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HUD CPD Issues ESG-CV Waiver Notice

HUD’s Office of Community Planning and Development (CPD) issued Notice CPD-20-08 on September 1, providing statutory and regulatory waivers for the $3.96 billion supplemental Emergency Solutions Grant program funds (ESG-CV) Congress appropriated through the CARES Act (see Memo, 4/6, 6/15). The CARES Act requires ESG-CV funds to be used to prevent, prepare for, and respond to coronavirus among individuals and families who are homeless or receiving homeless assistance, and to support additional homeless assistance and homelessness prevention activities to mitigate the impacts of the coronavirus. Key features of the notice are summarized below.

Means of Carrying Out Grant Activities (page 8)

States may use up to 100% of their grant to carry out activities directly instead of sub-granting funds to units of local government or nonprofits. States may make subawards to public housing agencies (PHAs) or local development authorities. More households might be quickly assisted where PHAs are accustomed to providing rental assistance.

Obligation (page 8)

  1. Obligation Deadlines. The period for obligating ESG-CV funds begins on the date HUD signed a recipient’s grant agreement for the first allocation of ESG-CV funds but applies to the first and second allocations. Instead of starting the period sometime shortly after the CARES Act was signed on March 27, this waiver effectively extends the time a recipient has to obligate ESG-CV for two years starting from the much later date when the grant agreement was signed.
  2. Expenditures. All funds awarded to a recipient through the first and second ESG-CV allocations must be spent by September 30, 2022. To ensure ESG-CV funds are spent quickly:
  • HUD may recapture up to 20% of a recipient’s total award, including first and second allocation amounts, if the recipient has not spent at least 20% by September 30, 2021.
  • HUD may recapture up to 80% of a recipient’s total award, including first and second allocation amounts, if the recipient has not spent at least 80% by March 31, 2022.

Match (page 9)

As provided by the CARES Act, ESG-CV funds are not subject to the usual ESG match requirement.

Program Components and Eligible Activities (page 10)

  1. Emergency Shelter and Street Outreach Cap. As provided by the CARES Act, the usual ESG 60% cap on the amount of ESG that can be spent on street outreach and emergency shelter activities does not apply.   
  2. Pre-Award Costs. ESG-CV funds may cover or reimburse costs incurred on or after January 21, 2020.
  3. Additional Eligible Activities. Temporary emergency shelters will not be subject to the three- to ten-year minimum use periods (page 11). Instead, ESG-CV may be used to support temporary emergency shelters until January 1, 2022, with some exceptions (page 12). ESG-CV may be used as incentives to landlords to house people experiencing homelessness or at risk of homelessness (page 13). However, the amount of the incentives cannot be more than three times the rent charged for a unit. Eligible landlord incentives include:
  • Signing bonuses equal to up to two months of rent;
  • Security deposits equal to up to three months of rent;
  • Paying the cost of repairing damage not covered by a security deposit or damage while the household is still living in a unit; and,
  • Paying the cost of extra cleaning or maintenance of a unit or appliances.
  1. Waivers, Alternative Requirements and Statutory Flexibilities for Existing Eligible Activities.
  1. Short-term and Medium-Term Rental Assistance. Paragraph (i): Under the regular ESG regulations medium-term rent assistance is defined as more than three months but not more than 24 months of rent assistance during any three-year period. The notice modifies this provision, reducing the maximum term to 12 months. The notice explains the reduction is designed to provide more individuals and families with assistance. While more households might be able to be assisted, the impacts of the pandemic are liable to be more long-lasting than 12 months, necessitating more than 12 months of assistance for many households.

In addition, another unmodified provision of the regulation allows for a one-time payment of back rent (arrears) for up to six months of rent arrears, including any late fees on those arrears. The waiver reducing the term to 12 months presents a potential adverse consequence. For example, if a household is provided four months of arrears, that household will only have eight months left of ongoing medium-term rent assistance due to the new 12-month cap.

Paragraph (ii): The notice allows rental assistance to be used to pay for rent greater than the Fair Market Rent (FMR) as long as the rent meets HUD’s rent reasonableness standards. This will help households move quickly into housing or retain their existing housing, which is especially critical in the context of the pandemic. This waiver provides additional flexibility beyond the March 31, 2020 waiver (see Memo, 4/6) made to the regular ESG program and extended to ESG-CV funds on May 22, 2020 (see Memo, 6/1).

  1. Administrative Costs. As allowed by the CARES Act, entities receiving ESG-CV may spend up to 10% (instead of 7.5%) of their total ESG-CV grant for administrative costs.
  2. Currently assisted households. To help households already receiving regular ESG services (such as housing stability case management, mediation, legal services, or credit repair) or short-term or medium-term rental assistance, the notice allows these households to retain assistance when they reach the regulation’s maximum 24-month limit if the 24-month end date is between January 21, 2020 and March 1, 2021. This extra assistance can only last an additional six months.
  3. Legal services. Legal services are limited to those necessary to help households obtain housing or keep them from losing their homes. Apparently, this provision does not allow other legal services eligible under the regular ESG regulation, such as: orders of protection and other civil remedies for survivors of domestic violence, dating violence, sexual assault, and stalking; appeals of veterans and public benefit claim denials; child support; and resolution of outstanding criminal warrants.

Program Requirements (page 16)

  1. Consultation and coordination. The notice waives the requirements to consult the Continuum of Care (CoC) and to coordinate with other targeted homeless services.
  2. Duplication of benefits. The notice defines duplication of benefits in one paragraph and indicates that additional guidance is forthcoming. The CDBG-CV program has provided more guidance on duplication of benefits that might assist ESG-CV advocates while waiting for further guidance (which CPD is also promising for CDBG-CV). For CDBG-CV see:

Definitions (page 3)

At Risk of Homelessness. Disability advocates are concerned that the Notice does not explicitly include in the definition of “at risk of homelessness,” people with disabilities exiting “congregate settings.” People with disabilities in congregate settings such as group homes are at elevated risk of contracting COVID-19. Disability advocates ask HUD to provide guidance specifically declaring that people with disabilities exiting institutional and congregate settings are eligible for ESG-CV (and ESG) assistance. In addition, they are asking HUD guidance to include privately funded settings as well as publicly funded settings. Disability advocates propose modifying item (VI) in the definition of “at risk of homelessness” be modified as follows:

(VI) Is exiting an publicly funded institution, congregate setting, or system of care (such as a health-care facility, a mental health facility, foster care or other youth facility, or correction program or institution), regardless of funding source.

As of September 5, 2020, the notice is not on CPD’s COVID-19 Grantee Guidance webpage; however, it is on HUD Exchange’s ESG website under “Memos, Waivers, Grant Amendments.”

Notice CPD-20-08 is at: https://bit.ly/2YY1rUQ

More information about ESG is on page 4-82 of the NLIHC 2020 Advocates’ Guide.