U.S. Department of the Treasury

Emergency Rental Assistance Under the Consolidated Appropriations Act, 2021

Reallocation Guidance

October 4, 2021

Updated March 30, 2022

I. Overview

Section 501 of Division N of the Consolidated Appropriations Act, 2021 appropriated $25 billion

for the delivery of emergency rental assistance (ERA) to eligible households suffering

unemployment or other financial hardship due to the novel coronavirus pandemic. The

Department of the Treasury allocated these funds to states, the District of Columbia, U.S.

territories, Indian tribes, Tribally designated housing entities (TDHEs), the Department of

Hawaiian Homelands, and units of local government (Grantees).

Congress later appropriated an additional $21,550,000,000 for ERA under the American Rescue

Plan Act of 2021. Treasury refers to 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 ERA1, and addresses ERA2 only to the extent relevant to the reallocation of ERA1

funds. Treasury will publish guidance for the reallocation of ERA2 funds, which will not begin

until March 31, 2022, at a later date.

The Consolidated Appropriations Act, 2021 requires Treasury to begin reallocating “excess”

ERA1 funds on September 30, 2021. Treasury’s objective in reallocations is to ensure ERA

funds remain available to Grantees in accordance with their jurisdictional needs and

demonstrated capacity to deliver assistance while the ERA appropriations remain available.

This guidance sets forth the procedures for the ERA1 reallocation process. It describes how

Grantees that have obligated insufficient funds as of September 30, 2021 will be required to

submit a Performance Improvement Plan and how excess funds will be identified based on the

Grantee’s expenditures. It further describes timelines and mitigating factors related to the

recapture of excess funds. This guidance also describes a voluntary reallocation process through

which a Grantee may request that Treasury reallocate its funds to another Grantee. It also

clarifies that Treasury will not recapture funds from Indian Tribes, TDHEs or U.S. territories

prior to April 2022.

II. Obligations and Excess Funds

The ERA1 statute requires Treasury to identify “excess funds” for reallocation from amounts

Grantees have “not obligated” from their initial ERA1 allocations. Specifically, the statute

provides that beginning on September 30, 2021, Treasury must recapture excess funds, as

determined by the Secretary, not obligated by a grantee for eligible ERA1 purposes, and

Treasury must reallocate those funds to Grantees that, at the time of the reallocation, have

obligated at least 65% of their initial ERA1 allocation. The amount of any reallocation is based

on demonstrated need within a Grantee’s jurisdiction, as determined by Treasury.

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Consistent with these requirements, Treasury has developed the following policies and

procedures for identifying the excess funds that will be available for reallocation.

A. Obligating ERA Funds

Treasury will not recapture funds that a grantee has obligated. Treasury will consider funds to be

obligated if they meet any of the following conditions:

 The funds have actually been spent providing financial assistance and housing stability

services under ERA for eligible households;

 The funds are needed to pay for assistance promised in a commitment letter issued to

induce a landlord to enter a rental agreement with an eligible household under Treasury’s

ERA FAQ #35; or

 Subject to the conditions described below concerning subrecipients, the Grantee has, as

part of the Grantee’s ERA program administration, entered into a binding agreement or

funding commitment requiring the Grantee to disburse the funds to a third party for

eligible ERA1 purposes (a Contractual Obligation).

A Contractual Obligation will include situations in which (i) assistance has been approved for an

eligible household but the payment to the landlord or utility provider has not yet been disbursed,

or (ii) assistance has been approved but not yet disbursed under a bulk payment arrangement

with a large landlord or utility provider under Treasury’s ERA FAQ #38.

Funds may not be deemed to be under a Contractual Obligation for more than 12 months.

Treasury will consider any funds under a Contractual Obligation (subject to this 12-month limit)

or any funds covered by a commitment letter issued to an eligible household to remain obligated

for 30 days after the termination of the relevant agreement, funding commitment, or commitment

letter. Funds not expended or re-obligated within the 30-day period will be considered deobligated and potentially subject to reallocation in accordance with this guidance. In addition,

under the ERA1 statute (as amended), Grantees must obligate all funds from their initial

allocations by September 30, 2022.

Grantees are encouraged to partner with local nonprofit organizations and governmental agencies

to expedite the obligation process and delivery of assistance to eligible households. However,

Grantees may not use subrecipient agreements with these entities to avoid meeting the statutory

obligation deadlines, and funds will not be considered obligated based solely on the fact they are

subject to an agreement that provides for another entity to administer assistance on the Grantee’s

behalf. Funds paid or payable by a Grantee under a subrecipient agreement, and that have not

been expended by the subrecipient for permissible purposes, will be considered obligated only to

the extent that such funds (i) represent the subrecipient’s permissible compensation for ERA1-

related responsibilities, in accordance with Treasury’s ERA FAQ #21; or (ii) will be used to pay

obligations under binding agreements or funding commitments that would constitute Contractual

Obligations if entered into by the Grantee directly.

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The ERA1 statute provides that Grantees may use up to 10% of their allocations for

administrative costs attributable to providing financial assistance and housing stability services.

For reallocation purposes, Treasury will consider 10% of each Grantee’s initial allocation as

having been obligated for administrative costs regardless of the Grantee’s actual expenditures,

commitments, or obligations.

Grantees will be required to submit a certification indicating the amount of funds they have

obligated through September 30, 2021 (an Obligated Funds Certification). Grantees that have

obligated less than 65% of their allocations, or that do not provide an Obligated Funds

Certification, will be required to submit for Treasury’s approval a program self-assessment and

improvement plan, as described in Section II.C.2, in a form provided by Treasury (a Program

Improvement Plan), no later than November 15, 2021.

B. Identifying Excess Funds

Treasury will rely on the following factors for identifying excess funds. Each factor will be

applied separately. If Treasury identifies excess funds based on multiple factors, the amount to

be reallocated from the Grantee will equal the aggregate total. Treasury will not identify excess

funds from allocations to Indian Tribes, TDHEs or U.S. territories prior to April 2022.

Treasury will notify a Grantee in writing upon determining that any part of its allocation

constitutes excess funds and will provide instructions for the funds’ return. Excess funds must

be returned within 10 days of receiving such notice.

1. Insufficient Expenditure Ratio

In addition to evaluating the amount of ERA1 funding obligated by a Grantee as of September

30, 2021, Treasury will also evaluate a Grantee’s “Expenditure Ratio” as of September 30, 2021

and approximately every two months thereafter. A Grantee’s Expenditure Ratio1 will be

calculated as (i) the Grantee’s total expenditurefollows:

Total Expenditure of ERA1 fundsFunds on assistanceAssistance to eligible households divided

by (ii) an amount equal to 90% of the Grantee’s totalEligible Households

1 The initial version of this Guidance, issued on October 4, 2021, provided that a Grantee’s Expenditure Ratio would

be calculated by dividing (i) the Grantee’s total expenditure of ERA1 funds on assistance to eligible households by

(ii) an amount equal to 90% of the Grantee’s total ERA1 allocations as of the date of the assessment. In the initial

round of reallocation, the original formula produces a result equivalent to the revised formula above. However,

following the recapture of funds, the original formula would not properly account for the Grantee’s administrative

expenses, and the two formulas would produce different results. Treasury has adopted this revised formula for all

Expenditure Ratio assessments following the initial round of reallocation in order to clearly account for the

exclusion of the Grantee’s portion of administrative expenses and the excess funds returned in previous reallocations

from the denominator of the formula.

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Initial ERA1 allocations as of the date of the assessment.2 Award Amount – Returned Excess

Funds – 10% of Initial ERA1 Award for Administrative Expenses3

The Grantee’s total assistance expenditures will be determined based on the Grantee’s interim

report to Treasury for the first quarter of 2021 and each subsequent monthly reportor quarterly

reports. When available, Treasury will rely on final quarterly and monthly reports; otherwise,

Treasury will base its calculations on the relevant interim reports. Grantees will be required to

continue providing monthly reports at least through March 31, 2022. If funds are recaptured

from a Grantee, the denominator of the Expenditure Ratio will be adjusted accordingly.as

provided above. The “First Assessment” means Treasury’s assessment of a Grantee’s

performance and Expenditure Ratio based on the reporting data through September 30, 2021.

A Grantee whose Expenditure Ratio is below 30% for the First Assessment will be considered to

have excess funds. Beginning with the 30% threshold established for September 2021, the

minimum Expenditure Ratio will increase by 5% each calendar month (and, as indicated above,

assessments will occur approximately every two months).

For each Grantee whose Expenditure Ratio is below the then-applicable minimum threshold at

the time of an assessment, Treasury will calculate the Grantee’s amount of excess funds as the

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

minimum Expenditure Ratio applicable to that assessment and (ii) the Grantee’s reported total

assistance expenditures. As a result, the amount subject to recapture will be less for Grantees

whose Expenditure Ratios are closer to the minimum.

2. Failure to Make Required Submissions

As described elsewhere in this guidance, a Grantee will be required to submit a Program

Improvement Plan if the Grantee does not certify that the Grantee has obligated sufficient ERA1

funding as of September 30, 2021, and the Grantee may submit a Program Improvement Plan to

mitigate an excess funds determination that results from an insufficient Expenditure Ratio on

September 30, 2021. A Grantee that submits a Program Improvement Plan will be required to

deliver a report within 60 days after the date of Treasury’s approval of the Program Improvement

Plan confirming that actions have been taken to implement the policy and administrative

improvements identified in the Program Improvement Plan. The first report will be due on April

1, 2022 for grantees that received e-mail notification of their Program Improvement Plan

approval in December 2021 and thereafter will be due within 60 days after the end of the month

the Program Improvement Plan was approved.

A Grantee that is required to submit a Program Improvement Plan but does not do so by

November 15, 2021 will be determined to have excess funds in an amount equal to 10% of the

Grantee’s initial allocation. A Grantee that submits a Program Improvement Plan but does not

submit the required report confirming progress in implementing the actions identified in the

2 This allowance reflects the ERA1 statute’s requirement that at least 90% of a grantee’s allocation be spent on

assistance to eligible households, with the remainder to be used for administrative costs. 3 This allowance reflects the ERA1 statute’s provision permitting a Grantee to spend up to 10% of the Grantee’s

initial ERA1 allocation on administrative costs. See section V for further discussion on administrative expenses.

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Performance Improvement Plan in a timely manner may be determined to have excess funds in

an amount equal to 10% of the Grantee’s allocation at that time (taking into account any previous

reallocations).

3. Unobligated Funds at Final Assessment

Treasury will conduct a final assessment of each grantee’s Expenditure Ratio based on data

reported through March 31, 2022. At that time, any unobligated ERA1 funds may be determined

to be excess funds.

C. Mitigating Factors for Excess Funds.

If a Grantee is subject to an excess funds determination based on the criteria described above, the

Grantee may request that Treasury reduce or not make the determination based on any of the

following three criteria.

1. First Assessment Mitigation

Treasury will not make a determination of excess funds based on an insufficient Expenditure

Ratio for the First Assessment if the Grantee submits by November 15, 2021 a certification

signed by an authorized official of the Grantee that confirms that either (i) the Grantee has

obligated at least 65% of its allocation or (ii) the Grantee’s Expenditure Ratio is at least 30%.

2. Developing a Program Improvement Plan

As indicated in Section II.A, Grantees that have obligated less than 65% of their allocations, or

that do not provide an Obligated Funds Certification, will be required to submit for Treasury’s

approval a program self-assessment and improvement plan. Further, with respect to the First

Assessment, a Grantee may request that Treasury reduce an excess funds determination if the

Grantee submits a Program Improvement Plan as described below no later than November 15,

2021. If Treasury approves such a Program Improvement Plan, any reduction in the excess

funds determination will not exceed the amount of total assistance expenditures required for the

Grantee’s Expenditure Ratio to equal 15%.

The Program Improvement Plan will identify (i) policies and practices recommended by

Treasury that the Grantee has already implemented, such as the use of self-attestations to confirm

applicant income eligibility; eviction diversion partnerships; and engaging providers of culturally

and linguistically relevant housing stability services; (ii) whether the Grantee has adopted any

policies or practices that Treasury has discouraged; (iii) key obstacles to delivering ERA

assistance to eligible households in the Grantee’s jurisdiction; (iv) actions that the Grantee will

take to improve program performance; and (v) a projection of the Grantee’s ERA1 expenditures

over the following four months. Treasury will approve a Grantee’s Program Improvement Plan

if it is complete and identifies actions for improvement that relate to adopting policies and

practices recommended by Treasury, ceasing policies and practices Treasury has discouraged, or

otherwise adequately addresses the key obstacles identified by the Grantee in the Program

Improvement Plan.

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3. Exigent Circumstances

Treasury may also reduce or not 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.

III. Distributing Reallocated Funds

A. Requesting Reallocated Funds

Treasury will begin accepting requests from Grantees for reallocated funds, on a form to be

published by Treasury, on October 15, 2021. As the ERA1 statute requires, reallocated funds

will only be available to Grantees that have obligated at least 65% of their own initial ERA1

allocations. 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 minimum Expenditure Ratios, 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 (Relative 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, Tribe, TDHE, or U.S. territory), but would apply the

relevant limit uniformly among Grantees within a category.

Grantees may be required to amend their existing ERA1 program agreements as a condition to

receiving reallocated ERA1 funds. These amendments will ensure the program agreements are

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

described in this guidance.

C. Reallocation Priorities

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

funds that are recaptured from a Grantee to another Grantee in the same state. When appropriate,

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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.

D. Extended Statutory Deadline

Grantees are prohibited from obligating any funds from their initial allocations after the statutory

deadline of September 30, 2022. Grantees may, however, request an extension through

December 29, 2022 to continue obligating funds received through reallocation. The funding

request form described in Section III.A. will enable such extension requests.

After June 30, 2022, Treasury intends to consider whether additional recapture of unobligated

funds is appropriate to help ensure that ERA1 funds are used by the statutory deadline.

IV. Voluntary Reallocation

Beginning September 30, 2021, Grantees may request the transfer of some or all of their

allocations to another Grantee that (i) administers an ERA1 program in the same state, territory,

or Tribal area and (ii) has obligated or spent at least 65% of its own allocation by the time of

transfer. Grantees may request Treasury’s assistance in identifying a permissible transferee.

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 65% of its own 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 ERA1 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

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

funds would be recaptured; (ii) leave a Grantee with insufficient funds to meet the needs in its

jurisdiction; or (iii) otherwise undermine the purposes of reallocation.

V. Use of Funds for Administrative Expenses and Housing Stability Services

A Grantee may spend up to 10% of its initial ERA1 allocation for administrative expenses only if

the Grantee obligates at least 30% of its initial allocation for the provision of financial assistance

and housing stability services on behalf of eligible households by September 30, 2022. If a

Grantee has obligated less than 30% of its initial allocation providing financial assistance and

housing stability services as of September 30, 2022, Treasury will presume that the Grantee’s

administrative expenses were not attributable to such services – and therefore were not

permissible uses of ERA1 funds – to the extent that the administrative expenses exceed 10% of

the Grantee’s allocation after deducting amounts recaptured or reallocated as excess funds,

unless the Grantee can demonstrate that those costs are related to the delivery of the program.

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