Can a municipality spend funds from the second tranche of the Emergency Rental Assistance Program (“ERAP2”) before depleting all funds from the first tranche (“ERAP1”)?

Guidance from the U.S. Department of the Treasury (“Treasury”) does not indicate whether ERAP1 funding must be depleted before beginning to use funds from ERAP2.

To maximize the use of ERAP funding, to the extent that an activity is eligible under ERAP1, a municipality may choose to utilize ERAP1 funds until ERAP1 funds are exhausted. Additionally, ERAP1 funds are available until September 30, 2022, while ERAP2 funds are slated to remain available until September 30, 2025. Further, on October 25, 2021, Treasury announced guidance on the reallocation of ERAP1 funds to ensure “additional funds are made available to grantees with a proven capacity to deliver ERA in jurisdictions where families remain at serious risk of eviction or housing instability.”[1] Notably, grantees should consider prioritizing ERAP1 to prevent jeopardizing funding for reallocation.   

Each ERAP program is intended to support low-income households at risk for homelessness and affected by the COVID-19 pandemic and its economic impacts by helping make rent and utility payments.[2] There are differences, however, between ERAP1 and ERAP2, some of which may make certain activities or costs assignable to one program but precluded from the other. A non-exhaustive list of differences includes:

• ERAP1 and ERAP2 require that eligible households demonstrate financial hardship due, directly or indirectly, to the pandemic; and one or more individuals within the household can demonstrate a risk of experiencing homelessness or housing instability.[3]
• ERAP1 requires the household has income at or below 80% of area median income, while ERAP2 requires the household is a low-income family (as such term is defined in section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b)))[4].
• ERAP2 can be offered directly to renters when landlords do not accept ERAP payments.[5]
• ERAP1 requires contact first be made with landlords and utilities before funds are offered to renters, while ERAP2 does not include this requirement.[6]
• ERAP1 limits household eligibility to 12 months (with 3-month extensions available under certain circumstances), while ERAP2 sets a cap of 18 months of household support combined between ERAP1 and ERAP2.[7]

Additional resources for ERAP include:

• Treasury's ERAP Resources Site;
• Treasury's ERAP2 Fact Sheet (May 7, 2021);
• Treasury's FAQ sheet regarding the ERAP1 and ERAP2 programs (May 7, 2021);
• The National Association of Counties’ list of county ERAP programs;
• Questions and Answers on ERA Reporting v 1.0 (September 27, 2021);
• ERA Reporting Guidance v 2.0 (October 7, 2021);
• Addendum to ERA Reporting Guidance – Clarifications and Guidance for Financial Reporting on Recipient and Subrecipient Activities (October 28, 2021); and
• Deputy Secretary of Treasury letter outlining guidance on reallocation of funds (October 25, 2021).

Last Updated: December 27, 2021