HUD Publishes Notice on CARES Act HCV, HAP and Admin Fee Distribution

This article was also published on the NAHRO Blog.

Earlier today, HUD released two notices detailing the requirements for accessing Coronavirus Aid, Relief, and Economic Security (CARES) Act funding for the Housing Choice Voucher (HCV) program. The notices detail the mechanisms for accessing both additional Housing Assistance Payment (HAP) funding and administrative fee funding. The two notices are titled the following:

• PIH Notice PIH-2020-17 – “CARES Act – Housing Choice Voucher (HCV) Program Housing Assistance Payments (HAP) Supplemental Funding”; and
• PIH Notice PIH-2020-18 – “CARES Act – HCV Program Administrative Fees – Second Award.”

These notices allocate $400 million in HAP funding and $472 million in administrative fee funding. Additional information on each notice can be found below.

Accessing CARES Act HAP Funding – PIH-2020-17

The CARES Act allocated $400 million in HAP funding for the HCV program. The act states that this funding can go only to certain PHAs:

1. PHAs experiencing a significant increase in voucher per unit cost (PUC) due to extraordinary circumstances; or
2. PHAs that–despite taking reasonable cost saving measures (determined by HUD)–would otherwise be required to terminate assistance to families as a result of insufficient funding (i.e., PHAs in “shortfall”).

Significant Increase in PUC Due to Extraordinary Circumstances

If a PHA has previously submitted applications for calendar year (CY) 2020 HAP renewal set-aside funding under the “Unforeseen Circumstances” category due to PUC increases caused by COVID-19, the PHA must resubmit according to instructions in this new notice. For those who submitted under the “Unforeseen Circumstances” category for other reasons, they are not required to resubmit, but may do so if their PUC has further increased because of COVID-19.

Public Housing Agencies must meet certain requirements to access this funding. First, applications must be submitted by Oct. 31, 2020. Applications will be reviewed by HUD on a rolling basis. Second, to be eligible, a PHA must have a PUC that is 102 percent or greater than the PUC HUD used to determine the PHA’s CY 2020 renewal funding. The PHA must also meet the submission requirements detailed in the notice.

The PHA will also receive a priority status. If the PHA’s HAP reserves contain an amount that is less than the amount needed to cover 3 months of HAP expenses, the PHA will qualify for priority status. Public housing agencies qualifying for priority status will receive funding shortly after their application is processed, subject to funding availability. Those agencies that receive regular priority will receive notification that their application has been approved, but funding will not be made until November.

To be eligible for funding, a PHA must submit a completed Appendix B in the notice to 2020COVIDHCV@hud.gov.

The period of availability for funds awarded in this category is until June 30, 2021. These funds may not be rolled into restricted net position (RNP) and must be tracked and accounted for separately through the period of availability.

Shortfall Funding

For PHAs that apply under this category, if the PHA previously applied for shortfall funds under the CY 2020 HAP renewal set-aside, the PHA does not have to reapply. For PHAs that have not submitted a shortfall application by the date of this notice, to access these funds under this category, those PHAs must do so in accordance with this notice. The Department will address shortfall first with CARES Act funding, then with the 2020 HAP renewal set-aside funding.

To be eligible for shortfall funding, PHAs must meet one of the following two scenarios:

• Shortfall Scenario 1: Applicable to PHAs that have a confirmed shortfall by the Shortfall Prevention Team on or by March 31, 2020; or
• Shortfall Scenario 2: Application to PHAs that were not in a confirmed shortfall by the Shortfall Prevent Team as of March 31, 2020. The Department will review each application here on a case-by-case basis.

The Department will use the HCV Two-Year Forecasting Tool to determine shortfall status. Additional details are provided in the notice. Agencies with specific questions may contact 2020ShortfallInquiries@hud.gov.

Certain requirements must be met to access funds in this category. The PHA must submit Appendix D, if applicable (e.g., those who have already submitted materials). Additionally, the application period will remain open and PHAs may submit applications for funding later in the year, if attrition does not resolve their shortfall. Requests for this funding must be submitted to 2020Shortfallapplications@hud.gov.  

The period of availability for funds awarded in this category is until December 31, 2020. These funds may not be rolled into restricted net position (RNP) and must be tracked and accounted for separately through the period of availability.

Accessing CARES Act Administrative Funding – PIH-2020-18

The CARES Act allocated $850 million for additional administrative fee funding. The Department has allocated $378 million in the past. This notice allocates the remainder of $472 million in administrative fees to PHAs.

The $472 million (the equivalent of 2.35 months of administrative fee eligibility) will be disbursed to all PHAs–including Moving to Work PHAs–in a single disbursement in the beginning of August. The amount of funding allocated will determined by multiplying the total unit months leased (UML) in the voucher management system (VMS) for the month of May by double the CY 2020 administrative fee rates at an approximate proration of 117 percent.

The notice also expands the use of eligible uses of CARES Act administrative fees (see below). Requests for additional uses may be sent to FinancialManagementCenter@hud.gov. New uses will be added at HUD’s HCV page.

The period of availability for expenditure for these funds is until June 30, 2021. These funds may not be rolled into unrestricted net position (UNP) and must be tracked and accounted for separately through the period of availability. Unexpended funds will be recaptured by HUD.

Eligible Uses of CARES Act HCV Administrative Fees

The notice expands the list of eligible activities that administrative funds may be used for. Now, CARES Act administrative fees may be used for:

• Any current eligible HCV (including Mainstream vouchers) administrative costs during the period that the program remains impacted by COVID-19;
  • Including necessary upgrades to information technology or computer systems to enhance telework capacities and overtime pay for PHA staff to carry out HCV Program responsibilities; and
• New COVID-19 related activities;
  • PHA staff and resident related eligible expenses (NEW):
    • Sourcing and purchasing personal protective equipment for PHA staff and for residents visiting the PHA offices or premises for program related reasons;
    • Expenses incurred because of COVID-19 restrictions impacting PHA operations (e.g., paying for transportation expenses for PHA staff who rely on public transit that is no longer available);
    • COVID-19 testing costs for PHA Staff and participating families. PHAs should adopt reasonable operating procedures related to testing;
  • Other eligible activities related to social distancing and PHA operations (NEW):
    • Creation or update of infectious disease outbreak plan;
    • Physical improvements to office space including expansion, remodel, or space rental;
    • Costs to facilitate and coordinate with local schools and local governments receiving funds from the U.S. Department of Education for the education of students in the program:
      1. Costs for technological needs of program participants with school aged children being homeschooled as a result of the pandemic that are not and will not be provided through other Federal, State, or local governments;
    • Procuring cleaning supplies and/or services to maintain safe and sanitary HCV units including common areas and in-unit cleaning of all Project-Based Voucher (PBV) assisted units (New text highlighted);
    • Relocation of PHA staff and participating families to health units or other designated units for testing, hospitalization, or quarantine, or transportation to these locations to limit the exposure that could be caused by using mass transportation (New text highlighted);
    • Additional costs to supportive services vendors incurred due to COVID-19;
    • Costs to retain or increase owner participation in the HCV Program, such as incentive costs (e.g., the PHA offers owner an incentive payment to participate in recognition of added difficulties of making units available for HCV families to rent while stay-at-home orders or social distancing practices are in effect); 
    • Costs for providing childcare for the children of PHA staff that would not have otherwise been incurred (e.g., children are at home due to school closings, PHA staff are working outside of regular work schedules, etc.);
    • Costs associated with the delivery of goods, including food and medical supplies that comply with the Centers for Disease Control (CDC) requirements, to program participants;
    • Public health-related security costs to enforce orders to shelter-in-place, stay-at-home orders, or visitor-restriction policies for PHA owned PBV projects;
    • Administration costs associated with the implementation of COVID-19-related activities that are not eligible HCV administrative costs (e.g., paying overtime to staff to carry-out these COVID-19-related activities); and
    • Other costs either directly or indirectly related to COVID-19 as determined eligible on a case-by-case basis at the Secretary’s discretion.