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Texas to receive $1.9B in federal rental assistance funds

Synopsis

Additional funds to help renters financially impacted by the pandemic have been allocated to the state, though program details must still be finalized. Learn more about when this assistance may be available.


Key takeaways

  • Recent federal legislation included $25 billion in funds for rental assistance; Texas is expected to receive $1.9 billion.
  • The majority of the funding will be administered by the state, with the rest allocated to cities and counties with populations of 200,000 or more.
  • The U.S. Treasury Department must provide guidelines for using the funds before any are distributed, so availability is not expected immediately.
  • Both property owners and residents must agree to participate in the program to receive the funds, but either can apply. Payments will be made directly to property owners.
  • The state is expected to reallocate CARES funding that had been earmarked for rental assistance to assist mortgage holders in need. Some funds from the CARES Act and from this new legislation will be set aside for the state’s eviction diversion program.

While there are still many details to be worked out, Texas has been allocated an estimated $1.9 billion from the recently passed federal Consolidated Appropriations Act.

Of that amount, 55 percent of the funds will be administered by the state and 45 percent has been allocated to cities/counties with populations of 200,000 or more. It is expected that any funds not accepted by cities/counties will be added to the state’s share.

While allocated payments are to be made by the federal government to the eligible grantees no later than 30 days after the enactment of the Act, funds won’t be able to be administered until the Treasury Department provides regulatory guidance.

Eligible households must be delinquent at least one month and meet income eligibility requirements, including:

  • A household income below 80 percent of area median income (AMI);
  • A demonstrable risk of experiencing homelessness or housing instability; and
  • One or more household members who qualify for unemployment benefits or experienced financial hardship due, directly or indirectly, to the pandemic.

In addition, the federal legislation provides that priority will be given to households that do not exceed 50 percent of the area median income for the household. However, it has not yet been determined how that will be implemented.

Either property owners or residents can apply for funding, but both parties must agree to participate. Payments will be made directly to property owners.

For the state-administered rental assistance funds, it is expected that applicants will go directly through the state rather than having to deal with local agencies. The state plans to have an online application system. However, given all of the logistical issues that need to be implemented along with the need for regulatory guidance from the U.S, Treasury Department, it is anticipated that it may take one or two months before funds are ready to be distributed.

Eligible households can receive prospective rent payments for up to three months. After that time, households will need to reapply and be recertified for eligibility.

All funds must be committed by September 2021 and spent by December 2021.

A set-aside of funds will be held for eviction diversion.

The National Apartment Association has prepared a summary of all industry-related provisions in the Consolidated Appropriations Act including other types of tenant assistance, project-based rental assistance, relevant tax provisions and the Paycheck Protection Program. The summary can be found at Full Summary: Consolidated Appropriations Act of 2021 | National Apartment Association (naahq.org)

The Texas Apartment Association has been in close contact with state officials regarding the development of the state’s rental assistance program and will be providing details on the TAA website and in publications as they become available. Members in cities or counties of 200,000 or more should contact local officials or their local association for program details.

State rental assistance from CARES Act funds

While the state had previously announced plans to distribute about $171 million in funds received form the CARES Act for rental assistance, given the new tranche of federal funding, it has been proposed that most of the state money allocated to rental assistance will be shifted to mortgage payment assistance.

However, the state still plans to allocate approximately $37 million in Community Development Block Grant (CDBG) rental assistance funds for about 45 cities and counties that applied for funding. Contracts with agencies to administer those funds (sub-recipients) are scheduled to be issued January 15. A list of those cities and counties will be available after the contracts have been finalized.

Sub-recipients will accept applications and disburse the funds after the contracts are signed and 10 percent of the funds will be allocated to the Texas Eviction Diversion Program.

The CDBG CARES Act funds will have similar income eligibility restrictions as the Eviction Diversion Pilot Program funds and allow payments for up to six months.

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