HUD’s Office of Community Planning and Development (CPD) issued “Using CDBG Emergency Payments for Rental Assistance in Coronavirus Responses,” a long-awaited “Quick Guide” offering Community Development Block Grant (CDBG) Entitlement Jurisdictions and states (“grantees”) guidance on providing emergency rental assistance payments using special supplemental CDBG funds (known as “CDBG-CV”) provided by the “CARES Act” and through regular 2019 and 2020 CDBG fund allocations. As Emergency Rental Assistance Program (ERAP) funds administered by the U.S. Department of the Treasury dwindle in some jurisdictions, CDBG-CV funds may provide brief respites for low-income renters in need in those locales. The “Quick Guide” states on page 12 that grantees have up to six years to spend all their CDBG-CV funds from the date a grant agreement was signed with HUD for the first CDBG-CV allocation but that 80% of a grantee’s CDBG-CV funds must be spent within three years of the initial grant agreement date.
Page 10 of the “Quick Guide” provides a helpful reminder regarding the use of CDBG-CV funds to provide emergency payments for current and unpaid rent and utility bills to landlords or utility providers on behalf of households. Payments may be made for up to six months; the six-month period begins when the first payment is made. To be eligible, a household must have a projected income at the time of the application for assistance that is equal to or less than 80% of the area median income (AMI). However, the “Quick Guide” also notes on page 11 that “most CDBG grantees will qualify for an emergency payment program for rental assistance by demonstrating that at least 51% of the beneficiaries have income equal to or less than 80% AMI,” meaning that as many as 49% of assisted households could be moderate- or middle-income.
Grantees must document that a household’s income was impacted by the coronavirus by providing verification that its members were unable to work due to illness or required dependent care; a termination or furlough notice from an employer; pay stubs reflecting reduced work hours; or a late notice or eviction notice. The “Quick Guide” emphasizes the absence of any CDBG or CDBG-CV requirement that an eviction notice is needed to be eligible for assistance.
On page 12, the “Quick Guide” reiterates guidance provided in April 2021 regarding the Lead Safe Housing Rule (LSHR). That rule applies to CDBG-funded rental assistance payments at units built before 1978 where children under the age of six or pregnant women live. However, the requirements to conduct a visual assessment, paint stabilization, and maintenance do not apply for up to 100 days. The 100-day period starts the day of the first rental assistance payment. If rental assistance is expected to exceed 100 days (more than three months), a visual lead-based paint inspection is required, making it difficult to provide rent assistance for the full six months allowed by the waiver for households in units covered by the LSHR (see Memo, 4/12/21). Remote visual inspections are allowed due to the pandemic.
The CARES Act provided $5 billion in supplemental CDBG-CV funds and suspended the statutory 15% cap on the amount of a jurisdiction’s CDBG allocation that can be used for “public services,” which the provision of rental or utility payment assistance would normally be considered. The act limited the exemption from the 15% cap to “activities to prevent, prepare for, and respond to the coronavirus.” The act also stated that a grantee’s fiscal year (FY) 2019 and FY20 regular CDBG allocations are free from the 15% public-service cap (see Memo, 4/20/20).
A CDBG fact sheet dated July 10, 2020, reaffirmed that using CDBG or CDBG-CV funds for emergency rental assistance is an eligible activity (see Memo, 7/20/20). Existing CDBG regulations for Entitlement Cities [24 CFR 570.207(b)(4)] allow the use of CDBG to make “emergency grant payments made over a period of up to three consecutive months to the provider of such items or services [‘food, clothing, housing (rent or mortgage), or utilities’] on behalf of an individual or family.” Although the regulations for states do not have this provision, Basically CDBG for States indicates in several places that a state may use the Entitlement Cities regulations as a safe harbor. Therefore, the use of CDBG to provide assistance for up to three months in the form of rent or mortgage assistance and utility payments has been and remains an eligible use of CDBG. An August 20, 2020, waiver extended to six months the amount of time a household may receive rent and/or utility assistance (see Memo, 8/17/20).
The first nine pages of the “Quick Guide” are devoted to suggestions regarding ways to plan for using CDBG-CV for rent and/or utility payments, such as conducting a needs assessment and inventorying other funds that can address rent and utility payments, such as the CARES Act’s $150 billion Coronavirus Relief Fund (CRF), Federal Emergency Management Agency (FEMA) funds, and ERAP.
Read “Using CDBG Emergency Payments for Rental Assistance in Coronavirus Responses” at: https://bit.ly/3qqodCE
Read more about CDBG-CV on page 10-15 of NLIHC’s 2021 Advocates’ Guide.
Read more about CDBG on page 8-4 of NLIHC’s 2022 Advocates’ Guide.