[Federal Register Volume 64, Number 248 (Tuesday, December 28, 1999)]
[Notices]
[Pages 72852-72866]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33673]
[[Page 72851]]
_______________________________________________________________________
Part XI
Department of Housing and Urban Development
_______________________________________________________________________
1999 HUD Disaster Recovery Initiative; Notice
Federal Register / Vol. 64, No. 248 / Tuesday, December 28, 1999 /
Notices
[[Page 72852]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4482-N-01]
1999 HUD Disaster Recovery Initiative
AGENCY: Office of Community Planning and Development, HUD.
ACTION: Notice.
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SUMMARY: This notice provides requirements to govern the use of $20
million in Community Development Block Grant (CDBG) funds for
additional unmet disaster recovery needs.
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:
I. Empowering Communities for Recovery
A. Purpose
1. This Notice describes policies and procedures applicable to the
HUD Disaster Recovery Initiative (DRI) for funds appropriated under the
Omnibus Consolidated and Emergency Supplemental Appropriations Act,
1999 (Pub. L. 105-277, 112 Stat. 2681, approved October 21, 1998).
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 support other Federal agencies in assisting 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
natural disasters receiving Presidential declarations.
4. DRI 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 (Corps of Engineers).
B. Authority
The Omnibus Consolidated and Emergency Supplemental Appropriations
Act, 1999 (Public Law 105-277, 112 Stat. 2681, approved October 21,
1998).
C. Benefiting Persons of Low and Moderate Income
1. DRI funds are provided by a supplemental appropriation under the
Community Development Block Grant program authority of title I of the
Housing and Community Development Act of 1974, (42 U.S.C. 5301 et
seq.). Use of those funds is governed by that Act and regulations at 24
CFR part 570, except as modified by this notice and a separate notice
of waivers and modifications appearing elsewhere in today's Federal
Register. The primary objective of that program is the development 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. States and State grant recipients
should give maximum feasible priority to funding activities that
benefit persons of low and moderate income.
2. A State must use more than 50 percent of its DRI funds for
activities that benefit primarily persons of low and moderate income.
The Secretary may waive this requirement only on a case-by-case basis
and only upon making a finding of a compelling need to do so. HUD will
consider such a waiver only after it receives a request from a State
that includes a justification that establishes a compelling need for
the waiver. The compelling need must reflect a public purpose directly
related to disaster recovery, and the justification must include a
determination by the State, with supporting documentation, that there
is no practicable alternative course of action to otherwise targeting
funds to activities which principally benefit persons of low and
moderate income. As required by statute, HUD will provide an
explanation of the finding of compelling need to the Congressional
Committees on Appropriations.
D. Definitions
Regulatory references are in title 24 of the Code of Federal
Regulations (CFR), and will be cited by section (Sec. ), unless
otherwise cited.
1999 Supplemental Appropriations Act means the Omnibus Consolidated
and Emergency Supplemental Appropriations Act, 1999 (Public Law 105-
277, 112 Stat. 2681, approved October 21, 1998).
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 non-legislative functions or services provided by government at
decentralized locations.
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.
Director means the Director of the Federal Emergency Management
Agency.
Disaster means a major disaster declared by the President under
title IV of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act, as amended (42 U.S.C. 5121 et seq.) in Federal fiscal
year 1998 or 1999.
Family means all persons living in the same household who are
related by birth, marriage or adoption.
FEMA means the Federal Emergency Management Agency.
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
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or unrelated persons who share living arrangements.
HUD means the U.S. Department of Housing and Urban Development.
Income. For the purpose of State grant recipients determining
whether a family or household is of low and moderate income, such
recipients may select any of the three definitions listed below for
each activity. However, integrally related activities of the same type
and qualifying under the same paragraph of Sec. 570.483(b) shall use
the same definition of income. The option to choose a definition does
not apply to activities that qualify under Sec. 570.483(b)(1) (Area
benefit activities), except when the recipient carries out a survey
under Sec. 570.483(b)(1)(I). Activities qualifying under
Sec. 570.483(b)(1), at the discretion of the State, must use the area
income data supplied by HUD or survey data which is methodologically
sound.
a. The three definitions are as follows:
i. ``Annual income'' as defined for the Public Housing and Section
8 programs at Sec. 5.609 (except that if the DRI 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 DRI 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) before its repeal.
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 persons 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, and the Commonwealth of
Puerto Rico, or an instrumentality thereof approved by the Governor.
Additionally, except as pertains to environmental review
responsibilities under Part 58, for these 1999 Supplemental
Appropriations Act funds only, the term ``State'' also includes an
Indian tribe.
State grant recipient means a unit of general local government that
receives a DRI grant through a State. Additionally, for these 1999
Supplemental Appropriations Act funds only, the term ``State grant
recipient'' also includes Indian tribes.
Unit of general local government means any city, county, town,
township, parish, village or other general purpose political
subdivision of a State; a combination of such political subdivisions
recognized by the Secretary; and the District of Columbia.
Unmet need means projects identified by the Director as those which
have not or will not be addressed by other Federal disaster assistance
programs, and need that is not addressed by activities reimbursable by
or for which funds are made available by the Federal Emergency
Management Agency, the Small Business Administration, or the Army Corps
of Engineers.
E. Allocation and Expenditure of Funds
1. $250 million has been appropriated for the 1999 HUD Disaster
Recovery Initiative under division B, title IV, Chapter 7 of the 1999
Supplemental Appropriations Act. Title IV of the 1999 Emergency
Supplemental Appropriations Act (Pub. L. 106-31, 113 Stat. 57, approved
May 21, 1999) rescinded $230 million of these funds. The $20 million
balance of these funds has been made available for obligation by HUD
until October 1, 2002. States are responsible to HUD for the timely
expenditure of funds in accordance with any expenditure deadlines HUD
may include as grant agreement conditions.
2. The 1999 Supplemental Appropriations Act requires that HUD
allocate funds to States, based on unmet needs identified by the
director of FEMA as those which have not or will not be addressed by
other Federal disaster assistance programs. HUD has used the following
procedures in allocating the funds.
a. In calculating allocations, HUD will use data identified by FEMA
from State, and Federal sources as unmet needs (or surrogates for unmet
needs) in four areas: housing, business recovery, mitigation, and
public works and facilities.
b. The allocation calculations will include appropriate weights and
adjustment factors. The weightings of the unmet needs categories are at
following ratios: housing, 40 percent; business recovery, 20 percent;
mitigation, 20 percent; and public works and facilities, 20 percent.
c. HUD has set minimum grant amounts for the allocation of funds at
the lesser of $1.5 million or the amount of unmet need identified by
FEMA from State sources, except such minimum
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shall not apply to funds allocated under paragraph e.
d. HUD may calculate the allocation of funds to States in one or
more groupings of, or individual, disaster declarations, as it deems
appropriate.
e. HUD may allocate up to $20 million in accordance with paragraph
2 of the notice published March 10, 1999, at 64 FR 11943, which amends
paragraph I.E.2.e. of the notice published October 22, 1998 (63 FR
56764), to state, ``If a State certifies that it has determined that
the unmet needs data previously submitted to FEMA are inaccurate or
significantly incomplete, within 45 days of publication of this notice,
the Governor may request HUD, in consultation with FEMA, to accept,
review, and identify as unmet needs, a revised State submission of such
needs. Those needs must be related to a disaster declared during fiscal
year 1998 or declared prior to the date of this notice during fiscal
year 1999. Such request must be accompanied by the revised unmet needs
data in the same format as previously prescribed by FEMA and by a
justification for reconsideration.''
3. The appropriation accounting provisions in 31 U.S.C. 1551-1557,
added by section 1405 of the National Defense Authorization Act for
Fiscal Year 1991 (Public Law 101-510), limit the availability of
certain appropriations for expenditure. With respect to the funds
appropriated for the 1999 HUD Disaster Recovery Initiative, this
statute requires the withdrawal from the States' lines of credit any
DRI funds appropriated under the 1999 Supplemental Appropriations Act
that the States have not expended before October 1, 2007. This
limitation may not be waived. HUD may place shorter deadlines on the
expenditure of those funds via grant agreement conditions.
4. The 1999 Supplemental Appropriations Act requires that each
State administer the DRI funds ``in conjunction with its Federal
Emergency Management Agency program or its community development block
grants program or by the entity designated by its Chief Executive
Officer to administer the HOME Investment Partnerships program.''
Whichever agency the governor designates to administer the DRI funds
must have the capacity to comply with all applicable requirements of
this notice in a timely manner. Whichever State agency administers the
DRI funds should coordinate with the agency or agencies that administer
the other two programs named above.
F. Non-Federal Public Matching Funds Requirement
1. The 1999 Supplemental Appropriations Act requires that ``each
State shall provide not less than 25 percent in non-Federal public
matching funds or its equivalent value (other than administrative
costs)'' for any 1999 HUD Disaster Recovery Initiative grant funds
which it receives.
2. Match contributions must be made to DRI-funded recovery projects
related to covered disasters.
3. Match may be provided by any public entity from non-Federal cash
(e.g., general or dedicated revenues), real estate, or other similar
assets owned or controlled by the public entity or the value of public
improvements and public facilities activities, or force account
undertaken.
4. Match funds must be reasonably valued. For example, base the
value of cash grants on the dollar value of the grant; value below
market interest rate loans on the present discounted cash value of the
amount of subsidy; value taxes forgiven for future years based on the
present discounted cash value of the revenue foregone; and value a
donation of real estate titled to the State or State grant recipient
based on a professional appraisal.
5. The State must make match contributions before all DRI funds are
expended. Match contributions must total not less than 25 percent of
the disaster grant funds drawn from the State's line of credit,
excluding funds drawn for administrative and planning costs.
6. States may not count administrative costs toward the required
non-Federal public matching funds or equivalent value.
7. Contributions that have been or will be counted as satisfying a
matching requirement of another Federal grant or award, including any
other DRI grant or Community Development Block Grant, may not count as
satisfying the matching contribution requirement for the HUD Disaster
Recovery Initiative.
8. Match contributions must be contributed permanently to a
disaster-related activity. To receive match credit for the full amount
of a loan made with non-Federal public funds to a DRI funded activity,
all repayment, interest, or other return on the loan must be treated as
CDBG program income.
9. The following are examples that do not count toward meeting a
grantee's matching contribution requirement:
a. Contributions made with or derived from Federal resources or
funds, regardless of when the Federal resources or funds were received
or expended. Use of CDBG funds (defined at Sec. 570.3) under section
105(a)(9) of the Act for payment of the non-Federal share required in
connection with a Federal grant-in-aid program is permissible;
b. Contributions made with or derived from private resources or
funds, regardless of when the private resources or funds were received
or expended;
c. The interest rate subsidy attributable to the Federal tax
exemption on financing or the value attributable to Federal tax
credits;
10. Contributions are credited at the time the contribution is made
and reported to HUD quarterly, as follows:
a. Credit a cash contribution when the funds are expended for a
disaster-related activity or at the time the State awards DRI funds if
the activity was completed before the award of DRI funds;
b. Credit the subsidy value of a below-market interest rate loan at
the time of the loan closing;
c. Credit the value of State or local taxes, fees, or other charges
that are normally and customarily imposed but waived, foregone, or
deferred at the time the State or State grant recipient or other public
entity officially waives, forgoes, or defers the taxes, fees, or other
charges;
d. Credit the value of donated land or other real property at the
time ownership of the property is transferred to the public entity
carrying out the DRI-assisted or disaster-related activity;
e. Credit the direct cost of relocation payments and services at
the time that the payments and services are provided.
11. For DRI-assisted projects involving more than one State, the
State that makes the match contribution may decide to retain the match
credit or permit the other State to claim the credit.
G. Submission Requirements
1. Prerequisites to a State's receipt of a DRI grant include a
citizen participation plan; publication of its proposed Action Plan;
notice and comment; and submission of an Action Plan for Disaster
Recovery.
2. Each State 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 State'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 DRI funds;
d. The State's method of distribution;
e. Units of general local government receiving State distributions;
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f. The proposed uses for the DRI funds for each unit of general
local government and Indian tribe receiving State distributions;
g. An explanation of why other federal disaster assistance programs
do not cover the costs of unmet needs identify to FEMA;
h. An explanation of how the disaster impacted the proposed
projects; and
i. The specific sources from which the match requirement will be
achieved.
2A. Indian tribes, only, may omit from their Action Plans items
2(d) and 2(e) above.
3. A State must only distribute DRI funds to units of general local
government, including cities (both CDBG metropolitan cities and non-
metropolitan cities) and counties (including CDBG urban counties), and
to Indian tribes that have the capability to carry out disaster
recovery activities. Indian tribes may carry out activities directly
and must meet the requirements of this notice placed on State grant
recipients, except as exempted.
4. Each State must describe monitoring standards and procedures
pursuant to Sec. 91.330 and include certifications pursuant to:
a. Section 91.325(a)(1), affirmatively furthering fair housing;
b. Section 91.325(a)(3), drug-free workplace;
c. Section 91.325(a)(4), anti-lobbying;
d. Section 91.325(a)(5), authority of the State to carry out the
program;
e. Section 91.325(a)(7), acquisition and relocation, except as
waived;
f. Section I.G.5. of this notice, citizen participation;
g. Section 91.325(b)(2), consultation with local governments;
h. Section 91.325(b)(5), compliance with anti-discrimination laws;
i. Section 91.325(b)(6), excessive force;
j. Section 91.325(b)(7), compliance with applicable laws.
4A. Instead of following paragraph G.4., above, each Indian tribe
must describe monitoring standards and procedures and certify that:
a. It will comply with the requirements of Title II of Public Law
90-284 (25 U.S.C. 1301) (the Indian Civil Rights Act) and any
applicable anti-discrimination laws;
b. It will provide the drug-free workplace required by 24 CFR part
24, subpart F;
c. It will comply with restrictions on lobbying required by 24 CFR
part 87, together with disclosure forms, if required by that part;
d. It will comply with all applicable laws;
e. It possesses the legal authority to apply for the DRI grant and
execute the proposed program;
f. Except as waived, it will comply with the acquisition and
relocation requirements of the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970, as amended, implementing
regulations at 49 CFR part 24;
g. Prior to submission of its application to HUD, it has met the
citizen participation requirements of Section I.G.5. of this notice;
h. The Action Plan for Disaster Recovery has been developed so that
more than 50 percent of the funds received under this grant will be
used for activities that benefit low- and moderate-income persons (as
the term ``activities benefiting low- and moderate-income persons'' is
used at Sec. 570.483(b)).
5. 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 State and State grant recipients
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 DRI 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 and units of general local
government an opportunity to examine its content and to submit comments
on the proposed disaster recovery plan and on the community development
performance of the grantee; and
iii. Provide citizens and 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 State shall
consider any such comments and views and may, if it deems appropriate,
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 HUD together with the certifications required
under section I.G.4. or 4A., above. Any Action Plan for Disaster
Recovery may be modified or amended from time to time by the State in
accordance with the same procedures required in this paragraph for the
preparation and submission of such Action Plan for Disaster Recovery.
b. A DRI grant may be made only if the State certifies that it is
following, and that it will require its State grant recipients to
follow, a detailed citizen participation plan that:
i. Provides for and encourages citizen participation, with
particular emphasis on areas in which DRI 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 DRI
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 State for the development and execution of its DRI
Action Plan.
H. Determining Eligibility of Activities
An activity may be assisted in whole or in part with DRI funds only
if all of the following requirements are met:
1. Neither the State nor its State grant recipients may use DRI
funds for activities reimbursable or for which funds are made available
by FEMA, SBA, or the Corps of Engineers.
2. Any project underway prior to a Presidentially declared disaster
may not receive DRI funds unless the disaster directly impacted the
project.
3. Compliance with national objectives. States receiving
allocations 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:
a. Will benefit to low- and moderate-income families;
b. Will aid in the prevention or elimination of slums or blight; or
c. May also include activities that the State and its State grant
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.
d. Consistent with the foregoing, each State and State grant
recipient must ensure, and maintain evidence, that each of its
activities assisted with DRI funds meets one of the three above
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national objectives as contained in its certification. Criteria for
determining whether an activity addresses one or more of these
objectives are contained at Sec. 570.483.
4. Compliance with the primary objective. In using HUD Disaster
Recovery Initiative funds under the authority of the Act, the State
must meet the primary objective of the development 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. To meet the primary objective, more
than 50 percent of the funds in each grant must be used for activities
that principally benefit persons of low and moderate income as
determined by the criteria under Sec. 570.483(b), unless waived under
section I.C.2. When calculating the percentage of funds expended for
such activities:
a. Costs of administration and planning eligible under section
I.H.6. of this notice will be assumed to benefit low- and moderate-
income persons in the same proportion as the remainder of the DRI funds
and, accordingly, shall be excluded from the calculation;
b. Funds expended for the acquisition, new construction,
reconstruction, or rehabilitation of property for housing that
qualifies under Sec. 570.483(b)(3) must be counted for this purpose but
shall be limited to an amount determined by multiplying the total cost
(including DRI grant and non-DRI 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.
c. Funds expended for any other activities qualifying under
Sec. 570.483(b) must be counted for this purpose in their entirety.
5. 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.
6. Eligible activities. DRI funds may be used for activities
carried out by a State grant recipient that are relevant to disaster
recovery, as described in this Notice. States and State grant
recipients must use funds appropriated under the 1999 Supplemental
Appropriations Act only for disaster relief, long-term recovery, and
mitigation activities related to a covered disaster in communities
affected by a Presidentially declared disaster that is designated
during Federal fiscal year 1998 or 1999. Such communities must be in
areas included in such declarations. These funds will supplement, not
replace, FEMA and other Federal funds. To the extent the use of funds
does not violate the restriction at section I.H., eligible activities
include:
a. Acquisition of real property (including the buying out of flood-
prone properties 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 to the extent that
these activities are not eligible under FEMA's Public Assistance
program;
d. Rehabilitation or reconstruction of residential and non-
residential buildings and improvements;
e. Acquisition, construction, reconstruction, or installation of
public works, facilities and improvements, such as water and sewer
facilities, streets, neighborhood centers, and the conversion of school
buildings for eligible purposes, to the extent that these activities
are not eligible under FEMA's Public Assistance program;
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, if such services are new or an
increased level of services, limiting costs to no more than 15 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 recovery activities that benefit the public
by:
i. Creating or retaining jobs for low- and moderate-income persons;
ii. Preventing or eliminating slums and blight;
iii. Meeting urgent needs;
iv. Creating or retaining community-owned businesses;
v. Assisting businesses that provide goods or services needed by,
and affordable to, low- and moderate-income residents; or
vi. Providing related technical assistance;
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. Any other activity authorized under section 105(a) of the
Housing and Community Development Act of 1974, as amended, not waived
by this notice or subsequently, provided that it relates to recovery
from a covered Presidentially declared disaster. The Department may
grant waivers permitting States and State grant recipients to undertake
additional activities with DRI funds if they are consistent with the
requirements of division B, title IV, chapter 7 of Public Law 105-277
after a full consideration of a waiver request.
7. 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 DRI 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 DRI 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.
8. 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
[[Page 72857]]
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 DRI 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 DRI 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-DRI grant portion may be
made provided that DRI funds are used to pay the special assessment in
behalf of all properties owned and occupied by low-and moderate-income
persons. However, DRI funds need not be used to pay the special
assessments in behalf of properties owned and occupied by moderate-
income persons if the State or State grant recipient certifies that it
does not have sufficient DRI funds to pay the assessments in behalf of
all of the low-and moderate-income persons who are owner-occupants.
Funds collected through such special assessments are not program
income.
c. Public improvements not initially assisted with DRI funds. The
payment of special assessments with DRI funds constitutes HUD Disaster
Recovery assistance to the public improvement. Therefore, DRI 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 paragraph I.H.3.a., b. or c.; and
iii. The requirements of paragraph I.H.8.b.ii. are met.
9. Limitation on planning and administrative costs.
a. No more than 20 percent of the sum of any grant to a State, plus
program income, shall be expended for planning and program
administrative costs under section I.H.6.k.
b. State administrative costs. The State is responsible for the
administration of its HUD Disaster Recovery Initiative. The amount of
DRI 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. This paragraph 9.b. does
not apply to Indian tribes.
10. Reimbursement for pre-award costs. The effective date of the
grant agreement is the date HUD obligates the appropriated funds by
executing the grant agreement.
a. Prior to the effective date of the grant agreement, a State
grant recipient may incur costs beginning on or after the incident date
of the Presidentially declared disaster, and then charge those costs to
DRI grant funds, provided that:
i. The State permits such use;
ii. Such funds do not reimburse costs paid with other Federal grant
funds; and
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 including the prohibition contained
in Sec. 58.22(a) on commitment of HUD assistance and non-HUD funds
prior to HUD approval of the Request for Release of Funds and the
certification of the responsible entity for activities that require an
environmental review.
11. Activities outside the jurisdiction of the unit of general
local government. DRI funds may assist an activity located outside the
jurisdiction of the unit of general local government that receives the
DRI funds as a State grant recipient, provided the unit of general
local government determines that the activity is meeting its disaster
recovery needs.
I. 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 recovery
purposes under paragraph H.6.j. 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. The guidelines and standards may be found at Sec. 570.482(e) and
(f). 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.
J. 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 State or unit
of general local government are not eligible for assistance.
2. The following activities may not be assisted with DRI funds
unless authorized under provisions of section 105(a)(15) of the Act.
a. Purchase of equipment. The purchase of equipment with DRI 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 DRI 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. DRI 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 State grant recipient or its
subrecipients in the administration of activities assisted with DRI
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 DRI 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.
[[Page 72858]]
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 DRI 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 DRI 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.
3. Use of DRI funds as a non-Federal cost-share for Corps of
Engineers projects. The use of more than $250,000 in DRI funds as a
non-Federal cost-share for any project funded by the Secretary of the
Army through the Corps of Engineers is ineligible.
4. Prohibition on use of DRI funds for employment relocation
activities. No DRI funds may be used to assist directly in the
relocation of any industrial or commercial plant, facility, or
operation, from one area to another, if the relocation is likely to
result in a significant loss of employment in the labor market area
from which the relocation occurs.
K. Treatment of Program Income
Any program income generated by HUD Disaster Recovery Initiative
becomes program income to the State's CDBG program, not to its DRI
grant. Such program income shall be returned to the State as program
income for the year in which the State redistributes those funds.
Therefore, any program income generated by DRI funds is to be included
in cost cap calculations and program requirements for use of the CDBG
funds. For States not participating in the CDBG program, program income
received by the State after closeout of its grant is not subject to any
Federal requirement.
L. Acquisition (Buyouts) of Flood-Damaged Properties
1. Payment of pre-flood values for buyouts. HUD Disaster Recovery
Initiative State grant recipients 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 DRI 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 an amount equal to
the housing replacement cost minus:
i. 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. 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 flood plain. Purchase of such properties with
DRI funding is permitted if the properties are incidental to the
project as a whole.
4. Ownership and maintenance of acquired property.
Any property acquired with DRI 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 or covenant
running with the land must require that the property be dedicated and
maintained for compatible uses in perpetuity.
5. Future Federal assistance to owners remaining in flood plain.
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 DRI 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.
[[Page 72859]]
Such written notification shall be contained in documents
evidencing the transfer of ownership of the property.
d. Failure to notify. 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, 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.
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 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, etc.). The term ``flood disaster area'' is defined in
section 582(d)(2) to include an area receiving a Presidential
declaration of a major disaster or emergency as a result of flood
conditions.
M. Other Program Requirements
1. General. This section I.M. enumerates laws that HUD will treat
as applicable to the HUD Disaster Recovery Initiative grants to States
and State grant recipients, including statutes expressly made
applicable by the Act and certain other statutes and Executive Orders
for which HUD has enforcement responsibility. The absence of mention
herein of any other statute for which HUD does not have direct
enforcement responsibility is not intended to be taken as an indication
that, in HUD's opinion, such statute or Executive Order is not
applicable to activities assisted with DRI funds. States are governed
by applicable laws.
2. Labor standards. In part because Davis-Bacon requirements are
not applicable to FEMA disaster grants, it is necessary to clarify the
applicability of Davis-Bacon requirements in relationship to the use of
DRI funds in disaster recovery efforts. This section of this Notice
addresses Davis-Bacon applicability to use of DRI 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 the
authority under section 107(e)(2) of the Act, HUD has waived the labor
standards requirements of Indian tribes under DRI.
In accordance with Section 110(a) of the Act, construction work
financed in whole or in part with DRI funds is subject to Federal labor
standards provisions including the payment of Davis-Bacon 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. DRI 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 DRI 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 to the start of construction, if there is no contract
award. However, HUD may request, and the DOL may approve, a wage
determination effective on the date the DRI 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 DRI 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 unit of general local government
contemplated use of or reimbursement by DRI 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 DRI 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
DRI activities.
Note that most forms of DRI 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 DRI 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. State DRI grants are subject
to sections 102(a) and 202(a) of the Flood Disaster Protection Act of
1973, respectively for the requirements for assisted property owners to
purchase flood insurance and the effect of nonparticipation of the
community in the flood insurance program. These requirements cannot be
waived.
a. State grant recipients 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,
[[Page 72860]]
noncompliant communities under the National Flood Insurance Program.
Specific guidance can be found in the references in section I.M.3.b.
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(a)) 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 or more 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 FEMA 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 State's Action Plan for Disaster Recovery, funds shall
not be expended for acquisition or construction purposes in an area
that has been identified by 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. 4012a(a).)
N. Waiver of Statutory and Regulatory Requirements That Would Otherwise
Apply to the HUD Disaster Recovery Initiative
1. Division B, title IV, chapter 7 of the 1999 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. Also, as
provided in implementing language in section I.C.2. in this notice, the
statute requires that more than 50 percent of the funds must benefit
primarily persons of low and moderate income unless HUD makes a
finding, based on a State's request, that there is a compelling need to
waive such requirement. 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 division B, title IV, chapter 7 of the 1999 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 appears elsewhere
by notice in today's Federal Register. HUD has published a notice
listing the specific statutory and regulatory requirements that have
been waived and setting 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. States and State grant recipients should give priority to
projects that benefit low-and moderate-income individuals to the
maximum extent practicable.
II. Ensuring the Public Trust
A. Program Administrative, Recordkeeping and Reporting Requirements
The program administrative requirements at Secs. 570.489-570.492,
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. HUD will compile this
PER for the HUD Disaster Recovery Initiative from the quarterly reports
submitted under paragraph 2 below, except that, with the final
quarterly report submitted prior to grant closeout, States must also
include with the PER 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. Congress has required that quarterly reports be submitted
regarding the actual projects, localities and needs for which funds
have been provided. HUD must also receive reporting information for
program management purposes. Therefore, each State must submit a
quarterly report, as HUD prescribes, no later than 30 days following
each calendar quarter, beginning after the first full calendar quarter
after grant award and continuing until all funds have been expended and
that expenditure reported. Each quarterly 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. Quarterly
reports must be submitted using HUD's web-based Disaster Recovery
Initiative Grant Reporting system. Annually (i.e., with every fourth
submission), the report shall include a financial reconciliation of
funds budgeted and expended, and calculation of the overall percent of
benefit to low- and moderate-income persons. HUD has sought approval
from OMB for new information collection requirements in accordance with
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). OMB approval
is under OMB control number 2506-0165, which expires on May 31, 2001.
In accordance with the Paperwork Reduction Act, HUD may not conduct or
sponsor and a person is not required to respond to, a collection of
information unless the collection displays a valid control number.
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
[[Page 72861]]
Indian Tribal Governments;'' A-122, ``Cost Principles for Non-profit
Organizations;'' or A-21, ``Cost Principles for Educational
Institutions,'' as applicable. 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:
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 State grant recipients are limited to
those authorized under Sec. 570.489(b).
2. Uniform administrative requirements and cost principles. The
State and State grant recipients, their agencies or instrumentalities,
and subrecipients shall comply with the policies, guidelines, and
requirements of OMB Circulars A-87 and A-133 (implemented at 24 CFR
part 45), as applicable. States shall also comply with the applicable
requirements of Sec. 570.489 that are not otherwise waived or modified
by this notice.
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 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 DRI 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 Sec. 570.489(g) 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 DRI 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 the State, 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 and assuring
that State grant recipients comply with their certifications to
affirmatively further fair housing.
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.
3. Paragraphs C.1. and C.2., above, do not apply to Indian tribes,
which are instead governed by the requirements of the Indian Civil
Rights Act (25 U.S.C. 1301-1303, Title II of the Civil Rights Act of
1968).
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 DRI funds made
available pursuant to the Act. ``Funded in whole or in part with HUD
community development funds'' means that DRI funds have been
transferred by the State grant recipient or a subrecipient to an
identifiable administrative unit and disbursed in a program or
activity.
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 DRI 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''
[[Page 72862]]
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 DRI 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 activity funded in whole or in part with
DRI 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.
4. Paragraphs D.1. and D.2., above, do not apply to Indian tribes,
which are governed by the Indian Civil Rights Act.
E. Environmental Review Requirements
1. Prior to the commitment of any DRI 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. State grant
recipients must assume the responsibility for environmental reviews
under the Disaster Recovery Initiative. States administering DRI funds
must assume the responsibilities set forth in Sec. 58.18 for overseeing
the State grant recipients' compliance with environmental review
requirements, including receiving requests for release of funds (RROF)
and environmental certifications form State grant recipients and
objections from government agencies and the public in accordance with
subpart H of 24 CFR part 58. Indian tribes must forward to the
responsible HUD field office the environmental certification, the RROF
and any objections received, and must recommend to HUD whether to
approve or disapprove the certification and RROF.
2. Disaster recovery assistance in a floodplain.
a. The State grant recipient must follow the eight-step decision-
making process required by Executive Order 11988, Floodplain
Management, as codified for HUD programs at Sec. 55.20. The Order
covers the proposed acquisition, construction, improvement,
disposition, financing, and use of property in a floodplain. 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 the State
grant recipients as they are for the HUD Disaster Recovery Initiative,
but are usually undertaken by Federal staff or contractors. Therefore,
the State grant recipients 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 HUD and other Federal agencies
jointly fund a project related to recovery from a covered disaster.
b. A State grant recipient 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 the State grant
recipient 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 grant
recipient 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 grant recipient 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 grant
recipient 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 grant recipient 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 grant recipient 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
[[Page 72863]]
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, and
Executive Order 11988 on Floodplain Management, a State shall assure
that it has 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 State grant recipient 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 the
State grant recipient determines that the displacement 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 State grant recipient
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 State grant recipient 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
DRI funds for buyouts, a State may permit a State grant recipient to
provide relocation payments and other relocation assistance to persons
displaced by activities that are not subject to paragraphs 2. The State
may also permit the State grant recipient to provide relocation
assistance to persons receiving assistance under paragraph 2. of this
section at levels in excess of those required by this paragraph. Unless
such assistance is provided under State or local law, the State grant
recipient shall provide such assistance only upon the basis of a
written determination that the assistance is appropriate. The State
grant recipient must adopt a written policy available to the public
that describes the relocation assistance that the State grant recipient
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
State grant recipient 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 that government. 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, where grant, loan or guarantee funds are provided by a State,
may file a written request for further review of the State grant
recipient's decision to the State.
6. Responsibility of the State.
a. The State is responsible for ensuring compliance with these
requirements, notwithstanding any third party's contractual obligation
to the State grant recipient to comply with the provisions of this
section. For purposes of State DRI funds, the State shall require State
grant 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 State and State grant recipient 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.
[[Page 72864]]
3. Contracting with small and minority firms, women's business
enterprises and labor surplus area firms.
a. The State and State grant recipient 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.
H. Lead-Based Paint
States shall comply with the provisions of Sec. 570.487(c).
I. 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 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, DRI 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 DRI funds.
a. DRI 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 DRI funds at no more
than fair market value for a non-religious use.
b. DRI 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 DRI 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, DRI 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 State grant
recipient or subrecipient from which the DRI 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
[[Page 72865]]
carried out on property owned by the primarily religious entity, DRI
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 DRI grant
expenditure for the public services.
K. Political Activities
DRI 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 DRI
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. Procurement
When procuring property or services to be paid for in whole or in
part with DRI funds, the State shall follow its procurement policies
and procedures. The State shall establish requirements for procurement
policies and procedures for State grant recipients, based on full and
open competition. Methods of procurement (e.g., small purchase, sealed
bids/formal advertising, competitive proposals, and noncompetitive
proposals) and their applicability shall be specified by the State.
Cost plus a percentage of cost and percentage of construction costs
methods of contracting shall not be used. The policies and procedures
shall also include standards of conduct governing employees engaged in
the award or administration of contracts. (Other conflicts of interest
are covered by section II.N. of this notice and Sec. 570.489(h).) The
State shall ensure that all purchase orders and contracts include any
clauses required by Federal statutes, executive orders and implementing
regulations. The State may adopt procurement standards in Sec. 85.36,
and may adopt procurement standards in Sec. 85.36 for its State grant
recipients that are also CDBG entitlement communities regardless of
whether the State adopts such standards for other State grant
recipients. Indian tribes must follow the procurement standards in
Sec. 85.36.
N. Conflict of Interest
1. Applicability. In the procurement of supplies, equipment,
construction, and services by the States, State grant recipients, and
subrecipients, the conflict of interest provisions in section II.M.
shall apply. In all cases not governed by section II.M., this section
II.N. shall apply. Such cases include the acquisition and disposition
of real property and the provision of assistance with DRI funds by the
unit of general local government or its subrecipients, to individuals,
businesses and other private entities.
2. Conflicts prohibited. Except for eligible administrative or
personnel costs, the general rule is that no persons described in
paragraph 3. of this section who exercise or have exercised any
functions or responsibilities with respect to HUD Disaster Recovery
Initiative-assisted activities or who are in a position to participate
in a decision-making process or gain inside information with regard to
such activities, may obtain a financial interest or benefit from the
activity, or have an interest or benefit from the activity, or have an
interest in any contract, subcontract or agreement with respect
thereto, or the proceeds thereunder, either for themselves or those
with whom they have family or business ties, during their tenure or for
one year thereafter.
3. Persons covered. The conflict of interest provisions for
paragraph 2. apply to any person who is an employee, agent, consultant,
officer, or elected official or appointed official of the State, or of
a State grant recipient, or of any designated public agencies, or
subrecipients which are receiving DRI funds.
4. Exceptions: Threshold requirements. Upon written request by the
State, an exception to the provisions of paragraph 2. of this section
involving an employee, agent, consultant, officer, or elected official
or appointed official of the State may be granted by HUD on a case-by-
case basis. In all other cases, the State may grant such an exception
upon written request of the State grant recipient provided the State
shall fully document its determination in compliance with all
requirements of paragraph 4.a., including the State's position with
respect to each factor at paragraph 5., and such documentation shall be
available for review by the public and by HUD. An exception may be
granted after it is determined that such an exception will serve to
further the purpose of the Act and the effective and efficient
administration of the program or project of the State or State grant
recipient, as appropriate. An exception may be considered only after
the State or State grant recipient, as appropriate, has provided the
following:
a. 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
b. An opinion of the attorney for the State or the State grant
recipient, as appropriate, that the interest for which the exception is
sought would not violate State or local law.
5. Factors to be considered for exceptions. In determining whether
to grant a requested exception after the requirements of paragraph 4.
have been satisfactorily met, the cumulative effect of the following
factors, where applicable, shall be considered:
a. Whether the exception would provide a significant cost benefit
or an essential degree of expertise to the program or project which
would otherwise not be available;
b. Whether an opportunity was provided for open competitive bidding
or negotiation;
c. 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;
d. Whether the affected person has withdrawn from his or her
functions or responsibilities, or the decision-making process with
respect to the specific assisted activity in question;
e. Whether the interest or benefit was present before the affected
person was in a position as described in this paragraph 5.
f. Whether undue hardship will result either to the State or the
unit of general local government or the person affected when weighed
against the public interest served by avoiding the prohibited conflict;
and
g. Any other relevant considerations.
O. Performance Reviews and Dispute Resolution and Enforcement Actions
The provisions of 24 CFR subpart I apply to States, regarding HUD
review of grantee performance, resolution of disputes regarding grantee
performance, and adjudicative, remedial and enforcement actions that
HUD may take to resolve noncompliance matters.
Finding of No Significant Impact
A Finding of No Significant Impact with respect to the environment
has been made in accordance with HUD
[[Page 72866]]
regulations at 24 CFR part 50, which implement section 102(2)(C) of the
National Environmental Policy Act of 1969 (42 U.S.C. 4332). The Finding
of No Significant Impact is available for public inspection between
7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules Docket
Clerk, Office of General Counsel, Department of Housing and Urban
Development, Room 10276, 451 Seventh Street, S.W., Washington, DC
20410.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers for the 1999 HUD
Disaster Recovery Initiative are as follows: 14.219; 14.228.
Dated: December 21, 1999.
Joseph D'Agosta,
General Deputy Assistant Secretary for Community Planning and
Development.
[FR Doc. 99-33673 Filed 12-27-99; 8:45 am]
BILLING CODE 4210-29-P