Lawmakers Seek Changes to HUD Coronavirus Funding
Say Most Recent Allocation Shortchanged New York State
Washington, DC – New York federal lawmakers are calling on the U.S. Department of Housing and Urban Development (HUD) to revise how it allocates funds in its next disbursement of Community Development Block Grant (CDBG) funding, which Congress approved in response to the COVID-19 pandemic. In a letter to HUD Secretary Carson, Rep. Nydia M. Velázquez (D-NY); Senator Charles E. Schumer (D-NY); Rep. Hakeem Jeffries (D-NY); and Senator Kirsten E. Gillibrand (D-NY) argue that New York state was shortchanged in the most recent round of funding. Their letter calls for HUD to significantly revise its methodology for distributing CDBG funds.
The lawmakers wrote, “The formula HUD developed for Round 2 funding failed to include the most pertinent metrics and the best available data. As a result, the State of New York was denied critical funding resources that are still desperately needed to combat the COVID-19 pandemic in our state. In fact, despite New York being the epicenter of the pandemic here in the United States, the failure in HUD’s allocation methodology resulted in the State of New York seeing the largest decline in share of CDBG funding between Round 1 and Round 2 of any state in the country.”
The text of the letter is below and a .pdf is online here.
The Honorable Dr. Benjamin S. Carson, Sr. M.D.
U.S. Department of Housing and Urban Development
451 7th Street S.W.
Washington, D.C. 20410
Dear Secretary Carson:
It is with deep frustration and disappointment we write to you today regarding the U.S. Department of Housing and Urban Development’s (“HUD”) methodology for allocating Round 2 Community Development Block Grant (“CDBG”) funding which was provided for in the Coronavirus Aid, Relief, and Economic Security Act (“the CARES Act”), on May 11th, 2020.
The formula HUD developed for Round 2 funding failed to include the most pertinent metrics and the best available data. As a result, the State of New York was denied critical funding resources that are still desperately needed to combat the COVID-19 pandemic in our state. In fact, despite New York being the epicenter of the pandemic here in the United States, the failure in HUD’s allocation methodology resulted in the State of New York seeing the largest decline in share of CDBG funding between Round 1 and Round 2 of any state in the country.
In March, Congress passed the CARES Act which provided $5 billion in CDBG funding, to be distributed by HUD, in order to help states and insular areas respond to the impact of COVID-19. Under the CARES Act, Congress provided for three separate rounds of funding, and specifically noted three different allocation methods for each round.
As set forth in the CARES Act, HUD was required to allocate $2 billion of CDBG funding in Round 1 according to the same formula HUD used for the regular FY 2020 CDBG formula. HUD allocated $2 billion of Round 1 funding on April 2nd and the State of New York received a total of $192,774,513.00, which equates to 9.64 percent of total disbursement.
For the $1 billion Congress allocated for Round 2 funding, the CARES Act states that funds should be allocated to states and insular areas to “prevent, prepare for, and respond to coronavirus…based on public health needs, risk of transmission of coronavirus, number of coronavirus cases compared to the national average, and economic and housing market disruptions, and other factors, as determined by the Secretary, using the best available data.”
HUD distributed the Round 2 funding to states and insular areas on May 11th according to a formula the Department developed after interpreting the CARES Act. Under Round 2 funding, New York State’s total allocation was only $70,522,417.00, which is only a 7.05 percent share of all Round 2 funding and a 26.8 percent decline in the State’s share from Round 1. As noted above, New York’s 7.05 percent share allocation constitutes the largest decline of any state between Round 1 and Round 2.
The formula your Department relied on to distribute Round 2 funding is, in our view, antithetical to both the spirit and the intent of the CARES Act, which was to provide greater resources to those states and insular areas with the greatest public health, housing, and economic disruption needs arising from the COVID-19 pandemic.
The Round 2 allocation formula relied on the count of low-income elderly households and the count of children in poverty to satisfy the public health need metric—which was given a 60 percent weight to the overall formula. The formula also used the number of unemployment insurance claims over a six-week period as the only proxy for economic and housing market disruption—and provided it with a 40 percent weight to the overall formula.
While the public health needs of low-income seniors are accounted for, the metric of public health need completely fails to take into account COVID-19 transmission and relevant housing factors, such as renter overcrowding and extremely low-income rent-burdened households. Organizations like the National Low Income Housing Coalition have highlighted the vulnerability of extremely low-income rent-burdened households to economic shocks and to worse health outcomes.
The formula only uses the count of COVID-19 cases as an adjustment factor so that most impacted places received only a “slightly higher share of funding.” It is important to note that, as of June 1st, 371,711 people had tested positive for COVID-19 across the State of New York. Worse, as of June 1st, COVID-19 has claimed the lives of 23,959 people in New York State, which is more than any other state in the country according to the Center for Disease Control. Given the severity of the circumstances the communities of our state are grappling with, it is simply unacceptable that the count of COVID-19 cases was not given more weight in the overall construction of the formula.
The CARES Act provides for a third round of funding. Round 3 funding makes $2 billion available for allocation to states and insular areas on a rolling basis until September 2022, based on a criteria to be determined by the Secretary. Given the failure of Round 2’s allocation formula to include the most pertinent metrics and the best available data, we urge you to disregard this formula and develop a new formula allocation for Round 3 funding. We further urge you not to use Round 2’s allocation formula in any future discretionary formulas that may be implemented as a result of the CARES Act or any future legislation passed by Congress in response to the COVID-19 crisis.
Instead, we urge you to develop a new formula for Round 3 funding that more accurately captures the public health, economic, and housing impacts of the COVID-19 crisis as defined by the CARES Act. This formula, and any future formula constituted by your Department, should start with the simple premise that no heavily COVID-19 impacted state or insular area, defined as experiencing more cases and/or deaths than the national average, should receive less than they would otherwise receive using a traditional formula.
Furthermore, we also expect HUD’s formula methodology for the Round 2 Allocation of the Emergency Solutions Grant (“ESG”), which must be distributed before June 25, 2020, to be consistent with the priorities set forth in the CARES Act. Specifically, the CARES Act requires that HUD’s construction of the ESG formula benefit homeless and unsheltered populations with the greatest need, as determined by “risk of transmission of coronavirus, high numbers or rates of sheltered and unsheltered homeless, and economic and housing market conditions”. Any formula that does not heavily weight both the total number of COVID-19 cases as a transmission factor and the total number of homeless and unsheltered populations in states or localities to determine allocation amounts would be impermissible as it would be ignoring the clear intent of the CARES Act.
States and localities continue to be on the front lines of fighting this pandemic. As federal policymakers we must provide states and localities with the resources they need to protect our friends and neighbors. We stand ready and willing to work with you on a funding formula that achieves this important goal.