On May 7, the U.S. Treasury Department, in coordination with the White House American Rescue Plan Implementation Team and the U.S. Department of Housing and Urban Development (HUD), released the allocation of the additional $21.6 billion under the American Rescue Plan for Emergency Rental Assistance (ERA 2). In concert with the additional funds, new guidance pertaining to the Emergency Rental Assistance Programs (ERA 1 and ERA2) were also released.
In December 2020, the Consolidated Appropriations Act was signed into law and included $25 billion in emergency rental assistance (ERA 1). The March 2021 American Rescue Plan Act further supplemented these funds with an additional $21.6 billion in emergency rental assistance (ERA 2).
As states continue to administer ERA 1 funding and begin to open enrollment for the ERA 2 program, NMHC remains engaged with Congress, the Treasury Department and HUD to ensure the programs are 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 both the ERA 1 and ERA 2 programs.
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 May 7, 2021. Supplemental guidance is expected to be released. 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 meeting with the Administration where we provided updates from NMHC members on implementation efforts as a follow-up to specific recommendations provided to the Administration via letters sent on April 20, February 9, February 26 and January 7.
- Treasury Department FAQ and Fact Sheet (most recent version dated May 7). https://bit.ly/3o6OEes
- Treasury Department List of Funding Distributed to States, Localities and More.
- 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) approved under the Consolidated Appropriations Act enacted in 2020 (ERA 1) makes available $25 billion and the American Rescue Plan enacted in 2021 includes $21.5 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 both the $25 billion approved in ERA 1 and the $21.5 billion approved in ERA 2, to the Treasury Department to create an 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.
- Link: https://home.treasury.gov/system/files/136/Emergency-Rental-Assistance-Payments-to-States-and-Eligible-Units-of-Local-Government.pdf
ERA 1 funds were provided to every state that applied in January 2021, with states receiving at least $200 million; although higher population states received more funding. Cities with populations over 200,000 were allowed to request to receive their allocations directly.
ERA 2 funds were provided to the states on May 7, 2021, with allocations for smaller states reduced from $200 million to $152 million.
On May 7, Treasury announced that they will be establishing an online hub of local emergency rental assistance program links to make it easier for renters and landlords to find programs in their area. NMHC will update this FAQ with a link to that hub once it is created.
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.
The Treasury Department has provided state and jurisdictional allocations on their website for both ERA 1 and ERA 2 funds. Every state that applied for ERA 1 funds has received funding. In early May, Treasury opened the application process for states to apply for ERA 2 funding. Treasury has urged grantees to apply by May 10, as the American Rescue Plan requires the Department to disburse 40 percent of funds by that date. Applications submitted after May 10, may not be approved as quickly.
Emergency Rental Assistance payments for ERA 1 were made directly to states by the Treasury Department in January 2021. On May 7, the Treasury Department released state allocation amounts for ERA 2 funds and opened the application process for states to apply for funding.
Under ERA 1, 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 aggregate amount of financial assistance an eligible household may receive under ERA 2, when combined with financial assistance under ERA 1, must not exceed 18 months.
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. At present, there is no single database detailing the various programs. However, the Treasury Department announced in their May 7 FAQ that they will be establishing an online hub of local emergency rental assistance program links to make it easier for renters and landlords to find programs in their area.
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.
The May 7 guidance states “programs must prohibit the eviction of renters for nonpayment in months for which they receive emergency rental assistance.” In addition, “Treasury strongly encourages grantees to require landlords that receive funds under the ERA, as a condition of receiving the funds, not evict tenants for nonpayment of rent for 30 to 90 days longer than the period covered by the rental assistance as a condition of receiving payment.”
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. While NMHC continues 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 – the May 7 guidance was silent on this issue.
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.
The May 7 Treasury guidance makes clear that ERA 2 funds “must be offered directly to renters when landlords do not accept payment.” ERA 2 does not require grantees to seek the cooperation of the landlord before providing assistance directly to the resident.
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 May 7 FAQ, once an owner is notified that a resident has applied for the assistance, they have a 7-calendar-day window to decide whether to participate in the program (if notified by mail) and 5 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. Furthermore, the May 7 Treasury FAQ allows administering entities to verify the income eligibility of renters by using any reasonable fact-specific proxy, such as the average income in the neighborhood in which renters live.
- Qualifies for unemployment benefits or has experienced a reduction in household income, incurred significant costs, or experienced a financial hardship due directly or indirectly to the COVID-19 pandemic;
- Demonstrates a risk of experiencing homelessness or housing instability; or
- Has a household income at or below 80 percent of the area median.
- Qualifies for unemployment benefits or has experienced a reduction in household income, incurred significant costs, or experienced a financial hardship during or due directly or indirectly to the COVID-19 pandemic;
- Demonstrates a risk of experiencing homelessness or housing instability; or
- Qualifies as a low-income family (as such term is defined in section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b)). 
An “eligible household” for ERA 1 is defined as a renter household in which at least one or more individuals meets the following criteria:
An “eligible household” for ERA 2 is defined as a renter household in which at least one or more individuals meets the following criteria:
Importantly, in ERA 1 residents must show financial hardship “due, directly or indirectly, to” COVID-19. The definition for eligibility was expanded in ERA 2 to include a financial hardship “during” the pandemic.
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.
 As of the date of these FAQs, the definition of “low-income families” in 42 U.S.C. 1437a(b) is “those families whose incomes do not exceed 80 per centum of the median income for the area, as determined by the Secretary [of Housing and Urban Development] with adjustments for smaller and larger families, except that the Secretary may establish income ceilings higher or lower than 80 per centum of the median for the area on the basis of the Secretary’s findings that such variations are necessary because of prevailing levels of construction costs or unusually high or low family incomes.”)
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. If an applicant’s household income has been verified to be at or below 80 percent of the area median income for ERA 1, or if an applicant’s household income has been verified as a low-income family as defined in section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b) for ERA 2, grantees are permitted to rely on a determination letter from the government agency that verified the applicant’s household income, as long as the determination was made on or after January 1, 2020. Importantly, the May 7 Treasury FAQ clarifies how applicant income should be documented and verified.
ERA 1 requires that payments not be duplicative of any other federally funded rental assistance. With respect to ERA 2, grantees must not refuse to provide assistance to households on the basis that they receive assistance, due to the disproportionate effect such a refusal could have on populations intended to receive assistance under the ERA and the potential for this practice to violate Title VI of the Civil Rights Act.
- 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.
ERA 1 and ERA 2 permit the enrollment of households for prospective rent. ERA 1 requires grantees not make commitments for prospective rent unless it has also provided assistance to reduce the rental arrears, this requirement does not apply to ERA 2.
Per the Treasury FAQ, funds may used for “other expenses related to housing” including:
Importantly, the May 7 Treasury FAQ, acknowledged “that there may be increased need over the coming months for more hard-pressed renters to find new housing,” a recognition that alternative housing options will be an important consideration for some individuals. To that end, Treasury has widened the scope of qualified expenses to include “moving expense, security deposits, future rent, utilities and the cost of a transitional stay in a hotel or motel when a family has been displaced.”
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.
Unlike the first round of ERA 1 funding, the new Treasury guidance states that ERA 2 funding must be made available to renters “first and immediately.” Implications for this new requirement are still unclear. However, many are interpreting this to mean that renters may now receive funding directly—rather than the current practice of housing providers receiving it on their behalf. Both the household and landlord should not submit applications for assistance to Treasury.
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 May 7, Treasury FAQ specifically states that, “Treasury strongly encourages grantees to avoid establishing documentation requirements that are likely to be barriers to participation for eligible households.”
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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