Maine will likely have to tell the federal government next month how it plans to speed up its spending of $200 million in funds meant for needy renters, and it could have to return some of that money so higher-need states can spend it.
The U.S. Treasury Department told states and other agencies receiving rent relief money last week that some may have to forfeit unspent money so the federal agency can give it to places where renters are in greater need.
And even though Maine has given out rental aid from a December 2020 congressional stimulus package more quickly than most other small states, the new guidelines will likely still apply to Maine in part.
The Maine State Housing Authority expects to have to submit a performance improvement plan to the feds next month under those guidelines showing how it will spend rent relief faster.
Maine received $200 million as part of a December 2020 congressional stimulus package to help states set up emergency rental assistance programs during the COVID-19 pandemic. That was the minimum amount Congress awarded to states, so most small states received that amount.
Maine received another $152 million through the American Rescue Plan passed in March. A housing expert previously called the combined $352 million a “wild” amount for a state of Maine’s size.
“We believe that we have more funds available than will ultimately be needed for rent relief in our state within the time frame of this program,” said Erik Jorgensen, senior director of government affairs and communications for MaineHousing.
The new federal guidelines mean that Maine may need to return some of its $200 million in initial rent relief funds if it cannot meet a threshold of obligating at least 65 percent of that sum by Nov. 15.
MaineHousing had approved about $68.8 million in rent relief for more than 12,000 households as of late September, according to a Sept. 29 report from the agency. That works out to about 34 percent of the $200 million package, though MaineHousing has been using money from both rent congressional relief packages.
Before it has to give back any money, MaineHousing will likely need to submit a performance improvement plan by Nov. 15 showing how it will accelerate its current spending, Jorgensen said.
Other states that haven’t spent at least 30 percent of their federal monies through Sept. 30 face the prospect of having to forfeit their money sooner to other states or to different agencies within their states.
Maine is not among those latter states, based on the latest spending data.
However, its $352 million stockpile is likely more than it can spend on rent relief, raising the likelihood that the federal government could seize some of the unspent money. Those funds would then go to another state, as MaineHousing is the sole custodian for Maine’s rent relief money.
States have until Sept. 30, 2022, to spend the congressional rental relief funds approved last December. The Treasury will begin taking back unspent and uncommitted funds by March 31, 2022, and reallocating them to other states.
The bulk of Maine’s funds have gone toward helping households cover rent or pay down rental arrears. Renters in population centers like Penobscot, York and Cumberland counties have claimed the highest numbers of benefits so far.
MaineHousing distributes rent relief to tenants through community action programs in each county. Penquis CAP oversees the program for tenants in Penobscot and Piscataquis counties.
If the federal government grants it permission, MaineHousing would look to use its rent relief money for other purposes, such as paying for the construction of new affordable housing units or helping more people afford homeownership, Jorgensen said.
Smaller states that also received $200 million in federal renters’ aid have spent even less than Maine.
Delaware has only spent or committed 7.2 percent of its rent relief, while West Virginia’s proportion is 10.2 percent. Rhode Island, which has spent or approved spending of 19.4 percent of its $200 million, is closer but still well below Maine’s pace of spending.
Maine has emerged as one of the models for state spending when it comes to providing rent relief, Jorgensen said.
“The Treasury has, in fact, held up Maine as a state where the program is working especially well,” he said. “We are among the top states of our size in terms of getting funds out the door.”