The American Rescue Plan Act of 2021 Provides Continued Rental and Other Housing Assistance | Practical Law

The American Rescue Plan Act of 2021 Provides Continued Rental and Other Housing Assistance | Practical Law

On March 10, 2021, Congress passed the American Rescue Plan Act of 2021 (Pub. L. No. 117-2) (ARPA), a $1.9 trillion appropriations bill designed to address the ongoing financial hardship caused by the COVID-19 pandemic. The legislation includes emergency residential rental assistance, emergency housing funding, and additional housing program and group funding. The ARPA was signed into law by President Biden on March 11, 2021.

The American Rescue Plan Act of 2021 Provides Continued Rental and Other Housing Assistance

by Practical Law Real Estate
Published on 12 Mar 2021 • USA (National/Federal)
On March 10, 2021, Congress passed the American Rescue Plan Act of 2021 (Pub. L. No. 117-2) (ARPA), a $1.9 trillion appropriations bill designed to address the ongoing financial hardship caused by the COVID-19 pandemic. The legislation includes emergency residential rental assistance, emergency housing funding, and additional housing program and group funding. The ARPA was signed into law by President Biden on March 11, 2021.
On his first day in office, President Biden announced an emergency legislative package to provide economic relief to families suffering in the midst of the COVID-19 pandemic (see White House: Briefing Room: President Biden Announces American Rescue Plan). Seven weeks later, Congress passed the American Rescue Plan Act of 2021 (Pub. L. No. 117-2) (ARPA). As signed by President Biden on March 11, 2021, the $1.9 trillion appropriations bill includes housing relief in the form of:
  • $21.55 billion in emergency rental assistance.
  • $9.961 billion in homeowners assistance.
  • $5 billion in emergency housing vouchers.
While President Biden sought a further legislative extension of the Centers for Disease Control and Prevention (CDC) foreclosure and eviction moratorium, the ARPA is silent on any further extension beyond January 31, 2021 provided for in the Consolidated Appropriations Act, 2021 (Pub. L. No. 116-260) (CAA) (see Legal Update, Year-End Appropriations Bill Provides Emergency Rental Assistance and Extension of Eviction Moratorium). The CDC's extension of the eviction moratorium through March 31, 2021 is currently under attack in the courts (see Legal Update, Texas Federal Judge Declares US CDC Residential Eviction Moratorium Unconstitutional).
For deadlines on federal, state, and local eviction moratoriums, see Practice Note, COVID-19: Commercial and Residential Tenant Eviction Moratoriums Select State and Local Laws Tracker (US).

Emergency Rental Assistance

The ARPA's Emergency Rental Assistance provisions (ARPA, Title III, Subtitle B, § 3201) includes an additional $21.55 billion for emergency rental assistance funded through the Coronavirus Relief Fund administered by the U.S. Department of Treasury (Treasury) and reserved in the following amounts:
  • $305 million for the Commonwealth of Puerto Rico, The United States Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa.
  • $152 million per state with further allocation of funds based on population.
  • $2.5 billion for payments to high-need grantees, which are very low-income renter households spending more than 50 percent of income on rent or living in substandard or overcrowded conditions.
These amounts are subject to the same terms and conditions that apply under paragraph (4) subsection 501(c) of subtitle A of title V of division N of the CAA (Pub. L. No. 116-220). For more information on eligibility, see Legal Update, Year-End Appropriations Bill Provides Emergency Rental Assistance and Extension of Eviction Moratorium.
The Treasury Secretary must pay at least 40 percent of the allocated funds within 60 days of the ARPA's enactment to any eligible grantee. The funds can provide financial assistance for up to 18 months for:
  • Rent.
  • Rental arrears.
  • Utilities and home energy costs.
  • Utilities and home energy costs arrears.
  • Other expenses related to housing as defined by the Treasury Secretary.
(ARPA, Title III, Subtitle B, § 3201(c) and (d)(1)(A).) The 18 months of financial assistance include any months where an eligible grantee received assistance under section 501 of subtitle A of title V of division N of the CAA (Pub. L. No. 116-220).
States may use:
  • Up to 10 percent of funds toward housing stability services.
  • Up to 15 percent of funds toward administrative costs.
(ARPA, Title III, Subtitle B, § 3201(d)(1)(B) and (C)).
Beginning March 31, 2022, the Treasury Secretary may recapture and reallocate funds to an eligible grantee who has obligated 50 percent of the total funds allocated. An eligible grantee may include:
  • The 50 states and the District of Columbia.
  • A unit of local government, defined in the section 501 of subtitle A of title V of division N of the CAA (Pub. L. No. 116-220).
  • The Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa.
(ARPA, Title III, Subtitle B, § 3201(e)(1), (2)).

Homeowners Assistance

The ARPA targets a reduction in homeowner displacement, providing $9.961 billion for a Homeowners Assistance Fund to help with:
  • Mortgage payment assistance.
  • Financial assistance for reinstatement of a mortgage or for housing related to a period of forbearance, delinquency, or default.
  • Principal reduction.
  • Helping interest rate reductions.
  • Payment assistance for:
    • utilities, such as electric, gas, home energy, and water;
    • internet service;
    • homeowner's, flood, and mortgage insurance; and
    • homeowner's and condominium association fees or common charges.
(ARPA, Title III, Subtitle B, § 3206(a)-(c)).

Emergency Housing Vouchers

In an effort to quell homelessness, the ARPA apportions $5 billion in emergency rental assistance vouchers under section 8(o) of the United States Housing Act of 1937 to assist those who are:
  • Homeless.
  • At risk of homelessness.
  • Fleeing or attempting to flee domestic violence, dating violence, sexual assault, stalking, or human trafficking.
  • Recently homeless and for whom rental assistance will prevent the family's homelessness or housing instability.
(42 U.S.C. § 1437f(o); ARPA, Title III, Subtitle B, § 3202(a), (b)).
Public housing agencies will be notified of the number of emergency vouchers to be allocated to the agency within 60 days of the ARPA's enactment (ARPA, Title III, Subtitle B, § 3202(b)(3)).

Additional Allocation

The ARPA further allocates funds focused on underserved populations:
  • $100 million for housing counseling through NeighborWorks America organizations with a minimum of 40 percent going to counseling organizations that:
    • target services for minority and low-income populations; or
    • provide counseling in neighborhoods with high concentrations of minority and low-income populations (ARPA, Title III, Subtitle B, § 3204).
  • $20 million for the Fair Housing Initiatives Program under section 561 of the Housing and Community Development Act of 1987 to ensure fair housing (42 U.S.C. § 3616a; ARPA, Title III, Subtitle B, § 3208). For additional information on fair housing laws, see Practice Note, Fair Housing Act: Guidance When Selling, Leasing, or Financing Residential Real Property.
  • $100 million for rental assistance for rural homeowners in USDA-financed properties (ARPA, Title III, Subtitle B, § 3203).
  • $39 million for direct loans made under sections 502 and 504 of the Housing Act of 1949 to assist rural homeowners (42 U.S.C. §§ 1472 and 1474; ARPA, Title III, Subtitle B, § 3207).

Practical Implications

The ARPA's Emergency Rental Assistance provisions enhance the economic relief provided for in the CAA. For homeowners and tenants currently unable to meet their financial obligations due to the impact of the COVID-19 pandemic, the ARPA provides much needed additional economic assistance. It may also assist landlords impacted by their tenants' inability to pay rent to meet their own financial obligations.
For a continuously updated collection of resources addressing COVID-19, see Practical Law's Real Estate Global Coronavirus Toolkit.