Treasury Has Indicated It May Change Requirements for States to Receive ERA 2 Funds, Jeopardizing Assistance in Colorado’s Plans to Spend Funds Before Statutory Deadline
Washington, D.C. – U.S. Senators John Hickenlooper and Michael Bennet joined U.S. Senators Joe Manchin, Shelley Moore Capito, and several bipartisan colleagues in urging the U.S. Treasury Department not to change Emergency Rental Assistance (ERA) 2 guidelines for states like Colorado that have met the ERA requirements set by Congress. The Treasury has indicated that it plans to change the guidelines for states to receive their full allocation of ERA 2 funds, jeopardizing rental assistance for thousands of Coloradans.
“It has come to our attention that the Department of Treasury (Treasury) is developing guidance regarding the reallocation of Emergency Rental Assistance (ERA) 2 funds. We are concerned that this guidance may seek to reallocate funding from states who have demonstrated the need and the ability to utilize all federally directed funding. Every state and locality that has a plan to expend this funding by the statutory deadline in 2025 should have access to the full funding levels initially allocated by Congress,” wrote Hickenlooper, Bennet, and the senators.
“To ensure that states are utilizing the program funds rather than holding them, Congress required that states obligate at least 75 percent of their initial tranche of funding in order to receive their remaining share of ERA 2. Given these parameters, states like West Virginia, Mississippi, Rhode Island, Delaware, Hawaii, New Hampshire and Colorado have been planning their utilization of ERA 2 funds based on the sunset date in statute, September 30, 2025,” continued Hickenlooper, Bennet, and their colleagues. “We request that Treasury provide full funding for those states that have met the requirements set by Congress, rather than pursue a recapture and reallocation policy that does not honor the projections made by those states.”
The Emergency Rental Assistance Program was established under the Consolidated Appropriations Act of 2021, which provided $25 billion in initial funding for the program, known as ERA 1. An additional $21.6 billion in funding, known as ERA 2, was allocated to the program following passage of the American Rescue Plan Act (ARPA) in March 2021. States like Colorado have plans to use their ERA 2 funds based on the sunset date in statute, September 30, 2025, to assist thousands of families. Now, the Treasury has indicated it will change the requirements states must meet to receive their full ERA 2 allocation, in contrast to its initial guidelines, putting Colorado and other states’ funding at risk for recapture, and undermining these states’ ability to serve families at risk of eviction and housing instability.
“In Colorado, emergency rental assistance funds have kept renters in their homes and helped small landlords avoid significant financial losses. To date, nearly 70,000 households, representing over 150,000 people, have avoided displacement and possible homelessness as a result of the program. It’s critical that Colorado get its full allocation of ERA funding to extend the diverse public and non-profit programs built to serve renters and landlords across our state,” said Zach Neumann, Executive Director and Co-Founder of the COVID-19 Eviction Defense Project.
In addition to Hickenlooper, Bennet, Manchin, and Capito, the letter was signed by U.S. Senators Roger Wicker, Jack Reed, Chris Coons, Mazie Hirono, Tom Carper, Cindy Hyde-Smith, Sheldon Whitehouse, and Maggie Hassan.
The text of the letter is available HERE and below.
Dear Secretary Yellen:
It has come to our attention that the Department of Treasury (Treasury) is developing guidance regarding the reallocation of Emergency Rental Assistance (ERA) 2 funds. We are concerned that this guidance may seek to reallocate funding from states who have demonstrated the need and the ability to utilize all federally directed funding.
Every state and locality that has a plan to expend this funding by the statutory deadline in 2025 should have access to the full funding levels initially allocated by Congress.
As you are aware, the Emergency Rental Assistance Program was established under the Consolidated Appropriations Act of 2021, which also provided $25 billion in initial funding for the program, known as ERA 1. Following passage of the American Rescue Plan Act (ARP) in March of 2021, an additional $21.6 billion was allocated towards the program to fund ERA 2. In each instance, a small state minimum was established to ensure that states like the majority of ours were not left behind.
On October 4, 2021, Treasury released their ERA1 guidance with a recapture and reallocation policy based on spending ratios beginning retroactively on September 30, 2021. Without significant notice of this policy, it quickly became clear that many states could not meet the spending ratio thresholds set by Treasury and that significant portions of their allocations would be recaptured and reallocated.
ERA 2 provides states additional flexibility as to how funds can be spent, additional time to expend funds, and gives more certainty to state housing agencies as funds cannot be reallocated once transmitted by Treasury. Additionally, to ensure that states are utilizing the program funds rather than holding them, Congress required that states obligate at least 75 percent of their initial tranche of funding in order to receive their remaining share of ERA 2.
Given these parameters, states like West Virginia, Mississippi, Rhode Island, Delaware, Hawaii, New Hampshire, and Colorado have been planning their utilization of ERA 2 funds based on the sunset date in statute, September 30, 2025. We request that Treasury provide full funding for those states that have met the requirements set by Congress, rather than pursue a recapture and reallocation policy that does not honor the projections made by those states.
Fundamentally, Congress knew that different states would expend their money at different paces. The reallocation process is there to ensure that funds do not go unused, but if funds are going to be used by the statutory deadlines, then they should be made fully available to the state to which they were congressionally allocated.
Thank you for your prompt attention to this issue.
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