CARES Act Provides $3 Billion in Housing and Urban Development Grants for State and Local Government

Published: June 11, 2020

Coronavirus (COVID-19) PandemicHealth ServicesHUDProfessional ServicesPublic HousingSocial ServicesSocial ServicesUrban Planning

An overview of the $3 billion in grant money released by Housing and Urban Development in response to the COVID-19 Pandemic.

Originally published: April 14, 2020. 

Updated: June 11, 2020, June 1, 2020, May 5, 2020, April 20, 2020

The $2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES Act) included $12.4 billion in funding for the US Department of Housing and Urban Development (HUD). $3.064 billion in funding to help low-income and vulnerable citizens were allocated immediately.

The funds will be allocated through three grant programs: the Community Development Block Grant program (CDBG), the Emergency Solutions Grant program (ESG) and the Housing Opportunity for Person With AIDS program (HOPWA).

Funding allocation breakdowns can be found in the attached Excel document.

The CARES Act also cut red tape in order to provide a targeted response to COVID-19. Included in this is the authority to provide housing assistance payments for rent, mortgage and utilizes for up to two years and the authority to provide relocation services for persons living with AIDS and their household members.

Additional funds followed the initial allocation after new grant formulas are written.

On May 1, 2020, the US Department of Housing and Urban Development announced a second wave of relief funds. $685 million was allocated to Public Housing Authorities across the US. The funds can be used for activities related to preparing, preventing and responding to an outbreak of Coronavirus. A list of entities receiving funds and the allocations can be seen here.  

On May 5, an additional allocation of $380 million was announced for Public Housing Authorities. The allocation of the additional $380 million can be found here.

HUD announced a third wave of relief funding totaling $1 billion through the Community Development Block Grant (CDBG) program on May 11. All 50 states received a portion of the relief funds which were allocated using a formula that focused on public health needs, risk of coronavirus transmission, rate of coronavirus cases and economic disruption. A list of allocations can be found here.  

On May 18, HUD announced $77 million in CARES Act funding to assist people living with disabilities. These funds will be distributed through HUD’s Section 811 Mainstream Housing Choice Voucher Program.

HUD allocated $2.96 billion in Emergency Solutions Grant (ESG) to support homeless individuals and those at risk of becoming homeless on June 11. These funds can be used to operate emergency shelters, provide hotel and motel vouchers to homeless families and individuals, provide essential services, including childcare, to people experiencing homelessness and prevent individuals from becoming homeless. All 50 states received funding. A list of allocations can be found here.

Community Development Block Grant (CDBG)

To date, $3 billion has been distributed to states and entitlement jurisdictions through the Community Development Block Grant. The money distributed can be used to construct medical facilities, expand hospital capacity, replace HVAC systems in order to transform buildings into temporary clinics or treatment centers, support businesses manufacturing medical supplies, construct group living facilities for patients undergoing treatment, and train health workers and technicians. 

CDBG funds are allocated through two formula processes. 70% of the program funds are granted to eligible local government. The eligibility requirements are: (1) principal cities of Metropolitan Statistical Areas, (2) metropolitan cities with populations of at least 50,000 and (3) urban counties with populations of at least 200,000 (not including entitlement city populations). The other 30% of CDBG funds are distributed to states based on a different formula allocation and will be given to communities that do not qualify for entitlement funds.

Cities and Counties have begun to announce how they are planning on spending the funds. For example, in Los Angeles County, the Community Block Development Grant funds will be used to set up an emergency rental assistance program and in Wayne County, Michigan $500,000 in Community Block Development Grant funds will be used to convert a vacant hospital to use in the COVID-19 pandemic.

Furthermore, States have begun to distribute funds to communities that did not qualify for entitlement funds based on the CDBG grant formula. In Indiana, Lt. Gov. Crouch announced 13 COVID-19 Response Recipients through the Office of Community and Rural Affairs (OCRA) which has been tasked with redirecting Community Development Block Grant funds. The Pennsylvania Department of Community and Economic Development (DCED) distributed $24,691,407 to cities, counties and boroughs in the first tranche of funding from the Community Development Block Grants.


Emergency Solutions Grants (ESG)

HUD will distribute $4 billion to states through the Emergency Solution Grants program. These funds can be used to help states keep homeless populations safe by allowing them to build and operate emergency shelters, provide hotel or motel vouchers to homeless families or individuals, provide essential services, including childcare and education services to people experiencing homeless and to rapidly rehouse homeless individuals.

For the first round of funding, the same formula was used to distribute additional CARES Act ESG supplemental funding as the regular ESG grants. HUD distributed $1 billion in the first round of funding. The second round of funding included $2.96 billion and was distributed by a formula that considered the risk of coronavirus transmission, the number of homeless individuals and economic and housing market conditions. The remaining $40 million ESG funds will be used to provide technical assistance to build capacity of grantees in communities that receive ESG funds.  

Communities have begun to release plans on how they will spend ESG funds. In Wichita, a homeless shelter will receive $60,000 in order to operate 24 hours day. Homeless individuals in Augusta, Georgia will be temporarily housed in hotels using ESG funds. Additionally, Mississippi released plans to use Emergency Solutions Grant program funds. Des Moines, Iowa plans on using the majority of their ESG funds for homeless prevention and rapid re-housing.

Housing Opportunities for Persons With AIDS (HOPWA)

$63.7 million will be used to help Americans with compromised immune systems through the Housing Opportunities for Persons With AIDS program. States can use these funds to increase the level of stable housing for individuals with AIDS and their family members, ensure access to HIV medical care and treatment, provide nutritional services to those with compromised immune systems and assist in job training.

$53.7 million will be allocated using the formula used to allocated FY20 HOPWA funds, while $10 million are to be provided as additional one-time, non-renewable grants to grantees that currently have contracts for permanent supportive housing.  Not all states will receive funds as allocated by the FY20 HOPWA formula.

Communities have begun to allocate funds or announce ways that organizations can submit proposals for using the funds. Mississippi, for example, has released a plan to use the HOPWA funds as allowed by the CARES Act. Baton Rouge, Louisiana is requesting proposals from organizations wishing to utilize the HOPWA funds.

Source: US Department of Housing and Urban Development, National Low Income Housing Coalition, Congressional Research Service