Treasury Details ERA 2 Reallocation Process, Announces Grantees Have Spent or Obligated $30 Billion
Today, the U.S. Treasury Department published its plans for reallocation of unspent dollars from the Emergency Rental Assistance program authorized under the American Rescue Plan Act (ERA 2).
As with ERA 1 reallocation, assessments for ERA 2 reallocation will take place over multiple rounds. For the first assessment round, grantees who have expended less than 20 percent of their funds as of March 31 could face recapture of the difference between their ERA 2 expenditure ratio as of that date and 20 percent of their grant. However, if a grantee can reach a 20 percent expenditure ratio by April 30, the grantee will not face recapture in the first assessment. A grantee also can avoid recapture if they voluntarily have reallocated at least 25 percent of their ERA 1 funding. Future assessments will happen quarterly thereafter, with the minimum expenditure ratio increasing by 20 percent each quarter.
In accordance with the statute, Treasury has been providing ERA 2 funds to grantees in tranches. The first tranche was equal to 40 percent of total funds, and grantees must obligate 75 percent of the funds they received in order to request subsequent tranches of funds. Treasury will not recapture any funds that have already been paid by Treasury to a grantee. Thus, the only dollars subject to recapture are funds grantees have not yet requested from Treasury. Treasury will consider any ERA 2 funds a grantee has not requested as of December 31 to be excess funds subject to reallocation.
Grantees who have spent or obligated at least 50 percent of their own initial allocation of ERA 2 will be eligible to receive reallocated ERA 2 funds. Treasury will distribute recaptured funds after each quarterly assessment. Treasury will prioritize grantees from the same state where the reallocated funds originated. For the remainder of the funds, Treasury will prioritize grantees expected to expend their funds promptly and those that have dedicated significant amounts of non-ERA funds to rental or utility assistance, including funding through the Coronavirus State and Local Fiscal Recovery Fund.
Treasury also provided further details on ERA 1 reallocation. It expects only one more round of ERA 1 reallocation, which will occur later this spring based on expenditure and obligation data through March 31. Treasury expects to leave each grantee with ERA 1 funding equal to the proportion the grantee spent in their strongest quarter to date, with the intention this will be enough to allow programs to continue to operate through the ERA 1 statutory deadline of September 30, 2022.
Separately, Treasury published spending data for both ERA 1 and ERA 2 through the end of February, showing grantees had spent or obligated approximately $30 billion of the $46 billion total Congress provided for both programs. Grantees have made more than 4.7 million payments to households. Treasury expects the vast majority of ERA funds to have been deployed, or at least paid to grantees, by mid-2022.
This data underscores the remarkable success of the ERA program. Treasury Deputy Secretary Wally Adeyemo states in the press release accompanying the data, “In just one year, the Emergency Rental Assistance program built a national infrastructure for eviction prevention that never existed before and has helped keep eviction rates well below historic averages throughout the pandemic.”
