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U.S. Department of the Treasury

Emergency Rental Assistance Under the American Rescue Plan Act of 2021 (ERA2)

Reallocation Guidance

Updated November 15, 2022 

I. Overview

In the American Rescue Plan Act of 2021, Congress appropriated $21,550,000,000 for the 

delivery of emergency rental assistance, utility assistance, and housing stability services to 

eligible households experiencing financial hardship during the novel coronavirus pandemic. 

This appropriation came after the passage of Section 501 of Division N of the Consolidated 

Appropriations Act, 2021, which appropriated $25 billion for similar purposes. Treasury refers 

to Emergency Rental Assistance (ERA) under the Consolidated Appropriations Act, 2021, as 

“ERA1” and ERA under the American Rescue Plan Act of 2021 as “ERA2.” This guidance is 

focused on ERA2 and addresses ERA1 only to the extent relevant to the reallocation of ERA2 

funds. Treasury published guidance on the reallocation of ERA1 funds on October 4, 2021.1

 

On May 7, 2021, Treasury announced its initial allocation of ERA2 funds to states, the District 

of Columbia, U.S. territories, and units of local government (Grantees) and shortly thereafter, 

made available to each Grantee 40% of its total initial ERA2 allocation. The American Rescue 

Plan Act of 2021 requires Treasury to begin reallocating ERA2 funds not yet paid to eligible 

Grantees on March 31, 2022. As with ERA1 reallocation, Treasury’s objective in ERA2 

reallocation is to ensure ERA funds are available to Grantees in accordance with their 

jurisdictional needs and demonstrated capacity to deliver assistance. This guidance sets forth the 

procedures for the ERA2 reallocation process. 

II. Determining Funds Available for Reallocation 

The ERA2 statute requires Treasury to identify funds for reallocation from amounts allocated to 

eligible Grantees, but not yet paid out to them. Specifically, the statute provides that beginning 

on March 31, 2022, Treasury must “reallocate funds allocated to eligible grantees ... but not yet 

paid,” according to a procedure established by Treasury. Under the statute, to be eligible to 

receive reallocated funds, a Grantee must have obligated2 at least 50% of its total initial ERA2 

allocation. 

Consistent with these requirements, Treasury has established the following procedures for 

identifying the funds that will be available for reallocation (“excess funds”). Treasury will notify 

a Grantee in writing upon determining that any part of its allocation constitutes excess funds. 

ERA2 funds paid to a Grantee. As required by the ERA2 statute, ERA2 funds that have been 

paid to a Grantee are not subject to involuntary reallocation and will not be considered excess 

funds. Further, pursuant to statutory requirements, the first tranche of funds made available to 

1 https://home.treasury.gov/system/files/136/ERA-Reallocation-Guidance.pdf 2 To determine whether a Grantee has obligated ERA2 funds, Treasury will rely on the same criteria applied to

ERA1 funds and set forth in the ERA1 Reallocation Guidance published on October 4, 2021. 
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Grantees, comprising 40% each Grantee’s initial ERA2 allocation, cannot be voluntarily or 

involuntarily reallocated. 

U.S. territories. Treasury will not identify excess funds from allocations to U.S. territories prior 

to December 31, 2022. 

Undrawn first tranche. For any Grantee that does not draw its first tranche of ERA2 funds, 

comprising 40% of its initial ERA2 allocation, by April 30, 2022, Treasury may deem all 

undrawn funds exceeding 40% of the Grantee’s initial ERA2 allocation to be excess funds 

subject to reallocation.3 

ERA2 Expenditure Ratio. Treasury will periodically determine a Grantee’s “ERA2 Expenditure 

Ratio,” which will be calculated as (i) the sum of the Grantee’s total expenditure of ERA2 funds 

on assistance to eligible households and eligible costs for housing stability services (for purposes 

of the Quarter 3 and Quarter 4 assessments) divided by (ii) an amount equal to 75% (for 

purposes of the Quarter 1 and 2 Assessments, described below) or 85% (for subsequent 

assessments) of the Grantee’s total ERA2 allocations, adjusted for any amounts reallocated from 

the Grantee, as of the date the excess funds determinations are approved by Treasury. The 75% 

and 85% allowances both reflect the ERA2 statute’s limitation that a maximum of 15% of the 

total amount of ERA2 funds paid to a Grantee may be used for administrative costs, and the 75% 

allowance also reflects the ability under the statute for Grantees to use up to 10% of their ERA2 

funds to provide housing stability services. Treasury encourages Grantees to use ERA2 funds 

for such housing stability services. 

Excess funds. As noted above, excess funds are funds that Treasury determines are available for 

reallocation. For each Grantee whose ERA2 Expenditure Ratio is below the then-applicable 

minimum threshold at the time of the assessment . Treasury will calculate the Grantee’s excess 

funds as the difference between (i) the amount of expenditures needed for the Grantee to achieve 

the then-applicable minimum threshold at the time of that assessment and (ii) the Grantee’s 

reported total assistance expenditures (i.e., the numerator of the ERA2 Expenditure Ratio 

calculation). As a result, the amount subject to reallocation will be less for Grantees whose 

Expenditure Ratios are closer to the minimum threshold. 

Exigent circumstances. Treasury may reduce or decline to make an excess funds determination 

if Treasury determines that the amount of excess funds was the result of exigent circumstances, 

such as a natural disaster. 

Periodic assessments. Treasury will calculate Grantees’ ERA2 Expenditure Ratios to assess 

Grantees’ excess funds several times, as described below.

Quarterly reports. Notwithstanding anything in this guidance to the contrary, if a Grantee fails to 

submit a required quarterly report by the applicable deadline, without having received an 

extension from Treasury, Treasury may deem all undrawn funds exceeding 40% of the Grantee’s 

initial ERA2 allocation to be excess funds subject to reallocation. 

3 Any such undrawn funds determined to be excess funds subject to reallocation will be reallocated in portions 

across multiple rounds of reallocation.
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1. Quarter 1 Assessment

A Grantee whose ERA2 Expenditure Ratio is below 20% for the Quarter 1 Assessment (as of 

March 31, 2022) will be considered to have excess funds in an amount equal to the difference 

between (i) the amount of expenditures needed for the Grantee to achieve an Expenditure Ratio 

of 20% and (ii) and the Grantee’s reported total assistance expenditures. 

For the Quarter 1 Assessment, Grantees will have an opportunity to avoid reallocation. If a 

Grantee meets the minimum ERA2 Expenditure Ratio based on reported data as of April 30, 

2022, Treasury will not reallocate the Grantee’s funds based on the Quarter 1 Assessment. 

However, if a Grantee does not meet the 20% threshold as of April 30, 2022, Treasury will 

calculate the Grantee’s excess funds based on data as of March 31, 2022. 

In addition, if a Grantee has voluntarily reallocated over 25% of its initial ERA1 allocation by 

March 31, 2022, Treasury will not reallocate the Grantee’s ERA2 funds in the Quarter 1 

Assessment.

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2. Quarter 2 and Quarter 3 Assessments 

A Grantee whose ERA2 Expenditure Ratio is below 40% in the Quarter 2 Assessment (as of 

June 30, 2022) or below 60% in the Quarter 3 Assessment (as of September 30, 2022) will be 

considered to have excess funds in an amount equal to the difference between (i) the amount of 

expenditures needed for the Grantee to achieve the then-applicable minimum Expenditure Ratio 

(i.e., 40% for the Quarter 2 Assessment and 60% for the Quarter 3 Assessment) and (ii) and the 

Grantee’s reported total assistance expenditures. 

3. Final Undrawn Funds Assessment

Treasury may determine any ERA2 funds that are undrawn as of December 31, 2022 to be 

excess funds subject to reallocation (with the exception of the first tranche of funds made 

available to Grantees, which comprise 40% each Grantee’s initial ERA2 allocation and are not 

subject to reallocation). 

III. Distributing Reallocated Funds

A. Requesting Reallocated Funds

Treasury will begin accepting requests from Grantees for reallocated funds after March 31, 2022 

on a form to be published by Treasury. As the ERA2 statute requires, reallocated funds will be 

available only to Grantees that have obligated at least 50% of their own initial ERA2 allocations

4 Under the ERA1 statute, reallocation could not begin prior to September 30, 2021. As a result, for any Grantee 

that engaged in voluntary reallocation on or after September 30, 2021, Treasury will consider the amounts of any 

sub-grant agreements entered into with one or more other Grantees in the same state prior to that date to count 

towards this 25% threshold.
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(regardless of any reallocation of funds). Each funding request will be required to indicate the 

amount requested and confirm the need for such funds in the Grantee’s jurisdiction. 

B. Allocation of Reallocated Funds

Periodically, Treasury will determine if there are sufficient funding requests from Grantees 

serving jurisdictions with demonstrated needs to warrant the disbursement of reallocated funds. 

Treasury will evaluate each request for reallocated funds based on the requesting Grantee’s 

demonstrated capacity to meet and exceed the applicable minimum Expenditure Ratio, and other 

indications of ERA need in the Grantee’s jurisdiction. The amount of any reallocation to a 

Grantee will be determined by Treasury, in its discretion, based on its assessment of these 

factors.

In the event Grantees request more reallocated funds than are available for distribution, each 

Grantee’s share will be calculated by (i) determining the aggregate amount of reallocated funds 

approved by Treasury based on its evaluation of the requests as described above; (ii) dividing the 

Grantee’s approved amount by this aggregate total; and (iii) multiplying the total amount 

available for distribution by the resulting percentage. 

, In addition, Treasury may limit a Grantee’s eligibility for reallocated funds as a percentage of 

its initial allocation if appropriate to enable an equitable distribution of the available excess funds 

based on demonstrated needs among requesting Grantees. Treasury may establish a different 

limit for each category of Grantee (state, locality, or U.S. territory), but would apply the relevant 

limit uniformly among Grantees within a category. 

Grantees may be required to amend their existing ERA2 program agreements as a condition of 

receiving reallocated ERA2 funds. These amendments will ensure the program agreement is

consistent with the Grantee’s augmented allocation amount and reflects the terms and conditions 

described in this guidance. 

C. Reallocation Priorities 

When feasible and consistent with jurisdictional needs, Treasury intends to reallocate excess 

funds from a Grantee to another Grantee in the same state. When appropriate, after such an 

intrastate reallocation, a Grantee’s excess funds will be reallocated to Grantees in other states. 

In addition, Treasury may prioritize the reallocation of funding to Grantees that are likely to 

expend all their remaining ERA1 and ERA2 allocations promptly. 

Treasury also intends to prioritize Grantees that have expended non-ERA funds, including State 

and Local Fiscal Recovery Funds, for rental or utility assistance substantially similar to eligible 

uses under ERA1 or ERA2 since the enactment of the ERA1 statute on December 27, 2020, in an 

amount exceeding 20% of their initial ERA2 allocation. For example, a grantee that surpasses 

this threshold using State and Local Fiscal Recovery Funds to provide for rental and utility 

assistance may be prioritized. To receive this prioritization, a Grantee must submit to Treasury, 

in a form determined by Treasury, a certification of, among other things, the amount of non-ERA 
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funding expended on ERA-eligible uses, the sources of these expenditures, and the number of 

households served. Treasury intends to implement this prioritization beginning with the 

reallocation based on the Quarter 2 Assessment.

IV. Voluntary Reallocation

A Grantee may request the transfer to other Grantees of up to 60% of its initial ERA2 allocation.

The transferee Grantees must (i) administer an ERA2 program in the same state or territory as 

the transferor and (ii) have obligated or spent at least 50% of their own initial ERA2 allocations

by the time of transfer. A Grantee may request Treasury’s assistance in identifying permissible 

transferees. 

To complete a voluntary reallocation, the transferor and transferee Grantees will generally be 

required to submit a written agreement signed by authorized officials, together with documents 

meeting the following requirements:

• The transferee must provide evidence of demonstrated need in its jurisdiction for the 

funds to be transferred. This requirement may be satisfied by (i) Treasury’s confirmation 

that the transferee has spent or obligated at least 50% of its own initial allocation and 

(ii) a description of the transferee’s need for the funds, attested to by the transferee’s 

authorized official. 

• Both the transferor and transferee Grantees must agree to comply with administrative 

requirements applicable to the transfer of federal funds between and among Grantees,

including the completion and submission of certain documents that Treasury will provide. 

• The transferor must acknowledge and agree in writing that the transferred amount will be 

deemed to be excess funds and disclaim any further right, title, or interest therein. 

• Both the transferor and transferee Grantees must attest to their compliance with all 

applicable ERA2 requirements under applicable law, guidance, or the Grantee’s funding 

agreement.

Upon approval, Treasury will provide the transferor and transferee Grantees with instructions for 

completing the necessary fund transfers. Treasury may determine not to approve a voluntary 

reallocation request if it appears that the proposed reallocation may (i) increase the risk that the 

funds would be reallocated by Treasury under this guidance; (ii) leave a Grantee with insufficient 

funds to meet the needs in its jurisdiction; or (iii) otherwise undermine the purposes of 

reallocation. 

A Grantee may also request the transfer of up to 60% of its initial ERA2 allocation, without 

designating any specific Grantee as transferee. Treasury, in its discretion, will determine and 

carry out the reallocation of these funds to Grantees based on an assessment of the factors set 

forth in Section III of this guidance and in a manner consistent with this Section IV.
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V. Use of Funds for Administrative Costs and Housing Stability Services

The ERA2 statute permits Grantees to use up to 15% of the total amount of ERA2 funds paid to 

the Grantee for certain administrative costs. In addition, under the statute, a Grantee may use up 

to 10% of the ERA2 funds it has received to provide case management and other services 

intended to help keep households stably housed. In accordance with the statutory requirements, 

these 15% and 10% limits are based on the total amount of ERA2 funds paid to each Grantee as 

of the relevant date, not the total amount of ERA2 funds allocated to the Grantee.