Program

COVID-19 Federal Assistance e311

Topics

Housing & Rental Assistance, Infrastructure & Maintenance Investments

May a municipality use CRF funds for repairs to buildings used to address the public health impact of COVID-19, e.g., decompression shelters?

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act-authorized Coronavirus Relief Funds ("CRF”) can be used for costs that were necessary to address the impact of the COVID-19 public health emergency[1], including repairs needed for a building to function as a shelter due to COVID-19 safety measures. The overarching eligibility rules for CRF allow for the coverage of expenses that:

  1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (“COVID–19”);
  2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and
  3. were incurred during the period that began on March 1, 2020 and ends on December 31, 2021.[2]

Accordingly, if the upgrades to the shelter were unbudgeted, incurred during the COVID-19 public health emergency, and necessary to respond to the pandemic, such upgrades should be eligible under CRF.

The requirement that expenditures be incurred ‘‘due to’’ the public health emergency means that expenditures must be used for actions taken to respond to the public health emergency.[3] Further, the statute also specifies that expenditures using CRF payments be ‘‘necessary.’’ The Department of the Treasury (“Treasury”) understands this term broadly to mean that the expenditure is reasonably necessary for its intended use in the reasonable judgment of the government officials responsible for spending CRF payments.[4] Support for necessary upgrades to the shelter can be bolstered by a narrative which includes the assessment by the relevant government official(s) that these changes were needed as a result of the pandemic.

Based on Treasury guidance, repairs to the shelter’s elevators could qualify as an eligible expense under the Coronavirus State and Local Fiscal Recovery Funds (“FRF”) as well. As outlined in Treasury’s Interim Final Rule (“the Rule”), eligible uses of FRF include supporting the COVID-19 public health response.[5] Moreover, Treasury addresses this specific scenario in its Frequently Asked Questions. Treasury authorizes use of FRF for the following activities:

A broad range of services are needed to contain COVID-19 and are eligible uses, including vaccination programs; medical care; testing; contact tracing; support for isolation or quarantine; supports for vulnerable populations to access medical or public health services … support for prevention, mitigation, or other services in congregate living facilities (e.g., nursing homes, incarceration settings, homeless shelters, group living facilities) and other key settings like schools … Capital investments in public facilities to meet pandemic operational needs are also eligible, such as physical plant improvements to public hospitals and health clinics or adaptations to public buildings to implement COVID-19 mitigation tactics.[6]

In the example above, the re-opened building had been closed prior to the pandemic; its re-opening and capital investments such as repairs can be argued to be eligible expenses in certain circumstances. Here, the likely eligibility stems from the municipality’s use of the building as a decompression shelter in direct response to the COVID-19 pandemic. [7] It is worth noting that the Rule permits funds to be used to cover costs incurred beginning on March 3, 2021.[8] Treasury’s Frequently Asked Questions (“FAQ”) document further clarifies that this limitation applies to costs incurred by the recipient (i.e., the state, local territorial, or Tribal government receiving funds). However, recipients may use Coronavirus State and Local Fiscal Recovery Funds to provide assistance to households, businesses, and individuals within the eligible use categories described in the Rule for economic harms experienced by those households, businesses, and individuals prior to March 3, 2021 as long as the obligation to provide assistance or funding was not incurred by the recipient prior to March 3, 2021. [9]

Last Revised: July 5, 2021

[1]DEPARTMENT OF THE TREASURY Coronavirus Relief Fund for States, Tribal Governments, and Certain Eligible Local Governments. Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021, Page 2, available at: https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf.

[2] Id.

[3] Id.

[4] Id.

[5] U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions #4.6 at 17-18, https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[6] Id. at 3-4.

[7] A decompression shelter is an overflow housing site established to reduce crowding in existing shelters. See Centers for Disease Control and Prevention, Interim Guidance for Homeless Service Providers to Plan and Respond to Coronavirus Disease 2019 (COVID019), available at: https://www.cdc.gov/coronavirus/2019-ncov/community/homeless-shelters/plan-prepare-respond.html.

[9] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of June 24, 2021),  – FAQ #4.7, at 18, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.