HUD Notice Soliciting Comments on ESG Interim Rule National Alliance to End Homelessness Summary of Notice June 25, 2015 Purpose: This document is meant to summarize the notice for readers and to ask for feedback from ESG recipients and subrecipients on what s working with ESG and not working with ESG for ending homelessness in your communities. Remember, this document is only intended to serve as a guide, not a substitute of the regulations themselves. We have included page numbers and encourage careful reading of the particular sections that pertain to your comments. Background: HUD recently released a Notice for the Emergency Solutions Grant (ESG) to collect additional public comment on the interim rule: Emergency Solutions Grants (ESG) Program; Solicitation of Comment on Specific Issues. This is the second interim rule, the previous interim rule was released in December 2011 for comment. The purpose of the second notice according to HUD: Because recipients and subrecipients have now had more experience implementing the interim rule, HUD recognizes that they may have additional input and comments for HUD to consider in its development of the ESG final rule (final rule). Comment Due Date: August 3, 2015. How to Submit Comments: Comments can be either submitted online (strongly recommended) through the Federal erulemaking Portal at http://www.regulations.gov, or in hard copy by mailing the comments to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410 7000. To ensure timely delivery, mailed comments should be sent in 2 weeks in advance. The Alliance will be submitting comments regarding this notice, and to aid in that process, we encourage readers to give us their feedback on the ESG program generally and the HUD notice specifically. Feedback you have for us can be sent by email to Jayme Day at jday@naeh.org. 1 HUD ESG Interim Rule Summary (NAEH June 2015)
NOTICE OUTLINE AND COMMENTS AND QUESTIONS A. Definitions HUD is proposing to clarify the definition for the following activities, entities, and terms: 1. At risk of homelessness 2. Emergency shelter 3. Local government and State 4. Project 5. Rapid Re-housing B. Community Planning and Development (CPD) Programs Community Planning and Development (CPD) Programs must coordinate and plan for multiple funds, including ESG, as part of a Consolidated Plan. HUD is proposing the following changes: 1. Submission of Action Plans only after formula allocations 2. Reimbursement for pre-agreement costs in CDBG program will align with B.1 above 3. Consultation and coordination between ESG recipients and CoC boards 4. Assessment housing and homeless needs to be reviewed 5. Incorporation of performance reporting into ESG sub award process 6. Adding and streamlining of written standards for ESG recipients 7. Adding requirements to HUD approval of Action Plans C. Emergency Solutions Grants Program Regulations HUD is requesting comments for the following proposed regulations: 1. How can HUD incentivize Rapid Re-housing? 2. Clarifies Street Outreach and Emergency Shelter Components 3. How can HUD define rapid and as quickly as possible, in terms of number of days? 4. Proposes additional activities under Housing Relocation and Stabilization Services 5. Use of Short-Term and Medium-Term Rental Assistance 6. Adds training as administrative cost 7. Consolidates ESG administration across multiple ESG recipients in same area 8. Expands ways to fulfill matching requirement 9. For ESG recipients - obligation, expenditure, and payment requirements 10. For ESG recipients - allowance of pre-award costs 11. For ESG recipients - how reallocations will occur 12. Consultation and coordination between ESG recipients and CoC boards (see B.3.) 13. Coordinated Assessment becomes Coordinated Entry 14. Adding and streamlining of written standards for ESG recipients (see B.6.) 15. Clarification of assessments for program participant eligibility and needs 16. Shelter and housing habitability and other standards 17. Conflicts of interest 18. Other Federal Requirements limiting eligibility and targeting 19. Recordkeeping and reporting requirements 20. Recipient sanctions 2 HUD ESG Interim Rule Summary (NAEH June 2015)
A. Definitions (p 31540) 1. At risk of homelessness (p 31540): In regards to the characteristics of housing associated with instability, HUD asks, What characteristics, if any, should be added to this portion of the definition of At Risk of Homelessness to aid recipients in determining who is at risk of homelessness? 2. Emergency shelter (p 31540): HUD is seeking comment on the following revisions to the definition of Emergency Shelter a. Adding building or portion of a building ; b. Clarifying that occupancy in an emergency shelter must not create any rights of tenancy under state or local law; c. Establishing a clearer distinction between emergency shelter and transitional housing, including removing leases or occupancy agreements from the definition; d. Removing or altering the concept of grandfathering in projects in the interim rule; e. Ensuring that emergency shelters are placed in locations that are not inconsistent with an area s zoning and building code. 3. Local government and State (p 31543): Asks for comments on what institutions are eligible to act on behalf of States and local governments and under what authorization process. 4. Project (p 31543): HUD is proposing defining projects based on components and HMIS implementation. For example, this definition would allow two (or more) separate emergency shelters in different parts of a city to be considered a single project for funding and administrative purposes, unless the shelters fell under different HMIS implementations. Conversely, if a recipient or subrecipient ran an emergency shelter and a rapid re-housing program out of the same building, those programs would need to be separated into separate projects. 5. Rapid Re-housing (p 31544): HUD is proposing to revise the definition of rapid re-housing by adding the phrase a package of rental assistance, financial assistance, and/or services, tailored to the household. B. Community Planning and Development (CPD) Programs (p 31544) 1. Submission of Action Plans Timing (p 31544): The proposed rule would prohibit action plans from being submitted before formula allocations are announced each fiscal year, but may allow citizen participation on the proposed plan before the allocations are announced. 2. Reimbursement for Pre-Agreement Costs in CDBG Program (p 31544) will match policy with B.1. 3. Consultation and Coordination (p 31554): HUD is seeking comment on how to better clarify consultation and coordination rules regarding the following: a. Facilitating ESG recipient Consultation with Continuums of Care b. Defining consultation, coordinating, and integrating to encourage better cooperation c. Requiring all CoC boards to include at least one staff member from the jurisdiction s ESG recipient d. Including tribal groups as a required group for consultation e. Requiring coordination with CoC and Rural Housing Stability Programs f. (p 31545) Specifically requiring Con Plan jurisdictions to coordinate with the relevant CoC on the homeless needs assessment, a one-year plan, and action items for achieving these goals. 3 HUD ESG Interim Rule Summary (NAEH June 2015)
4. Housing and Homeless Needs Assessment (p 31544) a. Nearing the termination of rapid re-housing assistance : HUD is considering either eliminating the requirement for state and local governments to collect data identifying households more likely to return to homelessness after rapid re-housing assistance ends, or clarifying the rule to only require ESG or CoC funded participants within 30 days of assistance termination to be counted. b. Estimating needs for States: HUD is questioning whether using public housing or Section 8 waitlist data is helpful for state planning. c. Estimation of homeless data: HUD is looking for feedback regarding how CoC s collect and disaggregate data about homelessness demographics. d. Scope of Consolidated Plan Data for States: HUD is considering giving states two options for reporting their Homeless Needs Assessment. If their territory includes entitlement jurisdictions, states must cite the jurisdiction and source of the data, or only report nonentitlement jurisdictions. e. Funding services to people on tribal lands: ESG recipients may use funds in tribal areas within their jurisdiction as long as they include those tribal areas in their consolidated plan. f. States use of HMIS and PIT data: Requires that states use HMIS and PIT data just as local governments are required to. 5. Process for Making Subawards (p 31546): HUD wishes to require ESG recipients to describe how they use performance data to determine subawards and is seeking comment on what effects this will have. 6. Written Standards for ESG Recipients (p 31556) a. When subrecipients receive ESG funds from multiple recipients: HUD is seeking comment on the challenges of resolving conflicts between different written standards when subrecipients receive ESG funds from multiple recipients. b. Asset policy: HUD is considering requiring clear policies to be developed in the written standards for evaluating a household s assets so a more complete and accurate assessment can be made. c. Written standards for subrecipients of local governments: HUD is considering allowing local governments to pass on the responsibility of establishing written standards onto their subrecipients. d. Written standards for projects: HUD is requesting comment on whether allowing written standards to be established at the project level is helpful to recipients and subrecipients. e. Limiting eligibility and targeting ESG assistance: HUD is considering revising the rule to allow subrecipients to target populations without criteria in the written standards, and is seeking comment regarding how and at what level decisions regarding targeting and eligibility should be made. 7. HUD Approval of Action Plans (p 31546): HUD is considering adding action plans which do not reflect the actual allocation amounts for their jurisdictions as substantially incomplete applications. HUD is also proposing to require ESG recipients to use HMIS to collect data for CAPER. 4 HUD ESG Interim Rule Summary (NAEH June 2015)
C. Emergency Solutions Grants Program Regulations (p 31546) 1. Incentives for Rapid Re-housing (p 31546): HUD is seeking comment regarding more creative ways to encourage rapid re-housing programs, such as: a. Requiring recipients to justify how serving people at risk of homelessness is more effective than targeting those experiencing homelessness b. Establishing performance measures that link CoC application scoring to performance of ESG recipients c. Requiring only the rent reasonableness standard for Rapid re-housing activities compared to both the rent reasonableness and FMR standards for prevention activities. 2. Street Outreach and Emergency Shelter Components (p 31546) a. Essential services under the Emergency Shelter Component: HUD proposes to clarify that anyone who meets Category 1 of the homeless definition besides those in transitional housing and is staying in a shelter or referred by a shelter may receive essential services. b. Unavailable and Inaccessible Services: HUD is considering adding definitions of unavailable and inaccessible, to clarify when ESG funds can be used on mainstream services and seeks comment on whether this would be helpful, and if so, what definitions may be helpful. c. Day shelters: HUD is considering explicitly stating that day shelters are emergency shelters and outlining that ESG funds may be used as long as the primary purpose is to shelter those who meet category 1 of the homeless definition, those persons can stay as long as it is open, operating costs can only be ESG funded to the extent the shelter is used to serve those persons, and that essential services are only provided to those persons. d. Involuntary family separation: HUD seeks comment on how to shape regulation to help recipients implement procedures that ensure if a shelter provides service to any family with children, they must service all families with children, regardless of the age of any child under 18. HUD also seeks comment on a proposal that would require that a shelter must service all members of a family together, if that family chooses. e. Fees in emergency shelters: HUD is considering explicitly allowing emergency shelters to charge a reasonable occupancy fee so long as the fee is based on the participant s capacity to pay and that the fee itself is not a barrier to occupancy. HUD is also considering prohibiting recipients and subrecipients providing Rapid Re-housing from charging anything over the participant s rent contribution. f. Minimum Period of Use Street Outreach and Emergency Shelter: HUD proposes to clarify the requirement that that services must be provided for at least as long as ESG funds are being expended for both the street outreach and emergency shelter components. Additionally, in regards to renovations for the emergency shelter component, services must continue for at least 3 or 10 years, depending on the renovation. g. Essential Services for Street Outreach, Case Management and Emergency Shelter, Case Management (obtaining identification documents): HUD is considering explicitly allowing ESG funds to pay for the process of obtaining identification documents for program participants if it is necessary for the participant to receive public benefits or other services. 5 HUD ESG Interim Rule Summary (NAEH June 2015)
h. Local Residency Requirements: HUD is considering adding a rule requiring recipients or subrecipients to provide service regardless of where a last permanent address was in their jurisdiction or not. 3. Defining rapid and as quickly as possible (p 31548): HUD is considering whether and how to define rapid in regards to the definition of Rapid Re-housing and is considering the following options and asks several questions on page 31548 about these options: a. Setting an across-the-board standard of a particular number of days for re-housing (7, 30, or higher) b. Setting a standard average number of days for a program c. Requiring communities to set standards based on local data and systems d. Continuing policy with no standard 4. Housing Relocation and Stabilization Services (p 31548): HUD is considering allowing the following to be covered by ESG funds a. Late fees on the participants rental and utility bills as well as utility reconnection costs. b. Court costs and legal activities for a landlord during the eviction process when necessary for the participant to stabilize housing c. Trash removal as an eligible utility cost d. Mediation for families and individuals to return to housing they have already left under both rapid re-housing and homelessness prevention components e. Broker fees to real estate agents when the fees are reasonable and necessary for the participant to obtain stable housing f. Housing Stability Case Management: In regards to the 30-day limit for Rapid Re-housing, HUD seeks comment on potential revisions, and asks, Has the 30-day limit on charging housing stability case management to the Rapid Re-housing component had an effect on increasing the rates at which program participants find housing? If not, why not? g. Credit reports for participants of a rapid re-housing program when all other options for a free report have been exhausted and a report is necessary to obtain housing 5. Short-Term and Medium-Term Rental Assistance (p 31549) a. Rental assistance in shared housing general: Clarifies that ESG funding can be used to provide rental assistance for participants in shared housing with the same restrictions as rental assistance in general. The only exception is that FMR for the participant would be calculated based on their pro-rata share of the entire unit s FMR. b. Rent restrictions (Fair Market Rent): HUD is considering providing recipients and subrecipients an alternative to limiting short and medium-term assistance that fall within the FMR restrictions. These alternatives include allowing units to be funded up to the local PHA standard, only by the rent reasonableness standard, or allowing ESG funds to cover FMR, with the participant covering the difference, among other flexibility options. c. Last month s rent, security deposits, and rental arrears: HUD is considering reclassifying last month s rent and security deposits as rental assistance rather than housing stabilization and relocation services. 6 HUD ESG Interim Rule Summary (NAEH June 2015)
d. Providing subrecipients with discretion to set caps and conditions: HUD is considering allowing subrecipients that ability to set caps on benefits for a family or household in the same manner as recipients can. e. Rental Assistance Agreement requirements: HUD is considering adding elements that must be required in any rental assistance agreement including: the term of assistance, the type of assistance, the amount of funds paid by recipient compared to the tenant, the address of the property, and the signatures of the recipient and the property owner. f. Lease: HUD is proposing to require that a lease for tenant based rental assistance to not condition the term of occupancy on the participation in the ESG program, as is already the case for PBRA. g. Using ESG funds for an unoccupied unit: HUD is considering allowing ESG funds to assist tenants who are placed in an institution, such as jail or hospital, for up to 90 days, unless the ESG recipient obtains knowledge that the participant will not exit the institution within 90 days. h. Advance payments of rental assistance: Considering prohibiting recipients from making advance payments more than 1 month at a time. i. Subleasing: Seeking comment on the possibility of allowing subleases. j. Tenant-based rental assistance (TBRA:) HUD is considering revising their rules to state that a recipient or subrecipient may determine the geographical area with which participants are able to move to using their allotted ESG funding. This is provided that the amount and type of assistance cannot require a participant to move out of their jurisdiction. HUD is also considering prohibiting recipients from denying service to those whose most recent permanent address fell outside of their jurisdiction. k. Project-based rental assistance (PBRA): HUD is considering revising PBRA rules which establishes a definition clarifying that PBRA is assistance to a family or household tied to a specific development or unit, that allows for a flexible term lease similar to TBRA rather than a 1-year lease, and/or which allows assistance to be transferred another unit in the same development, regardless of whether it is in the same building. 6. Administrative Activities and Indirect Costs (p 31552): HUD is considering allowing ESG funds to be used for subrecipients to attend training on ESG requirements when HUD-sponsored, HUDapproved, or a recipient-sponsored. 7. Consolidation of ESG Recipient Administration and Coordination (p 31552): HUD has proposed making changes to the process of reaching joint agreements in ESG allotments. Among the changes, joint agreement between a metropolitan city and an urban county will require a joint agreement to be reached regarding the jurisdiction s CDBG allotment as well. HUD clarifies that joint agreements may occur in any program year, but must last until the next county reclassification. Additionally, the agreement must designate a lead entity, the entities must enter a legally binding cooperation agreement, and the request must be sent to HUD before the Consolidated Plan is started. The request will be considered approved unless HUD notifies the jurisdictions within 45 day of submission, the grant total will equal the sum of both jurisdictions allocation, and the jurisdictions must align their consolidated plan program years with HUD 7 HUD ESG Interim Rule Summary (NAEH June 2015)
considering making the lead entity submit a new one. If state law allows, the jurisdictions may then apply to be a subrecipient of the state. 8. Matching Requirement (p 31553): In order to help recipients and subrecipients meet the matching requirement for ESG funding, HUD is considering: listing activities eligible for matched funding which are not eligible for ESG funding and allowing depreciation on donated buildings to count as a noncash matching contribution. HUD also seeks ways to make it easier match funds from other programs with different requirements, and is considering adopting the CoC requirements for a memorandum of understanding and clarifies cash matching is counted when the cost is incurred and in-kind matching when service is provided or the donation used. 9. Obligation, Expenditure, and Payment Requirements (p 31554) a. State as HMIS lead: HUD would like to clarify that when the State is the HMIS lead, these activities may be carried out directly by the state or through a procurement contract or written designation. b. Other changes include: Allowing a recipient an extension of 3 months for the obligation requirement and up to 12 months for the expenditure deadline, for good cause and establishing minimum elements required in subrecipient agreements. 10. Pre-Award Costs (p 31554): HUD is considering whether to allow pre-award costs when the activities comply with ESG requirements and the recipient includes the activities in the program year s action plan. 11. Reallocations (p 31554): HUD is considering changes to the reallocation rules that would do the following: extend the timeframe for substantial amendments to the Con Plan, remove the requirement that funds be made available to all non-urban counties, and prioritize private nonprofits when reallocating funds from local governments. 12. Consultation and Coordination: See Section B(3). 13. Coordinated Assessment (p 31555) a. Coordinated entry for walk-ins: HUD seeks comment on whether there are special circumstances to consider for how the final rule should be structured regarding walk-ins. b. Coordinated entry and Street Outreach: HUD is considering clarifying that coordinated entry is not required for the street outreach component, but is required for all other ESG funded activities. 14. Written Standards for ESG Recipients: See Section B(6) 15. Evaluation of Program Participant Eligibility and Needs (p 31556) a. Entry Assessment: HUD is considering whether it should distinguish the initial entry assessment between the street outreach and emergency shelter components. b. Housing stability case management requirements: HUD is seeking comment on the case management requirements of short and medium term rental assistance to determine whether it is effective in ensuring the assistance is appropriate. 16. Shelter and Housing Standards (p 31557) a. Essential services only (emergency shelters): HUD is considering requiring emergency shelters receiving ESG funding for essential services only to still meet the habitability standards for ESG funded shelters. 8 HUD ESG Interim Rule Summary (NAEH June 2015)
b. Housing Relocation and Stabilization Services only (Homelessness Prevention assistance to remain in unit): HUD is considering either removing the requirement that units meet habitability standards for EGS funds used to keep participants in the unit they already live in, or to revise the rule to provide assistance until an inspection is performed. c. Housing Quality Standards: HUD is considering allowing recipients to use the Housing Quality Standards rather than the current ESG standards. 17. Conflicts of Interest (p 31557) a. HUD is considering revising the conflict of interest rules regarding housing search assistance with units owned by a parent or subsidiary, and is considering prohibiting personal conflicts of interest, such as in the grant-making process. 18. Other Federal Requirements Limiting Eligibility and Targeting (p 31558) a. Rapid Re-housing and Homelessness Prevention: HUD proposes clarifying that while a project may target a service for a group with a particular disability, families or households with disabilities who may still benefit from that service cannot be excluded from the service simply because they do not have the same particular disability. b. Emergency shelters: HUD seeks comments on the policies regarding an emergency shelter s ability to target based on sex when privacy needs and space limitations make it appropriate, requirements that they must serve all families with children if they target any, along shelters to exclude registered sex offenders and those with criminal backgrounds when sheltering children, and that if a shelter targets a particular subpopulation with a disability, they cannot exclude others with a disability who may benefit from the service simply because they do not have the same disability. 19. Recordkeeping and Reporting Requirements (p 31558): HUD is considering ways to revise record keeping rules and seeks feedback to determine whether the following would be helpful or burdensome: a. Establishing a specific set of standards for each of the seven conditions for someone to be eligible for services under the at risk of homelessness definition b. Eliminating the requirement for documenting reasons for ineligibility under the street outreach component c. Removing the recordkeeping requirement for local governments to show maintenance of effort. d. Requiring subrecipients to keep records of services and assistance provided e. Adjusting the period of record retention for major renovations to line up with the minimum period of use standard, rather than simply 10 years after funds are obligated. 20. Recipient Sanctions (p 31559): HUD is considering removing the expenditure deadline requirement in cases when sanctions for noncompliance cause the reallocation of funds. 9 HUD ESG Interim Rule Summary (NAEH June 2015)