A. Program Administration
Any subrecipient receiving RR/HP funds shall be subject to all of the requirements that apply to the grantee under the HUD ESG Interim Regulations.
As a reminder, eligible components under Rapid Rehousing and Homeless Prevention include (more information can be found in the eligible activities section of this document, under Rapid Rehousing and Homelessness Prevention topic areas):
- Short-term rental assistance (3 months)
- Medium-term rental assistance (4 to 24 months)
- Rent arrearages (up to 6 months)
- Security deposits and Utility deposits (but only in a new apartment)
- Utility payments (up to 24 months including up to 6 months' arrearages)
- Moving cost assistance
- Staffing and operating costs associated with implementing eligible financial assistance activities
Housing Relocation and Stabilization Services:
- Case management
- Outreach and engagement
- Landlord/Tenant Education
- Housing search and placement (includes inspections)
- Legal services
- Credit repair/Financial Counseling
RR/HP Subrecipients MUST:
- Assess every program applicant for risk of entering shelter or verification of their current stay in shelter/on the street, and to determine income and program eligibility.
- Use a clear documented process to determine the type, level, and duration of assistance for each program participant, in compliance with the CoC's written standards.
- Review and verify documents and payments to ensure compliance with HUD regulations and to avoid and prevent fraud.
- Re-evaluate eligibility at least once every 3 months for all program participants receiving rental assistance for Homelessness Prevention assistance and every 12 months for Rapid Rehousing assistance.
- Provide case management or support services, as needed, to all program participants receiving assistance in order to transition them to independence.
- Adhere to all data collection and reporting requirements.
- Complete case notes for all transactions with participants. Staff should especially focus on tracking progress and explaining or justifying program eligibility or service decisions. Case notes will be reviewed during state and federal monitoring, so case managers should take the opportunity to include pertinent additional information or explain incongruities in the participant's file.
To help illustrate when specific requirements apply, the following matrix shows what ESG standards apply based on the services provided.
|Housing Relocation and Stabilization Services
Fair Market Rent
24 CFR 576.106(d)
24 CFR 576.106(d)
24 CFR 576.403(c)
Lead-based paint requirements
24 CFR 576.403(a)
Lease between the program
participant and landlord
24 CFR 576.106(g)
Rental assistance agreement
between the landlord and
recipient or subrecipient
24 CFR 576.106(e)
Maximum Amounts and
Periods of Assistance
(24-month cap in 3-year period)
24 CFR 576.105(c) & 576.106(a)
Participation in HMIS3
24 CFR 576.400(f)
Prohibition of use with other subsidies
24 CFR 576.104(d) & 576.106(c)
Recordkeeping and Reporting Requirements
24 CFR 576.500
- When providing homelessness prevention services only assistance - housing search and placement, housing stability case management, mediation, legal services, and credit repair - to keep a program participant in the same unit, a lead-based paint assessment is not required.
- Housing stability case management services cannot exceed 30 days during the period the program participant is seeking permanent housing. In addition, these services cannot exceed 24 months, not including the previous 30 days, during the period the program participant is living in permanent housing (24 CFR 576.105(b)(2)).
- Excludes victim service Subrecipients and legal service Subrecipients, which may maintain a comparable database.
- A one-time payment of rental arrears of the tenant's portion of the rental payment is permitted while the program participant is receiving another subsidy for rent.
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B. File Contents
General Program Documentation:
- Completed Assessment (including data on secondary adults and children)
- Signed HMIS Release(s) (For all adult members of the household)
- Income Verification
- Backup Documentation (Paystubs, 3rd Party Verifications, etc.)
- Housing Status Verification
- Backup Documentation (Doubled-Up Home Visit Form, Signed Note from Shelter, etc.)
- Lack of Resources Documentation
- Current Budget
- Case Notes
- Bank Statements/Credit Report
- Other documents to illustrate lack of resources.
- Staff Certification of Eligibility
- Case Notes and Housing Stabilization Plan
- Re-Evaluation of Eligibility (Completed every 3-months for RR and 12-months for HP)
- All OTHER documents and information collected during RR/HP services
Financial Assistance Forms
- Lead Compliance Documentation
- Current Unit Inspection Report (Habitability)
- Signed Lease Containing Participant's Name(s)
- Rent Reasonableness Documentation
- Utility Bills (if paid with RR/HP funds)
- Copies of financial assistance payments (checks, POs, etc.)
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C. Inspection Requirements
A subrecipient cannot use ESG funds to help a program participant remain in or move into housing that does not meet the minimum habitability standards under 576.403(c). This restriction applies to all activities under the Homeless Prevention and Rapid Rehousing components, including rental assistance and housing relocation and stabilization services. In addition:
- If an eligible household needs homeless prevention assistance to remain in its existing unit, the assistance can only be provided if that unit meets the minimum standards.
- If an eligible household needs homelessness prevention or rapid rehousing assistance to move to a new unit, the assistance can only be provided if the new unit meets the minimum standards.
- The unit the household is leaving does not need to be inspected.
- Minimum standards are required even if one-time assistance is provided (e.g. rental arrears, security deposit, etc.)
- The housing must also comply with other standards established by DHS that exceed or add to these minimum standards.
- The same standards apply regardless of the amount of rental assistance and/or housing relocation and stabilizations services funds involved.
- The subrecipient must be sure to document compliance with the ESG habitability standards in the program participant's file.
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D. Lead-based Requirements
The lead-based paint requirements exist to protect vulnerable families from potential health hazards. To prevent lead-poisoning in young children, ESG sub-recipients must comply with the Lead-Based Paint Poisoning Prevention Act of 1973 and its applicable regulations found at 24 CFR 35, Parts A, B, H, J, K, M, and R.
Under ESG, the rule is that a lead-based paint visual assessment must be completed for all units that meet the three following conditions:
- The household living in the unit is being assisted with ESG financial assistance (rent assistance, utilities assistance, utility/security deposits, or arrears),
- The unit was constructed prior to 1978, AND
- A child under the age of six is or will be living in the unit.
Under ESG, the lead requirements apply regardless of whether a household is remaining in an existing unit or moving to a new unit.
The visual assessment must be completed prior to ESG assistance being provided, and annually thereafter.
Subrecipients are responsible for ensuring that property owners and managers meet the lead-based paint requirements. It may be helpful for subrecipients to think about the requirements in two categories:
1. Disclosure requirements.
Disclosure requirements are triggered for ALL properties constructed prior to 1978. These requirements require that lessors (property owners or managers) provide tenants with:
As explained, this requirement relates to property owners/managers, but sharing this information with your participants (or ensuring they have received it) is an easy thing to do and will make your job easier.
2. The Visual Assessment.
As explained in the ESG Notice, visual assessments for ESG funded units are only triggered under certain circumstances:
- The leased property was constructed before 1978; AND
- A child under the age of six will be living in the unit occupied by the household receiving ESG assistance.
Staff may become a HUD-Certified Visual Assessor by successfully completing a 20-minute online training on HUD's website at: https://apps.hud.gov/offices/lead/training/visualassessment/h00101.htm.
Depending on the results of the visual assessment, additional steps may be required before assistance can be provided for that unit, as the unit needs to be brought into compliance. There are certain exceptions to the rule.
Visual assessments are not triggered under the following circumstances:
- It is a zero-bedroom or single room occupancy (SRO-sized) unit;
- X-ray or laboratory testing of all painted surfaces by certified personnel has been conducted in accordance with HUD regulations and the unit is officially certified to not contain lead-based paint;
- The property has had all lead-based paint identified and removed in accordance with HUD regulations;
- The participant is receiving Federal assistance from another program, where the unit has already undergone a visual assessment within the past 12 months - e.g., if the participant has a Section 8 voucher and is receiving ESG assistance for a security deposit or arrears (note, in such cases, ESG staff are required to obtain documentation that a visual assessment has been conducted from the subrecipient administering the other form of assistance for the ESG case file); or
- It meets any of the other exemptions described in 24 CFR Part 115(a).
If any of the conditions outlined above are met, staff simply needs to document the condition and place a copy in the case file.
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E. Fair Market Rent (FMR) and Rent Reasonableness Requirements
Rental assistance cannot be provided for a housing unit unless the total rent for the unit does not exceed the fair market rent established by HUD, as provided under 24 CFR 982.503, and complies with HUD's standard of rent reasonableness, as established under 24 CFR 982.507.
Rent reasonableness and FMR requirements do not apply when a program participant receives only financial assistance or services under Housing Stabilization and Relocation Services. This includes rental application fees, security deposits, an initial payment of "last month's rent," utility payments/deposits, and/or moving costs, housing search and placement, housing stability case management, landlord-tenant mediation, legal services, and credit repair.
The rent charged for a unit needs to meet both Fair Market Rent and Rent Reasonableness standards ONLY when rental assistance is provided under ESG.
For more information on calculating rent reasonableness and fair market rent, please visit the HUD Exchange Resource site (.pdf).
Fair Market Rent: Rent for units assisted under the ESG Program (with rental assistance) cannot exceed current HUD-published FMRs for their particular geographic region. FMRs for each fiscal year can be found by visiting HUD's website. The site allows recipients/sub recipients to search for FMRs by selecting their state and county. The site also provides detailed information on how the FMR was calculated for each area.
Rent Reasonableness: Rent for units assisted under the ESG Program (with rental assistance) must be reasonable in relation to rents currently being charged for comparable units in the private unassisted market and must not be in excess of rents currently being charged by the owner for comparable unassisted units. Documentation shall include market surveys, classified ads, or information from real estate agents, along with a signed lease. When comparing rent reasonableness, the proposed unit must be compared to three (3) other units.
F. Rental Assistance Agreements
When rental assistance is supported with ESG funds, a program participant and the landlord must have a written lease. In addition, a rental assistance agreement is required between the subrecipient (agency) and the landlord. The subrecipient must make timely payments to each owner in accordance with the rental assistance agreement. The DHS Grantee is solely responsible for paying late payment penalties that it incurs with non-ESG funds.
The subrecipient may make rental assistance payments only to an owner with whom the subrecipient has entered into a rental assistance agreement. The rental assistance agreement must set forth the terms under which rental assistance will be provided, including the requirements that apply under this section. The rental assistance agreement must provide that, during the term of the agreement, the landlord must give the subrecipient a copy of any notice to the program participant to vacate the housing unit, or any complaint used under state or local law to commence an eviction action against the program participant.
The rental assistance agreement must contain the same payment due date, grace period, and late payment penalty requirements as the program participant's lease.
The rental assistance agreement with the landlord must terminate and no further rental assistance payments under that agreement may be made if:
- The program participant moves out of the housing unit for which the program participant has a lease;
- The lease terminates and is not renewed; or
- The program participant becomes ineligible to receive ESG rental assistance.
The sub-recipient must make timely payments to each owner in accordance with the rental assistance agreement. The DHS Grantee is solely responsible for paying late payment penalties that it incurs with non-ESG funds.
G. Lease Requirements
Each program participant receiving rental assistance must have a legally binding, written lease for the rental unit, unless the assistance is solely for rental arrears. The lease must be between the owner and the program participant. Where the assistance is solely for rental arrears, an oral agreement may be accepted in place of a written lease, if the agreement gives the program participant an enforceable leasehold interest under state law and the agreement and rent owed are sufficiently documented by the owner's financial records, rent ledgers, or canceled checks.
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