[Federal Register Volume 68, Number 95 (Friday, May 16, 2003)]
[Notices]
[Pages 26640-26642]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12207]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4732-N-05]


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

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Notice of waivers granted.

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SUMMARY: This notice advises the public of modifications of the 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. This notice describes an 
eligibility waiver and a change to alternative requirements related to 
public benefit documentation for the Empire State Development 
Corporation's bridge loan program; describes an eligibility waiver 
related to special entities under the Community Development Block Grant 
program; describes a waiver of a regulatory application fee provision; 
and applies the waivers and alternate requirements to a third grant.

DATES: Effective Date: May 21, 2003.

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 
(Pub. L. 107-73, approved November 26, 2001) provides for the use of 
the disaster recovery supplemental appropriations of CDBG funds for 
grants 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.
    The 2002 Supplemental Appropriations Act For Further Recovery From 
And Response To Terrorist Attacks On The United States (Pub. L. 107-
206, approved August 2, 2002) provides for the use of the disaster 
recovery funds appropriated under it for assistance for properties and 
businesses (including the restoration of utility infrastructure) 
damaged by, and for economic revitalization directly related to, the 
terrorist attacks on the United States that occurred on September 11, 
2001, in New York City and for reimbursement to the State and City of 
New York for expenditures incurred from the regular Community 
Development Block Grant formula allocation used to achieve these same 
purposes.
    The third proviso of section 434 of Pub. L. 107-73 and Pub. L. 107-
206 under the title of ``COMMUNITY DEVELOPMENT FUND'' authorizes the 
Secretary to ``waive, or specify alternative requirements for, any 
provision of any statute or regulation that the Secretary administers 
in connection with the obligation by the Secretary or the use by the 
recipient of these funds (except for requirements related to fair 
housing,

[[Page 26641]]

nondiscrimination, labor standards, and the environment).''
    The Department finds that the following waivers and alternative 
requirements (together with previously granted waivers and alternative 
requirements) are necessary to facilitate the use of the $700 million 
awarded to New York State's Empire State Development Corporation (ESDC) 
and the $2.0 billion awarded and $783 million awaiting award to New 
York State's Lower Manhattan Development Corporation (LMDC) 
(collectively, the grantees).
    The Department also finds that such uses of funds, as described 
below, are not inconsistent with the overall purpose of the Housing and 
Community Development Act of 1974 (42 U.S.C. 5301 et seq.), or the 
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12701 et 
seq.).
    Except as noted by published waivers and alternative requirements, 
statutory and regulatory provisions governing the Community Development 
Block Grant program for states, including those at 24 CFR part 570, 
subpart I, shall apply to the use of these funds.
    In Federal Register notices of March 18, 2002, at 67 FR 12042 
(effective March 25, 2002) and May 22, 2002, at 67 FR 36017 (effective 
May 28, 2002), the Department promulgated waivers and alternative 
requirements necessary to facilitate the use of both $700 million in 
disaster recovery funds awarded to New York State's Empire State 
Development Corporation and $2.0 billion awarded to New York State's 
Lower Manhattan Development Corporation.
    This notice waives requirements at 42 U.S.C. 5305(a)(15) to the 
extent necessary to allow a national for-profit community development 
institution that otherwise meets CDBG eligibility requirements to 
qualify as a local development corporation. The entity seeking to 
participate in the ESDC business recovery loan program does not qualify 
because it is both national and for-profit. This waiver is necessary to 
support the unique circumstances of this grant: ESDC is a state grantee 
carrying out activities in an entitlement jurisdiction. The law permits 
states to select national nonprofits to carry out activities under this 
provision. The CDBG entitlement regulation, which serves as a guide for 
state grantees, permits either non- or for-profit local development 
corporations and neighborhood based organizations to qualify, if they 
otherwise meet regulatory qualification requirements. ESDC 
competitively selected several organizations to carry out community 
development lending activities under this provision. All but one of the 
organizations qualify under either the state approach or the 
entitlement approach. This waiver permits ESDC to fund one organization 
that is similar in purpose and function to the other groups and has a 
similar scope of activities.
    This notice also modifies the published alternate requirements 
related to reports and documentation for the bridge loan program 
implemented by ESDC in the immediate wake of the disaster. The bridge 
loan program is unlike the other activities because ESDC is not 
providing assistance directly to affected businesses; lending 
institutions are. What ESDC provides is a loss reserve account, 
designed to support private sector lenders that wished to take more 
risks in the wake of the disaster than would otherwise be permitted 
such institutions by oversight regulatory agencies. These lenders 
collected information sufficient to meet core CDBG requirements related 
to a special economic development activity undertaken under the urgent 
need national objective, but the program was implemented so rapidly 
that it predated the additional requirements of the referenced notices 
related to documentation of salary ranges and job types. HUD approved 
the action plan containing the bridge loan activity and is now 
clarifying in this notice what documentation requirements apply.
    This notice also waives the CDBG regulations at 24 CFR 
570.489(a)(2) to allow the grantees to charge registration fees where 
such fees are nominal and intended to discourage frivolous 
applications. The provision in the regulations banning fees for 
applications is intended to keep states from charging fees to units of 
general local government seeking to participate in the CDBG program. 
Such local governments carry out activities directly and may charge 
application fees. A previously granted waiver allows the state to carry 
out activities directly under these grants. This waiver is a companion 
to the previously granted waiver and it allows the state the same 
opportunity to charge application fees allowed other entities carrying 
out state CDBG activities directly.
    Finally, this notice makes the waivers and requirements of this 
notice and of the previous notices cited above applicable to funds 
appropriated under the 2002 Supplemental Appropriations Act for Further 
Recovery From and Response to Terrorist Attacks on the United States 
(Pub. L. 107-206, approved August 2, 2002). This law provides an 
additional $783 million to the state of New York through the LMDC for 
the same uses as the previous CDBG disaster appropriations to New York, 
including restoration of utility infrastructure, of which $33 million 
is directed by the relevant conference report to assist World Trade 
Center firms that suffered a disproportionate loss of their workforce 
and that intend to reestablish operations in New York City.
    The text below indicates the paragraph being updated.

Description of Modifications

    1. Paragraph 12 of the notice published at FR 67 FR 36017 (May 22, 
2002) is amended to read as follows:
    12. Public benefit standards for economic development activities. 
Currently, grantees are limited in the amount of CDBG assistance they 
may spend per job retained or created (or per low- and moderate-income 
person to whom 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), and (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. For the bridge loan program included in the Empire State 
Development Corporation's January 30, 2002, Action Plan, the grantee 
shall report and maintain public benefit documentation only on the 
total number of jobs created and retained. Paragraph (g) of 24 CFR 
570.482, regarding amendments to economic development projects after 
review determinations, is also waived to the extent its provisions are 
related to public benefit.
    Paragraph 16 of the notice published at 67 FR 36017 (May 22, 2002) 
is amended to read as follows:
    16. Performance reports. Generally, grantees submit an annual 
performance report ninety days after the jurisdiction's program year. 
The conferees for Pub. L. 107-73 directed 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 the

[[Page 26642]]

expenditures 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), and number 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 the number of low- and moderate-income households 
benefiting. For the bridge loan program included in the Empire State 
Development Corporation's January 30, 2002, Action Plan, the grantee is 
not required to report by salary ranges on the number of created and 
retained jobs. 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.
    3. Provisions of 42 U.S.C. 5305(a)(15) are hereby waived solely to 
allow a national for-profit community development institution that 
otherwise meets eligibility requirements under that provision and is 
participating in Empire State Development Corporation's business 
recovery loan fund program to qualify as an eligible local development 
corporation under that provision.
    4. The regulation at 24 CFR 570.489(a)(2) is waived to allow the 
grantees to charge registration or application fees to entities seeking 
to participate in grant-funded activities where such fees are nominal 
and intended to discourage frivolous applications.
    5. The requirements of this notice and previous Federal Register 
notices at 67 FR 12042 (March 18, 2002) and at 67 FR 36017 (May 22, 
2002) apply to the $783 million grant funded under the 2002 
Supplemental Appropriations Act for Further Recovery From and Response 
to Terrorist Attacks on the United States (Pub. L. 107-206, approved 
August 2, 2002).
    Section 434 of 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 May 21, 2003.

    Dated: May 12, 2003.
Roy A. Bernardi,
Assistant Secretary for Community Planning and Development.
[FR Doc. 03-12207 Filed 5-15-03; 8:45 am]
BILLING CODE 4210-29-P