Legal Alert

UPDATED: HUD Issues COVID-19 FAQs for Housing Authorities

by the Housing Group

April 28, 2020

During this time of uncertainty, Public Housing Authorities (PHAs) are now operating under stressed conditions with limited resources. HUD posted a revised “COVID-19 FAQs for Public Housing Agencies” on April 22, 2020, including updates to answers originally posted on March 13, 2020 and March 30, 2020 (the FAQ). Please see our alert on the March 30th FAQ version here. HUD continues to “strongly encourage[s] PHAs to continue using available funding to house families, keep families in their homes, and conduct critical operations that can be done remotely and safely.”

This Alert focuses on certain new and updated answers we feel are most impactful to PHAs and other owners of government-assisted housing.

Eviction Moratorium

The FAQ provides new guidance on Section 4024 of the CARES Act, which imposes a temporary moratorium on evictions, as well as a moratorium on fees and penalties related to nonpayment of rent. Note that this moratorium does not prevent PHAs or owners from evicting tenants for other good cause under the lease, including domestic violence situations where a lease needs to be bifurcated or noncompliance related to crimes committed by household members. The moratorium is in effect for a 120-day period beginning on March 27, 2020, the date the CARES Act was enacted. HUD explains the following:

The moratorium applies to the Public Housing Program, the Section 8 tenant-based and project based voucher programs, and Section 8 Moderate Rehabilitation Programs administered by the Office of Public and Indian Housing.
The moratorium applies to all tenants regardless of whether their employment status was affected by COVID-19.
Rent and fees accumulate and will still be owed at the end of the 120-day period. Families may, however, enter into repayment plans with PHAs.
If the amount owed at the end of the moratorium remains unpaid, PHAs may terminate assistance and pursue eviction.
For market rate properties housing tenants utilizing a HCV, if the property has a federally backed mortgage, Section 4024 of the CARES Act applies to the whole property. If the property does not have a federally backed mortgage, Section 4024 applies only to HCV holders.
All mixed-finance public housing properties owned by third parties are covered by the eviction moratorium. Private owners of properties that receive housing assistance payments under a PIH-assisted housing program must comply with the Section 4024 moratorium. Additionally, if other financing of a mixed-financed project includes an FHA-insured mortgage or equity from an allocation of LIHTCs, the project is subject to Section 4024.
For units assisted by LIHTC but that do not fit into the above categories, evictions are limited to situations in which the owner can demonstrate “good cause” in accordance with state and local law.

Use of Funds: Capital Fund Grants

Under the CARES Act, PHAs are empowered to use existing Capital Funds and Operating Funds more flexibly. PHAs are able to use such funds for “other expenses related to preventing, preparing for, and responding to coronavirus, including activities to support or maintain the health and safety of assisted individuals and families, and activities to support education and child care for impacted families.” This flexibility is allowed until December 31, 2020. In addition to the above, HUD is extending the time limit to obligate and use Capital Funds for one year, as more fully described in Notice PIH 2020-05. PHAs may use existing Capital Funds and Operating Funds, per the FAQ, to cover the following expenses relating to COVID-19:

Staff labor hours for emergency planning and response;
Personal protective equipment (PPE);
Cleaning supplies such as disinfectants and sanitizers;
Contracted services for cleaning;
Transportation of staff to perform essential functions and assist residents;
Capital expenditures designed to improve the safety of residents such as improved ventilation systems and high-grade filters, portable air filtration equipment, and portable humidifiers;
Necessary equipment to protect people engaged in modernization activities;
Public health training;
IT equipment and upgrades; and
Sanitation equipment for common areas.

Operations: Reporting and Inspection Extensions

HUD is extending the reporting due date of PHAs’ unaudited submission to the Real Estate Assessment Center (REAC) as required by 24 CFR 5.801(c) and 24 CFR 5.801(d)(1) for PHAs with a fiscal year end of December 31, 2019. The new due date for these PHAs’ unaudited submission is August 31, 2020. For PHAs with a fiscal year end of March 31, 2020, the new due date is November 30, 2020. The extension does not require PHAs to seek HUD approval for submissions in accordance with these due dates.
REAC will extend the deadline for submission of inspection appeals for inspections conducted prior to the outbreak of COVID-19. REAC will also accept appeals submitted within 60 days after resuming normal operations.

In addition to the guidance in the FAQ, PHAs now may look to newly available waiver authority provided for under the CARES Act and described in PIH Notice 2020-05. For more detail on this notice and the waivers made available for public housing and housing choice voucher programs, please see our alert published on April 13.

HUD is expected to release additional guidance as it relates to the CARES Act in the coming weeks. Ballard Spahr will continue to monitor this guidance and post additional updates as they are made available.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.