The American Rescue Plan: What’s in it for Housing?

On March 11, 2021, the $1.9 trillion American Rescue Plan (ARP) Act was signed into law. This legislation appropriates approximately $50B in housing-related assistance for lower-income households facing housing instability or currently experiencing homelessness. As rental and utility arrears continue to grow, the ARP offers much needed financial relief to struggling tenants and landlords. And, as communities observe increases in both calls for assistance and households falling into homelessness, the ARP provides ways to address the immediate needs of lower-income households. This support will also help the homeless and housing services system to stabilize. Finally, the funding priorities and eligible uses in the ARP provide insight into the types of strategies and solutions that will continue to be advanced; if maximized, these can outline pathways to long-term economic recovery.

This week’s blog post provides a high-level overview of the housing-related assistance in the ARP, and what it can mean for Charlotte-Mecklenburg.

EMERGENCY RENTAL ASSISTANCE

In addition to the $25B appropriated in the COVID-19 Relief Package in December 2020, the ARP adds $21.55B for the Emergency Rental Assistance (ERA) program. The ERA program is funded through the Coronavirus Relief Fund (CRF), which is administered by the U.S. Department of the Treasury. To be eligible for the ERA program, households must have income below 80% of Area Median Income (AMI), and must have one or more individuals who have either qualified for unemployment benefits, or experienced a reduction in household income; incurred significant costs, or experienced other financial hardship during the pandemic; or demonstrate a risk of experiencing homelessness or housing instability.

However, resources in the ERA are prioritized for households at or below 50% AMI and who are currently experiencing unemployment. Funding can cover both back and forward-going rent and utility payments, as well as other housing expenses, for up to 18 months. The deadline to allocate funding under the American Rescue Plan is September 30, 2025; the new legislation also extends the initial $25B in ERA funding from December 31, 2021 to September 30, 2022. As communities seek to update existing ERA programs or develop new models, they can use the lessons learned from 15 other communities released in this recent report.

HOUSING VOUCHERS

$5B is allocated to Public Housing Authorities for housing vouchers to either provide new, or renew existing, emergency vouchers. Housing Vouchers are designed to support extremely low-income households who need long-term financial assistance to access housing. To be eligible, households much be at risk of or currently experiencing homelessness; fleeing or attempting to flee domestic violence, dating violence, stalking, sexual assault, or human trafficking; or who are recently homeless, and this rental assistance will prevent homelessness or having a high risk of housing instability.

Housing vouchers under this bill may be reissued to new households who need the assistance up until September 30, 2023; after that date, the housing voucher will remain with the assigned household and terminate only after they no longer need it. Communities can target the ERA program funding for households who need assistance for up to 18 months and reserve the additional Housing Vouchers for the households who need it the most. Partnering with the homeless services system and Coordinated Entry will best ensure alignment and prioritization of resources.

HOMELESSNESS ASSISTANCE

$5B in the American Rescue Plan will support rental assistance and supportive services for the purpose of developing affordable and supportive housing and acquiring non-congregate shelter to be converted into affordable housing or used as emergency shelter. This means that communities can use ARP funding to acquire commercial properties, such as hotels and motels, and convert them to non-congregate shelter, affordable housing, or supportive housing for people living in congregate emergency shelter or in unsheltered settings. Of this total, it estimated that that Charlotte (HOME Consortia CNSRT participation jurisdiction) will receive $11,742,983 to be allocated using the HOME Investment Partnerships program formula.

To be eligible, households must be at risk of or currently experiencing homelessness; fleeing or attempting to flee domestic violence, dating violence, stalking, sexual assault, or human trafficking; in need of supportive services to prevent homelessness or having a high risk of housing instability; or households with a veteran family member that meets one of these criteria. The identified use for this funding underscores the direction of the current administration toward non-congregate shelter design and emphasis on affordable housing solutions.

HOMEOWNER ASSISTANCE

$9.96B will help homeowners avoid foreclosure through the Homeowner Assistance Fund, which is administered by the U.S. Department of the Treasury.

UTILITY ASSISTANCE

$4.5B will target utility assistance through the Low-Income Home Energy Assistance Program (LIHEAP). An additional $500 million is allocated for water assistance through the Low-Income Household Drinking Water and Wastewater Emergency Assistance Program.

HOUSING COUNSELING

$100M in the bill supports housing counseling through NeighborWorks America. Of that total, at least 40% must go to housing counseling organizations that focus on minority and lower-income homeowners, renters, and individuals experiencing homelessness; or provide services in neighborhoods with high concentrations of minority and low-income homeowners, renters, and individuals experiencing homelessness.

FAIR HOUSING ACTIVITIES

$20M is provided in the American Rescue Plan to support Fair Housing activities.

EVICTION MORATORIUM

Because of the budget reconciliation mechanism used to advance the ARP, it does not address the need to extend the U.S. Centers for Disease Control and Prevention (CDC) eviction moratorium. Currently, the moratorium is set to expire on March 31, 2021.

COMPLEMENTARY SAFETY NET RESOURCES

The ARP also provides direct financial assistance to households, including $1,400 direct stimulus checks; expansion of unemployment insurance, with $300 in additional weekly benefits through September 6, 2021; and an expanded child tax credit program. Whereas the housing-related assistance in the ARP addresses “supply-driven” factors of homelessness (access to and availability of permanent affordable housing through units and subsidies), this type of assistance addresses the other side of the equation: “demand-driven” factors. Demand-driven factors focus on meeting the needs of households facing housing instability & homelessness, including help with rent and other household expenses; food; childcare; transportation; information about, and access to, affordable housing; and support and assistance navigating systems.

SO, WHAT

The American Rescue Plan arguably represents the largest federal investment since the domestic policy programs launched during the 1960s, which focused on ending racial injustice and eliminating poverty. Those initiatives included the $7.5B Housing and Urban Development Act of 1965, which paved the way for the Housing Choice Voucher program and creation of the Cabinet-level department of Housing & Urban Development.

It is estimated that the Emergency Rental Assistance program dollars, alone, could serve between 4 and 6 million renter households, which will also indirectly help struggling landlords and property owners. This is cause for hope. However, while the COVID-19 relief packages can help address issues caused by the pandemic, they do not resolve the pre-existing conditions of housing instability and homelessness that predated it.

It is, therefore, critical, that communities do not solely use the funding from the American Rescue Plan as a band-aid. Rather, communities should integrate the new funding into comprehensive, long-term economic recovery plans to address the pre-existing conditions. This includes ensuring access to and availability of permanent affordable housing (in the form of rental assistance to gap costs and the physical units themselves); removing barriers to access and sustain permanent affordable housing; and strengthening supports and safety net measures to help lower-income households “make the math work.” The ARP can be the basis of a true rescue plan for the most vulnerable members of our community.