Hartford Business Journal

8 Hartford Business Journal • November 2, 2020 • www.HartfordBusiness.com ing not to pay rent simply to take advantage of a temporary situation. "That certainly is not my experi- ence," Kemple said. "While there may be people out there who are taking advantage, the vast majority of people who I have any contact with are really in desperate straits." Kemple has pushed the Lamont administration to commit more fund- ing, at least another $60 million, to the state's rental assistance program, and she hopes a federal rental assistance stimulus is forthcoming. Mixed bag The pandemic is impacting land- lords unevenly. Many tenants — particularly in higher-end properties — have been paying rent as usual. The quasi-public Capital Region Development Authority (CRDA), which has 24 apartment buildings containing nearly 2,000 units in its loan portfolio, hasn't heard much complaining from its landlord-borrowers about renter nonpayment, according to Executive Director Michael Freimuth. "I've been expecting it to pop up some place, but we haven't seen it," Freimuth said. "That doesn't mean there aren't individual cases out there." Any pandemic-related troubles experienced by CRDA's multifamily developments — which are con- centrated in downtown Hartford and contain largely market-rate units — have been mostly related to construction delays, sluggish leasing activity for newly finished properties, and higher vacancy rates for some. The Connecticut Housing Finance Authority (CHFA), which oversees a $1.3-billion portfolio of more than 700 Connecticut rental properties, reports similar financial stability. While CHFA was worried back in March about how COVID-19 might impact its portfolio, things so far have turned out better than expected, CHFA CEO Nandini Natarajan said. The quasi-public agency, which is- sues public bonds to finance affordable housing for low- and moderate- income renters, has had to grant only seven loan payment defer- rals to developer- borrowers facing a COVID-19 cash crunch. Natarajan's hunch is that federal stimulus money has lessened the potential blow, in addition to tenants in those proper- ties having been deemed essential workers and still earning a paycheck. Section 8 vouchers held by a portion of CHFA tenants also guarantee some stability in rent payments. 107 Old Windsor Road, Bloomfi eld, CT 06002 (860) 242-8586 | Fax (860) 242-8587 www.pdsec.com PDS ENGINEERING & CONSTRUCTION, INC. THINK • PLAN • BUILD Another Successful Project by PDS DESIGN BUILDERS • GENERAL CONTRACTORS • CONSTRUCTION MANAGERS Spotlight on: Public Safety Litchfi eld County Regional Fire School | Torrington, CT Total Project Size: 28,050 SF The State of Connecticut selected PDS to Design/Build their state of the art Regional Fire School in Torrington, CT. The project entailed demolishing all existing buildings to create a new 4 facility campus complex. These buildings consist of a 12,650 SF administration facility, a 6,000 SF maintenance facility, a 5,900 SF burn building, and a 3,500 SF training tower. These buildings were designed to meet the compliance standards for High Performance Buildings as required for State Facilities. The campus is located atop a mountain with severe differences in grade elevation. >> Ticking Time Bomb? continued Lower-end apartment properties face more stress Glastonbury-based Trio Properties manages 23 apartment properties in Connecticut, the major- ity of them Class A buildings, including a handful of CRDA-financed developments in Hartford. Trio has seen firsthand the ways in which COVID-19 has put tenants of lower means into tougher situations, said President Jeff Ferony. "[The eviction moratorium] is affecting property types a little differently," Ferony said. "It's all really about the socioeconomic level of the residents." He said tenants in higher-end buildings who have lost their jobs or have otherwise needed to break their leases have been more likely to approach building management to negotiate a buyout. The resulting vacancies from those agree- ments have been more of a challenge across Trio's portfolio, according to Ferony, who is an active member of the Connecticut Apart- ment Association. However, rent delinquency rates across the nearly two-dozen properties Trio manages have more than doubled, from 2.9% at the end of 2019 to 6.9% at the end of September, he said. One property in particular, a Class B complex in Greater Hartford, is helping to drive that trend, according to Ferony, with a rent delinquency rate of 23% as of Oct. 21, vs. 3% in normal times. "The property's cash flow is in trouble, we're having a hard time paying some bills, we're trying to shuffle around cash and we have to go to our client to ask for funding," Ferony said. "They're going to have to come up with money from somewhere else to keep services going there." The annualized revenue impact for the owner could be approximately 10%, which he called "very meaningful." He suspects many other rental properties could be in a similar or even worse position. If tenants continue to not pay into the com- ing year, the financial damage could reach a breaking point for some. "I think services are going to be curtailed to some degree," he said. "I think that's what people are nervous about — not being able to pay their bills and their vendors shutting them off." Nandini Natarajan, CEO, Connecticut Housing Finance Authority

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