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Commercial Real Estate

How Can the $46.5B Emergency Rental Assistance Program Help Your Tenants?

Two COVID-19 stimulus packages provide emergency rental assistance to help people catch up on their rent and utilities.


Along with critical medical and financial impacts, the COVID-19 pandemic has presented significant challenges for both landlords and tenants. For many tenants, widespread job loss has made paying rent on time difficult or even impossible. Meanwhile, owners of multifamily properties face a decrease in income, but still must pay their mortgages and maintain their properties.

At a time when landlords and tenants are struggling, how can both groups’ needs be reconciled?  Amy Williamson, Manager of the Financial Empowerment Center at the City of Sacramento, says, “Even though their interests are somewhat diametrically opposed from one point of view, they both have the same need, which is to have financial stability in their life.”

Two COVID-19 stimulus packages provide financial aid through the Emergency Rental Assistance Program.

Signed into law Dec. 27, 2020, the $900 billion stimulus package outlined in the Coronavirus Aid, Relief, and Economic Security (CARES) Act included $25 billion in emergency rental assistance distributed through the Coronavirus Relief Fund (CRF) to help people get caught up on their rent and utility costs.

A second stimulus package included in the American Rescue Plan Act, signed into law March 11, 2021, provides for roughly $22 billion in additional emergency rental assistance through the CRF, for a total of almost $47 billion, according to Paul Kealey, Chief Operating Officer at the National Low Income Housing Coalition (NLIHC).

In an analysis of the American Rescue Plan, the NLIHC states, “These investments will help prevent millions of low-income people from losing their homes during the pandemic and will provide cities and states with the resources they need to help people experiencing homelessness be safely housed during and after the pandemic.”

The Centers for Disease Control and Prevention’s federal eviction moratorium extends through June 30, 2021. Renters can continue to stay in their homes, helping to stem the spread of COVID-19 during this time of intense health and economic challenges.

 

Who Is Eligible?

According to the U.S. Department of the Treasury, only households obligated to pay rent on a residential dwelling are eligible. At least one individual in the household must meet the following criteria:

  • Qualify for unemployment or has experienced a reduction in household income, incurred significant costs or experienced a financial hardship due to COVID-19
  • Demonstrate a risk of experiencing homelessness or housing instability
  • Have a household income at or below 80% of the area median

Household income is determined by either the total income for calendar year 2020 or the household’s monthly income at the time of application. For renters using the monthly method, income eligibility must be determined every three months. In addition, rental assistance should not duplicate any other federally funded rental assistance to the household.

States have been directed to prioritize applicants with incomes less than 50% of the area median, as well as applicants who have been out of work for 90 days or more. 

 

What Are the Funds For?

At JPMorgan Chase, Nia Hope, Vice President of Global Public Policy, and Abigail Suarez, Vice President of Global Philanthropy, point out that the federal legislation allows states to enact their programs but puts some parameters around what the money can be used for, and some of that may be up to interpretation.

The NLIHC analysis of the first stimulus package breaks down how the CRF funds are to be used by percentages. “At least 90% of the funds must be used to provide financial assistance, including back and forward rent and utility payments for up to 18 months. Recipients would be able to use the remainder of funds (up to 10%) to provide housing stability services, such as case management, eviction prevention and rehousing services.

“Under the legislation, cities and states can make payments directly to landlords or utility companies on behalf of renters. If [the] landlord refuses to accept the rental assistance, cities and states can give assistance directly to the renter, who can then make payments to the landlord or utility provider.”

How and where to apply will vary in cities across the country. For many locations, applications will go through existing rental assistance funds. In other cases, new programs will be created for applications and to distribute the funds.

 

How Can You Help Your Tenants?

Nia Hope says for landlords, “part of the best practice is to have consistent and regular communication” with their tenants in the midst of a crisis like this.
 
Catherine Reeves, Development Coordinator at NLIHC echoed the need for good communication. “Landlord participation is going to be really key, “ she says. “If you're a landlord, begin communicating with your renters about what is known about the eligibility requirements for this rental assistance.

“And as renters, you can begin pulling together whatever documentation you'll have related to your income or decline in income, unemployment benefits, any unusual costs incurred during the pandemic, past two utility or rent notices, eviction notices, etc.—start pulling all of that together.”

Kealey adds, “Landlords should inform their tenants that emergency rental assistance is available for those who qualify and do their best to spell out the eligibility requirements. 

“We hope that all that kind of documentation is not needed, but it wouldn't hurt for landlords to encourage their renters to pull together whatever documentation you do have just in case it is required.”

Eligible tenants can apply for emergency rental assistance. According to the U.S. Department of the Treasury, a property owner can also apply on behalf of an eligible household.

 

Where Can You Find Helpful Resources?

Tamara Lindsay, Chief of Strategy at the Cities for Financial Empowerment (CFE) Fund, says access to trusted information is critical to avoid potential scams. 

The NLIHC’s state and local rental assistance resource page includes a list of COVID-19 emergency rental programs across the U.S. and related links for more information. The page also includes resources on evictions and moratoriums.

Commercial Real Estate Multifamily Lending

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