Home National housing Why Arizona Could Lose $ 60 Million in Federal Money

Why Arizona Could Lose $ 60 Million in Federal Money


Arizona stands to lose some of the $ 315 million it received in federal rent assistance for rural areas.

The state program spent just 10% of its federal funding to help tenants affected by the pandemic stay in their homes, and a federal rule required that triple that rate be spent by September 30.

Arizona has one of the greatest rental assistance needs and one of the lowest fund distribution rates among states, according to a national nonprofit housing organization.

The Arizona Department of Economic Security, which manages the state’s rental and utility assistance, must develop a plan to get a lot more money for troubled tenants and homeowners in less time. ‘a month.

That plan should include reshuffling funds for the Phoenix and Tucson metro rental programs that have already spent a large chunk of their own federal money to help tenants and landlords.

In late September, the U.S. Treasury Department announced plans to begin reallocating emergency rental aid from states, counties, and cities that had not spent at least 30% to other housing programs. State and city that help more people.

The federal government allocated rental funds to major cities and counties and then to states to cover smaller and rural areas.

DES spokeswoman Tasya Peterson said the state knew when it received the funding that it was more than needed to help rural tenants in Arizona, and that it is now working on a plan to reallocate rent assistance funding to metropolitan areas of the state that have spent most of their share of the funds and need more.

“Federal guidelines and messages from the US Department of the Treasury indicated that the funding would stay in one state,” Peterson said.

DES received the bulk of nearly half a billion dollars in leasing funds from the first round of federal funding allocated in January.

Cities in metro Phoenix and Maricopa County received about $ 124 million, less administration fees, from the first round of rent assistance funding.

About 90% of that federal Valley rent assistance has gone to landlords and tenants, so none of the rent assistance programs in the Phoenix area are at risk of losing funding.

The Treasury deadline to submit a plan to spend more of the rent assistance or reallocate it is November 15.

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Give more money to tenants

The Biden administration wanted a national moratorium on evictions for areas hardest hit by COVID-19 to last until October 3 to give cities and states more time to get the aid money. rent. But a U.S. Supreme Court ruling ended the ban in late August.

Evictions doubled in Maricopa County in September, the first month after the moratorium ended.

Arizona could lose approximately $ 60 million in state rental funds based on the Treasury rule that the amount of “excess funds” recovered from a state or city will be the difference between the percentage already spent on rent assistance and the 30% threshold.

But the amount of reallocated money could increase if Arizona’s plan to spend more isn’t approved or doesn’t work.

The DES plan must show how it will speed up the distribution of funds. If the plan is approved, the DES must report to the Treasury every two months on its spending or potentially lose additional funding.

A Treasury official said states and cities that missed the September 30 deadline can avoid losing funds if they show they have spent 30% of the funds or at least committed 65% of the funds. money in mid-November.

Some say that the big spending of money by the federal government on the state is an imbalanced population.

DES received 55% of the rent subsidy and its program covers rural areas with 1.26 million inhabitants. According to an analysis by the Arizona Multifamily Association, the remaining 45% of the funding was intended to help tenants in urban areas of 5.9 million people.

Move rent assistance dollars from A to Z

Peterson said DES is currently working to reallocate funds to cities and counties in Arizona, including Pima County and Tucson, which are lacking rent assistance and have asked for money.

Tucson and Pima County each requested $ 11 million from DES for their rent assistance programs for a total of $ 22 million, as both almost entirely spent their first-round funds in the housing assistance program. emergency rent, said Dan Sullivan, director of community and workforce. development in Pima County.

“We want to make sure that we spend as much of DES funds to ensure that the state doesn’t lose money, and DES has been great in working with us to do that,” he said.

Most of Phoenix’s metro rental programs have been criticized for getting off to a slow start, but at the end of the summer, the federal government reduced restrictions on who could receive the money. Since then, the money has reached tenants more quickly.

Phoenix received about $ 46 million in the first round of emergency rent assistance and spent 88% of it to help tenants.

“The city is actively developing an agreement with DES to begin serving Phoenix residents as well with rental assistance,” said Phoenix spokeswoman Stephanie Barnes. “This will not only increase the overall access of Phoenix residents to emergency rental financing and utility assistance, but will also help with the expense of statewide funding.”

Help with eviction: Rent assistance can cover legal fees for landlords. From now on, tenants in eviction can benefit from legal aid.

Maricopa County received $ 41.6 million to help tenants and spent 90% of the money to help tenants.

County spokeswoman Amy Bolton said the county was happy with the prospect of getting funds reallocated in accordance with Treasury guidelines.

Mesa has received $ 14.1 million in federal tenant funding and has spent it all to help its residents.

“Mesa invites any opportunity to serve more people – be it funds from DES or the Treasury,” said Natalie Lewis, deputy city manager. “Our systems are working well and we are ready to help. “

Arizona Multihousing Association CEO Courtney LeVinus said the homeowner group is urging the Treasury and Congress to endorse a more centralized approach to eviction action.

“A unified approach would cut the red tape that created so many delays, reduce confusion for applicants and reduce overhead costs that have diverted millions of dollars that could be used to relieve residents and landlords,” he said. she declared.

Arizona is not just a state in danger of losing federal rent assistance

By the end of August, 42% of states and cities with emergency rent assistance funds had not reached the 30% spending level of the treasury, according to the latest analysis from the National Low Income Housing Coalition.

But among the states with the most renters and landlords who need help, he found Arizona to have one of the lowest rent assistance rates. Georgia, Florida and Ohio were the other three states on this list.

Among cities and counties, the Housing Coalition found that Baltimore, Washington King County, Texas Dallas County, and Denver had the lowest cash distribution rates. Baltimore and King County had distributed less than 1% of their rental funds by the end of August.

The Treasury Department is expected to release a list of states, counties, and cities that are at risk of losing money, based on expense counts as of September 30, next week.

State use of federal funds

Arizona has encountered problems spending other federal aid during the pandemic.

Recently, the Treasury said that two programs announced by Governor Doug Ducey in August that reward school districts for not imposing COVID-19-related mandates violate federal rules, and the state could lose money.

At least $ 173 million in federal funds have been set aside for Arizona programs that have awarded $ 7,000 to families who wish to move their children from schools that impose masks and other COVID-19 precautions and have donated $ 1,800 per student to districts that did not impose the mandate.

The Treasury said the programs “undermine evidence-based efforts” to stop the coronavirus and are “not an authorized use” of the money.

Last year, Ducey used $ 400 million of the federal CARES Act stimulus money granted to Arizona to offset existing government spending instead of fighting COVID-19.

The move drew criticism from Democratic lawmakers and health groups.

Contact the reporter at [email protected] or 602-444-8040. Follow her on Twitter @Catherinereagor.

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