Treasury Redistributes Emergency Rental Assistance Money

November 2021 was a record-breaking month for providing Emergency Rental Assistance (ERA) assistance, according to a recent announcement from the Treasury Department. State and local governments provided assistance to approximately 665,000 renters and owners. And the $2.9 billion in ERA expenditures from both ERA1 and ERA2 funds in November 2021 represents the largest amount of assistance paid to eligible households and the largest number of payments made in any month since the programs were created.

The latest data shows that November was the third straight month of over $2.8 billion in ERA spending and over 500,000 payments under the programs. Within this announcement, the Treasury Department stated that it has begun the process of redistributing emergency rental assistance money that jurisdictions did not use.

One level deeper: The ERA reallocation process, required by the statute, gives the Treasury Department the opportunity to reallocate grant amounts to better reflect rental needs. Communities that received the initial funding faced losing it if they didn’t obligate at least 65 percent or spend 15 percent of the money by November 2021.             

The ERA statute required Treasury to begin a reallocation process on Sept. 30, 2021, whereby “excess funds,” that are not obligated, are recaptured from grantees and reallocated to eligible grantees that obligated at least 65 percent of their total ERA1 award and have a demonstrated need for such funds.

What they're saying: According to the Treasury Department, there will be multiple rounds of reallocation. In this first round of reallocation, Treasury disbursed over $1.1 billion in ERA funding, more than three-quarters of which are significant, one-time transfers proposed voluntarily between ERA grantees in the same state. In other words, any amounts recaptured from a grantee were first prioritized to grantees in the same state that were deemed eligible to receive reallocated funds.

Funds were then distributed nationally, prioritizing grantees that had substantially completed their spending of ERA1, with grantees that made more rapid progress on the expenditure of their ERA2 funding weighted more heavily.

Four states (California, New Jersey, New York, and Oregon) and the District of Columbia received additional funds as part of the reallocation. Specifically, $50 million of the reallocated funds will go to California, the most of any state. New Jersey will receive $43 million, and New York will receive $27 million. The District of Columbia will get $18 million in emergency rental assistance.

What's next: Treasury has now begun informing grantees about the process for requesting funding in the second round of ERA reallocations. By statute, the process for reallocating ERA2 funds will not begin until March 31, 2022, and Treasury will publish separate guidance for this reallocation.