WHAT YOU NEED TO KNOW: EMERGENCY RENTAL ASSISTANCE FAQS
In December 2020, Congress passed the Consolidated Appropriations Act that—among other COVID relief measures— allocated $25 billion to the Treasury Department to create a new Emergency Rental Assistance program.
As states begin to open enrollment, NAA and NMHC remain engaged with Congress and the U.S. Treasury Department to ensure the program is administered in an efficient and effective manner that works for both residents and property owners/managers.
This document is an overview of the requirements set forth in the COVID-19 relief package signed into law December 27, 2020, and administered by the Treasury Department and Department of Housing and Urban Development (HUD). On January 19, the Treasury Department published a Frequently Asked Questions Document. Supplemental FAQs are expected to be released on a rolling basis. Leading industry groups sent a coalition letter to Treasury and HUD outlining a number of specific recommendations regarding implementation of the Rental Assistance Program. This was a follow-up letter to a letter sent on January 7. NAA and NMHC will continue to update this document as more information becomes available.
The information provided herein is general in nature and is not intended to be legal advice. It is designed to assist our members in understanding this issue area, but it is not intended to address specific fact circumstances or business situations. For specific legal advice, consult your attorney.
The Emergency Rental Assistance program makes 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. Grantees use the funds to provide assistance to eligible households through existing or newly created rental assistance programs. Below are the most frequently asked questions (FAQs):
The measure allocates $25 billion to the Treasury Department to create a new Emergency Rental Assistance Program. Many states and localities have already established their own renal assistance programs using prior CARES Act funds, and this model will replenish those programs (with some modifications) instead of trying to create a new federal program from scratch.
The Treasury Department will distribute the funds to the states, with no state receiving less than $200 million. Cities with populations over 200,000 can request to receive their allocations directly. The deadline for states to apply for assistance was January 12, 2021.
NAA and NMHC have requested the Treasury Department provide state and jurisdictional allocations and information as to how to participate in the program for households and owners on the Treasury website with links to administering state and local entities.
Emergency Rental Assistance payments will be made directly to States by the Treasury Department. Completed payment information and a signed acceptance of the award terms form were required to be submitted to the Department on January 12, 2021. Eligible grantees that do not provide complete information by January 12, 2021, may not receive an Emergency Rental Assistance payment.
Funds are available to be paid directly to the property owner on behalf of the renter.
Property owners will be able to apply for rental assistance on behalf of the resident.
If a property owner does not wish to participate, funds may be paid directly to the renter for subsequent payment to the property owner.
Jurisdictions are directed to prioritize households that are currently unemployed and have been unemployed for 90 days as well as households earning 50 percent of area median income (AMI) and below. Importantly, the measure bases qualifying income on the income the household is receiving at the time of application for assistance and not their prior income. Despite this preference, jurisdictions do have some flexibility to serve those with incomes up to 80 percent of AMI and can establish additional criteria.
An “eligible household” is defined as a renter household in which at least one or more individuals meets the following criteria:
- Qualifies for unemployment or has experienced a reduction in household income, incurred significant costs, or experienced a financial hardship due to COVID-19;
- Demonstrates a risk of experiencing homelessness or housing instability; and
- Has a household income at or below 80 percent of the area median.
Household income is determined as either the household’s total income for calendar year 2020 or the household’s monthly income at the time of application. For household incomes determined using the latter method, income eligibility must be redetermined every 3 months.
Jurisdictions are required to use no less than 90 percent of the funds for rental payments and are encouraged to prioritize rental and utility arrears. Assistance must be provided to reduce an eligible household’s rental arrears before the household may receive assistance for future rent payments.
An application for rental assistance may be submitted by either an eligible household or by a landlord on behalf of that eligible household. Households and landlords must apply through programs established by grantees/states or the entity the state has selected to administer the program. Administering entities have placed additional requirements on program participation, including rules regarding evictions and rental payments. In general, funds will be paid directly to landlords and utility service providers. If a landlord does not wish to participate, funds may be paid directly to the eligible household. Both the household and landlord should not submit applications for assistance to Treasury.
On January 19, the U.S. Treasury published a Frequently Asked Questions (FAQ) regarding the $25 billion Emergency Rental Assistance Program (ERAP), approved in the COVID-19 relief package signed into law December 27. These FAQs answer 14 questions and provide information on participation requirements, recordkeeping and definitions.
The FAQ outlines criteria for both prospective rent, rental arrears, utilities and home energy costs. Specifically, the following are among some provisions included:
- Clarifies that the ERA program can be used to cover rental payments beginning after March 13, 2020.
- Defines which utilities are covered under the program, including electricity, gas, water, sewer, trash removal, and energy costs such as fuel oil.
- Clarifies how applicant income should be documented and verified.
- Outlines the types of data and documentation grantees should collect in order to comply with Treasury reporting and recordkeeping requirements.
- Clarifies requirements for applicants who occupy federally subsidized or mixed-use properties such as LIHTC and for applicants receiving rental assistance other than ERA such as Housing Choice Voucher, Public Housing or Project Based Housing.