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Iowa will not have to return any of its Emergency Rental Assistance funds to the federal government, despite a slow distribution rate of the aid money.
Iowa was one of several states that struggled to distribute federal rental assistance. The U.S. Treasury set a mid-November deadline for those slow-moving states, promising clawbacks of ERA funds that were not allocated quickly enough.
Between January and Oct. 1, Iowa allocated only about $20 million of its initial $195 million grant. But Ashley Jared, spokesperson for the Iowa Finance Authority, said the state agency obligated more than $73 million — a 42% expenditure ratio, as calculated by federal guidelines — by the Nov. 15 deadline. That surpassed a 30% threshold set by the Treasury.
“IFA has not been notified of any additional reallocation of funds as of today,” Jared said in an email.
Instead, IFA has requested to transfer $30 million of the $195 million to local entities that have seen higher demand for the assistance. Local governments were able to apply separately for the federal fund. Those programs, especially in Polk and Linn counties, saw much quicker allocation than the statewide program.
“Much of the demand for assistance came from and continues to come from eligible households located in those two counties, which are served by county programs, rather than IFA’s program,” Jared wrote in an email. “Therefore, demand for funding through IFA’s program has been limited.”
Anne Bacon is the executive director of IMPACT, a nonprofit that led the distribution of ERA funds for the City of Des Moines and Polk County. She said the central Iowa programs have already exhausted $26 million from two rounds of ERA funding. While they wait for the transfer of $30 million, Polk County allocated $10 million to rent assistance.
“It is that 10 million that we are operating on now,” Bacon wrote in an email.
IFA is also expecting another round of money. Director Debi Durham decided in September to apply for funding through the second round of the ERA program, though she expressed concerns about the slow distribution of the first round. IFA has received the first $59 million of a grant that will total $149 million.
Jared said IFA is developing a program to distribute these new funds.
“This program is still under development, but we are exploring creative approaches to getting the funds to various populations in need of assistance,” she wrote. “More information will be available soon.”
The ERA 2 funding has more lenient restrictions than the first round. Applicants do not need to prove they suffered financial hardship due directly to COVID-19, so long as their difficulties occurred during the pandemic. The funding also does not expire until 2025, whereas ERA 1 ends next year.
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