California fights for federal tax dollars to cover $300M it spent on COVID-era housing program

California may be forced to cover at least $300 million spent on its COVID-era housing program after a "retroactive" rule change prompted the Federal Emergency Management Agency to place caps on reimbursements, the New York Post reported.

In March 2020, California Democratic Governor Gavin Newsom enacted Project Room Key, a program that placed homeless people into empty hotel rooms to cut back on the spread of COVID-19.

FEMA officials guaranteed it would reimburse California cities and counties 75% of the program's cost. Later, it stated it would reimburse the entire cost through July 1, 2022, and then 90% after that. However, in October, the federal agency stated that it would not provide reimbursements for many hotel stays longer than 20 days between June 2021 and May 2023, according to the San Francisco Chronicle.

San Francisco officials claimed they were blindsided by the October announcement and would have acted differently if the reimbursement cap had been shared previously.

According to data reported by the San Francisco Chronicle, the city spent $84,600 to house each homeless person. San Francisco wants federal taxpayers to cover the $190 million spent to house 5,000 people.

California Office of Emergency Services Director Nancy Ward sent FEMA a memo in January calling on the agency to reverse its decision. According to Ward, FEMA "inconsistently" applied its policy across the nation.

San Francisco Supervisor Aaron Peskin stated, "It's not over until FEMA sings, and we're not done."

In a letter to FEMA officials, San Francisco Controller Ben Rosenfield accused the agency of implementing an "impermissible retroactive law."

"We intend to explore every option to appeal any claims denied by FEMA Region 9 that we believe to be eligible for reimbursement, based on the guidance in effect at the time," he said.

According to city officials, FEMA's refusal to cover the expenses could pose a "significant potential risk" to its budget.

Without reimbursements from FEMA, Sonoma County could be on the hook for $32 million and San Diego County for $28 million, Cal Matters reported.

Daniel Lopez, a spokesperson for Newsom's office, told Cal Matters that the governor's office looks forward to FEMA "honoring its commitments."

FEMA told the Post that all states were provided "the same guidance and policy updates throughout the pandemic."

"FEMA is committed to working with each impacted jurisdiction on all requests for federal funding to maximize reimbursement for the appropriate life-saving measures they implemented to protect their citizens from COVID-19, while also ensuring the appropriate oversight of federal funds," it added.

The agency is still reviewing funding requests submitted by states, cities, and other jurisdictions.

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