Iowa faces rent assistance clawback

Iowa could lose millions of dollars in federal emergency rent assistance due to slow distribution of a $195 million grant, federal officials warned the state this week.

• The state has disbursed less than 10% ($18.4 million), as of Tuesday.
• Those that haven't obligated 65% of their funds have until Nov. 15 to submit an improvement plan — which Iowa plans to do, Ashley Jared, a spokesperson for the Iowa Finance Authority, told us.

Why it matters: Nearly 10,000 Iowans face the likelihood of eviction in the next two months, according to the most recent household pulse survey from the U.S. Census Bureau.

Driving the news: The U.S. Department of Treasury notified states and local governments Monday about the new requirement. It's part of an effort to reach more tenants facing eviction.

• State and local governments that fail to act face a 10% clawback — which amounts to nearly $20 million for Iowa.

State of play: Iowa allocated millions of dollars to assist renters and homeowners earlier in the pandemic and that reduced demand, Jared said.

• Polk and Linn counties are distributing allocations themselves, which is separate from the state's allotment and that also contributes to less demand, she said.

The big picture: Iowa isn’t alone. Just $7.7 billion (16%) of the nearly $47 billion Congress allocated in December to help people pay rent was distributed through August.

We can help: Polk County and Des Moines' separate allotment of $26 million is spent, Anne Bacon, director of housing assistance nonprofit IMPACT, told Jason yesterday. (Her group is administering Polk and DSM's allocations.)

• A $30 million allocation from Iowa's portion will likely be transferred to Polk and Des Moines in coming weeks as IFA works to expedite payments from the state fund, Bacon said.

Of note: Another $149 million in a second round of rent assistance has been requested by Iowa, Jared said.

• But that round has a spending deadline of Sept. 30, 2025, three years after the current grant must be depleted.