Deputy Secretary of the Treasury Letter to ERA Recipient (September 24, 2021)

Summary

A letter dated September 24, 2021 from the Deputy Secretary of the Treasury, addressed to an ERA Recipient, on how Treasury intends to approach the reallocation of Emergency Rental Assistance funds. It states that the statute directs the Treasury Department to begin reallocating "excess" ERA1 funds on September 30, 2021. It describes a framework in which a grantee may be eligible to receive reallocated funds if it has obligated at least 65% of its total ERA1 allocation and demonstrates a need for additional funds. It also states that Treasury plans to use the grantee's expenditure ratio to identify excess funds.

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                           THE DEPUTY SECRETARY OF THE TREASURY
                                                    WASHINGTON



                                                September 24, 2021


Dear ERA Recipient:
The COVID-19 pandemic resulted in job losses, reductions in hours, and small business closures that left
millions of families without the income needed to cover their rent and stay in their homes. Too many
tenants have lived with the fear of eviction. Many landlords, especially those who own just a small
number of units, have struggled with loss of income from tenants who have been unable to pay their rent.
In December 2020, Congress passed the Emergency Rental Assistance Program under the Consolidated
Appropriations Act, 2021 (ERAl) to respond to the pandemic by helping low-income renters cover rent
and utility costs. Congress recognized that keeping families in their homes helps protect their health and
limits the economic scarring caused by evictions. Preventing evictions during this pandemic is critical to
tenants and landlords and is an essential part of protecting public health and our economy.
Congress anticipated that there would be a need to reallocate ERAl funds in the fall of 2021 in order to
address evolving needs for rental assistance over the course of the ERA program and to reflect the greater
capacity of some recipients to deploy funding. The statute directs the Treasury Department to begin
reallocating "excess" ERAl funds on September 30, 2021 and empowers Treasury to develop reallocation
procedures governing this process.
I am writing to provide insight into how Treasury intends to approach the reallocation process and outline
our vision for the months to come. Our overarching goal is for ERA grantees to deliver as much
assistance to as many eligible renters as possible. This requires us to direct these resources to state and
local agencies demonstrating the greatest capacity for delivering funds to tenants and landlords and to
places experiencing the highest needs. We anticipate implementing the reallocation process over a period
of time, with escalating consequences if a state or locality fails to demonstrate progress in using its ERA 1
funds or implementing the flexibilities Treasury has made available.
Treasury anticipates releasing detailed reallocation guidance in the coming days. In advance of that
release, I would like to share the anticipated framework for our approach.

•   Make additional funds available to high-performing grantees based on demonstrated need:
    Numerous state and local grantees will exhaust their ERAl funds in the coming weeks and months,
    and some will also exhaust their allocation from the second round of the ERA program (ERA2).
    Treasury will act rapidly this year to ensure that additional ERAl funding is available to those
    grantees that may be eligible to receive reallocated funds. Consistent with the ERAl statute, a grantee
    may be eligible to receive reallocated funds if it has obligated at least 65% of its total ERAl
    allocation and demonstrates a need for additional funds. Treasury will reallocate funds over time, in
    tranches, as recaptured funds become available. In our guidance, Treasury will explain the process for
    accepting requests from grantees for reallocated funds.

•   Identify "excess funds" for reallocation through a fair approach based on transparent
    benchmarks: To identify excess funds which can be reallocated, Treasury plans to use the grantee's
    expenditure ratio. 1 Grantees have been regularly reporting their expenditure data to Treasury, so

1 The expenditure ratio will be calculated as the grantee's total expenditures on assistance to eligible households

from January through September 2021 (based on interim reports for the first quarter of 2021 and monthly reports
submitted thereafter), divided by an amount equal to 90 percent of the grantee's ERAl allocation. This reflects the


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