Section Q: Project Renewals

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Since 1997, applying for an SHP renewal grant has been part of the annual national competitive award process. Section 423 of the McKinney-Vento Act (42 USC 11383(a)) authorizes grantees to reapply to renew grants for leasing, operating costs and supportive services. (See also 24 CFR 583.100(b)(6).) Since section 426(h)(i) of the McKinney-Vento Act authorizes the use of up to 5 percent of a grant for administrative expenses and because HUD has implemented that by designating a portion of grant funds for administrative expenses, the amounts awarded for administrative expenses may also be renewed. The McKinney-Vento Act does not authorize renewal of grants for acquisition, rehabilitation and new construction. Applications should request sufficient funds to complete these activities within the initial grant term and within the original budget. The McKinney-Vento Act also does not expressly authorize renewal of grants for technical assistance or for HMIS, which was first authorized as an eligible use of SHP funds in 2001. However, in order to comply with Congress’ direction to HUD to continue its collaborative efforts with local jurisdictions to collect and analyze data on homelessness, HUD has been accepting applications to continue the operation of HMIS. HUD expects to publish a rule on HMIS for further clarification.

What is a Renewal Grant?

A renewal grant gives SHP assistance to a current grantee or project sponsor that received SHP funding over the past year(s). The renewal grant funds the continuation of the same activities (with the exception of acquisition, rehabilitation and new construction funds) as the initial grant, as it exists at the time the renewal application is submitted to HUD. The initial grant is eligible for renewal in the competition held the year before the grant term is due to expire. The regulations in section 24 CFR 583.235 cover renewals and authorize HUD to noncompetitively renew grants. HUD has awarded renewals through competition since the 1990s. Grantees should carefully review the NOFA each year for instructions on obtaining renewal grants.

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When Does a Renewal Grant Begin?

Renewal grants’ operating years generally start on the day following the completion of the initial grant. A grantee confirms the start date of the operating year by entering it into the LOCCS financial system. (If an incorrect date is set, the grantee should contact their local field office to correct the date.) If the grantee has not entered a start date into the LOCCS system, HUD looks at the date when a grantee first drew down funds for leasing, operating, or supportive services activities to determine the operating year start date because that date usually coincides with the start of operations. This is a rough estimate of when the operating year began.

Grantees and project sponsors are responsible for keeping grant files and for knowing the beginning and ending dates of their grants. Grantees and project sponsors may consult with their local field offices about renewal dates but should anticipate when to apply for renewal funding.

More guidance on operating start dates is found in Section F Important Dates.

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How to Apply for a Renewal Grant

Since 1997, grantees apply for renewal as part of the Continuum of Care Homeless Assistance national competition. Grantees apply in the year before their initial grant expires. For example, a project expiring in calendar year 2007 would be eligible in the 2006 competition. In this way, all projects that are successful in the competition have continuity; projects that are unsuccessful have time to seek other funding.

Only the current grantee can be an applicant for a renewal. In order to identify the current grantee as the applicant in the competition, a Standard Form 424 must be included as part of the application. Please note that project sponsors and other entities that are not the grantee cannot apply for renewal.

Renewal applicants complete the section of the application designated for renewal projects. Renewal projects, just like all other projects, must meet all project eligibility, capacity, and quality standards as identified in the NOFA or they will be rejected. Beginning with the 2007 competition, if awarded funds, renewal projects with changes must complete a Technical Submission prior to signing a grant agreement. If there are no changes to the projects and funds are available, the project can proceed to the grant execution phase. See Section G Conditional Approval and Program Cycle for more information on the Technical Submission.

A renewal project, like any other project, should appear on the community’s Continuum of Care priority list. If a renewal project does not appear on the priority list, it will not be funded. Communities should reference guidance provided in annual NOFAs on the renewal process.

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How Much Funding Should I Request for my SHP Renewal?

The amount an applicant may request for activities eligible for renewal in an existing project (i.e., leasing, operations, supportive services, and administration) is based on the average annual amount of the grant being renewed as approved by HUD for these activities in the existing grant’s Technical Submission. Renewal funds can only be requested for continuing a previously approved project at the same level of housing and/or services provided in the previous grant.

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Failure to Apply for Renewal Funding

The need for the continuation of previously funded projects should be carefully considered in the local Continuum of Care planning process. HUD does not require that a project be proposed for renewal or given a higher priority than other projects. However, HUD is very concerned that the on-going housing needs of homeless persons currently being served by existing projects be taken into consideration. Beginning with the 2005 NOFA, HUD began providing CoCs the option of using a hold harmless reallocation method to reallocate their pro rata need funds in order to create more permanent supportive housing projects. This method is intended to provide CoCs with excessive renewal demand with maximum flexibility in addressing current needs and the discretion to not request funding for or to reduce the requested amount of one or more SHP renewal project applications.

If a grantee fails to apply for an SHP project renewal, or if a renewal project fails to receive funding in the competition, the project is not eligible for renewal in the next year's competition unless the grantee and HUD execute an amendment to the grant agreement, extending the term. (See Section S Grant Extensions for guidance on extending grants.) During that time, the grantee will have to secure other funding to continue the project. Note that, beginning in 1999, a grantee may use State or local funds as interim or emergency funding as well as any other funds to continue the project and still remain eligible for SHP funding as long as the project term has been extended into the next calendar year. If HUD grant funds are not used in the subsequent calendar year, then the grant term ends and no renewal is available.

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Guidance on Reductions in Project Scope

If less than the maximum amount of HUD funding is requested in a renewal application, grantees must reduce or eliminate elements of the project. However, be aware that the project must meet all project eligibility and quality standards as identified in the McKinney Act, the program regulations and the NOFA.

If the scope of a project is reduced, grantees or project sponsors will be required to document this change at the grant execution phase. Grantees or project sponsors that reduce the number of units or participants (reflected in the application under the Point in Time Housing and Participants Chart), must include a written summary explaining the following:

  • why it is necessary to reduce the scope of the project;
  • which elements (housing units, services, etc.) of the project will remain and which will be reduced or eliminated; and
  • the number of persons served compared to the number in the original grant.

Grantees or project sponsors must also include a proposed revised budget reflecting the associated cost reductions, if applicable. HUD may reduce funding proportionately according to the reduction in scope.

For guidance on reducing the number of units supported by your project in conjunction with current fair market rents, see Section D Eligible Activities. For general guidance on reductions in project scope, see Section R Grant Amendments.

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State Renewal Projects

In some initial grants, a state is the grantee. For renewal purposes, a state's renewal project would need to be part of the local Continuum of Care and entered on the local community's priority list.

If the state's grant is being carried out in various locations, a state may need to divide the renewal request among several Continuum of Care priority lists. For example, a state may have an expiring SHP grant being carried out in three places – two cities with their own Continuum of Care strategies and one area, which is part of the state's Continuum of Care strategy. In that case, the first two projects would appear on those communities' priority lists with the state as the applicant. The third project would appear on the state's priority list with the state as the applicant.

A state with an SHP, transitional housing grant may choose to request HUD approval for a change of grantee to a project sponsor, or another entity, that is eligible to be a grantee (has sufficient capacity, is a private nonprofit organization or governmental entity, etc.). The state would request that the HUD field office process an amendment to the existing grant to change the grantee. Neither the project sponsor nor the other entity could apply for renewal without an approved grant amendment, since it would not be the approved grantee for the current project.

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Section Q: Frequently Asked Questions

  1. A current SHP grantee decides to add new activities or expand the level of an existing approved activity to its existing SHP funded project (i.e., by adding 3 new units or serving 20 more people) and submits an application requesting funding for these new activities. Would this be considered a renewal grant?

    No. In order to be considered an SHP renewal, a project must not include either a new activity or an expansion of an existing activity. An expansion of an existing project is considered a new effort and would be submitted as a new project.

  2. Do I have to submit separate project applications to both renew and expand my SHP project?

    Yes. If a project is eligible for renewal and the grantee wants to apply for funds to both renew the existing project and to add new activities or expand existing activities to the same project, a separate Exhibit 2 must be submitted for each. That is, an Exhibit 2 should be submitted requesting the renewal of the existing project and another Exhibit 2 should be submitted requesting funding for only the additional new or expanded activities. In addition, both projects should be included in the Continuum of Care application.

  3. How do I determine if my project is eligible for SHP renewal?

    To be eligible for an SHP renewal, your current HUD grant must expire in the calendar year following the application due date under the NOFA. Grantees should read NOFAs carefully for provisions applying to renewal grants.

    The term ends when the specified time period for the grant elapses. For example, the term for a 2003 SHP grant awarded for three years ends three years from the operating start date. However, if a grant term has been extended, the term ends when the period of extension expires as indicated in the grant agreement amendment. If the grant whose term was extended is subsequently renewed, the renewal grant term begins when the extension period expires.

    Contact your local HUD field office to discuss whether your project is eligible for renewal in the upcoming competition. Your discussions with the field office should clarify the terms of any extensions, as well as any amendments that have been executed. Any minor changes (less than 10 percent shift of funds from one activity to another) should be part of your discussion.

  4. What happens if HUD inadvertently renews an ineligible project?

    If HUD inadvertently provides funding to an ineligible project, the awarded funds will be cancelled and the grantee must return the funds to HUD.

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