By Emma Whitford

Law360 (March 15, 2022, 4:21 PM EDT) -- New York will receive just a small portion of its latest request for additional federal funding to fulfill tens of thousands of pending rental assistance applications, new U.S. Treasury Department figures show — roughly $119.2 million of $1.6 billion sought in late January.

The additional funding is part of more than $1 billion in federal dollars now flowing to jurisdictions across the country as part of a second reallocation round, Treasury revealed Monday. Nearly half of the funds are passing voluntarily between jurisdictions within a given state, while the rest has been pulled from underperforming cities, states and counties.

New York received the second-largest reallocation of pandemic-era assistance in the country behind California, which got more than $136.4 million. State officials said they expect the new funding to cover about 8,500 pending applications, or about 7% of an estimated 120,000 qualifying applications that currently lack funding.

In a statement to Law360, Jim Urso, a spokesperson for New York Gov. Kathy Hochul, said the governor's office will continue to pursue additional funding from the federal government for New York's Emergency Rental Assistance Program.

"Governor Hochul prioritized supporting tenants and homeowners hit hard by the pandemic from day one … and will continue pushing to secure every available dollar from the U.S. Treasury to provide relief to the New Yorkers who need it most," he said.

ERAP launched in June with roughly $2.4 billion in primarily federal dollars. After a rocky start, application processing sped up. In November, Hochul announced that all the funds were either paid out or earmarked, and that more would be needed.

Then, at the beginning of January, New York learned that its initial $1 billion request for additional funding would turn up just $27 million, potentially leaving thousands of pending applications unfulfilled.

Concerned that many tenants and landlords could be left out, Hochul joined a handful of governors in a joint letter to Treasury calling for more aid for states with large low-income renter populations.

The governor's office also signaled that a portion of $2 billion in state coronavirus relief funds could go toward ERAP as part of the upcoming state budget, pending negotiations with the state Senate and Assembly.

In recent days, leaders in both the Senate and Assembly recommended ERAP funding in their respective budget proposals.

The Senate recommended up to $1 billion in the absence of federal intervention, while the Assembly put forward $1.25 billion plus an additional $400 million for a related program serving landlords whose tenants have moved out or declined to participate in ERAP.

Treasury unveiled in October its process for reallocating unused funds from the first $25 billion allocation of emergency assistance, known as ERA1, as required under the December 2020 Consolidated Appropriations Act.

The money was earmarked to cover rent and utility arrears accumulated during the COVID-19 pandemic and has since been supplemented with another $21.5 billion set aside in March 2021 under the American Rescue Plan Act, known as ERA2.

ERA2 funds won't be free for reallocation until the end of the month, according to Treasury, which plans to release separate guidance for that process.

More rounds of ERA1 reallocation are also anticipated, though a Treasury official said Tuesday that the department expects few resources will be freed up in the coming months relative to the overall need nationally.

The federal government recaptured $377.6 million from underperforming jurisdictions in the latest round announced Monday, with some of the largest shares pulled from states.

Wyoming lost more than $59 million, South Dakota more than $57 million, Montana more than $45.3 million, Alabama about $42 million, and Idaho and Vermont about $30 million each. New Hampshire lost $18.7 million, while Nebraska lost $11.7 million and Arkansas $8.8 million.

On the local level, $5.5 million was pulled from Rockingham County in New Hampshire and more than $4.4 million was taken from Ocean County, New Jersey, among other cities and counties.

New York's pandemic rental assistance program covers up to 12 months of missed pandemic rent and three months of future rent, with payments issued directly to landlords. Tenants must make no more than 80% of the area median income to qualify and must also demonstrate pandemic-related financial hardship and housing instability.

The state says it has issued 130,773 payments so far, totaling about $1.63 billion. Another $392 million has been set aside on behalf of 31,400 qualifying tenants but has yet to reach landlords, according to the state.

In statements Tuesday, advocates for New York landlords and tenants alike called on the state to send funds to ERAP.

Joseph Strasburg, president of the Rent Stabilization Association, a landlord trade group, said Treasury's allotment "falls woefully short," making "passage of the state Assembly's recently proposed budget bill even more significant and urgent."

The state should put up at least $1 billion, said Judith Goldiner, attorney-in-charge of the civil law reform unit at the Legal Aid Society, as Treasury's latest funding falls "drastically short of the statewide demand we are seeing from tenants at risk of eviction."

--Editing by Janice Carter Brown.

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