Arkansas forfeits covid rent relief funds back to federal government

Unspent federal aid to go elsewhere

The U.S. Treasury Building is viewed in Washington in this May 4, 2021, file photo. (AP/Patrick Semansky)
The U.S. Treasury Building is viewed in Washington in this May 4, 2021, file photo. (AP/Patrick Semansky)

Almost $9 million of Arkansas' pandemic rent relief funds were taken back by the U.S. Treasury Department to be distributed to more populous states, the department announced this week.

The Arkansas Department of Human Services has $17.5 million left for renters after the Treasury Department clawed back $8.8 million, Human Services spokesman Gavin Lesnick said Friday.

The federal Consolidated Appropriations Act distributed $46.5 billion among the states in early 2021 to give to tenants dealing with financial hardship due to covid-19. The program covers past-due rent back to April 1, 2020. It also can cover missed utility payments and up to three months of future rent payments.

Arkansas received $173 million to cover 72 counties, while the three most populous -- Pulaski, Benton and Washington -- each received their own pots of money.

This week, the Treasury Department reclaimed a total of more than $377 million from 11 states, 22 counties and two cities in an "involuntary recapture," as stated on the Treasury website. Montana lost the largest amount, nearly $60 million, while Yuma County, Ariz., lost the smallest amount, $9,940.18.

The unspent funds will go to California, Illinois, New York and New Jersey, where the demand for rent relief is highest.

The Treasury Department has also been moving funds within and between states on a voluntary basis, including the shift of $23 million from the Arkansas Department of Human Services to Benton and Washington counties in January. Lesnick said Human Services "signed off on" the intrastate transfer.

The two Northwest Arkansas counties have already distributed a cumulative $27 million in rental assistance after receiving the first round of federal funds in 2021.

Members of Congress, including U.S. Rep. French Hill, R-Ark., have warned that the redistribution of rental assistance could overlook communities.

"Taking money away from rural communities like those across Arkansas ignores the acute housing problems that exist outside of America's big cities," he said in a January statement.

Hill could not be reached for comment Friday.

Neil Sealy, director of Arkansas Renters United, said the loss of $8.8 million hurts Arkansas tenants because the economic fallout of covid-19 "is going to be a long-term issue," especially since the pandemic is not over.

"If you get sick and can't work for a while, you get behind, and we're through the latest omicron upsurge [of covid-19], but we don't know what's going to happen next," Sealy said Friday.

Once the Department of Human Services has exhausted its rent relief funds, Lesnick said, tenants in need will still have the option of turning to the 36 social services agencies statewide that participate in the state's Emergency Solutions Grant program. The annual grant from the U.S. Department of Housing and Urban Development was funded in 2020 by the Coronavirus Aid, Relief and Economic Security (CARES) Act, and the agencies received more than $18 million in 2020 for covid-19 aid.

The state uses CARES funds to reimburse the 36 agencies for their work helping renters affected by covid-19 stay housed. Some agencies also distribute some of the $173 million rent relief allocation and receive reimbursement, Lesnick said in February.

Arkansas was one of seven states that, as of June, had distributed less than 1% of federal rental relief funds. By the end of August, the state faced a backlog of 8,000 applications and had distributed $7.2 million, or 4% of the funds.

Renters and housing advocates expressed frustration with the program because it initially required landlords to submit matching applications for each tenant, and some landlords refused to participate.

The Department of Human Services loosened the requirement in September 2021 after pressure from Congress.

In January, the department paused its acceptance of rent relief applications to "ensure we don't take in more eligible applications than we can fund," department spokeswoman Amy Webb said at the time. The department enacted the pause when it altered the distribution process so checks would be issued to both the tenant and the landlord as a fraud prevention measure, at the urging of some state legislators.

The online application portal reopened Wednesday, Lesnick said.

"We are confident that we have funds available for new applications at this time," he said in an email. "We are closely monitoring the new applications that come in, and we will make a determination on when to close the portal based on that data."

Sealy said the pause kept help from tenants facing imminent eviction during the past month and a half.

"We certainly need the money that was clawed back, but we need to find other resources and help keep people in their homes, because covid is still with us," he said. "We're not out of the woods, and the economic damage that people went through will be with us for a long time."