Emergency Rental Assistance Is Running Out, but the Need Is Still Great

Since early 2021, state, county, city, and tribal governments have been working hard to distribute $46.55 billion of federal funding available for emergency rental assistance (ERA).¹ These funds have been critical to helping millions of households prevent evictions, avoid homelessness, and to afford other essential costs for their families. As of the end of June 2022, the ERA program had helped more than 6.5 million households.²

To distribute this aid, many public-sector agencies built robust delivery systems that did not exist pre-pandemic. In addition, many built stronger partnerships with external groups, like community-based organizations, research institutions, and third-party service providers. Across the country, jurisdictions stood up new eviction diversion programs, sometimes in partnership with the courts, to combine the ERA aid with creative approaches to reduce evictions. In just a few short years our nation built an entirely new infrastructure that supported low-income renters, but which was highly reliant on federal funds.

In many jurisdictions, these ERA funds are starting to run low or have run out entirely, prompting important questions about what comes next. Across the US, governments are facing the prospect of having to address housing instability that is at or greater than pre-pandemic levels, but without the aid that was available over the past few years.

This challenge may seem daunting, but it can also be viewed as an opportunity for agencies to take a step back and assess the way that they have been delivering housing stability programs and services. We now have new delivery systems built during COVID. We have plenty of ERA-related data to better understand the nature and location of housing instability in our communities. In addition, we have learned valuable lessons about how to deliver housing aid. We have a golden opportunity for housing agencies to step back and consider how they can better align their programs and services to match the needs in their communities.

An Opportunity to Reflect and Learn

The efforts involved in quickly standing up new ERA programs have been very taxing on state and local governments. Agencies that, prior to COVID, were more involved in public benefits, health and human services, or housing finance had to get into the business of delivering housing aid to households and landlords. These agencies had to build the infrastructure to distribute unprecedented amounts of funding to aid households quickly during the pandemic (and with the associated challenges with remote work), while ensuring sound record-keeping, and implementing effective processes for risk management and fraud prevention.

After undertaking this herculean task, many agencies and practitioners learned important lessons that provided critical insights into effective program design and delivery. These insights can be used to modify current programs and develop future programs to better reach and support individuals in need of rental assistance and related supports. Some examples of topics where jurisdictions saw significant learning opportunities included:

• Effective approaches to staffing and implementing delivery programs.
• Public/nonprofit/private partnerships to streamline delivery systems.
• Balancing volume of applications with the need for high-touch interaction.
• Technology platforms and data solutions.
• New ways to apply flexibility to applicant documentation, such as using “categorical eligibility” and “fact-specific proxy.”
• Approaches to case management and effectively utilizing direct-to-tenant financial support.
• How to design programs around underserved and marginalized groups; including using various outreach methods and leveraging local networks. Effective approaches to tenant and landlord outreach and coordination.
• Integration of assistance with eviction diversion models.
• Using rent assistance as the intake to connect applicants with other services.
• Marketing strategies to target outreach based on real-time applicant data.

In addition to these areas that can inform future programs and approaches, the federal programs allowed jurisdictions to collect a tremendous amount of data on tenants, and landlords. This level of data was not available pre-pandemic, and by analyzing it we can get significant insight into the state of housing instability. The fact that the ERA data can be analyzed at the household level provides a rare opportunity to determine how to provide housing support in the future—what the populations in need look like, how much support they require, where they are located, and what their causes of housing instability are. The data also provide previously unavailable information on landlords, property ownership, and rental conditions. The opportunity to carry out a once-in-a-generation revamp of housing stability structures, programs, and services is significant.

Post-ERAP Planning Elements: Locally Contextual

Policy and program approaches are developed in consideration to the state’s or local jurisdiction’s specific housing and economic conditions and demographic context. We include the following to assess and address specific housing needs.

Determining a Path Forward to Address Continued Need

There is a critical window of opportunity for governments to rebuild and reshape their housing stability ecosystem to respond to current needs. Housing agencies can now use a data-informed approach to assess whether their current agency structures, types of programs, service delivery systems, levels of funding, and marketing and outreach strategies are truly effective. In addition, many jurisdictions created new approaches during the pandemic, such as eviction diversion programs. We have the opportunity to ensure that housing-adjacent programs and agencies are coordinated and responsive to the level and nature of the ongoing need.

One of the lessons of the pandemic housing programs is that money is essential, but it’s not the only solution. There are tangible impacts of providing eviction diversion, counseling services, and access to other existing public benefits that are not necessarily dependent on the ERA funds. However, the key piece of a housing stability approach does rely on the ability to provide monetary aid. For jurisdictions facing ERA funds running short, there are critical questions around how to continue to provide this aid. Analyzing the ERA data can provide important insight into aspects like:

• If there is a smaller aid program, who are the populations most in need?
• How much aid represents the minimum viable subsidy to keep families housed?
• Can an eviction diversion program that involves mediation reduce the amount of necessary aid by negotiating concessions from landlords?
• In the absence of federal funds, how will the program be supported?

Jurisdictions across the country are using a variety of approaches to sustain housing programs and services. Many jurisdictions have local housing trust funds. Some have used tax-exempt or taxable municipal debt to finance rent assistance, and a handful of jurisdictions are considering the regular issuance of housing bonds, viewing housing as essential infrastructure. In other places, certain new fees are being levied to finance housing programs, such as increases in real estate transfer tax, construction impact fees, or revenue from expiring tax benefits that otherwise would have gone into general funds. And in some cases, public entities have partnered with banks, philanthropies, and community development financial institutions to build new housing investment funds that can leverage private dollars. 

Whatever the funding source, it is important that it be sized to address the anticipated need based on the ERA data and adjusted to reflect future-state assumptions. This kind of data-informed and targeted program design provides a framework for substantiating an ongoing appropriation. Another key is ensuring that the funding source is stable, rather than tying it to a source that can fluctuate and potentially be insufficient to meet annual funding targets.

Post ERAP Planning: Example Workstream Approach

 We examine housing needs from different angles, melding our data driven, stakeholder informed, locally contextual elements in the various parts of our proposed scope. The approach to a Housing Needs Assessment below demonstrates our multi-faceted approach.

How We Can Help

So how do agencies effectively use all of this data and lessons learned to rebuild our housing agencies, programs, and services to maximize their impact? This may require re-examining long-standing beliefs and operational assumptions, strengthening multi-sector partnerships, increasing high-touch interventions, identifying new local funding sources, and implementing more data-responsive approaches. Guidehouse is currently providing future-state planning to city and state housing agencies in order to help them better respond to the needs of their communities, informed by the data collected through ERA and other COVID programs. These efforts oftentimes involve analyzing quantitative data from COVID aid programs to get a more accurate picture of the need for housing stability services moving forward; collecting qualitative data through interviews, focus groups, surveys, and speaking with program participants—people with lived experience; and performing an assessment of agencies’ current structures, programs, and services in order to evaluate whether the existing ecosystem and framework for addressing housing stability issues matches the need identified through data collection.

Some key insights from our work with jurisdictions seeking to pivot beyond their ERA programs include:

• The experience of managing ERA programs has provided program administrators with critical insights into effective program design and delivery. These insights can be used to modify current programs and develop future programs to better reach and support individuals in need of rental assistance and related supports.
• Combining rental assistance programs with eviction prevention programs and activities, including landlord-tenant mediation, legal assistance, housing counseling, and direct engagement with the courts, can help improve tenant and landlord outcomes, make rental assistance and other housing supports more effective, and address housing instability on a larger scale.
• Rental assistance pipelines provide valuable avenues to reach landlords and tenants in order to connect them with other programs and services. Governments can develop new avenues for making that linkage, including navigation services through trusted partners to maximize the impact of those touchpoints with landlords and tenants.
• State and local governments must actively pursue myriad strategies in addressing the housing affordability crisis, including, but not limited to, sustaining and improving the existing housing stock, supporting first-time homebuyers to close the generational wealth gap, and reforming local land-use policy and regulations to allow for development of homes that are affordable to households at all income levels.
• Government entities cannot successfully tackle these programs alone. They need a robust ecosystem that involves trusted community partners, nonprofits, philanthropy, the courts, and efficient service delivery partners outside of government. One of the lessons of the pandemic is that effective programs frequently need partnerships and multi-sector collaboration.

ERA funding may be running short, but America’s communities are facing severe housing instability issues that are outlasting the immediate economic impacts of the pandemic. Many government entities built robust delivery infrastructure, new cross-sector partnerships, and eviction diversion programs that could be part of a long-term solution. Now is the time for agencies to take a step back and assess the shape of their housing stability ecosystem, to ensure that it responds to the current and future condition of need in our communities. By using the new ERA data and taking into account the lessons of the pandemic, agencies can more effectively deliver aid to households that will need it in the years to come.

Andrea Mannino contributed to this article.

¹ Authorized first by the Consolidated Appropriations Act of 2021 and then by the American Rescue Plan Act.
² https://home.treasury.gov/system/files/136/June-2022-ERA-Monthly-Data.xlsx.