Congress Approves $25 Billion in Rental Assistance—Who Can Use it, And How

Published by Mark Shelburne on Monday, December 28, 2020 - 12:00am

The $2.3 trillion omnibus spending and COVID-19 relief bills, which became law on Dec. 27, include $25 billion in emergency rental assistance. The need is overwhelming. Estimates for unpaid rent range from $34 billion to $70 billion, and the amount will undoubtedly continue rising into the new year. While the federal prohibition against evictions for nonpayment is in effect through January, bringing balances current is the only long-term solution.

Distribution

The U.S. Department of Treasury will distribute the funds to states, tribes, territories, the District of Columbia and units of local government with populations exceeding 200,000. The definition of locality is “a county, municipality, town, township, village, parish, borough, or other unit of general government below the State level.”

With regard to the split between states and localities, the new law references a provision in the CARES Act. In order to receive funding, a unit of local government must submit a certification Treasury. These amounts will reduce what goes to the state. Novogradac has produced estimates of what is available to the nation’s largest cities and counties.

Blog Chart: Cities Estimated to Receive the Most Rental Assistance
Click to Enlarge

 

Blog Chart: Counties Estimated to Receive the Most Rental Assistance
Click to Enlarge

 

Eligible Uses

Agencies receiving the funds must expend at least 90% to pay

  • rent;
  • rental arrears;
  • utilities and home energy costs;
  • utilities and home energy costs arrears; and
  • other housing expenses resulting from the pandemic.

The assistance can last up to 12 months, plus an additional three months if necessary to ensure housing stability.

There are two categories of uses from the remaining 10%: other services related to the pandemic (e.g., case management) and/or agencies’ administrative costs.

Eligible Households and Priorities

The funds may only benefit tenant households meeting each of the following three criteria. Agencies also must ensure the assistance is not duplicative of any other federally funded source.

1. One or more individuals has

  • qualified for unemployment benefits, or
  • experienced a reduction in household income, incurred significant costs, or experienced other financial hardship due, directly or indirectly, to the pandemic (applicant must attest in writing).

2. One or more individuals demonstrate a risk of experiencing homelessness or housing instability, which may include

  • a past due utility or rent notice or eviction notice,
  • unsafe or unhealthy living conditions, or
  • any other evidence of such risk.

3. The household income may not exceed 80% of the area median (AMI) based on either

  • total income for calendar year 2020, or
  • confirmation of monthly income at the time of application.

When documented by tenant confirmation, the agency must re-determine eligibility every three months. The assistance does not count as income for purposes of determining eligibility under any federally funded program.

Among eligible households, the policies must prioritize those with:

  • incomes less than 50% of AMI, or
  • at least one individual unemployed as of the date of the application who has not been employed for the preceding 90 days.

Agencies may add other criteria.

Expenditure Process

Agencies will make payments to landlords and/or utility providers on behalf of eligible households. If a landlord or utility provider is unwilling to participate, the agency may provide funding directly to eligible households.

Landlords may either assist renters in applying for assistance or apply on behalf of renters. With the latter, the landlord must

  • obtain the signature of the tenant (may be electronic),
  • provide documentation of the application to the tenant, and
  • use any payments received to satisfy the tenant’s rental obligations.

Agencies’ Responsibilities

The law requires Treasury report on the following, which means agencies will need to collect it:

  • eligible households receiving assistance;
  • acceptance rate of applicants;
  • types of assistance provided to each household;
  • average amount of funding provided per household;
  • household income level separated by >30% of AMI, 30% to 50% and 50% to 80%;
  • the average number of monthly rental or utility payments covered.

Before starting collection, agencies will need to establish data privacy and security requirements that provide

  • all information and used only for the purpose of submitting reports; and
  • confidentiality protections for survivors of intimate partner violence, sexual assault, or stalking.

Agencies also must provide documentation of payments to households.

Conclusion

The $25 billion is a crucial step towards helping low-income households survive the pandemic. Novogradac is available to help agencies and landlords implement this new resource.

More information will be available at the Novogradac Implementing and Accessing New $25 Billion Rental Assistance Webinar on January 12.