Section 2.1: Eligible Activities

The statute that created the Shelter Plus Care program strictly limits the kinds of activities that may be funded through S+C grants. The eligible activities are restricted to rental assistance for program participants and administrative costs associated with administering the rental assistance.

Rental Assistance

Grantees help make housing affordable for program participants by using S+C grant funds to pay the difference between the actual rent for a unit and 30 percent of the participant's income. (See Section 3 for more information on determining allowable rent levels and calculating tenant rent payments.)

Rental assistance can take several forms:

  • monthly rent payments;
  • when necessary, a security deposit in an amount up to one month's rent; and
  • one month's rent for housing units vacated by a program participant. The term "vacated" excludes brief periods of inpatient care (limited to 90 days for each occurrence). (See 582.105(d))

Grant funds can also be used to help offset utility costs paid by the participant if utilities are not included in the rent. Where rent does not include utilities, the tenant's contribution is reduced to allow for a reasonable utility allowance.

  • Grantees may obtain a utility allowance schedule from their local Public Housing Agency. (See CPD Notice 96-3)
  • If the reasonable utility allowance is more than the tenant rent contribution, the tenant must be reimbursed for the difference from S+C grant funds.

Administrative Costs

Grantees may use up to 8 percent of the S+C grant for certain administrative costs associated with the program. The allowable uses include:

  • Receiving new participants into the program;
  • Providing housing information and search assistance;
  • Determining participant income and rent contributions;
  • Inspecting units for compliance with Housing Quality Standards (See Section 3); and
  • Processing rental payments to landlords.

Here's how the funds available for administrative costs are determined. By statute, the amount of the S+C grant award is based on:

(Number of units to be assisted) x (HUD's Fair Market Rent in effect at the time the application is approved for the unit sizes the grantee expects to lease) x (the number of months of rental assistance to be provided)

In most cases, the actual costs of rental assistance are lower than the amount used to calculate the grant. This happens for several reasons. First, most participants contribute something to their rent, so they do not need the full FMR subsidy. In addition, in many communities sponsors are able to find units to lease that are less than the local FMRs.

As a result, grantees generally have excess funds to help cover the costs of administering the rental assistance. However, if making rental subsidy payments for the number of Shelter Plus Care participants specified in the grant agreement leaves less than 8 percent of the grant remaining, then the amount set aside out of the S+C grant for administrative costs cannot exceed that lower percentage. The grantee must pay for any administrative costs in excess of this cap with funds from some other source.

Distribution of the Administrative Costs

As discussed in Section 1, many local S+C projects involve a grantee and one or more sponsors, among whom program responsibilities are shared. In the SRO component, a local PHA must administer the rental assistance, but in the other components, rental assistance administration may be shared by grantee and sponsor(s) or handled exclusively by one or more sponsors.

HUD does not specify who can be reimbursed for administrative costs, only that these costs may not be more than 8 percent of the grant. Thus, grantees can apportion the funds according to which agency performs the eligible administrative tasks. For example, a PHA who handles the HQS inspections and tenant rent calculations may receive most if not all of the available administrative funds from the grantee as reimbursement for these eligible activities.

Ineligible Administrative Costs

HUD recognizes that there are other administrative costs necessary to running a local Shelter Plus Care project. But, by statute, administrative costs other than those described above cannot be covered by S+C grant funds.

Administrative costs that are not covered include:

  • Costs of administering the grant;
  • Costs of preparing reports to HUD; and
  • Costs associated with conducting audits of the grant.

Allowable Uses for Grant Savings

"Grant savings" may occur for two reasons:

  1. Actual rents for units occupied by S+C participants are lower than the FMR used to calculate the grant award; and/or
  2. S+C tenant rent contributions reduce the amount of grant funds required for rental assistance.

Grant savings may be used for the following:

  • to pay administrative costs as described above (up to 8 percent);
  • to repair damage to the units (up to one month's rent);
  • to cover rent increases up to locally determined reasonable rents (See Section 3); and
  • to serve a greater number of participants.

None of these uses requires HUD pre-approval.

Notes

S+C rental assistance cannot be used for housing that is currently receiving Federal funding for rental assistance or operating costs under another program. For example, a building that is already receiving project´┐Żbased Section 8 assistance may not have tenants who are receiving S+C rental assistance.

Eligible administrative costs include only those related to the administration of the housing assistance, NOT costs associated with the administration of the grant or the supportive services (Section 582.105).