Eligible Activities

SHP grants are awarded to fund projects proposing one or more of the following seven activities, subject to the requirements described here.

1. Acquisition

Many applicants propose to purchase property which will be used to provide supportive housing and/or supportive services to homeless persons. SHP acquisition grants may be used to:

  • pay for part of the purchase price of such a facility, as long as that property has not previously been used as supportive housing or for supportive services;
  • pay a portion of the costs of purchasing a structure which will be used to provide supportive housing or supportive services;
  • repay 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. Percentages and limits applicable to high cost areas are as follows:

Percentage Limit
100-119
$200,000
120-139
$250,000
140-159
$300,000
160-174
$350,000
175 and up
$400,000

The above limits apply to combined acquisition and rehabilitation activities. Contact the HUD Field Offices for the limit applicable to a given locality.

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

In addition, grants may also be used to pay off a current mortgage on a property (but not for periodic mortgage payments) as long as that property has not previously been used as supportive housing or for supportive services.

2. Rehabilitation

SHP grants may also be used to pay part of the cost of rehabilitating a building so that it may be used as supportive housing or to provide supportive services. An addition to an existing building, the addition of cost effective energy measures, and the costs of repairs necessary to bring an existing structure up to housing code regulations are rehabilitation costs which may also be partially funded with SHP grants.

3. New Construction

Proposals to build structures in which homeless persons will reside are also funded under the Supportive Housing Program. SHP grants may be used to pay part of the cost of constructing a supportive housing facility and include the cost of the land upon which the structure will be built. However, SHP funds may not be used to build structures which will be used to provide supportive services only.

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.

4. Leasing

Leasing a building so that it may be used for supportive housing or services, or to pay rent for individual units to be used for supportive housing, is an eligible SHP activity. A grantee may lease portions of a structure, the full structure, or multiple structures. Space or housing units chosen for comparison must be similar with respect to location, size, type, quality, amenities, facilities, and management services. The rent paid may only reflect actual costs and must be reasonable in comparison to rents being charged in the area for similar space or similar housing units. In addition, rents for individual housing units may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents (FMR). A project sponsor cannot lease a building or unit to itself that it already owns. FMRs are published annually in the Federal Register, usually in September, and should be used in estimating leasing costs.

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, the following should be considered: 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. FMR data sets are available on the HUD User web site. 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. It is also necessary 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 applicableederal Register, or;
    • comparable cost data, as appropriate, to show that the SHP request is within these limits.
    Note: 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.

5. Supportive Services

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. Almost any services aimed at moving homeless participants to independence are eligible for SHP support. SHP funds may be used to pay part of the actual costs of new or increased supportive services to homeless persons, including salaries paid to providers and other costs directly associated with providing such services. Some of these services include child care, employment assistance, health care, and case management.

When transitional housing participants move to permanent housing, grantees may use supportive services funding to pay the first and last month's rent on a housing unit, including security deposits. Other types of supportive services may continue to be provided to homeless persons for up to 6 months after moving to permanent 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 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.

Examples of 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.

Supportive Service Costs for SSO Projects (new as of August 24, 2022)

  • 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.

6. Operating Costs

Some of the costs associated with the day-to-day operation of supportive housing may be paid using SHP funds. Only operating costs 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.

Operating costs differ from supportive services costs in that they support the function and the operation of the housing project. 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.

Examples of eligible operating costs

  • salaries of staff not delivering services, such as project manager, security guard
  • utilities: gas, heat, electric, etc.
  • equipment: desks, computers, telephones used by staff
  • furnishings: beds, chairs, dressers, etc. provided for participants
  • equipment: refrigerators, ranges, etc.
  • food
  • relocation
  • maintenance and repair.

Examples of 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.

Multiple activities

  • Sometimes operational staff 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.

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.

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.

7. 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 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.

Examples of 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.

General Provisions

Applicants are not restricted to requesting funds for only one of the seven activities listed above. An individual project may contain a request for funding any combination of eligible activities, except that projects funded under the supportive services only component may not request funding for operating costs or new construction. Grantees receiving SHP assistance for acquisition, rehabilitation, or new construction must agree to operate the supportive housing or provide supportive services for a term of at least 20 years from the date of initial occupancy or date of initial service provision.