Federal Emergency Rental Assistance Enacted in December 2020 Permits Landlords to Assist with or Apply on Behalf of Tenants; Applications under the May 2020 COVID Rent Relief for April 2020 to July 2020 Rent Arrears Extended to February 1, 2021
On Sunday, December 27, 2020, President Trump signed the federal government’s most recent stimulus package into law. The new stimulus package includes substantial funding for emergency rental assistance, which is to be administered by states and local governments. Although there have not been any announcements as to which agency will administer New York’s funds, DHCR administered the first tranche of assistance in May, and has recently begun accepting new applications to distribute remaining funds from that first tranche.
Congress allocate $25 billion nationally for rent relief in the new bill. New York State is expected to receive approximately $1.3 billion of this amount.
Under the bill, funds for rent, utilities, and other housing related expenses are available for 12 months of arrears plus up to 3 months of prospective rent if necessary to ensure housing stability for a household subject to the available funds. For tenants who receive an initial grant of less than the maximum, second grants are potentially available as long as the aggregate of all grants does not exceed 15 months, and subject to funds not having been depleted.
Significantly, the bill expressly provides that landlords may assist tenants in applying for emergency rental assistance or apply on behalf of their tenants with the tenants’ consent and involvement.
As of the time of this writing, applications for this most recent federal emergency rental assistance program are not yet available. it is imperative for landlords to take a proactive approach as funding for New York is expected to be limited to $1.3 billion.
In order to be eligible for assistance under the bill, a household must meet three criteria: (1) they are at risk of experiencing homelessness or housing instability, which can be demonstrated by a past due utility bill, rent notice or eviction notice, unsafe or unhealthy living conditions, or such other evidence as the state or local administering agency may establish; (2) one or more household members qualifies for unemployment benefits or has lost income, incurred expenses or otherwise suffered financial hardship due to Covid; and (3) household income is below 80% of HUD area median income (see the attached chart).
Our firm advises contacting residents in arrears about obtaining both the new funds and funds remaining from the May 2020 appropriation. Further, we intend to advise tenants being served with rent demands that relief may be available to them under the rent relief programs. As ever, our firm stands ready to assist you in reviewing and implementing strategies to maximize collections in these difficult times. We will also be available to assist with the application process once it has been established.
A more detailed description of the programs follows:
Federal Emergency Rental Assistance Program Details
COVERED RENT RELIEF
Federal rent relief under this program covers a period not to exceed 12 months of rent arrears; utilities and home energy costs; arrears for utilities and home energy costs; and other expenses related to housing incurred due to COVID-19 PLUS an additional 3 months of prospective rent if necessary to ensure housing stability for a household subject to the available funds.
No less than 90% of the federal funds must be used for the above. No more than 10% of the federal funds may be used for administrative costs, case management and other services.
Following receipt of an initial grant, it is possible to obtain additional prospective rent if funds remain available, provided the total months of financial assistance does not exceed the program maximum of 12 months of rent and utilities arrears and an additional 3 months of prospective rent.
Under the federal statute, states and local governments may not make commitments for prospective rent payments unless they have also provided assistance to reduce an eligible household’s rental arrears. State and local governments must make sure that any federal rent relief is not duplicative of any other federally funded rental assistance provide to an eligible household.
The administering agency must give priority to applications submitted by or on behalf of households with income below 50% of HUD area median income and households in which at least one member has been unemployed for at least 90 days. State and local administering agencies may add addition criteria for prioritization.
Payments will go directly to landlords and utility providers.
“ELIGIBLE HOUSEHOLDS” UNDER THE FEDERAL EMERGENCY RENTAL ASSISTANCE PROGRAM
Under the federal statute, an “eligible household” means a household of 1 or more individuals who are obligated to pay rent on a residential dwelling and with respect to which the state or local government administering the program determines all 3 of the following conditions have been satisfied:
- That 1 or more individuals
a. Qualified for unemployment benefits OR
b. Experienced a reduction in household income, incurred significant costs, or experienced other financial hardship due, directly or indirectly to COVID-19, to which the applicant must attest in writing
- That 1 or more individuals within the household can demonstrate a risk of experiencing homelessness or housing instability, which may include
a. A past utility or rent notice or eviction notice
b. Unsafe or unhealthy living conditions, OR
c. Any other evidence of such risk, as determined by the state or local government administrating the rent relief program
- The household has a household income that is not more than 80% of HUD area median income for the household
PRIORITY OF APPLICATIONS
States and local governments are required to prioritize applications of eligible households that satisfy any of the following conditions:
- Household income does not exceed 50% of area income
- 1 or more individuals are unemployed as of the date of the application and have not been employed for a 90-day period preceding such date
- Other factors to prioritize applications that the state or local government administering the program may impose, including eligible households where 1 or more individuals within the household were unable to reach their place of employment or their place of employment was closed due to a public health order imposed as a direct result of COVID-19
LANDLORDS AND OWNERS MAY ASSIST A RENTER OR APPLY ON BEHALF OF TENANTS
The statute expressly states that nothing shall preclude a landlord or owner of a residential dwelling from:
- Assisting a renter in applying for assistance for a payment made under this section of the statute OR
- Applying for such assistance on behalf of a renter
REQUIREMENTS FOR APPLICATIONS SUBMITTED ON BEHALF OF TENANTS
If a landlord or owner of a residential dwelling submits an application for assistance under this section on behalf of a tenant:
- The landlord must obtain the signature of the tenant on such application, which may be documented electronically;
- Documentation of such application shall be provided to the tenant by the landlord; and
- Any payments received by the landlord under this section shall be used to satisfy the tenant’s rental obligations to the owner
Applications under the May 2020 COVID Rent Relief Program for April 2020 to July 2020 Rent Arrears Extended to February 1, 2021
This program provides a modest subsidy to households with rent arrears accruing between April 1, 2020 and July 31, 2020. The subsidy is available to pay the difference between the rent charged and 30% of household income for the covered months.
As of December 18, 2020, New York re-opened applications and loosened eligibility for tenants and residents to apply for the remaining available funds under the May 2020 COVID Rent Relief Program. Specifically, applications for this COVID Rent Relief Program are being accepted through February 1, 2021. Funding is a one-time subsidy paid directly to landlords. To be eligible under the original program requirements, a renter must have a primary residence in New York State; have lost income between April 1, 2020 and July 31, 2020; had a household income at or below 80% of the HUD area median income before March 7, 2020, and must be “rent burdened” both as of March 1, 2020 and during the period of April 1, 2020 and July 31, 2020. “Rent burdened” is defined as paying more than 30% of household income towards rent.
Roommates as well as tenants are eligible to apply for rent relief under this program.
A chart detailing maximum qualifying incomes is attached. Note that applications are not being processed on a first come, first served basis, but are being prioritized based on greatest economic and social need.
Under the prior eligibility rules, a renter had to show that they were “rent burdened” as of March 1, 2020 in order to apply. Under the new, slightly looser eligibility requirements, renters no longer are required to have been “rent burdened” as of March 1, 2020. For those applicants whose rent burden was lower than 30% on March 1st the subsidy will be sized to reduce their rent burden to 30% for the lowest month during the coverage period.
Further details can be found at the following link to the HCR website https://hcr.ny.gov/RRP
As always, we welcome any questions or issues you may wish to discuss, and looks forward to advocating on your behalf.