[Federal Register Volume 74, Number 209 (Friday, October 30, 2009)]
[Notices]
[Pages 56206-56208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-26181]



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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5358-N-01]


Reconsideration of Waivers Granted to and Alternative 
Requirements for the State of Mississippi Under Public Laws 109-148 and 
109-234

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of reconsidered waivers and alternative requirements.

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SUMMARY: As described in the Supplementary Information section of this 
Notice, HUD is authorized by statute to waive statutory and regulatory 
requirements and specify alternative requirements for this purpose, 
upon the request of the State grantees. This Notice describes the 
statutorily required reconsideration of additional waivers and 
alternative requirements applicable to the Community Development Block 
Grant (CDBG) disaster recovery grant provided to the State of 
Mississippi under the subject appropriations acts.

DATES: Effective Date: November 4, 2009

FOR FURTHER INFORMATION CONTACT: Scott Davis, Director, Disaster 
Recovery and Special Issues Division, Office of Block Grant Assistance, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Room 7286, Washington, DC 20410-7000, 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. Davis at 202-401-2044. (Except for the 
``800'' number, these telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION: 

Authority To Grant Waivers

    The first Federal fiscal year 2006 supplemental appropriation for 
the Community Development Block Grant (CDBG) disaster recovery program 
was the Department of Defense, Emergency Supplemental Appropriations to 
Address Hurricanes in the Gulf of Mexico, and Pandemic Influenza Act, 
2006 (Pub. L. 109-148, enacted December 30, 2005), which appropriated 
$11.5 billion for necessary expenses related to disaster relief, long-
term recovery, and restoration of infrastructure directly related to 
the consequences of the covered disasters. The second supplemental 
appropriation was in the Emergency Supplemental Appropriations Act for 
Defense, the Global War on Terror, and Hurricane Recovery, 2006 (Pub. 
L. 109-234, enacted June 15, 2006), which appropriated $5.2 billion in 
CDBG funds for necessary expenses related to disaster relief, long-term 
recovery, and restoration of infrastructure in the most impacted and 
distressed areas related to the consequences of the covered disasters. 
Both of these supplemental appropriation acts authorized 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 use by the recipient of these funds 
and guarantees, except for requirements related to fair housing, 
nondiscrimination, labor standards, and the environment (including 
waivers concerning lead-based paint), upon a request by the state and a 
finding by the Secretary that such a waiver would not be inconsistent 
with the overall purpose of the statute.
    The Secretary finds that the following waivers and alternative 
requirements, as described below, are not inconsistent with the overall 
purpose of Title I of the Housing and Community Development Act of 
1974, as amended (42 U.S.C. 5301 et seq.) (the 1974 Act), or the 
Cranston-Gonzalez National Affordable Housing Act, as amended (42 
U.S.C. 12721 et seq.). Under the requirements of the Department of 
Housing and Urban Development Act, as amended (42 U.S.C. 3535(q)), 
regulatory waivers must be published in the Federal Register. The 
waivers and alternative requirements contained in this notice were 
originally published October 24, 2006, (71 FR 62372), March 6, 2007, 
(72 FR 10020) and October 31, 2007, (72 FR 61788). Upon a finding of 
good cause supported by a written request from the State of 
Mississippi, these waivers and alternative requirements are being 
retained after reconsideration.
    Except as described in this and other notices applicable to these 
grants, statutory and regulatory provisions governing the CDBG program 
for States, including those at 24 CFR part 570, shall apply to the use 
of these funds.

Description of Changes

    This Notice does not address overall benefit. The waivers related 
to overall benefit in Mississippi were published in several previous 
notices. Because the waivers are inextricably interrelated and have 
common alternative requirements, HUD reconsidered all of them on 
December 12, 2008 (73 FR 75733), at which point, the reconsideration of 
the first waiver was required. Additionally, in the December 12, 2008, 
Notice, HUD rescinded the waiver granted in paragraph 5 of the March 6, 
2007, Notice (72 FR 10021), to the extent that it covers the Economic 
Development and Community Revitalization program. HUD continues to 
expect Mississippi to maintain low- and moderate-income benefit 
documentation for each activity providing such benefit.

Waiver Justification

    In general, waivers already granted to the State of Mississippi and 
alternative requirements already specified for CDBG disaster recovery 
grant funds provided under Public Law 109-148 and Public Law 109-234 
apply. The notices in which these prior waivers and alternative 
requirements applicable to Mississippi were published on February 13, 
2006, (71 FR 7666), June 14, 2006, (71 FR 34457), October 24, 2006 (71 
FR 62372), October 30, 2006; (71 FR 63337), March 6, 2007, (72 FR 
10020), August 24, 2007; (72 FR 48808), October 31, 2007; (72 FR 
61788), August 8, 2008 (73 FR 46312), and December 12, 2008 (73 FR 
75733). These provisions provide additional flexibility in program 
design and implementation for the disaster recovery grants. Please 
note, the provisions of this Notice do not apply to funds provided 
under the annual CDBG program.
    Low- and moderate-income household benefit for multi-unit housing 
projects. Upon consideration, HUD is retaining the state's waiver of 24 
CFR 570.483(b)(3) so that it can fund multi-unit projects and measure 
benefit to low- and moderate income households in such projects in a 
manner more supportive of mixed income housing. Under the cited 
regulation, the general rule is that at least 51 percent of the 
residents of an assisted structure must be income eligible. However, 
this waiver allows a proportional units approach, in which the number 
of income-eligible units is proportional to the amount of assistance 
provided.
    Therefore, the waiver and alternative requirements continue to give 
the State a choice. The State may measure benefit within a housing 
development project (1) according to the existing CDBG requirements, 
(2) according to the HOME program requirements at 24 CFR 92.205(d), or 
(3) according to the modified CDBG alternative requirements specified 
in this notice. The State must select and use just one method for each 
project. For these purposes, the term ``project'' will have the same 
meaning as in the HOME program at 24 CFR 92.2. Unlike the HOME program, 
the CDBG program does not regulate the maximum amount of assistance per 
unit, require unit and income reviews in the years following initial 
occupancy, require a specific form of subsidy layering review, or 
define affordability. The State is reminded, however, that CDBG does

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require that costs be necessary and reasonable and that the State must 
develop procedures and documentation to ensure that its housing 
investments meet this requirement. The State must also meet all civil 
rights and fair housing requirements.
    Housing incentives to resettle in Mississippi. The State may offer 
disaster recovery or mitigation housing incentives to promote housing 
development or resettlement in particular geographic areas. These 
incentives have served as a valuable tool in helping the State to 
mitigate risk to housing and communities, thereby reducing damage and 
cost in future disasters. With Mississippi's request, the Department is 
retaining the waiver of the 1974 Act and associated regulations to the 
extent necessary to make this use of grant funds eligible.
    Eligibility--buildings for the general conduct of government. Upon 
consideration, HUD is retaining the State's requested eligibility 
waiver to allow it to fund buildings for the general conduct of 
government in accordance with its Action Plan. The State can continue 
to assist construction, reconstruction, or rehabilitation of such 
buildings when the assistance meets the criteria in the Action Plan. 
HUD considered the State's request and agrees that it is still 
consistent with the overall purposes of the 1974 Act for the State to 
be allowed to use the grant funds under this Notice to fund critical 
projects involving repair of buildings for the general conduct of 
government that the State has selected in accordance with the method 
described in its Action Plan for Disaster Recovery and that the State 
has determined have substantial value in promoting disaster recovery.
    Public benefit for certain economic development activities. For its 
economic development programs, the State has requested a waiver of the 
public benefit standards for its economic development activities. The 
public benefit provisions set standards for individual economic 
development activities (such as a single loan to a business) and for 
economic development activities in the annual aggregate. These dollar 
thresholds were set more than a decade ago and under disaster recovery 
conditions (which often require a larger investment to achieve a given 
result), can be too low and thus impede recovery by limiting the amount 
of assistance the grantee may provide to a critical activity. The State 
has made public in its Action Plan the disaster recovery needs each 
activity is addressing and the public benefits expected. After 
consideration, this Notice retains the waiver for public benefit 
standards for the cited activities, except that the state shall report 
and maintain documentation on the creation and retention of, (a) total 
jobs, (b) number of jobs within certain salary ranges, (c) the average 
amount of assistance per job and activity or program, and (d) the types 
of jobs. As a conforming change for the same activities or programs, 
HUD is also waiving 24 CFR 570.482(g) to the extent its provisions are 
related to public benefit.
    Eligibility--Tourism. Upon reconsideration, HUD is retaining the 
waiver allowing support of the tourism industry. The Department 
understands that the support provided by Mississippi has been a useful 
recovery tool in a damaged regional economy that depends on tourism for 
many of its jobs and tax revenues. The jobs and tax revenues produced 
as a result of support of the tourism industry have played a valuable 
role in the economic revitalization of the Mississippi Gulf Coast 
region. The waiver will continue to permit advertising and marketing 
activities rather than direct assistance to tourism dependent 
businesses. Because the measures of long-term benefit from the proposed 
activities must be derived using regression analysis and other indirect 
means, the waiver will still cap the funds that may be used for this 
purpose. However, based on the state's request, that cap will increase 
from $5 million to $7 million. The assisted activities must continue to 
support tourism to the most impacted and distressed areas related to 
the effects of Hurricane Katrina. This waiver will now expire 2 years 
after the date of this notice, after which, support of the tourism 
industry will again be ineligible for CDBG disaster recovery funding.
    Eligibility--Project-Based Rental Assistance. After 
reconsideration, HUD is also retaining the waiver to allow the use of 
project-based rental assistance (herein referred to as PBRA) to 
encourage owners, including nonprofit owners, of small rental 
properties to reestablish affordable rental housing in areas that 
suffered the greatest losses. The subsidy funding can be used in 
conjunction with components of the State's Small Rental Assistance 
Program to repair, rehabilitate, reconstruct, or convert small rental 
properties. The funding should continue to target housing for low- and 
moderate-income families.
    A major challenge in providing affordable rental units is the 
difference between what tenants can afford to pay and the projected 
cost of operating these units. A project-based rental assistance 
program provides funding to landlords who rent a specified number of 
affordable apartments to low-income families or individuals. Assistance 
is tied directly to the properties so tenants can generally not move 
without losing their assistance. The Department encourages the state to 
avoid PBRA if other financing is available or if the project can 
reasonably be structured to achieve and maintain its target 
affordability without the subsidy. Therefore, HUD recommends an upfront 
review reflecting the perceived financial costs of a project over the 
life of the subsidy. Additionally, HUD recommends that the state 
establish written requirements for income eligibility, maximum rents, 
utility allowances, structure quality, and affirmative marketing of 
projects throughout the life of the program.
    Rental programs of this type can be risky; HUD again reminds the 
state of the regulatory requirement for annual financial audits of its 
programs and of the requirements published in Federal Register notices 
on February 13, 2006 (71 FR 7666), October 30, 2006 (71 FR 63337), and 
August 8, 2008, (73 FR 46312), that its entire program be under the 
purview of an internal auditor.

Applicable Rules, Statutes, Waivers, and Alternative Requirements

    1. General note. Except as described in this Notice, the statutory, 
regulatory, and notice provisions that shall apply to the use of these 
funds are:
    a. Those governing the funds appropriated under Public Law 109-148 
and Public Law 109-234 and already published in the Federal Register, 
including those in Notices 71 FR 7666, published February 13, 2006; (71 
FR 7666), June 14, 2006; (71 FR 34457), October 30, 2006; (71 FR 
63337), March 6, 2007; (72 FR 10020), August 24, 2007; (72 FR 48808), 
October 31, 2007; (72 FR 61788); August 8, 2008 (73 FR 46312); and 
December 12, 2008, (73 FR 75733).
    b. Those governing the Community Development Block Grant program 
for states, including those at 42 U.S.C. 5301 et seq. and 24 CFR part 
570.
    2. Low- and moderate-income benefit for multi-unit housing 
projects. 24 CFR 570.483(b)(3) is waived to the extent necessary to 
allow the state to document low- and moderate-income benefit in a 
proportional units approach for multi-unit housing projects. HUD will 
consider assistance for a multi-unit housing project to benefit low- 
and moderate-income households in the following circumstances:
    (a)(i) The CDBG assistance defrays the development costs of a 
housing project providing eligible permanent residential units that, 
upon completion, will be

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occupied by low- and moderate-income households; and
    (ii) If the project is rental, the units occupied by low- and 
moderate-income households will be leased at affordable rents. The 
grantee or unit of general local government shall adopt and make public 
its standards for determining ``affordable rents'' for this purpose; 
and
    (iii) The proportion of the total cost of developing the project to 
be borne by CDBG funds is no greater than the proportion of units in 
the project that will be occupied by low- and moderate-income 
households; or
    (b) When CDBG funds defray the development costs of eligible 
permanent residential units, such funds shall be considered to benefit 
low- and moderate-income persons if the grantee follows the provisions 
of 24 CFR 92.205(d); or
    (c) The requirements of 24 CFR 570.483(b)(3) are met.
    (d) The State must select and use just one method for each project.
    (e) The term ``project'' will have the same meaning as in the HOME 
program at 24 CFR 92.2.
    (f) If the State applies option (a) or (b) above to a housing 
project, 24 CFR 570.483(b)(3) is waived for that project.
    3. Eligibility--buildings for the general conduct of government. 42 
U.S.C. 5305(a) is waived to the extent necessary to allow the state to 
use the grant funds under this Notice to assist construction, 
reconstruction, or rehabilitation of buildings for the general conduct 
of government that the state has selected in accordance with the method 
described in its Action Plan for Disaster Recovery and that the state 
has determined have substantial value in promoting disaster recovery.
    4. Eligibility--incentives to resettle in Mississippi. 42 U.S.C. 
5305(a) is waived to the extent necessary to make eligible incentives 
to resettle in Mississippi in accordance with the state's approved 
Action Plan and published program design.
    5. Public benefit standards for economic development activities. 
For economic development activities designed to create or retain jobs 
or businesses, the 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, (c) average amount of assistance provided per 
job by activity or program, and (d) types of jobs. Paragraph (g) of 24 
CFR 570.482 is also waived to the extent its provisions are related to 
public benefit.
    6. Waiver to permit some activities in support of the tourism 
industry. 42 U.S.C. 5305(a) and 24 CFR 570.489(f) are waived to the 
extent necessary to make eligible use of no more than $7 million for 
assistance for the tourism industry, including promotion of a community 
or communities in general, provided the assisted activities are 
designed to support tourism to the most impacted and distressed areas, 
related to the effects of Hurricane Katrina. This waiver will expire 2 
years after the date of this notice, after which support for the 
tourism industry, such as promotion of a community in general, will 
again be ineligible for CDBG funding.
    7. Waiver to permit project-based rental subsidies for affordable 
rental housing. 42 U.S.C 5305(a) is waived to the extent necessary to 
make eligible the rental income subsidy assistance component of the 
Small Rental Assistance Program included in the State's HUD-approved 
Action Plan for Disaster Recovery, provided that the assisted 
activities are designed to ensure that CDBG funds will be invested only 
in proportion to the extent of anticipated need.
    8. Information collection approval note. HUD has approval for 
information collection requirements in accordance with the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3520) under OMB control number 
2506-0165. In accordance with the Paperwork Reduction Act, HUD may not 
conduct or sponsor, nor is a person required to respond to, a 
collection of information, unless the collection displays a valid 
control number.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers for the disaster 
recovery grants under this Notice are as follows: 14.219; 14.228.

Finding of No Significant Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD 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 8 a.m. and 5 p.m. weekdays in 
the Office of the Rules Docket Clerk, Office of General Counsel, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Room 10276, Washington, DC 20410-0500.

    Dated: October 21, 2009.
Mercedes M. M[aacute]rquez,
Assistant Secretary for Community Planning and Development.
[FR Doc. E9-26181 Filed 10-27-09; 4:15 pm]
BILLING CODE 4210-67-P