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A Review of the American Rescue Plan

On March 10, the U.S. House of Representatives, on a vote of 220–211, passed the American Rescue Plan Act, a $1.9 trillion COVID-19 relief bill that includes nearly $50 billion in assistance for housing and homelessness, with $27.4 billion for rental assistance. A total of $5 billion is provided for emergency vouchers.

On March 6, the Senate passed an amended version of the Act on a 50–49 vote. The first iteration of the Act passed in the House on a 219–212 vote. The bill was signed into law by President Biden on March 11. Despite President Biden’s hopes that this bill would be supported in a bipartisan fashion, the three separate votes fell almost entirely along partisan lines, with all but one Democrat voting to support the final measure and all Republicans voting against it.


Breakdown of the $27.4 Billion in Rental Assistance

$21.55 billion for emergency rental assistance (for current rent and utilities as well as arrears), slightly higher than the original House number ($20.25 billion) and includes $2.5 billion for what are defined as high-need communities. The funds will be administered through the Coronavirus Relief Fund (CRF) and administered by the U.S. Department of the Treasury with funds allocated to states and local governments. Assistance, up to 18 months, is provided for households where one or more individuals: has qualified for unemployment benefits or experienced a reduction in household income, incurred significant costs, or experienced other financial hardship during or due, directly or indirectly, to the pandemic; can demonstrate a risk of experiencing homelessness or housing instability; and has a household income below 80 percent of AMI. Eligible grantees are those considered to have a high need, as demonstrated by: the number of very low-income renter households paying more than 50 percent of income on rent or living in substandard or overcrowded conditions; rental market costs, and employment trends. Not more than 10 percent may be used for case management or 15 percent for administrative costs. Funds are available until September 30, 2025. The bill also extends the deadline to spend the initial $25 billion of funding provided by Congress in December 2020 from December 31, 2021, to September 30, 2022.

$5 billion in emergency housing vouchers, with funds available through September 30, 2030, for households that are (or are at risk of) experiencing homelessness; are fleeing or attempting to flee domestic violence, dating violence, stalking, sexual assault, or human trafficking; or to stabilize households at risk of homelessness or having a high risk of housing instability.

Emergency voucher funds may be used to serve these households as follows:

  • Incremental emergency vouchers;
  • Renewals of the vouchers;
  • Fees for the costs of administering vouchers and other eligible expenses (as defined by notice) to prevent, prepare, and respond to coronavirus to facilitate the leasing of the emergency vouchers, such as security deposit assistance and other costs related to retention and support of participating owners; and
  • Adjustments in the calendar year 2021 Section 8 renewal funding allocation, including mainstream vouchers, for public housing agencies that experience a significant increase in voucher per-unit costs (PUC) due to extraordinary circumstances or that, despite taking reasonable cost savings measures, would otherwise be required to terminate rental assistance for families as a result of insufficient funding.

Public housing authorities (HAs) will be notified of any voucher allocation within 60 days of the enactment of the Act, and vouchers will be distributed by a formula (undefined) that includes HA capacity and ensures geographic diversity, including rural areas. The HUD Secretary may revoke and redistribute any unleased vouchers and associated funds, including administrative fees, after a reasonable time (undefined). After September 30, 2023, an HA may not reissue any vouchers when assistance for the family assisted ends. The bill provides broad waiver authority to the Secretary to waive or provide alternative requirements necessary to expedite or facilitate the use of funds.

In light of the lack of detail as to how funds will be allocated to HAs, PHADA urges HUD to work with industry groups in making such determinations. It cannot be over-stated that many HAs, particularly small to medium agencies, have focused on emergency protocols related to COVID-19 and therefore may not have voucher utilization numbers that accurately reflect their leasing capacity. Furthermore, many HAs that have received emergency vouchers from the first allocation have had difficulties with contacting applicants and leasing due to COVID-19 but move as expeditiously as possible and will continue to do so to serve households in need. Some have experiences difficulties where they have had to consolidate their mainstream and voucher waiting lists. Especially in those geographical areas that have been hit the hardest, which includes smaller rural areas, it is important to get these vouchers into the hands of households that have experienced severe hardship. It should also be noted that prior SEMAP scores, which HUD might consider, are too outdated at this point to be reliable. PHADA’s proposal for emergency vouchers can be found here.

$750 million for tribal housing needs through the Native American Housing Block Grants, Native Hawaiian Housing Block Grants, and Indian Community Development Block Grants programs.

$100 million for rural housing to assist households living in USDA-financed properties. Funds are available until September 30, 2022, and may be used to cover rental assistance and arrears.


Funding for Other Housing and Homelessness Programs

$10 billion in homeowner assistance, including $9.961 billion to help homeowners avoid foreclosure through the Homeowner Assistance Fund administered by Treasury, to remain available until September 30, 2025. Funds will be allocated to states and tribal nations. Funds are provided to eligible entities for the following purposes:

  • Preventing homeowner mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services;
  • Displacements of homeowners experiencing financial hardship (after January 21, 2020) through qualified expenses related to:
  • – Mortgage payment assistance; reinstating a mortgage; delinquency or default payments;
  • – Principal reduction;
  • – Interest rate reductions;
  • – Payment assistance for utilities;
  • – Homeowner’s insurance, flood insurance, and mortgage insurance;
  • – Homeowner’s association, condominium association fees, or common charges.

$39 million to assist rural homeowners through USDA’s Section 502 and Section 504 direct loan programs.

$5 billion to assist people experiencing homelessness, including rental assistance, housing counseling, homeless prevention services, and affordable rental housing development, the latter of which includes acquisition and development costs. Funds are targeted for individuals or households that are (or are at risk of) experiencing homelessness; people who are fleeing or attempting to flee domestic violence, dating violence, stalking, sexual assault, or human trafficking; populations for whom supportive services would prevent the family’s homelessness or having a high risk of housing instability; or households with a veteran family member that meets one of these criteria. Funds, disbursed to states and localities, will be allocated within 30 days of enactment using the HOME Investment Partnerships program formula, with up to 15 percent of funds to be used for administrative costs.

$5 billion in utility assistance, including $4.5 billion through the Low Income Home Energy Assistance Program (LIHEAP) and $500 million for water assistance through the Low-Income Household Drinking Water and Wastewater Emergency Assistance Program.

$100 million in housing counseling funds through NeighborWorks America. Not less than 40 percent must be provided to housing counseling organizations that target minority and low-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.

$20 million for fair housing activities.


Other Provisions

  • The bill provides direct payments of up to $1,400 for individuals with less than $75,000 per year in income and $2,800 for couples (who file jointly) with less than $150,000 per year. Partial payments will stop for those with income over $80,000, compared to the previous allowance of up to $100,000.
  • Federal unemployment insurance payments will continue to include the additional $300 supplement until September 6, 2021. President Biden and Democrats have pushed to enact this legislation before March 14, when unemployment benefits from the previously enacted COVID-19 legislation ends.
  • Expansion of the child tax credit, including an increase to $3,000 per child (up from $2,000), with an additional $600 for children under 6 years old, and making the credit fully refundable (versus reducing tax liability, as is now the law). Supporters of these and other child tax credit provisions hope for permanent expansion, which some have labeled transformational. President Biden has asserted that changes to the child tax credit will reduce child poverty by half.

The controversial and much debated amendment to raise the minimum wage to $15 per hour was offered by Sen. Bernie Sanders (D-VT) despite the Senate parliamentarian’s ruling that the provision violates the stringent rules governing budget reconciliation. The amendment was not adopted.

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