HUD’s Office of Community Planning and Development (CPD) posted long-awaited guidance for using $5 billion supplemental Community Development Block Grant (CDBG) funds (called CDBG-CV) appropriated by the CARES Act (see Memo, 4/6). The CDBG-CV COVID-19 Fact Sheet dated July 10 was posted to CPD’s COVID-19 webpage on July 15. The most important new information concerns “duplication of benefits.”
Duplication of Benefits
Advocates have been clamoring for guidance regarding duplication of benefits (DOB), and some jurisdictions have been reluctant to move forward with plans to use CDBG-CV for emergency rental assistance until CPD provided DOB guidance. The CARES Act requires CPD to ensure that adequate procedures are in place to prevent any duplication of benefits as required by the “Robert T. Stafford Disaster Relief and Emergency Assistance Act.”
Repeating earlier DOB guidance in a June 20, 2019 Federal Register notice on the use of CDBG Disaster Recovery (CDBG-DR) funds, Q7 (page 2) of the Fact Sheet states:
A duplication of benefits occurs when a person, household, business, government, or other entity receives financial assistance from multiple sources for the same purpose, and the total assistance received for that purpose is more than the total need for assistance.
Q7 adds that grant funds may not be used to pay for a particular cost if another source of financial assistance is available to fully pay for that same cost (emphasis added).
Q8 (page 3) states that CDBG-CV grantees (e.g., cities, counties, states) must have policies and procedures in place to prevent duplication of benefits with Stafford Act FEMA funds and other CARES Act programs (e.g., Emergency Solutions Grant, ESG-CV funds). Grantees may not use CDBG-CV funds for costs already fully covered by other programs (emphasis added). However, CPD is not saying that grantees should avoid the same uses as other CARES Act programs if unmet need exists. Rather, CPD is advising grantees to be strategic in designing programs to align funding sources with local needs.
CDBG-CV funds cannot be used to cover costs that have already been paid for or that will be paid for by another federal program, insurance, or other sources. If this occurs, the grantee will have to repay that amount to its CDBG-CV account.
Before CDBG-CV assistance is provided, a grantee must verify that subrecipients, assisted individuals or families, businesses, and other entities have not previously received or will not receive duplicative assistance from another source. The Fact Sheet indicates this DOB analysis may be accomplished in various ways, offering two examples:
- Requiring entities or beneficiaries to provide a self-certification indicating that they have not received a duplicative benefit.
- Requiring entities or beneficiaries to fill out a questionnaire listing potentially duplicative assistance that they have already received, or reasonably anticipate receiving.
Based on such analysis, a grantee should only use CDBG-CV funds for unmet needs or costs not met by other sources of assistance. A grantee must also require a subgrantee, individual or family, business, or other entity to agree to repay the grantee if they subsequently receive a duplicative benefit. A CDBG-CV grantee may allow payment of a cost that will be or is likely to be paid by another source in the future if the person or entity receiving the assistance enters into an agreement to repay CDBG-CV funds when the other source of assistance is received.
Emergency Rental Assistance
Q13 (page 5) reaffirms that using CDBG and CDBG-CV for emergency rental assistance is an eligible activity. As NLIHC previously reports (see Memo, 4/6), 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 include this provision, Basically CDBG for States (see Q4, page 2) indicates that a state may use the Entitlement Cities regulations as a safe harbor.
Therefore, the use of CDBG to provide assistance up to three months of rent or mortgage assistance and utility payments has been and remains an eligible use of CDBG. Q13 reminds grantees to be alert for possible duplication of benefits because emergency rental assistance may be available from the ESG program or under other federal or state emergency programs.
Missing from the Fact Sheet is guidance on whether CDBG-CV can be used to pay rent arrearages from recent months.
CPD Acting Assistant Secretary John Gibbs suggested on a national call hosted by NLIHC on April 20 that CPD is considering extending to six months the period of time a household may receive emergency rental assistance. The Fact Sheet is silent on this point, and such an extension would require a waiver of the current regulation. Q18 indicates that CPD “intends” to issue a notice in the Federal Register to provide waivers. To date, the Office of Management and Budget’s (OMB’s) Office of Information and Regulatory Affairs (OIRA) does not have such a notice under review; therefore, any potential six-month extension is not imminent.
The CARES Act suspends 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 limits 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 from the 15% public-service cap. Q11 and Q12 (page 4) refer to the suspension of the 15% cap on public services.
Two other notable features of the Fact Sheet are:
- Q29 (page 10) clarifies that CDBG funds may be used to pay for a FEMA cost-share (which can be up to 25% of the cost of a FEMA-assisted activity).
- Q28 (page 9) indicates that CDBG may be used for a food bank to purchase and deliver emergency food, as long as the food bank can demonstrate that is meeting the CDBG “national objective” of primarily serving persons with low- or moderate-income (up to 80% of the area median income).
CDBG-CV COVID-19 Fact Sheet is at: https://bit.ly/2ZwTZAX
More information about CDBG is on page 8-3 of NLIHC’s 2020 Advocates’ Guide.