Audit finds California risks forfeiting millions for renters

California has been slow to distribute rental assistance money for residents struggling during the coronavirus pandemic, and the state risks forfeiting hundreds of millions of dollars in federal funds, auditors said Thursday.

Delays by the Department of Housing and Community Development in distributing the first $1.8 billion in federal money could mean California will miss out on the next round of funding meant to help renters avoid eviction, the state auditor’s office said in a report.

“Given the narrow time frame set by the federal government, we wanted to impress upon you the need for continued attention in order to minimize the risk and the amount of funds the state could lose beginning September 30, 2021,” Auditor Elaine Howle wrote in a letter to Gov. Gavin Newsom.

The department “must employ every effort possible to increase its amount of funds obligated before the federal deadline,” the report said.

Under federal rules, money is “obligated” when the state has agreed to pay it to households, not necessarily when it has been paid.

The department had obligated about $1.4 billion, or 81% of its first round of federal funding, according to the audit. If it does not obligate more money to renters before the end of the month, the department “may lose up to $337 million of its remaining unobligated funds,” the report said.

Gustavo F. Velasquez, director of the Department of Housing and Community Development, said his agency was likely to receive additional money back because federal rules allow redistribution of funds from states that don’t obligate 65% of their money to the states that do meet that threshold.

The department’s implementation of the Emergency Rental Assistance Program “has helped nearly 50,000 households by providing both rental and utility assistance for tenant households that are at or below extremely low-income levels,” Velasquez wrote in a letter to Howle.

“This has resulted in nearly $1.4 billion in requested assistance, and nearly $500 million paid to date,” he wrote.

 

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