Treasury Says Not Much Rental Assistance Money Will Be Redirected to High-Demand States

Not much federal rental assistance money will be redirected to high-demand states, said Gene Sperling, who is in charge of overseeing the implementation of the President's COVID rescue package.

In a statement Friday, the Treasury Department said state and localities in November paid out $2.9 billion in rental assistance to tenants, the biggest amount since the federal assistance program started.

The rental assistance is divided into two portions, with the first tranche, known as ERA1, being $25 billion, and the second, known as ERA2, being $21.5 billion. ERA2 is meant to be spent over a longer period of time.

However, the Treasury said that over 100 grantees, like programs in states like New York and Texas, have shown they have already used nearly all of their ERA1 money.

Sperling, who is in charge of handling the implementation of President Joe Biden's $1.9 trillion coronavirus rescue package, said there are little funds to reallocate.

He estimated that more than $1.1 billion would be allocated in the first three rounds of reimbursement. Of that $1.1 billion, $875 million of it will be redirected to cities and counties that need it from state-run programs within states.

"There won't be huge amounts of excess funds," Sperling said, according to the Associated Press. "Reallocation will help but won't fill the gaps of large states like Texas, New York or California that have largely committed their funds and still have significant needs."

The latest figures show $17.39 billion has been allocated to help cover back rent, putting the program on pace to pay out or allocate $30 billion by the end of 2021. So far, there have been more than 3.1 million payments.

"We are just seeing that people got their programs started, made them simpler and more efficient," Sperling said in an email interview. "A lot of places are moving fast and you are getting large amount of funds out quicker to renters in need."

Diane Yentel, CEO of the National Low Income Housing Coalition, welcomed the increased pace of disbursement.

"Efforts by the Biden administration, advocates, program administrators and others have significantly improved emergency rental assistance (ERA) programs and quickened the pace of ERA distribution, keeping millions of people stably housed," she said in a statement. "Nearly 10 million people in over 3 million households have been assisted with these vital resources. With back rent paid, these families have a clean slate and some housing stability to start the year."

But with the improved results of the $46.5 billion program have come with concerns it won't reach all tenants who need help.

A dozen states are shifting money to localities. Georgia, for example, is shifting $50 million to Fulton and DeKalb counties. In Arizona, $39 million is being shifted from the state to Maricopa County.

Several places will get money from a pool of funds reallocated from low-performing states. California will get $50.3 million, New Jersey $40.8 million, New York $27 million and the District of Columbia $17.8 million.

New York's $27 million may only end up funding 2,177 applications, New York State Office of Temporary and Disability Assistance Executive Deputy Commissioner Barbara Guinn said in a state court filing Monday. Guinn's filing in a lawsuit launched by advocates came days before a state judge ordered New York to reopen its application portal, shuttered in November.

Tenant advocacy groups say New York should once again accept applications, which temporarily provide eviction protections to applicants. However, lawyers representing New York have argued the state should keep the application portal closed to avoid giving future applicants "false hope" due to the lack of available rental relief funds.

Guinn said it's "entirely unclear" whether New York will get more federal funds in March.

The initial rollout of the federal program was plagued by slow disbursement, with administration officials publicly blaming state and municipal partners for bottlenecking the process with excessive bureaucracy often aimed at preventing fraud.

More recently, the problem was that some parts of the country were expending all their money while others, especially in parts of the South, were lagging behind.

Those entities that have not obligated 65 percent of their ERA1 money or are found to have an expenditure ratio below 30 percent as of September 30, based on a Treasury formula, faced having the money reallocated. Grantees could avoid losing the money if they submitted a plan by November 15 showing how they would improve distribution or be able to get their distribution numbers above the 65 percent or 30 percent threshold.

The deadline for submitting a request for the second round of reallocated funds is January 21. By statute, the process for reallocating ERA2 funds won't begin until March 31, 2022.

The Associated Press contributed to this report.