HUD Announces New Round of COVID-19 Supplemental Payments

We’ll go over the costs eligible for reimbursement, the minimum payment amounts, and how to request CSP funds.

On Sept. 16, HUD’s Office of Multifamily Housing Programs announced it’s opening a new application period for owners to apply for more than $180 million in supplemental operating funds to support expenses for protecting residents and staff from COVID-19 (HUD Notice H 2021-05). Owners of properties participating in HUD’s Section 202 Housing for Low- and Very-Low Income Elderly, Section 811 Housing for Low- and Very-Low Income Persons with Disabilities, and Section 8 Project-Based Rental Assistance programs are eligible to receive reimbursements from this pool of funds.

The announcement is the fourth and likely final request window for COVID-19 Supplemental Payments (CSP) made available through the enactment of the CARES Act in 2020. With this legislation, $1 billion was appropriated for the Project-Based Rental Assistance program (PBRA), $50 million for Section 202 Supportive Housing for the Elderly, and $15 million for Section 811 Supportive Housing for Persons with Disabilities.

New flexibilities. For this round, HUD has implemented some new flexibilities to more adequately address pressing needs:

• Extended time frame for eligible expenses from four months to seven months (funds can be used to cover expenses incurred between April 1, 2021, and Oct. 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.

We’ll go over the types of costs eligible for reimbursement, the minimum payment amounts, and how to request CSP funds.

Who’s Eligible?

Owners of sites with all types of project-based rental assistance contracts directly administered by HUD”s Office of Multifamily Housing. This includes Section 8 PBRA, Section 202 PRACs, SPRACs, and PACs, and Section 811 PRAC. Sites that receive Section 811 Project Rental Assistance via a state housing agency are not eligible.

To receive CSP, all properties must be in good standing with HUD and must meet the financial need criteria. A site in good standing with HUD is dependent on Management and Occupancy Reviews, REAC inspection scores, and Annual Financial Statement reporting. For the financial need criteria, an example is that sites with current residual receipt account balances must first utilize any balances in excess of $250 per unit. However, some of the financial need criteria for smaller requests are waived in this fourth round.

Also, as in previous rounds, sites anticipating surplus cash at any point in the next 12 months are not eligible for a CSP. However, in this fourth round of CSP funds, sites projecting surplus cash are now eligible for amounts up to the Standard CSP cap for expenses incurred from April 1, 2021, to Oct. 31, 2021.

What Costs Are Eligible?

CSP funds are available for operating cost increases that are directly related to a site’s efforts to prevent and respond to the COVID-19 pandemic. Personal protective equipment (PPE), increased cleaning and sanitization, as well as air filtration expenses, are among the most common expenditures.

With this fourth round, a few new types of eligible expenses have been added. These include WiFi Internet equipment, HVAC upgrades, and in limited cases emergency generators. HUD has divided eligible costs into two categories—operational expenses and capital expenses.

Operational expenses. These expenses include the following:

• Increased frequency of cleaning and disinfecting common areas and property management offices as a preventative measure.
• 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.
• Office technology and other equipment to facilitate social distancing.
• 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.
• 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.
• Site control measures in support of shelter-in-place, stay-at-home orders, or visitor restriction policies within properties.
• 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).
• 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).
• 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 (such as rental or purchase of a window fan or portable air purifier in the leasing office or high-traffic common areas).
• 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.

Eligible capital expenses. This CSP round considers reimbursement of certain capital investments made in direct response to COVID-19 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. These expenses are newly eligible in this round:

• 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.
• 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.
• 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 won’t 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 can’t be included in HUD rents or in utility allowances.

Reimbursement Amounts

Under this round, all properties with CSP-eligible expenses can expect to receive a minimum payment that’s calculated based on each site’s standard CSP payment amount. Payments for requests above the minimum level may be prorated if funds aren’t sufficient to fully reimburse all eligible requests.

The Standard CSP payment cap is calculated based on each site’s Standard CSP payment amount. Minimum payments for Section 8 PBRA properties will be equivalent to the Standard CSP amount. However, due to the level of available funds, for all PRAC, SPRAC, and PAC contracts, HUD’s minimum expected payment will be 70 percent 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.

Sites 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. These requests must be submitted with supporting documentation for expenses and evidence of specific COVID-19 impacts.

How to Request Funds

To request CSP funds, owners need to complete form HUD 52671-E and email it to HUD or their contract administrator no later than Nov. 19, 2021. You can find the form at www.hud.gov/sites/dfiles/OCHCO/documents/52671-e.pdf.

Some smaller requests covering multiple operating periods may be combined on a single HUD-52671-E. If an owner hasn’t 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.

Some smaller requests covering multiple operating periods may be combined on a single Combined Request. An owner may choose to combine all expenses if: (a) the owner hasn’t previously received CSP for expenses incurred in a particular prior period; (b) the owner is now seeking reimbursement for multiple operating periods; and (c) the total expenses are less than the single period Standard CSP cap.

In prior CSP rounds, HUD wouldn’t provide CSP for expenses incurred in an operating period for which CSP was previously approved. For this round, HUD is permitting owners to amend approved prior round CSP requests to include additional expenses that they may have inadvertently omitted or that are now eligible by the Round IV notice.