Summary of Emergency Rental Assistance (ERA2) Reallocation Guidance — Treasury (March 30, 2022)

Summary

Treasury summary dated March 30, 2022 of its Reallocation Guidance for the second Emergency Rental Assistance Program (ERA2), aimed at speeding assistance to tenants and landlords. Grantees with expenditure ratios below 20% as of March 31 are found to have excess funds subject to potential reallocation, unless their ratio reaches at least 20% by April 30 or they voluntarily reallocated at least 25% of their ERA1 allocation. The threshold then rises by 20 percentage points each quarter, and from December 31, 2022 any unpaid funds may be designated excess. A grantee must have spent or obligated at least 50% of its own allocation to receive reallocated funds, with priority to grantees in the same state. A grantee may also ask to transfer up to 60% of its initial ERA2 allocation to other grantees in its state or territory.

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                          U.S. Department of the Treasury
         Summary of Emergency Rental Assistance (ERA2) Reallocation Guidance

                                         March 30, 2022

This document explains the structure of the Treasury Department’s approach to reallocating
funds for the second Emergency Rental Assistance Program (ERA2) under the Reallocation
Guidance issued in March 2022. The Guidance’s central goal is to help more people stay in their
homes and avoid eviction by speeding up the delivery of assistance to tenants and landlords in
need.

Treasury will carry out the statutory requirement to reallocate funds to accomplish this goal in
three ways: 1) make more resources available to high-performing grantees based on need, (2)
incentivize increased spending on ERA2 eligible uses through adoption of best practices among
grantees to help them streamline and improve their processes and the dedication of other funds to
meet the significant need relative to funding available for rental and utility assistance, and (3)
work to ensure funds do not go unused by programs unwilling or unable to assist struggling
renters and landlords.

The Guidance covers the major aspects of how these funds will be reallocated, including the
following:

    •   Grantees who have insufficient expenditure ratios—a measure of funds actually
        spent providing assistance to eligible households—will face reallocation. Grantees
        with expenditure ratios below 20% as of March 31, based on the program data they
        submit to Treasury, will be determined to have “excess funds” subject to potential
        reallocation. Specifically, a grantee with an expenditure ratio below 20% will be
        determined to have excess funds equal to the difference between its reported
        expenditures and the amount of expenditure needed to reach the 20% threshold.

    •   A Grantee with both inadequate obligations and insufficient expenditures will have
        two ways to mitigate the amount that Treasury would otherwise reallocate as a
        result of this first assessment.

           o The grantee can avoid reallocation if, based on data submitted to Treasury
             reflecting expenditures as of April 30, it has achieved an expenditure ratio is at
             least 20%. Otherwise, excess funds will be calculated based on the difference
             between its reported expenditures as of March 31 and the amount of expenditure
             needed to reach the 20% threshold.

           o Further, grantees will avoid reallocation if they have made voluntary
             reallocations of ERA1 funds in at least the amount of 25% of their ERA1
             allocation.
    •   After the first assessment, Treasury will assess each grantee’s expenditure ratio on
        a quarterly basis. The expenditure ratio threshold used to calculate excess funds will
        rise by 20 percentage points each quarter (for example, the threshold as of June 30 will
        be 40 percent). As of December 31, 2022, any unpaid funds may be designated as excess
        funds and be reallocated, helping to ensure that funding does not go unused and is
        appropriately used in the emergency context. Under the ERA2 statute, funds paid to a
        grantee (based on the grantee having achieved 75% obligation of funds disbursed to
        date) may not be reallocated.

    •   Treasury expects to distribute reallocated funds after each quarterly assessment, as
        warranted based on availability and confirmed need. Treasury will soon begin
        collecting requests from grantees for additional funds. These requests will be submitted
        on a standard form provided by Treasury that allows grantees to confirm and describe the
        needs in their communities. A grantee must have spent or obligated at least 50% of its
        own initial allocation to be eligible for reallocated funds. As excess funds become
        available, Treasury will prioritize, when feasible, requests from grantees in the same
        state where the funds were initially allocated. The remainder will be available for
        reallocation nationwide, with priority afforded to grantees already on track to expend
        ERA funds promptly. Treasury also intends to prioritize grantees that have dedicated a
        significant amount of non-ERA funds to rental or utility assistance substantially similar
        to assistance under ERA, including through the use of State and Local Fiscal Relief
        dollars for these purposes.

    •   A Grantee may also reallocate funds on a voluntary basis. A Grantee may request
        the transfer to other Grantees of up to 60% of its initial ERA2 allocation. The transferee
        Grantees must (i) administer an ERA2 program in the same state or territory as the
        transferor and (ii) have obligated or spent at least 50% of their own initial ERA2
        allocations by the time of transfer. A Grantee may request Treasury’s assistance in
        identifying permissible transferees. A Grantee may request the transfer of up to 60% of
        its initial ERA2 allocation, without designating any specific Grantee as transferee.
        Treasury, in its discretion, will determine and carry out the reallocation of these funds to
        Grantees.

As with Treasury’s ERA1 reallocation guidance, published on October 4, 2021, this guidance is
intended to reflect Treasury’s commitment to ensure that funds are being used promptly to
address the significant nationwide need in communities that need assistance, recognizing the full
scope of need in many cases surpasses the amount allocated for assistance under Treasury’s
Emergency Rental Assistance Programs.


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