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 (ERAP).
As states begin to open enrollment, NMHC remains engaged with Congress and the Treasury Department to ensure the program is administered in an efficient and effective manner that works for both residents and property owners/managers.
In an effort to clarify specific provisions set forth as part of the program, Treasury has released guidance on an ongoing basis. The most recent guidance was released on March 26, 2021. Supplemental guidance is expected to be released in the future. In addition, the IRS has also released FAQs on Emergency Rental Assistance (ERA), outlining criteria for landlords to follow regarding ERA payments.
NMHC continues to provide feedback to Treasury and HUD regarding implementation. Most recently, NMHC spearheaded a real estate coalition letter to Treasury and HUD on February 26, 2021, outlining a number of specific recommendations. This was a follow-up to letters sent on January 7 and February 9.
- Treasury Department FAQ (most recent version dated March 26). https://bit.ly/3q4vmpm.
- Treasury Department List of Funding Distributed to States, Localities and More. https://bit.ly/37YzPUh.
- National Council of State Housing Agencies (NCSHA) State Level Emergency Assistance Programs. https://bit.ly/302vfjn
- IRS Emergency Rental Assistance FAQ (most recent version dated March 26). https://bit.ly/2PD5Hrl
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 (ERAP) 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.
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.
Every state that applied by a January 12 deadline received at least $200 million by January 26; although higherpopulation states received more funding. Cities with populations over 200,000 were allowed to request to receive their allocations directly.
Access all Emergency Rental Assistance fund disbursements by visiting USAspending.gov. In addition, you may also view state and local allocations by accessing the U.S. Treasury Department, Payments to States and Eligible Units of Local Government document. Finally, the National Council of State Housing Agencies (NCSHA) has created a map with links to state rental assistance programs.
NMHC has 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 have been 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.
Eligible households may receive up to 12 months of assistance, plus an additional three months if necessary, to ensure housing stability. Assistance can only be allowed in three-month increments, after which point an eligible household must re-apply for funds. The ERAP program can be used to cover rental payments and arrears beginning after March 13, 2020.
Each state and locality is charged with creating its own program and determining allocation priorities. Unfortunately,
there is no single database, as of now, that details the various programs. A chart with links to existing state programs
is available from NCSHA at https://www.ncsha.org/wp-content/uploads/2021-Updated-State-Level-ERA-Administrative-Entities.pdf. Firms are encouraged to research how their state or locality is distributing their aid so they can
share that information with residents.
The federal law makes it clear that if your resident does not apply for the relief directly and is behind on their rent, you, as a housing provider, can apply on their behalf and receive the funds directly. The law says you will need the resident’s signature/permission to do so, however and provide documentation of such application to the resident. In terms of practical application, though, this specific issue will likely be determined by each jurisdiction distributing the federal funds.
As written, the legislation requires housing providers to secure the resident’s signature or approval to seek rental assistance. That may complicate efforts by housing providers to seek past rent reimbursements for residents who have left the property. NMHC will continue to urge Congress, Treasury and local jurisdictions to allow for housing providers to be able to recoup lost rent through ERAP, including when the home has been vacated and contact with the resident cannot be re-established.
As long as your firm is participating in your jurisdiction’s program, any relief approved for your residents will be paid
directly to you. Some jurisdictions are requiring owners to erase some amount of past-due rent or forego their ability
to evict a non-paying resident, which may cause your firm not to actively participate in the program. In that case,
the resident can apply on their own and will be directed to deliver any relief they receive to their housing provider.
Enforcement of this requirement is undetermined at this point.
No. You do not have to participate. If you choose not to participate, your resident may receive funds directly which
they are supposed to use to pay the property owner. The enforcement mechanisms to make this happen are unclear,
however. Importantly, per the Treasury FAQ, once an owner is notified that a resident has applied for
the assistance, they have a 14-calendar-day window to decide whether to participate in the program (if notified by
mail) and 10 calendar days if notified by phone, text or email.
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.
- 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.
An “eligible household” is defined as a renter household in which at least one or more individuals meets the following criteria:
The Treasury FAQ also 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).
Beyond that, 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.
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 three months. Importantly, the Treasury FAQ clarifies how applicant income should be documented and verified.
- Internet service provided to the rental unit;
- Relocation expenses (including rental security deposits)
- Rental fees (including application or screening fees)
- Reasonable accrued late fees;
- Utilities and home energy costs; and
- Utilities and home energy costs arrears.
Jurisdictions are required to use no less than 90 percent of the funds they receive for rental and utility payments. Currently, they are further encouraged to prioritize rental and utility arrears. According to the law, assistance must be used for rental arrears before the household may receive assistance for future rent payments.
Per the Treasury FAQ, funds may used for “other expenses related to housing” including:
The Treasury FAQ also defines terms and how these costs should be documented.
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.
Per the Treasury FAQ, residents may self-attest as to their eligibility for the program, rather than requiring burdensome paperwork. Specifically, the FAQ reads, “... given the challenges presented by the COVID-19 pandemic, grantees may be flexible as to the particular form of documentation they require, including by permitting photocopies or digital photographs of documents, e-mails, or attestations from employers, landlords, caseworkers, or others with knowledge of the household’s circumstances. Grantees must require all applications for assistance to include an attestation from the applicant that all information included is correct and complete."
This will vary by state and locality, however; the Treasury Department did clarify in its FAQ that residents may self-attest as to their eligibility for the program. Specifically, the FAQ reads, “... given the challenges presented by the COVID-19 pandemic, grantees may be flexible as to the particular form of documentation they require, including by permitting photocopies or digital photographs of documents, e-mails, or attestations from employers, landlords, caseworkers, or others with knowledge of the household’s circumstances. Grantees must require all applications for assistance to include an attestation from the applicant that all information included is correct and complete."
The Treasury FAQ outlines the types of data and documentation grantees should collect in order to comply with Treasury reporting and recordkeeping requirements.
On January 19, the Treasury Department released initial guidance. Then, on February 22, the Treasury Department published an updated Frequently Asked Questions Document. Most recently, Treasury released a FAQ on March 16 with minor updates.
The most recent guidance answers 28 questions and provides information on participation requirements, recordkeeping and definitions. The FAQ outlines criteria for both prospective rent, rental arrears, utilities and home energy costs. Access the Treasury FAQ here.
Yes. Per the IRS FAQ, Section 501 Emergency Rental Assistance payments received – whether from a tenant or from a Distributing Entity on a tenant’s behalf – are includible in your gross income.
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