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HUD Posts CDBG-CV Waiver Notice

HUD’s Office of Community Planning and Development (CPD) posted an advance version of a notice waiving certain regulations pertaining to $5 billion in supplemental Community Development Block Grant program funds (CDBG-CV) Congress appropriated through the CARES Act. The notice will eventually be published in the Federal Register. The most significant waiver extends to six consecutive months (up from three) the period over which a CDBG grantee (a city, county, or state) may provide emergency rental assistance to a household unable to pay rent because its income has decreased due to the coronavirus pandemic. NLIHC urged CPD on April 20 to extend the time frame beyond three months.

Emergency Rent Assistance (pages 39-40)

The regular CDBG program regulations [24 CFR 570.207(b)(4)] allow grantees to provide emergency payments of rent, utility, mortgage, food, or clothing assistance for up to three months to the provider of the service (e.g. landlord) on behalf of a household. The waiver will extend the period to six months. The notice adds that grantees must document how they will determine that the amount of assistance to be provided is necessary and reasonable. The CARES Act also allows grantees to use CDBG funds from their regular FY19 and FY20 CDBG allocations to provide emergency payments, although the notice does not mention this option in this section of the notice. 

Providing emergency rental assistance or utility payment assistance is normally considered a “public service” in the CDBG regulations, and the CDBG statute has a 15% cap on the amount of a grantee’s yearly allocation that may be obligated for all public services. However, the CARES Act suspends the statutory 15% cap, as long as the public service prevents, prepares for, or responds to the coronavirus. Use of CDBG for emergency rent assistance has seldom been used, in part because the regulation allowing it is contained in a section of the regulations concerning ineligible uses of CDBG.

The notice only cites the Entitlement CDBG regulations (for larger cities and urban counties). The State CDBG regulations do not have a similar provision, so some states hesitated to use CDBG-CV for emergency rental assistance. However, HUD sub-regulatory guidance, “Basically CDBG for States,” makes clear multiple times that although a state must follow the text of the Housing and Community Development Act, a state may use the CDBG Entitlement regulations as a “safe harbor.”

Use of CDBG-CV for Covering Back Rent (Arrears)

The notice does not address the use of CDBG for helping tenants pay for past-due rent (arrears), something that NLIHC and other advocates have urged CPD to allow during the pandemic. On NLIHC’s national coronavirus, housing, and homelessness call on July 27, NLIHC again asked CPD about arrears. A CPD representative replied that consideration of rent arrears is “case-dependent,” suggesting that CPD has not found a clear way of providing guidance. Consequently, CPD will likely address arrears one case at a time. The CPD representative stated that paying for arrears is probably allowable if the arrears occurred from March onward. 

NLIHC urged CPD to not leave the fate of a request to use CDBG-CV for arrears up to a grantee on a case-by-case basis, suggesting that CPD explain in future guidance how CDBG-CV could be used to cover rent arrears. Advocates need to know such an option exists so that residents are not solely dependent on a grantee to request use CDBG-CV for rent arrears; some grantees might not want to pursue emergency rental assistance. If CPD guidance is widely available, advocates could press local policy makers to use CDBG-CV for arrears. The CPD representative indicated that CPD guidance might be forthcoming.

Immigration Status (page 62)

With one exception, the notice is consistent with guidance from the National Housing Law Project that CDBG does not have any specific immigration restrictions (“Eligibility for Assistance Based on Immigration Status” [English] and [Español]).

The exception has to do with employment. The Department of Homeland Security and the U.S. Citizenship and Immigration Services state that the Immigration Reform and Control Act prohibits employers from hiring and employing an individual knowing that the individual is not authorized to be employed. This generally applicable law applies to CDBG grantees and their subrecipients and/or contractors/subcontractors (including employees recruited under Section 3).

Length of Time to Spend CDBG-CV (page 57)

Grantees must spend all CDBG-CV funds within a six-year “period of performance” established by the CDBG-CV grant agreement between CPD and the grantee. Grantees must spend at least 80% of all CDBG-CV funds by the end of the third year of the period of performance. Also, the CARES Act requires grantees to submit their CDBG-CV action plan and the annual Action Plan for FY19 and FY20 CDBG funds by August 16, 2021 (page 24).

Reporting (page 60)

The CARES Act requires grantees to submit a quarterly report within ten days of the end of the calendar quarter. The report must include: amount of funds received; amount of funds obligated or expended for each project or activity; a detailed list of all projects or activities, including a description of the project or activity; and detailed information about any subcontracts or subgrants awarded by the grantee. The CARES Act does not require the report contain information about race, disability, family status, or any other Fair Housing Act protected class. Nor is there any requirement to report the income of those assisted.

Income and race will be reported in a CDBG grantee’s Consolidated Annual Performance and Evaluation Report (CAPER). However, CAPER information is presented in the aggregate, not by individual activity. Furthermore, the notice postpones CAPER reporting until 180 days after the end of a grantee’s program year, up from 90 days (page 65) – which is too late for advocates to rectify uses that they think do not meet the CDBG law or regulations, or that do not meet community priories.

Other Items of Interest

  • The CDBG statute requires 70% of a jurisdiction’s CDBG funds be used to benefit low- and moderate-income households (LMI), which is household income up to 80% of the area median income, (AMI). For CDBG-CV, the notice will retain the 70% LMI requirement. However, the notice states that for CDBG-CV, the calculation of overall LMI benefit will be separated from the regular annual formula CDBG calculation of overall LMI benefit. In other words, 70% of a grantee’s CDBG-CV must be spent for activities that benefit LMI households – not 70% of their CDBG-CV + regular annual formula CDBG (page 35).
  • The notice provides guidance about duplication of benefits, but there is nothing new or different from earlier guidance, CDBG COVID-19 Fact Sheet, July 10 (see Memo, 7/20) or the Duplication of Benefits Memorandum, July 13 (see Memo, 8/3). 
  • The CARES Act allows grantees to be reimbursed for pandemic-related activities they carried out before the Act was signed on March 27. The notice limits reimbursement to costs incurred after January 21 (page 25).
  • There are a number of waivers pertaining to the State CDBG program:
      • States are allowed to use a portion of their CDBG-CV to directly carry out activities through their employees, contractors, and subrecipients in all geographic areas (page 47), including in Entitlement jurisdictions (page 46) and Tribal areas (pages 46), including using Tribes as subrecipients (page 49).
      • States are allowed to use a portion of their CDBG-CV in Entitlement jurisdictions (pages 46 and 50), provided the state sets aside a portion of its grant for use by non-entitlement units of local government. That portion must be no less than the amount equal to the state’s first CDBG-CV allocation but may be from any portion of the state’s second or third CDBG-CV allocation (page 46).

The notice, “FR 6218-N-01 Notice of Program Rules, Waivers, and Alternative Requirements Under the CARES Act for CDBG Program Coronavirus Response Grants, FY19 & 20 CDBGs, and for Other Formula Programs,” is at: https://bit.ly/3kAT9f3

More information about regular CDBG is on page 8-3 of NLIHC’s 2020 Advocates’ Guide.