The Federal Consolidated Appropriations Act of 2021, signed into law on December 27, 2020, provided additional COVID-19 stimulus and relief funding. Included in the relief package was $25 billion in aid to state and local governments for the Emergency Rental Assistance Program (ERAP). ERAP funds are being provided directly to states and local governments to provide assistance to eligible households through existing or newly created rental assistance programs. Local governments with populations greater than 200,000 were eligible to apply for a direct allocation from the U.S. Treasury.
The State of California’s allotment of federal ERAP funds is approximately $2.6 billion. Of that amount, $1.1 billion was allocated directly to local governments with populations greater than 200,000, and $1.5 billion was allocated to the state. On January 12, Yolo County submitted the application for direct federal funding, and subsequently received an allocation of $6.5 million for emergency rental assistance.
On January 29, the Governor signed into law Senate Bill 91, which extended and provided new tenant and property owner protections and appropriated $1.5 billion for the State Rental Assistance Program. Under this program, $150 million is being reserved for counties with populations less than 200,000, while $1.3 billion is being reserved for cities and counties with populations greater than 200,000. Yolo County’s share of this state funding is approximately $7.1 million, bringing the County’s total funding allotment for emergency rental assistance to $13.6 million.
Key provisions of the Federal Emergency Rental Assistance Program include the following:
- Funding can be used for rent, rental arrears, utilities, energy or other housing-related expenses
- Eligibility is limited to households below 80% of Area Median Income (AMI), with a priority on households below 50% AMI or who have been unemployed for more than 90 days
- Recipients must demonstrate financial hardship
- Funding must be fully spent by December 31, 2021, but may be reallocated to other jurisdictions if 65% is not obligated by September 30, 2021.
The State Rental Assistance Program, while adhering to the federal framework, layers on a few additional requirements, in particular:
- If landlords choose to participate, rental assistance shall not exceed 80% of a tenant’s rental debt from 4/1/20 to 3/31/21, and all remaining rental debt must be forgiven
- If landlords choose not to participate, tenants may apply for assistance directly, which shall not exceed 25% of unpaid rental debt
- Assistance may be provided for prospective rent at a rate of 25% of monthly rent
- Rental arrears must be prioritized before prospective rent.
In terms of program administration, the state is requiring local jurisdiction to choose one of three options no later than February 12:
Option 1 – Join State Program – Under this option, the state would operate and administer the entire rental assistance program on behalf of the County. The County’s direct federal allocation would be transferred to the state and, combined with the County’s state reservation, used to provide rental assistance to Yolo County residents. The state will be contracting with the Local Initiatives Support Corporation (LISC) to be the program implementer, and will partner with local communities on outreach and education.
Option 2 – Operate Program Locally – Under this option, the state funding would be provided to the County as a block grant, and the County would administer both the state and federal portions. Both the state and federal portions would be required to conform with the requirements of the State Rental Assistance Program, including the assistance limits described above. In addition, the state would impose a more aggressive timeline for expenditure of block grant funds, whereby funding would need to be fully expended by August 1, 2020, and would be reallocated to other jurisdictions if 65% is not obligated by June 1, 2020.
Option 3 – Hybrid State-Local Program – Under this option, the County would retain the direct federal allocation and administer that portion of the program locally, while the state portion would be administered at the state level. The federal portion administered by the County would not need to conform to the State Rental Assistance Program, which could result in two sets of different program requirements for the same target population. In addition, the County would be responsible for ensuring non-duplication of benefits. Due to the additional complexities involved, the state is discouraging use of this option.
Staff Recommendation
Based on the size of the program and the short timeframe for expenditure of funds, staff recommends that the County select Option 1 and join the State Rental Assistance Program. Setting up a local program of this magnitude would require significant time and effort, and imposes a greater risk of funds not being expended being reallocated to other jurisdictions. Relying on the state to administer back-end functions of the program, such as setting up an application portal, establishing call centers, performing eligibility verification, issuing payments and submitting federal reporting, will allow the County and partner organizations to focus time and energy on education and outreach to impacted communities. Importantly, under Option 1, 1.5% of the County’s federal allocation, or approximately $98,000, would be retained by the County and could be used for education and outreach, legal assistance or other elements of program administration. |