NY To Receive Fraction Of $1B Rent Aid Request, Court Told

By Emma Whitford
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Law360 (January 4, 2022, 3:25 PM EST) -- New York will receive a small portion of the nearly $1 billion in additional funding it has sought from the U.S. Treasury Department to cover coronavirus rent arrears, intended to fulfill thousands of pending requests to aid struggling tenants and landlords.

The federal government has allocated about $27.2 million to New York in supplemental funding, according to an email filed Monday in state court. This amounts to about 3% of the funding requested in November as available funds dwindled, prompting state officials to stop considering new applications across most of the state.

"The amount of reallocated funds requested by eligible grantees was far greater than the funding available to distribute," according to a Dec. 30 email from Treasury to New York's Office of Temporary and Disability Assistance. "However, Treasury approved the State of New York's request in the following amount: $27,219,044.18."

The correspondence was filed as an exhibit in a lawsuit in which tenants and their advocates are seeking to reopen the state's Emergency Rental Assistance Program portal, which provides eviction protections to those with pending applications. A broad anti-eviction law preventing most evictions across New York is set to expire on Jan. 15. 

The U.S. Treasury Department did not immediately reply to a request for comment. 

The federal government said in October that it planned to reallocate certain unused funds from the federal government's first $25 billion allocation of emergency rental assistance, known as ERA1, and would be accepting requests from states and localities. 

New York began administering one of the largest emergency rental assistance programs in the country in June, with more than $2 billion at its disposal to cover rent and utility arrears. And though the program got off to a rocky start, payments picked up steam last summer.

New York Gov. Kathy Hochul warned that funds were running low in late September, indicating that she planned to seek more money.

On Tuesday, Hochul's office confirmed the roughly $27 million allocation and said the state would continue pushing for additional funding.

"While we are disappointed in the amount of additional rental relief funds the U.S. Treasury has reallocated to New York at this time, the state will continue pursuing all avenues to secure federal funding that keeps New Yorkers in their homes," Hochul spokesperson Bryan Lesswing said.

The state's Office of Temporary and Disability Assistance, or OTDA, has operated ERAP, administering rental assistance to landlords whose tenants fell behind during the pandemic.

To date, OTDA says that it has paid out $1.25 billion to landlords, across 100,000 individual payments. An additional $774 million has been set aside on behalf of 62,000 qualifying tenants, the agency said.

Yet many applications remain unfilled, according to a Monday affidavit from Executive Deputy Commissioner Barbara Guinn, opposing tenants' motion to immediately reopen the portal.

"OTDA has received over 65,000 additional applications that are projected to equate to approximately $700 million in payments," Guinn said. "On top of that are an additional 34,000 applications from tenants residing in subsidized housing, projected to equate to roughly $162 million in payments."

The new funding from Treasury will be "far from sufficient even to support all of the applications that already have been submitted to OTDA," Guinn added.

Ellen Davidson, an attorney with the Legal Aid Society, is representing the tenants seeking to reopen the ERAP portal, who had a preliminary injunction hearing Tuesday afternoon.

"It's a disappointing decision from the Treasury Department considering that … we've clearly used our money and there continues to be more need," Davidson said.

New York could receive more funding when a second tranche of federal funds goes up for reallocation this spring, she added.

Representing OTDA during Tuesday's hearing, Assistant Attorney General Noam Lerer accused the tenants of painting a "very rosy picture of future additional funding."

New York must come up with more money one way or another, according to the office of state Sen. Brian Kavanagh, a Democrat and chair of the Senate's housing committee.

Stanley Davis, a spokesperson for Kavanagh, said, "The state budget process is coming up and he does want this need to be fulfilled in full, whether using state resources or federal resources."

The plaintiffs are represented by Edward Josephson, Ellen Davidson and Alex MacDougall of the Legal Aid Society.

The Office of Temporary and Disability Assistance is represented by Assistant Attorneys General Noam Lerer and Celina Rogers.

The case is Maria Hidalgo et al. v. New York State Office of Temporary and Disability Assistance, case number 453931/2021, in the Supreme Court of the State of New York, County of New York.

--Editing by Robert Rudinger.

Update: This story has been updated with additional remarks from Hochul's office, Kavanagh's office and Tuesday's hearing.

For a reprint of this article, please contact reprints@law360.com.

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