HB 1336 FN — Relative to Regulated Conditional Deposits
Senator Lang: Madam President, I move to remove House Bill 1336 from the table.
The motion is to remove House Bill 1336 from the table. It is a non-debatable motion. All in favor say I... All oppose say no... The eyes have it, then a motion to remove passes.
Senator [questioning]: Because these were FN bills, were they not subject to having had to be acted on two weeks ago, or waved or sent to funding?
Senator Gray: I did ask the staff about the bills and both of them were waved. If you'd like a copy, staff can provide it.
Senator Murphy: Madam President, it was my duty to introduce the bill last week. I'd like to give the introduction now if I may.
Clerk: The committee on commerce, to which was referred House Bill 1336 FN, an act relative to regulated conditional deposits, having considered the same, the committee recommends that the bill is ought to pass with an amendment by a vote of 3 to 2. Senator Murphy for the committee.
Senator Murphy: Thank you, Madam President. I move House Bill 1336 ought to pass with amendment. This bill would allow for the use of regulated conditional deposits by landlords and tenants, legalize the use of circular funds by security deposit assistant organizations, and clarify that advanced rental payments are not held in escrow. An RCD would help to offset potential risk associated with a tenant. This is a win-win situation for a tenant who might be marginal in a very competitive rental market and a landlord who might need an additional guarantee before mitigating a higher risk landlord-tenant situation. This bill would thus help tenants find a home who would otherwise face a difficult search for a willing landlord.
The committee amendment would make it explicit that any security deposit funds advanced by a municipality shall be returned after the termination of a tenancy. Given the tight criteria established around the use of these RCDs and the ability for third-party payers to receive their money back, a majority of the commerce committee asked for your support on the motion of ought to pass with amendment on House Bill 1336. Thank you, Madam President.
Senator Reardon: Thank you, Madam President. I rise in opposition to HB 1336. The median rental for an apartment in the state of New Hampshire is well over $2,000 a month, and I believe landlords, given the opportunity to reduce their risk, will take advantage of that every time and ask for this conditional security deposit, which really means two security deposits. So what they're asking the renter for is a month's rent over $2,000 and two security deposits over $2,000 — in excess of $6,000 they're asking. And if that person is lucky enough to still have the dream of owning a house in the state of New Hampshire, then maybe they actually have that in the bank. But it's more likely that a tenant will get some assistance from a municipality, which is now paying not one month's security deposit but two months' security deposit. So our taxpayer funds that they're using to assist people are going to go half as far as they've gone in the past.
It's been said that this is only for really low-income people that landlords are going to give a chance to rent an apartment to, but in fact this bill provides five separate reasons why a landlord can ask for two months' rent. One is a low credit score below 650, but one of them is they couldn't contact the last landlord for a reference — they were unable to verify the present landlord reference and the most recent prior landlord. I've been a landlord, I've rented apartments, and I have been the renter and the rentee. In that case, landlords rarely give references for prior tenants.
So I think what this means is this body is setting up renters in the state of New Hampshire to either be able to commit thousands of dollars — not to mention, to get a great apartment nowadays you've got to rent it right then, so you're probably still paying rent where you are already — you're over $8,000 now to get the average apartment in the state of New Hampshire. I think it's a travesty that we would do this to residents. Municipalities are already providing rental and security deposit assistance to low-income people that qualify, and I think this is just a bad look for us to do this to young renters in the state of New Hampshire.
Senator Fenton (question to Senator Reardon): We hear a lot about housing. Housing is the number one issue that our constituents talk to us about. Does this bill reduce barriers for our constituents to get housing?
Senator Reardon: This bill actually increases barriers. You heard that the average renter is going to come up with over $8,000 potentially to rent the average apartment in the state of New Hampshire.
Senator Fenton (follow-up): So who is this bill helping?
Senator Reardon: It's certainly not going to help businesses who are desperate for workers to move into their towns. It's going to price young people out of apartments, and not necessarily even young people — anybody looking to rent an apartment. It reduces the risks for landlords that are already for-profit businesses here in the state of New Hampshire.
Senator Lang (question to Senator Murphy): Is the real reason for this bill that people who are going into the rental market in various conditions who might not normally be accepted by landlords due to low credit scores, lack of work history, lack of recommendations or references — to give them a way of mitigating the landlord's risk and accepting those renters who may otherwise end up homeless and sitting on the street? Allows them to be able to get into an area that otherwise they would not have access to, and they can also get their deposit back after one year. Is that correct?
Senator Murphy: That's correct. This is about providing people who would otherwise potentially be homeless, who would be turned away from a landlord, a way to mitigate that higher risk and convince the landlord to give them an opportunity that otherwise wouldn't be there. That's what this is about. It's about increasing housing opportunity.
Senator Perkins Kukla (question to Senator Reardon): What we just heard is that part of the supposed reason for this bill is to allow renters who couldn't otherwise get into apartments to get in, but this bill proposes a solution where those costs come directly out of the pocket of our workers, our renters. Are there other programs you're aware of from your long career in housing that help landlords mitigate this risk?
Senator Reardon: There are programs in regions of the state that do help those landlords mitigate, particularly in the Seacoast. There's a robust program. And I might add, landlords have lots of choices when they put an apartment out for rent. They are inundated with applications. I don't know why you don't take somebody with a great credit score that you just can't verify their last landlord and get two months' security deposit from them. Why you take a chance on a riskier — that doesn't make business sense to me.
Senator Avard: Thank you, Madam President. From my perspective as a cleaner — I've cleaned some places that have cost thousands of dollars because of abuse, and the landlords have to make up for that. On Orange Street, the third floor, there were a half dozen German Shepherds locked in a closet, feces all over the house running down into the apartments underneath. It cost thousands of dollars to mitigate that one project. I do carpet cleaning all around the state. In order for the landlord to recoup the damages that are done, it's phenomenal some of the abuses that do go on. If they're going to take in somebody with risk, they really need to be compensated to mitigate some of the tragedy. I've seen a lot, everywhere from Concord all the way up north, Nashua, all the way out towards Portsmouth. I do believe that this gives opportunity to those that may have a higher risk. Not every place is going to be $2,000. Not every one is going to be $8,000. Some of these may be $1,500 or $1,000, because I've seen small ones. I do support this. I believe that the renters — the land owners really should be compensated for some of the risks that they take, because there are a lot of tragedies. I think it's fair for them, and I do think this helps out with more opportunities for people with poor credit, maybe transients, because there are a number of transients.
Senator Perkins Kukla (question to Senator Murphy): You and I have had many conversations about housing. The argument that's being offered is that this bill would help those who may not otherwise be able to get an apartment find an apartment, but I think part of the challenge is that some of these individuals cannot afford the apartment already. So how in your vision is someone who is already struggling to find an apartment and pay a rent and pay a security deposit now having more access to apartments because the cost has gone up?
Senator Murphy: Thank you for the question. I think someone who is truly that impoverished that they have no means of earning the first security deposit, they are already on the verge of hopelessness and homelessness. There are some communities — and we heard about this in committee — that reach out and help those people with security deposits, and they would be able to advance the money for an RCD. But the amendment takes care of that money and makes sure it comes back to the community or back to the municipality down the road. There is assistance available for those people in that situation. Again, these are people that the landlords would otherwise turn away and not ever consider renting to. This allows them the opportunity, perhaps, if they can access the funds, perhaps they can have that opportunity to have housing.
Senator Perkins Kukla (follow-up): I appreciate the response, but in the case you're describing, wouldn't a better policy for the state be to expand existing programs that provide assistance to these potential renters so that they potentially have greater access, as opposed to the resources of local programs that might assist with security deposits going half as far?
Senator Murphy: Senator, with respect, I think you and I are fundamentally going to disagree on the role of the state in providing housing for people. I would go back to the private market every single time and believe the private sector is always going to be better at doing virtually anything than the public sector. We just fundamentally disagree, politely. I believe that the private sector is always going to do a better job of providing housing or really any other good or service than the public sector.
Senator Perkins Kukla: Thank you, which is where we find ourselves today.
A roll call has been requested by Senator Rosenwald, seconded by Senator Avard, on the committee amendment.
Roll Call Vote on Committee Amendment:

Yes: Senators Rochefort, Lang, McConkey, Gray, Innis, Ward, McHugh, Avard, Murphy, Pearl, Sullivan, Abbas, Gannon, Carson
No: Senators Waters, Prentiss, Fenton, Rosenwald, Reardon, Birdsell, Long, Perkins Kukla, Altschiller
Excused: Senator Ricciardi

Result: 14 to 9 — the committee amendment is adopted.
A roll call has been requested by Senator Perkins Kukla, seconded by Senator Fenton, on ought to pass as amended.
Roll Call Vote on Ought to Pass as Amended:

Yes: Senators Rochefort, Lang, McConkey, Gray, Innis, Ward, McHugh, Avard, Murphy, Pearl, Sullivan, Abbas, Gannon, Carson
No: Senators Waters, Prentiss, Fenton, Rosenwald, Reardon, Birdsell, Long, Perkins Kukla, Altschiller
Excused: Senator Ricciardi

Result: 14 to 9 — the bill as amended passes. The motion of ought to pass as amended is adopted and the bill is ordered to third reading.