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Local governments scramble on U.S. home rental aid after 'use it or lose it' order

Published Nov 05, 2021 01:49PM ET
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3/3 © Reuters. FILE PHOTO: A "For Rent" sign is posted outside a residential home in Carlsbad, California, U.S. on January 18, 2017. REUTERS/Mike Blake 2/3

By David Lawder

BETHLEHEM, Pa. (Reuters) - Dozens of state and local governments are scrambling to explain how they plan to distribute billions of dollars in home rental aid funds in coming months as the U.S. Treasury pursues plans to reallocate unspent funds from lagging communities.

U.S. Deputy Treasury Secretary Wally Adeyemo told Reuters that every underperforming jurisdiction has contacted the department to explain how they will improve their performance under the $46.6 billion Emergency Rental Assistance Program.

Adeyemo has set a Nov. 15 deadline for state and local governments to submit formal plans to the Treasury, which will help determine which locations lose funds and which get more.

The program, aimed at preventing housing evictions during the COVID-19 pandemic, was created by Congress in December 2020 and expanded in March. It got off to a slow start, due partly to local difficulties in launching procedures to approve applications, with only $10.3 billion spent through the end of September

Adeyemo said in an interview that the threat of losing funds has pushed state and local governments to make better use of Treasury rules, such as reduced documentation requirements. "It's forced them to start thinking about, 'How can we use these flexibilities to keep this money?'" Adeyemo said.

Some 22 states and more than 100 local government grantees fall into that category, having spent less than 30% of their initial allocation based on Sept 30 Treasury data

Those with an expenditure ratio above 65% are eligible to gain reallocated funds. (SEE graphic for state expenditure ratios).


Three jurisdictions in Pennsylvania illustrate the wide variations in spending rates - and economic needs.

The Treasury has repeatedly cited Philadelphia as a star performer, with nearly all of its $70 million in local allocations spent, thanks to innovative measures like requiring residents or landlords to apply for program funds before courts approve evictions.

Philadelphia Mayor Jim Kenney told reporters last week the city was eager to get more funds to help more residents, 23% of whom live in poverty, according to U.S. Census Bureau data,northamptoncountypennsylvania,philadelphiacountypennsylvania,PA/PST045219.

Lackawanna County, Pennsylvania, home to President Joe Biden's original hometown of Scranton, has spent only 2% of its initial $6.2 million local allocation. It could lose funds to other jurisdictions even though it has spent $2.1 million from funding allocated to the state.

Eileen Wilson, Lackawanna County's housing resources coordinator, said the county will detail plans in a Nov. 15 submission to spend the remainder its allocation. After a City of Scranton rent relief program ends, she expects a bigger pool of applicants for the county-wide program as rents increase.

"Our biggest mistake was not switching over to using the federal funds sooner," Wilson told Reuters.

Northampton County, home to Bethlehem and Easton, met an expenditure target of 51%, enough to keep the rest of its $9.1 million initial allocation, but not enough to receive reallocated funds.

Bethlehem's location, a two-hour bus ride west of New York City, has drawn an influx of residents during the pandemic, creating a very tight housing market that is pushing up rents and squeezing some local residents into homelessness, county officials said.

With homeless shelters still closed due to the COVID-19 pandemic, they plan to use funds to house more homeless people in hotels this winter - an expense allowed under the Treasury's program rules.

"I anticipate this winter burning through that money much faster when our social services agency partners identify somebody that needs to go to a hotel," said Stephen Barron, the county's fiscal affairs director.

Local governments scramble on U.S. home rental aid after 'use it or lose it' order

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