ORANJ position on 2022 Bills on Refundable Deposits
There is recent legislation, introduced into both legislative bodies of the state, that seeks to create a mandatory provision in the state law for the return of deposits within one year following departure of the resident. Most of the laws regulating CCRCs are designed to insure their ongoing solvency. This proposed legislation could have the opposite effect which is why ORANJ opposes it. The financial health of CCRCs is the critical issue.
In the past there were issues with refundable deposits when the living unit in question had to be reoccupied before a departed resident received their refund. Legislation was passed in 2018 which required a sequential priority system to resolve these issues.
The percentage of residential units occupied varies significantly based on factors such as the economy, stock markets, housing prices, hurricanes and other weather events, and, very significantly, health crises such as the Covid 19 pandemic. If a significant number of residents pass or move away in a brief period of time and demand for residential units is low, the proposed legislation requiring refunds within a year could cause a financial crisis for a CCRC. This could force cutbacks in staff and services, which could further reduce demand, ultimately resulting in CCRCs seeking financial protection in the courts with residents’ deposits possibly diminished or delayed. Newspaper reports reflect the failure of CCRCs in other states due to occupancy declines due to winter storms, hurricanes, and especially the Covid 19 pandemic.
By and large, the recent sensational newspaper stories in the NJ Star Ledger about long delays relate to contracts in existence before 2018. The sequential priority system is generally working well.
We do not wish any of our CCRCs in New Jersey to suffer severe financial difficulties due to temporary causes of low occupancy. The proposed legislation would exacerbate such situations by requiring refundable entrance fees to be refunded by a CCRC during a period when insufficient new entrance fees are being received.
Most of the CCRCs in New Jersey are nonprofits, which do not have the capacity to raise additional equity in the markets. Many have their origins in religious homes for the elderly. New Jersey CCRCs are required to provide sustaining charitable assistance to a resident who is experiencing financial difficulties, except in limited circumstances.
ORANJ has sent letters to the following key legislators asking for a withdrawal of their bills. Senator Codey and Senator Gill (S-1457), Assemblywoman Jasey and Assemblywoman McKnight (A-1196), and Assembly-woman Munoz (A-4078), who are all sponsoring legislators of the bills. ORANJ also sent letters to Senator Vitale, Senator Gopal, and Senator Singer, all key Senate persons, informing them that ORANJ has asked Senator Codey and Senator Gill to withdraw Senate Bill 1457 and suggesting nonsupport of the bills if they reach committee hearings.
Jim McCracken, President & CEO, LeadingAgeNJ/DE, recently stated that their position on the proposed legislation is consistent with ORANJ and that they would like to coordinate our advocacy on this issue. He has suggested that ORANJ mobilize our membership to contact local district legislators to urge them to oppose the bills if or when they may begin to move in the fall of this Legislative Session.
Our final step will be to ask our ORANJ regional vice presidents to contact the CCRCs within their regions and ask them to suggest to their resident members that they contact their local New Jersey district representatives urging them to oppose this legislation. We would also ask each resident association president to publish internal information supporting the ORANJ position for distribution to the residents within their respective CCRCs.
Your support is urgently needed.
Gary Baldwin, Chair, Legislative Committee
Organization of Residents Associations of New Jersey