Massive Rent Relief Program Approved in State Budget, Program Still Not Implemented
As we anticipated ahead of going to press with last month’s issue of the RSA Reporter, Governor Andrew Cuomo and the Legislature ultimately included the federally-funded rent subsidy program in the annual State budget that was approved during the first week of April.
Despite months of expecting the State Office of Temporary and Disability Assistance (OTDA) to independently implement the program in the early months of 2021, the so-called pro-tenant Legislature decided to include the billion-dollar program in the State budget, withholding much-needed rent relief from building owners and tenants while other states had already rolled out their rent relief programs.
After stalling, OTDA will still be in charge of implementing the program. However, there are still uncertainties with regard to how quickly the State agency will be able to open the application process. Until the application portal is officially opened, the following language was provided through the State budget about the rent relief program:
Creation of Program and Availability of Funds: The COVID-19 Emergency Rental Assistance Program of 2021 will be administered through OTDA. It will be funded with a total of $2.35 billion of federal rent assistance from the Consolidated Appropriations Act of 2020 ($1.3 billion) and the American Rescue Plan Act of 2021 ($1.05 billion).
a. The commissioner of OTDA will implement a rent and utility assistance program. Once applications are available from OTDA, for the first 30 days, up to 65% of the funds will be available for New York City tenants and at least 35% will be made available to localities outside of the City.
b. After 30 days, money will be allocated on a rolling basis, subject to any priorities established by the statute, as outlined below.
c. OTDA will establish an application process by telephone or online, and will also coordinate with non-profit organizations or local government staff to provide additional application support.
d. OTDA will provide tracking information for both tenants and property owners on its website for any application received/submitted.
e. Self-attestation by tenants will be permitted to the extent allowable by federal law.
f. Income requirements: Up to 80% of Area Media Income (AMI), demonstrates a risk of homelessness/housing instability, and qualified for unemployment, reduced income, incurred financial hardship due to COVID-19.
g. Income will be determined either by calendar year of 2020, or the monthly income at the time of application
h. Immigration status is not a factor, but full-time college students who are listed as dependents are not eligible.
i. Must be a primary resident of New York State.
Applicants Receiving Priority:
j. Greatest priority will be given to households earning up to 50% AMI and have one or more individuals who are unemployed as of the date of application and have been unemployed for at least 90 days prior (it is not clear whether the priority will be given if household meets both criteria, or if it is an “either or” analysis. We are hopeful this will be clarified through final guidance from OTDA).
k. Additional priority groups will be as follows, in no particular order (“Priority Group B”):
i. Mobile home tenants;
ii. Households with at least one individual from a “vulnerable population,” i.e., domestic violence or human trafficking victim or veteran;
iii. Households with a pending eviction;
iv. Households from communities disproportionately impacted by COVID-19 as established by OTDA regulations;
v. Households where owner is a “small landlord,” i.e., a person or entity who owns 20 or fewer units.
l. Notwithstanding the above, for the first 30 days of the application period, the following priority sequence will be in effect:
i. 50% AMI plus meets any of the criteria listed in Priority Group B
ii. 50% AMI without any additional criteria being met
iii. 80% AMI plus meets any of the criteria listed in Priority Group B
iv. 80% AMI without any additional criteria being met
m. After the above 30-day priority period, the statute states all applications will be processed on a “rolling basis.” It is not yet clear how any priorities will be established, if any, after these 30 days.
Property Owner Requirements Under the Law:
n. Building owners must:
i. Apply any monies received to straight rent arrears only for the time period indicated;
ii. Provide OTDA with needed information (such as payment info);
iii. Keep all information provided confidential.
o. Eviction restrictions:
i. During the application period, all holdover and nonpayment proceedings are stayed and/or cannot be commenced against a household who has applied until a determination has been made.
ii. After an application is approved, acceptance of payment by the owner will:
1. constitute proof that all monies sought for the covered time period have been satisfied;
2. all late fees for that period are waived;
3. constitute an agreement not to increase the monthly rent for a one-year period following the receipt of the first rental assistance payment by the owner;
4. constitute an agreement to not commence any holdover proceeding for a one-year period following the receipt of the first rental assistance payment by the owner (although we expect further clarification from OTDA, RSA believes that this provision will be interpreted to include all holdover proceedings, although we would still argue that it should only apply to lease expiration and holdover tenancies);
5. require building owner to notify tenant of these protections.
p. Up to 12 months of rental arrears plus up to three months prospective rent may be paid.
i. Prospective rent payments are only available to “rent burdened households,” defined as households that pay 30% or more of their gross monthly income in rent.
q. Payments are made directly to the property owner. However, if owners cannot be reached, money will be held by the state for at least 180 days, after which tenant will be able to use any proof that they were approved but the owner did not accept payment in defense of any rental obligations for the covered time period.
i. Outreach efforts by OTDA will include a mailing and phone calls.
Although the foundation of the program details were outlined in the State budget, an anticipated timeframe for the when applications will be accepted through OTDA is still unknown. This is alarming not only because of the fact that thousands of tenants and property owners are desperately in need of financial assistance to cover rent arrears, but because as of now, New York State only has a limited window to disperse these funds before the federal government can retract the money.
Under the provisions outlined by the second federal stimulus package enacted in December 2020, the State is required to spend the first $1.3 billion in relief by the end of September 2021. The remaining funds provided by the third stimulus package must be spent by the end of April 2022. Whether or not President Joe Biden will grant an extension is also unknown at this juncture.
Ahead of the anticipated opening of the application period, RSA submitted various questions to OTDA that seek clarification on many provisions of the program. Such questions included, if a tenant vacated an apartment, either because the lease ended or tenant broke the lease, will the building owner be eligible for back rent? If an owner negotiated a lowered rent during the pandemic, will the owner be eligible to apply for the difference between the abated rent and the lease rent? In total, RSA submitted over 10 questions seeking clarity on how funding will work.
As soon as OTDA provides final program and application details, as well as answers to our various questions, RSA will provide them to our membership through a robust outreach effort. We urge our members to share the program information with your tenants and other fellow property owners.
We will keep you apprised of all upcoming developments.