ALBANY — New York’s small landlords are taking out second mortgages, cashing life insurance policies and other last-resort measures to stay afloat as they fight to access COVID-19 assistance promised to satisfy millions of dollars in rental arrears incurred over the last 17 months as some tenants abused the state’s eviction moratorium.

Steve and Kathy Nagy, of New Baltimore, Greene County, are more than $13,100 in arrears on their rental property at 1164 Broadway, Albany. A man not on the lease stayed in the upstairs apartment without paying rent for 15 months under the eviction moratorium, which ends Tuesday.

Top state executives are discussing how to address the looming expiration after the U.S. Supreme Court struck down a federal moratorium on evictions late Thursday night.

“I am in talks with the Senate Majority Leader and Assembly Speaker to call a special session to address the impending eviction crisis, given the Supreme Court’s decision,” Gov. Kathy Hochul said in a statement Friday. “Our teams will be working through the weekend to address how best to deliver relief to renters and homeowners in need as quickly as possible.”

The newly minted New York governor said she was “exploring all options to further protect New Yorkers from eviction” after the ruling, which effectively said Congress would have to act to extend the moratorium.

“I am very disappointed in the Supreme Court’s appalling and insensitive ruling that eliminates a key line of defense for tenants facing housing insecurity during the ongoing pandemic,” Hochul said earlier Friday on the decision.

Lawmakers had not been briefed on discussions or met with their conferences as of Friday afternoon.

Earlier this month, two lawmakers introduced a bill to extend the moratorium through Oct. 31. The Legislature has been out of session since June 10.

The Nagys have had tenants in their sole Albany property for more than 34 years. Their tenant Fantasia rented the two-bedroom upstairs apartment with her two sons April 1, 2020, but died days after paying her $875 monthly rent in May 2020.

Days later, Steve received a call from Fantasia’s fiance to tell them the news of her death and requested to rent the apartment. The man, who was recently released from prison and has a criminal record, promised to provide personal information, including his name, employment and income information, but he never responded to the couple’s repeated requests to connect and remained in the residence for at least 15 months.

“I was texting him because that’s all I could do,” Steve recalled. “He wouldn’t answer the phone at all, he wouldn’t answer the door.”

The Nagys contacted various local officials, police and state representatives, who could provide little to no help under the moratorium. It was first enacted by state court judges on March 15, 2020 and extended 90 days by then-Gov. Andrew Cuomo to protect residential and commercial tenants who could not pay rent due to financial hardships caused by the COVID-19 pandemic.

The New Baltimore couple hired an attorney, who could not provide much legal assistance as the Legislature voted to extend the temporary ban multiple times in 2020 and 2021. The legal services cost $1,000.

The man was served papers last September, but the illegal squatter said “he knew his rights,” referring to the ongoing eviction protections.

“We’ve always had tenants who were decent. Our one tenant was there 20 years,” Kathy said. “We’ve always been good to our tenants. Now, scum of the earth are all coming out and they’re taking full advantage of New York state and its middle-class landlords.”

The man staying on the second floor left the residence in February 2021. The property owners changed the locks, but he broke in and returned for several months this spring.

The Nagys applied for relief under the state’s $2.7 billion Emergency Rental Assistance Program — or federal COVID-19 rent relief for tenants, homeowners, small landlords and business owners, but have hit roadblocks without contact or knowledge about their former squatter.

In June, representatives with the state Office of Temporary and Disability Assistance overseeing the program told the Nagys they are likely ineligible to receive relief because their original tenant died.

Then, Steve received an automated email from OTDA on Aug. 20 saying their application was received, but the message was directed toward an applicant seeking protections from eviction.

“All I want is what is owed to me,” he said. “What the state did and what the government did is not fair.”

OTDA cannot comment on individual applications.

The billions the state received in federal COVID rental relief requires separate tenant and landlord components, per federal requirements, according to representatives with OTDA.

“No ifs, ands or buts,” a department representative said Friday. “We have less discretion in this area. Unfortunately, the federal government is requiring tenant participation.”

State law permits applications be approved to distribute relief payments with at least the tenant side completed, but not when only the landlord’s piece is provided.

A bill sponsored by Sen. James Skoufis, D-Woodbury, would expand ERAP eligibility to landlords “who have made a good faith effort to contact a tenant and assist them in applying for the rental assistance,” or if the tenant has already vacated the residence.

The measure passed both houses of state Legislature this session, but has been awaiting a governor’s signature. It would also provide guidance on how to spend the $100 million the state budgeted for the ERAP for unique situations not covered in federal criteria.

Sen. Skoufis was in active negotiations with former Gov. Cuomo and Executive Chamber staff last month about technical issues involving amending language in the budget.

“Then the political world blew up and this stopped happening,” Skoufis said Friday of Cuomo, who left office in disgrace Monday.

“I would have expected this to be resolved right now if not for the tumult that happened recently,” the senator added.

Representatives with Gov. Hochul’s office declined to comment on the pending legislation, and would not answer questions about further negotiations or when the bill will be signed into law.

“My hope, my expectation is this is going to be a top priority bill to deal with for the new governor,” Skoufis said.

OTDA does not comment on proposed or pending legislation.

Sen. Michelle Hinchey, D-Saugerties, who represents Greene County, co-sponsored the measure.

“My office has been contacted by small landlords and renters alike about the challenges they’re facing in accessing ERAP funds — these are New Yorkers who have lost income during this pandemic through no fault of their own and we are doing everything we can to help,” Hinchey said Friday. “We continue to work with the governor and our legislative colleagues to get this money out quickly and encourage all eligible New Yorkers to complete their applications as soon as possible. Anyone experiencing challenges related to ERAP can call my office at 845-331-3810 for assistance.”

Lawmakers across the state have received calls from afflicted small landlords since the pandemic began.

The Nagys’ case is not unique, said Debbie Pusatere, president of the NY Capital Region Apartment Association, who has spent the pandemic speaking with small landlords across the state faced with similar issues.

NYCRAA includes landlords from the Hudson Valley to Western New York and the north country owning a collective 44,000 units.

Pusatere described fellow landlords’ horror stories over the last 17 months and their plight as they could not remove tenants who shot or stabbed each other, or for any kind of nuisance under the moratorium.

Pusatere, a small landlord who runs DeKita LLC and RossWorks LLC, is owed more than $150,000 in arrears from 65 tenants. Twenty-six renters, or 40%, continue to live in their residences without paying a dime. At least 10 people vacated their residences owing a collective $60,000.

On Friday, she said she’s holding her breath hoping the eviction moratorium expires for good Tuesday.

“I shouldn’t have to take out a second mortgage policy on my home, which I’ve done. I shouldn’t have to cash in my life insurance policy, which I’ve done,” Pusatere said. “I’m in debt more than I’ve ever been in my whole life. Why is that OK?”

In three weeks, Pusatere owes about $6,500 in insurance payments, which have increased since the pandemic began.

“I’m going to throw it on a credit card and hope for the best,” she said.

The Capital Region small landlord estimates about $60,000 in owed property tax, water and sewer bills by the end of September. She pays up to $1,500 a week to four maintenance workers on her payroll and also has a mortgage and a family.

“The bank of Deb is closed — I don’t care what they do,” she said. “If they were to compensate us, that’s a different story. I need to be reimbursed every dollar I had stolen from me. I’ve been a good and faithful servant for 18 months. I have no more to give.”

Pusatere is aware of one small landlord in Western New York who has received ERAP relief payments without a tenant’s component. She knows of no other upstate property owners who have received the promised assistance.

More and more New Yorkers started to take advantage of the continuing eviction moratorium the longer it has remained in place, Pusatere said.

“In the beginning, the people who would pay were really trying, the people struggling really tried to pay me something,” she said. “In January [2021], it got worse and worse and worse. Tenant A started saying to tenant B, ‘I’m not paying rent, why are you bothering?’ “It’s frustrating because the Democratic lawmakers, I feel, are anti-landlord,” Pusatere continued. “I think they’re trying to run the middle class out of business. They’re not there to protect my rights. They’re protecting the rights of tenants and not landlords. That’s discrimination and it’s apparent there’s no sense of urgency for them to help us.”

Emergency Rental Assistance Program applications without errors or do not lack information are processed in an average of four to seven weeks, according to OTDA.

To date, the only ERAP applications to be denied were out of jurisdiction or duplicates, according to the department. Denied applications may be appealed.

Hochul, who took office Tuesday, has said multiple times this week hastening processing ERAP applications and getting the relief out the door is her top priority.

The state knew about $1.3 billion in federal rental assistance in December. More than $808 million of the $2.7 billion has either been obligated or distributed as of Friday, according to OTDA.

“OTDA is continually working with its contractor to improve the application process, including the front-facing site, while maintaining the security and integrity of the program,” according the department Friday. “Any technical issues are being addressed promptly and as they arise.”

The Emergency Rental Assistance Program has distributed more than $203 million in direct payments to more than 15,000 landlords to cover arrears, including nearly $65 million in roughly 5,000 payments over a five-day period ending Aug. 23, according to the department.

Officials with the state OTDA referred to Hochul’s statement Friday blasting the Supreme Court for striking down the federal ban on evictions.

Progressive lawmakers have pushed Congressional leaders to move quickly to enact a new moratorium.

An estimated 800,000 to 1.2 million households are behind in paying rent of the state’s 4.1 million tenant households, lawmakers have said.

—

Tribune News Service contributed to this report.