Emergency Rental Assistance Reallocation Guidance — Treasury (October 4, 2021, updated March 30, 2022)

Summary

Department of the Treasury guidance titled Emergency Rental Assistance Under the Consolidated Appropriations Act, 2021 Reallocation Guidance, dated October 4, 2021 and updated March 30, 2022. It states that the Consolidated Appropriations Act, 2021 appropriated $25 billion for emergency rental assistance and that Congress later appropriated an additional $21,550,000,000 under the American Rescue Plan Act of 2021. The guidance sets forth the procedures for the ERA1 reallocation process, including a Performance Improvement Plan for Grantees that have obligated insufficient funds as of September 30, 2021, and a voluntary reallocation process. It states that Treasury must reallocate funds to Grantees that have obligated at least 65% of their initial ERA1 allocation.

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Issuer: Congressional materials
Document type: Department Of The Treasury Redlined Version Home Treasury Gov 7Cb0Eb69B9
Case: Department Of The Treasury Redlined Version Home Treasury Gov 7Cb0Eb69B9

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“Emergency Rental Assistance Reallocation Guidance — Treasury (October 4, 2021, updated March 30, 2022).” Original at home.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/department-of-the-treasury-redlined-version-home-treasury-gov-7cb0eb69b9/, SHA-256 a5f1136bc287319d057fc40a6b8acbad7a8cfebd215d9f56fb50c17b0c6efd48.

Full text

U.S. Department of the Treasury
Emergency Rental Assistance Under the Consolidated Appropriations Act, 2021
Reallocation Guidance

October 4, 2021
Updated March 30, 2022

I. Overview

Section 501 of Division N of the Consolidated Appropriations Act, 2021 appropriated $25 billion
for the delivery of emergency rental assistance (ERA) to eligible households suffering
unemployment or other financial hardship due to the novel coronavirus pandemic. The
Department of the Treasury allocated these funds to states, the District of Columbia, U.S.
territories, Indian tribes, Tribally designated housing entities (TDHEs), the Department of
Hawaiian Homelands, and units of local government (Grantees).

Congress later appropriated an additional $21,550,000,000 for ERA under the American Rescue
Plan Act of 2021. Treasury refers to ERA under the Consolidated Appropriations Act, 2021, as
“ERA1” and ERA under the American Rescue Plan Act of 2021 as “ERA2.” This guidance is
focused on ERA1, and addresses ERA2 only to the extent relevant to the reallocation of ERA1
funds. Treasury will publish guidance for the reallocation of ERA2 funds, which will not begin
until March 31, 2022, at a later date.

The Consolidated Appropriations Act, 2021 requires Treasury to begin reallocating “excess”
ERA1 funds on September 30, 2021. Treasury’s objective in reallocations is to ensure ERA
funds remain available to Grantees in accordance with their jurisdictional needs and
demonstrated capacity to deliver assistance while the ERA appropriations remain available.

This guidance sets forth the procedures for the ERA1 reallocation process. It describes how
Grantees that have obligated insufficient funds as of September 30, 2021 will be required to
submit a Performance Improvement Plan and how excess funds will be identified based on the
Grantee’s expenditures. It further describes timelines and mitigating factors related to the
recapture of excess funds. This guidance also describes a voluntary reallocation process through
which a Grantee may request that Treasury reallocate its funds to another Grantee. It also
clarifies that Treasury will not recapture funds from Indian Tribes, TDHEs or U.S. territories
prior to April 2022.

II. Obligations and Excess Funds

The ERA1 statute requires Treasury to identify “excess funds” for reallocation from amounts
Grantees have “not obligated” from their initial ERA1 allocations. Specifically, the statute
provides that beginning on September 30, 2021, Treasury must recapture excess funds, as
determined by the Secretary, not obligated by a grantee for eligible ERA1 purposes, and
Treasury must reallocate those funds to Grantees that, at the time of the reallocation, have
obligated at least 65% of their initial ERA1 allocation. The amount of any reallocation is based
on demonstrated need within a Grantee’s jurisdiction, as determined by Treasury.

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Consistent with these requirements, Treasury has developed the following policies and
procedures for identifying the excess funds that will be available for reallocation.

A. Obligating ERA Funds

Treasury will not recapture funds that a grantee has obligated. Treasury will consider funds to be
obligated if they meet any of the following conditions:

 The funds have actually been spent providing financial assistance and housing stability
services under ERA for eligible households;

 The funds are needed to pay for assistance promised in a commitment letter issued to
induce a landlord to enter a rental agreement with an eligible household under Treasury’s
ERA FAQ #35; or

 Subject to the conditions described below concerning subrecipients, the Grantee has, as
part of the Grantee’s ERA program administration, entered into a binding agreement or
funding commitment requiring the Grantee to disburse the funds to a third party for
eligible ERA1 purposes (a Contractual Obligation).

A Contractual Obligation will include situations in which (i) assistance has been approved for an
eligible household but the payment to the landlord or utility provider has not yet been disbursed,
or (ii) assistance has been approved but not yet disbursed under a bulk payment arrangement
with a large landlord or utility provider under Treasury’s ERA FAQ #38.

Funds may not be deemed to be under a Contractual Obligation for more than 12 months.
Treasury will consider any funds under a Contractual Obligation (subject to this 12-month limit)
or any funds covered by a commitment letter issued to an eligible household to remain obligated
for 30 days after the termination of the relevant agreement, funding commitment, or commitment
letter. Funds not expended or re-obligated within the 30-day period will be considered de-
obligated and potentially subject to reallocation in accordance with this guidance. In addition,
under the ERA1 statute (as amended), Grantees must obligate all funds from their initial
allocations by September 30, 2022.

Grantees are encouraged to partner with local nonprofit organizations and governmental agencies
to expedite the obligation process and delivery of assistance to eligible households. However,
Grantees may not use subrecipient agreements with these entities to avoid meeting the statutory
obligation deadlines, and funds will not be considered obligated based solely on the fact they are
subject to an agreement that provides for another entity to administer assistance on the Grantee’s
behalf. Funds paid or payable by a Grantee under a subrecipient agreement, and that have not
been expended by the subrecipient for permissible purposes, will be considered obligated only to
the extent that such funds (i) represent the subrecipient’s permissible compensation for ERA1-
related responsibilities, in accordance with Treasury’s ERA FAQ #21; or (ii) will be used to pay
obligations under binding agreements or funding commitments that would constitute Contractual
Obligations if entered into by the Grantee directly.

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The ERA1 statute provides that Grantees may use up to 10% of their allocations for
administrative costs attributable to providing financial assistance and housing stability services.
For reallocation purposes, Treasury will consider 10% of each Grantee’s initial allocation as
having been obligated for administrative costs regardless of the Grantee’s actual expenditures,
commitments, or obligations.

Grantees will be required to submit a certification indicating the amount of funds they have
obligated through September 30, 2021 (an Obligated Funds Certification). Grantees that have
obligated less than 65% of their allocations, or that do not provide an Obligated Funds
Certification, will be required to submit for Treasury’s approval a program self-assessment and
improvement plan, as described in Section II.C.2, in a form provided by Treasury (a Program
Improvement Plan), no later than November 15, 2021.

B. Identifying Excess Funds

Treasury will rely on the following factors for identifying excess funds. Each factor will be
applied separately. If Treasury identifies excess funds based on multiple factors, the amount to
be reallocated from the Grantee will equal the aggregate total. Treasury will not identify excess
funds from allocations to Indian Tribes, TDHEs or U.S. territories prior to April 2022.

Treasury will notify a Grantee in writing upon determining that any part of its allocation
constitutes excess funds and will provide instructions for the funds’ return. Excess funds must
be returned within 10 days of receiving such notice.

1. Insufficient Expenditure Ratio

In addition to evaluating the amount of ERA1 funding obligated by a Grantee as of September
30, 2021, Treasury will also evaluate a Grantee’s “Expenditure Ratio” as of September 30, 2021
and approximately every two months thereafter. A Grantee’s Expenditure Ratio 1 will be
calculated as (i) the Grantee’s total expenditurefollows:

Total Expenditure of ERA1 fundsFunds on assistanceAssistance to eligible households divided
by (ii) an amount equal to 90% of the Grantee’s totalEligible Households

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The initial version of this Guidance, issued on October 4, 2021, provided that a Grantee’s Expenditure Ratio would
be calculated by dividing (i) the Grantee’s total expenditure of ERA1 funds on assistance to eligible households by
(ii) an amount equal to 90% of the Grantee’s total ERA1 allocations as of the date of the assessment. In the initial
round of reallocation, the original formula produces a result equivalent to the revised formula above. However,
following the recapture of funds, the original formula would not properly account for the Grantee’s administrative
expenses, and the two formulas would produce different results. Treasury has adopted this revised formula for all
Expenditure Ratio assessments following the initial round of reallocation in order to clearly account for the
exclusion of the Grantee’s portion of administrative expenses and the excess funds returned in previous reallocations
from the denominator of the formula.

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Initial ERA1 allocations as of the date of the assessment. 2 Award Amount – Returned Excess
Funds – 10% of Initial ERA1 Award for Administrative Expenses 3

The Grantee’s total assistance expenditures will be determined based on the Grantee’s interim
report to Treasury for the first quarter of 2021 and each subsequent monthly reportor quarterly
reports. When available, Treasury will rely on final quarterly and monthly reports; otherwise,
Treasury will base its calculations on the relevant interim reports. Grantees will be required to
continue providing monthly reports at least through March 31, 2022. If funds are recaptured
from a Grantee, the denominator of the Expenditure Ratio will be adjusted accordingly.as
provided above. The “First Assessment” means Treasury’s assessment of a Grantee’s
performance and Expenditure Ratio based on the reporting data through September 30, 2021.

A Grantee whose Expenditure Ratio is below 30% for the First Assessment will be considered to
have excess funds. Beginning with the 30% threshold established for September 2021, the
minimum Expenditure Ratio will increase by 5% each calendar month (and, as indicated above,
assessments will occur approximately every two months).

For each Grantee whose Expenditure Ratio is below the then-applicable minimum threshold at
the time of an assessment, Treasury will calculate the Grantee’s amount of excess funds as the
difference between (i) the amount of expenditures needed for the Grantee to achieve the
minimum Expenditure Ratio applicable to that assessment and (ii) the Grantee’s reported total
assistance expenditures. As a result, the amount subject to recapture will be less for Grantees
whose Expenditure Ratios are closer to the minimum.

2. Failure to Make Required Submissions

As described elsewhere in this guidance, a Grantee will be required to submit a Program
Improvement Plan if the Grantee does not certify that the Grantee has obligated sufficient ERA1
funding as of September 30, 2021, and the Grantee may submit a Program Improvement Plan to
mitigate an excess funds determination that results from an insufficient Expenditure Ratio on
September 30, 2021. A Grantee that submits a Program Improvement Plan will be required to
deliver a report within 60 days after the date of Treasury’s approval of the Program Improvement
Plan confirming that actions have been taken to implement the policy and administrative
improvements identified in the Program Improvement Plan. The first report will be due on April
1, 2022 for grantees that received e-mail notification of their Program Improvement Plan
approval in December 2021 and thereafter will be due within 60 days after the end of the month
the Program Improvement Plan was approved.

A Grantee that is required to submit a Program Improvement Plan but does not do so by
November 15, 2021 will be determined to have excess funds in an amount equal to 10% of the
Grantee’s initial allocation. A Grantee that submits a Program Improvement Plan but does not
submit the required report confirming progress in implementing the actions identified in the

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This allowance reflects the ERA1 statute’s requirement that at least 90% of a grantee’s allocation be spent on
assistance to eligible households, with the remainder to be used for administrative costs.
3
This allowance reflects the ERA1 statute’s provision permitting a Grantee to spend up to 10% of the Grantee’s
initial ERA1 allocation on administrative costs. See section V for further discussion on administrative expenses.

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Performance Improvement Plan in a timely manner may be determined to have excess funds in
an amount equal to 10% of the Grantee’s allocation at that time (taking into account any previous
reallocations).

3. Unobligated Funds at Final Assessment

Treasury will conduct a final assessment of each grantee’s Expenditure Ratio based on data
reported through March 31, 2022. At that time, any unobligated ERA1 funds may be determined
to be excess funds.

C. Mitigating Factors for Excess Funds.

If a Grantee is subject to an excess funds determination based on the criteria described above, the
Grantee may request that Treasury reduce or not make the determination based on any of the
following three criteria.

1. First Assessment Mitigation

Treasury will not make a determination of excess funds based on an insufficient Expenditure
Ratio for the First Assessment if the Grantee submits by November 15, 2021 a certification
signed by an authorized official of the Grantee that confirms that either (i) the Grantee has
obligated at least 65% of its allocation or (ii) the Grantee’s Expenditure Ratio is at least 30%.

2. Developing a Program Improvement Plan

As indicated in Section II.A, Grantees that have obligated less than 65% of their allocations, or
that do not provide an Obligated Funds Certification, will be required to submit for Treasury’s
approval a program self-assessment and improvement plan. Further, with respect to the First
Assessment, a Grantee may request that Treasury reduce an excess funds determination if the
Grantee submits a Program Improvement Plan as described below no later than November 15,
2021. If Treasury approves such a Program Improvement Plan, any reduction in the excess
funds determination will not exceed the amount of total assistance expenditures required for the
Grantee’s Expenditure Ratio to equal 15%.

The Program Improvement Plan will identify (i) policies and practices recommended by
Treasury that the Grantee has already implemented, such as the use of self-attestations to confirm
applicant income eligibility; eviction diversion partnerships; and engaging providers of culturally
and linguistically relevant housing stability services; (ii) whether the Grantee has adopted any
policies or practices that Treasury has discouraged; (iii) key obstacles to delivering ERA
assistance to eligible households in the Grantee’s jurisdiction; (iv) actions that the Grantee will
take to improve program performance; and (v) a projection of the Grantee’s ERA1 expenditures
over the following four months. Treasury will approve a Grantee’s Program Improvement Plan
if it is complete and identifies actions for improvement that relate to adopting policies and
practices recommended by Treasury, ceasing policies and practices Treasury has discouraged, or
otherwise adequately addresses the key obstacles identified by the Grantee in the Program
Improvement Plan.

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3. Exigent Circumstances

Treasury may also reduce or not make an excess funds determination if Treasury determines that
the amount of excess funds was the result of exigent circumstances, such as a natural disaster.

III. Distributing Reallocated Funds

A. Requesting Reallocated Funds

Treasury will begin accepting requests from Grantees for reallocated funds, on a form to be
published by Treasury, on October 15, 2021. As the ERA1 statute requires, reallocated funds
will only be available to Grantees that have obligated at least 65% of their own initial ERA1
allocations. Each funding request will be required to indicate the amount requested and confirm
the need for such funds in the Grantee’s jurisdiction.

B. Allocation of Reallocated Funds

Periodically, Treasury will determine if there are sufficient funding requests from Grantees
serving jurisdictions with demonstrated needs to warrant the disbursement of reallocated funds.
Treasury will evaluate each request for reallocated funds based on the requesting Grantee’s
demonstrated capacity to meet and exceed the minimum Expenditure Ratios, and other
indications of ERA need in the Grantee’s jurisdiction. The amount of any reallocation to a
Grantee will be determined by Treasury, in its discretion, based on its assessment of these
factors.

In the event Grantees request more reallocated funds than are available for distribution, each
Grantee’s share (Relative Share) will be calculated by (i) determining the aggregate amount of
reallocated funds approved by Treasury based on its evaluation of the requests as described
above; (ii) dividing the Grantee’s approved amount by this aggregate total; and (iii) multiplying
the total amount available for distribution by the resulting percentage. In addition, Treasury may
limit a Grantee’s eligibility for reallocated funds as a percentage of its initial allocation if
appropriate to enable an equitable distribution of the available excess funds based on
demonstrated needs among requesting Grantees. Treasury may establish a different limit for
each category of Grantee (state, locality, Tribe, TDHE, or U.S. territory), but would apply the
relevant limit uniformly among Grantees within a category.

Grantees may be required to amend their existing ERA1 program agreements as a condition to
receiving reallocated ERA1 funds. These amendments will ensure the program agreements are
consistent with the Grantee’s augmented allocation amount and reflect the terms and conditions
described in this guidance.

C. Reallocation Priorities

When feasible and consistent with jurisdictional needs, Treasury intends to reallocate excess
funds that are recaptured from a Grantee to another Grantee in the same state. When appropriate,

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after such an intrastate reallocation, a Grantee’s excess funds will be reallocated to Grantees in
other states.

In addition, Treasury may prioritize the reallocation of funding to Grantees that are likely to
expend all their remaining ERA1 and ERA2 allocations promptly.

D. Extended Statutory Deadline

Grantees are prohibited from obligating any funds from their initial allocations after the statutory
deadline of September 30, 2022. Grantees may, however, request an extension through
December 29, 2022 to continue obligating funds received through reallocation. The funding
request form described in Section III.A. will enable such extension requests.

After June 30, 2022, Treasury intends to consider whether additional recapture of unobligated
funds is appropriate to help ensure that ERA1 funds are used by the statutory deadline.

IV. Voluntary Reallocation

Beginning September 30, 2021, Grantees may request the transfer of some or all of their
allocations to another Grantee that (i) administers an ERA1 program in the same state, territory,
or Tribal area and (ii) has obligated or spent at least 65% of its own allocation by the time of
transfer. Grantees may request Treasury’s assistance in identifying a permissible transferee.

To complete a voluntary reallocation, the transferor and transferee Grantees will generally be
required to submit a written agreement signed by authorized officials, together with documents
meeting the following requirements:

 The transferee must provide evidence of demonstrated need in its jurisdiction for the
funds to be transferred. This requirement may be satisfied by (i) Treasury’s confirmation
that the transferee has spent or obligated at least 65% of its own allocation and (ii) a
description of the transferee’s need for the funds, attested to by the transferee’s
authorized official.

 Both the transferor and transferee Grantees must agree to comply with administrative
requirements applicable to the transfer of federal funds between and among Grantees,
including the completion and submission of certain documents that Treasury will provide.

 The transferor must acknowledge and agree in writing that the transferred amount will be
deemed to be excess funds and disclaim any further right, title, or interest therein.

 Both the transferor and transferee Grantees must attest to their compliance with all
applicable ERA1 requirements under applicable law, guidance, or the Grantee’s funding
agreement.

Upon approval, Treasury will provide the transferor and transferee Grantees with instructions for
completing the necessary fund transfers. Treasury may determine not to approve a voluntary

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reallocation request if it appears that the proposed reallocation may (i) increase the risk that the
funds would be recaptured; (ii) leave a Grantee with insufficient funds to meet the needs in its
jurisdiction; or (iii) otherwise undermine the purposes of reallocation.

V. Use of Funds for Administrative Expenses and Housing Stability Services

A Grantee may spend up to 10% of its initial ERA1 allocation for administrative expenses only if
the Grantee obligates at least 30% of its initial allocation for the provision of financial assistance
and housing stability services on behalf of eligible households by September 30, 2022. If a
Grantee has obligated less than 30% of its initial allocation providing financial assistance and
housing stability services as of September 30, 2022, Treasury will presume that the Grantee’s
administrative expenses were not attributable to such services – and therefore were not
permissible uses of ERA1 funds – to the extent that the administrative expenses exceed 10% of
the Grantee’s allocation after deducting amounts recaptured or reallocated as excess funds,
unless the Grantee can demonstrate that those costs are related to the delivery of the program.

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