[Federal Register Volume 62, Number 173 (Monday, September 8, 1997)]
[Rules and Regulations]
[Pages 47344-47358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23752]
[[Page 47343]]
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Part VIII
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Chapter V
HUD Disaster Recovery Initiative; Final Rule
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 /
Rules and Regulations
[[Page 47344]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Chapter V
[Docket No. FR-4254-N-01]
HUD Disaster Recovery Initiative
AGENCY: Office of Community Planning and Development, HUD.
ACTION: Notice of disaster recovery funds availability and waivers.
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SUMMARY: The 1997 Emergency Supplemental Appropriations Act for
Recovery from Natural Disasters, with respect to the HUD Disaster
Recovery Initiative grant funds, requires the publication of a Notice
governing the use of such funds in conjunction with any program
administered by the Federal Emergency Management Agency (FEMA) for
buyouts of structures in disaster areas. This Notice addresses that
requirement and provides other guidance on the use of those funds.
EFFECTIVE DATE: June 12, 1997.
FOR FURTHER INFORMATION CONTACT: Jan C. Opper, Senior Program Officer,
Office of Block Grant Assistance, Department of Housing and Urban
Development, Room 7286, 451 Seventh Street, SW., Washington, DC 20410,
telephone number (202) 708-3587. Persons with hearing or speech
impairments may access this number via TTY by calling the Federal
Information Relay Service at (800) 877-8339. FAX inquiries may be sent
to Mr. Opper at (202) 401-2044. (Except for the ``800'' number, these
telephone numbers are not toll-free.)
SUPPLEMENTARY INFORMATION:
I. Empowering Communities for Recovery
A. Purpose
1. This Notice describes policies and procedures applicable to the
HUD Disaster Recovery Initiative.
2. When a community is hit hard by a natural disaster, there is
often a long, difficult process of recovery. Most impacted areas never
fully recover because of limited resources. HUD is uniquely positioned
to assist States and communities with disaster recovery, because of its
mission and experience as the Federal Government's agency for
addressing a broad spectrum of needs related to community viability
(e.g., housing, economic and community development).
3. HUD's Disaster Recovery Initiative helps communities impacted by
disasters receiving Presidential declarations. When other agencies
cannot assist, HUD steps in with gap funding for recovery activities--
providing the glue that holds together the sometimes disconnected
pieces of disaster recovery. Because Federal government resources will
never be sufficient to cover costs of total recovery, HUD's program
requires a partnership of Federal, State and local governments, the
business community and citizens.
4. HUD Disaster Recovery funds are intended to support the
activities of other Federal agencies and cannot be used for activities
reimbursable or for which funds are made available by the Federal
Emergency Management Agency (FEMA), the Small Business Administration
(SBA), or the U.S. Army Corps of Engineers (USACE).
B. Benefiting Persons of Low and Moderate Income
1. An objective of the program is the redevelopment of viable urban
communities, by providing decent housing and a suitable living
environment and expanding economic opportunities, especially for
persons of low and moderate income.
2. A grantee must use at least 50 percent of its HUD Disaster
Recovery funds for activities that benefit persons of low and moderate
income. The Secretary may waive this requirement only on a case-by-case
basis. HUD will consider such a waiver after receiving a request from a
grantee that includes a justification that establishes good cause for
the waiver and reflects a public purpose.
C. Definitions
Regulatory references are in title 24 of the Code of Federal
Regulations (CFR), unless otherwise cited.
Act means Title I of the Housing and Community Development Act of
1974, as amended (42 U.S.C. 5301 et seq.).
Buildings for the general conduct of government means city halls,
county administrative buildings, State capitol or office buildings or
other facilities in which the legislative, judicial or general
administrative affairs of the government are conducted. Such term does
not include such facilities as neighborhood service centers or special
purpose buildings located in low and moderate income areas that house
various nonlegislative functions or services provided by government at
decentralized locations.
Chief Executive Officer of a State or unit of general local
government means the elected official or the legally designated
official, who has the primary responsibility for the conduct of that
entity's governmental affairs. Examples of the ``chief executive
officer'' of a unit of general local government are: the elected mayor
of a municipality; the elected county executive of a county; the
chairperson of a county commission or board in a county that has no
elected county executive; and the official designated pursuant to law
by the governing body of a unit of general local government.
City means the following:
a. Any unit of general local government that is classified as a
municipality by the United States Bureau of the Census, or
b. Any other unit of general local government that is a town or
township and that, in the determination of the Secretary:
i. Possesses powers and performs functions comparable to those
associated with municipalities;
ii. Is closely settled; and
iii. Contains within its boundaries no incorporated places as
defined by the United States Bureau of the Census that have not entered
into cooperation agreements with the town or township for a period
covering at least 3 years to undertake or assist in the undertaking of
essential community development and housing assistance activities. The
determination of eligibility of a town or township to qualify as a city
will be based on information available from the United States Bureau of
the Census and information provided by the town or township and its
included units of general local government.
Grantee means:
a. A City that receives no less than $200,000 under the disaster
formula allocation, has the capacity to carry out this program, and
remaining disaster recovery needs; or that is in a State in which HUD
administers its community development program.
b. A County that receives no less than $200,000 under the disaster
formula allocation, has the capacity to carry out this program, and
remaining disaster recovery needs; or that is in a State in which HUD
administers its community development program. The county may designate
a local government or governments to carry out the program on its
behalf.
c. A State government that receives a HUD Disaster Recovery grant
allocation that includes funds calculated for places that would have
received an allocation below the minimum grant size.
Household means all the persons who occupy a housing unit. The
occupants may be a single family, one person living alone, two or more
families living together, or any other group of related or unrelated
persons who share living arrangements.
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HUD means the Department of Housing and Urban Development.
Income. For the purpose of city and county grantees determining
whether a family or household is low- and moderate-income, grantees may
select any of the three definitions listed below for each activity,
except that integrally related activities of the same type and
qualifying under the same paragraph of Sec. 570.208(a) shall use the
same definition of income. The option to choose a definition does not
apply to activities that qualify under Sec. 570.208(a)(1) (Area benefit
activities), except when the recipient carries out a survey under
Sec. 570.208(a)(1)(vi). Activities qualifying under Sec. 570.208(a)(1)
generally must use the area income data supplied to recipients by HUD.
a. The three definitions are as follows:
i. Annual income as defined under the Section 8 Housing Assistance
Payments program at Sec. 813.106 (except that if the HUD Disaster
Recovery Initiative assistance being provided is homeowner
rehabilitation, the value of the homeowner's primary residence may be
excluded from any calculation of Net Family Assets); or
ii. Annual Income as reported under the Census long-form for the
most recent available decennial Census. This definition includes:
(1) Wages, salaries, tips, commissions, etc.;
(2) Self-employment income from own non-farm business, including
proprietorships and partnerships;
(3) Farm self-employment income;
(4) Interest, dividends, net rental income, or income from estates
or trusts;
(5) Social Security or railroad retirement;
(6) Supplemental Security Income, Aid to Families with Dependent
Children, or other public assistance or public welfare programs;
(7) Retirement, survivor, or disability pensions; and
(8) Any other sources of income received regularly, including
Veterans' (VA) payments, unemployment compensation, and alimony; or
iii. Adjusted gross income as defined for purposes of reporting
under Internal Revenue Service (IRS) Form 1040 for individual Federal
annual income tax purposes.
b. Estimate the annual income of a family or household by
projecting the prevailing rate of income of each person at the time
assistance is provided for the individual, family, or household (as
applicable). Estimated annual income shall include income from all
family or household members, as applicable. Income or asset enhancement
derived from the HUD Disaster Recovery grant-assisted activity shall
not be considered in calculating estimated annual income.
Indian tribe means any Indian tribe, band, group, and nation,
including Alaska Indians, Aleuts, and Eskimos and any Alaska Native
Village, of the United States that is considered an eligible recipient
under the Indian Self-Determination and Education Assistance Act (Pub.
L. 93-638) or under the State and Local Fiscal Assistance Act of 1972
(Pub. L. 92-512).
Low- and moderate-income household means a household having an
income equal to or less than the Section 8 low-income limit established
by HUD.
Low- and moderate-income person means a member of a family having
an income equal to or less than the Section 8 low-income limit
established by HUD. Unrelated individuals will be considered as one-
person families for this purpose.
Low-income household means a household having an income equal to or
less than the Section 8 very low-income limit established by HUD.
Low-income person means a member of a family that has an income
equal to or less than the Section 8 very low-income limit established
by HUD. Unrelated individuals shall be considered as one-person
families for this purpose.
Moderate-income household means a household having an income equal
to or less than the Section 8 low-income limit and greater than the
Section 8 very low-income limit, established by HUD.
Moderate-income person means a member of a family that has an
income equal to or less than the Section 8 low-income limit and greater
than the Section 8 very low-income limit, established by HUD. Unrelated
individuals shall be considered as one-person families for this
purpose.
Secretary means the Secretary of Housing and Urban Development.
Small business means a business that meets the criteria set forth
in section 3(a) of the Small Business Act (15 U.S.C. 631, 636, 637).
State means any State of the United States, or an instrumentality
thereof approved by the Governor; and the Commonwealth of Puerto Rico.
Unit of general local government means any city, county, town,
township, parish, village or other general purpose political
subdivision of a State; Guam, the Northern Mariana Islands, the Virgin
Islands, and American Samoa or a general purpose political subdivision
thereof; a combination of such political subdivisions recognized by the
Secretary; and the District of Columbia.
D. Allocation of Funds
1. $500 million has been appropriated for the HUD Disaster Recovery
Initiative under Title II, Chapter 10 of the 1997 Emergency
Supplemental Appropriations Act for Recovery from Natural Disasters
(Pub. L. 105-18; approved June 12, 1997) (the 1997 Supplemental
Appropriations Act).
2. HUD will generally allocate funds to grantees based on a formula
that reflects disaster recovery needs that are not met by other Federal
programs provided that the grantee has the capacity to carry out this
program, and on remaining needs.
E. Submission Requirements
1. Prerequisites to a grantee's receipt of a HUD Disaster Recovery
grant include a citizen participation plan; publication of Plan
proposals by grantees; notice and comment; and submission of an Action
Plan for Disaster Recovery.
2. Each city or county grantee must submit to HUD, for approval, an
Action Plan for Disaster Recovery that describes:
a. The recovery needs resulting from the covered disaster;
b. The grantee's overall plan for recovery;
c. Expected Federal, non-Federal public, and private resources, and
their relationship, if any, to activities to be funded with HUD
Disaster Recovery funds;
d. The projected uses for the HUD Disaster Recovery funds; and
e. In the case of a new HUD grantee, it should describe how
expenditure of its funds fits within a current local or State recovery
plan.
3. The city or county grantee must describe monitoring standards
and procedures pursuant to Sec. 91.230 and include certifications
pursuant to:
a. Sec. 91.225(a)(1), affirmatively furthering fair housing;
b. Sec. 91.225(a)(3), drug-free workplace;
c. Sec. 91.225(a)(4), anti-lobbying;
d. Sec. 91.225(a)(7), acquisition and relocation, except as waived;
e. Sec. 91.225(b)(1), citizen participation, except as waived;
f. Sec. 91.225(b)(5), excessive force;
g. Sec. 91.225(b)(6), compliance with anti-discrimination laws;
h. Sec. 91.225(b)(7), compliance with lead-based paint procedures;
and
i. Sec. 91.225(b)(8), compliance with applicable laws.
4. Each State grantee must submit to HUD, for approval, an Action
Plan for Disaster Recovery that describes:
a. The recovery needs resulting from the covered disaster;
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b. The grantee's overall plan for recovery;
c. Expected Federal, non-Federal public, and private resources, and
their relationship, if any, to activities to be funded with HUD
Disaster Recovery funds; and
d. The State's method of distribution.
5. A State grantee may distribute HUD Disaster Recovery funds to
units of general local government, including city and county grantees
that otherwise receive HUD Disaster Recovery funds, and to Indian
tribes.
6. The State grantee must describe monitoring standards and
procedures pursuant to Sec. 91.330 and include certifications pursuant
to:
a. Sec. 91.325(a)(1), affirmatively furthering fair housing;
b. Sec. 91.325(a)(3), drug-free workplace;
c. Sec. 91.325(a)(4), anti-lobbying;
d. Sec. 91.325(a)(5), authority of the State to carry out the
program;
e. Sec. 91.325(a)(7), acquisition and relocation, except as waived;
f. Sec. 91.325(b)(1), citizen participation, except as waived;
g. Sec. 91.325(b)(2), consultation with local governments;
h. Sec. 91.325(b)(5), compliance with antidiscrimination laws;
i. Sec. 91.325(b)(6), excessive force;
j. Sec. 91.325(b)(7), compliance with applicable laws.
7. Citizen participation
a. In order to permit public examination and appraisal of the
Action Plan for Disaster Recovery, to enhance the public accountability
of grantees, and to facilitate coordination of activities with
different levels of government, the grantee (or unit of general local
government receiving a grant from a State) shall in a timely manner--
i. Furnish citizens or, as appropriate, units of general local
government information concerning the amount of funds available for
proposed HUD Disaster Recovery grant activities and the range of
activities that may be undertaken, including the estimated amount
proposed to be used for activities that will benefit persons of low and
moderate income;
ii. Publish a proposed Action Plan for Disaster Recovery in such
manner to afford affected citizens or, as appropriate, units of general
local government an opportunity to examine its content and to submit
comments on the proposed disaster recovery performance and on the
community development performance of the grantee; and
iii. Provide citizens or, as appropriate, units of general local
government with reasonable notice of, and opportunity to comment on,
any substantial change proposed to be made in the use of funds received
under this grant from one eligible activity to another or in the method
of distribution of such funds.
In preparing the Action Plan for Disaster Recovery, the grantee
shall consider any such comments and views and may, if deemed
appropriate by the grantee, modify the proposed Action Plan for
Disaster Recovery. The Action Plan for Disaster Recovery shall be made
available to the public, and a copy shall be furnished to the Secretary
together with the certifications required under sections 3. and 5.
above. Any Action Plan for Disaster Recovery may be modified or amended
from time to time by the grantee in accordance with the same procedures
required in this paragraph for the preparation and submission of such
Action Plan for Disaster Recovery.
b. A HUD Disaster Recovery grant may be made only if the grantee
certifies that it is following a detailed citizen participation plan
that:
i. Provides for and encourages citizen participation, with
particular emphasis on areas in which HUD Disaster Recovery funds are
proposed to be used;
ii. Provides citizens with information and records relating to the
grantee's proposed use of funds, and relating to the actual use of HUD
Disaster Recovery funds; and
iii. Identifies how the needs of non-English speaking residents
will be met in the case of public hearings where a significant number
of non-English speaking residents can be reasonably expected to
participate.
This paragraph may not be construed to restrict the responsibility
or authority of the grantee for the development and execution of its
HUD Disaster Recovery Initiative.
F. Eligible Activities
1. Grantees may not use HUD Disaster Recovery funds for activities
reimbursable or for which funds are made available by the Federal
Emergency Management Agency (FEMA), the Small Business Administration
(SBA), or the U.S. Army Corps of Engineers (USACE).
2. Disaster Recovery funds may be used for activities that are
relevant to disaster recovery, as described in this Notice. Grantees
must use funds appropriated under Title II, Chapter 10 of the 1997
Emergency Supplemental Appropriations Act for Recovery from Natural
Disasters (Pub. L. 105-18) for buyouts, relocation, long-term recovery,
and mitigation related to a covered disaster. These funds will
supplement, not replace, Federal Emergency Management Agency (FEMA) and
other Federal funds. Those activities include:
a. Acquisition of real property (including the buying out of
properties in a flood plain and the acquisition of relocation
property);
b. Relocation payments and assistance for displaced persons,
businesses, organizations, and farm operations;
c. Debris removal, clearance, and demolition;
d. Rehabilitation or reconstruction of residential and non-
residential structures;
e. Acquisition, construction, reconstruction, or installation of
public facilities and improvements, such as water and sewer facilities,
streets, neighborhood centers, and the conversion of school buildings
for eligible purposes;
f. Code enforcement in deteriorated or deteriorating areas, e.g.,
disaster areas;
g. Assistance to facilitate homeownership among low and moderate
income persons, e.g., downpayment assistance, interest rate subsidies,
loan guarantees;
h. Provision of public services, limiting costs to no more than 25
percent of the grant amount;
i. Activities relating to energy conservation and renewable energy
resources, incorporated into recovery;
j. Provision of assistance to profit-motivated businesses to carry
out economic development or recovery activities that benefit the public
through job creation/retention; and
k. Planning and administration costs up to 20 percent of the grant
(e.g., planning, urban environmental design and policy-planning-
management-capacity building activities and payment of reasonable
program administration costs for: general management, oversight and
coordination; public information; fair housing activities; indirect
costs charged to the HUD Disaster Recovery Initiative under a cost
allocation plan prepared in accordance with OMB Circulars A-21, A-87,
or A-122 as applicable; and submission of applications for Federal
programs; as well as,
l. Acquisition, construction, or reconstruction of buildings for
the general conduct of government damaged or destroyed as a direct
result of a Presidentially declared disaster; and
m. Construction of new replacement housing by units of general
local government damaged or destroyed as a direct result of a
Presidentially declared disaster.
3. Determination of eligibility. An activity may be assisted in
whole or in part with HUD Disaster Recovery funds
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only if all of the following requirements are met:
a. Compliance with section F. Each activity must meet the
eligibility requirements of section F of this notice.
b. Compliance with national objectives. Grant recipients under the
HUD Disaster Recovery Initiative must certify that their projected use
of funds has been developed so as to give maximum feasible priority to
activities that will carry out one of the national objectives of
benefit to low- and moderate-income families or aid in the prevention
or elimination of slums or blight; the projected use of funds may also
include activities that the recipient certifies are designed to meet
other community development needs having a particular urgency because
existing conditions pose a serious and immediate threat to the health
or welfare of the community where other financial resources are not
available to meet such needs. Consistent with the foregoing, each
recipient must ensure, and maintain evidence, that each of its
activities assisted with HUD Disaster Recovery funds meets one of the
three national objectives as contained in its certification. Criteria
for determining whether an activity addresses one or more of these
objectives are contained at Sec. 570.208.
c. Compliance with the primary objective. The primary objective of
the HUD Disaster Recovery Initiative is the redevelopment of viable
urban communities, by providing decent housing and a suitable living
environment and expanding economic opportunities, especially for
persons of low and moderate income. In determining the percentage of
funds expended for such activities:
i. Costs of administration and planning eligible under section F.1.
of this notice will be assumed to benefit low- and moderate-income
persons in the same proportion as the remainder of the HUD Disaster
Recovery funds and, accordingly, shall be excluded from the
calculation;
ii. Funds expended for the acquisition, new construction or
rehabilitation of property for housing that qualifies under
Sec. 570.208(a)(3) must be counted for this purpose but shall be
limited to an amount determined by multiplying the total cost
(including HUD Disaster Recovery grant and non-HUD Disaster Recovery
grant costs) of the acquisition, construction or rehabilitation by the
percent of units in such housing to be occupied by low- and moderate-
income persons.
iii. Funds expended for any other activities qualifying under
Sec. 570.208(a) must be counted for this purpose in their entirety.
d. Compliance with environmental review procedures. The
environmental review procedures set forth at 24 CFR part 58 must be
completed for each activity (or project as defined in 24 CFR part 58),
as applicable.
4. Special policies governing facilities. The following special
policies apply to:
a. Facilities containing both eligible and ineligible uses. A
public facility otherwise eligible for assistance under the HUD
Disaster Recovery Initiative may be provided with HUD Disaster Recovery
funds even if it is part of a multiple use building containing
ineligible uses, if:
i. The facility that is otherwise eligible and proposed for
assistance will occupy a designated and discrete area within the larger
facility; and
ii. The recipient can determine the costs attributable to the
facility proposed for assistance as separate and distinct from the
overall costs of the multiple-use building and/or facility.
Allowable costs are limited to those attributable to the eligible
portion of the building or facility.
b. Fees for use of facilities. Reasonable fees may be charged for
the use of the facilities assisted with HUD Disaster Recovery funds,
but charges such as excessive membership fees, which will have the
effect of precluding low- and moderate-income persons from using the
facilities, are not permitted.
5. Special assessments under the HUD Disaster Recovery Initiative.
The following policies relate to special assessments under the HUD
Disaster Recovery Initiative:
a. Definition of special assessment. The term ``special
assessment'' means the recovery of the capital costs of a public
improvement, such as streets, water or sewer lines, curbs, and gutters,
through a fee or charge levied or filed as a lien against a parcel of
real estate as a direct result of benefit derived from the installation
of a public improvement, or a one-time charge made as a condition of
access to a public improvement. This term does not relate to taxes, or
the establishment of the value of real estate for the purpose of
levying real estate, property, or ad valorem taxes, and does not
include periodic charges based on the use of a public improvement, such
as water or sewer user charges, even if such charges include the
recovery of all or some portion of the capital costs of the public
improvement.
b. Special assessments to recover capital costs. Where HUD Disaster
Recovery funds are used to pay all or part of the cost of a public
improvement, special assessments may be imposed as follows:
i. Special assessments to recover the HUD Disaster Recovery funds
may be made only against properties owned and occupied by persons not
of low and moderate income. Such assessments constitute program income.
ii. Special assessments to recover the non-HUD Disaster Recovery
grant portion may be made provided that HUD Disaster Recovery funds are
used to pay the special assessment in behalf of all properties owned
and occupied by low and moderate income persons; except that HUD
Disaster Recovery funds need not be used to pay the special assessments
in behalf of properties owned and occupied by moderate-income persons
if the grant recipient certifies that it does not have sufficient HUD
Disaster Recovery funds to pay the assessments in behalf of all of the
low- and moderate-income owner-occupant persons. Funds collected
through such special assessments are not program income.
c. Public improvements not initially assisted with HUD Disaster
Recovery funds. The payment of special assessments with HUD Disaster
Recovery funds constitutes HUD Disaster Recovery assistance to the
public improvement. Therefore, HUD Disaster Recovery funds may be used
to pay special assessments provided:
i. The installation of the public improvements was carried out in
compliance with requirements applicable to activities assisted under
this initiative, including environmental, citizen participation, and
Davis-Bacon requirements;
ii. The installation of the public improvement meets a criterion
for national objectives in Sec. 570.208 (a)(1), (b), or (c); and
iii. The requirements of Sec. 570.200(c)(2)(ii) are met.
6. Limitation on planning and administrative costs.
a. No more than 20 percent of the sum of any grant, plus program
income, shall be expended for planning and program administrative
costs, paragraph F.1.k. HUD will consider requests for waiver and
modification of this limitation under extraordinary disaster recovery
circumstances on a case-by-case basis.
b. State administrative costs. The State is responsible for the
administration of its HUD Disaster Recovery Initiative. The amount of
HUD Disaster Recovery funds used to pay administrative costs incurred
by the State in carrying out its responsibilities under this program
shall not exceed 2 percent of the aggregate of the State's grant.
[[Page 47348]]
7. Reimbursement for pre-award costs. The effective date of the
grant agreement is the program year start date.
a. Prior to the effective date of the grant agreement, a recipient
may incur costs beginning on or after the incident date of the
Presidentially declared disaster, and then after the effective date of
the grant agreement pay for those costs using its HUD Disaster Recovery
funds, provided that for city and county grantees:
i. The activity for which the costs are being incurred is included
in its Action Plan for Disaster Recovery prior to the costs being paid;
ii. Citizens are advised of the extent to which these pre-award
costs will affect the HUD Disaster Recovery funds;
iii. The costs and activities funded are in compliance with the
requirements of this initiative and with the Environmental Review
Procedures stated in 24 CFR part 58;
iv. HUD Disaster Recovery grant payments for pre-award costs will
be made during a time no longer than the next 24 months following the
effective date of the grant agreement or amendment in which the
activity is first included; and
v. The total amount of pre-award costs to be paid during any
program year pursuant to this provision is no more than the greater of
25 percent of the amount of the grant made for that year or $300,000.
b. Upon the written request of the recipient, HUD may authorize
payment of pre-award costs for activities that do not meet the criteria
at paragraphs 7.a.iv or 7.a.v. of this section, if HUD determines, in
writing, that there is good cause for granting an exception upon
consideration of the following factors, as applicable:
i. Whether granting the authority would result in a significant
contribution to the goals and purposes of the HUD Disaster Recovery
Initiative;
ii. Whether failure to grant the authority would result in undue
hardship to the recipient or beneficiaries of the activity;
iii. Whether granting the authority would not result in a violation
of a statutory provision;
iv. Whether circumstances are clearly beyond the recipient's
control; or
v. Any other relevant considerations.
8. Activities outside the jurisdiction of the unit of general local
government. HUD Disaster Recovery funds may assist an activity located
outside the jurisdiction of the unit of general local government that
receives the HUD Disaster Recovery funds, provided the unit of general
local government determines that the activity is meeting its disaster
recovery needs and reasonable benefits accrue to residents of the
jurisdiction.
G. Guidelines for Evaluating and Selecting Economic Development
Projects
HUD provides guidelines to assist the recipient to evaluate and
select activities to be carried out for economic development purposes.
These guidelines are composed of two components: guidelines for
evaluating project costs and financial requirements; and standards for
evaluating public benefit. The standards for evaluating public benefit
are mandatory, but the guidelines for evaluating projects costs and
financial requirements are not. They may be found at Sec. 570.482 (e)
and (f) for States and at Sec. 570.209 for cities and counties. HUD may
consider the waiver of such standards on a case-by-case basis upon
submission of a written justification as to why the recipient cannot
meet the requirement and a proposed alternative that assures at least a
minimum level of public benefit.
H. Ineligible Activities
1. General government expenses. Except as otherwise specifically
authorized in this Notice, or under OMB Circular A-87, expenses
required to carry out the regular responsibilities of the unit of
general local government are not eligible for assistance.
2. The following activities may not be assisted with HUD Disaster
Recovery funds unless authorized under provisions of section 105(a)(15)
of the Act.
a. Purchase of equipment. The purchase of equipment with HUD
Disaster Recovery funds is generally ineligible.
i. Construction equipment. The purchase of construction equipment
is ineligible, but compensation for the use of such equipment through
leasing, depreciation, or use allowances pursuant to OMB Circulars A-
21, A-87 or A-122 as applicable for an otherwise eligible activity is
an eligible use of HUD Disaster Recovery funds. However, the purchase
of construction equipment for use as part of a solid waste disposal
facility is eligible.
ii. Fire protection equipment. Fire protection equipment is
considered for this purpose to be an integral part of a public facility
and thus, purchase of such equipment would be eligible.
iii. Furnishings and personal property. The purchase of equipment,
fixtures, motor vehicles, furnishings, or other personal property not
an integral structural fixture is generally ineligible. HUD Disaster
Recovery funds may be used, however, to purchase or to pay depreciation
or use allowances (in accordance with OMB Circulars A-21, A-87 or A-
122, as applicable) for such items when necessary for use by a
recipient or its subrecipients in the administration of activities
assisted with HUD Disaster Recovery funds, or when eligible as fire
fighting equipment, or when such items constitute all or part of a
public service.
b. Operating and maintenance expenses. The general rule is that any
expense associated with repairing, operating or maintaining public
facilities, improvements and services is ineligible. Specific
exceptions to this general rule are operating and maintenance expenses
associated with public service activities, interim assistance, and
office space for program staff employed in carrying out the HUD
Disaster Recovery Initiative. For example, the use of HUD Disaster
Recovery funds to pay the allocable costs of operating and maintaining
a facility used in providing a public service would be eligible, even
if no other costs of providing such a service are assisted with such
funds. Examples of ineligible operating and maintenance expenses are:
i. Maintenance and repair of publicly owned streets, parks,
playgrounds, water and sewer facilities, neighborhood facilities,
senior centers, centers for persons with disabilities, parking and
other public facilities and improvements. Examples of maintenance and
repair activities for which HUD Disaster Recovery funds may not be used
include the filling of pot holes in streets, repairing of cracks in
sidewalks, the mowing of recreational areas, and the replacement of
expended street light bulbs; and
ii. Payment of salaries for staff, utility costs and similar
expenses necessary for the operation of public works and facilities.
c. Income payments. The general rule is that HUD Disaster Recovery
funds may not be used for income payments. For purposes of the HUD
Disaster Recovery Initiative, ``income payments'' means a series of
subsistence-type grant payments made to an individual or family for
items such as food, clothing, housing (rent or mortgage), or utilities,
but excludes emergency grant payments made over a period of up to three
consecutive months to the provider of such items or services on behalf
of an individual or family. HUD may consider a waiver request for
exceptional circumstances on a case-by-case basis.
[[Page 47349]]
I. Criteria for National Objectives
The criteria at Sec. 570.483 and Sec. 570.208 shall be used for
States and for cities and counties, respectively, to determine whether
a HUD Disaster Recovery Initiative-assisted activity complies with one
or more of the national objectives.
J. Treatment of Program Income
For cities and counties, program income generated by HUD Disaster
Recovery Initiative becomes program income to the grantee's CDBG
program, not to its HUD Disaster Recovery grant. (For new grantees, not
participating in the CDBG program, program income is governed by the
provisions of Sec. 570.426). Therefore, any program income generated by
HUD Disaster Recovery funds is to be included in cost cap calculations
and program requirements for use of the CDBG funds. However, for
States, the program income shall be returned to the State as program
income for the year in which the State redistributes those funds.
K. Acquisition (Buyouts) of Flood-Damaged Properties
1. Payment of Pre-flood Values for Buyouts. HUD Disaster Recovery
Initiative grantees have the discretion to pay pre-flood or post-flood
values for the acquisition of properties located in a flood way or
flood plain. In using HUD Disaster Recovery funds for such
acquisitions, the grantee must uniformly apply whichever valuation
method it chooses.
2. Duplication of Benefits and Optional Relocation Payments with
Buyouts. a. Optional relocation assistance should only be provided to
the extent necessary for displaced persons to relocate in a
``comparable replacement dwelling,'' as defined in 42 U.S.C. 4601(10)
and 49 CFR 24.2(d), except as provided by HUD with prior approval on a
case by case basis when sufficient cause exists due to extraordinary
erosive economic impact of relocation, and shall not exceed the
difference between the housing replacement cost and the sum of:
i. The net proceeds from any flood insurance payment (proceeds net
of the cost of documented repairs of flood damage),
ii. Personal tax savings that result from an owner's tax deduction
of capital loss on displacement property,
iii. FEMA Hazard Mitigation Grant Program acquisition proceeds, and
iv. SBA disaster loan assistance.
3. Buyout of Undamaged Properties. a. Many buyout projects contain
some properties that were undamaged by the floods. Local administrators
sometimes seek to offer buyouts to owners of undamaged properties to
maximize clearance of the floodplain. Purchase of such properties with
HUD Disaster Recovery funding is permitted if the properties are
incidental to the project as a whole.
4. Ownership and Maintenance of Acquired Property. a. Any property
acquired with HUD Disaster Recovery funds being used to match FEMA
Section 404 Hazard Mitigation Grant Program funds is subject to section
404(b)(2) of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act, as amended, which requires that such property will be
dedicated and maintained in perpetuity for a use that is compatible
with open space, recreational, or wetlands management practices. In
addition, with minor exceptions, no new structure may be erected on the
property and no subsequent application for Federal disaster assistance
may be made for any purpose. The acquiring entity may want to lease
such property to adjacent property owners or other parties for
compatible uses in return for a maintenance agreement. Although Federal
policy encourages leasing rather than selling such property, the
property may be sold. In all cases, a deed restriction must require
that the property be dedicated and maintained for compatible uses in
perpetuity.
5. Future Federal Assistance to Owners Remaining in Floodplain.
a. Section 582 of the National Flood Insurance Reform Act of 1994
(in Title V of Pub. L. 103-325) (42 U.S.C. 5154a) prohibits flood
disaster assistance in certain circumstances. In general, it provides
that no Federal disaster relief assistance made available in a flood
disaster area may be used to make a payment (including any loan
assistance payment) to a person for repair, replacement, or restoration
for damage to any personal, residential, or commercial property, if
that person at any time has received flood disaster assistance that was
conditional on the person first having obtained flood insurance under
applicable Federal law and the person has subsequently failed to obtain
and maintain flood insurance as required under applicable Federal law
on such property. (Section 582 is self-implementing without
regulations.) This means that a grantee may not provide disaster
assistance for the above-mentioned repair, replacement, or restoration
to a person that has failed to meet this requirement.
b. Section 582 also implies a responsibility for a grantee that
receives HUD Disaster Recovery funds or that, under section 122 of the
Act, designates annually appropriated CDBG funds for disaster recovery.
That responsibility is to inform property owners receiving disaster
assistance that triggers the flood insurance purchase requirement that
they have a statutory responsibility to notify any transferee of the
requirement to obtain and maintain flood insurance, and that the
transferring owner may be liable if he or she fails to do so. These
requirements are described below.
c. Duty To Notify. In the event of the transfer of any property
described in paragraph e, the transferor shall, not later than the date
on which such transfer occurs, notify the transferee in writing of the
requirements to:
i. Obtain flood insurance in accordance with applicable Federal law
with respect to such property, if the property is not so insured as of
the date on which the property is transferred; and
ii. Maintain flood insurance in accordance with applicable Federal
law with respect to such property.
Such written notification shall be contained in documents
evidencing the transfer of ownership of the property.
d. Failure To Notify. If a transferor fails to make notification
and, subsequent to the transfer of the property:
i. The transferee fails to obtain or maintain flood insurance, in
accordance with applicable Federal law, with respect to the property;
ii. The property is damaged by a flood disaster; and
iii. Federal disaster relief assistance is provided for the repair,
replacement, or restoration of the property as a result of such damage,
the transferor must reimburse the Federal Government in an amount
equal to the amount of the Federal disaster relief assistance provided
with respect to the property.
e. The notification requirements apply to personal, commercial, or
residential property for which Federal disaster relief assistance made
available in a flood disaster area has been provided, prior to the date
on which the property is transferred, for repair, replacement, or
restoration of the property, if such assistance was conditioned upon
obtaining flood insurance in accordance with applicable Federal law
with respect to such property.
f. The term ``Federal disaster relief assistance'' applies to HUD
or other Federal assistance for disaster relief in ``flood disaster
areas.'' This prohibition applies only to when the new disaster relief
assistance was given for a loss caused by flooding. It does not apply
to disaster assistance caused by other sources (i.e., earthquakes,
fire, wind,
[[Page 47350]]
etc.). The term ``flood disaster area'' is defined in section 582(d)(2)
to mean an area receiving a Presidential declaration of a major
disaster or emergency as a result of flood conditions.
L. Other Program Requirements
1. General. This section L. enumerates laws that the Secretary will
treat as applicable to the HUD Disaster Recovery Initiative grants to
cities and counties, including statutes expressly made applicable by
the Act and certain other statutes and Executive Orders for which the
Secretary has enforcement responsibility. The absence of mention herein
of any other statute for which the Secretary does not have direct
enforcement responsibility is not intended to be taken as an indication
that, in the Secretary's opinion, such statute or Executive Order is
not applicable to activities assisted under the Act. States are
governed by applicable laws.
2. Labor standards.
In part because Davis-Bacon requirements are not applicable to
Federal Emergency Management Agency (FEMA) disaster grants, it is
necessary to clarify the applicability of Davis-Bacon requirements in
relationship to the use of HUD Disaster Recovery funds in disaster
recovery efforts. This section of this Notice addresses Davis-Bacon
applicability to use of HUD Disaster Recovery funds to reimburse
property owners for construction work either completed or in process at
the time use of those funds is contemplated.
In accordance with Section 110(a) of the Act, construction work
financed in whole or in part with HUD Disaster Recovery funds is
subject to Federal labor standards provisions including the payment of
Davis-Bacon Act prevailing wage rates. Additionally, such work is
subject to the requirements of the Copeland Act governing the
certification and submission of weekly payroll reports and prohibiting
kick-backs and other impermissible deductions from wages, and the
overtime requirements of the Contract Work Hours and Safety Standards
Act. The requirements found in Department of Labor (DOL) regulations
for Davis-Bacon administration and enforcement (29 CFR parts 1, 3, 5,
6, and 7) also apply.
a. Applicability. HUD Disaster Recovery activities are subject to
program policies and parameters for Federal labor standards
applicability at Sec. 570.603. The labor provisions apply to
rehabilitation of residential property only if such property contains 8
or more units.
b. Volunteers. Section 110(b) of the Act provides for the use of
volunteer labor on construction work subject to Federal labor
standards. Volunteers may be utilized to the extent permitted under the
regulations in 24 CFR part 70.
c. Work in progress. In accordance with 29 CFR 1.6(g), if HUD
Disaster Recovery funds are approved after start of construction (e.g.,
rehabilitation), Davis-Bacon requirements apply to the construction
work. In such cases, the appropriate Davis-Bacon wage decision and
contract standards must be incorporated into the contract
specifications retroactively to the date of award or start of
construction, whichever was first. However, HUD may request and the DOL
may approve a wage determination effective on the date the Disaster
Recovery funding is approved (i.e., not retroactively to the start of
construction), provided that HUD considers and DOL agrees that it is
necessary and proper in the public interest to prevent injustice or
undue hardship, and provided further that there is no evidence of
intent to apply for Federal funding or assistance prior to contract
award or start of construction, as appropriate.
d. Reimbursement for completed construction work. When HUD Disaster
Recovery funds are proposed to reimburse property owners for
construction work performed and fully completed as disaster damage
rehabilitation, Federal labor standards provisions (i.e., Davis-Bacon
wage rates and related requirements) are not applicable to the
completed work provided that:
i. Neither the owner nor the city or county grantee, or for States,
the unit of general local government, contemplated use of or
reimbursement by HUD Disaster Recovery funds for the rehabilitation(s)
before or during the time construction work was underway; and
ii. No other Federal funding requiring the payment of Davis-Bacon
wage rates was used to carry out the work.
In these cases, the use of HUD Disaster Recovery funds to reimburse
owners for completed rehabilitation does not constitute financing of
construction work within the meaning of the labor standards provisions
of Section 110 of the Act.
e. Davis-Bacon Streamlining. The HUD Office of Labor Relations has
instituted a number of streamlining measures that significantly reduce
the paperwork/recordkeeping burdens commonly attributed to Davis-Bacon
projects. In addition, Labor Relations headquarters and field staff are
committed to providing expedited processing on all matters related to
HUD Disaster Recovery activities.
Note that most forms of HUD Disaster Recovery assistance to
homeowners would not trigger Davis-Bacon requirements. Grantees should
contact Richard S. Allan, Assistant to the Secretary for Labor
Relations (Acting), or Jade M. Banks at (202)708-0370 for assistance in
determining whether and to what extent Davis-Bacon requirements apply
to specific activities undertaken with HUD Disaster Recovery funds.
Information about Federal labor standards provisions and HUD programs
is also available on the HUD Homepage at: http://www.hud.gov/olr/
olr__int2.html.
3. National Flood Insurance Program. a. Cities and counties may not
use HUD Disaster Recovery Initiative funding in flood hazard areas for
acquisition or construction projects in communities that have been
identified by FEMA as nonparticipating, noncompliant communities under
the National Flood Insurance Program. Specific guidance can be found in
the references in paragraph 3.b. for cities and counties. Though State-
administered formula programs are statutorily exempt from flood
insurance purchase requirements, HUD strongly encourages States to
adopt a similar policy if they have the authority to do so. Listings of
participating, nonparticipating, and suspended communities are in the
FEMA Federal Insurance Administration's ``National Flood Insurance
Program Community Status Book,'' available on the World Wide Web at
http://www.fema.gov/home/fema/csb.htm for viewing or downloading.
FEMA's revised publication, ``Mandatory Purchase of Flood Insurance
Guidelines,'' reflecting new provisions of the National Flood Insurance
Reform Act of 1994 is also available on the World Wide Web at http://
www/fema.gov/nfip/mpurfi.htm.
b. Section 202(a) of the Flood Disaster Protection Act of 1973 (42
U.S.C. 4106) provides that no Federal officer or agency shall approve
any financial assistance for acquisition or construction purposes (as
defined under section 3(a) of said Act (42 U.S.C. 4003(a)), one year
after a community has been formally notified of its identification as a
community containing an area of special flood hazard, for use in any
area that has been identified by the Director of the Federal Emergency
Management Agency as an area having special flood hazards unless the
community in which such area is situated is then participating in the
National Flood Insurance Program. Notwithstanding the date of HUD
approval of a city's or county's Action Plan for Disaster Recovery
funds shall
[[Page 47351]]
not be expended for acquisition or construction purposes in an area
that has been identified by the Federal Emergency Management Agency
(FEMA) as having special flood hazards unless the community in which
the area is situated is participating in the National Flood Insurance
Program in accordance with 44 CFR parts 59-79, or less than a year has
passed since FEMA notification to the community regarding such hazards;
and, where the community is participating, flood insurance is obtained
in accordance with section 102(a) of the Flood Disaster Protection Act
of 1973 (42 U.S.C. 4012(a).)
M. Waiver of Statutory and Regulatory Requirements That Would Otherwise
Apply to the HUD Disaster Recovery Initiative
1. Title II, Chapter 10 of the 1997 Supplemental Appropriations Act
provides that in administering these amounts, the Secretary may waive,
or specify alternative requirements for, any provision of any statute
or regulation that the Secretary administers in connection with the
obligation by the Secretary or the use by the recipient of these funds,
except for statutory requirements related to civil rights, fair housing
and nondiscrimination, the environment, and labor standards, upon a
finding that such waiver is required to facilitate the use of such
funds, and would not be inconsistent with the overall purpose of the
statute. As noted, the Secretary may not waive statutory requirements
related to civil rights, fair housing and nondiscrimination, the
environment, or labor standards. The procedures set forth in this
notice reflect the waiver of the statutory and regulatory requirements
that the Secretary considered necessary for the implementation of the
HUD Disaster Recovery Initiative, and that are authorized to be waived
under Title II, Chapter 10 of the 1997 Supplemental Appropriations Act.
The statutory and regulatory requirements that have been waived pertain
to requirements governing consolidated planning submissions, CDBG
program requirements, acquisition and relocation requirements, and
other program related requirements. Appendix A to this notice lists the
specific statutory and regulatory requirements that have been waived
and sets forth the reasons for the waivers. With respect to the waivers
of these statutory and regulatory requirements, no further action need
be taken by the grantees.
2. HUD may issue additional waivers (beyond those already waived by
the Secretary in the implementation of this initiative) deemed
appropriate under this authority. HUD will consider additional waivers
on a case-by-case basis, as requested by grantees. Such waivers will
receive expedited review.
3. Grantees should give priority to projects that benefit low-and
moderate-income individuals to the maximum extent possible.
II. Ensuring the Public Trust
A. Program Administrative, Recordkeeping and Reporting Requirements
The program administrative requirements at Secs. 570.489-570.492
for States and at Secs. 570.500-570.513 for cities and counties, which
are not otherwise waived, shall apply, except that, with respect to
reporting:
1. States must submit a Performance Evaluation Report (PER)
pursuant to 24 CFR 91.520, separately for the HUD Disaster Recovery
Initiative, similar in all other respects to that which is required for
the CDBG program regulated at 24 CFR part 570. The first PER for the
HUD Disaster Recovery Initiative will be due ninety (90) days after the
12-month period following the effective date of the grant and each 12-
month period thereafter until all funds are spent. The PER must include
a special narrative that discusses how the State assured that
activities met the requirements of this Notice with respect to the
buyout of structures in a disaster area.
2. Cities and counties must submit a Performance Report for the HUD
Disaster Recovery Initiative in accordance with 24 CFR 91.520. The
Performance Report will be due ninety (90) days after each 12-month
period following the effective date of the grant each year until all
funds are spent. The final Performance Report will be due ninety (90)
days after all funds are spent. It also must include a special
narrative that discusses how the city or county assured that activities
met the requirements of this Notice with respect to the buyout of
structures in a disaster area.
3. In addition, Congress has required that quarterly reports be
submitted on all disbursements and use of funds for or associated with
buyouts. Therefore, each grantee must submit a quarterly report, as HUD
will prescribe, no later than 30 days following each calendar quarter,
beginning after the first full calendar quarter after grant award. That
report will include information on the project name, activity,
location, national objective, funds budgeted and expended, non-HUD
Disaster Recovery Initiative Federal source and funds, numbers of
properties and housing units, and numbers of low- and moderate-income
households. HUD will seek approval from OMB for any new information
collection requirements in accordance with the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501-3520).
B. Cost Principles
1. Direct and Indirect Cost principles. Costs incurred, whether
charged on a direct or an indirect basis, must be in conformance with
OMB Circulars A-87, ``Cost Principles for State, Local and Indian
Tribal Governments''; A-122, ``Cost Principles for Non-profit
Organizations''; or A-21, ``Cost Principles for Educational
Institutions,'' as applicable. 1 All items of cost listed in
Attachment B of these Circulars that require prior Federal agency
approval are allowable without prior approval of HUD to the extent they
comply with the general policies and principles stated in Attachment A
of such circulars and are otherwise eligible under the HUD Disaster
Recovery Initiative, except for the following:
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\1\ These circulars are available from the American Communities
Center by calling the following toll-free numbers: (800) 998-9999 or
(800) 483-2209 (TTY).
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i. Depreciation methods for fixed assets shall not be changed
without HUD's specific approval or, if charged through a cost
allocation plan, the Federal cognizant agency.
ii. Fines and penalties (including punitive damages) are
unallowable costs to the HUD Disaster Recovery Initiative.
iii. Pre-award costs for city and county grantees are limited to
those authorized under Sec. 570.200(h).
2. Uniform administrative requirements and cost principles. The
city or county grantee, its agencies or instrumentalities, and
subrecipients shall comply with the policies, guidelines, and
requirements of 24 CFR part 85 and OMB Circulars A-87, A-110
(implemented at 24 CFR part 84), A-122, A-133 (implemented at 24 CFR
part 45), as applicable, as they relate to the acceptance and use of
Federal funds, HUD Disaster Recovery grants. The applicable sections of
24 CFR parts 84 and 85 are set forth at Sec. 570.502. States shall
comply with the applicable requirements of Sec. 570.489 that are not
otherwise waived.
3. Consultant activities. Consulting services are eligible for
assistance for professional assistance in program planning, development
of community development objectives, and other general professional
guidance relating to program execution. The use of
[[Page 47352]]
consultants is governed by the following:
a. Employer-employee type of relationship. No person providing
consultant services in an employer-employee type of relationship shall
receive more than a reasonable rate of compensation for personal
services paid with HUD Disaster Recovery funds. In no event, however,
shall such compensation exceed the equivalent of the daily rate paid
for Level IV of the Executive Schedule. Such services shall be
evidenced by written agreements between the parties that detail the
responsibilities, standards, and compensation.
b. Independent contractor relationship. Consultant services
provided under an independent contractor relationship are governed by
the procurement requirements in 24 CFR 85.36 and are not subject to the
Level IV limitation.
C. Public Law 88-352 and Public Law 90-284; Affirmatively Furthering
Fair Housing; Executive Order 11063
1. The following requirements apply to HUD Disaster Recovery
Initiative:
a. Public Law 88-352, which is title VI of the Civil Rights Act of
1964 (42 U.S.C. 2000d et seq.), and implementing regulations in 24 CFR
part 1.
b. Public Law 90-284, which is the Fair Housing Act (42 U.S.C.
3601-3620). In accordance with the Fair Housing Act, the Secretary
requires that grantees administer all programs and activities related
to housing and community development in a manner to affirmatively
further the policies of the Fair Housing Act. Furthermore, for each
grantee receiving a HUD Disaster Recovery grant, the certification that
the grantee will affirmatively further fair housing shall specifically
require the grantee to assume the responsibility of fair housing
planning by conducting an analysis to identify impediments to fair
housing choice within its jurisdiction, taking appropriate actions to
overcome the effects of any impediments identified through that
analysis, and maintaining records reflecting the analysis and actions
in this regard.
2. Executive Order 11063, as amended by Executive Order 12259 (3
CFR, 1959-1963 Comp., p. 652; 3 CFR, 1980 Comp., p. 307)(Equal
Opportunity in Housing), and implementing regulations in 24 CFR part
107, also apply.
D. Section 109 of the Act
1. No person in the United States shall on the ground of race,
color, religion, national origin or sex, be excluded from participation
in, be denied the benefits of, or be subjected to discrimination under,
any program or activity funded in whole or in part with HUD Disaster
Recovery funds made available pursuant to the Act. For purposes of this
requirement, ``program or activity'' is defined as any function
conducted by an identifiable administrative unit of the recipient, or
by any unit of government, subrecipient, or private contractor
receiving HUD Disaster Recovery grant funds or loans from the
recipient. ``Funded in whole or in part with HUD community development
funds'' means that HUD Disaster Recovery funds have been transferred by
the recipient or a subrecipient to an identifiable administrative unit
and disbursed in a program or activity. The term ``recipient'' means
recipient as defined in Sec. 1.2(f).
2. Specific discriminatory actions prohibited and corrective
actions. a. A recipient may not, under any program or activity,
directly or through contractual or other arrangements, on the ground of
race, color, religion, national origin, or sex:
i. Deny any individual any facilities, services, financial aid or
other benefits provided under the program or activity.
ii. Provide any facilities, services, financial aid or other
benefits that are different, or are provided in a different form, from
that provided to others under the program or activity.
iii. Subject an individual to segregated or separate treatment in
any facility in, or in any matter of process related to receipt of any
service or benefit under the program or activity.
iv. Restrict an individual in any way in access to, or in the
enjoyment of, any advantage or privilege enjoyed by others in
connection with facilities, services, financial aid or other benefits
under the program or activity.
v. Treat an individual differently from others in determining
whether the individual satisfies any admission, enrollment,
eligibility, membership, or other requirement or condition that the
individual must meet in order to be provided any facilities, services
or other benefit provided under the program or activity.
vi. Deny an individual an opportunity to participate in a program
or activity as an employee.
b. A recipient may not use criteria or methods of administration
that have the effect of subjecting persons to discrimination on the
basis of race, color, religion, national origin, or sex, or have the
effect of defeating or substantially impairing accomplishment of the
objectives of the program or activity with respect to persons of a
particular race, color, religion, national origin, or sex.
c. A recipient, in determining the site or location of housing or
facilities provided in whole or in part with funds, may not make
selections of such site or location that have the effect of excluding
persons from, denying them the benefits of, or subjecting them to
discrimination on the ground of race, color, religion, national origin,
or sex; or that have the purpose or effect of defeating or
substantially impairing the accomplishment of the objectives of the
Act.
d. i. In administering a program or activity funded in whole or in
part with HUD Disaster Recovery funds regarding which the recipient has
previously discriminated against persons on the ground of race, color,
religion, national origin or sex, or if there is sufficient evidence to
conclude that such discrimination existed, the recipient must take
remedial affirmative action to overcome the effects of prior
discrimination. The word ``previously'' does not exclude current
discriminatory practices.
ii. In the absence of discrimination, a recipient, in administering
a program or activity funded in whole or in part with HUD Disaster
Recovery funds, may take any nondiscriminatory affirmative action
necessary to ensure that the program or activity is open to all without
regard to race, color, religion, national origin or sex.
iii. After a finding of noncompliance or after a recipient has a
firm basis to conclude that discrimination has occurred, a recipient
shall not be prohibited from taking any eligible action to ameliorate
an imbalance in services or facilities provided to any geographic area
or specific group of persons within its jurisdiction, where the purpose
of such action is to remedy prior discriminatory practice or usage.
e. Notwithstanding anything to the contrary, nothing contained
herein shall be construed to prohibit any recipient from maintaining or
constructing separate living facilities or rest room facilities for the
different sexes. Furthermore, selectivity on the basis of sex is not
prohibited when institutional or custodial services can properly be
performed only by a member of the same sex as the recipients of the
services.
3. Any prohibition against discrimination on the basis of age under
the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.) or with
respect to an otherwise qualified handicapped person as provided in
section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) shall
also apply to any program or
[[Page 47353]]
activity funded in whole or in part with HUD Disaster Recovery funds.
HUD regulations implementing the Age Discrimination Act are contained
in 24 CFR part 146 and the regulations implementing section 504 are
contained in 24 CFR part 8.
E. Environmental Review Requirements
1. Prior to the commitment of any HUD Disaster Recovery funds,
grantees must comply with the regulations in 24 CFR part 58. These
regulations require: the analysis of potential environmental impacts;
consultation with interested parties; and public notification of the
results of the analysis and intent to request release of funds from
HUD. Also, they require that the State or local government assume
compliance with these rules by execution of the grant agreement with
HUD, and a State or local government certification that it will comply
with all the applicable Federal environmental rules.
2. Disaster Recovery Assistance in a Flood Plain. a. Grantees must
follow the eight-step decision-making process required by Executive
Order 11988, Flood Plain Management, codified for HUD programs at
Sec. 55.20. The Order covers the proposed acquisition, construction,
improvement, disposition, financing, and use of property in a flood
plain. Other related Federal environmental laws and authorities noted
at Sec. 58.5 may also apply.
b. The Office of Management and Budget (OMB) and the Council on
Environmental Quality (CEQ) jointly issued a memorandum on February 18,
1997 entitled ``Floodplain Management and Procedures For Evaluation and
Review of Levee and Associated Restoration Projects,'' which emphasizes
the need to consider nonstructural alternatives, e.g., ``buyouts,'' in
flood disaster recovery activities and the need for coordination among
all levels of government.
3. Environmental assessments and reviews may be tiered to eliminate
duplication and to save time and resources. For other Federal programs,
environmental assessments and reviews are not carried out by grantees
as they are for the HUD Disaster Recovery Initiative, but are usually
undertaken by Federal staff or contractors. Therefore, grantees must
coordinate with other Federal agencies, e.g., FEMA, to tier
environmental assessments and reviews for activities funded by programs
of both Federal agencies.
4. Joint Environmental Assessments between HUD and Other Federal
Agencies. a. In addition to the provisions of Sec. 58.33, the following
special procedures may be employed when a project related to recovery
from a covered disaster is jointly funded by HUD and other Federal
agencies.
b. A State or local government administering Federal environmental
requirements for the HUD Disaster Recovery Initiative may enter into
cooperating agreements with other Federal agencies to prepare an
environmental assessment for a HUD Disaster Recovery Initiative-funded
project. The cooperating agreement will identify the project, all
Federal agencies party to the agreement (including State and local
governments acting for HUD under the provisions of 24 CFR part 58),
which agency will be the lead agency and prepare the environment
assessment, and the scope of the assessment, including the size and
area of potential impact. The lead agency will prepare the assessment,
using its own CEQ-approved procedures, and conduct all required
reviews, consultations and public notifications under applicable
related laws and authorities.
c. The provisions of 24 CFR part 58 would apply if a State or local
government administering a HUD-funded program that is subject to part
58 (e.g., the HUD Disaster Recovery Initiative) is the lead agency.
d. If the State or local government that assumes the HUD
environmental review responsibilities is not the lead agency, then that
government must review the completed environmental assessment that was
prepared by a lead agency under the cooperating agreement. If the
review of the document determines that the information is not accurate
or complete or does not meet the requirements of 24 CFR part 58, a
State or local government administering the provisions of 24 CFR part
58 must reject the assessment and prepare its own independent
assessment as required in 24 CFR part 58. A State or local government
acting as a cooperating agency remains responsible for review under
authorities that may be unique to HUD-assisted projects under part 58,
i.e., HUD environmental standards in 24 CFR part 51 and HUD policy
regarding toxic or hazardous materials. However, if a lead agency's
assessment meets the requirements of part 58, except for a lack of
coverage of these particular areas, the cooperating agency need not
reject the assessment. In these cases, the cooperating agency may add
its own review of these areas and its own findings regarding the
overall environmental impact of the project.
e. If an assessment showing no significant environmental impact is
adopted by a State or local government administering the provisions of
24 CFR part 58, it must formally record its adoption pursuant to
Sec. 58.38, prepare a statement that the proposed HUD funding of the
proposed project produces no significant environmental impact (FONSI),
and follow the provisions for release of funds as stated in subpart H
of 24 CFR part 58, including notice to the public and the statutory
waiting period.
F. Displacement, Relocation, Acquisition, and Replacement of Housing
1. General policy for minimizing displacement. Consistent with the
other goals and objectives of the HUD Disaster Recovery Initiative,
grantees (or States or State recipients, as applicable) shall assure
that they have taken all reasonable steps to minimize the displacement
of persons (families, individuals, businesses, nonprofit organizations,
and farms) as a result of activities assisted under this program.
2. Relocation assistance for displaced persons at URA levels. a. A
displaced person shall be provided with relocation assistance at the
levels described in, and in accordance with the requirements of, 49 CFR
part 24, which contains the government-wide regulations implementing
the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970 (URA) (42 U.S.C. 4601-4655).
b. Displaced person. i. For purposes of paragraph 2. of this
section, the term ``displaced person'' means any person (family,
individual, business, nonprofit organization, or farm) that moves from
real property, or moves his or her personal property from real
property, permanently and involuntarily, as a direct result of
rehabilitation, demolition, or acquisition for an activity assisted
under this initiative. A permanent, involuntary move for an assisted
activity includes a permanent move from real property that is made:
(1) After notice by the grantee (or the State recipient, if
applicable) to move permanently from the property, if the move occurs
after the initial official submission to HUD (or the State, as
applicable) for grant, loan, or loan guarantee funds under this
initiative that are later provided or granted.
(2) After notice by the property owner to move permanently from the
property, if the move occurs after the date of the submission of a
request for financial assistance by the property owner (or person in
control of the site) that is later approved for the requested activity.
(3) Before the date described in paragraph 2.b.i.(1) or (2), if
either HUD or the grantee (or State, as applicable) determines that the
displacement
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directly resulted from acquisition, rehabilitation, or demolition for
the requested activity.
(4) If the person is the tenant-occupant of a dwelling unit and any
one of the following two situations occurs:
(a) The tenant is required to relocate temporarily for the activity
but the tenant is not offered payment for all reasonable out-of-pocket
expenses incurred in connection with the temporary relocation,
including the cost of moving to and from the temporary location and any
increased housing costs, or other conditions of the temporary
relocation are not reasonable; and the tenant does not return to the
building/complex; or
(b) The tenant is required to move to another unit in the building/
complex, but is not offered reimbursement for all reasonable out-of-
pocket expenses incurred in connection with the move.
ii. Notwithstanding the provisions of paragraph 2.b.i., the term
``displaced person'' does not include:
(1) A person who is evicted for cause based upon serious or
repeated violations of material terms of the lease or occupancy
agreement. To exclude a person on this basis, the grantee (or State or
State recipient, as applicable) must determine that the eviction was
not undertaken for the purpose of evading the obligation to provide
relocation assistance under this section;
(2) A person who moves into the property after the date of the
notice described in paragraph 2.b.i. (1) or (2) of this section, but
who received a written notice of the expected displacement before
occupancy.
(3) A person who is not displaced as described in 49 CFR
24.2(g)(2).
(4) A person who the grantee (or State, as applicable) determines
is not displaced as a direct result of the acquisition, rehabilitation,
or demolition for an assisted activity. To exclude a person on this
basis, HUD must concur in that determination.
iii. A grantee (or State or State recipient, as applicable) may, at
any time, request HUD to determine whether a person is a displaced
person under this section.
3. Optional relocation assistance. In connection with the use of
HUD Disaster Recovery funds for buyouts, a grantee may provide (or the
State may permit the State recipient to provide, as applicable)
relocation payments and other relocation assistance to persons
displaced by activities that are not subject to paragraphs 2. or 3. The
grantee may also provide (or the State may also permit the State
recipient to provide, as applicable) relocation assistance to persons
receiving assistance under paragraphs 2. or 3. of this section at
levels in excess of those required by these paragraphs. Unless such
assistance is provided under State or local law, the grantee (or State
recipient, as applicable) shall provide such assistance only upon the
basis of a written determination that the assistance is appropriate.
The grantee (or State recipient, as applicable) must adopt a written
policy available to the public that describes the relocation assistance
that the grantee (or State recipient, as applicable) has elected to
provide and that provides for equal relocation assistance within each
class of displaced persons.
4. Acquisition of real property. The acquisition of real property
for an assisted activity is subject to 49 CFR part 24, subpart B.
5. Appeals. If a person disagrees with the determination of the
grantee (or the State recipient, as applicable) concerning the person's
eligibility for, or the amount of, a relocation payment under this
section, the person may file a written appeal of that determination
with the grantee (or the State recipient, as applicable). The appeal
procedures to be followed are described in 49 CFR 24.10. In addition, a
low- or moderate-income household that has been displaced from a
dwelling may file a written request for review of the grantee's
decision to the HUD Field Office. For purposes of State HUD Disaster
Recovery funds, a low- or moderate-income household may file a written
request for review of the State recipient's decision with the State.
6. Responsibility of grantee or State. a. The grantee (or State, if
applicable) is responsible for ensuring compliance with these
requirements, notwithstanding any third party's contractual obligation
to the grantee to comply with the provisions of this section. For
purposes of State HUD Disaster Recovery funds, the State shall require
State recipients to certify that they will comply with the requirements
of this section.
b. The cost of assistance required under this section may be paid
from local public funds, funds provided under this initiative, or funds
available from other sources.
c. The grantee (or State and State recipient, as applicable) must
maintain records in sufficient detail to demonstrate compliance with
the provisions of this section.
G. Employment and Contracting Opportunities
1. Grantees shall comply with Executive Order 11246, as amended by
Executive Orders 11375, 11478, 12086, and 12107 (3 CFR, 1964-1965
Comp., p. 339; 3 CFR, 1966-1970 Comp., p. 684; 3 CFR, 1966-1970 Comp.,
p. 803; 3 CFR, 1978 Comp., p. 230; and 3 CFR, 1978 Comp., p. 264)
(Equal Employment Opportunity) and the implementing regulations at 41
CFR chapter 60; and
2. Though requirements of Section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701u) and implementing regulations
at 24 CFR part 135, are waived, HUD encourages each grantee to give
priority to the hiring of local low and moderate income persons and
contractors in carrying out its disaster recovery activities.
3. Contracting with small and minority firms, women's business
enterprises and labor surplus area firms. a. The grantee and subgrantee
must take all necessary affirmative steps to assure that minority
firms, women's business enterprises, and labor surplus area firms are
used when possible.
b. Affirmative steps include:
i. Placing qualified small and minority businesses and women's
business enterprises on solicitation lists;
ii. Assuring that small and minority businesses and women's
business enterprises are solicited whenever they are potential sources;
iii. Dividing total requirements, when economically feasible, into
smaller tasks or quantities to permit maximum participation by small
and minority businesses, and women's business enterprises;
iv. Establishing delivery schedules, where the requirement permits,
which encourage participation by small and minority businesses, and
women's business enterprises;
v. Using the services and assistance of SBA and the Minority
Business Development Agency of the U.S. Department of Commerce; and
vi. Requiring the prime contractor, if subcontracts are to be let,
to take the affirmative steps listed in subparagraphs (1) through (5)
above.
Lead-Based Paint
1. Requirements for city and county grantees. City and county
grantees shall comply with the requirements of Sec. 570.608.
2. Requirements for State grantees. States shall comply with the
provisions of Sec. 570.487(c).
Architectural Barriers Act and the Americans With Disabilities Act
1. The Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157)
requires certain Federal and Federally funded buildings and other
facilities to be designed, constructed, or altered in accordance with
standards that insure
[[Page 47355]]
accessibility to, and use by, physically handicapped people. A building
or facility designed, constructed, or altered with funds allocated or
reallocated under this initiative after December 11, 1995, and that
meets the definition of ``residential structure'' as defined in 24 CFR
40.2 or the definition of ``building'' as defined in 41 CFR 101-
19.602(a) is subject to the requirements of the Architectural Barriers
Act of 1968 (42 U.S.C. 4151-4157) and shall comply with the Uniform
Federal Accessibility Standards (Appendix A to 24 CFR part 40 for
residential structures, and Appendix A to 41 CFR part 101-19, subpart
101-19.6, for general type buildings).
2. The Americans with Disabilities Act (42 U.S.C. 12131; 47 U.S.C.
155, 201, 218 and 225) (ADA) provides comprehensive civil rights to
individuals with disabilities in the areas of employment, public
accommodations, State and local government services, and
telecommunications. It further provides that discrimination includes a
failure to design and construct facilities for first occupancy no later
than January 26, 1993 that are readily accessible to and usable by
individuals with disabilities. Further, the ADA requires the removal of
architectural barriers and communication barriers that are structural
in nature in existing facilities, where such removal is readily
achievable--that is, easily accomplishable and able to be carried out
without much difficulty or expense.
J. Constitutional Prohibition
1. In accordance with First Amendment church/state principles, as a
general rule, HUD Disaster Recovery Grant assistance may not be used
for religious activities or provided to primarily religious entities
for any activities, including secular activities.
2. The following restrictions and limitations therefore apply to
the use of HUD Disaster Recovery funds.
a. HUD Disaster Recovery funds may not be used for the acquisition
of property or the construction or rehabilitation (including historic
preservation and removal of architectural barriers) of structures to be
used for religious purposes or purposes that will otherwise promote
religious interests. This limitation includes the acquisition of
property for ownership by primarily religious entities and the
construction or rehabilitation (including historic preservation and
removal of architectural barriers) of structures owned by such entities
(except as permitted under paragraph 2.b. of this section with respect
to rehabilitation and under paragraph 2.d. of this section with respect
to repairs undertaken in connection with public services) regardless of
the use to be made of the property or structure. Property owned by
primarily religious entities may be acquired with HUD Disaster Recovery
funds at no more than fair market value for a non-religious use.
b. HUD Disaster Recovery funds may be used to rehabilitate
buildings owned by primarily religious entities to be used for a wholly
secular purpose under the following conditions:
i. The building (or portion thereof) that is to be improved with
the HUD Disaster Recovery Initiative assistance has been leased to an
existing or newly established wholly secular entity (which may be an
entity established by the religious entity);
ii. The HUD Disaster Recovery Initiative assistance is provided to
the lessee (and not the lessor) to make the improvements;
iii. The leased premises will be used exclusively for secular
purposes available to persons regardless of religion;
iv. The lease payments do not exceed the fair market rent of the
premises as they were before the improvements are made;
v. The portion of the cost of any improvements that also serve a
non-leased part of the building will be allocated to and paid for by
the lessor;
vi. The lessor enters into a binding agreement that unless the
lessee, or a qualified successor lessee, retains the use of the leased
premises for a wholly secular purpose for at least the useful life of
the improvements, the lessor will pay to the lessee an amount equal to
the residual value of the improvements;
vii. The lessee must remit the amount received from the lessor
under paragraph b.vi. of this section to the recipient or subrecipient
from which the HUD Disaster Recovery funds were derived.
viii. The lessee can also enter into a management contract
authorizing the lessor religious entity to use the building for its
intended secular purpose, e.g., homeless shelter, provision of public
services. In such case, the religious entity must agree in the
management contract to carry out the secular purpose in a manner free
from religious influences in accordance with the principles set forth
in paragraph c.
c. As a general rule, HUD Disaster Recovery funds may be used for
eligible public services to be provided through a primarily religious
entity, where the religious entity enters into an agreement with the
recipient or subrecipient from which the HUD Disaster Recovery funds
are derived that, in connection with the provision of such services:
i. It will not discriminate against any employee or applicant for
employment on the basis of religion and will not limit employment or
give preference in employment to persons on the basis of religion;
ii. It will not discriminate against any person applying for such
public services on the basis of religion and will not limit such
services or give preference to persons on the basis of religion;
iii. It will provide no religious instruction or counseling,
conduct no religious worship or services, engage in no religious
proselytizing, and exert no other religious influence in the provision
of such public services;
iv. Where the public services provided under paragraph 2.c. are
carried out on property owned by the primarily religious entity, HUD
Disaster Recovery funds may also be used for minor repairs to such
property that are directly related to carrying out the public services
where the cost constitutes in dollar terms only an incidental portion
of the HUD Disaster Recovery grant expenditure for the public services.
K. Political Activities
HUD Disaster Recovery funds may not be used to finance the use of
facilities or equipment for political purposes or to engage in other
partisan political activities, such as candidate forums, voter
transportation, or voter registration. However, a facility originally
assisted with HUD Disaster Recovery funds may be used on an incidental
basis to hold political meetings, candidate forums, or voter
registration campaigns, provided that all parties and organizations
have access to the facility on an equal basis, and are assessed equal
rent or use charges, if any.
L. Use of Debarred, Suspended, or Ineligible Contractors or
Subrecipients
The requirements set forth in 24 CFR part 24 apply to this program.
M. Conflict of Interest
1. In the procurement of supplies, equipment, construction, and
services by city and county grantees and by their subrecipients, the
conflict of interest provisions in Secs. 85.36 and 84.42, respectively,
shall apply. States and their recipients shall be governed by the
provisions of Sec. 570.489(g).
2. In all cases not governed by 24 CFR 85.36 and 84.42, the
following provisions shall apply. Such cases include the acquisition
and disposition
[[Page 47356]]
of real property and the provision of assistance by the recipient or by
its subrecipients to individuals, businesses, and other private
entities under eligible activities that authorize such assistance
(e.g., rehabilitation, preservation, and other improvements of private
properties or facilities pursuant to Sec. 570.202; or grants, loans,
and other assistance to businesses, individuals, and other private
entities pursuant to Secs. 570.203, 570.204, or 570.703(i)).
3. Conflicts prohibited. The general rule is that no persons
described in paragraph 4. who exercise or have exercised any functions
or responsibilities with respect to HUD Disaster Recovery Initiative
activities, or who are in a position to participate in a decisionmaking
process or gain inside information with regard to such activities, may
obtain a financial interest or benefit from a HUD Disaster Recovery
grant, or have a financial interest in any contract, subcontract, or
agreement with respect to a HUD Disaster Recovery grant, or with
respect to the proceeds of the HUD Disaster Recovery Initiative-
assisted activity, either for themselves or those with whom they have
business or immediate family ties, during their tenure or for one year
thereafter.
4. Persons covered. The conflict of interest provisions of
paragraph 2. of this section apply to any person who is an employee,
agent, consultant, officer, or elected official or appointed official
of the recipient, or of any designated public agencies, or of
subrecipients that are receiving HUD Disaster Recovery funds.
5. Exceptions. Upon the written request of a city or county
grantee, HUD may grant an exception to the provisions of paragraph 2.
of this section on a case-by-case basis when it has satisfactorily met
the threshold requirements of paragraph 5.a., taking into account the
cumulative effects of paragraph 5.b. State grantees shall follow the
provisions of Sec. 570.489(h) covering exceptions to the provisions of
paragraph 2.
a. Threshold requirements. HUD will consider an exception only
after the recipient has provided the following documentation:
i. A disclosure of the nature of the conflict, accompanied by an
assurance that there has been public disclosure of the conflict and a
description of how the public disclosure was made; and
ii. An opinion of the recipient's attorney that the interest for
which the exception is sought would not violate State or local law.
b. Factors to be considered for exceptions. In determining whether
to grant a requested exception after the recipient has satisfactorily
met the requirements of paragraph 5.a., HUD shall conclude that such an
exception will serve to further the purposes of the HUD Disaster
Recovery Initiative and the effective and efficient administration of
the recipient's program or project, taking into account the cumulative
effect of the following factors, as applicable:
i. Whether the exception would provide a significant cost benefit
or an essential degree of expertise to the program or project that
would otherwise not be available;
ii. Whether an opportunity was provided for open competitive
bidding or negotiation;
iii. Whether the person affected is a member of a group or class of
low-or moderate-income persons intended to be the beneficiaries of the
assisted activity, and the exception will permit such person to receive
generally the same interests or benefits as are being made available or
provided to the group or class;
iv. Whether the affected person has withdrawn from his or her
functions or responsibilities, or the decisionmaking process with
respect to the specific assisted activity in question;
v. Whether the interest or benefit was present before the affected
person was in a position as described in paragraph b. of this section;
vi. Whether undue hardship will result either to the recipient or
the person affected when weighed against the public interest served by
avoiding the prohibited conflict; and
vii. Any other relevant considerations.
N. Performance Reviews and Dispute Resolution and Enforcement Actions
The provisions of 24 CFR subparts I and O apply to States and to
cities and counties, respectively, regarding HUD's review of grantee
performance, resolution of disputes regarding grantee performance, and
adjudicative, remedial and enforcement actions that HUD may take to
resolve noncompliance matters.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers for the HUD
Disaster Recovery Initiative are as follows: 14.218; 14.219; 14.228.
Dated: September 3, 1997.
Jacquie M. Lawing,
General Deputy Assistant Secretary for Community Planning and
Development.
Appendix A--Waiver of Requirements for Community Development Block
Grant Funds Under the 1997 Emergency Supplemental Appropriations Act
for Recovery From Natural Disasters (Public Law 105-18)
Title II, Chapter 10 of the 1997 Emergency Supplemental
Appropriations Act for Recovery from Natural Disasters (the Act),
appropriates $500 million in Community Development Block Grant
(CDBG) funds to use for buyouts, relocation, long-term recovery, and
mitigation in communities affected by the flooding in the upper
Midwest and other covered natural disasters.
With respect to these supplemental funds, the Act authorizes the
Secretary of HUD to ``waive, or specify alternative requirements
for, any provision of any statute or regulation that the Secretary
administers in connection with the obligation by the Secretary or
the use by the recipient of these funds, except for statutory
requirements related to civil rights, fair housing and
nondiscrimination, the environment, and labor standards, upon a
finding that such waiver is required to facilitate the use of such
funds, and would not be inconsistent with the overall purpose of the
statute.''
In conjunction with this statutory provision and pursuant to 24
CFR 5.110, the Department has determined that it has good cause to
waive certain regulatory provisions governing the use of Disaster
Recovery Initiative funds. Therefore, to facilitate the use of the
Disaster Recovery Initiative funds appropriated under Chapter 10 of
the Act, the following provisions have been waived for the reasons
set forth below. These waivers apply to activities funded under the
Act with Disaster Recovery Initiative funds.
Consolidated Submissions for Community Planning and Development
Programs
Description of Requirements Waived
Citizen participation requirements at 42 U.S.C.
5304(a), 42 U.S.C. 5306(d)(5)(C), 24 CFR 91.105(c) and 91.115(c), to
the extent that expedited amendment of the grantee's Consolidated
Plan is necessary to ensure timely delivery of assistance, except
that grantees must provide alternative procedures for public notice
of funding availability, as approved by HUD.
Justification: To provide the flexibility to expedite the
availability of disaster recovery assistance, if necessary.
The requirements at 42 U.S.C. 12705(a)(2), 42 U.S.C.
5304(a)(1), 42 U.S.C. 5304(m), 24 CFR 91.220, 24 CFR 91.235, 24 CFR
31.320 and 24 CFR 570.420(d).
Justification: To provide the flexibility to expedite the
availability of disaster recovery assistance, if necessary. These
requirements concern the submission of an Annual Action Plan (for
cities, counties and states receiving annual allocations of regular
CDBG funding); 24 CFR 91.235 contains the requirements for
Abbreviated Consolidated Plans (for non-entitled units of general
local government not receiving CDBG funding through a state). 42
[[Page 47357]]
U.S.C. 5304(m) contains the requirement for submission of a
Community Development Plan describing a grantee's priority non-
housing community development needs. Paragraph I. E. of the Federal
Register Notice implementing the Disaster Recovery Initiative
establishes streamlined, alternative planning and submission
requirements for Disaster Recovery Initiative funding which meet the
intent of the National Affordable Housing Act and the Housing and
Community Development Act. All city, county and state grantees which
receive formula allocations of CDBG funding have already met the
statutory and regulatory requirements for the five-year strategic
plan in the Consolidated Plan.
Citizen participation requirements at 42 U.S.C.
5304(a)(2) and (a)(3) (A) through (E), 24 CFR 91.100 through 91.115,
24 CFR 570.405(h), 24 CFR 570.431 and 24 CFR 570.486(a).
Justification: To provide the flexibility to expedite the
availability of disaster recovery assistance, if necessary.
Paragraph I. E. of the Federal Register Notice implementing the
Disaster Recovery Initiative establishes streamlined, alternative
citizen participation requirements for Disaster Recovery Initiative
funding which meet the intent of the National Affordable Housing Act
and the Housing and Community Development Act.
Community Development Block Grant Program
Description of Requirements Waived
The definition of a ``unit of general local
government'' at 42 U.S.C. 5302(a)(1) and 24 CFR 570.3.
Justification: The statutory and regulatory definitions of a
unit of general local government have, over time, become outdated.
The definition includes the Trust Territory of the Pacific Islands.
Since this definition was first enacted, all jurisdictions within
the Trust Territory of the Pacific have become independent nations.
The definition of a unit of general local government included in the
Federal Register Notice implementing the Disaster Recovery
Initiative excludes the Trust Territory of the Pacific.
Requirements at 42 U.S.C. 5301(c), 42 U.S.C.
5304(b)(3)(A), 24 CFR 570.200(a)(3) (for cities and counties) and 24
CFR 570.484 (for States) that 70 percent of funds, over a period not
to exceed three years, are for activities that benefit low and
moderate income persons.
Justification: Because the damage to community
development and housing is without regard to income, it is important
to give grantees maximum flexibility to carrying activities within
the confines of the CDBG program national objectives. Paragraph
I.B.2 of the Federal Register Notice implementing the Disaster
Recovery Initiative establishes alternative requirements for
complying with the statutory mandate that each grantee's program
principally (at least 50%) benefit low- and moderate-income persons.
Requirements at 42 U.S.C. 5301(c), 42 U.S.C.
5304(b)(3)(A), 24 CFR 570.200(a)(3) for the CDBG entitlement program
and 570.484 for the State CDBG program that 70 percent of funds,
over a period not to exceed three years, are for activities that
benefit low and moderate income persons.
Justification: Because the damage to community development and
housing is without regard to income, it is important to give
grantees maximum flexibility to carrying activities within the
confines of the CDBG program national objectives.
Requirements at 42 U.S.C. 5305(a), 24 CFR 570.200
(a)(1) and (e) through (h), 24 CFR 570.201 through 570.207, and 24
CFR 570.482 (a) through (d), concerning activities eligible for
funding under the Disaster Recovery Initiative.
Justification: To give maximum flexibility to grantees in
addressing the wide variety of needs resulting from natural
disasters, the Department has established alternative requirements
for eligible activities at paragraph I.F.1 of the Federal Register
Notice implementing the Disaster Recovery Initiative. These
requirements will ensure compliance with the eligibility
requirements of Title II, Chapter 10 of Public Law 105-18, and will
ensure accountability in the use of funds.
Prohibitions on new housing construction at 24 CFR
570.207(b)(3) and modifying 42 U.S.C. 5305(a) to provide for the use
of such designated funds for new housing construction.
24 CFR 570.207(b)(3) prohibits use of funds for new housing
construction except for assisted housing under section 17 of the
United States Housing Act of 1937, housing constructed by a special
subrecipient, pursuant to Sec. 570.204(a), and last resort housing
under the Uniform Relocation Act pursuant to 49 CFR Part 24.
Justification: If a large number of housing units are destroyed
as a result of the disaster, the flexibility to permit grantees to
directly provide new construction assistance would be essential in
furthering the purposes of disaster recovery.
Restrictions on the repair or reconstruction of
buildings used for the general conduct of government at 42 U.S.C.
5305 (a)(2) and (a)(14), and 24 CFR 570.207(a)(1).
Justification: Required if there is significant damage to public
buildings. Waiver of this provision would permit repair and
reconstruction.
The 50 percent of downpayment limitation on direct
homeownership assistance for low or moderate income homebuyers at 42
U.S.C. 5305(a)(24)(D).
Justification: Required to provide additional assistance to low/
moderate income disaster victims in instances in which direct
homeownership assistance with 50 percent of a downpayment is
insufficient.
The limitation on the amount of funds used for public
services at 42 U.S.C. 5305(a)(8) and 24 CFR 570.201 (e)(1) or (2),
as applicable to the affected grantee, to hereby modify those
provisions to allow an increase of 10 percent above the previous
limitation.
Justification: Disaster response may require additional level of
public services and public services not previously provided by
grantees during emergency and recovery periods, e.g., day care,
housing counseling, legal services, health services, safety
services.
Provisions of 42 U.S.C. Chapter 69--Community
Development and 24 CFR part 570 that would prohibit States electing
to receive CDBG funds from distributing such funds to units of
general local government in entitlement communities and to Indian
tribes, including 42 U.S.C. 5306(d) (1) and (2)(A) and 24 CFR
570.480(a), to the extent that such provisions limit the
distribution of funds to units of general local government located
in nonentitlement areas and to Indian tribes.
Justification: This provides the State the flexibility necessary
to meet a wide range of recovery needs in any areas of the State,
including those in entitlement communities and on Indian
reservations, that have been affected by the disaster.
Requirements that the State grantees must match the
amount of CDBG funds used for the administration of the State's CDBG
program at 42 U.S.C. 5306(d)(3)(A) and 24 CFR 570.489(a)(1) with
respect to funds designated for disaster recovery under 42 U.S.C.
5321.
Justification: Waiving these provisions would prevent undue
hardship on the State and further the purposes of disaster recovery.
Requirements at 24 CFR 570.480(a), 570.481(a) and
570.486(b).
Justification: These provisions describe requirements which are
specific to States' administration of CDBG funding for non-
entitlement areas. 24 CFR 570.480(a) indicates that other subparts
of Part 570 are generally not applicable to the State CDBG program;
24 CFR 570.481(a) indicates that HUD will defer to States'
interpretations of the definitions of terms contained in 42 U.S.C.
5300 et. seq.; 24 CFR 570.486(b) governs activities serving
beneficiaries outside the jurisdiction of the unit of general local
government. HUD is waiving a number of statutory definitions for
purposes of the Disaster Recovery Initiative. HUD has determined
that it is necessary to apply certain program requirements of the
Disaster Recovery Initiative uniformly to city, county and State
grantees. Where possible, the Federal Register Notice implementing
the Disaster Recovery Initiative retains the administrative
flexibility provided to States in the State CDBG program.
Requirements of 42 U.S.C. 5306(d)(3)(A) and 24 CFR
570.489(a) concerning the use of Disaster Recovery Initiative funds
for State administrative costs, including matching funds
requirements.
Justification: Waiving these provisions would prevent undue
hardship on States and would further the purposes of disaster
recovery, by eliminating the requirement that Disaster Recovery
Initiative funds spent on State administrative costs be matched with
State funding. Paragraph I.F.6.b of the Federal Register Notice
implementing the Disaster Recovery Initiative establishes
alternative requirements for States' use of funds for costs incurred
in administering this funding.
The provisions at 42 U.S.C. 5304(j) and 24 CFR
570.489(e), for the State CDBG program, that require States to allow
units of local government to retain program income. All program
income will be returned to the State and will become program income
for
[[Page 47358]]
the year in which the State redistributes those funds.
Justification: Waiver of this provision will also allow States
to quickly utilize all program income for other eligible activities.
Requirements of 42 U.S.C. 5306(d)(2)(C)(iii) concerning
restrictions on a State's ability to limit activities eligible for
funding.
Justification: Waiving these requirements will increase State
grantees' flexibility in prioritizing and responding to disaster
recovery needs.
Acquisition and Relocation Requirements for CDBG Disaster Supplemental
Funds
Description of Requirements Waived
One-for-one replacement requirements at 42 U.S.C.
5304(d)(2) and 24 CFR 570.606(c)(1), for low and moderate income
dwelling units (1) damaged by the disaster, (2) for which CDBG funds
are used for demolition, and (3) which are not suitable for
rehabilitation.
Requires that all occupied and vacant occupiable low/moderate
income dwelling units that are demolished or converted to a use
other than as low/moderate income dwelling units in connection with
a CDBG activity must be replaced with low/moderate income dwelling
units.
Justification: Not waiving this provision would discourage
grantees from demolition and clearance of dwelling units that would
otherwise be appropriate for CDBG assistance. Such inaction would
inhibit recovery efforts and add to health and safety problems.
Relocation requirements at 42 U.S.C. 5304(d)(2)(iii)
and (iv) and 24 CFR 570.606(c)(2), in order to permit a grantee to
meet all or part of its obligation to provide relocation benefits to
displaced persons under sections 204 and 205 of the Uniform
Relocation Assistance and Real Property Acquisition Policies Act of
1970, as amended (42 U.S.C. 4601 et. seq) (URA).
The statutory requirements of the URA are also applicable to the
administration of FEMA's assistance, and disparities in rental
assistance payments for activities funds by HUD and that agency will
thus be eliminated.
Justification: FEMA is subject to the requirements of the URA.
Pursuant to this authority, FEMA requires that rental assistance
payments be calculated on the basis of the amount necessary to lease
or rent comparable housing for a period of 42 months. HUD is also
subject to these requirements, but is also covered by alternative
relocation provisions authorized under 42 U.S.C. 5304(d)(2)(iii) and
(iv) and implementing regulations at 24 CFR 570.606(c)(2). These
alternative relocation benefits, available to low- and moderate-
income displacees opting to receive them in certain HUD programs,
require the calculation of similar rental assistance payments on the
basis of 60 months, rather than 42 months, thereby creating a
disparity between the available benefits offered by HUD and FEMA,
respectively. The waiver assures uniform and equitable treatment for
all such tenants under the URA, as qualified by this waiver.
Requirements at 49 CFR 24.2(d)(8)(ii), 24.402(b)(2) and
24.404, to the extent that they require grantees to provide URA
financial assistance sufficient to reduce the displaced person's
post-displacement rent/utility cost to 30 percent of household
income.
Justification: The failure to suspend these requirements would
impede disaster recovery. To the extent that a tenant has been
paying rents in excess of 30 percent of household income without
demonstrable hardship, rental assistance payments to reduce tenant
costs to 30 percent would not be required.
Requirements of Sections 204 and 205 of the URA, and 49
CFR Part 24, to the extent necessary to permit a grantee to meet all
or a portion of a grantee's replacement housing financial assistance
obligation to a displaced renter who elects to relocate to rental
housing through a tenant-based rental assistance (TBRA) housing
program subsidy (e.g., Section 8 rental voucher or certificate)
provided that the renter is also provided referrals to suitable,
available rental replacement dwellings where the owner is willing to
participate in the TBRA program, and the period of authorized
assistance is at least 42 months.
Justification: Failure to grant the waiver would impede disaster
recovery whenever TBRA program subsidies are available but funds for
cash relocation assistance are limited. The change conforms URA
policy with Section 104(d) relocation assistance.
Requirements of Section 202(b) of the URA and 49 CFR
24.302, to the extent that they require a grantee to offer a person
displaced from a dwelling unit the option to receive a ``moving
expense and dislocation allowance'' based on the current schedule of
allowances prepared by the Federal Highway Administration, provided
that the grantee establishes and offers the person a moving expense
and dislocation allowance under a schedule of allowances that are
reasonable for the jurisdiction and take into account the number of
rooms in the displacement dwelling, whether the person owns and must
move the furniture, and, at a minimum, the kinds of expenses
described in 49 CFR 24.303(a)(1).
Justification: Failure to suspend this provision would impede
disaster recovery by requiring grantees to offer allowances that do
not reflect local labor and transportation costs. Persons displaced
from a dwelling remain entitled to choose a payment for actual
reasonable moving and related expenses if they find that approach
preferable to the locally established moving expense and dislocation
allowance.
Requirements of Section 414 of the Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C. 5181) so that Uniform
Relocation Act provisions do not apply when a homeowner displaced by
the disaster is assisted.
Section 414 states: ``Notwithstanding any other provision of
law, no person otherwise eligible for any kind of replacement
housing payment under the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970 (P.L. 91-646) shall be
denied such eligibility as a result of his being unable, because of
a major disaster as determined by the President, to meet the
occupancy requirements set by such Act.''
Justification: Failure to waive Section 414 would impede
disaster recovery, discouraging grantees from the acquisition,
demolition or rehabilitation of disaster-damaged housing because of
excessive costs that would result from replacement housing payments
made to former homeowners displaced by the disaster. Homeowners
actually displaced by a HUD-assisted disaster recovery project will
continue to receive URA assistance. Homeowners displaced by the
disaster may apply for assistance under available disaster recovery
programs.
Other Applicable Requirements
Requirements of 12 U.S.C. 1701u, 24 CFR 570.607(b) and
24 CFR part 135, concerning the requirements of Section 3 of the
Housing and Urban Development Act of 1968.
Justification: Waiving these requirements will increase
grantees' flexibility in responding to disaster recovery needs and
will increase the efficiency with which activities may be
implemented to meet those needs. However, in the Federal Register
Notice implementing the Disaster Recovery Initiative funding, HUD
encourages grantees to give priority to the hiring of local low-and
moderate-income persons and contractors in carrying out its
activities.
Requirements of 24 CFR 570.612 and 24 CFR part 52,
concerning applicability of Executive Order 12372 regarding
intergovernmental consultation and review of activities proposed for
Federal funding.
Justification: Waiving these requirements will increase
grantees' flexibility in responding to disaster recovery needs and
will increase the efficiency with which activities may be
implemented to meet those needs.
[FR Doc. 97-23752 Filed 9-4-97; 11:50 am]
BILLING CODE 4210-29-P