HUD Announces New Round of COVID-19 Payments for Housing Providers

Regulation | September 17, 2021 | by Juliana Bilowich

In the fourth and anticipated final round of COVID-19 Supplemental Payments, HUD responded to LeadingAge requests for changes, including an extended request deadline and expanded uses of funds. Providers can complete expenditures by October 31 and submit requests by November 19th.

On September 16, HUD announced the fourth round of COVID-19 Supplemental Payments (CSPs) for Multifamily housing providers. The funds are available to help Section 8, Section 202, and Section 811 properties prepare for and respond to COVID-19. Requests are due to the agency by November 19, 2021, and can cover expenses incurred between April, 1, 2021 and October 31, 2021. This is anticipated to be the final round of CSPs utilizing CARES Act funds. 

HUD has implemented several submission requirements in the fourth request window for CSPs, some of which were specifically requested by LeadingAge:

  • Extended timeframe for eligible expenses from four months to seven months (funds can be used to cover expenses incurred between April 1, 2021, and October 31, 2021), and extended time to request the funds;
  • Expanded eligible reimbursements to include limited types of capital investments made in direct response to COVID-19, such as improvements in ventilation and air filtration in common areas, emergency generators, and installation of broadband Wi-Fi infrastructure;
  • Minimum expected funding levels for each property, so that owners can be certain that reimbursement will occur at no less than established levels; and
  • Streamlined prioritization schedule for approval of requests for reimbursements that exceed minimum payment amounts.

The HUD Notice, titled "Continued Availability of Funds for COVID-19 Supplemental Payments for Properties Receiving Project-Based Rental Assistance under the Section 8, Section 202, or Section 811 Programs," is available here; a HUD press release and one-pager of the Notice are also available. 

**Update: Information about extended deadline flexibility for capital expenses is available here, and information about the CSP request form is available here.**

Eligibility

Owners of project-based rental assistance contracts through HUD’s Office of Multifamily Housing are eligible to request CSP payments from HUD. This includes Section 8 Project-Based Rental Assistance (PBRA), Section 202 PRACs, SPRACs, PACs, and Section 811 PRACs.

To receive a CSP, the property must be in good standing with HUD and must meet certain financial need criteria. For example, properties will current residual receipt account balances must first utilize any balances in excess of $250 per unit. Some of the financial need criteria for smaller requests are waived in this fourth round. A property must also be in good standing with HUD related to Management and Occupancy Reviews, REAC inspection scores, and Annual Financial Statement reporting. 

Surplus Cash: As in previous rounds, properties anticipating surplus cash at any point in the next 12 months are not eligible for a CSP. However, an important change requested by LeadingAge in this fourth round of CSP funds related to surplus cash. Properties projecting surplus cash are now eligible for amounts up to the Standard CSP cap for expenses incurred from April 1, 2021 and October 31, 2021.

Types of Costs Eligible for Reimbursement

CSP funds were appropriated by Congress through the CARES Act to help affordable housing providers prevent, prepare for, and respond to COVID-19 at their properties. Through the CSP funds, HUD will supplement regular HAP, PAC, PRAC, and SPRAC funds for project expenses related to COVID-19. CSPs are available only to offset actual COVID-19 related costs, but cannot cover lower tenant rent contributions, extended vacancies, or unpaid tenant charges. The CSPs are also not intended to cover new annualized expenses that should be instead addresses through the annual budget process.

Properties can request CSPs as an offset for the following types of costs, which have been newly classified as Category A and Category B expenses:
Category A – Operational Expenses:

  1. Increased frequency of cleaning and disinfecting common areas and property management offices as a preventative measure.
  2. Intensive deep cleaning and sanitization services in response to the presence of COVID-19 cases at the property, which may include treatment in units being prepared for re-occupancy, in addition to common areas.
  3. Office technology and other equipment to facilitate social distancing.
  4. Personal protective equipment (PPE) such as face masks, goggles, gloves, and hand hygiene products for use by property management staff and for residents entering leasing offices or using common areas.
  5. Facility and equipment expenses related to maintaining adequate social distancing, including but not limited to cough/sneeze barriers or modifying or limiting access to communal spaces.
  6. Site control measures in support of shelter-in-place, stay-at-home orders, or visitor restriction policies within properties.
  7. Temporary staffing, contract services, overtime pay, and/or supply expenditures to maintain or enhance ongoing service coordination in properties designated to serve the elderly or persons with disabilities (excludes service coordinator positions funded by a Multifamily Service Coordinator Grant).
  8. Temporary staffing increases to process higher-than-normal volumes of interim tenant recertifications requested by tenants due to loss of income (includes overtime and new positions; excludes “hazard pay” or other bonuses).
  9. Incremental costs of upgrading disposable HVAC air filters to include those with higher Minimum Efficiency Reporting Value ratings. This should not include the full cost of routine replacement but may include the incremental cost of purchasing higher-quality filters over basic ones that were previously used. Also permitted are minor equipment expenditures to improve air quality over a temporary period (i.e., rental or purchase of a window fan or portable air purifier in the leasing office or high-traffic common areas).
  10. Property operating costs associated with facilitating access to COVID-19 vaccination and testing services for residents that are administered by third-party healthcare providers. Overtime for property management staff and existing service coordinators, additional cleaning and PPE associated with conducting vaccination, and testing events and temporary clinics at the property are among the eligible expenses. Also covered are owner reimbursements to residents for public transit fares and owner costs for transportation services, not to exceed the current Internal Revenue Service rate of $0.56 per mile, to provide residents access to nearby vaccination sites. Expenses for tent, table, and chair rentals for outdoor vaccination events at the property will be permitted. Reimbursable expenses do NOT include the costs for provision of any medical care, such as the cost of individual tests, vaccinations, or clinical consultations.

Category B – Eligible Capital Expenses: This CSP round will consider reimbursement of certain capital investments made in direct response to COVID-19. These are capital improvements that will benefit the property over a multi-year period that includes, but may extend beyond, the period for which the property is affected by COVID-19.

The following are Eligible Capital Expenses that are newly eligible under Round IV:

  1. Incremental Costs for HVAC System Ventilation and Filtration Upgrades. Owners may include only the marginal cost of system enhancements specifically designed to limit virus transmission in building common areas by improving air flow and filtration. CSP reimbursements are authorized to supplement, not replace, expenditures from the Reserve for Replacement accounts for HVAC systems. All technologies must be consistent with virus mitigation measures identified by the CDC. Please see CDC communications on maintaining healthy environments in common areas of multifamily housing, including “Ensuring Adequate Ventilation” (https://www.cdc.gov/coronavirus/2019-ncov/community/multifamily-housing.html).
  2. Emergency Generators to protect vulnerable elderly residents from the exposure risk associated with evacuations/displacement. HUD will allow reimbursement only where generators are necessary to address critical medical needs and a documented risk of recurring power outages pose a significant risk to residents if stay-at-home orders or other public health directives prevent or discourage temporary relocations.
  3. Broadband Wi-Fi Infrastructure. Though an increasing number of buildings include broadband wiring for individual units and community rooms, this infrastructure does not exist in many older HUD-assisted buildings that have not been recently renovated. Building-wide Wi-Fi is recognized as an effective means to make internet service available to residents in facilities that are not currently wired throughout for broadband. HUD will allow CSP reimbursement for the purchase and installation of infrastructure needed to support building-wide Wi-Fi. The equipment may support service within tenant units and/or in common areas such as the lobby or community rooms. HUD will not allow CSP reimbursement for monthly service costs, which may be paid only from external (non-project funds) or through an optional service charge paid by tenants The provision of internet services for tenants cannot be included in HUD rents or in utility allowances.

Eligible Timeframe for Costs

In the fourth round of CSPs, HUD will consider reimbursement requests for eligible costs incurred between the enactment of the CARES Act on March 27, 2020, and October 31, 2021. LeadingAge recommends that providers complete purchases as soon as possible for inclusion in this final request window. 

In order to be considered for reimbursement by HUD, all expenditures related to staffing, contractors, and other services must be for services provided during the eligible time frame. Costs for purchases of bulk supplies, including PPE and hand sanitizer, may reflect inventory purchased before October 31 but anticipated for use through December 31, 2021.

Reimbursement Amounts

Minimum Payments: In another important change in the fourth CSP round, all properties with CSP-eligible expenses can expect to receive a minimum payment. Whether the amount requested is above or below the Standard Payment cap for the property determines eligibility requirements, the level of supporting documentation required by HUD, and the funding priority.

Standard Payment Amounts: The Standard CSP Cap is calculated based on each property’s Standard CSP payment amount; the term replaces “Tier I” from previous rounds. However, for all PRAC, SPRAC, and PAC contracts, HUD’s minimum expected payment will be 70% of the Standard CSP amount. An upper limit of $25,000 has been added to Standard CSP requests.

The minimum payment per property for round four is calculated using the following formula:

  • $2,500 base amount per property
  • Add $75 per HUD-assisted unit
  • Add $1,000 if designated as an elderly property
  • Add up to $1,250 for a budget-based Service Coordinator program.

Standard CSP request caps are calculated per property, not per contract; scattered-site projects are considered one property.

Above Standard Amount: Properties can request larger sums above the Standard CSP cap to address cost increases associated with responding to reported COVID-19 outbreaks among property residents or in response to extensive community exposure that creates a threat to the health and safety of residents within the community (previously “Tier II”).

Requests above a property’s Standard CSP cap must justified by supporting documentation for expenses and evidence of specific COVID-19 impacts; there is no cap on payments to individual properties except the overall availability of funds.

Requesting CSP Funds

To request CSP funds, owners and agents will submit form HUD 52671-E and email it to HUD or to their contract administrator by 11:59 local time on November 19, 2021.

HUD is currently in the process of updating form 52671-E, which will be available in late September. Properties can expect to organize expenses into cost categories and to submit expense documentation for requests exceeding the Standard CSP amount.

Separate Requests: Owners may prepare and submit a CSP Request, Form HUD52671-E, for each of the four operating periods:

  • Operating Period 1: March 27, 2020, through July 31, 2020;
  • Operating Period 2: August 1, 2020, through November 30, 2020;
  • Operating Period 3: December 1, 2020, through March 31, 2021;
  • Operating Period 4: April 1, 2021, through October 31, 2021.

Combined Requests: Some smaller requests covering multiple operating periods may be combined on a single HUD-52671-E. If an owner has not previously received a CSP for expenses incurred in a particular prior period, is now seeking reimbursement for multiple operating periods, and the total expenses fall below the single period Standard CSP cap, the owner may choose to combine all expenses on one HUD-52671-E. If an owner is seeking reimbursement for multiple operating periods, and the total expenses for which reimbursement is being sought exceed the Standard CSP cap, the owner must separate expenses from the different operating periods and submit up to four separate HUD-52671-E forms.

Amendments to Prior Approvals: In prior CSP rounds HUD has prohibited the approval of a CSP that included expenses incurred in an operating period for which a CSP of any amount was previously approved. For CSP Round IV, HUD will permit owners to amend prior round approved CSP requests to include additional expenses that they may have inadvertently omitted or are now made eligible by the Round IV Notice. All amendments to prior round requests will be subject to current Standard CSP caps and must be evaluated cumulatively to determine eligibility.

Overall Funds Available

Funding from the CARES Act is available for CSPs for the following accounts:

  • Project-Based Rental Assistance (Section 8): $190 million Initial CSP Allocation, $158 Balance Available for Round IV
  • Housing for the Elderly (Section 202): $25 million Initial CSP Allocation, $16 million Balance Available for Round IV
  • Housing for Persons with Disabilities (Section 811): $9 million initial CSP Allocation, $7 million Balance Available for Round IV

HUD anticipates this round of CSPs to be the final request window for COVID-19 Supplemental Payments utilizing CARES Act funds. HUD is currently deliberating about an additional CARES Act payment for grant-funded Service Coordinators.