[Federal Register Volume 63, Number 204 (Thursday, October 22, 1998)]
[Notices]
[Pages 56777-56780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28437]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4398-N-02]


1998 HUD Disaster Recovery Initiative; Waivers and Modifications 
of Requirements for Community Development Block Grant Funds Under the 
1998 Supplemental Appropriations and Rescissions Act

AGENCY: Office of Community Planning and Development, HUD.

ACTION: Notice of waivers and modifications.

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SUMMARY: Elsewhere in today's Federal Register, HUD published a notice 
governing the allocation and use of funds under the 1998 Disaster 
Recovery Initiative. In implementing this Initiative, HUD is authorized 
by statute to waive statutory and regulatory requirements. This notice 
lists the provisions being waived and provides justifications for these 
waivers.

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, S.W., 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:
    Title II, Chapter 6 of the 1998 Supplemental Appropriations and 
Rescissions Act (the Act), appropriates $130 million in Community 
Development Block Grant (CDBG) funds to use for disaster relief, long-
term recovery, and mitigation in communities affected by Presidentially 
declared natural disasters designated during fiscal year 1998.
    With respect to these supplemental funds, the Act provides that 
Secretary of HUD, except as provided in the next proviso,

    ``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: Provided further, That the Secretary 
may waive the requirements that activities benefit persons of low- and 
moderate-income, except that at least 50 percent of the funds under 
this head must benefit primarily persons of low- and moderate-income 
unless the Secretary makes a finding of compelling need.''

    In conjunction with these statutory provisions 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 6 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 91.115(c), to the extent that expedited amendment 
of the State'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), and 24 CFR 91.320.
    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 
States receiving annual allocations of regular CDBG funding). 42 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. Section I.G. of the Federal Register notice, 
published elsewhere in today's Federal Register, implementing the 
Disaster Recovery Initiative establishes streamlined, alternative 
planning and submission requirements for Disaster Recovery Initiative 
funding which meet the intent of the Cranston-Gonzalez National 
Affordable Housing Act and the Housing and Community Development Act. 
All State grantees that receive formula allocations of CDBG funding 
have already met the statutory

[[Page 56778]]

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 91.110 and 91.115, and 24 CFR 570.486(a).
    Justification: To provide the flexibility to expedite the 
availability of disaster recovery assistance, if necessary. Section 
I.G. 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. Such requirements provide for public notice, 
appraisal, examination, and comment on the activities proposed for the 
use of DRI funds, but do not specifically require public hearings.

Community Development Block Grant Program

Description of Requirements Waived

    Requirements at 42 U.S.C. 5301(c), 42 U.S.C. 5304(b)(3)(A) 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: Grantees should give maximum feasible priority to 
funding activities that benefit persons of low and moderate income. 
Because the damage to community development and housing is without 
regard to income, and income-producing jobs are often lost following a 
disaster for a period of time, it is important to give grantees maximum 
flexibility to carry out recovery activities within the confines of the 
CDBG program national objectives, which are not waived. Also, with 
mitigation activities such as the buyout of flood prone properties, it 
is within the community's interest and consistent with Federal disaster 
and floodplain policy to reduce the risks to health and safety and to 
lessen future disaster damage and related costs by buying out all 
properties with areas at risk, rather than taking a patchwork approach. 
Section I.C.2 of the Federal Register notice implementing the Disaster 
Recovery Initiative establishes 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. 5305(a) 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 section I.H. of the Federal Register notice implementing 
the Disaster Recovery Initiative. These requirements will ensure 
compliance with the eligibility requirements of the Act and will ensure 
accountability in the use of funds.
    Modifying 42 U.S.C. 5305(a)(9) to prohibit the use of DRI funds as 
a non-Federal cost-share to meet the requirements of a Federal grant-
in-aid program, except in the case of such use with respect to FEMA's 
Hazard Mitigation grant program (HMGP) under section 404 of the Robert 
T. Stafford Disaster Assistance and Emergency Relief Act, as amended, 
or except as may be permitted by waiver of this restriction on a case-
by-case basis.
    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.
    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 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. The Act permits 
HUD to specify alternative requirements for purposes of the Disaster 
Recovery Initiative. 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)(1) 
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.H.8.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 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, 
except that for States not participating in the CDBG program, program 
income received by a State after closeout of its grant shall not be 
subject to any Federal requirement.
    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 570.488, 570.606(c) and 42.375(a), 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

[[Page 56779]]

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. These requirements 
are waived provided the grantee assures HUD it will use all resources 
at its disposal, including DRI funds authorized to be used for a 
program of optional relocation assistance under 42 U.S.C. 505(a)(11), 
to ensure no displaced homeowner will be denied access to decent, safe 
and sanitary suitable replacement housing because he or she has not 
received sufficient financial assistance.
    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) and 42.350(e), 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 assistance, and 
disparities in rental assistance payments for activities funded 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.


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    Dated: October 19, 1998.
Saul N. Ramirez, Jr.,
Assistant Secretary for Community Planning and Development.
[FR Doc. 98-28437 Filed 10-21-98; 8:45 am]
BILLING CODE 4210-29-P