Articles Tagged with COVID-19

The Small Business Administration administers the “Economic Injury Disaster Loan” program. This program, recently expanded to address the economic fallout of COVID-19, may be especially useful to NJ landlords, multi-family property owners and other small business suffering dramatic reductions in revenue. This program (just one of many) may aid businesses in search of liquidity.

The Economic Injury Disaster Loan Program is a component of the Small Business Act, 15 USC 636.  An eligible business must be in a “declared disaster area.”  New Jersey is, by Presidential action, a declared disaster area due to COVID-19. To qualify for an EIDL loan, the applicant must be (1) a “small business;” (2) have used/consumed “all reasonably available funds” and (3) “unable to obtain credit elsewhere”.  Importantly, principal owners (those with a 20% or greater interest in the company) and affiliate companies must also have expended “all reasonably available funds.” An approved loan carries an interest rate of 3.75%. The funds can be used for “working capital necessary to carry on…until resumption of normal operations.” The funds cannot be used to refinance debt, pay other agency loans, pay taxes or pay dividends or other non-wage compensation. This is only a summary of the basics. There are additional underwriting criteria and, of course, paperwork.

Important changes may be coming to the EIDL program. Pending federal legislation may relax the “unable to obtain credit elsewhere” requirement. Although the application can be onerous (and requires significant owner financial disclosure)  the program offers important liquidity during uncertain times.

Executive Order 107 imposes uniform restrictions on certain activities in New Jersey. Many media outlets covered the generic requirements of this Order. This post focuses on the effective of Executive 107 on the multi-family property industry.

As a general matter, EO107 requires that all New Jersey employees remain home or at their “place of residence” unless a specific exception applies. One of these exceptions is travel necessary to report to or perform a job.  The Order further requires that business “whether closed or open to the public” “accommodate’ the workforce for “telework or work-from-home arrangements.” Multi-family properties rely on the hard and essential work of porters, building maintenance staff and service technicians. It is impossible for these workers to perform their jobs remotely.

EO17 requires that businesses with workers who cannot work remotely “reduce the staff on site to the minimal number necessary to ensure operations can continue.” For the remaining minimal staff, it is required that business operations “abide by social distancing practices” and engage in the “frequent use of sanitizing products on common surfaces.”

On March 21, 2020, Governor Murphy signed Executive Order 108. The purpose of this Order is to create statewide uniformity of COVID-19/Coronavirus related restrictions. The Order invalidates “all county or municipal restriction imposed in response to COVID-19…” that any in way “will or might conflict” with the statewide restrictions imposed by Executive Order 107.  This is an important, though unfortunately necessary, Order.  During uncertain times, multi-family property owners and managers will benefit from this uniformity.

Unless specifically permitted by the Governor, municipal restrictions imposed in response to COVID-19 are invalidated. Varying curfews and county-specific bans on “worldly employment or business” are not enforceable. The only COVID-19/Coronavirus related restrictions to be followed are those imposed by the federal government and Executive Order 107. A subsequent post will address the specific effects of Executive Order 107 on the multi-family property industry. For now, the takeaway is: Make business decisions according to State-wide guidance, not local authority.

Offit Kurman, P.A., maintains a broad-based landlord and property owner representation practice. In New Jersey, Offit Kurman represents landlords and property managers in maximizing return, resolving disputes and avoiding unnecessary and costly delays. The Firm’s New Jersey geographic practice area includes: Jersey City, Hoboken, Bayonne, Hudson County, Newark, Essex County, Woodbridge, Middlesex County, Paterson, Passaic County, Hackensack, Bergen County and other points across New Jersey.

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