How to Tap Funds in the Emergency Rental Assistance Program

We explain how renters and owners can access the $25 billion assistance to cover past-due rents.

On Dec. 27, 2020, the Consolidated Appropriations Act, the year-end omnibus legislation that includes appropriations for all federal departments and agencies, tax provisions, and much needed COVID-19 relief provisions, was enacted. The relief for those affected by the ongoing COVID-19 pandemic has garnered the most attention.

Moody’s Analytics, a data firm, estimates that 11.4 million U.S. households that are behind on their rent owe an average of $6,000 each. And, according to the firm, most of the debt was accrued after enhanced unemployment payments expired last summer.

The legislation provides for $25 billion in emergency rental assistance and extends the federal eviction moratorium issued by the Centers for Disease Control and Prevention through Jan. 31, 2021.

On Jan. 5, the Treasury Department launched the Emergency Rental Assistance program established by the Consolidated Appropriations Act, making available $25 billion to assist households that are unable to pay rent and utilities due to the COVID-19 pandemic. The funds are provided directly to states, U.S. Territories, local governments, and Indian tribes. And grantees use the funds to provide assistance to eligible households through existing or newly created rental assistance programs.

We’ll answer eight common questions on eligibility, types of assistance, and how renters and owners can access the $25 billion in rental assistance money to help cover tenants’ past-due rents.

8 FAQs ABOUT THE EMERGENCY RENTAL ASSISTANCE PROGRAM

How will the Treasury distribute the funding?

The $25 billion in emergency rental assistance is funded through the Coronavirus Relief Fund (CRF) and administered by the U.S. Department of Treasury. Each state will have to establish agencies to distribute the funds to eligible families. And the funds can be used for rent, rent arrears, and past and future utility bills.

The funds will be provided directly to eligible grantees, which include “States (including the District of Columbia), U.S. Territories (Puerto Rico, the United States Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa), local governments with more than 200,000 residents, the Department of Hawaiian Home Lands, and Indian tribes (defined to include Alaska native corporations) or the tribally designated housing entity of an Indian tribe.”

Of the total amount of rental assistance, $400 million will be allocated to U.S. territories and $800 million to tribal communities. The remaining funds will be distributed within to states and localities with populations of 200,000 or more.

What types of assistance can eligible households receive?

At least 90 percent of the funds must be used to provide financial assistance, including back and forward rent and utility payments and other housing expenses that were incurred due, directly or indirectly, to the pandemic.

Assistance can be provided for 12 months. States and localities can provide an additional three months of assistance “if necessary to ensure housing stability for a household.”

The rental assistance can be paid directly to landlords, or the funds can be distributed directly to the renters. This will allow for relief to both renters who are at risk of losing their homes, as well as the property owners who rely on rental payments for their livelihoods. 

When providing forward rent, assistance can only be given for three months, though households can subsequently reapply for additional assistance. To the extent that households have back rent, states and localities may not make commitments for forward rent payments unless they’ve also provided assistance to reduce an eligible household’s rental arrears.

Recipients can use up to 10 percent of funds to provide case management and other services related to the pandemic, as defined by the Treasury secretary, intended to help keep households stably housed.

Who is eligible to receive rental assistance?

Households and individuals will need to show that their household income is below 80 percent of the area median income and that at least one person in the household:

• Has qualified for unemployment benefits or can attest in writing that he or she has experienced a reduction in household income, incurred significant costs, or experienced other financial hardship due, directly or indirectly, to the pandemic; and
• Can show that they are at risk of eviction or housing instability.

Income determination will be based on either the household’s total income in 2020, or the monthly income the household is receiving at the time of application. If income determinations are made based on the applicant’s monthly income, the state or locality must re-determine eligibility after three months.

Funds must be used for households with incomes below 80 percent of area median income (AMI), and states and localities must prioritize households below 50 percent of AMI or those who are unemployed and have been unemployed for 90 days. States and localities can provide additional prioritization of funds.

What documentation will be required?

The legislation states that applicants must qualify for unemployment benefits or attest in writing that they have experienced a reduction in household income, incurred significant costs, or experienced other financial hardship due, directly or indirectly, to the pandemic. Additionally, applicants must demonstrate a risk of experiencing homelessness or housing instability.

Ultimately, the specific evidence required to show risk of experiencing homelessness or housing instability will be determined by the eligible grantee the funds are distributed to. The Treasury Department says this may include past due rent and utility notices and eviction notices, if any, as part of the application process.

Must a beneficiary of the program have rental arrears?

No, the statute doesn’t prohibit the enrollment of households for only prospective benefits. Section 501(c)(2)(B)(iii) of Division N of the act says that assistance to reduce rental arrears, if any, must be provided before prospective rental benefits may be provided. The statute also limits prospective benefits to three months at one time.

Must a state or locality pay for all of a household’s rental or utility arrears?

No. The full payment of arrears is allowed up to the 12-month limit established by the statute if the arrears can be shown to be due to COVID-19. States may provide assistance for an additional three months if necessary to ensure housing stability for a household. But a state may structure a program to provide less than full coverage of arrears.

How will renters or landlords apply for assistance?

Renters will apply for assistance with entities that state and local grantees select to administer the program. States and localities can make payments directly to landlords or utility companies on behalf of renters. If a landlord refuses to accept the rental assistance, the administering entity can provide assistance directly to the renter, who can then make payments to the landlord or utility provider. Landlords can directly apply for rental assistance under the program but must notify the tenant that assistance is being provided on his behalf and obtain the tenant’s consent.

How will the program handle ‘duplication of benefits?’

The legislation states that “to the extent feasible,” grantees should ensure that any rental assistance provided to an eligible household is not duplicative of other federally funded rental assistance. The Treasury Department has said an eligible household that occupies a federally subsidized residential or mixed-use property may receive Emergency Rental Assistance funds, provided that those funds aren’t applied to costs that have been or will be reimbursed under any other federal assistance.

Since an eligible LIHTC household doesn't receive a direct monthly federal subsidy, these households can qualify for emergency rental assistance. In the case of an LIHTC unit, rents aren’t based on a tenant’s income. Instead, rent is set by the use restriction tied to the unit. This means that a tenant’s rent won’t change even if the family’s income significantly increases or decreases.

If the renter receives emergency rental assistance through the Coronavirus Relief Fund (CRF), the fund can’t pay for the same obligation that’s being assisted by other funding—for example, if someone receives one month of rental assistance through the CARES Act, she wouldn’t be eligible to receive additional emergency rental assistance through the CRF for the same month. But households that received CARES Act funds for rental assistance previously but are no longer receiving that assistance and still need help should be able to receive CRF funds.

CDC Extends Federal Eviction Moratorium to March 31

Section 502 of the Consolidated Appropriations Act contains an extension of the Temporary Halt in Residential Evictions originally issued by the Centers for Disease Control and Prevention (CDC) on Sept. 4, 2020. The moratorium was set to expire on Dec. 31, 2020, and the legislation extended the moratorium through Jan. 31, 2021.

On Jan. 20, 2021, President Biden signed an executive order mandating that the CDC extend the current eviction moratorium until at least March 31, 2021. While the extension is not yet published in the Federal Register, Dr. Rochelle Walensky, the new director of the CDC, has already agreed to implement the eviction moratorium extension. (We previously discussed the CDC order in the October 2020 issue; see “CDC, HHS Temporarily Halt Residential Evictions Nationwide.”)

To invoke the CDC’s order, residents must provide a signed declaration to the owner. Each adult listed on the lease should complete and provide a declaration. The declaration requires the resident to agree that he or she:

• Has used best efforts to obtain all available government assistance for rent or housing;
• Either expects to earn no more than $99,000 in annual income for calendar year 2020 (or no more than $198,000 if filing a joint tax return), wasn’t required to report any income in 2019 to the IRS, or received an Economic Impact Payment (stimulus check) pursuant to Section 2201 of the CARES Act;
• Is unable to pay full rent or make a full housing payment due to substantial loss of household income, loss of compensable hours of work or wages, layoffs, or extraordinary out-of-pocket medical expenses;
• Is using best efforts to make timely partial payments that are as close to the full payment as the individual’s circumstances may permit, taking into account other nondiscretionary expenses;
• If evicted, would likely become homeless, need to move into a homeless shelter, or need to move into a new residence shared by other people who live in close quarters because he or she has no other available housing options;
• Understands he or she will still need to pay rent at the end of the moratorium (now extended to March 31, 2021);
• Understands that fees, penalties, or interest for not paying rent or making a housing payment on time, as required, may still be charged or collected; and
• Understands that any false/misleading statements may result in criminal and civil actions.

Residents who previously submitted a declaration should not be asked to resubmit and should have continued protections until March 31, 2021. Nothing in the CDC order prevents landlords from charging or collecting fees, penalties, or interest as a result of a tenant’s inability to pay rent on a timely basis. And evictions unrelated to nonpayment of rent can still take place. In addition, any state, local, tribal, or territorial area with a moratorium on residential evictions that provides the same or greater level of public-health protection can supersede the CDC order.