How Emergency Rental Assistance Reallocation Works — U.S. Department of the Treasury (October 4, 2021)

Summary

Treasury summary dated October 4, 2021 of its Reallocation Guidance for the first Emergency Rental Assistance Program (ERA1). Grantees that have not obligated at least 65% of their ERA1 funds must submit a program improvement plan by November 15, or 10% of their funds will be deemed excess. Grantees below the 65% obligation level with expenditure ratios below 30% as of September 30 face recapture of the gap to the 30% threshold, unless by November 15, 2021 they certify a 30% ratio or 65% obligation; an approved plan adds a one-time 15% to the ratio. The threshold then rises by 5 percentage points each month, and from March 31, 2022 unobligated funds may be reallocated, ahead of the September 30, 2022 statutory deadline. Recaptured funds go first to grantees in the same state.

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                           U.S. Department of the Treasury
                   How Emergency Rental Assistance Reallocation Works

                                         October 4, 2021

This document explains the structure of the Treasury Department’s approach to reallocating
funds under the first Emergency Rental Assistance Program (ERA1) under the Reallocation
Guidance (the Guidance) issued by Treasury on October 4, 2021. 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 adoption of best practices among grantees to
help them streamline and improve their processes, 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 that have not obligated at least 65% of their ERA1 funds – a measure that
       captures both spent and committed funds – must submit a program improvement
       plan. Grantees under the 65% obligation threshold must submit a program improvement
       plan by November 15 that identifies how they will accelerate their delivery of assistance
       to eligible tenants and landlords. Treasury will consider whether grantees plan to
       implement the best practices described in Treasury’s guidance, including the use of self-
       attestations; the use of eviction diversion partnerships; engagement with providers of
       culturally and linguistically relevant housing stability services; and other strategies that
       have accelerated the delivery of rental assistance provided in jurisdictions across the
       country.

       Grantees will be required to submit a report on their progress with their plan within 60
       days of its approval by Treasury. If grantees do not submit an adequate plan or fail to
       submit the required confirmation, 10% of their ERA1 funds will be determined to be
       “excess funds.” Treasury will release forms and instructions for program improvement
       plans in the near future.

      Grantees who have not obligated at least 65% of ERA1 funding who have
       insufficient expenditure ratios—a measure of funds actually spent providing
       assistance to eligible households—will face reallocation. Grantees with expenditure
       ratios below 30% as of September 30, based on the program data they submit to Treasury
       by October 15, will be determined to have “excess funds” subject to potential recapture.
       Specifically, a grantee with an expenditure ratio below 30% will be determined to have
       excess funds equal to the difference between its reported expenditures and the amount of
       expenditure needed to reach the 30% threshold.
   A Grantee with both inadequate obligations and insufficient expenditures will have
    a variety of ways to mitigate the amount that Treasury would otherwise recapture
    as a result of this first assessment.

       o The grantee can avoid recapture if, by November 15, 2021, it is able to certify to
         Treasury that its expenditure ratio is at least 30%, or that it has obligated at least
         65% of its ERA1 allocation.
       o Further, grantees that submit a program improvement plan that is approved by
         Treasury will benefit from a recalculation of the grantee’s excess funds
         determination that will assume a one-time 15% addition to their expenditure ratio
         to help them meet minimum expenditure ratio threshold of 30%. This will afford
         grantees an additional opportunity to accelerate spending before losing funds as
         they put in place new policies.

   After the first assessment, Treasury will assess each grantee’s expenditure ratio
    approximately every two months. The expenditure ratio threshold used to calculate
    excess funds will rise by 5 percentage points every calendar month (for example, the
    threshold as of November 30 will be 40 percent). As of March 31, 2022, any unobligated
    funds may be designated as excess funds and be reallocated, helping to ensure that
    funding does not go unused as a result of the September 30, 2022 statutory deadline for
    obligating ERA1 funds.

   Treasury expects to distribute recaptured funds about every two months, 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. 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 both their remaining ERA1 and ERA2
    funds. In making all these decisions, Treasury will be guided by its commitment to ensure
    better relief – not less – to those living in jurisdictions that have so far underperformed in
    getting emergency rental relief to eligible members of their communities.


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