Treasury Releases Guidance on Emergency Rental Assistance Funds Reallocation

On March 30, the U.S. Department of Treasury (Treasury) released guidance on how it will reallocate unused funds from the second tranche of funding of the Emergency Rental Assistance (ERA) program, or ERA2.

ERA2 was authorized by the American Rescue Plan Act of 2021 (ARPA). Treasury’s approach to reallocating ERA2 funds is designed to ensure as many low-income renters as possible have access to this assistance during the pandemic. These guidelines include incentives to encourage state and local governments to commit additional funding, including a portion of their State and Local Fiscal Recovery Funds to assist more renters and make continued investments in housing stability and make long-term investments in eviction prevention.

According to the Treasury’s guidelines:

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 increased spending on ERA2 eligible uses through adoption of best practices among grantees to help them streamline and improve their processes and the dedication of other funds to meet the significant need relative to funding available for rental and utility assistance, and (3) work to ensure funds do not go unused by programs unwilling or unable to assist struggling renters and landlords.

According to the National Association of Counties (NACo) analysis:

Congress passed $25 billion in emergency rental aid in December 2020 and a second round of $21.5 billion in March of 2021 to assist families struggling to make rental and utility payments.

Treasury also announced that through February 2022, state and local grantees have made over 4.7 million payments to households and spent, or obligated, approximately $30 billion of the program’s total $46 billion. Treasury expects most of the remaining funds to be deployed to households or paid to grantees by the summer of 2022.

ERA2 reallocation will take place in multiple rounds, the same as the ERA1 reallocation process, and will ensure that funds will be used in the most efficient manner to address tenants that need the most assistance.

Learn more about the ERA2 reallocation process.
Read NACo’s full analysis.
Access the breakdown of the American Rescue Plan Act (ARPA).

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