FEMA Offers Full Reimbursement for Pandemic Shelter Costs—But Cities Are Still Jittery

Cities and counties have been slow to take advantage of the promise of full and retroactive FEMA reimbursement to expand emergency housing programs, frustrating housing advocates. What’s getting in the way?

A FEMA sign posted outside the hurricane Harvey disaster recovery center.
iStock photo by michelmond

Over the last year, thousands of unhoused and vulnerable people have moved from the streets or congregate spaces into hotel and motel rooms thanks to a bevy of emergency housing programs aimed at reducing the spread of COVID-19. Shelterforce recently wrote about how these programs worked, and why some local governments were now purchasing hotels for long-term housing.

Though the need is still great, some of these emergency housing programs are winding down due to funding issues.

FEMA had been reimbursing cities, counties, and states 75 percent of the cost for COVID-related non-congregate shelter, but once other sources of funding ran out—like those provided by the federal CARES Act—local governments opted to shutter their hotel and motel lease programs.

There was cause for celebration earlier this year when the Biden administration announced that FEMA would provide 100 percent reimbursement for non-congregate shelter, retroactive to the start of the pandemic and through Sept. 30, 2021. Advocates said the move would make a major difference in the availability of COVID-safe shelter. “It will enable states and communities to address the urgent health and housing needs of people experiencing homelessness and other residents of congregate facilities during the pandemic,” the National Low Income Housing Coalition said in a statement after the announcement.

But cities and counties have so far been slow to take advantage of the promise of full and retroactive reimbursement to expand these emergency programs, frustrating many housing advocates. According to an investigation by Grist, only 23 local governments have submitted funding requests as of early April. What’s getting in the way?     

FEMA Fears

It turns out several things are, among them the fact that there’s no guarantee a city will be reimbursed. Not every application for reimbursement is approved, and not every expenditure in an approved application will be covered. Noah Patton, housing policy analyst with the National Low Income Housing Coalition, says local governments must submit their applications to regional FEMA officials for approval, showing among other things, copies of public health orders from local officials. The sticking point is proving what is eligible for repayment.

“To be reimbursed for costs incurred, recipients and sub-recipients must provide sufficient documentation to establish eligibility of the non-congregate sheltering activities, including the need for non-congregate sheltering resulting from the declared event, reasonableness, and costs,” a FEMA spokesperson told Shelterforce.

Government staff in charge of local applications for FEMA reimbursement say the process is intensive and takes time. Patricia Huber, assistant city administrative officer for the City of Los Angeles, says it took the city until March to apply because it had to collect and process paperwork from multiple departments, and because FEMA asks for very specific details in its application, including the scale of each project, all the costs associated, and paperwork from every agency involved. There was never any doubt the city would apply, be it for 75 percent or 100 percent reimbursement, Huber says, but the “administrative burden” for the process is heavy; the city is hiring a contractor to help. The city is currently collecting and processing documents from mid-August to mid-December 2020, with the goal of submitting an application to FEMA at the end of April. Uncertainty about the application’s approval is impacting the city’s decision about whether to expand its hotel housing programs.

Once applications are put together, submitted, and approved, there isn’t a clear timeline for when FEMA sends out the reimbursement. Patton says the timetable depends on the complexity of a request; it can happen as quickly as three months or it can take years.

Because local governments must pay for the programs up front, during a time when COVID-19 has strained city budgets, officials are hesitant to move forward with programs. If a delay in the federal government repaying cities and counties is a significant obstacle, there must be a way to expedite payments, says Randy Shaw, executive director of the nonprofit Tenderloin Housing Clinic.

But those aren’t the only issues. FEMA only covers the cost of leasing the hotels, and many emergency housing programs incorporate wraparound services to ensure residents get their needs met and have help planning their next steps. Service provision can be a significant cost.

[RELATED: Hotel Rooms for the Homeless Change Health Outcomes Beyond COVID]

The City of Seattle and King County, for instance, are pursuing FEMA reimbursement for non-congregate shelter costs, but they are also looking for ways to pay for wraparound services. Seattle is covering the full cost of supportive services for 380 people who live in hotels and other non-congregate shelters, according to Kamaria Hightower, a spokesperson for Seattle Mayor Jenny Durkan. This includes two recently opened hotels for unhoused individuals, which the city is funding with non-FEMA federal funds, while coordinating with the county and state to find ways to split costs. “The city continues to operate following FEMA guidance, which is FEMA will not reimburse all costs and the most significant costs of shelters—services—are not eligible for FEMA reimbursement,” Hightower said.

Cities Making Tough Calls

While the challenges associated with the FEMA application process may be affecting some city officials’ decisions about continuing their respective hotel programs, few city spokespersons were willing to say so directly. Los Angeles has spent approximately $59 million on Project Roomkey so far. It is keeping 1,200 rooms in three hotels open through September by redirecting $75 million from elsewhere in the city’s budget to cover them, with the goal of getting those costs reimbursed by FEMA. Nonetheless, Project Roomkey is still far below the city’s original goal of 15,000 hotel rooms leased and occupied. Although the city council has voted to expand the program, it has not happened. The upfront cost seems to be one of the concerns, though Los Angeles City Controller Ron Galperin says upfront costs shouldn’t be a deal-breaker. Galperin acknowledged that there are budget shortfalls, but the city’s treasury maintains a balance of approximately $10 billion.

“If the issue is cash flow […] we can solve that cash flow issue,” Galperin said during a video conference in April. “That should not be the impediment.” That balance is intended for other city needs, but it can be loaned and leveraged to front some expenses that will be paid back, he says.

Activists and others point to what Galperin said and have asked officials why the treasury balance has not been used to expand the program further. Galperin’s point was also cited by federal Judge David Carter in an April 20 order regarding an ongoing lawsuit over the city and county’s handling of homelessness. Carter cited legal activists and the Los Angeles Business Council’s (LABC) push for expanding Project Roomkey, noting the administration’s expansion of FEMA reimbursement rates and offers from the LABC and others to provide assistance with the administrative burden.

Hotel programs in Philadelphia ended earlier this year, in part due to concerns with having to pay upfront for the costs. Residents who lived in the hotels were relocated to city-owned buildings. The programs were funded by the CARES Act, which expired at the end of 2020, and state funding. Max Ray-Riek, a member of the advocacy group ACT-UP, says people are still living in those city-owned buildings awaiting vouchers to other housing locations.

Other cities, while recognizing the obstacles, are prioritizing their non-congregate housing programs anyway, while hoping FEMA reimbursement will come through eventually.

For instance last month the Seattle City Council unanimously voted to budget $12 million for hotel and tiny house programs, even if everything is not reimbursed by FEMA.

In April, Washington, D.C., announced it would add 200 beds to its pandemic emergency housing by leasing rooms at a fourth hotel. That addition would mean hotel housing for approximately 800 people. Around the same time, Baltimore moved to extend its emergency programs through June, with a plan of applying for $35 million in FEMA reimbursement, though local advocates say the city should keep hotels leased for as long as reimbursement is possible, currently through the end of September.

And in March, San Francisco County expanded its shelter-in-place hotel program, with the Board of Supervisors adding 400 rooms to its inventory. Now more than 2,200 San Franciscans are housed in the hotels. As reported in SFist, the expected total cost of the program should drop from $18 million per month to a total cost of $3 million for the fiscal year after FEMA reimbursement.               

Advocates Urge Boldness

Housing advocates are urging localities to take full advantage of the unprecedented support from FEMA to get people off the streets. They say there will not be another opportunity like this one, where housing costs can be fully covered.

Shayla Myers, senior attorney with the Legal Aid Foundation of Los Angeles, notes that the pandemic is still a threat, especially to vulnerable populations. Demand for non-congregate shelter is still high, Myers says, with thousands of people who could fill rooms. With the promise of full reimbursement, those people should be housed, says Myers.

Whether they choose to continue or expand these housing programs shows the priorities of the cities or states involved, says Patton of National Low Income Housing Coalition. He notes that some communities have found ways to deal with the upfront costs, such as Missoula, Montana, where the city bought a motel for $1.2 million and the county is leasing it and pursuing FEMA reimbursement, so that the city is paid while the county waits to recoup its costs.

Patton says it comes down to the political will to take action and handle the administrative burden, and

that the risk of some reimbursement applications being rejected shouldn’t preclude government officials from applying, if they can take the upfront financial hit. Even if FEMA rejects some parts of claims and, say, only 90 percent of costs are approved, he says, the benefits are still worth the effort.

Myers notes that Los Angeles still lacks permanent housing. She wonders if not having an exit strategy for participants explains in part why the city isn’t going further with hotel plans.

However, the argument that it’s not worth housing people for a limited time is problematic, says Andreanecia Morris, executive director of the HousingNOLA, a nonprofit working to solve homelessness in New Orleans. Even if there isn’t permanent housing for everyone, she says, these hotel programs get people off the streets during a pandemic, and into spaces where they can connect with services and get help. Morris says that once President Joe Biden ordered full and retroactive reimbursement, cities should have been “all hands on deck” to house people in hotels and motels. 

Patton agrees. “The fact that you may not know what you’ll do as a city government with the folks you are able to place into hotels for three months should not stop you from initiating the program … That’ll be a question for September, but [in the meantime] it will ensure folks are safe. The direct goal is saving lives.”

The expansion of reimbursement is part of the administration’s wider efforts to provide housing protections. On March 29, the Centers for Disease Control and Prevention extended a moratorium on renter evictions through the end of June. The recently passed American Rescue Plan provided $350 billion in relief for states and cities and also included $5 billion in HOME funding for the U.S. Department of Housing and Urban Development. Those funds can be used for the purchase of hotels for shelter, and for their conversion into long-term housing, which could be part of the answer on exit strategy. That’s in part what is happening in Dane County, Wisconsin. On April 23, the county announced it would use money from the plan for a $13 million effort to move more than 300 people in a hotel program into permanent housing over the next few years.

In any case, funding for local governments in the American Rescue Plan should remove some of the concerns about upfront costs, says Ray-Riek of ACT-UP. “It was kind of a reasonable excuse in the waning days of the Trump administration—‘Money for cities is ending’—I could kind of understand that,” he says. But “with Biden bailing out cities, with billions of dollars coming to Philadelphia, [and] FEMA saying they’ll reimburse in full,” that starts to ring hollow, he says.

Given the ongoing need for this emergency housing and the Sept. 30 end date for the FEMA reimbursement program, some communities are looking for other ways to continue these programs. In Los Angeles, a city council proposal calls for getting $150 million in emergency funds from the state to continue Project Roomkey.

Although HUD is not involved in federal reimbursement for emergency housing, a HUD official said that the department “applaud[s] communities for stepping up to protect people using hotels for shelter.”

“Data shows that that has helped keep transmission rates low among the unhoused population,” the HUD official stated. “It is important to note that the best protection is a vaccine and a stable home, and we are working to get people both of them.”

1 COMMENT

  1. If the current FEMA, HUD and COVID-related funding (e.g. for hotels) is only temporary and the end goal is getting people permanently housed, who/what will pay for the costs of permanent housing when the current funding wanes and ends? What are the costs of permanent housing (especially in high housing cost areas)? And, how will low wage workers pay housing costs without HUD and other government support?

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