Rental assistance to shift to areas of need

The Treasury Department on Monday announced plans to start reallocating the billions of dollars in federal rental assistance in a bid to get more money into the hands of tenants facing eviction.

The move, which was required by Congress when it allocated the funding, follows the slow distribution of rental assistance in many parts of the country.

A little more than 16.5% of the tens of billions of dollars in federal assistance reached tenants in August, compared with 11% a month earlier.

Lawmakers have approved $46.5 billion in spending on rental assistance, and Treasury

is targeting the first tranche of money known as ERA1, which amounts to $25 billion. States and cities are mostly allocating ERA1 money, which must be spent by Sept. 30, 2022. Allocation of the second installment of $21.5 billion can go through through Sept. 30, 2025.

The goal, Treasury officials said, is to reallocate money from those programs that either don’t need it or don’t have the desire to set up a program.

Those entities that have not obligated 65% of their ERA1 funds or are found to have an expenditure ratio below 30% as of Sept. 30 based on a Treasury formula will face having the money reallocated.

Grantees can avoid losing the money if they submit a plan by Nov. 15 showing how they will improve distribution or are able to get their distribution numbers above the 65% or 30% threshold.

There will also be the option of entities voluntary returning the money, with the goal that it could be redistributed to the same state, territory or tribal area.

Treasury officials did not identify any places that could lose money, but the August data suggest there are a whole host of places that have been slow in getting money out. There was also an expectation that some money would be shifted, based on demand, once the program was up and running.

They said that several larger cities, including Houston and Philadelphia, had already exhausted their ERA1 money.