House Passes $3 Trillion Covid-19 Relief Legislation
On May 15, the House of Representatives passed a $3 trillion bill detailing House leadership’s priorities for the next coronavirus package. H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act), includes funding for a wide range of programs, including critical investments in affordable housing and community development. If enacted, HEROES would deliver almost $1 trillion in aid to state and local governments who are incurring added costs associated with the public health emergency amid revenue shortfalls. The bill also calls for another round of $1,200 economic impact payments, extending unemployment benefits and strengthening the Payroll Protection and Economic Injury Disaster Loan programs.
HEROES would also provide resources for affordable housing and community development programs at HUD, USDA, and Treasury:
Housing and Urban Development
- $100 billion for Emergency Rental Assistance
- $11.5 billion for Homeless Assistance Grants
- $5 billion for the Community Development Block Grant (CDBG) program
- $4 billion for Tenant-Based Rental Assistance
- $2 billion for the Public Housing Operating Fund
- $1 billion for New Emergency Housing Vouchers
- $750 million for Project-Based Rental Assistance
- $500 million for Housing for the Elderly
- $200 million for Housing for Persons with Disabilities
- $100 million for Housing Counseling Assistance
- $14 million for the Office of Fair Housing and Equal Opportunity.
The largest appropriations for HUD are aimed at supporting families and individuals that are unable to maintain housing stability or afford their rent and utilities during the Covid-19 emergency. The $100 billion Emergency Rental Assistance program is based on legislation that House Financial Services Committee Chair Maxine Waters (D-CA-43), Representative Denny Heck (D-WA-10), and Ranking Member of the Senate Banking Committee Sherrod Brown (D-OH) introduced on May 8, called the Emergency Rental Assistance and Rental Market Stabilization Act of 2020. The funds for the program would be administered through the existing Emergency Solutions Grant Program (ESG), but would have some adjustments to broaden the scope of eligible applicants. The second pot of funding for ESG -- $11.5 billion -- would go toward addressing challenges that people experiencing homelessness are facing in relation to the pandemic.
USDA Rural Housing Service
The HEROES Act would specifically address the need for housing assistance in rural communities by providing $309 million for USDA’s Section 521 Rental Assistance program. The bill specifies that up to $25 million may be used for rural vouchers to adress reductions in tenant rent contributions and to provide rental assistance to unassisted households living in USDA subsidized properties who are struggling to pay rent during the pandemic.
Department of the Treasury
The bill would set up a $75 billion Homeowner Assistance Fund at the Department of the Treasury to provide flexible aid through state housing finance agencies that could be used to support homeowners and renters affected by Covid-19 who need assistance to avoid mortgage defaults, foreclosures, and evictions. The fund would dispense financing nationwide and includes a small state minimum, guaranteeing each state would receive at least $250 million. This program is based off legislation that Senators Sherrod Brown (D-OH) and Jack Reed (D-RI) introduced on May 6 (S. 3620) that collected 18 co-sponsors, including all the democratic members of the Senate Banking Committee.
The legislation would also provide the Community Development Financial Institutions Fund Program Account with $1 billion to prevent, prepare for and respond to the coronavirus. The grants will be distributed based on a formula that takes into account factors like program capacity, balance sheet strength, certification status, and financial and compliance performance. The bill also states that no less than $25 million must be used to provide technical and financial assistance and training to Native American, Native Hawaiian, and Alaska Native communities.
Eviction and Foreclosure Moratoria
If enacted, the HEROES Act would amend the eviction moratorium and multifamily forbearance provisions in the CARES Act that Congress passed in March. It would extend the CARES Act’s eviction and foreclosure moratoria for another year and expand the provision to include all dwelling units, regardless of whether they are subsidized or backed by a federal mortgage program, and regardless of whether a signed lease is in place. It would also extend the multifamily property forbearance allowances for both 1-4 unit properties as well as all multifamily properties and align the timeframe for forbearance to that of the eviction moratorium (12-months).
Key Affordable Housing Programs Not Included in HEROES
While there are many provisions included in the legislation that will offer strong support and boost housing stability throughout the nation, unfortunately, the bill did not appropriate funds for a few vital programs.
The HOME Investment Partnership Program, which is one of the most flexible housing programs Congress has ever enacted, was not included in the HEROES Act. HOME is well-positioned to respond to the plethora of housing needs that are already impacting our nation and could also help cover operating costs incurred by affordable rental housing owners during the pandemic, and address costs associated with construction and lease-up delays and changes to deal terms and pricing.
The Section 4 Capacity Building Program was also not included, despite the fact that the spread of Covid-19 is causing financial strain for many community-based non-profit organizations throughout the country. These groups are facing decreased funding coupled with an increased demand for their services as they work to address numerous emerging needs in their communities. Section 4 has been used before to sustain local groups during times of economic distress and is well positioned to do so again.
Finally, the ACTION Campaign’s Housing Credit priorities were also not included in the package. Enterprise and our partners believe that the legislation should have enacted a minimum 4 percent Housing Credit rate, given that the 4 percent Housing Credit rate fluctuates monthly based on federal borrowing rates and therefore is at an all-time low, jeopardizing the financial viability of critical affordable housing developments currently in the pipeline. Enterprise is also in favor of lowering the “50 percent test” threshold for bond financing required to access 4 percent Housing Credits, so that affordable housing developments facing new expenses due to COVID-19 do not risk losing access to the critical 4 percent Housing Credit. Enacting these two provisions for the Housing Credit would help stabilize our nation’s affordable housing delivery system amidst a severe shortage of affordable rental housing in the United States, which the Covid-19 pandemic has only exacerbated.
The Senate is not likely to take up the bill as passed by the House. Senate Leadership has instead said they are monitoring the implementation of previous COVID-19 legislation. It is possible they might release their own version of a bill in the coming weeks.
For more information, view the full HEROES Act text as well as a section-by-section summary. For regular updates on the federal response to Covid-19, sign up for our daily newsletter Today in Housing, as well as our bi-weekly publication, Capitol Express.