On May 11, the U.S. Department of Housing and Urban Development (HUD) released the second wave of Community Development Block Grant (CDBG) supplemental funding per the CARES Act to help state and local governments provide relief to the communities they serve in light of the coronavirus. According to the CARES Act, HUD must disburse a total of $5 billion in supplemental CDBG funding, which can, in part, be used by CDBG grantees for rental assistance to help individuals who are experiencing financial hardship due to COVID-19.
HUD requires that funds are allocated to state and local governments, also referred to as grantees, according to a formula based on:
- public health needs;
- risk of transmission of coronavirus;
- rate of coronavirus cases compared to the national average;
- economic and housing market disruption; and
- other factors, as determined by the HUD secretary.
The formula dictates that HUD must weigh factors such as data on low-income elderly and children in poverty, an aggregate count of unemployment insurance claims over the past six weeks and the per capita rate of confirmed coronavirus cases. All of the factors are adjusted so that grantees in areas where COVID-19 cases are higher than the national average receive more funding.
Grantees may select from more than 25 eligible CDBG activities to shape their programs to meet the unique needs of their local community. Importantly for the industry, “small business assistance or emergency housing payments for entities and families impacted by economic and housing market disruptions” are eligible activities. As grantees decide how to spend their allocations, National Apartment Association (NAA) affiliates and members should remind policymakers that in addition to the list of eligible uses, HUD regulations make clear that rent or mortgage assistance and utility payments for up to three months, in the form of “emergency grant payments”, are eligible uses of CDBG funds.
As you work with policymakers on COVID-19 related relief for the industry, NAA affiliates and members should also consider that the CARES Act removed the 15 percent cap, required by statute to limit the amount of a jurisdiction’s CDBG allocation used for “public services.” The statutory cap would normally affect the provision of rental or utility payment assistance. Further, the Act applies the exemption to “activities to prevent, prepare for, and respond to the coronavirus” and to jurisdictions’ FY19 and FY20 CDBG allocations, opening up even more resources for rental assistance locally.
Recently, the San Antonio Apartment Association worked hand-in-hand with the City of San Antonio to utilize CDBG funding from the CARES Act for an emergency rental assistance program. The new program provides individuals and families up to $300 for rent, mortgage, utility and internet access assistance in the event of a COVID-19 hardship. The assistance is paid directly to the landlord, financial institution, internet provider and utility provider.
We encourage industry professionals to work with grantees to maximize the benefit of newly released CDBG funding to the industry. To enact such programs, grantees already receiving CDBG funds will have to amend their CDBG plan to include a rental assistance program or augment an existing rental assistance program that is already in the CDBG plan. To learn more about rental assistance policy, CDBG, or other HUD housing programs, please contact Jodie Applewhite, Manager of Public Policy.