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Treasury Department Updates Coronavirus Relief Fund FAQs

The U.S. Treasury Department published an update to Coronavirus Relief Fund Frequently Asked Questions on October 19. Questions A. 57–59 and B.13 were added and Questions A. 42, 49, and 53 were revised. Only answer 58 will be of potential interest to Memo readers.

Because Treasury guidance can sometimes be imprecise, answer 58 is presented here in full, with key text in bold:

May payments from the Fund be used for real property acquisition and improvements and to purchase equipment to address the COVID-19 public health emergency?

The expenses of acquiring or improving real property and of acquiring equipment (e.g., vehicles) may be covered with payments from the Fund in certain cases. For example, Treasury’s initial guidance referenced coverage of the costs of establishing temporary public medical facilities and other measures to increase COVID-19 treatment capacity, including related construction costs, as an eligible use of funds. Any such use must be consistent with the requirements of section 601(d) of the Social Security Act as added by the CARES Act.

As with all uses of payments from the Fund, the use of payments to acquire or improve property is limited to that which is necessary due to the COVID-19 public health emergency. In the context of acquisitions of real estate and acquisitions of equipment, this means that the acquisition itself must be necessary. In particular, a government must (i) determine that it is not able to meet the need arising from the public health emergency in a cost-effective manner by leasing property or equipment or by improving property already owned and (ii) maintain documentation to support this determination. Likewise, an improvement, such as the installation of modifications to permit social distancing, would need to be determined to be necessary to address the COVID-19 public health emergency.

Previous guidance [from May 4, see current A. 28] regarding the requirement that payments from the Fund may only be used to cover costs that were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020 focused on the acquisition of goods and services and leases of real property and equipment, but the same principles apply to acquisitions and improvements of real property and acquisitions of equipment. Such acquisitions and improvements must be completed and the acquired or improved property or acquisition of equipment be put to use in service of the COVID-19-related use for which it was acquired or improved by December 30. Finally, as with all costs covered with payments from the Fund, such costs must not have been previously accounted for in the budget most recently approved as of March 27, 2020.                                

Many advocates and some local and state governments had hoped to use some Coronavirus Relief Funds (CRF) to acquire disused hotels or other structures to convert them to homeless facilities in order to supplement existing homeless facilities that had to house fewer people due to the need for social distancing in order to avoid spreading coronavirus. However, initial (April 22) Treasury guidance, “Coronavirus Relief Fund Guidance for State, Territorial, Local, and Tribal Governments,” defined costs “incurred” differently than HUD: “A cost is “incurred” when the responsible unit of government has expended funds to cover the cost.”

The updated (September 2) guidance “Coronavirus Relief Fund Guidance for State, Territorial, Local, and Tribal Governments” elaborates on “incurred” over pages 2-4. However, the examples primarily relate to leasing facilities or providing goods and services, not acquisition and improvements to real property such as hotels or other structures. The closest the updated guidance gets is identifying as an example of “eligible expenditures” is “expensed for care of homeless populations,” which in context implies “services” not housing.

The timeframe required to acquire and convert a property to house homeless people is generally quite long, not to mention beginning to house homeless people in time to meet the December 30 deadline. Given that reality most state and local governments had to give up the idea.

Coronavirus Relief Fund Frequently Asked Questions is at: https://bit.ly/3m1HuWu

Coronavirus Relief Fund Guidance for State, Territorial, Local, and Tribal Governments is at: https://bit.ly/37sPOKN