January 28, 2021

The Legislature today approved SB 91 (Committee on Budget and Fiscal Review). The bill represents the agreement the Governor and Legislative leaders reached on federal rental assistance funding and COVID-19 eviction limitations earlier this week. As legislation to implement the budget, the bill will take immediate effect upon the Governor’s signature. 

The bill also deploys California’s share of the rental assistance funding included in the federal COVID-19 relief bill, which allocated $1.5 billion to the state and $1.1 billion directly to local governments with populations with more than 200,000. Further, the bill establishes the criteria and prioritization for use of the state-administered rental assistance funding from the federal bill, including the funding available to cities and counties with more than 200,000 population as state block grants (please see additional requirements related to acceptance of block grant funding below).

Counties With Populations Fewer Than 200,000

From the $1.5 billion allocated to the state, the bill includes an initial set-aside of $150 million for rental assistance to residents in the 30 counties with populations fewer than 200,000. This set-aside ensures that residents of these counties are eligible for assistance from the total $2.6 billion program approximately in proportion to their share of the state’s population.

The state would administer the portion of funding reserved for smaller counties. The bill includes provisions outlining the requirements that the “program implementer” contracted to operate the state-administered program must meet, including technological capacity to manage applications from landlords and tenants, financial expertise to manage payments, and “relationships with community-level partners to ensure all regional geographies and target communities throughout the state have access to the program.”

Counties With Populations of Greater Than 200,000

Local governments with populations of 200,000 and greater that received a direct allocation of funding for rental assistance from the federal government would also be able to apply for block grant funding from the state’s $1.5 billion share. CSAC’s rough estimates of the direct allocations and potential block grants are attached to this email. Alternatively, large cities and counties can elect to participate in the state-administered program if they prefer not to administer their own programs.

Under the bill, counties with more than 200,000 in population must apply for a block grant to manage their population-based share of the $1.5 billion in statewide funding by February 12, 2021. A city or county that receives block grant funds must obligate at least 65 percent of those funds by June 1, 2021 and expend the full amount of the allocation by August 1, 2021. Additional details and requirements for participation in the block grant program are included in Section 24 of the budget trailer bill. CSAC’s estimates of direct federal allocations and eligible block grant shares for large counties are available here.

Large counties that opt to take the state block grant funds must agree to use both their share of block grant funding and their direct federal allocation of rental assistance funding consistent with the prioritization and requirements for the use of rental assistance funds outlined below and in Section 24 of SB 91.

Prioritization of Assistance Funding – State-Administered Program and Block Grant Program

The funding allocated via the state-administered program, as well as through block grants to larger counties, is required to first prioritize households under 50 percent of the area median income (AMI), followed by households in communities disproportionately affected by COVID-19 (as determined by the Department of Housing and Community Development), and finally households under 80 AMI not included in the prior two categories. The top priority for the use of assistance funding would be rental arrears; followed by prospective rent payments, utility payments (both arrears and prospective payments), and other housing-related expenses eligible under the federal legislation.

Under the state-administered program and any state block grant-funded program, if a landlord agrees to participate in the rental assistance program, funding will be available to pay up to 80 percent of an eligible household’s unpaid rent accumulated from April 2020 through March 2021, provided that the landlord agrees to forgive the remaining 20 percent. If a landlord refuses to participate, tenants can apply for assistance for rental arrears, but are be limited to compensation of 25 percent of the eligible household’s unpaid rent accumulated from April 2020 through March 2021. Eligible tenants whose landlords refuse to participate will be prioritized for assistance for prospective rent payments, utility payments, and other eligible housing-related expenses.

Eviction Protections

In addition to the provisions related to rental assistance funding, SB 91 extends the key COVID-19 eviction protections established under AB 3088 (Chiu, 2020) through June 30, 2021, which were previously set to expire on February 1, 2021, including the requirement that tenants pay 25 percent per month by the end of the “moratorium” period. The bill also extends the limited preemption of local eviction protection ordinances to align with the extended term for eviction protections in state law (see Section 21 of the bill). A summary of AB 3088 is available in this Bulletin article.

Geographic Equity

Rental assistance funds would initially be reserved for the benefit of tenants and landlords in individual counties—both smaller counties in the state-administered program and larger counties eligible for the block grant program—based on each county’s share of the statewide population. The bill, however, allows flexibility for the state to reallocate funding based on demand and to maximize expenditures as federal deadlines for use of the rental assistance funding approach. Note that the federal bill allows unused funds to be reallocated among states and other grantees beginning September 30, 2021 and funds are available through December 31, 2021.

Next Steps

CSAC will be working with the Administration to provide forums for counties to receive additional information and ask questions about the implementation of the rental assistance program in the coming weeks.