[Federal Register Volume 77, Number 73 (Monday, April 16, 2012)]
[Notices]
[Pages 22583-22599]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-9094]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5628-N-01]
Allocations, Common Application, Waivers, and Alternative
Requirements for Community Development Block Grant (CDBG) Disaster
Recovery Grantees Under the Department of Housing and Urban Development
Appropriations Act, 2012
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This Notice advises the public of the allocation of CDBG
disaster recovery funds for the purpose of assisting recovery in the
most impacted and distressed areas declared a major disaster in 2011
under title IV of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5121 et seq.). As described in the
SUPPLEMENTARY INFORMATION section of this Notice, HUD is authorized by
statute and regulations to waive statutory and regulatory requirements
and specify alternative requirements upon the request of a grantee.
Therefore, this Notice describes applicable waivers and alternative
requirements, as well as the application process, eligibility
requirements, and relevant statutory provisions for grants provided
under this Notice.
DATES: Effective Date: April 23, 2012.
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 7th Street SW., Room
7286, Washington, DC 20410, telephone number 202-708-3587. Persons with
hearing or speech impairments may access this number via TTY by calling
the Federal Relay Service at 800-877-8339. Facsimile 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:
Table of Contents
I. Allocations
II. Use of Funds
III. Prevention of Fraud, Abuse, and Duplication of Benefits
IV. Authority To Grant Waivers
V. Overview of Grant Process
VI. Applicable Rules, Statutes, Waivers, and Alternative
Requirements
VII. Duration of Funding
VIII. Catalog of Federal Domestic Assistance
IX. Finding of No Significant Impact
Appendix A: Allocation Methodology
I. Allocations
Section 239 of the Department of Housing and Urban Development
Appropriations Act, 2012 (Pub. L. 112-55, approved November 18, 2011)
(Appropriations Act) makes available up to $400 million, to remain
available until expended, in CDBG funds for necessary expenses related
to disaster relief, long-term recovery, restoration of infrastructure
and housing, and economic revitalization in the most impacted and
distressed areas resulting from a major disaster declared pursuant to
the Robert T. Stafford Disaster Relief and Emergency Assistance Act of
1974 (42 U.S.C. 5121 et seq.) in 2011. The law provides that grants
shall be awarded directly to a State or unit of general local
government at the discretion of the Secretary.
To comply with statutory direction that funds be used for disaster-
related expenses in the most impacted and distressed areas, HUD
computes allocations based on data that are generally available and
that cover all the eligible affected areas. Within states receiving an
allocation in this Notice, the Department identified the ``most
impacted and distressed areas'' as those counties that have more than
$10 million in estimated unmet severe housing and business needs. If a
CDBG entitlement jurisdiction accounts for $6 million or more of funds
allocated within a state, it receives a direct award (due to its
extraordinarily high level of localized unmet need, one non-entitlement
jurisdiction (the city of Minot, ND) also receives a direct award under
this Notice). Each local jurisdiction receiving a direct award lies
within a county that meets the ``most impacted and distressed''
criterion.
To ensure that funds are dedicated to the most impacted and
distressed areas, 80 percent of the combined total of all the funds
awarded within a state (this includes funds awarded directly to a State
as well as those funds awarded directly to local governments) must be
spent in the ``most impacted and distressed'' counties (i.e,. those
identified by HUD as having more than
[[Page 22584]]
$10 million in estimated unmet severe housing and business needs).
Since a local government receiving a direct grant allocation must spend
the entirety of its grant within its jurisdiction, HUD has identified
the remaining amount of each grant awarded directly to a State that
must be expended within its ``most impacted'' counties in order to
reach the 80 percent threshold (see Table 1). A more detailed
explanation of HUD's allocation methodology is provided as Appendix A
within this Notice.
The principle behind the 80 percent rule is that each State
received their allocation based on the estimated unmet needs in the
most impacted counties (i.e., those counties with more than $10 million
in severe unmet housing and business needs) and thus HUD is requiring
that each State direct these limited resources toward those most
impacted counties. Nonetheless, HUD recognizes that there may be
circumstances where data regarding damage estimates are subsequently
revised, highly localized damage may occur outside of the most impacted
counties, or overall recovery would otherwise benefit from expenditures
outside of those most impacted counties. As a result, HUD is permitting
States to spend the portion of its award in excess of the 80 percent
threshold to address recovery needs outside of its ``most impacted''
counties. However, these funds must still be spent within counties that
received a Presidential disaster declaration in 2011.
Based on a review of the impacts from Presidentially-declared
disasters occurring in 2011, and estimates of unmet need, HUD is making
the following allocations:
Table 1--Allocations Under Pub. L. 112-55
----------------------------------------------------------------------------------------------------------------
Minimum amount that
must be expended in the
Disaster No. State Grantee Allocation ``most impacted''
counties identified
----------------------------------------------------------------------------------------------------------------
4020, 4031............... New York................ State of New York. $71,654,116 ($53,011,323)
Schoharie, Tioga,
Broome, Greene, and/or
Orange.
4020, 4031............... New York................ Orange County, NY. 11,422,029 All funds must be spent
within jurisdiction.
4031..................... New York................ Town of Union, NY. 10,137,818 All funds must be spent
within jurisdiction.
1981..................... North Dakota............ State of North 11,782,684 ($0) Ward.
Dakota.
1981..................... North Dakota............ City of Minot, ND. 67,575,964 All funds must be spent
within jurisdiction.
1971..................... Alabama................. State of Alabama.. 24,697,966 ($13,584,750)
Tuscaloosa, Marion,
Jefferson and/or
DeKalb.
1971..................... Alabama................. City of Tuscaloosa 16,634,702 All funds must be spent
within jurisdiction.
1971..................... Alabama................. Jefferson County.. 7,847,084 All funds must be spent
within jurisdiction.
1971..................... Alabama................. City of Birmingham 6,386,326 All funds must be spent
within jurisdiction.
1980, 4012............... Missouri................ State of Missouri. 8,719,059 ($0) Jasper.
1980..................... Missouri................ City of Joplin, MO 45,266,709 All funds must be spent
within jurisdiction.
4025, 4030............... Pennsylvania............ State of 27,142,501 ($17,283,073) Bradford,
Pennsylvania. Dauphin, Columbia,
Wyoming, and/or
Luzerne.
4025, 4030............... Pennsylvania............ Luzerne County, PA 15,738,806 All funds must be spent
within jurisdiction.
4030..................... Pennsylvania............ Dauphin County, PA 6,415,833 All funds must be spent
within jurisdiction.
4029..................... Texas................... State of Texas.... 31,319,686 ($25,055,749) Bastrop.
1995, 4001, 4022......... Vermont................. State of Vermont.. 21,660,211 ($17,328,169)
Washington and/or
Windsor.
4021..................... New Jersey.............. State of New 15,598,506 ($12,478,805) Passaic.
Jersey.
----------------
Total................ ........................ .................. $400,000,000 .......................
----------------------------------------------------------------------------------------------------------------
As stated by the Appropriations Act, funds provided in today's
Notice shall not adversely affect the amount of any non-disaster
formula assistance received by a State or unit of general local
government under the Community Development Fund. Unless noted
otherwise, the term ``grantee'' refers to any grantee--whether State,
city, or county--receiving a direct award under this Notice.
II. Use of Funds
The Appropriations Act requires funds to be used only for specific
disaster-related purposes. The law also requires that prior to the
obligation of funds a grantee shall submit a plan detailing the
proposed use of all funds, including criteria for eligibility and how
the use of these funds will address long-term recovery. Thus, in an
Action Plan for Disaster Recovery, grantees must describe uses and
activities that are: (1) Authorized under title I of the Housing and
Community Development Act of 1974 (HCD Act) or allowed by this Notice,
and (2) a response to a disaster-related impact. To help meet these
requirements, the Department expects each grantee to conduct an
assessment of community impacts and unmet needs to guide the
development and prioritization of planned recovery activities.
Allocations of funding in each grantee's Action Plan should reflect the
findings of that grantee's needs assessment. For more guidance on the
needs assessment and the creation of the Action Plan, see paragraph 1
under section VI of this Notice: ``Applicable Rules, Statutes, Waivers,
and Alternative Requirements.''
Additionally, as provided for in the HCD Act, funds may be used as
a matching requirement, share, or contribution for any other Federal
program. Funds may not be used for activities reimbursable by, or for
which funds are made available by, the Federal Emergency Management
Agency (FEMA), the U.S. Army Corps of Engineers (USACE), or the Small
Business Administration (SBA).
III. Prevention of Fraud, Abuse, and Duplication of Benefits
To prevent fraud, abuse of funds, mismanagement, and duplication of
benefits under the Appropriations Act, this Notice includes specific
reporting, written procedures, monitoring, and internal audit
requirements applicable to each grantee. Departmental guidance to
assist in preventing a duplication of benefits is provided at 76 FR
71060 (published November 16, 2011) and in paragraph 26 in this Notice.
Other reporting, procedural, and monitoring requirements are discussed
in paragraphs 1 and 14, under section VI of this Notice: ``Applicable
Rules, Statutes, Waivers, and Alternative Requirements.'' In addition,
the Department will institute risk analysis and on-site monitoring of
grantee management as well as collaborate with the HUD Office of
Inspector General to
[[Page 22585]]
plan and implement oversight of these funds.
IV. Authority To Grant Waivers
The Appropriations Act 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 use by the recipient, of these funds
and guarantees, except for requirements related to fair housing,
nondiscrimination, labor standards, and the environment (including
requirements concerning lead-based paint), upon: (1) A request by the
grantee explaining why such a waiver is required to facilitate the use
of such funds or guarantees, and (2) a finding by the Secretary that
such a waiver would not be inconsistent with the overall purpose of the
HCD Act. Regulatory waiver authority is also provided by 24 CFR 5.110,
91.600, and 570.5.
V. Overview of Grant Process
To begin expenditure of CDBG disaster recovery funds, the following
expedited steps are necessary:
Grantee adopts citizen participation plan for disaster
recovery in accordance with the requirements of this Notice;
Grantee publishes its Action Plan for Disaster Recovery on
the grantee's official web site for no less than 7 calendar days to
solicit public comment;
Grantee responds to public comment and submits its Action
Plan (which includes Standard Form 424 (SF-424) and certifications) to
HUD no later than 90 days after the date of this Notice;
HUD expedites review (allotted 45 days from date of
receipt; however, completion of review is anticipated much sooner);
HUD accepts the Action Plan and sends a cover letter,
grant conditions, and signed grant agreement to the grantee;
Grantee signs and returns the fully executed grant
agreement;
Grantee ensures that the final HUD-accepted Action Plan
posted on its official Web site;
HUD establishes the grantee's line of credit;
Grantee requests and receives Disaster Recovery Grant
Reporting (DRGR) system access (if the grantee does not already have
it);
If it has not already done so, grantee enters the
activities from its published Action Plan into DRGR and submits it to
HUD. (Funds can be drawn from the line of credit only for activities
that are established in DRGR.)
After the Responsible entity completes applicable
environmental review(s) pursuant to 24 CFR part 58 and, as applicable,
receives from HUD or the State an approved Request for Release of Funds
and certification, the grantee may draw down funds from the line of
credit.
The grantee must begin to draw down funds no later than
180 days after the date of this Notice.
VI. Applicable Rules, Statutes, Waivers, and Alternative Requirements
The Secretary finds that the waivers and alternative requirements,
as described in this Notice, are necessary to facilitate the use of
these funds for the statutory purposes, and are not inconsistent with
the overall purpose of the HCD Act or the Cranston-Gonzalez National
Affordable Housing Act, as amended. Under the requirements of the
Appropriations Act and the Department of Housing and Urban Development
Reform Act of 1989 (the HUD Reform Act), regulatory waivers must be
justified and published in the Federal Register.
This section of the Notice describes applicable waivers and
alternative requirements granted in response to requests from grantees.
The following requirements provide additional flexibility in program
design and implementation and implement statutory requirements unique
to this appropriation. As a result, they apply only to the CDBG
disaster recovery funds appropriated in the Appropriations Act, and not
to funds provided under the annual formula State or Entitlement CDBG
programs, or those provided under any other component of the CDBG
program, such as the Neighborhood Stabilization Program.
Grantees may request additional waivers from the Department as
needed to address specific needs related to their recovery activities.
The Department will respond to requests for waivers after working with
the grantee to tailor its program(s) to best meet its needs. Except
where noted, waivers and alternative requirements apply to all grantees
under this Notice.
Except as described in this Notice, statutory and regulatory
provisions governing the State CDBG program shall apply to any State
receiving an allocation under this Notice. Statutory and regulatory
provisions governing the Entitlement CDBG program shall apply to any
unit of general local government receiving a direct allocation in this
Notice. Applicable statutory provisions can be found at 42 U.S.C. 5301
et seq. Applicable State and entitlement regulations can be found at 24
CFR part 570.
1. Action Plan for Disaster Recovery waiver and alternative
requirement. The traditional requirements for CDBG actions plans,
located at 42 U.S.C. 12705(a)(2), 42 U.S.C. 5304(a)(1), 42 U.S.C.
5304(m), 42 U.S.C. 5306(d)(2)(C)(iii), 24 CFR 91.220, and 24 CFR 91.320
are waived for these disaster recovery grants. Instead, grantee must
submit to HUD an Action Plan for Disaster Recovery. This streamlined
plan will allow grantees to more quickly and effectively implement
disaster recovery programs while conforming with statutory
requirements. During the course of the grant, HUD will monitor the
grantee's actions and use of funds for consistency with the plan, as
well as meeting the performance and timeliness objectives therein.
A. Action Plan. The Action Plan must identify the proposed use of
all funds, including criteria for eligibility, and how the uses address
long-term recovery needs. Due to the need to develop and submit an
acceptable Action Plan in a timely manner, a grantee's Action Plan may
program or budget a portion of funds toward a particular use with only
a broad or general description of that use. However, HUD will not
consider an Action Plan substantially complete unless at least 50
percent of grant funds are articulated at the level of detail described
in paragraphs (B) or (C) of this subsection, as applicable. Funds
dedicated for uses not described in accordance with paragraphs (B) or
(C) of this subsection will be restricted on the grantee's line of
credit until the grantee submits, and HUD accepts, an Action Plan
amendment programming the use of those funds at the necessary level of
detail as described in paragraphs (B) or (C) of this subsection. Once
the Action Plan amendment is accepted, and the Responsible entity
completes an environmental review and obtains HUD approval of a Request
for Release of Funds, as applicable, HUD will unblock the restricted
funds and the grantee may begin to draw them down immediately. The
grantee must program 100 percent of its grant funds at the necessary
level of detail within 9 months of the date of this Notice.
The Action Plan must contain:
(1) An impact and unmet needs assessment. Development of a needs
assessment to understand the type and location of community needs will
enable grantees to target limited resources to areas with the greatest
need. Grantees receiving an award under today's Notice must conduct a
needs assessment to inform the allocation of CDBG disaster recovery
resources. CDBG-DR funds may be used
[[Page 22586]]
to conduct the needs assessment. At a minimum, the needs assessment
must evaluate three core aspects of recovery--housing (interim and
permanent, owner and rental, single family and multifamily, affordable
and market rate), infrastructure, and the economy (e.g., estimated job
losses or tax revenue loss due to the disaster). The assessment must
also take into account the various forms of assistance available to, or
likely to be available to, affected communities (e.g., projected FEMA
funds) and individuals (e.g., estimated insurance) to ensure CDBG
disaster recovery funds meet needs that are not likely to be addressed
by other sources of funds. The assessment must use the best available
data and cite data sources.
Impacts should be described geographically by type at the lowest
level practicable (e.g., county level or lower if available). Grantees
should use the most recent available data (e.g., from FEMA and SBA) and
estimate the portion of need likely to be addressed by insurance
proceeds, other federal assistance, or any other funding source (thus
producing an estimate of unmet need).
Disaster recovery needs evolve over time as the full impact of a
disaster is realized and costs of damages transition from estimated to
actual. Remaining recovery needs also evolve over time as they are met
by dedicated resources. As a result, the needs assessment and Action
Plan may be considered as a living document, which grantees may need to
periodically update over time.
(2) A description of how the grantee will promote (a) sound,
sustainable long-term recovery planning informed by a post-disaster
evaluation of hazard risk, especially land-use decisions that reflect
responsible flood plain management, and (b) how it will coordinate with
other local and regional planning efforts;
(3) A description of how the grantee will leverage CDBG disaster
recovery funds with funding provided by other federal, state, local,
private, and non-profit sources to generate a more effective and
comprehensive recovery. Examples of other federal sources are those
provided by HUD, FEMA (specifically the Public Assistance Program,
Individual Assistance Program, and Hazard Mitigation Grant Program),
the Small Business Administration, Economic Development Administration,
U.S. Army Corps of Engineers, and the U.S. Department of Agriculture.
The grantee should seek to maximize the number of activities and the
degree to which CDBG funds are leveraged. Leveraged funds shall be
identified for each activity, as applicable, in the DRGR system;
(4) A description of how the grantee will encourage construction
methods that emphasize high quality, durability, energy efficiency,
sustainability, and mold resistance, including how it will support
adoption and enforcement of modern building codes and mitigation of
hazard risk, where appropriate;
(5) A description of how the grantee will encourage the provision
of adequate, flood-resistant housing for all income groups, including a
description of the activities it plans to undertake to address: (a)
Transitional housing needs of homeless individuals and families
(including subpopulations), (b) prevention of low-income individuals
and families with children (especially those with incomes below 30
percent of the area median) from becoming homeless, and (c) the special
needs of persons who are not homeless but require supportive housing
(e.g., elderly, persons with disabilities, persons with alcohol or
other drug addiction, persons with HIV/AIDS and their families, and
public housing residents, as identified in 24 CFR 91.315 (e) or
91.215(e) as applicable); grantees should consider how planning
decisions may affect racial, ethnic, and low-income concentrations.
They should also consider ways to promote the availability of
affordable housing in low-poverty, non-minority areas where appropriate
and in response to disaster related impacts;
(6) A description of how the grantee plans to minimize displacement
of persons or entities, and assist any persons or entities displaced;
(7) A description of how the grantee will handle program income,
and the purpose(s) for which it may be used;
(8) A description of monitoring standards and procedures that are
sufficient to ensure program requirements, including nonduplication of
benefits, are met and that provide for continual quality assurance and
investigation. Grantees must also have an internal audit function with
responsible audit staff reporting independently to the chief officer or
board of the governing body of any designated administering entity;
(9) A description of the steps the grantee will take to prevent
fraud, abuse, and mismanagement of funds (including potential conflicts
of interest and duplication of benefits). All such steps taken shall be
identified quarterly in its performance report to HUD;
(10) A description of how the grantee will provide for increasing
the capacity of grant recipients, subrecipients, subgrantees, and any
other entity responsible for administering activities under this grant;
(11) A description of the connection between identified unmet needs
and the allocation of CDBG disaster recovery resources by the grantee;
and
(12) A performance schedule. The Action Plan must include a
performance schedule for carrying out programs and/or activities. The
schedule should include projected performance (in terms of both
expenditures and outcome measures) for the following activity types (at
a minimum): (1) Housing, (2) infrastructure, (3) economic development,
(4) planning and administration, and (5) other (if applicable). The
Action Plan should also include a projected expenditure schedule for
the entirety of the grant amount as a whole. Grantees may revise the
performance schedule as needed via an Action Plan amendment to reflect
any changes in programs or activities.
B. Funds awarded to a State. A State's Action Plan shall describe
the method of distribution of funds to units of local government and/or
descriptions of specific programs or activities the State will carry
out directly. The description must include:
(1) How the needs assessment informed allocation determinations;
(2) The threshold factors and grant size limits that are to be
applied;
(3) The projected uses for the CDBG disaster recovery funds, by
responsible entity, activity, and geographic area, when the State
carries out an activity directly;
(4) For each proposed program and/or activity carried out directly,
its respective CDBG activity eligibility category (or categories) as
well as national objective(s).
(5) How the method of distribution to local governments or
programs/activities carried out directly will result in long-term
recovery from specific impacts of the disaster.
(6) When funds are allocated to units of local government, all
criteria used to distribute funds to local governments including the
relative importance of each criterion; and
(7) When applications are solicited for programs carried out
directly, all criteria used to select applications for funding,
including the relative importance of each criterion.
C. Funds awarded directly to a unit of general local government.
The unit of local government shall describe specific programs and/or
activities it will carry out. The Action Plan must describe:
(1) How the needs assessment informed allocation determinations;
(2) The threshold factors and grant size limits that are to be
applied;
[[Page 22587]]
(3) The projected uses for the CDBG disaster recovery funds, by
responsible entity, activity, and geographic area;
(4) How the projected uses of the funds will meet CDBG eligibility
criteria and a national objective;
(5) How the projected uses of funds will result in long-term
recovery from specific impacts of the disaster; and
(6) All criteria used to select applications, including the
relative importance of each criterion.
D. Clarification of disaster-related activities. All CDBG disaster
recovery activities must clearly address an impact of the disaster for
which funding was appropriated. Given the standard CDBG requirements,
this means each activity must: (1) Be CDBG eligible (or receive a
waiver), (2) meet a national objective, and (3) address a direct or
indirect impact from the disaster in a Presidentially-declared county.
A disaster-related impact can be addressed through any eligible CDBG
activity.
(1) Housing. Typical housing activities include new construction
and rehabilitation of single family or multifamily units. Most often,
grantees use CDBG disaster recovery funds to rehabilitate damaged homes
and rental units. However, grantees may also fund new construction or
rehabilitate units not damaged by the disaster if the activity clearly
addresses a disaster-related impact. This impact can be demonstrated by
the disaster's overall effect on the quality, quantity, and
affordability of the housing stock and the resulting inability of that
stock to meet post-disaster needs and population demands. The standard
CDBG rehabilitation and reconstruction rules apply.
(2) Infrastructure. Typical infrastructure activities include the
repair, replacement, or relocation of damaged public facilities.
(3) Economic Revitalization. Economic revitalization is not limited
to activities that are ``special economic development'' activities
under the HCD Act, or to activities that create or retain jobs. For
CDBG disaster recovery purposes, economic revitalization can include
any activity that demonstrably restores and improves some aspect of the
local economy; the activity may address job losses, or negative impacts
to tax revenues or businesses. Examples of eligible activities include
providing loans and grants to businesses, funding job training, making
improvements to commercial/retail districts, and financing other
efforts that attract/retain workers in devastated communities. All
economic revitalization activities must address an economic impact(s)
caused by the disaster (e.g., loss of jobs, loss of public revenue).
Through its needs assessment and Action Plan, the grantee should
clearly identify the economic loss or need resulting from the disaster,
and how the proposed activities will address that loss/need.
(4) Preparedness and Mitigation. The Appropriations Act states that
funds shall be used for recovering from a Presidentially-declared major
disaster. As such, all activities must respond to the impacts of the
declared disaster. HUD strongly encourages grantees to incorporate
preparedness and mitigation measures into rebuilding activities, which
helps to ensure that communities recover to be safer and stronger than
prior to the disaster. Incorporation of these measures also reduces
costs in recovering from future disasters. However, given the limited
funding available and the language in the Appropriations Act, CDBG
disaster recovery funds may not be used for activities that are solely
designed to prepare for and/or mitigate the effects of a future
disaster without any tie to rebuilding from the previous disaster.
(5) Tie to the Disaster. Grantees must document in each project
file how that activity is tied to the disaster for which it is
receiving CDBG assistance.
In regard to physical losses, damage or rebuilding estimates are
often the most effective tool for demonstrating the connection to the
disaster. For economic or other non-physical losses, post-disaster
analyses or assessments may best document the relationship between the
loss and the disaster.
Note that grantees are not limited in their recovery to returning
to pre-disaster conditions. Rather, grantees are encouraged to
undertake activities in such a way that not only addresses the
disaster-related impacts, but leaves communities better positioned to
meet the needs of their post-disaster populations and prospects for
growth.
E. Use of funds for other disasters not covered by the
Appropriations Act. CDBG disaster recovery funds awarded under this
Notice may not be used to address an impact or need originating from a
disaster not occurring in 2011. However, if a need that arose from a
previous disaster was exacerbated by a 2011 disaster, funds under this
Notice may be used. In addition, if an impact or need originating from
a 2011 disaster is subsequently exacerbated by a future disaster, funds
under this Notice may also be used.
F. Use of the urgent need national objective. The traditional
certification requirements for the documentation of urgent need,
located at 24 CFR 570.208(c) and 24 CFR 570.483(d), are waived for the
grants under this Notice. In the context of disaster recovery, these
standard requirements may prove burdensome and redundant. Since the
Department only provides CDBG disaster recovery awards to grantees with
documented disaster-related impacts (as supported by data provided by
FEMA, SBA, and other sources), and each grantee is limited to spending
funds only in counties with a Presidential disaster declaration of
recent origin respective to each appropriation, the following
streamlined alternative requirement recognizes the inherent urgency in
addressing the serious threat to community welfare following a major
disaster.
Grantees need not issue formal certification statements in order to
qualify an activity as meeting the urgent need national objective.
Instead, each grantee receiving a direct award under this Notice must
document how all programs and/or activities funded under the urgent
need national objective respond to a disaster-related impact identified
by the grantee. This waiver and alternative requirement allows grantees
to more effectively and quickly implement disaster recovery programs.
Grantees may reference in their Action Plan the type, scale, and
location of the disaster-related impacts that each program and/or
activity is addressing.
Grantees should identify these disaster-related impacts in their
Action Plan needs assessment. The needs assessment should be updated as
new or more detailed/accurate disaster-related impacts are known.
Understanding that major disasters present unique challenges and that
recovery can take years, it is not necessary for an activity to begin
within 18 months of the disaster in order to use the urgent need
national objective.
Grantees should still be mindful to use the ``low- and moderate
income person benefit'' national objective for all activities that
qualify under such criteria. At least 50 percent of the entire CDBG
disaster recovery grant award must be used for activities that benefit
low- and moderate-income persons.
G. Clarity of Action Plan. All grantees must include sufficient
information so that citizens, units of general local government (where
applicable), and other eligible subgrantees, subrecipients, or
applicants will be able to understand and comment on the Action Plan
and, if applicable, be able to prepare responsive applications to the
grantee. The Action Plan must include a single chart or table that
illustrates, at the most practical level, how all funds are budgeted
(e.g., by program, subgrantee, grantee-
[[Page 22588]]
administered activity, or other category). An amount generally not to
exceed ten percent of the total grant amount may be budgeted as a
separate activity for the contingency of cost overruns and
unanticipated unmet needs. Once a grantee expends 80 percent of its
grant amount, it should program any remaining funds budgeted for
contingency into an eligible activity in order to fully expend all
funds by addressing unmet needs and close out the grant.
In the case of Action Plan amendments, each amendment should
constitute the entirety of the Action Plan, as amended. The beginning
of every Action Plan amendment must include a section that identifies
exactly what content is being added, deleted, or changed. This section
must also include a chart or table that clearly illustrates where funds
are coming from and where they are moving to. The Action Plan must
include a revised budget allocation table that reflects the entirety of
all funds, as amended. A grantee's most recent version of its entire
Action Plan should be able to be accessed and viewed as a single
document at any given point in time, rather than the public having to
view and cross-reference changes among multiple amendments.
H. Review of Action Plan; obligation and expenditure of funds. The
Action Plan must be submitted to HUD (including Standard Form 424 (SF-
424) and certifications) within 90 days of the date of this Notice. HUD
will expedite its review of each Action Plan--taking no more than 45
days from the date of receipt. Once HUD accepts the Action Plan, it
will then issue a grant agreement obligating all funds to the grantee.
In addition, HUD will establish the line of credit and the grantee will
receive DRGR access (if it does not have access already). The grantee
must also enter its Action Plan activities into the DRGR system in
order to draw funds against them. It may enter these activities into
DRGR before or after submission of the Action Plan to HUD.
All funds programmed or budgeted at a generalized level will be
restricted from access on the grantee's line of credit. Once the
generalized uses are described in an amended Action Plan at the
necessary level of detail, they will be released by HUD and made
available for use. After the Responsible Entity completes environmental
review(s) pursuant to 24 CFR part 58 (as applicable) and receives from
HUD or the State an approved Request for Release of Funds and
certification (as applicable), the grantee may draw down funds from the
line of credit for an activity. The disbursement of grant funds must
begin no later than 180 days after the date of this Notice.
I. Amending the Action Plan. Even after all funds have been
programmed or budgeted in a grantee's Action Plan at the necessary
level of detail, the grantee may continue to subsequently amend its
plan as needed. As needs often change throughout the long-term recovery
process, grantees may find it necessary to amend its Action Plan to
update its needs assessment, modify activities, create new ones, or to
re-program funds.
2. Citizen participation waiver and alternative requirement. To
permit a more streamlined process, and ensure disaster recovery grants
are awarded in a timely manner, provisions of 42 U.S.C. 5304(a)(2) and
(3), 42 U.S.C. 12707, 24 CFR 570.486, 24 CFR 91.105(b) and (c), and 24
CFR 91.115(b) and (c), with respect to citizen participation
requirements, are waived and replaced by the requirements below. The
streamlined requirements do not mandate public hearings at a state,
entitlement, or local government level, but do require providing a
reasonable opportunity (at least 7 days) for citizen comment and
ongoing citizen access to information about the use of grant funds. The
streamlined citizen participation requirements for a grant administered
under this Notice are:
A. Before the grantee adopts the Action Plan for this grant or any
substantial amendment to this grant, the grantee will publish the
proposed plan or amendment (including the information required in this
Notice for an Action Plan for Disaster Recovery). The manner of
publication must include prominent posting on the grantee's official
Web site and must afford citizens, affected local governments, and
other interested parties a reasonable opportunity to examine the plan
or amendment's contents. The topic of disaster recovery should be
navigable by citizens from the grantee (or administering agency)
homepage. Grantees are also encouraged to notify affected citizens
through electronic mailings, press releases, statements by public
officials, media advertisements, public service announcements, and/or
contacts with neighborhood organizations.
Despite the expedited process, grantees are still responsible for
ensuring that all citizens have equal access to information about the
programs, including persons with disabilities and limited English
proficiency. Each grantee must ensure that program information is
available in the appropriate languages for the geographic area served
by the jurisdiction. This issue may be particularly applicable to
States receiving an award under this Notice. Unlike grantees in the
regular State CDBG program, State grantees under today's Notice may
make grants throughout the state, including to entitlement communities.
For assistance in ensuring that this information is available to LEP
populations, recipients should consult the Final Guidance to Federal
Financial Assistance Recipients Regarding Title VI, Prohibition Against
National Origin Discrimination Affecting Limited English Proficient
Persons published on January 22, 2007, in the Federal Register (72 FR
2732).
Subsequent to publication of the Action Plan, the grantee must
provide a reasonable time frame and method(s) (including electronic
submission) for receiving comments on the plan or substantial
amendment. In its Action Plan, each grantee must specify criteria for
determining what changes in the grantee's plan constitute a substantial
amendment to the plan. At a minimum, the following modifications will
constitute a substantial amendment: A change in program benefit or
eligibility criteria; the allocation or re-allocation of more than $1
million; or the addition or deletion of an activity. The grantee may
substantially amend the Action Plan if it follows the same procedures
required in this Notice for the preparation and submission of an Action
Plan for Disaster Recovery. Prior to submission of a substantial
amendment, the grantee is encouraged to work with its HUD
representative to ensure the proposed change is consistent with this
Notice, and all applicable regulations and Federal law.
B. The grantee must notify HUD, but is not required to undertake
public comment, when it makes any plan amendment that is not
substantial. However, every amendment to the Action Plan (substantial
and non-substantial) must be numbered sequentially and posted on the
grantee's Web site. The Department will acknowledge receipt of the
notification of non-substantial amendments via email within 5 business
days.
C. The grantee must consider all comments, received orally or in
writing, on the Action Plan or any substantial amendment. A summary of
these comments or views, and the grantee's response to each must be
submitted to HUD with the Action Plan or substantial amendment.
D. The grantee must make the Action Plan, any substantial
amendments, and all performance reports available to the public on its
Web site and on request. In addition, the grantee must make these
[[Page 22589]]
documents available in a form accessible to persons with disabilities
and non-English-speaking persons. During the term of the grant, the
grantee will provide citizens, affected local governments, and other
interested parties with reasonable and timely access to information and
records relating to the Action Plan and to the grantee's use of grant
funds.
E. The grantee will provide a timely written response to every
citizen complaint. The response will be provided within 15 working days
of the receipt of the complaint, if practicable.
3. Direct grant administration and means of carrying out eligible
activities--applicable to State grantees only. Requirements at 42
U.S.C. 5306 are waived to the extent necessary to allow a State to use
its disaster recovery grant allocation directly to carry out State-
administered activities eligible under this Notice, rather than
distribute all funds to units of local government. In using statutory
language similar to that used for prior CDBG supplemental
appropriations, the Department believes Congress is signaling its
intent that the States under this appropriation also be able to carry
out activities directly. Pursuant to this waiver, the standard at
section 570.480(c) will also include activities that the State carries
out directly. Note that any city or county receiving a direct award
under this Notice will be subject to the standard CDBG entitlement
program regulations. Thus, the waiver and alternative requirement
described here is inapplicable to local jurisdictions.
Activities eligible under this Notice may be undertaken, subject to
State law, by the grantee through its employees, through procurement
contracts, or through loans or grants under agreements with
subrecipients. Activities made eligible under section 105(a)(15) of the
HCD Act, as amended, may only be undertaken by entities specified in
that section, whether the assistance is provided to such an entity from
the State or from a unit of general local government.
4. Consolidated Plan waiver. HUD is waiving the requirement for
consistency with the consolidated plan (requirements at 42 U.S.C.
12706, 24 CFR 91.325(a)(5), 24 CFR 91.225(a)(5), 24 CFR 91.325(b)(2),
and 24 CFR 91.225(b)(3)), because the effects of a major disaster alter
a grantee's priorities for meeting housing, employment, and
infrastructure needs. In conjunction, 42 U.S.C. 5304(e), to the extent
that it would require HUD to annually review grantee performance under
the consistency criteria, is also waived. However, this waiver applies
only until the grantee first updates its full consolidated plan more
than 30 months following the disaster. While grantees are encouraged to
incorporate disaster-recovery needs into their consolidated plan
updates as soon as practicable, any unmet disaster-related needs and
associated priorities should be incorporated into the grantee's next
consolidated plan update following the expiration of the 30-month
waiver period. If not completed already, the grantee should update its
Analysis of Impediments in coordination with its post-waiver
consolidated plan update, so that it more accurately reflects housing
conditions following the disaster.
This waiver also allows the disaster recovery action plan for non-
entitlement communities to also serve as an abbreviated Consolidated
Plan under the authority at 42 U.S.C. 12705(b) because the Secretary
has determined that this is appropriate given the types and amounts of
assistance the non-entitlement will receive for disaster purposes. For
non-entitlement communities, HUD is also waiving 24 CFR part 91,
subpart C to the extent that these provisions require elements that are
not specifically required by this Notice.
The waiver is granted consistent with the non-entitlement's
existing submission of needs data for addressing housing and community
development needs in the State's Consolidated Plan. Note that the 30
month requirement does not apply to any non-entitlement community
receiving funds under this Notice, however, it must update and amend
its Action Plan within 18 months of the date of this Notice to include
actions it plans to take to remove or ameliorate the negative effects
of public policies that serve as barriers to affordable housing. Such
policies, procedures and processes include, but are not limited to,
land use controls, tax policies affecting land, zoning ordinances,
building codes, fees and charges, growth limitations, and policies
affecting the return on residential investment. Consistent with
91.220(j), proposed plans or actions should be reviewed periodically to
ensure they best respond to the barriers to affordable housing, as they
exist at that time.
5. Requirement for consultation during plan preparation. Currently,
the statute and regulations require States to consult with affected
units of local government in non-entitlement areas of the State in
determining the State's proposed method of distribution. HUD is waiving
42 U.S.C. 5306(d)(2)(C)(iv), 42 U.S.C. 5306(d)(2)(D), 24 CFR 91.325(b),
and 24 CFR 91.110, with the alternative requirement that any State
receiving an allocation under this Notice consult with all disaster-
affected units of general local government, including any CDBG-
entitlement communities, in determining the use of funds. This ensures
State grantees sufficiently assess the recovery needs of all areas
affected by the disaster. For local governments receiving a direct
award under this Notice, HUD is waiving 24 CFR 91.100 with the
alternative requirement that the jurisdiction should consult with
adjacent units of general local government, including local government
agencies with metropolitan-wide planning responsibilities, particularly
for problems and solutions that go beyond a single jurisdiction.
6. Overall benefit waiver and alternative requirement. The primary
objective of the HCD Act is the ``development of viable urban
communities, by providing decent housing and a suitable living
environment and expanding economic opportunities, principally for
persons of low and moderate income.'' 42 U.S.C. 5301(c). To carry out
this objective, the statute requires that 70 percent of the aggregate
of a regular CDBG program's funds be used to support activities
benefitting low- and moderate-income persons. This target could be
difficult to reach, and perhaps even impossible, for many communities
affected by the 2011 disasters. Grantees under this Notice experienced
disaster impacts that affected entire communities--regardless of
income, and the existing requirement may prevent grantees from
providing assistance to damaged areas of need.
Therefore, this Notice waives the requirements at 42 U.S.C.
5301(c), 42 U.S.C. 5304(b)(3)(A), 24 CFR 570.484, and 24 CFR
570.200(a)(3), that 70 percent of funds be used for activities that
benefit low- and moderate-income persons. Instead, 50 percent of funds
must benefit low- and moderate-income persons. This provides grantees
with greater flexibility to carry out recovery activities by allowing
up to 50 percent of the grant to assist activities under the urgent
need or prevention or elimination of slums or blight national
objectives.
7. Use of the ``upper quartile'' or ``exception criteria'' for low-
and moderate-income area benefit activities--not applicable to all
grantees. Section 105(c)(2)(A) of the HCD Act provides that ``In any
case in which an assisted activity described in subsection (a) is
designed to serve an area generally and is clearly designed to meet
identified needs of persons of low and moderate income in such area,
such
[[Page 22590]]
activity shall be considered to principally benefit persons of low and
moderate income if * * * (ii) in any metropolitan city or urban county,
the area served by such jurisdiction is within the highest quartile of
all areas within the jurisdiction of such city or county in terms of
the degree of concentration of persons of low and moderate income * *
*'' HUD permits an exception to the low- and moderate-income area
benefit requirement that an area contain at least 51 percent low- and
moderate-income residents. This exception applies to entitlement
communities that have few, if any, areas within their jurisdiction that
have 51 percent or more low- and moderate-income residents. These
communities are allowed to use a percentage less than 51 percent to
qualify activities under the low- and moderate-income area benefit
category. This exception is referred to as the ``exception criteria''
or the ``upper quartile''. A grantee qualifies for this exception when
less than one quarter of the populated block groups in its
jurisdictions contain 51 percent or more low- and moderate-income
persons. In such communities, activities must serve an area which
contains a percentage of low- and moderate-income residents that is
within the upper quartile of all Census block groups within its
jurisdiction in terms of the degree of concentration of low- and
moderate-income residents. HUD assesses each grantee's census block
groups to determine whether a grantee qualifies to use this exception
and identifies the alternative percentage the grantee may use instead
of 51 percent for the purpose of qualifying activities under the low-
and moderate-income area benefit. HUD determines the lowest proportion
a grantee may use to qualify an area for this purpose and advises the
grantee accordingly.
The Department has considered and granted the requests of Orange
County, New York to apply the exception criteria to these disaster
recovery grants. The Department also grants the request of the State of
New Jersey to allow the following entitlement communities that have
disaster declarations and total damage that exceeds $3,000,000 to apply
the exception criteria for these disaster recovery grants: Passaic
County, Bergen County, Morris County, Somerset County, Essex County,
Middlesex County, and Monmouth County. HUD also waives section
105(c)(2)(ii) of the HCD Act and the regulations at 570.208(a)(1)(ii)
to the extent that they limit the exception criteria to any
metropolitan city or urban county to allow the city of Minot, a non-
entitlement community, to utilize the exception criteria for the
purpose of classifying activities under the low- and moderate-income
area benefit national objective. HUD will provide data to the city of
Minot on how this exception shall be applied.
It must be noted that HUD annually updates the low- and moderate-
income summary data used to identify the exception criteria; disaster
recovery grantees are required to use the most recent data available in
implementing the exception criteria.
8. Note on change to administration limitation. For all grantees
under today's Notice, the annual CDBG program administration
requirements must be modified to be consistent with the Appropriations
Act, which allows up to 5 percent of the grant to be used for
administrative costs, whether by the grantee, by entities designated by
the grantee, by units of general local government, or by subrecipients.
Thus, the total of all costs classified as administrative must be less
than or equal to the 5 percent cap.
A. For State grantees under this Notice, the provisions of 42
U.S.C. 5306(d) and 24 CFR 570.489(a)(1)(i) and (iii) will not apply to
the extent that they cap administration and technical assistance
expenditures, limit a State's ability to charge a nominal application
fee for grant applications for activities the State carries out
directly, and require a dollar-for-dollar match of State funds for
administrative costs exceeding $100,000. 42 U.S.C. 5306(d)(5) and (6)
are waived and replaced with the alternative requirement that the
aggregate total for administrative and technical assistance
expenditures must not exceed 5 percent. States remain limited to
spending a maximum of 20 percent of their total grant amount on a
combination of planning and program administration costs. Planning
costs subject to the 20 percent cap are those defined in 42 U.S.C.
5305(a)(12).
B. Any city or county receiving a direct award under this Notice is
also subject to the 5 percent administrative cap. This 5 percent
applies to all administrative costs--whether incurred by the grantee or
its subrecipients. However, cities or counties receiving a direct
allocation under this Notice also remain limited to spending 20 percent
of their total allocation on a combination of planning and program
administration costs.
9. Planning-only activities--applicable to State grantees only. The
annual State CDBG program requires that local government grant
recipients for planning-only grants must document that the use of funds
meets a national objective. In the State CDBG program, these planning
grants are typically used for individual project plans. By contrast,
planning activities carried out by entitlement communities are more
likely to include non-project specific plans such as functional land-
use plans, master plans, historic preservation plans, comprehensive
plans, community recovery plans, development of housing codes, zoning
ordinances, and neighborhood plans. These plans may guide long-term
community development efforts comprising multiple activities funded by
multiple sources. In the entitlement program, these more general
planning activities are presumed to meet a national objective under the
requirements at 24 CFR 570.208(d)(4).
The Department notes that almost all effective CDBG disaster
recoveries in the past have relied on some form of area-wide or
comprehensive planning activity to guide overall redevelopment
independent of the ultimate source of implementation funds. Therefore,
for State grantees receiving an award under this Notice, the Department
is removing the eligibility requirements at 24 CFR 570.483(b)(5) or
(c)(3). Instead, States must comply with 24 CFR 570.208(d)(4) when
funding disaster recovery-assisted planning-only grants, or directly
administering planning activities that guide recovery in accordance
with the Appropriations Act. In addition, the types of planning
activities that States may fund or undertake are expanded to be
consistent with those of entitlement communities identified at 24 CFR
570.205.
10. Waiver and alternative requirement for distribution to CDBG
metropolitan cities and urban counties--applicable to State grantees
only. Section 5302(a)(7) of title 42, U.S.C. (definition of
``nonentitlement area'') and provisions of 24 CFR part 570 that would
prohibit a State from distributing CDBG funds to entitlement
communities and Indian tribes under the CDBG program, are waived,
including 24 CFR 570.480(a). Instead, the State may distribute funds to
units of local government and Indian tribes.
11. Use of subrecipients--applicable to State grantees only. The
State CDBG program rule does not make specific provision for the
treatment of entities that the CDBG Entitlement program calls
``subrecipients.'' The waiver allowing the State to directly carry out
activities creates a situation in which the State may use subrecipients
to carry out activities in a manner similar to an entitlement
community. Therefore, for States taking advantage of the waiver to
carry out activities directly, the
[[Page 22591]]
requirements at 24 CFR 570.502, 570.503, and 570.500(c) apply, except
that specific references to 24 CFR parts 84 and 85 must be included in
subrecipient agreements. OMB Circular A-87 shall apply to States and
any subrecipients of a State, whether carrying out activities directly
or through the use of a subrecipient.
12. Recordkeeping--applicable to State grantees only. When a State
carries out activities directly, 24 CFR 570.490(b) is waived and the
following alternative provision shall apply: The State shall establish
and maintain such records as may be necessary to facilitate review and
audit by HUD of the State's administration of CDBG disaster recovery
funds under 24 CFR 570.493. Consistent with applicable statutes,
regulations, waivers and alternative requirements, and other federal
requirements, the content of records maintained by the State shall be
sufficient to: Enable HUD to make the applicable determinations
described at 24 CFR 570.493; make compliance determinations for
activities carried out directly by the State; and show how activities
funded are consistent with the descriptions of activities proposed for
funding in the Action Plan and/or DRGR system. For fair housing and
equal opportunity purposes, and as applicable, such records shall
include data on the racial, ethnic, and gender characteristics of
persons who are applicants for, participants in, or beneficiaries of
the program.
13. Change of use of real property--applicable to State grantees
only. This waiver conforms to the change of use of real property rule
to the waiver allowing a State to carry out activities directly. For
purposes of this program, all references to ``unit of general local
government'' in 24 CFR 570.489(j), shall be read as ``unit of general
local government or State.''
14. Responsibility for review and handling of noncompliance --
applicable to State grantees only. This change is in conformance with
the waiver allowing the State to carry out activities directly. 24 CFR
570.492 is waived and the following alternative requirement applies for
any State receiving a direct award under this Notice: the State shall
make reviews and audits, including onsite reviews of any subrecipients,
designated public agencies, and units of general local government, as
may be necessary or appropriate to meet the requirements of section
104(e)(2) of the HCD Act, as amended, as modified by this Notice. In
the case of noncompliance with these requirements, the State shall take
such actions as may be appropriate to prevent a continuance of the
deficiency, mitigate any adverse effects or consequences, and prevent a
recurrence. The State shall establish remedies for noncompliance by any
designated subrecipients, public agencies, or units of general local
government.
15. Housing-related eligibility waivers. The broadening of Section
105(a)(24) of the HCD Act is necessary following major disasters in
which large numbers of affordable housing units have been damaged or
destroyed, as is the case of the disasters eligible under this Notice.
Thus, in accordance with the grantees' requests, 42 U.S.C. 5305(a) is
waived to the extent necessary to allow: (1) Homeownership assistance
for households with up to 120 percent of the area median income, (2)
down payment assistance for up to 100 percent of the down payment (42
U.S.C. 5305(a)(24)(D)), and (3) new housing construction. While
homeownership assistance may be provided to households with up to 120
percent of the area median income, only those funds used to serve
households with up to 80 percent of the area median income may qualify
as meeting the low- and moderate-income person benefit national
objective.
16. Housing incentives to resettle in disaster-affected
communities--not applicable to all grantees. Incentive payments are
generally offered in addition to other programs or funding (such as
insurance), to encourage households to relocate in a suitable housing
development or an area promoted by the community's comprehensive
recovery plan. For example, a grantee may offer an incentive payment
(possibly in addition to a buyout payment) for households that
volunteer to relocate outside of floodplain or to a lower-risk area.
Therefore, 42 U.S.C. 5305(a) and associated regulations are waived
to the extent necessary to allow the provision of housing incentives.
These grantees must maintain documentation, at least at a programmatic
level, describing how the amount of assistance was determined to be
necessary and reasonable, and the incentives must be in accordance with
the grantee's approved Action Plan and published program design(s).
This waiver does not permit a compensation program. Additionally, if
the grantee requires the incentives to be used for a particular purpose
by the household receiving the assistance, then the eligible use for
that activity will be that required use, not an incentive. This waiver
does not apply to the following grantees: The city of Birmingham,
Jefferson County, and the State of Texas.
17. Limitation on emergency grant payments--not applicable to all
grantees. 42 U.S.C. 5305(a)(8) is waived to extend interim mortgage
assistance to qualified individuals from three months to up to 20
months. The time required for a household to complete the rebuilding
process may often extend beyond three months, during which mortgage
payments may be due but the home is inhabitable. Thus, this interim
assistance will be critical for many households facing financial
hardship during this period. This waiver and alternative requirement do
not apply to the following grantees: Jefferson County, city of
Tuscaloosa, State of Missouri, and the State of Texas.
18. Buildings for the general conduct of government--not applicable
to all grantees. 42 U.S.C. 5305(a) is waived to the extent necessary to
allow grantees to fund the rehabilitation or reconstruction of public
buildings that are otherwise ineligible. HUD believes this waiver is
consistent with the overall purposes of the HCD Act, and is necessary
for many grantees to adequately address critical infrastructure needs
created by the disaster. This waiver does not apply to the following
grantees: City of Birmingham, Jefferson County, and the State of
Missouri.
Regardless of this waiver, CDBG disaster recovery funds allocated
under this Notice may not be used for activities reimbursable by, or
for which funds are made available by, FEMA or the Army Corps of
Engineers.
19. Waiver and modification of the job relocation clause to permit
assistance to help a business return. Traditional CDBG requirements
prevent program participants from providing assistance to a business to
relocate from one labor market area to another--if the relocation is
likely to result in a significant loss of jobs in the labor market from
which the business moved. This prohibition can be a critical barrier to
reestablishing and rebuilding a displaced employment base after a major
disaster. Therefore, 42 U.S.C. 5305(h), 24 CFR 570.210, and 24 CFR
570.482 are waived to allow a grantee to provide assistance to any
business that was operating in the disaster-declared labor market area
before the incident date of the applicable disaster and has since
moved, in whole or in part, from the affected area to another State or
to a labor market area within the same State to continue business.
20. One-for-one replacement housing, relocation, and real property
acquisition requirements. CDBG-assisted activities, programs and
projects are subject to the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of
[[Page 22592]]
1970, as amended, (42 U.S.C. 4601 et seq.) (``URA'') and section 104(d)
of the HCD Act (42 U.S.C. 5304(d)) (``Section 104(d)''). The
implementing regulations for the URA are at 49 CFR part 24. The
regulations for Section 104(d) are at 24 CFR part 42, subpart C.
For the purpose of promoting the availability of decent, safe, and
sanitary housing, HUD is waiving the following URA and Section 104(d)
requirements for grantees under this Notice:
A. One-for-one replacement requirements at 42 U.S.C.
5304(d)(2)(A)(i)-(ii) and (d)(3) and 24 CFR 42.375 are waived for
lower-income dwelling units that are damaged by the disaster and not
suitable for rehabilitation. HUD is waiving this requirement because
the requirement does not account for the large, sudden changes that a
major disaster may cause to the local housing stock, population, or
economy. Furthermore, the requirement may discourage grantees from
converting or demolishing disaster-damaged housing when excessive costs
would result from replacing all such units. Disaster-damaged housing
structures, unsuitable for rehabilitation, can pose a threat to public
health and safety and to economic revitalization. Grantees should re-
assess post-disaster population and housing needs to determine the
appropriate type and amount of lower-income dwelling units to
rehabilitate and/or rebuild. Grantees should note, however, that the
demolition and/or disposition of Public Housing Authority-owned public
housing units is covered by Section 18 of the United States Housing Act
of 1937, as amended, and 24 CFR part 970.
B. The Section 104(d) relocation assistance requirements at 42
U.S.C. 5304(d)(2)(A) and 24 CFR 42.350 are waived to the extent that
they differ from the requirements of the URA and implementing
regulations at 49 CFR part 24 for activities related to disaster
recovery.
This waiver is necessary to eliminate disparities in rental
assistance payments associated with activities typically funded by HUD
and FEMA (e.g., buyouts and relocation). FEMA funds are subject to the
requirements of the URA and, consequently, FEMA requires rental
assistance payments for displaced persons to be calculated on the basis
of an amount necessary to enable the displaced person to rent
comparable replacement housing for a period of 42 months. CDBG funds
are also subject to the URA requirements; however, unlike FEMA funds,
they are also subject to the provisions of Section 104(d). Section
104(d) requires that the calculation of rental assistance payments for
displaced persons be made on the basis of 60 months. When a project is
subject to both the URA and Section 104(d), the displaced person may
choose to receive assistance under either authority. This waiver of the
Section 104(d) requirements assures uniform and equitable treatment in
getting the URA and its implementing regulations as the sole standard
for relocation assistance under this Notice.
C. The requirements at 49 CFR 24.101(b)(2)(i)-(ii) are waived to
the extent that they apply to an arm's length voluntary purchase
carried out by a person who does not have the power of eminent domain,
in connection with the purchase and occupancy of a principal residence
by that person. Given the often large-scale acquisition needs of
grantees, this waiver is necessary to reduce burdensome administrative
requirements following a disaster.
D. The requirements at sections 204(a) and 206 of the URA, 49 CFR
24.2(a)(6)(viii), 24.402(b)(2), and 24.404 are waived to the extent
that they require the grantee to provide relocation assistance
sufficient to reduce a low-income person's rent/utility costs to 30
percent of household income post-displacement when the person had been
paying rent in excess of 30 percent of household income without
``demonstrable hardship'' before the project. Thus, to the extent that
a tenant has been paying rent in excess of 30 percent of household
income without demonstrable hardship, a reduction in rental assistance
payments to 30 percent of household income would not be required.
Before using this waiver, the grantee must establish a definition of
``demonstrable hardship.''
E. The requirements of sections 204 and 205 of the URA, and 49 CFR
24.2(a)(6)(ix) and 24.402(b) are waived to the extent necessary to
permit a grantee to meet all or a portion of a grantee's replacement
housing financial assistance obligation to a displaced tenant by
offering rental housing through a tenant-based rental assistance (TBRA)
housing program subsidy (e.g., Section 8 rental voucher or
certificate), provided that the tenant is provided referrals to
comparable replacement dwellings in accordance with 49 CFR 24.204(a)
where the owner is willing to participate in the TBRA program, and the
period of authorized assistance is at least 42 months. Failure to grant
this waiver would impede disaster recovery whenever TBRA program
subsidies are available but funds for cash relocation assistance are
limited. This waiver gives grantees an additional relocation resource
option.
F. The requirements at section 202(b) of the URA and 49 CFR 24.302,
which require that a grantee offer a displaced person the option to
receive a ``moving expense and dislocation allowance'' based on a
schedule of allowances prepared by the Federal Highway Administration
as an alternative to receiving payment for actual moving and related
expenses, are waived. As an alternative, the grantee must establish and
offer the person a ``moving expense and dislocation allowance'' under a
schedule of allowances that is reasonable for the jurisdiction and that
takes into account the number of rooms in the displacement dwelling,
whether the person owns and must move the furniture, and, at a minimum,
the kinds of expenses described in 49 CFR 24.301. Without this waiver
and alternative requirement, disaster recovery may be impeded by
requiring grantees to offer allowances that do not reflect current
local labor and transportation costs. Persons displaced from a dwelling
remain entitled to choose a payment for actual reasonable moving and
related expenses if they find that approach preferable to the locally
established ``moving expense and dislocation allowance.''
G. The regulation at 24 CFR 570.606(d) is waived to the extent that
it requires optional relocation policies to be established at the
grantee or state recipient level. Unlike the regular CDBG program,
States may carry out disaster recovery activities directly or through
subrecipients. The regulation at 24 CFR 570.606(d) governing optional
relocation policies does not account for this distinction. This waiver
makes clear that local governments, including subrecipients, receiving
CDBG disaster funds may establish separate optional relocation
policies. This waiver is intended to provide States and local
governments with maximum flexibility in developing optional relocation
policies with CDBG disaster recovery funds.
21. Program income alternative requirement. The Department is
waiving applicable program income rules at 570.500(a) and (b), 570.504,
42 USC 5304(j), and 570.489(e) to the extent necessary to provide
additional flexibility as described under today's Notice. The
alternative requirements provide guidance regarding the use of program
income received before and after grant closeout and address revolving
loan funds.
A. Definition of program income.
(1) For the purposes of this subpart, ``program income'' is defined
as gross income generated from the use of CDBG funds, except as
provided in
[[Page 22593]]
subparagraph D of this paragraph, and received by: (1) A State, unit of
local government, or tribe, or (2) a subrecipient of a State, unit of
general local government, or tribe. When income is generated by an
activity that is only partially assisted with CDBG funds, the income
shall be prorated to reflect the percentage of CDBG funds used (e.g., a
single loan supported by CDBG funds and other funds; a single parcel of
land purchased with CDBG funds and other funds). Program income
includes, but is not limited to, the following:
(a) Proceeds from the disposition by sale or long-term lease of
real property purchased or improved with CDBG funds;
(b) Proceeds from the disposition of equipment purchased with CDBG
funds;
(c) Gross income from the use or rental of real or personal
property acquired by a State, unit of general local government, or
tribe or subrecipient of a State, unit of general local government, or
tribe with CDBG funds, less costs incidental to generation of the
income (i.e., net income);
(d) Net income from the use or rental of real property owned by a
State, unit of general local government, or tribe or subrecipient of a
State, unit of general local government, or tribe, that was constructed
or improved with CDBG funds;
(e) Payments of principal and interest on loans made using CDBG
funds;
(f) Proceeds from the sale of loans made with CDBG funds;
(g) Proceeds from the sale of obligations secured by loans made
with CDBG funds;
(h) Interest earned on program income pending disposition of the
income, but excluding interest earned on funds held in a revolving fund
account;
(i) Funds collected through special assessments made against
properties owned and occupied by households not of low- and moderate-
income, where the special assessments are used to recover all or part
of the CDBG portion of a public improvement; and
(j) Gross income paid to a State, unit of local government, tribe,
or paid to a subrecipient thereof from the ownership interest in a for-
profit entity in which the income is in return for the provision of
CDBG assistance.
(2) ``Program income'' does not include the following:
(a) The total amount of funds which is less than $25,000 received
in a single year and retained by a State, unit of local government,
tribe, or retained by a subrecipient thereof;
(b) Amounts generated by activities eligible under section
105(a)(15) of the HCD Act and carried out by an entity under the
authority of section 105(a)(15) of the HCD Act;
B. Retention of program income. Per 24 CFR 570.504(c), a unit of
government receiving a direct award under this Notice may permit a
subrecipient to retain program income. State grantees may permit a unit
of local government or tribe which receives or will receive program
income to retain the program income, but are not required to do so.
C. Program income--use, closeout, and transfer.
(1) Program income received (and retained, if applicable) before or
after closeout of the grant that generated the program income, and used
to continue disaster recovery activities, is treated as additional
disaster recovery CDBG funds subject to the requirements of this Notice
and must be used in accordance with the grantee's Action Plan for
Disaster Recovery. To the maximum extent feasible, program income shall
be used or distributed before additional withdrawals from the U.S.
Treasury are made, except as provided in subparagraph D of this
paragraph.
(2) In addition to the regulations dealing with program income
found at 24 CFR 570.489(e) and 570.504, the following rules apply:
Grantees may transfer program income before closeout of the grant that
generated the program income to its annual CDBG program. In addition,
State grantees may transfer program income before closeout to any
annual CDBG-funded activities administered by a unit of general local
government or Indian tribe within the State. Program income received by
a grantee, or received and retained by a subgrantee, after closeout of
the grant that generated the program income, may also be transferred to
a grantee's annual CDBG award. In all cases, any program income that is
not used to continue the disaster recovery activity that generated the
program income ceases to be subject to the waivers and alternative
requirements of this Notice.
For nonentitlement communities without another ongoing CDBG grant
received directly from HUD, program income on hand when the CDBG
disaster recovery grant is closed by HUD, shall continue to be subject
to the eligibility requirements and all other applicable provisions
under this Notice until expended. Program income received after
closeout by HUD of the CDBG disaster recovery grant shall not be
governed by the provisions of this Notice, except that such income
shall be used for activities that meet a CDBG national objective and
the eligibility requirements described in section 105 of the HCD Act.
D. Revolving loan funds. Units of general local government
receiving a direct award under this Notice, State grantees, and units
of local government or tribes (permitted by a State grantee) may
establish revolving funds to carry out specific, identified activities.
A revolving fund, for this purpose, is a separate fund (with a set of
accounts that are independent of other program accounts) established to
carry out specific activities. These activities generate payments,
which will be used to support similar activities going forward. These
payments to the revolving fund are program income and must be
substantially disbursed from the revolving fund before additional grant
funds are drawn from the U.S. Treasury for payments which could be
funded from the revolving fund. Such program income is not required to
be disbursed for non-revolving fund activities.
State grantees may also establish a revolving fund to distribute
funds to units of local government or tribes to carry out specific,
identified activities. The same requirements, outlined above, apply to
this type of revolving loan fund. Last, note that no revolving fund,
established per this Notice, shall be directly funded or capitalized
with CDBG disaster recovery grant funds.
22. National Objective Documentation for Economic Development
Activities. 24 CFR 570.483(b)(4)(i) and 570.208(a)(4)(i) are waived to
allow the grantees under this Notice to identify low- and moderate-
income jobs benefit by documenting, for each person employed, the name
of the business, type of job, and the annual wages or salary of the
job. HUD will consider the person income-qualified if the annual wages
or salary of the job is at or under the HUD-established income limit
for a one-person family. This method replaces the standard CDBG
requirement--in which grantees must review the annual wages or salary
of a job in comparison to the person's total household income and size
(i.e. number of persons). Thus, it streamlines the documentation
process because it allows the collection of wage data for each position
created or retained from the assisted businesses, rather than from each
individual household.
This alternative requirement has been granted on several prior
occasions to CDBG disaster recovery grantees, and to date, those grants
have not exhibited any issues of concern in calculating the benefit to
low- and moderate-income persons. The Department believes this waiver
is consistent with the HCD Act.
23. Public benefit for certain economic development activities. The
[[Page 22594]]
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 aggregate. Currently, public
benefit standards limit the amount of CDBG assistance per job retained
or created, or the amount of CDBG assistance per low- and moderate-
income person to which goods or services are provided by the activity.
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 impede recovery by limiting the amount
of assistance the grantee may provide to a critical activity.
This Notice waives the public benefit standards at 42 U.S.C.
5305(e)(3), 24 CFR 570.482(f)(1), (2), (3), (4)(i), (5), and (6), and
24 CFR 570.209(b)(1), (2), (3)(i), (4), for economic development
activities designed to create or retain jobs or businesses (including,
but not limited to, long-term, short-term, and infrastructure
projects). However, grantees shall report and maintain documentation on
the creation and retention of total jobs; the number of jobs within
certain salary ranges; the average amount of assistance provided per
job, by activity or program; and the types of jobs. Paragraph (g) of 24
CFR 570.482, and 24 CFR 570.209(c), and (d) are also waived to the
extent these provisions are related to public benefit.
24. Allow reimbursement for pre-agreement costs. The provisions of
24 CFR 570.489(b) are applied to permit a State to reimburse itself for
otherwise allowable costs incurred by itself or its subgrantees on or
after the incident date of the covered disaster. Any unit of general
local government receiving a direct allocation under this Notice is
subject to the provisions of 24 CFR 570.200(h) but may reimburse itself
or its subrecipients for otherwise allowable costs incurred on or after
the incident date of the covered disaster. 24 CFR 570.200(h)(1)(i) will
not apply to the extent that it requires pre-agreement activities to be
included in a consolidated plan.
The Department expects both State grantees and units of general
local government receiving a direct award under this Notice to include
all pre-agreement activities in their Action Plans.
25. Clarifying note on the process for environmental release of
funds when a State carries out activities directly. Usually, a State
distributes CDBG funds to units of local government and takes on HUD's
role in receiving environmental certifications from the grant
recipients and approving releases of funds. For this grant, HUD will
allow a State grantee to also carry out activities directly instead of
distributing all program funds to subrecipients and/or subgrantees.
According to the environmental regulations at 24 CFR 58.4, when a State
carries out activities directly, the State must submit the
certification and request for release of funds to HUD for approval.
26. Duplication of benefits. In general, section 312 of the Robert
T. Stafford Disaster Assistance and Emergency Relief Act (42 U.S.C.
5155), as amended, prohibits any person, business concern, or other
entity from receiving financial assistance with respect to any part of
a loss resulting from a major disaster as to which he has received
financial assistance under any other program or from insurance or any
other source. In order to comply with this law, grantees must ensure
that each activity provides assistance to a person or entity only to
the extent that the person or entity has a disaster recovery need that
has not been fully met.
Given the often complex nature of this issue, the Department has
published a separate Notice explaining the duplication of benefit
requirements applicable to CDBG disaster recovery grantees; it can be
found at 76 FR 71060 (published November 16, 2011). Grantees under
today's Notice are hereby subject to 76 FR 71060 in full.
27. Flood buyouts--not applicable to all grantees. Grantees under
this notice are able to undertake property acquisition for a variety of
purposes. However, the term ``buyouts'' as referenced in this Notice
refers to acquisition of properties located in a floodway or floodplain
that is intended to reduce risk from future flooding. HUD is providing
alternative requirements for consistency with the application of other
federal resources commonly used for this type of activity. The
following alternative requirements do not apply to the city of
Birmingham, and Jefferson County.
A. For buyout activities, the following requirements apply:
(1) Any property acquired, accepted, or from which a structure will
be removed pursuant to the project will be dedicated and maintained in
perpetuity for a use that is compatible with open space, recreational,
or wetlands management practices;
(2) no new structure will be erected on property acquired, accepted
or from which a structure was removed under the acquisition or
relocation program other than (a) a public facility that is open on all
sides and functionally related to a designated open space; (b) a rest
room; or (c) a structure that the local floodplain manager approves in
writing before the commencement of the construction of the structure;
and
(3) after receipt of the assistance, with respect to any property
acquired, accepted, or from which a structure was removed under the
acquisition or relocation program, no subsequent application for
additional disaster assistance for any purpose will be made by the
recipient to any Federal entity.
B. Grantees have the discretion to determine an appropriate
valuation method (including the use of pre-flood value, post-flood
value, or cost of reconstruction as a basis for property value).
However, in using CDBG disaster recovery funds for buyouts, the grantee
must uniformly apply whichever valuation method it chooses.
C. All buyouts must still meet activity eligibility and national
objective requirements.
D. Grantees should identify all acquisition activities that are
buyouts in the DRGR system.
28. Flood insurance.
A. Flood insurance purchase requirements. HUD does not prohibit the
use of CDBG Disaster Assistance for existing residential buildings in
the Special Flood Hazard Area (SFHA) (or ``100-year'' floodplain).
However, Federal laws and regulations related to both flood insurance
and floodplain management must be followed, as applicable. With respect
to flood insurance, a HUD-assisted homeowner for a property located in
the SFHA must obtain and maintain flood insurance in the amount and
duration prescribed by FEMA's National Flood Insurance Program. Section
102(a) of the Flood Disaster Protection Act of 1973 mandates the
purchase of flood insurance protection for any HUD-assisted property
within the SFHA.
B. Future federal assistance to owners remaining in floodplain.
(1) Section 582 of the National Flood Insurance Reform Act of 1994,
as amended, (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 federal 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
[[Page 22595]]
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 abovementioned repair, replacement,
or restoration to a person who has failed to meet this requirement.
(2) Section 582 also implies a responsibility for a grantee that
receives CDBG disaster recovery funds or that, under 42 U.S.C. 5321,
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.
(3) Duty to notify. In the event of the transfer of any property
described in paragraph (5), the transferor shall, not later than the
date on which such transfer occurs, notify the transferee in writing of
the requirements to:
(a) 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
(b) Maintain flood insurance in accordance with applicable federal
law with respect to such property. Such written notification shall be
contained in documents evidencing the transfer of ownership of the
property.
(4) Failure to notify. If a transferor fails to provide notice as
described above and, subsequent to the transfer of the property:
(a) The transferee fails to obtain or maintain flood insurance, in
accordance with applicable federal law, with respect to the property;
(b) The property is damaged by a flood disaster; and
(c) Federal disaster relief assistance is provided for the repair,
replacement, or restoration of the property as a result of such damage,
the transferor shall be required to reimburse the Federal Government in
an amount equal to the amount of the federal disaster relief assistance
provided with respect to the property.
(5) 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.
(6) The term ``Federal disaster relief assistance'' applies to HUD
or other federal assistance for disaster relief in ``flood disaster
areas.'' The term ``flood disaster area'' is defined in section
582(d)(2) of the National Flood Insurance Reform Act of 1994, as
amended, to include an area receiving a presidential declaration of a
major disaster or emergency as a result of flood conditions.
29. Procurement.
A. Grants to States. Per 24 CFR 570.489(d), a State must have
fiscal and administrative requirements for expending and accounting for
all funds. Furthermore, per 24 CFR 570.489(g), a State shall establish
requirements for procurement policies and procedures for units of
general local government based on full and open competition. All
subgrantees of a State (including units of general local government)
are subject to the procurement policies and procedures required by the
State.
A State may meet the above requirements by adopting 24 CFR part 85.
If a State has adopted part 85 in full, it must follow the same
policies and procedures it uses when procuring property and services
with its non-Federal funds. However, the State must ensure that every
purchase order or other contract includes any clauses required by
Federal statutes and executive orders and their implementing
regulations per 24 CFR 85.36(a).
If a State has not adopted 24 CFR 85.36(a), but has adopted 24 CFR
85.36(b) through (i), the State and its subgrantees must follow State
and local law (as applicable), so long as the procurements conform to
applicable Federal law and the standards identified in 24 CFR 85.36(b)
through (i).
B. Direct grants to units of general local government. Any unit of
general local government receiving a direct appropriation under today's
Notice will be subject to 24 CFR 85.36(b) through (i).
30. Timely distribution of funds. 24 CFR 570.494 and 24 CFR 570.902
regarding timely distribution of funds are waived and replaced with
alternative requirements under this Notice. HUD expects each grantee to
expeditiously obligate and expend all funds, including any recaptured
funds or program income, and to carry out activities in a timely
manner. HUD will evaluate timeliness in relation to each grantee's
established performance schedule as identified in its Action Plan.
The Department will, absent substantial evidence to the contrary,
deem a grantee to be carrying out its programs and activities in a
timely manner if the schedule for carrying out its activities is
substantially met.
In determining the appropriate corrective action to take with
respect to a HUD determination that a grantee is not carrying out its
activities in a timely manner pursuant to this section, HUD will take
into account the extent to which unexpended funds have been obligated
by the grantee and its sub-recipients for specific activities at the
time the finding is made and other relevant information.
If a grantee is determined to be untimely pursuant to this section,
and the grantee is again determined to be untimely 12 months following
the initial determination, HUD may elect to recapture any unobligated
funds and reallocate to another entity with the authority and capacity
to carry out the remaining recovery activities, unless HUD determines
that the untimeliness resulted from factors beyond the grantee's
reasonable control.
31. Performance review authorities. Section 104(e)(1) of the HCD
Act requires that the Secretary shall, at least on an annual basis,
make such reviews and audits as may be necessary or appropriate to
determine whether the recipient has carried out its activities in a
timely manner, whether the recipient has carried out those activities
and its certifications in accordance with the requirements and the
primary objectives of the Act and with other applicable laws, and
whether the recipient has a continuing capacity to carry out those
activities in a timely manner.
The requirements for submission of a Performance Evaluation Report
(PER) pursuant to 42 U.S.C. 12708 and 24 CFR 91.520 are waived. In the
alternative, and to ensure consistency between grants allocated under
this Notice and grants allocated previously under the CDBG disaster
recovery program, HUD is requiring that:
A. Each grantee must enter its Action Plan for Disaster Recovery,
including performance measures, into HUD's DRGR system. As more
detailed information about uses of funds is identified by the grantee,
the grantee must enter such detail into DRGR, in sufficient detail to
serve as the basis for acceptable performance reports.
B. Each grantee must submit a quarterly performance report, as HUD
prescribes, no later than 30 days following the end of each calendar
quarter, beginning after the first full
[[Page 22596]]
calendar quarter after grant award and continuing until all funds have
been expended and all expenditures have been reported. Each quarterly
report will include information about the uses of funds during the
applicable quarter including (but not limited to) the project name,
activity, location, and national objective; funds budgeted, obligated,
drawn down, and expended; the funding source and total amount of any
non-CDBG disaster recovery funds to be expended on each activity;
beginning and completion dates of activities; achieved performance
outcomes such as number of housing units complete or number of low- and
moderate-income persons benefiting; and the race and ethnic status of
persons assisted under direct-benefit activities. Within the section
titled ``Overall Progress Narrative'' in DRGR, grantees must include a
description of the actions taken to affirmatively further fair housing.
Quarterly reports to HUD must be submitted using HUD's DRGR system
and, within 3 days of submission, be posted on the grantee's official
Web site.
C. Reporting requirements. Once each grantee enters its action Plan
into the DRGR system, it must submit to HUD a projection of
expenditures and outcomes (projected on a quarterly basis) for each
major activity type in DRGR. This will enable HUD to track proposed
versus actual performance in coordination with each grantee's
submission of DRGR quarterly performance reports.
D. In addition to providing these reports to Congress and the
public, HUD will use them--in addition to transactional data from DRGR
and other information provided by the grantee--to: (1) Monitor for
anomalies or performance problems that suggest fraud, abuse of funds,
and duplication of benefits; (2) reconcile budgets, obligations,
funding draws, and expenditures; (3) calculate applicable
administrative and public service limitations and the overall
percentage of funds that benefit low- and moderate-income persons; and
(4) analyze the risk of grantee programs to determine priorities for
monitoring.
32. Review of continuing capacity to carry out CDBG funded
activities in a timely manner. If HUD determines that the grantee has
not carried out its CDBG activities and certifications in accordance
with the requirements and criteria described in this section, HUD will
undertake a further review to determine whether or not the grantee has
the continuing capacity to carry out its activities in a timely manner.
In making the determination, the Department will consider the nature
and extent of the recipient's performance deficiencies, types of
corrective actions the recipient has undertaken, and the success or
likely success of such actions.
33. Corrective and remedial actions. HUD will undertake corrective
and remedial actions in accordance with 24 CFR 570.910 and 24 CFR
570.913.
34. Reduction, withdrawal, or adjustment of a grant or other
appropriate action. Prior to a reduction, withdrawal, or adjustment of
a grant or other appropriate action, taken pursuant to this section,
the recipient shall be notified of such proposed action and given an
opportunity within a prescribed time period for an informal
consultation.
Consistent with the procedures described in this Notice, the
Secretary may adjust, reduce or withdraw the grant or take other
actions as appropriate, except that funds already expended on eligible
approved activities shall not be recaptured.
35. Certifications waiver and alternative requirement. Sections
91.325 and 91.225 of title 24 of the Code of Federal Regulations are
waived. Each State or unit of general local government receiving a
direct allocation under this Notice must make the following
certifications with its Action Plan:
A. The grantee certifies that it will affirmatively further fair
housing, which means that it will conduct an analysis to identify
impediments to fair housing choice within its jurisdiction take
appropriate actions to overcome the effects of any impediments
identified through that analysis, and maintain records reflecting the
analysis and actions in this regard. (See 24 CFR 570.487(b)(2) and
570.601(a)(2).)
B. The grantee certifies that it has in effect and is following a
residential anti-displacement and relocation assistance plan in
connection with any activity assisted with funding under the CDBG
program.
C. The grantee certifies its compliance with restrictions on
lobbying required by 24 CFR part 87, together with disclosure forms, if
required by part 87.
D. The grantee certifies that the Action Plan for Disaster Recovery
is authorized under State and local law (as applicable) and that the
grantee, and any entity or entities designated by the grantee,
possess(es) the legal authority to carry out the program for which it
is seeking funding, in accordance with applicable HUD regulations and
this Notice.
E. The grantee certifies that activities to be undertaken with
funds under this Notice are consistent with its Action Plan.
F. The grantee certifies that it will comply with the acquisition
and relocation requirements of the URA, as amended, and implementing
regulations at 49 CFR part 24, except where waivers or alternative
requirements are provided for in this Notice.
G. The grantee certifies that it will comply with section 3 of the
Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and
implementing regulations at 24 CFR part 135.
H. The grantee certifies that it is following a detailed citizen
participation plan that satisfies the requirements of 24 CFR 91.105 or
91.115, as applicable (except as provided for in notices providing
waivers and alternative requirements for this grant). Also, each unit
of local government receiving assistance from a State grantee must
follow a detailed citizen participation plan that satisfies the
requirements of 24 CFR 570.486 (except as provided for in notices
providing waivers and alternative requirements for this grant).
I. Each State receiving a direct award under this Notice certifies
that it has consulted with affected units of local government in
counties designated in covered major disaster declarations in the non-
entitlement, entitlement, and tribal areas of the State in determining
the method of distribution of funding.
J. The grantee certifies that it is complying with each of the
following criteria:
(1) Funds will be used solely for necessary expenses related to
disaster relief, long-term recovery, restoration of infrastructure and
housing, and economic revitalization in the most impacted and
distressed areas for which the President declared a major disaster in
2011, pursuant to the Robert T. Stafford Disaster Relief and Emergency
Assistance Act of 1974 (42 U.S.C. 5121 et seq.).
(2) With respect to activities expected to be assisted with CDBG
disaster recovery funds, the Action Plan has been developed so as to
give the maximum feasible priority to activities that will benefit low-
and moderate-income families.
(3) The aggregate use of CDBG disaster recovery funds shall
principally benefit low- and moderate-income families in a manner that
ensures that at least 50 percent of the grant amount is expended for
activities that benefit such persons.
(4) The grantee will not attempt to recover any capital costs of
public improvements assisted with CDBG disaster recovery grant funds,
by assessing any amount against properties
[[Page 22597]]
owned and occupied by persons of low- and moderate-income, including
any fee charged or assessment made as a condition of obtaining access
to such public improvements, unless: (A) Disaster recovery grant funds
are used to pay the proportion of such fee or assessment that relates
to the capital costs of such public improvements that are financed from
revenue sources other than under this title; or (B) for purposes of
assessing any amount against properties owned and occupied by persons
of moderate income, the grantee certifies to the Secretary that it
lacks sufficient CDBG funds (in any form) to comply with the
requirements of clause (A).
K. The grantee certifies that the grant will be conducted and
administered in conformity with title VI of the Civil Rights Act of
1964 (42 U.S.C. 2000d) and the Fair Housing Act (42 U.S.C. 3601-3619)
and implementing regulations.
L. The grantee certifies that it has adopted and is enforcing the
following policies. In addition, States receiving a direct award must
certify that they will require units of general local government that
receive grant funds to certify that they have adopted and are
enforcing:
(1) A policy prohibiting the use of excessive force by law
enforcement agencies within its jurisdiction against any individuals
engaged in nonviolent civil rights demonstrations; and
(2) A policy of enforcing applicable State and local laws against
physically barring entrance to or exit from a facility or location that
is the subject of such nonviolent civil rights demonstrations within
its jurisdiction.
M. Each State or unit of local government receiving a direct award
under this Notice certifies that it (and any subrecipient or
administering entity) has the capacity to carry out disaster recovery
activities in a timely manner; or the State or unit of local government
will develop a plan to increase capacity where such capacity is
lacking.
N. The grantee certifies that it will not use CDBG disaster
recovery funds for any activity in an area delineated as a special
flood hazard area in FEMA's most current flood advisory maps, unless it
also ensures that the action is designed or modified to minimize harm
to or within the floodplain, in accordance with Executive Order 11988
and 24 CFR part 55.
O. The grantee certifies that its activities concerning lead-based
paint will comply with the requirements of 24 CFR part 35, subparts A,
B, J, K, and R.
P. The grantee certifies that it will comply with applicable laws.
36. Information collection approval note. HUD has submitted
documentation to OMB seeking emergency approval for information
collection requirements in accordance with the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501-3520). The submission is under review by OMB
and approval pending. 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.
VII. Duration of Funding
The Appropriations Act directs that these funds be available until
expended. However, in accordance with 31 U.S.C. 1555, HUD shall close
the appropriation account and cancel any remaining obligated or
unobligated balance if the Secretary or the President determines that
the purposes for which the appropriation has been made have been
carried out and no disbursements have been made against the
appropriation for 2 consecutive fiscal years. In such a case, the funds
shall not be available for obligation or expenditure for any purpose
after the account is closed.
VIII. Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers for the disaster
recovery grants under this Notice are as follows: 14.218; 14.228.
IX. Finding of No Significant Impact
A Finding of No Significant Impact (FONSI) 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(2)(C)). The FONSI is
available for public inspection between 8 a.m. and 5 p.m. weekdays in
the Regulations Division, Office of General Counsel, Department of
Housing and Urban Development, 451 7th Street SW., Room 10276,
Washington, DC 20410-0500. Due to security measures at the HUD
Headquarters building, an advance appointment to review the docket file
must be scheduled by calling the Regulations Division at 202-708-3055
(this is not a toll-free number). Hearing or speech-impaired
individuals may access this number through TTY by calling the toll-free
Federal Relay Service at 800-877-8339.
Dated: April 9, 2012.
Mercedes M. M[aacute]rquez,
Assistant Secretary for Community Planning and Development.
Appendix A--Allocation Methodology
This section describes the methods behind HUD's allocation of $400
million in the 2011 CDBG Disaster Recovery Funds. Section 239 of Public
Law 112-55, enacted on November 18, 2011, appropriates $400 million
through the Community Development Block Grant (CDBG) program for:
* * * necessary expenses for activities authorized under title I of the
Housing and Community Development Act of 1974 (Pub. L. 93-383) related
to disaster relief, long-term recovery, restoration of infrastructure
and housing, and economic revitalization in the most impacted and
distressed areas resulting from a major disaster declared pursuant to
the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5121 et seq.) in 2011; Provided, That funds shall be awarded
directly to the State or unit of general local government at the
discretion of the Secretary; * * *
HUD allocates funds based on its estimate of the total unmet needs
for infrastructure and the unmet needs for severe damage to businesses
and housing that remain to be addressed in the most impacted counties
after taking into account December 2011 data on insurance, FEMA
assistance, and SBA disaster loans. To meet the statutory requirement
that the funds be targeted to ``the most impacted or distressed
areas,'' this allocation:
(1) Limits funding to the states and counties with the highest
level of severe unmet needs. Specifically, the calculation of unmet
housing and business needs is limited only to those homes and
businesses that experienced severe damage (see definitions below). That
is, it excludes homes and businesses with minor or moderate damage that
may have some unmet needs remaining. Further, to target funds to the
most impacted or distressed areas, only counties with $10 million \1\
or more in severe unmet housing and business needs are used to
determine a state's allocation. Thus, funding is provided based on the
severe needs of
[[Page 22598]]
the most impacted counties in each state.
---------------------------------------------------------------------------
\1\ For the cut off thresholds used in this formula, minimum
county need of $10 million in severe unmet housing and business
needs, the $10 million minimum grant for a state (point 4), and the
$6 million minimum grant for an entitlement jurisdiction (point 5a),
these represent ``natural breaks'' in the distribution. That is, the
next county, state or grantee on the list has a significant
separation in need or estimated grant from the last county, state,
or grantee included in the list.
---------------------------------------------------------------------------
(2) Factors in disaster related infrastructure repair costs
statewide that are not reimbursed by FEMA Public Assistance. For all of
these disasters, this is calculated as the 25 percent state match
requirement.
(3) Funds are allocated based on each state's share of total unmet
needs. This is calculated as each state's proportional share of the sum
of infrastructure and severe unmet housing and business needs from the
most impacted counties.\2\
---------------------------------------------------------------------------
\2\ When calculating the grants, the internal weight between
factors is maintained at the ratio of all severe unmet housing and
business needs in all counties to unmet infrastructure needs in all
counties.
---------------------------------------------------------------------------
(4) Restricts funding only to states that receive a minimum grant
of $10 million or more. These funds are limited to only the states with
the highest levels of unmet need. As such, funding is limited to states
that would receive aggregate funding of $10 million or more based on
their total unmet needs. The calculated grant amounts for states that
would have received less than $10 million are provided to the states
above $10 million through a pro-rata increase.
(5) Specifies the counties and jurisdictions that are most impacted
or distressed by:
a. Providing direct funding to CDBG entitlement jurisdictions (and
one nonentitlement city) with significant remaining severe unmet needs.
Within a State, if an entitlement jurisdiction accounts for $6 million
or more of the funding allocated to a State, it is allocated a direct
grant (the $6 million threshold represents a ``natural break'' in
funding among entitlement jurisdictions). Otherwise the funding is
provided directly to the State. Due to its extraordinarily high level
of localized need, one non-entitlement jurisdiction (Minot, ND) also
receives a direct allocation.
b. Directing that a minimum of 80% of the total funds allocated
within a state, including those allocated directly to the State and to
local governments, must be spent on the disaster recovery needs of the
communities and individuals in the most impacted and distressed
counties (i.e., those counties identified by HUD). The principle behind
the 80 percent rule is that each state received its allocation based on
the unmet needs in the most impacted counties (those counties with more
than $10 million in severe unmet housing and business needs) and thus
HUD will require that all grantees within a State direct these limited
resources toward those most impacted counties.\3\ Nonetheless, HUD
recognizes that there are likely circumstances where its data is
incomplete, damage is highly localized outside of one of the heavily
impacted counties, or recovery would otherwise benefit from
expenditures outside of those most impacted counties and thus provides
some flexibility to address those needs for State grantees. While local
governments receiving direct grant allocations from HUD must spend
their total grant within their own jurisdictions, HUD will allow a
portion of the State non-entitlement grant to be spent outside of the
most impacted counties, in an amount not to exceed that which yields 80
percent of all funding within a state to be spent in the most impacted
counties.
---------------------------------------------------------------------------
\3\ Each state receives funding based on all of infrastructure
needs within a state, minus the infrastructure needs estimated to
lie within entitlement jurisdictions receiving direct grants. In
addition, each state also receives funding from all severe housing
and business needs in the most impacted counties minus the estimated
severe housing and business needs within entitlement jurisdictions
receiving direct grants.
---------------------------------------------------------------------------
HUD will provide States with county level data on unmet needs to
assist with their planning.
Methods for estimating unmet needs for business, infrastructure,
and housing: The data HUD staff have identified as being available to
calculate unmet needs for the targeted disasters (major disasters with
Presidential declaration issued in 2011 and for which FEMA individual
assistance was available) come from the following data sources:
FEMA Individual Assistance program data on housing unit
damage, as of 12/20/2011;
SBA for management of its disaster assistance loan program
for housing repair and replacement, as of 12/21/2011;
SBA for management of its disaster assistance loan program
for business real estate repair and replacement as well as content
loss, as of 12/22/2011; and
FEMA estimated and obligated amounts under its Public
Assistance program for permanent work, federal and state cost share, as
of 12/20/2011.
Calculating Severe Unmet Housing Needs
The core data on housing damage for both the unmet housing needs
are based on home inspection data for FEMA's Individual Assistance
program. For unmet housing needs, the FEMA data are supplemented by
Small Business Administration data from its Disaster Loan Program. HUD
calculates ``unmet housing needs'' as the number of housing units with
unmet needs times the estimated cost to repair those units less repair
funds already provided by FEMA and SBA, where:
The owner-occupied units included in the unmet needs
analysis are those determined by FEMA to be eligible for a repair or
replacement grant.
Each of the FEMA inspected owner-occupied units are
classified by HUD into one of five categories:
Minor-Low: Less than $3,000 of FEMA inspected damage
Minor-High: $3,000 to $7,999 of FEMA inspected damage
Major-Low: $8,000 to $14,999 of FEMA inspected damage
Major-High: $15,000 to $28,800 of FEMA inspected damage
Severe: Greater than $28,800 of FEMA inspected damage or
determined destroyed.
Only units in the Major-High and Severe categories are counted
toward the severe unmet housing needs calculation.
The rental units included in the unmet needs analysis are
those assessed for personal property loss, near owner-occupied
dwellings with major-high and severe damage, and where the tenant has
an income of less than $20,000. The use of the $20,000 income cut-off
for calculating rental unmet needs is intended to capture the loss of
affordable rental housing.
The average cost to fully repair a home for a specific
disaster within each of the damage categories noted above is calculated
using the median ratio between real property damage repair costs
determined by the Small Business Administration for its disaster loan
program and the FEMA assessment of real estate damage, for the subset
of homes inspected by both SBA and FEMA. Because SBA inspects for full
repair costs, it is presumed to reflect the full cost to repair the
home, which is generally greater than FEMA estimations of the cost to
make the home habitable. If fewer than 25 SBA inspections are made for
homes within a FEMA damage category, the median ratio between SBA and
FEMA assessment of damage in the category for that disaster has a cap
applied at the 75th percentile of all damaged units for that category
for all disasters and a floor applied at the 25th percentile. If there
are no SBA inspections within a FEMA damage category, the national
median ratio between SBA and FEMA assessment of damage within a FEMA
damage category is used.
To obtain estimates for unmet needs, only properties
receiving a
[[Page 22599]]
FEMA grant are included in the calculation (since these are the cases
assumed to have insufficient insurance coverage). Furthermore, the FEMA
grant amount and all SBA loans are subtracted out of the total
estimated damage to obtain a final unmet needs estimate.
Calculating Infrastructure Needs
To best proxy unmet infrastructure needs, HUD uses data from FEMA's
Public Assistance program on the state match requirement (usually 25
percent of the estimated public assistance needs). This allocation uses
only a subset of the Public Assistance damage estimates reflecting the
categories of activities most likely to require CDBG funding above the
Public Assistance and state match requirement. Those activities are
categories: C-Roads and Bridges; D-Water Control Facilities; E-Public
Buildings; F-Public Utilities; and G-Recreational-Other. Categories A
(Debris Removal) and B (Protective Measures) are largely expended
immediately after a disaster and reflect interim recovery measures
rather than the long-term recovery measures for which CDBG funds are
generally used. Because Public Assistance damage estimates are
available only statewide (and not county), CDBG funding allocated by
the estimate of unmet infrastructure needs are sub-allocated to
counties and local jurisdictions based on each jurisdiction's
proportion of unmet housing needs (categories minor-high to severe).
Calculating Economic Revitalization Needs
Based on SBA disaster loans to businesses, HUD used the sum of real
property and real content loss of small businesses not receiving an SBA
disaster loan. This is adjusted upward by the proportion of
applications that were received for a disaster that content and real
property loss were not calculated because the applicant had inadequate
credit or income. For example, if a state had 160 applications for
assistance, 150 had calculated needs and 10 were denied in the pre-
processing stage for not enough income or poor credit, the estimated
unmet need calculation would be increased as (1 + 10/160) * calculated
unmet real content loss.
Because applications denied for poor credit or income are the most
likely measure of requiring the type of assistance available with CDBG
recovery funds, the calculated unmet business needs for each state are
adjusted upwards by the proportion of total applications that were
denied at the pre-process stage because of poor credit or inability to
show repayment ability. Similar to housing, estimated damage is used to
determine what unmet needs will be counted as severe unmet needs. Only
properties with total real estate and content loss in excess of $65,000
are considered severe damage for purposes of identifying the most
impacted areas.
Category 1: real estate + content loss = below 12,000
Category 2: real estate + content loss = 12,000-30,000
Category 3: real estate + content loss = 30,000-65,000
Category 4: real estate + content loss = 65,000-150,000
Category 5: real estate + content loss = above 150,000
To obtain unmet business needs, the amount for approved SBA loans
is subtracted out of the total estimated damage. Since SBA business
needs are best measured at the county level, HUD estimates the
distribution of needs to local entitlement jurisdictions based on the
distribution of all unmet housing needs.
[FR Doc. 2012-9094 Filed 4-13-12; 8:45 am]
BILLING CODE 4210-67-P