Emergency Rental Assistance: Challenges to Efficient Distribution and Potential Solutions

In response to the COVID-19 crisis, Congress established the Emergency Rental Assistance (ERA) program, approving $46.6 billion for households affected by the economic consequences of the pandemic and struggling to pay rent. COVID-19 exposed the financial insecurity of many households; with the sudden loss of jobs and income, struggling families missed rent payments and began accruing housing-related debt. Under the ERA program, the Treasury Department provides formula funding to states and localities, which distribute the money to nearly 500 new and existing ERA programs that mainly offer rent and utility assistance.

The Supreme Court struck down the CDC’s moratorium on evictions on August 26. About 1.4 million Americans are very likely to face eviction in the next two months, according to census survey data, while the Urban Institute estimates 3 million households will face eviction by the end of the year without assistance. Eviction is often devastating for a family’s economic prospects, leading to multiple unwanted moves or homelessness, long-term difficulty securing housing, as well as potential job losses and health issues.

While the U.S. has not experienced a nationwide spike in eviction filings since the end of the eviction moratorium last month, housing advocates warn that it is still too soon to say whether a wave of evictions will occur—an increase in evictions could be gradual rather than sudden.

As of September 2021, more than eight months after the ERA program was signed into law, only $9.4 billion (about 20%) of ERA funds were approved or paid to households. Efficient distribution of aid would be very effective at staving off evictions, as every state has been allocated enough assistance to cover all estimated back rent. Sadly, assistance has not been quick enough at reaching those who need it. Starting September 30, U.S. Treasury Dept. can “claw back,” or rescind, ERA funds from states, cities, and counties that have spent fewer than 65% of their first set of funding. However, in early October Treasury announced that state and local governments have until November 15 to avoid clawbacks if they submit an improvement plan.

Delays in distributing funds stem partly from the complexity and scale of the task. Many of the hundreds of ERA programs are brand new and had to hire staff, scale technical capacity, and develop rules for directing federal dollars. Both new and previously existing programs had limited capacity, dealing with far more applications than they could quickly process. In fact, 60% of program administrators surveyed identified staff capacity as a major hurdle. In Texas, for example, ERA programs started with a staff of about 100 but increased to over 1,500 to accommodate the number of applications. Program administrators have also identified difficulty with technology as a challenge for program implementation.

Another major source of delays has been the documentation requirements used by ERA programs. Many programs screen applications by requiring tenants to provide a variety of documents, including: proof of income, proof of COVID hardship, a current lease, and a government-issued ID. Programs also commonly require landlords to provide a W-9 form, a current lease, and a pledge not to evict the participating tenant. The verification process for multiple forms of documentation slows down the process significantly, with hundreds of thousands of applications awaiting approval.

Many renters and landlords are also still unaware of ERA availability, preventing those in need from taking advantage of the programs. As of June, over half of renters and 40% of landlords were not aware of ERA options. Other eligible renters lack internet access to apply for aid. Additionally, many landlords have refused to participate in the programs: in one survey, 50% of ERA program administrators identified landlord refusal as a major hurdle to accessing funds. Many landlords are reluctant to participate because they feel the ERA funds have too many conditions attached, such as a pledge not to evict problematic tenants and requirements to disclose sensitive financial information.

Delays in distributing assistance vary geographically. Virginia and Texas have led the nation as the most efficient states, disbursing 51% and 43% of funds respectively, as of August. Meanwhile, Alabama, Arkansas, Indiana, Mississippi, North Dakota, South Carolina, and Wyoming distributed less than 2%.

According to testimonies from multiple witnesses at a recent House Financial Services Committee hearing, ERA programs that were more successful at quickly distributing funds had robust outreach efforts, higher staff capacity, and simple and accessible application processes.

The Biden administration’s August guidance clarified that ERA programs can allow applicants to use self-attestation, forms where applicants themselves declare their income and financial hardship, as opposed to other forms of documentation. Critics of self-attestation claim that they heighten the risk of fraud and error that verification of other documents can mitigate. Proponents argue that the risk of fraud and error is a necessary tradeoff to disburse relief rapidly enough to prevent an eviction crisis. Despite federal guidance, only 16% of ERA programs allow self-attestation for income, and 26% of programs allow self-attestation for non-traditional income, as of early September.

Federal guidance allows and encourages programs to direct ERA funds directly to tenants. For ERA2, the funding established under the American Rescue Plan Act, Treasury requires programs to provide direct-to-tenant assistance when landlords refuse to participate. The data is mixed. According to the National Low-Income Housing Coalition, only 28% of programs allow for direct-to-tenant assistance, though another survey indicated that 69% of programs allow direct-to-tenant assistance when landlords choose not to participate, suggesting that some programs may not be clearly communicating their parameters to the public.

Other housing advocates note that ERA program administrators are wary of allowing self-attestation or direct-to-tenant assistance because they are concerned about being held liable for errors in distributing funds. Organizations such as the National Low Income Housing Coalition have called on Congress to enact an explicit safe harbor law to empower good faith efforts by program administrators to speed up the distribution of funds.

Democrats and Republicans on the House Financial Services Committee have each introduced legislation to expedite the distribution of ERA funds:

• The Committee recently passed H.R. 5196, the Expediting Assistance to Renters and Landlords Act of 2021, introduced by Committee Chair Rep. Maxine Waters (D-CA), on a party line vote. The legislation would require ERA programs to provide direct-to-tenant assistance when landlords refuse to participate and would allow landlords to directly apply for back rent from ERA funds on behalf of tenants, so long as landlords notify tenants and provide them with stable housing for 120 days. The bill would also increase outreach to eligible renters and landlords and require that poor-performing ERA programs submit performance plans detailing how they plan to speed up distribution of funding.
• In June, Ranking Member Rep. Patrick McHenry (R-NC) introduced H.R. 3913, the Renter Protection Act of 2021, which would combine ERA1 and ERA2 into one fund and require Treasury to disburse all funds within 30 days. The bill would also establish a December 2021 deadline for ERA programs to distribute funds to households and require any unused ERA money to exclusively pay off back rent.

Even before the pandemic, some local ERA programs existed in jurisdictions across the country, generally available to lower-income households with an eviction filing or utility shutoff notice due to circumstances beyond their control. However, no permanent, federally-funded national program existed. Once the pandemic subsides and COVID-related rental assistance funding has dried up, many low-income Americans will continue to be vulnerable to financial shocks as the high cost of rent continues to outpace wage growth.

In 2013, BPC’s Housing Commission recommended creating a permanent, federal emergency rental assistance program for short-term relief to low-income renters that normally can afford rent but suffer temporary setbacks. Specifically, the proposal called for one-time assistance of up to $1,200 to households with incomes between 30% and 80% of the area median. S. 2182, the Eviction Crisis Act, introduced by a bipartisan group of senators, would advance this recommendation by creating an emergency assistance program, in addition to other provisions intended to improve data and analysis on evictions, reduce preventable evictions, and mitigate the impact of evictions on families.

A permanent, federally-funded program could be scaled up quickly in response to future financial shocks, avoiding numerous barriers to quickly disburse funds, and mitigate the risk of an eviction crisis. According to a new BPC/Morning Consult poll, 70% of Americans support the creation of such a permanent program, including a majority of respondents from both political parties.

The pandemic presents an opportunity for long-term reform, as the network of ERA programs established in response to COVID could provide the framework for a standing program. Over the past year, policymakers have scrambled to create, scale up, and repeatedly try to adapt the ERA program to help deeply vulnerable renters; the lessons learned from this process should inform permanent reforms.

For more information, check out:

• The homepage of BPC’s new J. Ronald Terwilliger Center for Housing Policy
• BPC Action’s statement on the reintroduction of the Eviction Crisis Act
• Polling from Morning Consult and BPC on recent housing trends, including public opinion and understanding of emergency rental assistance programs