On January 19, the Department of Treasury released a Frequently Asked Questions (FAQ) document that provides further guidance on the requirements for accessing and implementing the Emergency Rental Assistance Program (ERAP). The FAQ, which will guide how the $25 billion is deployed, provided further clarity for grantees and eligible applicants but still leaves some areas of concern and confusion unresolved.

Overview of the Emergency Rental Assistance Program

Based on the current formula for allocating funds, $23.875 billion will go to states and local governments; $800 million will go to Tribal governments and the Department of Hawaiian Homelands; $400 million to Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands and American Samoa; and $15 million will be set aside for Treasury to implement the program. Additionally, allocations to eligible local governments (those with populations of 200,000 or more) will come from that state’s share, capped at 45 percent of the total state allocation. The minimum amount a state (including the District of Columbia) can receive is $200 million.

To be eligible for assistance, recipients must be renter households earning less than 80 percent of area median income (AMI) with a preference given to households earning less than 50 percent AMI. Renters must also demonstrate they are either at risk of homelessness or housing instability, and must also demonstrate financial hardship by documenting that they qualified for unemployment insurance, experienced a reduction in income, incurred significant costs, or experienced hardship due to the pandemic. At least 90 percent of allotted funds must be used for the payment of rent and utilities and rent and utility arrears, and the remaining ten percent may be used for housing stability services, including case management, administrative costs, and other services to maintain housing stability.

The ERAP will be crucial to ensuring that tenants stay housed while also helping to stabilize the rental housing industry. Coupled with stimulus checks and the extension of the eviction moratorium, the ERAP will facilitate essential housing security for many families.

Key Takeaways from Treasury’s FAQ

Documenting Eligibility

Most significantly, the FAQ guidance clarifies that program administrators will be required to obtain documentation of a household’s hardships – despite pleas from housing advocates and practitioners that Treasury allow applicants to self-certify their income and risk of homelessness. Grantees will therefore be required to verify either the household’s total income for calendar 2020 or the household’s monthly income at the time of application, using the two months prior to the date of application. Moreover, grantees will be required to obtain source documentation to prove the tenant’s risk of homelessness or housing instability.

This provision of the guidance is concerning, as it will likely inhibit the ability of state and local governments to ensure timely and fair distribution of resources. Tenants are certain to face challenges in obtaining needed documents, accessing the internet, and receiving timely responses from unemployment agencies, landlords, and utility providers. For instance, qualified applicants whose last employer has suspended activities or had to shut down operations will have tremendous difficultly proving their hardship was “Covid-related”. Moreover, this requirement is in stark contrast to existing rental assistance programs which allow tenants to self-attest to their hardships because program administrators know all too well the administrative hurdles involved in obtaining wage statements, eviction notices, past due rent or utility notices, unemployment compensation statements and more – and doing it all electronically. For prospective rent and utility payments, the statute requires that tenants re-apply, and grantees re-certify hardship every three months, which will certainly add to the administrative hurdles.

Applications

Under the ERAP program, grantees can make payments directly to tenants only if a landlord or utility provider declines to participate in the program. This provision led many stakeholders to question what activities would constitute as outreach and non-participation. On this point, the FAQ clarifies that a “reasonable effort” to contact the landlord or utility provider will have been satisfied if a request is sent in writing via certified mail and the addressee does not respond within 21 days, or at least three emails and/or phone calls are documented in a 21-day period without a response. This provision is troubling because, in many states, 21 days is sufficient time to evict a tenant who has not evoked their declaration form under the CDC eviction moratorium. This provision will also further delay the deployment of much-needed resources.

Administrative Costs

As stated above, at least 90 percent of allotted funds must be used for the payment of rent and utilities. According to the FAQ, the remaining 10 percent may be used for a combination of services and administrative costs. However, there is some disagreement about this distribution of funds, which is addressed in 2 different sections of the statute. Subsection (c)(3) Housing Stabilization Services clearly states that 10 percent of funds are set aside for services, while subsection (c)(5) clarified that 10 percent of funds maybe be set aside for administrative costs. Advocates believe Congress intended to allow grantees to set aside a full 10 percent (of the 90 percent allocated for rent and utilities) for administration, which will be necessary for a program of this size and scope. 

Other takeaways from the FAQ include: 

• Eligible utilities and home energy costs include electricity, gas, water and sewer, trash removal and energy costs, such as fuel oil. Telecommunication services such as the telephone, cable, and the internet, however, will not be considered to be utilities.
• Recipients do not need to owe rent arrears to qualify and grantees are not required to pay all arrears – although grantees may not provide assistance for arrears that were accrued prior to March 13, 2020.
• Recipients do not need to be in the home they occupied when the pandemic began.
• Households who receive a monthly federal subsidy that adjusts the tenant’s rent according to changes in income, such a HUD’s Housing Choice Vouchers or Project-Based Rental Assistance, may not receive ERAP assistance. However, if the applicant receives rental assistance that does not adjust the tenant’s rent based on changes in income, then the tenant can use ERAP assistance to cover the tenant-paid portion of rent and utility costs.

Remaining Questions

To ensure that these critically needed resources reach vulnerable households as quickly and effectively as possible, the following questions require further clarification:   

• Would Treasury accept the tenant’s signed CDC eviction moratorium declaration form as documentation of hardship?
• How can grantees demonstrate the required prioritization of households below 50% AMI, and can this be accomplished by streamlining ERAP with other income-qualified federal programs? 
• What is included under “housing related services”, and specifically, do right-to-counsel programs qualify?

Next Steps

Enterprise applauds Congress for taking this bold step to promote the housing stability of millions of Americans. The new administration must work quickly to ensure that housing and unemployment benefits roll out promptly and any lingering questions and concerns are addressed with further guidance. These priorities will ensure that families that have been impacted by the pandemic have the support that they need during this public health emergency. For more information on the specifics of the program and the recently published FAQ, click here.