Treasury Updates ERA FAQs as Funds Start Rolling Out

The U.S. Department of the Treasury recently announced that it has distributed $6.1 billion through the Emergency Rental Assistance (ERA) program in less than two weeks since $21.6 billion was allocated to the program through funding provided by the American Rescue Plan Act of 2021. The program is intended to prevent evictions and ensure basic housing security for Americans affected by the COVID-19 pandemic. This second iteration of the ERA program was created on March 11 when President Biden signed the legislation into law.

The funds are beginning to be distributed at a precarious time for many low-income renters. According to the Treasury Department, nearly 7 million Americans reported being behind on rent in the second half of April 2021, and more than 40 percent of those renters worry that they could be evicted sometime in the next two months. In addition, there are almost 12 million Americans who lack confidence that they can make next month’s rent.

“The pandemic has exacerbated America’s already severe housing affordability crisis, threatening the security and livelihoods of families and landlords through no fault of their own,” stated Deputy Secretary of the Treasury Wally Adeyemo. “Treasury is committed to providing direct, rapid support to those impacted by the COVID-19 pandemic and addressing the deep disparities in our housing systems that threaten our economic recovery.”

Although funds are being distributed to states and communities, the ERA program has been criticized for the slow pace of money actually getting into the hands of landlords and renters. According to a March report from the Government Accountability Office, a lack of clear guidance has caused some grantees to develop burdensome application requirements, which have increased processing times and limited participation.

To address the delays in vetting applicants and distributing aid to renters and landlords, the Biden administration has issued enhanced policies to help quickly distribute the funds. The Treasury Department has updated the guidance to emphasize additional flexibilities in this second round of funding. We’ll cover the points the Treasury Department considers to be significant changes with regard to landlord response times, self-attestation, and federally assisted households.

Direct-to-Tenant Assistance

The Treasury guidance makes clear that emergency rental assistance provided by the American Rescue Plan (ERA2) must be offered directly to renters when landlords choose not to participate. The Treasury Department is cutting in half the time to determine whether a landlord elects to participate. With the first round of the Emergency Rental Assistance program, local programs had to wait 14 days when reaching out by mail or 10 days when reaching out by phone, text, or email before offering relief to a tenant directly. Those wait times are now cut in half, to seven days and five days respectively.

In addition, while rental assistance programs under the initial Emergency Rental Assistance Plan (ERA1) required an offer of assistance to landlords before reaching out to renters, the guidance has made clear that the new ERA2 funds can be used to provide assistance to renters first and immediately.

Broader Eligibility Standard

ERA2 eligibility requires only that households qualify for unemployment or have a financial hardship during the pandemic, as opposed to a financial hardship caused in some way by the pandemic for ERA1. This difference in the eligibility criteria should reduce the burden applicants face in qualifying for assistance. The updated Treasury Department FAQs note that, because the standard in ERA2 eligibility standard is broader than the standard in ERA1, any applicant who qualifies for ERA1 automatically meets the standard for ERA2.

Additionally, to be eligible for ERA2, one or more individuals within the household must demonstrate a risk of experiencing homelessness or housing instability and the household must be a low-income family defined as a household income at or below 80 percent of area median income.

Reduced Burdensome Documentation

The new guidance strongly discourages ERA programs from establishing documentation requirements that would make it difficult to receive aid, and it allows alternative ways to verify eligibility.

Financial hardship. The state or local department that administers the ERA program must document that one or more members of the applicant’s household either: (i) qualified for unemployment benefits; or (ii) experienced a reduction in household income, incurred significant costs, or experienced other financial hardship during or due, directly or indirectly, to the coronavirus pandemic. To document this, the grantee is permitted to rely on either a written attestation signed by the applicant or other relevant documentation regarding the household member’s qualification for unemployment benefits.

Risk of homelessness or housing instability. The statute establishing ERA2 requires that one or more individuals within the household can 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 (which may include overcrowding), or any other evidence of risk, as determined by the program administrator. The Treasury Department says that administrators may establish additional criteria for determining whether a household satisfies this requirement and should adopt policies and procedures addressing how they will determine the presence of unsafe or unhealthy living conditions and what evidence of risk to accept in order to support their determination that a household satisfies this requirement.

Income criteria. If an applicant’s household income has been verified as a low-income family in connection with another local, state, or federal government assistance program, administrators are permitted to rely on a determination letter from the government agency that verified the applicant’s household income or status as a low-income family, provided that the determination for such program was made on or after Jan. 1, 2020.

The Treasury Department is also allowing proxies to verify eligibility of low-income renters. Instead of documentation requirements that could prevent some of the most vulnerable renters from completing applications and receiving assistance, programs will now be able to verify the income eligibility of renters using any reasonable fact-specific proxy, such as the average income in the neighborhood in which renters live.

In addition to a determination letter or proxy to verify the income eligibility component, the Treasury Department is allowing written attestation. To the extent that a household’s income is not verifiable due to the impact of COVID-19 (for example, because a place of employment has closed) or has been received in cash, or if the household has no qualifying income, administrators may accept a written attestation from the applicant regarding household income.

If a written attestation without further documentation of income or a fact-specific proxy is relied on, the administrator must reassess household income for such household every three months. In appropriate cases, program administrators may rely on an attestation from a caseworker or other professional with knowledge of a household’s circumstances to certify that an applicant’s household income qualifies for assistance.

Eviction Protections

Under both ERA 1 and 2, the programs must prohibit the eviction of renters for nonpayment in months for which they receive emergency rental assistance. Treasury strongly encourages administrators to require that landlords not evict tenants for nonpayment of rent for 30 to 90 days longer than the period covered by the emergency rental assistance as a condition of receiving payment.

Federally Assisted Households

The new guidance prohibits ERA2 programs from denying assistance to eligible residents solely because they live in federally assisted housing. The guidance states the ERA program is prohibited from denying assistance to federally assisted households, noting that doing so may violate civil rights laws:

Grantees are required to comply with Title VI of the Civil Rights Act and should evaluate whether their policies and practices regarding assistance to households that occupy federally subsidized residential or mixed-use properties or receive federal rental assistance comply with Title VI. With respect to ERA2, grantees must not refuse to provide assistance to households on the basis that they occupy such properties or receive such assistance, due to the disproportionate effect such a refusal could have on populations intended to receive assistance under the ERA and the potential for such a practice to violate applicable law, including Title VI.

The guidance further encourages administrators to partner with the owners of federally subsidized housing to ensure their residents are reached.

Treasury guidance since February has allowed, but not required, grantees to use ERA1 to pay the tenant-paid portion of rent for households assisted with other rental assistance programs such as Section 8 vouchers or project-based rental assistance. If an eligible household participates in a HUD-assisted rental program or lives in certain federally assisted properties and the tenant rent is adjusted according to changes in income, the renter household may receive ERA1 assistance for the tenant-owed portion of rent or utilities that is not subsidized. The guidance encourages administrators to confirm that the participant has already reported any income loss or financial hardship to the PHA or property manager and completed an interim re-examination before assistance is provided.

Prioritization of Assistance

ERA programs are required to prioritize assistance to low-income households and those with members who have been unemployed for more than 90 days. To help ensure that assistance is reaching those who most need it most, especially those with incomes below 50 percent of the area median income, administrators will be required to report how they will achieve the required prioritization of assistance.

White House Highlights Extra Efforts to Prevent Evictions

In addition to the new round of ERA funding and the enhanced policies to increase the flow of monies to households in need, the Biden administration says there will be an ongoing all-of-government response to address the COVID-driven housing crisis and keep renters in their homes. The administration says it will continue to aggressively support these emergency rental assistance efforts. Examples include:

• Deploying Joint HUD-Treasury Expert Response Teams: HUD and Treasury are finalizing an Interagency Agreement to send experts to some of the highest need areas to help states and localities urgently scale-up programs. More immediately, HUD will provide technical assistance on its programs to help administrators manage all their new CARES Act and American Rescue Plan resources.
• Improving Access to Information about Emergency Rental Assistance: Treasury will provide an online hub of links to local ERA programs to make it easier for renters and landlords to find programs in their area and will work with other government agencies and private sector partners to increase awareness of ERA resources among renters and landlords.
• Sharing Best Practices: Treasury staff are actively engaging grantees to answer questions and learn about best practices. Treasury will publish best practice highlights that are speeding vulnerable renters’ access to these urgently needed resources.
• Hosting a White House-HUD-Treasury Roundtable to Encourage Philanthropic Investment in Anti-Eviction Efforts: These agencies will jointly host a roundtable with philanthropic leaders to explore how philanthropy can support communities’ distribution of new federal funds for housing instability and homelessness, including how philanthropy can enhance the underlying capacity of local partners to equitably distribute these funds.
• Encouraging Additional Legal Services and Support to Hard-Pressed Tenants: HUD is developing a $20 million demonstration to provide legal assistance to low-income tenants at risk of or subject to evictions.
• Advancing the Nation’s Understanding of Evictions in the Marketplace: HUD will continue to build out a research agenda for helping the field better understand the prevalence of evictions and the disparate impact they have on disadvantaged communities. This includes assessing how the federal government could develop a national database of evictions.
• Promoting Fair Housing Enforcement: HUD will continue to enforce fair housing protections, prohibiting housing providers from acting to evict, harass, or treat tenants differently because of tenants’ race, color, religion, sex (including sexual orientation and gender identity), disability, familial status, or national origin.