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HUD Updates CARES Act FAQ’s, Clarifies Eligible Uses, Timelines, More

David Weber, PHADA Policy Analyst

On Friday, May 29, the HUD Office of Public and Indian Housing (PIH) issued an updated Frequently Asked Questions (FAQ) document, COVID-19 FAQs for Public Housing Agencies, Version 4 (https://bit.ly/2MV1PwU). Organized around seven topic areas, the document is now over 40 pages. PHADA has highlighted many concerns with HUD, and the expanded section on Eligible Uses of Funds responds to many of these concerns.

Most significantly, HUD has confirmed and reiterated throughout the FAQ Section 6 on Eligible Uses of Funds (EU questions on pages 32–40) that CARES Act Supplemental Operating Funds may be used for any normally eligible operating expenses. Further, CARES Act Supplemental Operating Funds may be used for any activity normally eligible under the Capital Fund. IN ADDITION to these normally eligible operating and capital fund activities, CARES Act Supplemental Operating Funds (as well as regular Operating and Capital Funds) may be used for “other expenses related to preventing, preparing for, and responding to coronavirus…” as defined in Section 6 of PIH Notice 2020-07.

 

Eligibility Dates and Drawdown Requirements Also Clarified

The updated FAQ clarifies that CARES Act funds may be used for expenses incurred beginning March 27, 2020, up until December 31, 2020. Funds not expended by December 31, 2020, will be recaptured by HUD unless the Secretary extends the December 31 deadline.

HUD also clarified that unlike regular Operating Funds, CARES Act Supplemental Operating Funds can only be drawn down from LOCCS once specific costs have been incurred for use of the funds. Question EU11 addresses this issue in a clear and practical manner:

EU11. Is the additional funding through the CARES Act treated like Capital Fund grants, where funds are drawn down only after expenses have been incurred?
A: Yes, pursuant to PIH Notice 2020-07, PHAs must record and account for the expenditure of all CARES Act funds. PHAs may draw down funds only for immediate expenses related to public housing during the COVID-19 pandemic.

 

Many Additional Topics Addressed, Section by Section Review

The new and updated FAQ questions address many additional topics, highlights of which are discussed below, section by section.

Section 1. provides information on Key Resources and is unchanged. It includes useful links to CDC, EPA, SAMHSA (Substance Abuse and Mental Health Services Administration) and some other resources.

Section 2. on Emergency Preparedness (EP) has no new information. The existing information includes valuable recommendations and links to resources for developing a plan to address an outbreak or emergency, cleaning guidance, and procurement.

Section 3. on the Eviction Moratorium (EM) has numerous updates and new questions. In most cases, they provide guidance or clarifications on specific questions around applicability, eviction step timelines, and handling non-payment and repayment agreements.

Section 4. on Operational Concerns (OC) is substantially expanded with many updated and new questions. Most of the new questions address fairy specific and limited situations, such as resident stipends that may exceed normal limits (OC6), RAD project financial data submission schedules (OC16), the mainstream program (OC53), or treatment of child care allowances for laid-off or furloughed workers who are receiving unemployment (OC60).

 

Some Notable New Items

  • OC21–OC23 address Personally Identifiable Information (PII). In short, PHAs must continue to comply with requirements stemming from the Privacy Act. The answers to provide good guidance regarding risks, steps and policies to reduce risk, and how to utilize arrangements with 3rd parties for sharing of information and providing services.
  • OC25 regarding Board approval of changes to an ACOP or other policy helpfully suggests that resolutions can be written to make changes temporary and authorize reverting to the prior policy without need for another Board action.
  • OC29 on applicability of the annual reexam waiver clarifies that the waiver can apply to any reexam that was scheduled or in process, but “PHAs that choose this waiver authority must complete all annual recertifications due in Calendar Year (CY) 2020 by December 31, 2020.”
  • OC45 adds that remote video inspection (RVI) can be utilized.
  • OC46 clarifies that waivers can only be effective as of April 10.
  • OC47–OC51 address Moving To Work Agencies.
  • OC54 says that you can accept a copy of a Social Security Card for an applicant at lease-up. However, OC55 says that the waivers regarding identifying and other documents for recertifications do NOT apply to new admissions.

Section 5. on Resident Health (RH) is short and has only 2 new questions on specific situations relating to using vacant units for quarantine and linking with local resources to provide assistance relating to food insecurity and elderly residents without caregivers.

Section 6. on Eligible Uses of Funds (EU), as noted above, clearly address that Supplemental Operating Funds “can cover normal operating and capital fund expenses.”

Questions EU6 and EU7 on page 33 address this most directly. Many of the new EU questions in the significantly expanded EU section are answers on more specific questions related to eligible uses, including the purchase of computers and internet access for telehealth, online job training access, and student support (all eligible). It also notes that expenses relating to providing essential services, such as contracts or purchase of a vehicle for food delivery, are eligible; however, the actual purchase of food for residents is not eligible.

EU10–EU12 address drawdowns and related administrative issues. It reinforces that while eligible uses of Supplemental and Regular Operating Funds are the same, the manner of administration of the CARES Act Operating Funds is different in two ways: 1) supplemental funds cannot be drawn down in advance, and can only be drawn down when specific expenses have been incurred. In this way, it acts like a Capital Fund grant, and agencies may be able to adapt mechanisms used for their Capital Fund to administer and track their Cares Act Operating Fund spending. 2) CARES Act Supplemental Operating Funds must be expended by December 31, 2020 and can only be used for costs incurred beginning March 27, 2020. Any unexpended funds will be recaptured and do not roll over into reserves. Thus the recommendation to spend CARES Act funds first.

EU14 addresses “covering lost rental revenue with CARES Act Funds.” CARES Act Funds can be used to cover the expenses that would have been paid from rental revenues. Generally, CARES Act funds should not be booked as rental revenue, as this would complicate tracking and reporting, would artificially decrease future operating fund calculations, and would inaccurately categorize the funds. This answer also addresses write-off of unpaid rents due to the Eviction Moratorium.

There were no new questions regarding CARES Act Supplemental Administrative Fee eligible uses. Existing guidance that they can be used for normal activities eligible under regular Administrative Fee uses, as well as the additional COVID related activities as per PIH Notice 2020-08 and the list on HUD’s HCV website. As with the Supplemental Operating Funds, CARES Act Supplemental Administrative Fee funds do not roll over into reserves and will be recaptured if not expended by December 31, 2020. Again, HUD is thus recommending that PHAs use CARES Act funding first.

 

Reporting Requirements Not Yet Addressed

A new question EU5 regarding CARES Act reporting requirements does not provide any new information beyond what was already included in PIH Notices 2020-07 and 2020-08: existing reporting requirements are anticipated to meet the requirements for CARES Act Reporting, but that PHAs receiving more than $150,000 in CARES Act funds combined are subject to potential additional reporting requirements as determined by HUD and OMB. PHADA continues to urge HUD to provide additional guidance on this matter as soon as possible.

PHADA will hold a webinar on eligibility, accounting and reporting on June 17 at 1:00 pm. The Webinar will feature Jason Casterline of accounting firm BDO PHA Finance, PHADA Board Member and Lebanon County Housing Authority Executive Director Bryan Hoffman, and PHADA Policy Analyst and former Housing Authority of the City of Pittsburgh COO David Weber. Topics to be covered include practical recommendations for how to administer and track CARES Act funds in order to be prepared for future reporting requirements. A link to a recording will be made available on PHADA’s website.

Section 7. on Grant Administration (GA) had only three new questions, all relating to ROSS and FSS grants.

PHADA appreciates HUD PIH efforts to provide clear and timely responses to questions and clarifications where needed, and PHADA staff will continue to work with HUD and Congressional staff to address remaining issues. For more information, or with questions on any item, please send them to us at: info@phada.org.