Notice of the FY 2011 Substantial Amendment Process and Other Related Information for Recipients of Emergency Solutions Grants Program Funds

Summary:

This Notice advises the public of the amounts, and spending restrictions on the use, of the second allocation of Fiscal Year (FY) 2011 Emergency Shelter Grants/Emergency Solutions Grants funding (including requirements for establishing each recipient's expenditure limit for emergency shelter and street outreach activities), requirements for receiving the second allocation, and requirements that apply to FY 2012 and future consolidated planning submissions.

Table of Contents

Table of Figures

Dates:

Effective Date: January 27, 2012.

Overview Information:

A. Federal Agency Name: Department of Housing and Urban Development, Office of Community Planning and Development.

B. Funding Opportunity Title: Funding Availability for the Emergency Solutions Grants (ESG) program.

C. Publication: This Notice is initially being published on HUD's Web site. All HUD materials will be posted on the HUD Homelessness Resource Exchange at:www.hudhre.info.

D. Catalog of Federal Domestic Assistance (CFDA) Number:14.231: Emergency Solutions Grants program (ESG).

E. Dates: Substantial amendments submitted pursuant to this Notice must be submitted in compliance with 24 CFR part 91 and the recipient's citizen participation plan no later than May 15, 2012.

F. Additional Overview Content Information: On November 15, 2011, the Department of Housing and Urban Development (HUD) posted the interim rule for the Emergency Solutions Grants program and Consolidated Plan conforming amendments (Interim Rule) on HUD's Homelessness Resource Exchange Web site at www.hudhre.info. On December 5, 2011, the Interim Rule was published in the Federal Register(see 76 FR 75954). Also on November 15, HUD announced the amounts of the second allocation of FY 2011 Emergency Shelter Grants program/Emergency Solutions Grants program funds. To receive funds from the second allocation, each eligible recipient must prepare, and obtain HUD approval of, a substantial amendment to its Fiscal Year (FY) 2011 Consolidated Plan Annual Action Plan (Annual Action Plan). This Notice advises recipients of the 24 CFR part 91 requirements that will apply to this substantial amendment, highlights the relevant changes under the Interim Rule, and provides guidance on critical decisions to be made in the planning process.

G. For Further Information: For questions about ESG, please submit them to the HUD Homelessness Resource Exchange Virtual Help Desk at http://www.hudhre.info/index.cfm?do=viewHelpdesk. For more information about ESG, or to view a copy of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11371et seq.) (McKinney-Vento Act), as amended by the Homeless Emergency and Rapid Transition to Housing Act of 2009 (Pub. L. 111-22) (HEARTH Act), or the amended ESG regulations, go to www.hudhre.info/hearth.

Supplementary information:

Table of Contents

I. Purpose

II. Overview

III. Spending Requirements and Critical Recipient Funding Decisions

IV. Requirements for Receiving the Second Allocation

V. Requirements That Apply to FY 2012 and Future Consolidated Planning Submissions

Appendices

A. FY 2011 ESG Allocations by State and Recipient Name

B. Checklist of Requirements for FY 2011 Substantial Amendment

C-1. Table 3C for local governments and territories: Consolidated Plan Listing of Projects

C-2. Table 3C for States: Annual Action Plan Planned Project Results

I. Purpose

On December 5, 2011 (76 FR 75954), the interim regulation for the Emergency Solutions Grants (ESG) program was published (Interim Rule). On January 4, 2012, it went into effect. ESG recipients will be eligible to receive additional FY 2011 ESG funds to carry out the new activities. This Notice provides further guidance on the requirements for receiving and using the additional funding (referred to in this Notice as “the second allocation”) and other requirements for future consolidated planning submissions.

II. Overview

A. Background

The Full-Year Continuing Appropriations Act, 2011 (Pub. L. 112-10, Division B) appropriated at least $225 million for the Emergency Solutions Grants program for FY 2011. Accordingly, HUD used its discretion to allocate $250 million in FY 2011 funds for the ESG program. However, because the program regulations were still being revised when this funding became available, HUD chose to release the funding in a two-stage allocation process. The first allocation was made available immediately, to avoid a lapse in funding for existing Emergency Shelter Grants activities. This allocation, which equaled the FY 2010 ESG funding level of $160 million, was made in May 2011 and was subject to the Emergency Shelter Grants regulations in effect at that time.

The amounts for each recipient for the second allocation of $90 million, which reflects the national increase in ESG funding from FY 2010 to FY 2011, were posted on HUD's Web site on November 15, 2011, the same day that the Interim Rule was posted on HUD's Web site. HUD provided this early notification so that recipients could begin their local planning processes. Appendix A of this Notice lists the amount allocated to each recipient. Section III of this Notice describes some of the key spending requirements and decisions that recipients must make. It also explains how the program's new expenditure limits will apply to the funds from the second allocation for the FY 2011 ESG grant, and how to calculate and document the amount of funds committed to homeless assistance activities in FY 2010.

To receive the second allocation of funds for the FY 2011 ESG grant, each recipient will be required to submit, and obtain HUD approval of, a substantial amendment to the FY 2011 Consolidated Plan Annual Action Plan (Annual Action Plan), in accordance with the recipient's citizen participation plan and 24 CFR part 91, as amended by the Interim Rule. Each must submit its substantial amendment to HUD no later than May 15, 2012. Section IV of this Notice specifies which 24 CFR part 91 requirements will apply to this substantial amendment and provides guidance on critical decisions to be made in the planning process.

Section V of this Notice highlights the Interim Rule's other changes to 24 CFR part 91, which will affect FY 2012 Annual Action Plans and future Consolidated Plan submissions. HUD plans to provide further guidance on those requirements in the coming months.

B. Environmental Review

This Notice provides operating instructions and procedures in connection with activities under the Interim Rule. The Interim Rule was subject to a required environmental review. Accordingly, under 24 CFR 50.19(c)(4), this Notice is categorically excluded from environmental review under the National Environmental Policy Act (42 U.S.C. 4321).

III. Spending Requirements and Critical Recipient Funding Decisions

The funds provided to recipients in the second allocation will be subject to all of the ESG requirements under the Interim Rule. These funds must be expended within 24 months after the date HUD signed the amendment to the recipient's FY 2011 grant agreement.

When making funding decisions, recipients should take into account several requirements and considerations. The Interim Rule increases communities' capacity to engage in strategic planning and program oversight by raising the expenditure limit on administrative activities. Also, the Interim Rule shifts the focus from emergency shelter to assisting people to quickly regain stability in permanent housing—this is reflected in the expenditure limits on street outreach and emergency shelter activities. Compliance with these expenditure limits will be measured using the total amount of the FY 2011 grant, not just the second allocation. HUD is encouraging communities to focus as much of their funding as possible on rapidly re-housing persons who are literally homeless in order to reduce the number of persons who are living in shelters and on the streets, in order to end homelessness in this country.

Now that the Interim Rule has become effective, recipients have the option of re-designating funds from the first allocation of FY 2011 grant funds to be used for the new eligible activities. However, this “reprogramming” of funds is subject to three conditions. First, the reprogramming and use of the funds must comply with the Interim Rule. Second, the reprogramming must not violate existing contracts or subgrant agreements. Third, unlike the second allocation of funds, the reprogrammed funds must still be expended within 24 months after the date HUD signed the original FY 2011 grant agreement.

A. Expenditure Limit for Administrative Activities

The Interim Rule increases the expenditure limit for administrative activities from 5 percent to 7.5 percent. Because each recipient could only spend up to 5 percent of the first allocation on administrative costs, a recipient will be able to use more than 7.5 percent of its second allocation for administrative costs, so long as the total expenditures for administrative activities using both the first and second allocations do not exceed 7.5 percent of the recipient's total FY 2011 ESG grant.

To calculate the maximum amount that recipients may use for administrative costs under the second allocation, recipients must first multiply the total FY 2011 grant by 7.5 percent. Next, the recipient must subtract from this amount the amount of funds allocated to administrative costs from the first allocation. The resulting amount is the maximum amount of funds available to recipients for administrative activities under the second allocation. For example, if the recipient received an initial allocation of $100,000 and a second allocation of $75,000 (for a total FY 2011 grant of $175,000), then the maximum amount that the recipient could spend on administrative activities from the second allocation is $8,125. This example is detailed here:

Step 1: Determine Total Amount Available for Administrative Activities
Total FY 2011 ESG Grant = $175,000
× .075
$13,125
Step 2: Determine Total Amount Allocated to Administrative Activities in Initial Allocation
First Allocation = $100,000
× .05
$5,000
Step 3: Determine Total Amount Available for Administrative Activities From Second Allocation
$13,125
−$5,000
$8,125

B. Expenditure Limit for Street Outreach and Emergency Shelter Activities

Under 24 CFR 576.100(b) of the Interim Rule, the total amount of each recipient's fiscal year grant that may be used for street outreach and emergency shelter activities cannot exceed the greater of:

(1) 60 percent of the recipient's fiscal year grant; or

(2) The amount of FY 2010 grant funds committed for homeless assistance activities.

To count toward the amount in paragraph (2), the FY 2010 funds must have been committed between the date that HUD signed the FY 2010 grant agreement and January 4, 2012, the effective date of the Interim Rule. In addition, each commitment must be sufficiently documented. HUD is defining “committed” as obligated; therefore, recipients must use the same type of evidence they will use to document an “obligation” under 24 CFR 576.203(a) of the Interim Rule. For states, this evidence consists of a subgrant agreement or a letter of award requiring payment from the grant to a subrecipient. For metropolitan cities, urban counties, and territories, this evidence may consist of a subgrant agreement, a letter of award requiring payment from the grant to a subrecipient, a procurement contract, or a written designation of a department within the government of the recipient to directly carry out an eligible activity. If the recipient is an urban county, the evidence may also consist of an agreement with, or letter of award requiring payment to, a member government that has designated a department to directly carry out an eligible activity.

To ensure that each recipient's use of its second allocation complies with the expenditure limit for street outreach and emergency shelter, each recipient must notify HUD of the amount of FY 2010 grant funds the recipient committed for homeless assistance activities. This notification must be made in writing to the HUD field office or on, or before, the date the recipient submits its substantial amendment. HUD strongly encourages recipients to use the format detailed in Table 1 to declare the total amount of FY 2010 grant funds obligated to homeless assistance activities. These activities include all activities that recipients would report as homeless assistance activities in the Integrated Disbursement Information System (IDIS) for the Emergency Shelter Grants program (emergency shelter renovation, major rehabilitation, conversion, essential services, maintenance, operation, etc.). Table 1 also includes spaces for recipients to declare the total amounts of FY 2010 grant funds committed for homelessness prevention and administrative activities. The amount for homelessness prevention plus the amount for homelessness assistance activities plus the amount for administrative activities must equal the recipient's total FY 2010 grant amount.

Recipients are not required to submit documentation at this time. However, recipients must retain documentation to support the amounts declared, and provide these documents when HUD requests them.

Table 1—Suggested Format for Declaration of FY 2010 Grant Fund Commitments
Activity typeObligated amount
Homeless Assistance $
Homelessness Prevention $
Administrative Activities $
Total FY 2010 Award $

For most, if not all, recipients, the amount of FY 2010 grant funds committed for homeless assistance activities will be greater than 60 percent of the recipient's total FY 2011 ESG grant. For these recipients, the amount of FY 2010 grant funds committed for homeless assistance activities will be the FY 2011 expenditure limit for emergency shelter and street outreach activities. If a recipient reached this limit when obligating funds from the first allocation, that recipient cannot use any funds from its second allocation for emergency shelter or street outreach activities. In the rare case where a recipient did not reach the limit when obligating funds from the first allocation, that recipient may use some funds from its second allocation for emergency shelter and/or street outreach activities, provided that (1) those activities comply with the Interim Rule, and (2) the total FY 2011 grant funds used for those activities do not exceed the FY 2011 expenditure limit.

C. Critical Need for Rapid Re-Housing

HUD strongly encourages each jurisdiction to focus as much of its new ESG funding as possible on rapidly re-housing individuals and families living on the streets or in emergency shelters. While both rapid re-housing and homelessness prevention are eligible activities, only rapid re-housing assistance targets those individuals and families living on the streets or in emergency shelters. Effective rapid re-housing programs help people transition out of the homeless assistance system as quickly as possible, decreasing the number of persons who are homeless within the community. Rapid re-housing also ensures that emergency shelter resources are used to serve individuals and families with the most urgent housing crises. In contrast, the success of homelessness prevention activities are 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 re-housing 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.

IV. Requirements for Receiving the Second Allocation

To receive funds under the second allocation, recipients must submit and obtain HUD approval of a substantial amendment to the FY 2011 Annual Action Plan. The substantial amendment must be prepared and submitted in accordance with the recipient's citizen participation plan and the requirements of 24 CFR part 91, as amended by the Interim Rule. Note that 24 CFR 576.200 requires territories to follow the requirements that apply to local governments under 24 CFR part 91.

Table 2, below, shows the regulatory requirements that will apply to the preparation and contents of the substantial amendment.

Table 2—Relevant Requirements for the Substantial Amendment
Local governments and territoriesStates
Consultation 24 CFR 91.100(d) 4 CFR 91.110(e).
Citizen Participation 24 CFR 91.105(c), (k) 24 CFR 91.115(c), (i).
Action Plan 24 CFR 91.220(a), (c), (d), (e), (l)(4) 24 CFR 91.320(a), (c), (d), (e), (k)(3).
Certifications 24 CFR 91.225(c) 24 CFR 91.325(c).

A. Requirements for Preparing the Substantial Amendment to the FY 2011 Consolidated Plan Annual Action Plan

1. Consultation—24 CFR 91.100(d), 91.110(e)

The Interim Rule promotes greater collaboration between ESG recipients and Continuums of Care in planning, funding, implementing and evaluating homeless assistance and homelessness prevention programs locally. In preparing the substantial amendment, each recipient must follow the consultation requirements at 24 CFR 91.100(d) for local governments and territories or 24 CFR 91.110(e) for states, as applicable. In particular, the Interim Rule requires ESG recipients to consult with the Continuum(s) of Care within their geographic area regarding: Determining how to allocate ESG funds for eligible activities; developing the performance standards for activities funded under ESG; and developing funding, policies, and procedures for the operation and administration of the Homeless Management Information System (HMIS). Examples of possible consultation processes include meetings with Continuum of Care leadership and members, and joint workgroups or committees.

2. Citizen Participation—24 CFR 91.105(c), (k), 91.115(c), (i)

Each recipient must follow its existing citizen participation plan when completing its substantial amendment.

B. Required Contents of Substantial Amendments—24 CFR 91.220(a), (c), (d), (e), (l)(4), 91.225(c), 91.320(a), (c), (d), (e), (k)(3), 91.325(c)

1. Standard Form 424 (SF-424)

The substantial amendment must include a Standard Form 424, as required by 24 CFR 91.220(a) for local governments and territories and 24 CFR 91.320(a) for states.

2. Summary of Consultation Process

Based on the requirements in 24 CFR 91.220(l)(4)(vi) for local governments and territories, and 24 CFR 91.320(k)(3)(v) for states, each recipient's substantial amendment must describe how the recipient consulted with the Continuum(s) of Care regarding: Determining how to allocate ESG funds for eligible activities; developing the performance standards for activities funded under ESG; and developing funding, policies, and procedures for the operation and administrative of the HMIS.

3. Summary of Citizen Participation Process

In accordance with 24 CFR 91.105(c)(3) for local governments and territories and 24 CFR 91.115(c)(3) for states, the substantial amendment must summarize the citizen participation process used in preparing the substantial amendment. It must also summarize the public comments or views received, along with a summary of the comments or views not accepted, including the reasons for not accepting those comments or views.

4. Match

All recipients, except territories, must match the second allocation with an equal amount of other federal, state and local resources (cash and non-cash) in accordance with the revised matching requirements at 24 CFR 576.201. States should note that the matching requirement applies to the entire FY 2011 ESG grant; therefore, the exception of the first $100,000 in 24 CFR 576.201(a)(2) was applied to the first allocation and states are required to match 100 percent of the second allocation. In accordance with 24 CFR 91.220(c) for local governments and territories and 24 CFR 91.320(c) for states, the substantial amendment must specify the types, amounts, and proposed uses of these resources. These resources must be contributed, used and reported in accordance with the Interim Rule's new requirements in order to count as match for the second allocation.

5. Proposed Activities and Overall Budget

a. Proposed Activities

The substantial amendment must provide certain details for each activity to be funded using the second allocation of funds and any reprogrammed funds from the first allocation. Possible activities include the following:

• Rapid Re-Housing—Rental Assistance;

• Rapid Re-Housing—Housing Relocation and Stabilization Services;

• Homelessness Prevention—Rental Assistance;

• Homelessness Prevention—Housing Relocation and Stabilization Services;

• HMIS;

• Emergency Shelter—Shelter Operations

• Emergency Shelter—Essential Services

• Emergency Shelter—Renovation

• Emergency Shelter—Assistance Required Under the Uniform Relocation and Real Property Acquisition Act of 1970 (URA)

• Street Outreach—Essential Services

The required details for each activity include:

(1) The corresponding priority need from the recipient's Annual Action Plan;

(2) A concise description of the activity, including the number and types of persons to be served;

(3) The corresponding standard objective category (decent housing, suitable living environment, or economic opportunity) and the corresponding outcome category (availability/accessibility, affordability, or sustainability), as described in the Federal Register Notice of Outcome Performance Measurement System forCommunity Planning and Development Formula Grant Programs, dated March 7, 2006 (71 FR 11470); and

(4) The start date and completion date (to indicate the period over which the grant will be used for that activity).

(5) ESG and other funding amounts

In addition, the following activity details are required for local governments and territories, and recommended for States:

(6) One or more performance indicators, such as the number of persons or households prevented from becoming homeless, the number of persons or households assisted from emergency shelters/streets into permanent housing, or the number of persons or households covered by the HMIS;

(7) Projected accomplishments, in accordance with each performance indicator, to be made within one year; and

(8) Projected accomplishments, in accordance with each performance indicator, to be made over the period for which the grant will be used for that activity.

These details can be provided in any clear, concise format. Recipients may use the projects workbook spreadsheet in the Consolidated Plan Management Process (CPMP) tool, which can be found at:http://www.hud.gov/offices/cpd/about/conplan/toolsandguidance/cpmp. As an alternative, local governments may use Table 3C (“Consolidated Plan Listing of Projects” for local governments and territories,), which can be found in Appendix C or at:http://www.hud.gov/offices/cpd/about/conplan/toolsandguidance/guidance. Local governments and territories that use Table 3C should substitute “activity” for “project” and do not need to enter information not mentioned above. States may use Table 3C, (“Annual Action Plan Planned Project Results” for states) to provide some of the required information; however, because it does not capture all that is required, they will need to provide the remaining details in another format.

b. Discussion of Funding Priorities

The substantial amendment must explain why the recipient chose to fund the proposed activities at the amounts specified under section IV.B.5.a above. The more specific the explanations are, the more useful the consultation and citizen participation process will be. If locally-relevant data is available, HUD strongly encourages recipients to use that data to support its funding priorities. In addition, HUD encourages each recipient to describe how its funding priorities will support the national priorities established in “Opening Doors: Federal Strategic Plan to Prevent and End Homelessness,” which can be found at:http://www.usich.gov/opening_doors. The amendment must also identify any obstacles to addressing underserved needs in the community.

c. Detailed Budget

The substantial amendment must include a detailed budget of the planned activities and funding levels. This budget must account for the entire second allocation, and any reprogrammed funds from the first allocation. Recipients may use Table 3 to complete this requirement (to access this table as an Excel document, with embedded formulas, please see www.hudhre.info/esg). Note that this table assumes that recipients will obligate the entire second allocation, and any reprogrammed funds, to the new eligible activities and administrative costs. If a recipient is eligible and proposes to obligate any of its second allocation for emergency shelter or street outreach activities, that recipient should contact its local HUD field office for additional guidance and resources.

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Table 3 provides a format for recipients to describe their detailed budget. It also includes space to detail funding for tenant-based rental assistance and project-based rental assistance. Numbers in the table are included only as examples.

HUD encourages this level of detail in the substantial amendment for two reasons. First, the more specific the activities and funding amounts are in the substantial amendment, the more useful the consultation and citizen participation process will be. Second, distinguishing the tenant-based rental assistance amount from the project-based rental assistance amount will help HUD assess the level of environmental review required. Project-based rental assistance will require a more extensive environmental review because the assistance is tied to the dwelling unit, not the tenant.

6. Written Standards for Provision of ESG Assistance (24 CFR 91.220(l)(4)(i), 91.320(k)(3)(i), 576.400 (e)(1), (e)(2), and (e)(3))

If the recipient is a metropolitan city, urban county, or territory, the substantial amendment must include written standards for providing the proposed ESG assistance, as required under 24 CFR 91.220(l)(4)(i) and 576.400 (e)(1) and (e)(3). If the recipient is a state, it must include written standards for providing ESG assistance or describe the requirements for subrecipients to establish and implement written standards, as required under 24 CFR 91.320(k)(3)(i) and 576.400(e)(2) and (e)(3).

HUD recognizes that development of comprehensive, coordinated, and effective policies and procedures is a process that takes a substantial amount of time and thought. HUD encourages recipients, therefore, to establish initial standards for this grant and continue to refine these standards in their Annual Action Plans as the community adapts and further develops strategies for targeting resources, and as new best practices are established. Recipients may use the policies and procedures developed for their Homelessness Prevention and Rapid Re-Housing Program (HPRP) as a place to start in developing the standards, but should also evaluate the effectiveness of these standards and make changes as necessary to meet ESG requirements. Recipients should also keep in mind that the amount of funding available under the ESG program is far less than the amount of funding available under HPRP; therefore, effective targeting becomes even more vital.

a. Standard policies and procedures for evaluating individuals' and families' eligibility for assistance under Emergency Solutions Grant (ESG).

The written standards must include standard policies and procedures for evaluating each individual or family's eligibility for ESG assistance. These policies and procedures must be consistent with the definitions of homeless and at risk of homelessness in 24 CFR 576.2 and the recordkeeping requirements in 24 CFR 576.500(b), (c), (d), and (e).

b. Policies and procedures for coordination among emergency shelter providers, essential service providers, homelessness prevention and rapid re-housing assistance providers, other homeless assistance providers, and mainstream service and housing providers.

The written standards must include policies and procedures for coordinating and integrating the proposed program components with other homeless assistance programs and mainstream housing and service programs, in order to promote a strategic, community-wide system to prevent and end homelessness. Sections 576.400(b) and (c) of the Interim Rule provide a list of these programs. The required coordination and integration may be done over the area covered by the Continuum of Care or a larger area over which services are coordinated.

c. Policies and procedures for determining and prioritizing which eligible families and individuals will receive homelessness prevention assistance and which eligible families and individuals will receive rapid re-housing assistance.

The amount of funds that will be available to recipients will likely not be enough to serve all persons who are homeless and all persons at risk of homelessness; therefore, the written standards must include targeting policies and procedures for rapid re-housing and homelessness prevention. For example, if a local government proposes to fund homelessness prevention, it must include policies and procedures for determining which individuals and families who qualify as at risk of homelessness can receive homelessness prevention assistance and which of those individuals and families should be prioritized for that assistance.

HUD encourages each jurisdiction to consider how these policies and procedures can be designed to provide rapid re-housing assistance to as many homeless people as possible, including those individuals and families who face multiple obstacles to obtaining and sustaining housing. An individual or family's ability to sustain housing should not be a threshold requirement. Instead, each program should focus on helping individuals and families overcome their immediate housing obstacles and connecting them with the resources they need to stay housed when the program ends.

In addition, for homelessness prevention assistance, recipients must include the risk factors that will be used to help determine individuals and families who are most in need of ESG homelessness prevention assistance to avoid moving into an emergency shelter or another place described in paragraph (1) of the `homeless' definition in 24 CFR 576.2.

Because predicting which families and individuals will become homeless “but for” ESG assistance is difficult, HUD encourages recipients to target assistance to families and individuals who are closest to going to a shelter, car, or the street, if not those who are about to spend their first night there (often referred to as “diversion”). Typically, these families and individuals will have the same characteristics as families and individuals who are already in shelters and on the streets. However, these characteristics can vary from one community to the next, so an effective targeting policy will depend on good local data. HUD recommends that communities not just identify these characteristics, but identify the combinations of these characteristics that are typical of families and individuals living in shelters or on the streets. These combinations of characteristics should serve as a guide for targeting and prioritizing prevention assistance to those families and individuals who are most in need.

d. Standards for determining the share of rent and utilities costs that each program participant must pay, if any, while receiving homelessness prevention or rapid re-housing assistance.

The written standards must include guidelines for determining a program participant's contribution to rent and utilities, if any, while they are receiving homelessness prevention or rapid re-housing assistance. When developing these guidelines, recipients should consider the challenges associated with homelessness in their community, the other resources available or lacking in their community, and the existing housing and economic conditions in their community. Additionally, HUD reminds recipients that they are able to be flexible and consider a wide range of options, including providing a fixed amount of assistance per person or requiring the program participant to paya certain portion of his or her income over the course of the assistance. If the assistance will be based on a percentage of the program participant's income, the standards must specify what percentage will be used and how income will be calculated.

e. Standards for determining how long a particular program participant will be provided with rental assistance and whether and how the amount of that assistance will be adjusted over time.

The written standards must include guidelines for determining the length and amount of assistance a participant will receive, as well as, changes in assistance amounts over time. ESG recipients must ensure that the following regulatory provisions are met when developing standards related to rental assistance: (1) Program participants receiving project-based rental assistance must have a lease that is for a period of 1-year, regardless of the length of rental assistance; (2) program participants receiving rapid re-housing assistance must be re-evaluated at least once every year and program participants receiving homelessness prevention assistance are required to be re-evaluated at least once every 3 months; and (3) no program participant may receive more than 24 months of assistance in a 3-year period.

As mentioned above, HUD encourages recipients to consider the challenges associated with homelessness in their community, the other resources available or lacking in their community, and the existing housing and economic conditions in their community. If recipients choose to establish additional criteria for re-evaluating eligibility, these should be described in this section.

f. Standards for determining the type, amount, and duration of housing stabilization and/or relocation services to provide a program participant, including the limits, if any, on the homelessness prevention or rapid re-housing assistance that each program participant may receive, such as the maximum amount of assistance, maximum number of months the program participant receives assistance; or the maximum number of times the program participant may receive assistance.

The written standards must include standards for determining the housing stabilization and/or relocation services that will be provided to a participant, including the types of services, amount of services, and the length of time a participant can receive services. The written standards must also include any limits that will be imposed above and beyond the Interim Rule's limits on the types and amount of assistance that a participant can receive. As with the standards for rental assistance, recipients are able to be flexible and consider a wide range of options when setting standards for housing stabilization and relocation standards for the jurisdiction. For example, recipients could adjust the services over time based on a set of indicators or require the program participant to contribute a certain portion of his or her income while receiving assistance. Except as provided for housing stability case management in § 576.105(b)(2) of the Interim Rule, no program participant may receive more than 24 months of assistance in a 3-year period.

7. Making Sub-Awards

Each recipient must describe its process for making sub-awards. Each state recipient must describe how it intends to make its allocation available to units of general local government and private nonprofit organizations, including community and faith-based organizations. Each territory or metropolitan city must describe how it intends to make its allocation available to private nonprofit organizations. Each urban county must describe how it intends to make its allocation available to private nonprofit organizations and to participating units of local government.

8. Homeless Participation Requirement

Under § 576.405(a) of the Interim Rule, each recipient that is not a state must provide for the participation of not less than one homeless individual or formerly homeless individual on the board of directors or other equivalent policymaking entity of the recipient, to the extent that the entity considers and makes policies and decisions regarding any facilities, services, or other assistance that receive ESG funding. This requirement remains the same as it was in the prior ESG regulations.

However, because all ESG recipients are governments, the policymaking entities for most, if not all, ESG recipients can only consist of elected officials. Before the Interim Rule, these recipients could request a waiver of the participation requirement, if they agreed to consult with homeless or formerly homeless individuals in considering and making policies and decisions regarding ESG-funded facilities, services, or other assistance. Now, under § 576.405(b) of the Interim Rule, recipients unable to meet the participation requirement are not required to apply for a waiver. Instead, they must develop and implement a plan (as part of their Annual Action Plan) to consult with homeless or formerly homeless individuals in considering and making policies and decisions regarding any ESG-funded facilities, services, or other assistance. Therefore, for those recipients that cannot meet the participation requirement in § 576.405(a), the substantial amendment must include a plan that meets the requirements under § 576.405(b).

9. Performance Standards

The recipient must describe the performance standards for evaluating ESG activities. These performance standards must be developed in consultation with the Continuum of Care. Unlike the performance indicators, the performance standards should go beyond projecting the number of persons or households who will exit or avoid homelessness under the grant. The purpose of these performance standards is to provide a measure for the ESG recipient and the Continuum of Care to evaluate each ESG service provider's effectiveness, such as how well the service provider succeeded at: (1) Targeting those who need the assistance most; (2) reducing the number of people living on the streets or emergency shelters; (3) shortening the time people spend homeless; and (4) reducing each program participant's housing barriers or housing stability risks.

HUD encourages recipients to develop performance standards for ESG activities that will complement or contribute to the Continuum of Care program performance measures detailed in Section 427 of the McKinney-Vento Act, as amended by the HEARTH Act. In future years, each Continuum of Care will be responsible for measuring the performance of ESG recipients within its geographic boundaries against these performance standards.

HUD also encourages recipients to carefully consider how the standards might help or hinder service providers' ability to target and design their programs so that homelessness is effectively shortened and reduced in the recipient's jurisdiction.

HUD recognizes that these standards will evolve over the next few years as ESG recipients and subrecipients have increasing access to HMIS data and as they become more integrated with the Continuums of Care within their geographic area.

10. Certifications—24 CFR 91.225(c), 91.325(c)

Each recipient must submit new ESG certifications in accordance with the requirements in 24 CFR 91.225(c) for local governments and territories and 24CFR 91.325(c) for states. Recipients can find updated certifications on HUD's Web site at www.hudhre.info.

C. Written Standards Required for Recipients Who Are Eligible and Decide To Use Part of the Second Allocation of FY 2011 Funds for Emergency Shelter and Street Outreach Activities

Recipients that plan to obligate funds to emergency shelter or street outreach activities, and that are eligible to do so (see Section III of this Notice for more information) must meet additional written standards requirements under 24 CFR 576.400 (e)(1), (2) and (3). HUD will not approve any emergency shelter or street outreach activities proposed in the substantial amendment until these requirements are met.

1. Local Governments and Territories

a. If a local government or territory decides to use the second allocation to fund essential services related to street outreach, the jurisdiction must include its standards for targeting and providing those services.

b. If a local government or territory decides to use the second allocation to fund any emergency shelter activities (such as rehabilitation/conversion, operations, or essential services) the jurisdiction must include its policies and procedures for admission, diversion, referral, and discharge by emergency shelters assisted under ESG. These policies and procedures must include standards regarding length of stay, if any, and safeguards to meet the safety and shelter needs of special populations—e.g., victims of domestic violence, dating violence, sexual assault, and stalking—and individuals and families who have the highest barriers to housing and are likely to be homeless the longest.

c. If a local government or territory decides to use the second allocation to fund essential services related to emergency shelter, the jurisdiction must include its policies and procedures for assessing, prioritizing, and reassessing individuals' and families' needs for essential services related to emergency shelter.

2. States

If a state decides to use the second allocation to fund street outreach and/or emergency shelter activities, then the state must either (1) include its own written standards as local governments and territories must do for those activities (see a, b, and c under paragraph 1 above) or (2) describe its requirements for its subrecipients to establish and implement the relevant written standards, as provided under 24 CFR 576.400(e)(2) and (3).

D. Requirements for Recipients Who Plan To Use the Risk Factor Under Paragraph (1)(iii)(G) of the “At Risk of Homelessness” Definition

If the recipient plans to serve individuals or families that are “at risk of homelessness,” as defined under 24 CFR 576.2, based on the risk factor, “otherwise lives in housing that has characteristics associated with instability and an increased risk of homelessness,” the recipient must describe the specific characteristics associated with instability and increased risk of homelessness as specified in paragraph (1)(iii)(G) of the “at risk of homelessness” definition. The characteristics may be evidenced by characteristics and needs of individuals and families currently entering the homeless assistance system or the streets. If a recipient does not describe these characteristics in the substantial amendment, the recipient cannot serve individuals and families using this risk factor in the “at risk of homelessness” definition. Note that an individual or family may not qualify simply by exhibiting this risk factor. In order to qualify as at risk of homelessness under paragraph (1) of the definition, that individual or family must also meet the criteria under paragraphs (1)(i) and (1)(ii) with respect to income and resources or support networks.

E. Requirements for Optional Changes to the FY 2011 Annual Action Plan

This part of the Notice describes changes to the FY 2011 Annual Action Plan that HUD encourages, but does not require recipients to make, including adding a description of the centralized or coordinated assessment system being used by recipients or subrecipients, if applicable, and providing updated monitoring standards and procedures.

1. Centralized or Coordinated Assessment System

Recipients are not required to participate in a centralized or coordinated assessment system until HUD provides additional standards to Continuums of Care through the publication of the Continuum of Care program rule. However, HUD recognizes that some communities have already established such systems and that ESG recipients and subrecipients either are participating in them or would like to participate in them. If the recipient's jurisdiction, or a portion of the recipient's jurisdiction, currently has a centralized or coordinated assessment system and the recipient or subrecipients participate in this system, HUD encourages the recipient to describe the assessment system in the substantial amendment.

2. Monitoring

The consolidated plan requires recipients to describe the standards and procedures that the jurisdiction will use to monitor activities carried out in furtherance of the plan and will use to ensure long-term compliance with requirements of the programs involved. The Interim Rule introduces a number of substantial changes to the activities and procedures required of ESG recipients and subrecipients that were not considered when these standards and procedures were originally developed. As recipients prepare their substantial amendments, HUD encourages recipients to review their monitoring standards and procedures accordingly. To help prevent future monitoring findings by HUD for noncompliance, recipients should ensure that established standards and procedures will allow them to monitor compliance with these new requirements. If existing procedures fall short in this regard, or if modifications are needed, then HUD encourages recipients to update their monitoring standards and procedures in this substantial amendment. As a key component of these modifications, recipients should address associated requirements for appropriate levels of staffing, as HUD has found that recipients that dedicate staff to monitoring compliance and carrying out other administrative tasks are better able to implement the changes in, and assure compliance with, the rule.

V. Requirements That Apply to FY 2012 and Future Consolidated Planning Submissions

This Notice focuses on requirements for receiving the second allocation of FY 2011 ESG funds. To receive any formula grant funds for FY 2012 and future fiscal years, all Consolidated Plan jurisdictions—regardless of whether they receive ESG funds—are required to comply with all of the revised requirements for preparing and submitting the Annual Action Plan, including all applicable consultation and citizen participation requirements. These requirements are specified under 24 CFR 91.100, 91.105, 91.220, and 91.225 for local governments (and territories for ESG) and under 24 CFR 91.110, 91.115, 91.320, and 91.325 for states.

In addition, after January 4, 2012 (the effective date of the Interim Rule), all submissions of Consolidated Planjurisdictions' housing and homeless needs assessments, housing market analyses, and strategic plans must comply with all of the revised requirements in 24 CFR part 91 that apply to submitting the complete 5-year Consolidated Plan. However, jurisdictions will not be required to submit a complete Consolidated Plan in accordance with the revised requirements until the next submission date scheduled under the jurisdiction's existing Consolidated Planning cycle.

With regard to the Consolidated Annual Performance and Evaluation Report (CAPER): ESG recipients will be required to report on ESG activities included in the substantial amendment to the 2011 Annual Action Plan and future Annual Action Plans using the new ESG-specific reporting requirements under § 91.520(g). All jurisdictions which submit a CAPER (both those receiving ESG funds and those not receiving ESG funds) will be required to report annually using the new homelessness reporting requirements under § 91.520(c), for FY 2012 and future program years. HUD plans to issue further guidance for all jurisdictions about complying with these other part 91 requirements.

Dated: January 20, 2012. Mercedes M. Márquez,

Assistant Secretary for Community Planning and Development.

Appendix A: FY 2011 ESG Allocations by State and Recipient Name

The following list provides the first and second allocations to Emergency Solutions Grants recipients for FY 2011.

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Appendix B: Checklist of Requirements for the Substantial Amendment to theFY 2011 Consolidated Plan Annual Action Plan

The substantial amendment must be prepared and submitted in accordance with the recipient's citizen participation plan and the requirements of 24 CFR part 91, as amended by the Interim Rule. The following outline is provided as a checklist to ensure an accurate and complete submission in accordance with the details of this Notice.

A. Requirements for Preparation

1. Consultation

• Consult with the Continuum(s) of Care within the geographic area on:

○ Determining how to allocate ESG funds for eligible activities;

○ Developing the performance standards for activities funded under ESG; and

○ Developing funding, policies, and procedures for the operation and administration of the HMIS.

2. Citizen Participation

• Follow existing citizen participation plan for completing a substantial amendment.

B. Required Contents of Substantial Amendments

1. SF-424

2. Summary of Consultation Process

• Describe how the recipient consulted with the Continuum(s) of Care on:

○ Determining how to allocate ESG funds for eligible activities;

○ Developing the performance standards for activities funded under ESG; and

○ Developing funding, policies, and procedures for the operation and administration of the HMIS.

3. Summary of Citizen Participation Process

• Summarize citizen participation process used;

• Summarize the public comments or views received; and

• Summarize the comments or views not accepted and include the reasons for not accepting those comments or views.

4. Match

• Describe:

○ Types of cash and/or non-cash resources used as match;

○ Specific amounts of resources used as match;

○ Proposed uses of match resources.

5. Proposed Activities and Overall Budget

a. Proposed Activities

• All recipients must include the following details for each proposed activity:

(1) corresponding priority needs from recipient's Annual Action Plan

(2) concise description of the activity, including the number and types of persons to be served

(3) corresponding standard objective and outcome categories

(4) start date and completion date

(5) ESG and other funding amounts

• Local governments and territories are required, and States are encouraged, to include the following details for each proposed activity:

(6) one or more performance indicators

(7) projected accomplishments, in accordance with each indicator, to be made within one year

(8) projected accomplishments, in accordance with each performance indicator, to be made over the period for which the grant will be used for that activity

Note: Table 3C (“Consolidated Plan Listings of Projects” for local governments and territories, or “Annual Action Plan Planned Project Results” for states) or the projects workbook spreadsheet in the Consolidated Plan Management Process tool may be used to format and provide some or all of these details, as applicable.

b. Discussion of Funding Priorities

• Explain why the recipient chose to fund the proposed activities at the amounts specified (recommended: if available, use locally relevant data to support the funding priorities, and explain how the funding priorities will support the national priorities established in Opening Doors: Federal Strategic Plan to Prevent and End Homelessness).

• Identify any obstacles to addressing underserved needs in the community.

c. Detailed Budget

• Include detailed budget of planned activities and funding levels accounting for entire second allocation and any reprogrammed funds from the first allocation (may use Table 3 in this Notice).

6. Written Standards for Provision of ESG Assistance

• If the recipient is a metropolitan city, urban county, or territory: include written standards for providing the proposed assistance.

• If the recipient is a state: include written standards for providing the proposed assistance or describe the requirements for subrecipients to establish and implement written standards.

The written standards must include:

a. Standard policies and procedures for evaluating individuals' and families' eligibility for assistance under ESG.

b. Policies and procedures for coordination among emergency shelter providers, essential service providers, homelessness prevention and rapid re-housing assistance providers, other homeless assistance providers, and mainstream service and housing providers.

c. Policies and procedures for determining and prioritizing which eligible families and individuals will receive homelessness prevention assistance and which eligible families and individuals will receive rapid re-housing assistance.

d. Standards for determining the share of rent and utilities costs that each program participant must pay, if any, while receiving homelessness prevention or rapid re-housing assistance.

e. Standards for determining how long a particular program participant will be provided with rental assistance and whether and how the amount of that assistance will be adjusted over time.

f. Standards for determining the type, amount, and duration of housing stabilization and/or relocation services to provide a program participant, including the limits, if any, on the homelessness prevention or rapid re-housing assistance that each program participant may receive, such as the maximum amount of assistance, maximum number of months the program participants receives assistance; or the maximum number of times the program participants may receive assistance.

7. Describe Process for Making Sub-Awards

8. Homeless Participation Requirement

• For those recipients who cannot meet the participation requirement in § 576.405(a), the substantial amendment must include a plan that meets the requirements under § 576.405(b).

9. Performance Standards

• The recipient must describe the performance standards for evaluating ESG activities, which must be developed in consultation with the Continuum(s) of Care.

10. Certifications

C. Written Standards Required for Recipients Who Are Eligible and Decide To Use Part of the Second Allocation of Fy 2011 Funds for Emergency Shelter and Street Outreach Activities

1. If the recipient is a metropolitan city, urban county, or territory: include written standards for providing the proposed assistance, as follows.

2. If the recipient is a state, either: (1) include written standards for providing the proposed assistance or(2) describe the requirements for subrecipients to establish and implement written standards.

The written standards must include:

a. If funding essential services related to street outreach with second allocation: standards for targeting and providing these services.

b. If funding any emergency shelter activities with second allocation: policies and procedures for admission, diversion, referral and discharge by emergency shelters assisted under ESG, including standards regarding length of stay, if any, and safeguards to meet the safety and shelter needs of special populations and persons with the highest barriers to housing.

c. If funding essential services related to emergency shelter with second allocation: policies and procedures for assessing, prioritizing, and reassessing individuals' and families' needs for essential services related to emergency shelter.

D. Requirements for Recipients Who Plan To Use the Risk Factor Under Paragraph (1)(iii)(G) of the “at Risk of Homelessness” Definition

• If recipient plans to serve persons “at risk of homelessness,” based on the risk factor “otherwise lives in housing that has characteristics associated with instability and an increased risk of homelessness:” describe specific characteristics associated with instability and increased risk of homelessness.

E. Requirements for Optional Changes to the FY 2011 Annual Action Plan

1. Centralized or Coordinated Assessment System

• If the recipient's jurisdiction, or a portion of the recipient's jurisdiction, currently has a centralized or coordinated assessment system and the recipient or subrecipients utilize the centralized or coordinated assessment system, the recipient should describe the assessment system in the substantial amendment.

2. Monitoring

• If existing monitoring procedures are not sufficient to allow recipients to monitor compliance with the new requirements, HUD encourages recipients to update their monitoring standards and procedures in the process of submitting this substantial amendment. This should address appropriate levels of staffing.

Appendix C-1: Table 3C for Local Governments and Territories: Consolidated Plan Listing of Projects

An electronic copy of this table can be found at:http://www.hud.gov/offices/cpd/about/conplan/toolsandguidance/guidance. Recipients should substitute “activity” for “project” and do not need to enter information not mentioned in Section IV.B.5.a of this Notice.

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Appendix C-2: Table 3C for States: Annual Action Plan Planned Project Results

An electronic copy of this table can be found at:http://www.hud.gov/offices/cpd/about/conplan/toolsandguidance/guidance.

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References

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