Section D Eligible Activities

Information by State  Print version   Shp Deskguide Contents   Introduction   Detailed Table of Contents   A. Program Goals   B. Eligible Participants   C. Program Components   D. Eligible Activities and Match   E. Reserved   F. Important Dates   G. Conditional Approval and Program Cycle   H. Site Control Requirements   I. Grantee Responsibilities   J. Reserved for Project Financing   K. Calculating Resident Rents   L. Reserved   M. Reserved for Financial Management   N. Annual Progress Reports   O. Reserved for Compliance Monitoring   P. Technical Assistance   Q. Project Renewals   R. Grant Amendments   S. Grant Extensions   T - X Reserved   Y. Spending and Recaptures   Z. Reserved for Closeouts

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Acquisition and rehabilitation   New construction   Leasing   Supportive services   Operating costs   Project administrative costs

SHP funding is generally available to support seven activities in supportive housing projects:

The only exception is for supportive services only projects which may receive SHP funds for all of these activities except new construction and operating costs. However, SHP funds provide only a portion of project costs because all but one eligible activity has limitations and/or matching requirements prescribed by law.

Acquisition and Rehabilitation

SHP grants for acquisition may be used to pay a portion of the costs of purchasing a structure which will be used to provide supportive housing or supportive services. SHP acquisition grants for acquisition may also be used for the repayment of outstanding debt on a loan made to purchase a structure which has not been previously used for supportive housing or supportive services.

In each project, the SHP grant for acquisition and rehabilitation is limited to between $200,000 and $400,000, per structure, depending on whether the project is in a high cost area. A high cost area is a locality that HUD has determined to have high acquisition and rehabilitation costs. Contact the HUD Field Offices for the limit applicable to a given locality. The percentages and limits are:

100-119% The limit is $200,000
120-139% The limit is $250,000
140-159% The limit is $300,000
160-174% The limit is $350,000
175% and up The limit is $400,000

This limit applies to combined acquisition and rehabilitation activities.

Projects receiving SHP grants for acquisition and rehabilitation must be operated for not less than 20 years for the purpose specified in the application.

New Construction

New construction costs are eligible under all program components except the supportive services only component. However, if grant funds are to be used for new construction, the applicant must demonstrate that the costs associated with new construction are substantially less than the costs associated with rehabilitation or that there is a lack of available units that could be rehabilitated at a cost less than new construction. (Demolition costs are not eligible under SHP.)

Grants for new construction are limited to $400,000 per structure (regardless of where the project is located). If the applicant is also acquiring land in tandem with the new construction, the $400,000 limit applies to both activities together. Therefore, an applicant would not apply for a new construction grant and a separate grant to acquire the land, but rather new construction to cover both the land and the structure.

Projects receiving SHP grants for new construction must be operated for not less than 20 years for the purpose specified in the application.

Match requirement for acquisition, rehabilitation, and new construction
SHP funds provided for acquisition, rehabilitation, and new construction must be matched by the recipient with an equal amount of funds from other sources. The cash source may be the recipient, the Federal Government, State and local governments, or private resources.

The matching funds must be committed during the second phase, or technical submission, of the application process. The commitment must be in the form of a letter submitted on letterhead stationery, signed by an authorized representative and dated. Each letter must contain the name of the organization providing the cash resource; the amount; the type of activity for which the funds will be used (e.g., acquisition, rehabilitation, or new construction); the name of the project sponsor organization and/or the name of the project; and the date the funds will be available.

Leasing

Leasing structures to provide supportive housing or supportive services, or to pay rent for individual units during the period covered by the grant is an eligible activity. A grantee may lease portions of a structure, the full structure, or multiple structures.

Housing standards

For any assistance provided, the housing and services must be in compliance with all applicable State and local housing codes, licensing requirements, and any other requirements of the jurisdiction in which the project is located regarding the condition of the structure and the operation of the housing or services.

Supportive housing must meet the habitability standards described in the program regulations at (583.300(b). Any variations from those standards proposed by the recipient must be approved by HUD.

Reasonable rents

In leasing all or part of structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. The rent may not exceed rents being charged by the same owner for comparable space.

In leasing individual units (houses or apartments), the rent paid may reflect only actual costs, and must be reasonable in relation to rents being charged for comparable units. In determining comparability, you should consider location, size, type, quality, amenities, facilities, and management services. If the owner has both assisted and unassisted housing units, rents for the assisted units may not exceed rents being charged for that owner's comparable unassisted units. The grantee should keep file documentation showing reasonableness.

The grant funds may also be used to pay the landlord for any damages to the leased units by homeless participants. Up to one month's rent may be used for this purpose.

The portion of rents paid with grant funds may not exceed HUD-determined fair market rents (FMR). FMRs are published annually in the Federal Register, and should be used in estimating leasing costs. The listings are available on HUD's web site, at www.huduser.org/datasets/pdrdatas.html.

The published FMRs are gross rent estimates, and include shelter rent and the cost of utilities (except telephone).

Leasing vs. operating costs

In most instances, leasing a structure or individual unit(s) would not require additional operating costs because the cost of leasing would include the landlord's expenses for maintenance, repair and utilities. If such costs are anticipated, the amount and proposed use should be documented in the original project proposal.

Limitations on leasing assistance

If the grant funds are used for leasing assistance, the grantee may not request assistance for acquisition or new construction for the same property.

If a leased unit requires rehabilitation, and grant funds will be used to rehabilitate the leased property, the project sponsor must have site control. You must be able to demonstrate that the rehabilitated property will serve the purpose specified in the application for at least 20 years.

If a family or individual has been assisted through leasing, and remains in that housing without further assistance, the applicant may not request assistance for acquisition, rehabilitation or new construction for that property.

Leasing assistance is subject to the requirements of the Lead-Based Paint Poisoning Prevention Act. For residential structures constructed before 1978, there are requirements and procedures for addressing the hazards of lead-based paint. The requirements encompass both the residential unit, and non-dwelling portions of a structure that might be used by children under seven years of age, such as a day care center.

Grantees may not give funds directly to participants to pay the leasing costs, but must pay individual landlords directly.

The project sponsor may not lease property that it already owns to itself, a parent, or a subsidiary organization. Any lease arrangement must be at arm's length. The funds designated for leasing may only be used for the actual costs of leasing a structure/unit. They may not be used to pay a project sponsor's mortgage or other costs of building operations.

Documentation of leasing costs

Applicants conditionally selected will include information about leasing in their technical submission that corresponds to the activities submitted in their original application. The technical submission should cover:

	leasing costs for supportive housing and/or supportive service facilities documented with fair market rent information from the applicable Federal Register, or;
	comparable cost data, as appropriate, to show that the SHP request is within these limits.

The Annual Performance Report (APR) is the vehicle for reporting leasing activities and documenting shared costs.

Renewal grants

Leasing activities are eligible for renewal grants as described in Section O.

Supportive Services

SHP funds can be used to pay for the actual costs of supportive services to homeless persons in a new project or for the actual costs of increasing supportive services to homeless persons in an existing homeless project. Supportive services are important in a project since they assist homeless participants in the transition from the streets or shelters to permanent or permanent supportive housing.

Eligible Supportive Services

Almost any services aimed at moving homeless participants to independence are eligible for SHP support. The following are examples of services which may be paid for with supportive service grant funds:

Outreach, Child care, Job training/placement, Case management, Health care, Transportation, Employment assistance, Education ,Vocational opportunities, Life skills, Counseling, Housing search assistance, Substance abuse treatment Parenting skills, Rent deposits, Psychiatric care, Mental health care, Home furnishings, Budgeting

Examples of eligible/ineligible supportive services costs are:

Eligible supportive service costs

	salary of case manager, counselor, therapist, etc.
	salary of case management supervisor when he/she is working with clients or working with a case manager on issues regarding clients
	desks, computers used by clients and their trainer in employment training programs
	food, clothing, transportation for use by clients
	medical/dental care for clients
	first and last month's rent, security deposits, credit checks for participants moving from transitional housing to permanent housing
	clothing, tools, and similar items needed by participants for jobs or job training
	beepers for outreach workers
	mileage allowance for service workers to visit participants at home, if participants reside in scattered site housing
	vehicle purchase and operation (gas, insurance, maintenance) when used for transporting clients

Ineligible supportive service costs for TH, PH and Safe Haven Projects

	salary of case management supervisor when he/she is not working directly on participant issues
	desks/computers used by staff for intake, or other daily activities
	office telephones, fax, postage, utilities, insurance
	office or meeting space
	staff recruitment/training

NEW as of 8/24/00
Please note that certain costs for SSO projects are eligible, but only to the extent that these costs are part of the project, and the project is classified as SSO. The scope of direct costs of providing supportive services has expanded and those costs include: staffing, utilities, equipment and supplies, furnishings, repairs and maintenance, transportation, insurance and security. Please check with your Field Office if you need clarification.

Participants in TH, PHPWD, SSO, Safe Havens may receive supportive services throughout the time they are part of the project. In TH, participants may also receive services after they leave the project.

A transitional housing participant who is graduating from the project may receive follow-up services paid for with SHP funds for an additional six months. This is done so that the participant is assisted in adjusting to independent living [24 CFR 583.120(b)].

Match requirement for supportive services

Beginning with the 1999 SHP awards, SHP grantees must share in the costs of supportive services. The requirement is an 80-20 split of supportive services costs between SHP and the grantee.

Match is a cash payment for the provision of supportive services. The grantee's cash source can be from itself, the Federal government, State and local governments or private contributions.

Grantees will be required to list the sources and amounts of cash the contributed toward the cost of supportive services in the Annual Performance Report. During monitoring, field offices will review the supporting documentation on site or remotely.

Operations

Operating costs are those costs associated with the physical day-to-day operation of supportive housing facility and for which cash payment is needed. Operating costs differ from supportive services cost in that operating costs support the function and the operation of the housing project. Only operating cost for a new project or the expanded portion of an existing project are eligible for SHP funding. Also, SHP funds may not be used for the cost of operating a supportive services only facility.

Eligible operational costs

The expense incurred by the grantee to operate supportive housing is an eligible SHP activity. Some examples include:

	Maintenance and Repair
	Operations staff
	Utilities
	Equipment
	Supplies
	Insurance
	Food
	Relocation
	Furnishings

Sometimes operational staff also carry out supportive services activities. To the extent a staff person does both, their expenses must be split between the two categories. The grantee will need documentation, such as time sheets, to show how the expenses were split.

Relocation assistance - the costs associated with displacing persons in order to use a structure are included under operational costs, even though such payments may be a one-time occurrence.

Operational costs vs. mortgage payments

Because SHP allows grantees to repay outstanding debt on a loan to purchase the structure under the acquisition activity, grantees may not consider mortgage payments as an operational cost. This means that when the operating budget is calculated, mortgage payments may not be included.

Examples of eligible and ineligible operational costs are:

Eligible operating costs

	salaries of staff not delivering services, such as project manager, security guard
	utilities costs: gas, heat, electric, etc.
	desks, computers, telephones used by staff
	furnishings (beds, chairs, dressers, etc.) for participants
	equipment (refrigerators, ranges, etc.)
	food

Ineligible operating costs

	mortgage payments (see Acquisition)
	recruitment or on-going training of staff
	rent (may be eligible as real property leasing)
	depreciation
	costs associated with the organization rather than the supportive housing project (fund raising efforts, pamphlets about organizations, etc.)
	operating costs of a supportive services only facility

Match requirement for operations

SHP grantees are responsible for matching the operational cost of supportive housing. Beginning with grants made in the FY 2000 competition, SHP funds can be used to pay up to 75% of the operating cost in each year of the grant term. (For grants made prior to FY 2000, SHP funds can be used to pay up to 75% of the operating cost for the first two years of the grant, and up to 50% for the third year of the grant.) The match requirement is the difference between the total operating costs and the amount of the SHP operating funds. Match requirements are to be made by cash and paid by the end of each operating year. The grantee's cash source can be from itself, the Federal government, State and local governments or private contributions. Grantees will be required to submit documentation at the end of each operating year that they contributed their share of cash.

Administrative Costs

Up to five percent of any grant awarded under SHP may be used for the purpose of paying costs of administering the assistance. Applicants and project sponsors must work together to determine the plan for distributing administrative funds between applicant and project sponsor (if different).

Administrative costs include the costs associated with accounting for the use of grant funds, preparing reports for submission to HUD, obtaining program audits, similar costs related to administering the grant after the award, and staff salaries associated with these administrative costs. They do not include the costs of carrying out acquisition, rehabilitation, new construction, leasing, supportive services or operating costs.

Examples of eligible and ineligible administrative costs are:

Eligible administrative costs

	preparation of Annual Progress Report
	audit of Supportive Housing Program
	staff time spent reviewing/verifying invoices for grant funds, drawing money from Treasury, and maintaining records of the use of those funds
	field office training on managing the grant

Ineligible administrative costs

	preparation of application/technical submission
	conferences, fund raising activities, and training in professional fields (such as social work or financial management)
	salary of organization's executive director (except to the extent he/she is involved in carrying out eligible administrative functions as shown under eligible administrative costs list

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