[Federal Register Volume 67, Number 18 (Monday, January 28, 2002)]
[Notices]
[Pages 4164-4166]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1936]



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Part IV





Department of Housing and Urban Development





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Statutory and Regulatory Waivers Granted to New York State for Recovery 
From the September 11, 2001 Terrorist Attacks; Notice

  Federal Register / Vol. 67, No. 18 / Monday, January 28, 2002 / 
Notices  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4732-N-01]


Statutory and Regulatory Waivers Granted to New York State for 
Recovery From the September 11, 2001 Terrorist Attacks

AGENCY: Office of Community Planning and Development, HUD.

ACTION: Notice of waivers granted.

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SUMMARY: This notice advises the public of waivers of regulations and 
statutory provisions granted to the State of New York for the purpose 
of assisting in the recovery from the September 11, 2001, terrorist 
attacks on New York City. As described in the SUPPLEMENTARY INFORMATION 
section of this notice, HUD is authorized by statute to waive statutory 
and regulatory requirements for this purpose. This notice lists the 
provisions being waived.

FOR FURTHER INFORMATION CONTACT: Jan C. Opper, Senior Program Officer, 
Office of Block Grant Assistance, Department of Housing and Urban 
Development, Room 7286, 451 Seventh Street, SW., Washington, DC 20410, 
telephone number (202) 708-3587. Persons with hearing or speech 
impairments may access this number via TTY by calling the Federal 
Information Relay Service at (800) 877-8339. FAX inquiries may be sent 
to Mr. Opper at (202) 401-2044. (Except for the ``800'' number, these 
telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

Authority to Grant Waivers

    Section 434 of the Departments of Veterans Affairs and Housing and 
Urban Development, and Independent Agencies Appropriations Act, 2002 
(Public Law 107-73, approved November 26, 2001) provides for the use of 
Community Development Block Grant (CDBG) funds made available from the 
Emergency Response Fund by the 2001 Emergency Supplemental 
Appropriations Act for Recovery from and Response to Terrorist Attacks 
on the United States (Public Law 107-38, approved September 18, 2001) 
to New York State for properties and businesses damaged by, and 
economic revitalization related to, the September 11, 2001, terrorist 
attacks on New York City. Section 434 authorizes the Secretary of HUD 
to waive, or specify alternative requirements for, any provision of any 
statute or regulation that the Secretary administers in connection with 
the obligation by the Secretary or use by the recipient of these funds, 
except for requirements related to fair housing, nondiscrimination, 
labor standards, and the environment. The Department finds that the 
following waivers and alternative requirements are necessary to 
facilitate the use of the initial $700 million in CDBG funds made 
available from the Emergency Response Fund, and that such use is not 
inconsistent with the overall purpose of the Housing and Community 
Development Act of 1974, as amended, or the Cranston-Gonzalez National 
Affordable Housing Act, as amended.

Description and Justification of Requirements Waived or Alternative 
Requirements Specified

1. Waiver of the Requirement That 70% of the CDBG Funds Received by the 
State Over a One-to-Three Year Period be for Activities That Benefit 
Persons of Low and Moderate Income

    The provisions of 42 U.S.C. 5301(c) and 5304(b)(3), and 24 CFR 
570.484 and 24 CFR 91.325(b)(4)(ii) with respect to the 70% overall 
benefit requirement are waived with respect to CDBG funds appropriated 
under the Emergency Response Fund. HUD expects the grantee will make a 
good faith effort to maximize benefits to low- and moderate-income 
persons, and maintain documentation of such efforts.

2. Waiver and Alternative Requirement--Streamlined Citizen 
Participation Requirements

    The provisions of 42 U.S.C. 5304(a)(2) and (3), 42 U.S.C. 12707, 
and 24 CFR 91.115(b) with respect to citizen participation requirements 
are waived and replaced by the requirements below. The streamlined 
requirements do not mandate public hearings, but do provide for a 
reasonable opportunity for citizen comment and for ongoing citizen 
access to information about the use of grant funds. The streamlined 
requirements for this grant are:
    a. Before the state adopts the action plan for or any substantial 
amendment to this grant, the state will publish the proposed plan or 
amendment (including the information required in waiver eight (8) 
below). Publication will be carried out in a manner that affords 
citizens, New York City, and other interested parties a reasonable 
opportunity to examine the plan or amendment's contents and to submit 
comments. The state's plans to minimize displacement of persons or 
entities and to assist any persons or entities displaced must be 
published with the action plan. Subsequent to publication, the state 
must provide a reasonable period to receive comments on the plan or 
substantial amendment.
    b. In the action plan, the state will specify the criteria for 
determining what changes in the state's activities constitute a 
substantial amendment to the plan. At a minimum, adding or deleting an 
activity or changing the planned beneficiaries of an activity will 
constitute a substantial change.
    c. The state must consider all comments received on the action plan 
or any substantial amendment and submit to HUD a summary of these 
comments and the state's response with the action plan or substantial 
amendment.
    d. The state must make the action plan, any substantial amendments, 
and all performance reports available to the public, on request. Also 
on request, the state must make these documents available in a form 
accessible to persons with disabilities. During the term of this grant, 
the state will provide citizens, New York City, and other interested 
parties reasonable and timely access to information and records 
relating to the action plan and the state's use of this grant.
    e. The state will provide a timely written response to every 
citizen complaint. Such response will be provided within 15 working 
days, if practicable, of the complaint.

3. Waiver and Altenative Requirement--Modification of Requirement for 
Consultation With Local Governments

    Currently statute and regulations require consultation with 
affected units of local government in the non-entitlement area of the 
state regarding the state's proposed method of distribution. HUD is 
waiving 42 U.S.C. 5306(d)(2)(C)(iv), 24 CFR 91.325(b), and 24 CFR 
91.110, with the alternative requirement that the state consult with 
New York City in determining the use of funds.

4. Waiver of Requirements for Consistency With the Consolidated Plan

    Requirements at 42 U.S.C. 12706 and 24 CFR 91.325(a)(6), that 
require that housing activities undertaken with CDBG, HOME, ESG, and 
HOPWA funds be consistent with the strategic plan, are waived. Also, 24 
CFR 570.903, which requires HUD to annually review grantee performance 
under the consistency criteria is also waived.

5. Alternative Requirement--Revision of the Process for Environmental 
Release of Funds so the State May Carry Out Activities Directly

    Usually, a state distributes CDBG funds to units of local 
government and serves in HUD's place as the responsible federal 
official reviewing environmental

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determinations made by the grant recipients and approving releases of 
funds. For this grant, waiver seven (7) below allows New York State to 
also carry out activities directly instead of distributing them to 
other governments. According to the environmental regulations at 24 CFR 
58.4, when a state carries out activities directly, HUD must serve as 
the responsible federal official and approve releases of funds.

6. Waiver and Alternative Requirement--Allowance for Reimbursement for 
Pre-Agreement Costs

    The provisions of 24 CFR 570.489(b) are modified to permit New York 
State or New York City to reimburse itself for otherwise allowable 
costs incurred on or after September 11, 2001.

7. Waiver and Alternative Requirement--Distribution and Use of Funds to 
and in a Metropolitan City

    Provisions of 42 U.S.C. 5306 currently require a state to 
distribute CDBG funds to units of general local government in 
nonmetropolitan areas for use in nonmetropolitan areas rather than 
carrying activities out directly. These provisions are waived with 
alternative requirements with respect to CDBG funds appropriated under 
the Emergency Response Fund to permit the state of New York to carry 
out activities directly in New York City and to permit the state to 
distribute these funds to New York City. Additionally, because New York 
State may carry out activities directly, HUD is waiving the regulations 
at 24 CFR 570.494 regarding timely distribution of funds. However, HUD 
expects New York State to expeditiously obligate and expend all funds, 
including any recaptured funds or program income, in carrying out 
activities in a timely manner.

8. Waiver and Alternative Requirement--Action Plan for Disaster 
Recovery

    Current state CDBG requirements for an action plan envision a state 
using a method for distributing substantially all CDBG funds received 
to other governments and not carrying out activities directly. This 
waiver allows the state to submit an action plan that may include 
activities directly undertaken by the state. With respect to CDBG funds 
appropriated under the Emergency Response Fund, the last sentence of 42 
U.S.C. 5304 (a)(1), 42 U.S.C.12705, and provisions of 24 CFR 91.320 and 
91.325(a)(5) are waived with alternative requirements that the state 
submit an action plan for disaster recovery that includes the 
following:
    a. Information specified at 24 CFR 91.220(a),(b),(d) and (g).
    b. A description of the activities the state will assist with grant 
funds. This description of activities shall estimate the number and 
type of beneficiaries of the proposed activities, proposed 
accomplishments, and a target date for completion of each activity. 
This information must be submitted in a form prescribed by HUD.

9. Waiver and Alternative Requirement--Changing Limitations on 
Administrative and Planning Expenses

    The current law and regulations require that 50 percent of any 
administrative expenses, in excess of $100,000, that do not exceed 2 
percent of the grant be paid from the grant. Provisions at 42 U.S.C. 
5306(d)(3)(A), 24 CFR 570.489(a)(1)(i) and 24 CFR 570.489(a)(3) are 
waived to allow use of CDBG disaster grant funds for planning and 
administrative expenses that do not exceed 10 percent of the grant 
amount plus 10 percent of program income.

10. Waiver--Public Benefit Standards for Economic Development 
Activities

    Currently, grantees are limited in the amount of CDBG assistance 
per job retained or created, or amount of CDBG assistance per low- and 
moderate-income person to which goods or services are provided by the 
activity, that will be considered to meet public benefit standards. 
Public benefit standards at 42 U.S.C. 5305(e)(3) and 24 CFR 
570.482(f)(1), (2), (3), (4)(i), (5), (6) are waived, except that the 
grantee shall report and maintain documentation on the creation and 
retention of (a) total jobs, (b) number of jobs within certain salary 
ranges, and (c) types of jobs. Paragraph (g) of 24 CFR 570.482 is also 
waived to the extent its provisions are related to public benefit.

11. Waiver of Duplication of Benefits

    The CDBG funds appropriated under the Emergency Response Fund may 
not be used to provide funds for the same specific uses as disaster 
loans made available by the Small Business Administration (SBA), in 
compliance with 15 U.S.C. 636(b)(1)(A). If the needs for assistance are 
more than the SBA disaster loan amount, CDBG disaster assistance may be 
used to fund such additional need. New York State should encourage the 
use of SBA physical damage and economic injury disaster loans; they 
offer low interest rates and favorable terms. Additionally, CDBG 
disaster assistance may not be used for the same specific uses as 
disaster assistance made available by the Federal Emergency Management 
Agency, e.g., for public works and facilities, in compliance with 
duplication of benefits prohibitions of 42 U.S.C. 5155 (section 312 of 
the Robert T. Stafford Disaster Assistance and Emergency Relief Act, as 
amended).

12. Waiver and Alternative Requirements--Performance Reports

    Generally, grantees submit an annual performance report 90 days 
after the jurisdiction's program year. The conferees for Public Law 
107-73 requested that HUD submit reports to the Committees on 
Appropriations quarterly on the obligation and expenditure of the CDBG 
funds appropriated under the Emergency Response Fund. Therefore, 42 
U.S.C. 12708(a)(1) and 24 CFR 91.520 are waived with respect to these 
funds, and HUD is establishing an alternative requirement that the 
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, Federal source and funds (other 
than CDBG disaster funds), numbers and North American Industry 
Classification System (NAICS) codes of businesses assisted by activity, 
total number of jobs created and retained by activity, numbers of such 
jobs by salary ranges (to be defined by HUD), numbers of properties and 
housing units assisted; for activities benefiting low- and moderate 
income persons, the number of jobs taken by persons of low- and 
moderate-income, and numbers of low- and moderate-income households 
benefiting. Quarterly reports must be submitted using HUD's web-based 
Disaster Recovery 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 status of 
administrative costs.

13. Waiver and Alternative Requirements--Allow Flexibility in Use of 
Program Income During Grant and Provide for Disposition at Grant 
Closeout

    A combination of CDBG provisions limits the flexibility available 
to the state and city for the use of program income. Generally, program 
income earned on disaster grants has been program income to the regular 
CDBG program of the applicable entitlement or state and has lost its 
disaster grant

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identity, thus losing use of the waivers and streamlined alternative 
requirements. Also, the state CDBG program rule and law are designed 
for a program in which the state distributes all funds rather than 
carrying out activities directly and the law specifically provides for 
local governments receiving grants to retain program income if they use 
it for additional eligible activities under the regular CDBG program. 
This waiver and the alternate requirements allow program income to the 
disaster grant to be governed by the original grant's requirements and 
waivers and to remain the state's until grant closeout, at which point 
any program income on hand or received subsequently will become program 
income to New York City's regular entitlement CDBG program. Therefore, 
42 U.S.C. 5304(j), 24 CFR 570.481(a) to the extent it relates to 
defining program income, and 24 CFR 570.489(e) are waived and the 
following alternative requirements apply:
    a. Program income is defined at 24 CFR 570.500(a);
    b. The requirements of 24 CFR 570.504(a) and (c);
    c. Program income received before grant closeout may be retained by 
the recipient if the income is treated as additional funds under this 
grant subject to all of this grant's applicable requirements;
    d. Substantially all program income other than any held in 
revolving funds shall be disbursed for eligible activities before 
additional cash withdrawals are made from the U.S. Treasury. Program 
income in the form of repayments to, or interest earned on, a revolving 
fund as defined in 24 CFR 570.500(b) shall be substantially disbursed 
from the fund before additional cash withdrawals are made from the U.S. 
Treasury for the same activity; and
    e. Program income on hand at the time of grant closeout and program 
income received after grant closeout shall be program income to the 
ongoing CDBG entitlement program of New York City.

14. Waiver--Modification of the Anti-Pirating Clause to Permit 
Assistance to Help a Business Return

    42 U.S.C. 5305(h) is hereby waived only to allow the state to 
provide assistance under this grant to any business that was operating 
in the covered disaster area before September 11, 2001, and has since 
moved in whole or in part from the affected area to continue business.
    The Departments of Veterans Affairs and Housing and Urban 
Development, and Independent Agencies Appropriations Act, 2002 (Public 
Law 107-73) requires HUD to publish these waivers in the Federal 
Register no later than five days before their effective date. The 
effective date of these waivers is February 2, 2002.

    Dated: January 22, 2002.
Roy A. Bernardi,
Assistant Secretary for Community Planning and Development.
[FR Doc. 02-1936 Filed 1-25-02; 8:45 am]
BILLING CODE 4210-29-P