$730K in rent relief: Oyster Bay didn't use it, will lose it

The U.S. Department of the Treasury took back nearly $730,000 in federal rent relief funding from Oyster Bay because the town didn't distribute aid fast enough, according to Treasury documents.

The Treasury is transferring the money to New York State and upstate Monroe County — governments serving communities that have nearly run through their share of assistance, the documents show.

The Treasury revealed that Oyster Bay was the only locality in the state to lose rent relief funding in reallocation plans released last week. The Treasury took $729,093.11 from Oyster Bay because the town didn't hit the benchmark of distributing at least 30% of money earmarked for assistance by the end of September. At that point, Oyster Bay had issued payments on behalf of 22 families, which accounted for 6% of the $8 million earmarked to the town for helping low-income tenants suffering financially because of the pandemic.

Oyster Bay spokeswoman Marta Kane cited, among other factors, the relatively small number of renters in the area for the slow payout. She didn't directly respond when asked if this meant the town had less need for the assistance.

"Funds were allotted solely on population and not rental statistics," Kane wrote in an email.

Michael Wigutow, supervising attorney for Nassau Suffolk Law Services,  said the nature of Oyster Bay's limited supply of rental housing reduced the need for the aid. 

Much of the rental housing  is federally subsidized, which means tenants who lose income should see a proportional decrease in their rent, according to Wigutow,  whose agency provides legal services to those who can't afford private attorneys.

Federal subsidies cover the difference, protecting landlords "from any financial hardship their tenants may face," Wigutow said in a statement.  That meant those tenants may be less likely to need pandemic rent relief. 

So, "the failure to use all the [rental assistance] funds awarded it, suggests the lack of affordable rental housing in the Town of Oyster Bay, apart from the federally subsidized units —  a longstanding need the pandemic served to shed a light on," Wigutow said. 

Kane also put part of the onus for Oyster Bay's slow payout on the state, which rejected any blame.

Kane said the town started receiving rent relief funds in January 2021. Oyster Bay's program got delayed because the town waited for the state to release details about how it would handle administration of rent relief, which came in April 2021, Kane said. At that point, Oyster Bay decided to distribute its allocation rather than let the state handle it, Kane said.

"The Town of Oyster Bay would have expended all monies received had it not been for New York State’s slow roll out and New York State’s eviction moratorium," Kane said in an email. 

The timeline and the moratorium was the same for all localities. Only Oyster Bay faces a clawback.

The town's Department of Intergovernmental Affairs decided to wait for details on the state's approach and then recommended having a community organization distribute the money — a move approved by the Town Board, according to Kane.

Oyster Bay partnered with the nonprofit Long Island Housing Partnership and launched its program July 1, a month after the state's Office of Temporary and Disability Assistance started taking applications, the state agency said. OTDA is distributing rent relief on behalf of all local governments on the Island, except for Oyster Bay and the Towns of Hempstead and Islip, which also chose to distribute their own funds.  Hempstead and Islip started accepting intake forms or applications before the state program opened and sooner than Oyster Bay, OTDA said.

“Municipalities that received federal rent relief dollars and chose to administer their funds themselves were under no obligation to wait for the state program to launch last spring," OTDA spokesman Justin Mason said in a statement.

The Long Island Housing Partnership referred questions to the town. 

 "Most eligible jurisdictions in New York opted-in to the statewide program, in part to avoid the pitfalls of standing up a new program from scratch," said Ingrid Gould Ellen, faculty director at the NYU Furman Center, which studies housing policy.  "That's always challenging under emergency circumstances, and the state had its share of hiccups as well. That said, other cities did manage to successfully distribute funds by the deadline."

The federal government began sending nearly $8.9 million to Oyster Bay in early 2021. Up to 10% could be used for administrative purposes like promoting the program or hiring nonprofits to help with applications. The money must be used by the end of September 2022. 

Last spring, another $7 million was budgeted for the town, with an allowance of 15% for administrative costs. The Treasury has not started assessing whether Oyster Bay and other governments that received more rent relief have hit spending targets tied to the second batch of money. 

Oyster Bay has received 302 applications; 118 have been approved, 134 are pending and 50 were rejected, Kane said. Almost $3.1 million in payments have been sent to landlords on behalf of tenants, she said. Nearly 70% of all rent relief funds  have been paid or earmarked for specific applicants, Kane said.

Oyster Bay could have lost more funding, but limited the recapture to roughly $730,000 by submitting a plan on how to improve its distribution of rent relief, a Treasury official said. The town noted in the plan that it was expanding efforts to publicize the program and began accepting attestations or statements outlining applicants' hardship rather than requiring proof of income in every situation. 

Nearly $722,000 of the recaptured funding will be sent to OTDA  to fund approved applications from communities participating in the state's program in the order that they were submitted, OTDA said. 

Another nearly $8,000 will go to Monroe County, which includes Rochester and the surrounding area and is running its own rent relief program. 

By Sarina Trangle

sarina.trangle@newsday.com@SarinaTrangle

Sarina Trangle covers affordability and cost of living issues and other business topics. She previously worked as an editor and reporter at amNewYork.