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A Review of the CARES Act

Act Provides Funding Broad Waiver Authority

Seth Embry, PHADA Policy Analyst

On Friday, March 27 the President signed H.R. 748, the CARES Act into law, the same day it was passed by the House of Representatives. The Act is the latest federal effort to provide emergency assistance and response to the coronavirus pandemic. In addition to the relief provided to families and businesses, the Act provides supplemental appropriations for various governmental activities including the Department of Housing and Urban Development’s housing, homelessness, and community development programs (see Appropriations Committee summary of the full bill here). The HUD funding section largely mirrors the text of the emergency funding bill introduced in the House on March 23, but with lower spending levels.

Housing Choice Voucher Program

The funds available for voucher payments are provided for adjustments to housing authorities’ allocations in order to prevent terminations resulting from increased voucher per unit costs. These increases are to be expected due to decreased tenant income. Such decreases are challenging to forecast, and therefore it is extraordinarily difficult to predict whether, and for how long, $400 million will be sufficient. However, PHADA has produced estimates that show the worst case needs for the voucher program range between $670 million and $986 million (large range due to variations in available tenant income data). The new law allows HUD to identify “new eligible activities” that HAs can use administrative fees for, including, but not limited to “activities to support or maintain the health and safety of assisted individuals and families, and costs related to retention and support of participating owners.”

 

Public Housing Program

CARES provides not only significant additional money for the Operating Fund, but also provides HAs with complete fungibility for both these new and previously appropriated FY 20 Operating and Capital funds. That fungibility is available only through the end of 2020 unless HUD finds that continuing the fungibility is needed to provide expanded services to public housing residents due to coronavirus. The aforementioned challenges in estimating needs in the HCV program exist for the public housing program, and PHADA’s rough estimate of need is about $800 million. That estimate is based solely on decreased tenant income and does not factor in increased costs for the mitigation of health risks, emergency staffing and other operational needs. Unfortunately, the Act does not address the considerable need for additional capital funds for emergency maintenance activities, for which PHADA will strongly advocate.

 

Project Based Rental Assistance

For PBRA, an additional $1 billion is provided so that owners and sponsors of assisted properties can continue to operate during the crisis.

While not provided with a direct appropriation, the new law does allow for HUD to shift unobligated funds to the Mainstream voucher program. These vouchers can be awarded without competition, although 25 percent of the funds must be awarded to HAs that received Mainstream voucher awards in 2017 and 2019.

 

Waivers

The CARES Act allows HUD to issue waivers for “any provision of statute or regulation” regarding the use of both this supplemental and FY 20 funding for the HCV and Public Housing programs, while language for the PBRA program restricts such waivers to the supplemental funding amount. This broad waiver authority will allow HUD to provide immediate and far-reaching relief from provisions of the 1937 Housing Act, along with other statutes. These waivers are critical, as important as the supplemental funding, and will enable HAs to properly care for residents and staff while maintaining their important mission of providing safe and affordable housing to their communities.

 

Evictions

While many HAs and states and localities placed moratoriums on eviction filings, hearings, and removals, some in Congress and the advocacy community pushed for a broad moratorium on evictions applicable to all renters in the U.S. This bill instead contains a moratorium (Section 4024) on evictions of tenants in federally subsidized housing – all of the currently-defined “covered programs” in the Violence Against Women Act (VAWA) and several rural housing programs (both vouchers and multifamily housing). These programs include public housing, HCV, PBRA, and LIHTC. The moratorium began on March 27 and lasts until July 25. During the moratorium, no housing provider participating in a covered program may file for eviction due to nonpayment of rent, fees, or other charges. Additionally, during the moratorium, no penalties for nonpayment of rent may be assessed against a tenant. Once the moratorium ends, housing providers must provide thirty days’ notice prior to requiring a tenant to vacate. During the moratorium, eviction actions can continue for cases filed prior to the moratorium, and new filings can be made on grounds other than nonpayment, in accordance with state and local law.

 

Keep Calling Congress

As Congressional leaders have indicated that future legislation will be put forward to continue the response to COVID-19, PHADA urges its members to continue to keep their elected representatives apprised of developing operational challenges. Depending on the length of the crisis, early industry estimates substantiate the need for additional supplemental funding. PHADA supports industry calls for a total of $8.5 billion in emergency funds. PHADA will advocate for additional funding, including substantial Capital Fund Program appropriations, in any future bills and asks members to do the same.