1.1 What is the Emergency Solutions Grant (ESG)?
The Emergency Solutions Grant (ESG) renames the Emergency Shelter Grant and broadens existing emergency shelter and homelessness prevention activities and adds short and medium-term rental assistance and services to rapidly re-house homeless people. This program places a greater focus on homelessness prevention for persons at risk of homelessness and rapid re-housing assistance for homeless persons.
The intent of ESG is to continue the grant funding for the Emergency Shelter Grant and to implement the expanded program that was temporarily funded as the Homeless Prevention Rapid Re-Housing program whose mission was to provide homelessness prevention assistance to households who would otherwise become homeless- many due to the economic crisis-and to provide assistance to rapidly re-house persons who are homeless.
Program components include (§ 576.100):
- Street Outreach
- Emergency Shelter (including supportive services)
- Homeless Prevention
- Rapid Re-Housing
- HMIS Component
- Administrative costs
1.2 Purpose of this Document
The Emergency Solutions Grants Program Policies and Procedures Manual serves as a guide to units of local government and private non-profit organizations interested in participating in the State-administered Emergency Solutions Grants (ESG) Program. This Manual describes the:
- ESG program
- requirements of subrecipients to manage programs using these funds
- State of Illinois policies and procedures for administering the program
The Emergency Solutions Grants Program Policies and Procedures Manual will assist ESG subrecipients to implement efficient and compliant ESG programs. It does not explain various DHS processes, e.g., contracting, reporting, invoicing, etc. These types of processes are subject to changes; for more information, contact DHS ESG staff.
The Emergency Solutions Grants Program Policies and Procedures Manual does not replace the regulations contained in 24 CFR Part 576, and subsequent amendments, or any other applicable Federal, State and local laws, ordinances and regulations pertaining to the Emergency Solutions Grants Program.
It simply highlights and emphasizes grant requirements. Subrecipients must always refer to the regulations and the grant agreement in determining what is allowable under the ESG program. The HEARTH Act refocuses homelessness-related strategies on the ultimate goal of reducing and ending homelessness and aligns them with the Continuum of Care planning strategies and performance measures, such as shortening the period of time that persons experience homelessness and helping persons who were recently homeless avoid becoming homeless again. Communities receiving ESG funds should develop formal strategies that will ensure the success of the HEARTH Act.
Local Continuums of Care and ESG subrecipients need to work together and need to establish and meet performance standards such as:
- Reducing the average length of time, a person is homeless
- Reducing return to homelessness
- Increasing access to permanent housing
- Reducing the number of homeless individuals and families
- Improving employment rate and income amounts of program participants
- Reducing first time homelessness
- Preventing homelessness and achieving independent living in permanent housing for families and youth defined as homeless under other Federal programs.
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1.3 How to Use this Document
While users can read this document cover to cover, DHS envisions that ESG subrecipients will use this resource as a desk reference and will referr to specific sections as needed. DHS understands that regulations can sometimes be complicated, so be sure to reach out if there are follow-up questions or concerns.
1.4 Guiding Principles
In administering this program, DHS offers the following guiding principles with which to approach shelter and service delivery:
- Housing is a basic human need so subrecipients need to ensure it is accessible, safe, and affordable for participants.
- Participant's basic needs should be met first (food, housing, clothing, etc.), with other needs focused on only after those are met (recovery, parenting, education, etc.) and even then, offered voluntarily.
- Participants have the right to set their own goals and make their own decisions, even if their goals are different than those of the agency providing the service. Subrecipients should work to reduce as many barriers to services as possible.
- Participants are the expert in what they need and how they can achieve their goals. Participants who are homeless are incredibly resilient and possess many strengths and assets, which should always be leveraged and considered in service delivery.
- Every participant has inherent dignity and worth so subrecipients need to treat participants in caring and respectful fashion, mindful of individual differences and cultural and ethnic diversity.
- Participants have a right to confidentiality and to be informed of their rights, especially as it relates to their records, program termination, grievances, etc.
- Services delivered to participants should promote participant well-being and work to integrate the participant with mainstream resources and the larger community as much as possible.
- Families, individuals, and children are better off in "home-like" settings rather than institutions.
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1.5 Using Contractors in the ESG and CoC Programs
Recipients and subrecipients under the Emergency Solutions Grants (ESG) Program and Continuum of Care (CoC) Programs may procure contractors as a means of implementing discrete eligible program activities. However, when selecting a contractor, the recipient/subrecipient must follow the procurement requirements in 24 CFR part 84 (government entities) or 85 (nonprofit organizations) or 2 CFR part 200, as applicable. A local government's or private nonprofit organization's own contracting process might not meet these requirements, so recipients/subrecipients must ensure that the process they use complies with HUD's rules.
When determining whether to use a subrecipient or a contractor, it is important to understand that there are key distinctions between subrecipients (including sub-subrecipients) and contractors - the two are not interchangeable. In general, a contractor does not have the same authority as a subrecipient:
- Subrecipients may exercise discretion in making program decisions and carrying out program activities, while contractors cannot. The McKinney-Vento Homeless Assistance Act.pdf and the program regulations impose specific restrictions and responsibilities on subrecipients, and each subrecipient must comply with those restrictions and responsibilities as part of the terms of its sub-award.
- Contractors are responsible for complying only with those requirements and conducting those activities that the recipient or subrecipent specifies in their contracts. Therefore, when a recipient/subrecipient uses a contractor, the recipient/subrecipient must ensure the contract specifies the program requirements and policies that apply to the tasks the contractor is to perform.
Please note that all subrecipients must be eligible under the ESG or CoC Program regulations, as applicable. Because for profit organizations are not eligible subrecipients under either the CoC or ESG programs, allocating funds to any for profit organization must be done through procurement of the organization as a contractor.
Responsibility for Grant Administration and Oversight
In all cases, recipients have responsibility to HUD for the grant, and HUD ultimately holds the recipient accountable if a subrecipient or a contractor uses funds in violation of program requirements. Therefore, the recipient is prohibited from assigning certain administrative responsibilities and functions to either subrecipients or contractors. For example:
- The recipient must be the entity that signs the grant agreement with HUD; and
- The recipient must maintain oversight over the funds and activities.
How do I know if an entity is a subrecipient or contractor?
These distinctions are important to understand both in determining whether existing agreements meet the qualifications for subrecipients or contractors, and also when a recipient is deciding when to procure a contractor and when to subgrant funds to a subrecipient. In determining whether an entity is actually acting as a subrecipient or a contractor, the nature of the relationship and the functions the entity is expected to perform are more important than the form or name of the agreement or what the entity is called (subgrant agreements are often referred to as "contracts" and are, in fact, a type of contract). Recipients and subrecipients should keep the following characteristics of an entity in mind when deciding whether and to what extent to procure a contractor to carry out program activities.
Characteristics Indicative of a Sub-recipient
In general, characteristics whose presence supports the classification of an entity as a subrecipient are when the entity:
- Makes determinations about who is eligible to receive what assistance;
- Has its performance measured in relation to whether objectives of the program were met (e.g. is accountable for meeting HUD-established performance measures);
- Has responsibility for programmatic decision making;
- Is responsible for adherence to applicable requirements in the program regulations and HUD's grant agreement with the recipient; and
- Uses the program funds to carry out a portion of a recipient's ESG program or to carry out a CoC or ESG project, for a public purpose specified in the McKinney-Vento Homeless Assistance Act (e.g. the benefit of homeless individuals and families and individuals and families at risk of homelessness), as opposed to providing goods or services for the benefit of the recipient or sub-recipient.
Characteristics Indicative of a Contractor
Contractors are paid for providing goods or services to the recipient/sub-recipient, to assist them in undertaking activities of the program. In general, characteristics whose presence supports the classification of an entity as a contractor are when the entity:
- Provides the goods and services within normal business operations;
- Provides similar goods or services to many different purchasers;
- Operates in a competitive environment;
- Provides goods or services that are ancillary to the operation of the ESG and CoC programs; and
- Is held to the terms of the contract rather than the compliance requirements of the ESG or CoC programs.
Note: Not all of the characteristics will be present in every situation, and there might be unusual circumstances or exceptions to the listed characteristics. HUD expects recipients/subrecipients to use their best judgment in determining whether an entity is cast in the role of a subrecipient or contractor. In addition, note that a single entity could serve as a contractor in some situations and a subrecipient in others.
Examples for Classifying Subrecipients and Contractors
Distinctions between a subrecipient and a contractor:
1. An organization that provides rental assistance would be:
- A contractor - if the organization's sole responsibility is to write and mail rent checks to landlords for program participants on whose behalf rental assistance is paid under the ESG or CoC Program. This is because the organization is hired and paid to complete a single task and has no other authority.
- A subrecipient - if it is operating a Rapid Re-housing project on behalf of the recipient and the recipient provides the sub-recipient with the authority to make decisions about items such as: project design; eligibility requirements for the project; conducting its own intakes and assessments; and writing its own rent checks to landlords or contracting out for that service. This is because the recipient has given full decision-making authority regarding the project design to the sub-recipient.
2. An organization that provides legal services to persons residing in an emergency shelter would be:
- A contractor - if the organization provides limited legal services only to those program participants designated to receive legal services by the emergency shelter provider. This is because the organization is hired and paid to complete previously agreed-upon services for program participants.
- A sub-recipient - if the organization: identifies its own program participants; completes its own intake and assessment of program participants; and determines and carries out the legal services it believes are required by the program participant. This is because the organization is conducting intake and assessment and making decisions about the design of its program.
For more information on this issue, see the Uniform Administrative Requirements at 24 CFR parts 84 and 85, 2 CFR part 200, the ESG Program Interim Rule at 24 CFR part 576, and the CoC Program Interim Rule at 24 CFR part 578.
Please note that all subrecipients must be eligible under the ESG or CoC Program regulations, as applicable. Because for-profit organizations are not eligible subrecipients under either the CoC or ESG programs, allocating funds to any for-profit organization must be done through procurement of the organization as a contractor.
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1.6 Use of Rapid Rehousing and Homelessness Prevention Resources
Although DHS understands many subrecipients have chosen to provide a one-time emergency rent or utility assistance to prevent homelessness in the past, subrecipients receiving ESG funds should implement activities that will ensure the ongoing housing stability of program participants.
DHS strongly encourages each jurisdiction to focus ESG funding on rapidly rehousing individuals and families living on the streets or in emergency shelters into permanent housing. While both rapid rehousing and homelessness prevention are eligible activities, only rapid rehousing assistance targets those individuals and families living on the streets or in emergency shelters. Effective rapid rehousing programs help participants to transition out of the homeless assistance system as quickly as possible, decreasing the number of persons who are homeless within a community.
Rapid rehousing also ensures that emergency shelter resources are used to serve individuals and families with the most urgent housing crisis. In contrast, the success of homelessness prevention activities is much more difficult to measure and the prevention assistance is harder to strategically target. These difficulties increase the risk that the use of ESG funds for homelessness prevention assistance will be inefficient at demonstrably preventing people from going to the streets or shelters. As public and nonprofit resources become increasingly strained, rapid rehousing should be given the highest priority under ESG to help ensure that existing resources-both within and outside the homeless assistance system- are used as efficiently as possible to help those most in need.
To help DHS achieve the goals and priorities reflected above, subrecipients should use ESG funds to design and implement programs that will:
- Broaden existing homelessness prevention activities
- Emphasize Rapid Rehousing programs
- Help program participants to quickly regain or obtain stability in permanent housing after experiencing homelessness
NOTE: Program participants are not to be exited from ESG-funded programs and activities unless the subrecipient can demonstrate improved and/or steady household income necessary to ensure household stability or terminate in accordance with the formal process established by the Continuum of Care.
1.7 State of Illinois ESG Contact Information
If you have specific program questions, please first send an email to DHS.ESG@illinois.gov and someone will return your email as soon as possible.
When there are changes to the policies and procedures manual, or if an answer to a question is needed by all providers, DHS ESG staff shall issue an email to all CoC Representative(s) who will, in turn, notify their respective subrecipients.
If you need to follow-up on existing questions, contact the ESG Staff.
Program Manager - Josalyn Smith (217) 524-8612
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