The U.S. Treasury Department recently published revised guidance for states and cities on how to use the Emergency Rental Assistance (ERA) funds that Congress approved last December. The new guidance issued this month makes it easier for low-income renters to access ERA, reversing earlier rules that heavily favored landlords.
An earlier FAQ document in March laid out who is eligible for the assistance, how much they can receive, and how long they can receive it.
What is Emergency Rental Assistance?
Emergency Rental Assistance works by paying for back rent, or rent going forward for qualified low-income renters. The same is true for past-due utility bills and utility assistance going forward. Utilities covered by ERA include electricity, gas, water and sewer, trash removal, and energy costs like fuel oil. Late fees for rent or utilities can also be reimbursed with ERA funds.
ERA can also pay for other housing expenses. These costs include relocation costs and rental fees. Rental security deposits are also relocation expenses. In addition, hotel and motel costs are eligible as part of a transition.
These other expenses also include the cost of internet service. The FAQ says that, “Internet service provided to a residence is related to housing and is in many cases a vital service that allows renters to engage in distance learning, telework, and telemedicine and obtain government services.”
Grantees do not have to pay for all of a household’s rent or overdue utility payments. Grantees may provide utility assistance only. ERA beneficiaries can get help with their rent going forward even if they don’t owe any back rent payments.
How Long Does Emergency Rental Assistance Last?
The ERA program was first funded with $25 billion in a December, 2020 COVID relief package. The recently passed American Rescue Plan included another $21.55 billion in ERA funds. Because of differences in the legislative language, some program rules will be different depending on what funds are used to help someone.
Assistance from the December legislation will be called ERA1. Assistance funded from the American Rescue Plan will be called ERA2.
Low-income renters can receive ERA1 for a total of 12 months. This includes both back rent and assistance going forward. A three month extension is possible if the grantee determines it is needed to maintain housing stability. If renters receive help from both ERA1 and ERA2 funds, the combined time they receive assistance cannot exceed 18 months.
Tenants can apply to have back rent paid from before the time the law was passed by Congress, but only as far back as March 13, 2020. This is the date the federal COVID-19 emergency was declared.
Who is Eligible for Emergency Rental Assistance?
- For ERA1, renters who qualified for unemployment benefits or had a reduction in income, incurred significant costs, or other financial hardship due, directly or indirectly, to the COVID-19 outbreak. For ERA2, the language has been changed to “financial hardship during the COVID-19 outbreak.”
- Renters who can demonstrate a risk of housing instability.
- Renters with incomes up to 80% of the Area Median Income (AMI). Grantees must prioritize renters with income at or below 50% AMI.
Homeowners are not eligible for ERA.
How to Get Emergency Rental Assistance
The FAQ’s guidance reduces the paperwork burden on low-income renters. Earlier guidance encouraged program grantees to provide assistance without imposing “undue documentation burdens.” The newest guidance prohibits grantees from having documentation requirements that would reduce participation.
ERA grantees are encouraged to accept “self-attestations” for any aspect of determining eligibility or the amount of assistance. This means that low-income renters can state in writing that they meet different eligibility criteria.
This guidance saves renters from having to find lots of documentation at a time when they are facing a housing crisis. Many grantees will still want documentation for some items, so applicants should check their local program’s document requirements before applying.
To qualify on the basis of unemployment, renters must be unemployed for at least 90 days before the application. The guidance says that grantees can accept self-attestations from unemployed applicants. Self-attestations are required from applicants who are claiming reduction in income or other financial hardship.
The guidance says that renters can show they are at risk of homelessness with several documents. A past-due utility bill, delinquent rent warning, or eviction notice all suggest an unstable housing situation. Documenting unsafe or unhealthy living conditions can also make the case that renters may risk experiencing homelessness.
Income eligibility can be figured on the basis of either total adjusted gross income for 2020, or monthly adjusted gross income at the time of the application. If renters qualify on the basis of monthly income, they will need to requalify every three months.
Grantees can accept self-attestations for income-eligibility. Documents that can be used to verify income include W-2’s, paystubs, tax filings, bank statements, or a written statement from an employer. The newest guidance also says that grantees may use “any reasonable fact-specific proxy to verify income eligibility.” An example would be if the renter lives in a neighborhood where the average income level is low.
What if Landlords Refuse to Participate?
The ERA program works best when landlords participate. The Treasury Department sends back rent and ongoing monthly payments directly to landlords. However, landlords can decline to participate in the program. When that happens, ERA can go directly to tenants so that they can make their rent payments themselves.
Earlier guidance gave programs the option to pay tenants directly when landlords refuse to participate. Few programs have given tenants this option. The National Low-Income Housing Coalition (NLIHC) has been tracking ERA programs around the country, During a March webinar, NLIHC researchers said that only about 30% of programs allow direct tenant payments.
The most recent guidance now REQUIRES state and local ERA programs to provide direct payments to tenants when landlords decline. In addition, the new guidance allows programs to just pay all renters directly, bypassing landlords altogether.
Before payments can go to tenants, grantees must do outreach to determine if landlords will participate. It is assumed that landlords will not participate if:
- A request is mailed and the grantee does not receive a reply in 7 days.
- A grantee does not receive a reply after three phone calls, texts, or emails within a 5 day period.
- A landlord declines to participate in writing.
The earliest guidance said that grantees had to wait 21 days before assuming landlords will not accept the ERA. This left little time to get funds to tenants so they pay rent on the first of the month. The new framework gives landlords time to decide if they want to accept the rental assistance. It also leaves plenty of time for tenants to receive funds and make their own payments.
What Documents Are Required?
All renters requesting ERA will need to document their place of residence and confirm the amount they pay for rent. A copy of the current lease is the best option. It establishes the address of the residence and shows the amount owed for rent.
If renters do not have a lease, other documentation can be used to confirm residence. These include evidence of paying utilities for the unit, or a written attestation from the landlord or management company.
When there is no signed lease, the amount of rent owed can be verified with other documents. These may include bank statements, check stubs, or a written attestation from the landlord or management company.
If applicants can verify their place of residence, but do not have the documents to verify their rent obligation, they have another option. Tenants can provide a written attestation requesting assistance up to 100% of the area Fair Market Rent, as determined by HUD.
Renters seeking ERA for unpaid utility bills will need to provide documentation. Low-income renters will need invoices, bills, or other documentation that shows the amount owed on utilities. These kinds of documents will also be needed if renters are looking for help with internet services.
Other Important Facts
Tenants in federally assisted housing can qualify for ERA, as long as it does not pay costs that are covered by their other federal housing assistance. The newest guidance prohibits ERA2 programs from rejecting applicants just because they live in federally assisted housing. ERA1 programs are at least encouraged not to reject applicants in federally assisted housing.
Even though these renters receive federal housing assistance, delays in income recertification may result in back rent owed. ERA can also help if these tenants find themselves unable to pay their portion of the rent or their utilities.
The newest guidance protects renters from eviction while payments are being made on their behalf. This will protect renters when there are delays getting their assistance payments out. The new guidance also encourages grantees to require landlords who take rental assistance to not evict tenants for at least 30-90 days after the assistance ends.
ERA can pay the cost of hotels and motels when renters are displaced and cannot find another place to stay. It will cover the cost of the room, but not other costs unrelated to shelter (like movie rentals or room service).
If a household is eligible for another program, such as Emergency Shelter Grants, agencies should use those funds first. The most recent guidance also strongly encourages use of ERA funds for transitional relocation expenses so that families can move more quickly to stable housing.
Tenants with rent-to-own agreements may qualify for ERA. These are cases where the tenant has the option to purchase the property at the end of the lease term. ERA can help these tenants if they do not hold the property’s mortgage, deed, or title; or have exercised the option to purchase.
Renters living in manufactured housing can also receive ERA. These renters are eligible for payments on the unit, the land it is on, or both. Households in manufactured homes may also receive utility assistance and help with other expenses related to housing.
ERA programs can use up to 10% of their funds for housing stability services. Examples of housing stability services include housing counseling, fair housing counseling, case management, services for domestic violence and human trafficking survivors, and services for seniors and persons with disabilities. Legal services to help people avoid eviction are also eligible for this funding.