCO.com, or email Hello@GROCO.com.

By Ron Cohen, CPA sent 06 18 2020

 

Related Posts