HUD’s Office of Community Planning and Development (CPD) posted new guidance on using Community Development Block Grant-Coronavirus (CDBG-CV) funds for rent assistance (and by extension utility assistance). In particular, the guidance explains how to use the CDBG-CV waiver allowing for rent payment assistance for up to 180 days without triggering costly and time-consuming lead-based paint inspections for any HUD assistance beyond 100 days. In addition, the guidance explains that a grantee may provide more than six months’ worth of rent assistance to a household because paying rent arrears in a lump sum simply counts as “one month” of rent assistance when measuring “six consecutive months” of assistance.
The three-page guidance document is in the form of Questions and Answers (Q&As) that are not numbered. It is dated March 30 but was posted on April 5 with the long title: “Using Annual Formula CDBG, FY 2019 and 2020 CDBG to prevent, prepare for, and respond to coronavirus, and CDBG-CV Funds for Rent or Mortgage and Arrearages Subsistence-Type Payments.”
Brief Background on CDBG-CV Rent Assistance Waiver
Existing CDBG regulations [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.” Therefore, the use of CDBG to provide assistance for up to three months in the form of rent or mortgage assistance and utility payments was already an eligible use of CDBG.
An August 20, 2020 waiver extended to six consecutive months the amount of time a household may receive rent and/or utility assistance.
The CARES Act removed 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 assistance or utility payment assistance would normally be considered. The Act limits the exemption from the 15% cap to “activities to prevent, prepare for, and respond to the coronavirus.” The Act also states that a jurisdiction’s FY19 and FY20 CDBG allocations are also free of the 15% public service cap.
The guidance only cites the Entitlement CDBG regulations (for larger cities and urban counties). The State CDBG regulations do not have a similar provision. However, HUD sub-regulatory guidance, “Basically CDBG for States,” makes very clear a number of 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.”
Although the guidance also discusses the use of “regular” (non-CDBG-CV) for rental assistance, this Memo article focuses specifically on CDBG-CV uses.
When Does the Clock Start for Counting Six Months of Emergency Rental Assistance?
The last Q&A on page two states that the six consecutive month period allowed for CDBG-CV rental assistance (and regular FY19 and FY20 CDBG used for coronavirus-related rental assistance) begins on the date the first payment is made to a landlord on behalf of a household.
The fifth Q&A on the first page clarifies that CDBG-CV may be used to pay rent arrears (back rent owed).
The first Q&A on page three clarifies that the six consecutive month period “begins when the payment is made to a landlord, not when a household’s back rent (arrears) began…The start of the six consecutive months…is related to when payments are made from the grant, not from the date of the arrearages.” A grantee may cover some or all of the amount in arrears within the first month of assistance and continue through the consecutive period of assistance.” It offers an example:
“For an individual four months in arrears on rent who applied for emergency payment assistance under CDBG-CV, the covered period may include the four months they are in arrears within the payment for the first month of assistance then continue for up to five more months to fulfill the up-to-six-consecutive-month-period allowance.”
In other words, a grantee may provide more than six months’ worth of assistance to a household because paying rent arrears in a lump sum simply counts as “one month” of rent assistance when measuring “six consecutive months.” In CPD’s example, that household would be receiving nine months’ worth of rent assistance because the four months of arrears in the example are “counted” as one month, allowing the household to receive additional assistance for another five consecutive months going forward.
But another hurdle must be considered: any HUD assistance longer than 100 days triggers a requirement that an assisted home have a lead-based paint visual inspection.
100-Day Lead-Based Hazard Inspection Requirement
The answer at the top of page 2 (the question is on the bottom of the first page) informs readers that rental assistance beyond 100 days triggers a requirement that there be a visual inspection to determine whether there are lead-based paint hazards. It also briefly refers to the last two Q&As on the last page.
The second to last Q&A on the last page is very helpful regarding the 100-day lead-paint cap. It states that the 100-day period begins at the time an actual rent assistance payment is made and then “counts” forward. The Q&A provides an example: “If assistance is being provided to an individual or family that covers three months of arrears within the first month of assistance, the 100 days begins at the time of payment going forward.”
Because this was still a bit confusing, NLIHC contacted CPD headquarters with the following paraphrase, which CPD confirmed as accurate:
“Payments for rent arrears do not necessarily ‘count’ toward the 100-day lead-based paint cap if those payments for arrears (in the example, three months of arrears) are paid to a landlord on May 1, allowing a household to still receive up to three months of rent assistance (June 1, July 1, August 1) without hitting the 100-day lead-based paint cap – even though technically the household is receiving 180 days of rent assistance.”
Remote Visual Inspections for Lead-Based Paint Hazards
The last Q&A indicates that due to the coronavirus it might not be safe for an onsite visual inspection after 100 days of rental assistance to determine whether there are lead-paint hazards. Therefore, CPD allows an owner or someone else (a “surrogate”) to perform a “remote visual inspection.”
Not indicated in the Q&A, HUD’s office of Public and Indian Housing (PIH) allows a tenant or owners to conduct such a remote visual inspection. PIH describes a “remote visual inspection” (RVI) as a method of conducting a housing inspection using video or digital picture technology performed with the use of a someone (a “proxy” or “surrogate”) who follows the direction of an official inspector. If CPD follows PIH, the CDBG-CV grantee would probably have to approve the substitute inspector who would be in the unit holding a camera and following the instructions of a remote official inspector.
While CPD does not specify, it might be instructive for advocates to know what PIH requires in terms of necessary equipment. PIH indicates that an official inspector decides what equipment is needed and lists commonly used equipment:
- A lighting device (e.g., a flashlight)
- A fully charged smartphone or tablet that has a reliable internet connection (Wi-Fi or at least 4G wireless service).
- A smartphone or tablet must have enough camera resolution (megapixels, sensors, and pixel size) for an inspector to see items in detail such as paint chips.
Other Key Information
The Second Q&A on the second page indicates that CDBG-CV grantees may accept a household’s “certification” that their income is less than 80% of the area median income (AMI) and therefore compliant with the CDBG statute’s benefitting a low- or moderate-income household “national objective.”
The second Q&A on the last page gives an example of the “six consecutive months” waiver that many advocates and grantees might not have thought of. A household may need CDBG-CV funds to cover rent arrears within the first month of assistance, be able to cover the second month, only to then need assistance for the third month. The Q&A states that this would be acceptable because it is within the period of up to six consecutive months.
“Using Annual Formula CDBG, FY 2019 and 2020 CDBG to prevent, prepare for, and respond to coronavirus, and CDBG-CV Funds for Rent or Mortgage and Arrearages Subsistence-Type Payments” is at: https://bit.ly/3unbpMW
More about the regular CDBG program is on page 8-3 of NLIHC’s 2020 Advocates’ Guide.