[Federal Register Volume 78, Number 76 (Friday, April 19, 2013)]
[Notices]
[Pages 23578-23581]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-09228]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5710-N-01]


Clarifying Guidance, Waivers, and Alternative Requirements for 
Hurricane Sandy Grantees in Receipt of Community Development Block 
Grant Disaster Recovery Funds

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

ACTION: Notice.

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SUMMARY: Previously, the Department allocated $5,400,000,000 of 
Community Development Block Grant disaster recovery (CDBG-DR) funds 
appropriated by the Disaster Relief Appropriations Act, 2013 (Pub. L. 
113-2) for the purpose of assisting recovery in the most impacted and 
distressed areas declared a major disaster due to Hurricane Sandy (see 
78 FR 14329, published in the Federal Register on March 5, 2013). This 
Notice provides clarifying guidance, waivers, and alternative 
requirements.

DATES: With the exception of waivers included in this Notice, this 
Notice is effective on April 19, 2013. The effective date for waivers 
in this Notice is April 24, 2013.

FOR FURTHER INFORMATION CONTACT: Stan Gimont, Director, Office of Block 
Grant Assistance, Office of Community Planning and Development, 
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. Gimont at 202-401-2044. (Except for the ``800'' number, 
these telephone numbers are not toll-free.) Email inquiries may be sent 
to [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background
II. Applicable Rules, Statutes, Waivers, and Alternative 
Requirements
III. Catalog of Federal Domestic Assistance
IV. Finding of No Significant Impact

I. Background

    The Disaster Relief Appropriations Act, 2013 (Pub. L. 113-2, 
approved January 29, 2013) (Appropriations Act) makes available 
$16,000,000,000 in Community Development Block Grant (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.) (Stafford 
Act), due to Hurricane Sandy and other eligible events in calendar 
years 2011, 2012, and 2013.
    On March 1, 2013, the President issued a sequestration order in 
accordance with section 251A of the Balanced Budget and Emergency 
Deficit Control Act. This provision of law and the order implementing 
sequestration reduces funding for disaster recovery grants from 
$15,980,000,000 to $15,181,000,000. The $10 million provided to CPD for 
administrative costs and the $10 million provided to the

[[Page 23579]]

Office of the Inspector General are also each reduced to $9.5 million.
    In a Federal Register Notice published March 5, 2013 (78 FR 14329), 
the Department allocated $5,400,000,000 after analyzing the impacts of 
Hurricane Sandy and identifying unmet needs. This Notice provides 
clarifying guidance, waivers, and alternative requirements to grantees 
in receipt of an allocation under the Appropriations Act.

II. Applicable Rules, Statutes, Waivers, and Alternative Requirements

    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 the use by the recipient of these funds 
(except for requirements related to fair housing, nondiscrimination, 
labor standards, and the environment). Waivers and alternative 
requirements are based upon a determination by the Secretary that good 
cause exists and that the waiver or alternative requirement is not 
inconsistent with the overall purposes of title I of the Housing and 
Community Development Act of 1974 (42 U.S.C. 5301 et seq.) (HCD Act). 
Regulatory waiver authority is also provided by 24 CFR 5.110, 91.600, 
and 570.5.
    This section provides additional waivers and alternative 
requirements to Hurricane Sandy grantees, and clarifies or modifies 
guidance provided at 78 FR 14329. For each waiver and alternative 
requirement described in this Notice, the Secretary has determined that 
good cause exists and the action is not inconsistent with the overall 
purpose of the HCD Act. Grantees may request additional waivers and 
alternative requirements from the Department as needed to address 
specific needs related to their recovery activities. Under the 
requirements of the Appropriations Act, regulatory waivers must be 
published in the Federal Register no later than five days before the 
effective date of such waiver.
    1. Action Plan for Disaster Recovery criterion for approval--
Elevation Requirements. Paragraph 1(a)(3) at 78 FR 14333 is hereby 
amended by deleting that paragraph and replacing it in its entirety 
with the following:
    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 take into account possible sea 
level rise; and (b) how it will coordinate with other local and 
regional planning efforts to ensure consistency.
    In addition, grantees must adopt and meet the following minimum 
requirements for approval: In order to better ensure a sustainable 
long-term recovery, grantees must elevate (or may, for certain non-
residential structures as described below, floodproof) new construction 
and substantially improved structures one foot higher than the latest 
Federal Emergency Management Agency (FEMA) issued base flood elevation. 
This standard and criterion for approval of an Action Plan was made 
after considering the history of FEMA flood mitigation efforts. This 
higher elevation also takes into account projected sea level rise, 
which is not considered in current FEMA maps and National Flood 
Insurance Program premiums, which will potentially rise as FEMA Flood 
Insurance Rate Maps that take Hurricane Sandy into account are issued.
    Each grantee must include in its Action Plan a description of how 
it will ensure compliance with the requirement that it will not use 
grant funds for any activity in an area delineated as a special flood 
hazard area or equivalent in FEMA's most recent and current data source 
unless it also ensures that the action is designed or modified to 
minimize harm to or within the floodplain. At a minimum, actions to 
minimize harm must include elevating or floodproofing new construction 
and substantial improvements to one foot above the base flood elevation 
and otherwise acting in accordance with Executive Order 11988 and 24 
CFR part 55. The relevant data source and best available data under 
Executive Order 11988 is the latest issued FEMA data or guidance, which 
includes advisory data (such as Advisory Base Flood Elevations) or 
preliminary and final Flood Insurance Rate Maps.
    Executive Order 11988 on floodplain management requires that 
federal agencies use the best available flood data to determine the 
location of projects and activities. In addition, best available flood 
risk data must be used to determine requirements for reconstruction, 
and the elevation of structures for grants funding (in whole or part) 
new construction and substantial-improvements as defined at 24 CFR 
55.2(b)(8). If a new construction or substantial improvement project or 
activity is located in a floodplain, the lowest floor must be designed 
using the base flood elevation, determined in accordance with the best 
available data, plus one foot as the baseline standard for elevation. 
If higher elevations are required by locally adopted code or standards, 
those higher standards would apply.
    Instead of elevating non-residential structures that are not 
critical actions as defined at 24 CFR 55.2(b)(2), grantees may design 
and construct the project such that below the flood level, the 
structure is floodproofed using the best available flood data plus one 
foot. Floodproofing requires structures to be water tight with walls 
substantially impermeable to the passage of water and with structural 
components having the capability of resisting hydrostatic loads, 
hydrodynamic loads, the effects of buoyancy or higher standards 
required by the FEMA National Flood Insurance Program as well as state 
and locally adopted codes. All mixed-use structures must be 
floodproofed consistent with the latest FEMA guidance.
    Each grantee that submitted an Action Plan prior to the publication 
of this Notice must amend its Plan to address this modified 
requirement. This revision will be treated as a non-substantial 
amendment and does not require a public comment period. Revised plans 
must be submitted to the Department within thirty (30) days of the 
effective date of this Notice.
    2. State of New York--counties eligible for CDBG-DR assistance. HUD 
is amending 78 FR 14330 to define ``most impacted and distressed 
counties'' to include counties that meet the revised threshold that 
will be used for non-Sandy allocations under Public Law 113-2. The new 
threshold identifies ``most impacted counties'' as counties with at 
least $10 million in damages. Of counties eligible for CDBG-DR 
assistance from the devastation of Hurricane Sandy, Westchester County, 
New York, meets this new threshold in addition to the ``most impacted 
counties'' already identified in FR 14330. As such, Table 2 at 78 FR 
14330 is amended to identify the following counties as the most 
impacted and distressed: Nassau, Suffolk, Rockland, and Westchester. In 
addition, to provide consistency among CDBG disaster recovery 
appropriations, HUD has determined that any county within the State of 
New York that received a Presidential declaration under FEMA-4020-DR 
(Hurricane Irene) or FEMA-4031-DR (Tropical Storm Lee) is eligible to 
receive assistance under the Appropriations Act. However, the State 
must expend at least 80 percent of its CDBG-DR allocation in its most 
impacted and distressed counties.
    3. Waiver to permit some activities in support of the tourism 
industry (State of New York only). The State of New York has requested 
a waiver to allow the State to use CDBG-DR funds to support

[[Page 23580]]

its $53.9 billion tourism industry and promote travel to communities in 
the disaster-impacted areas. Tourism in Sandy-impacted counties 
generates approximately $32.5 billion, $1.7 billion of which is created 
by disaster-affected businesses. In the surge area alone (nine of the 
14 impacted counties), Hurricane Sandy affected 32,282 businesses; the 
Long Island tourism industry lost approximately 6,000 jobs due to 
Sandy's impact. Without this waiver, the State estimates a $500 million 
loss in revenue.
    Tourism industry support, such as a national consumer awareness 
advertising campaign for an area in general, is ineligible for CDBG 
assistance. However, HUD understands that such support can be a useful 
recovery tool in a damaged regional economy that depends on tourism for 
many of its jobs and tax revenues and has granted similar waivers for 
several CDBG-DR disaster recovery efforts. As the State of New York is 
proposing advertising and marketing activities for this specific 
program, rather than direct assistance to tourism-dependent businesses, 
and because the measures of long-term benefit from the proposed 
activities must be derived using indirect means, 42 U.S.C. 5305(a) and 
24 CFR 570.489(f) are waived only to the extent necessary to make 
eligible use of no more than $30 million for assistance for the tourism 
industry. CDBG-DR funds may be used to promote a community or 
communities in general, provided the assisted activities are designed 
to support tourism to the most impacted and distressed areas related to 
the effects of Hurricane Sandy. This waiver will expire at the end of 
the State's two-year expenditure period.
    4. Tenant-based rental assistance (New York City only). The City of 
New York has found that low-income households were disproportionately 
impacted by Hurricane Sandy. Of the renters that registered for FEMA 
assistance, almost 65 percent had annual incomes less than $30,000. As 
of March 2013, nearly 1,200 households (almost 3,000 people) remain in 
hotels or interim facilities as a result of Hurricane Sandy, while an 
unknown number are living in unsafe conditions or ``doubled-up.''
    To assess the permanent housing needs of displaced persons and 
families, and to match those households with available housing units, 
the city's Department of Housing Preservation and Development (HPD) 
created a ``housing portal.'' To date, more than 1,600 households have 
registered for assistance; 84 percent of these have incomes at or below 
50 percent of the area median income. Meanwhile, HUD and FEMA are 
activating the Disaster Housing Assistance Program (DHAP), which could 
potentially address some households' need for rental assistance. 
However, DHAP is limited to one year, and the program requirements 
include evidence of sufficient financial assets to support a post-DHAP 
housing plan, which will exclude most extremely low-income households. 
Many of these households require a longer subsidy period so that they 
can develop a permanent housing plan. Thus, the Department is waiving 
42 U.S.C. 5305(a), to the extent necessary to make eligible rental 
assistance payments on behalf of low-income households (at or below 50 
percent of the area median income) displaced by Hurricane Sandy. 
Displaced households that have rejected public housing assistance, or 
declined a Section 8 voucher, will not be eligible. This waiver will 
expire at the end of the State's two year expenditure period.
    5. Program income alternative requirement. The following changes 
and additions are made to Paragraph 17 at 78 FR 14341. Paragraphs 
a.(1)(h) through (j) are replaced, paragraph a.(1)(k) is added, and 
paragraph (2) is replaced with the following:
    (h) Interest earned on funds held in a revolving fund account;
    (i) Interest earned on program income pending disposition of the 
income;
    (j) Funds collected through special assessments made against 
nonresidential properties and properties owned and occupied by 
households not of low and moderate income, if the special assessments 
are used to recover all or part of the CDBG-DR portion of a public 
improvement; and
    (k) Gross income paid to a unit of general local government or 
subgrantee of the unit of general local government from the ownership 
interest in a for-profit entity acquired in return for the provision of 
CDBG-DR assistance.
    (2) ``Program income'' does not include the following:
    (a) The total amount of funds, which does not exceed $35,000 
received in a single year from activities, other than revolving loan 
funds that is retained by a unit of general local government and its 
subgrantees (all funds received from revolving loan funds are 
considered program income, regardless of amount);
    (b) Amounts generated by activities eligible under section 
105(a)(15) of the Act and carried out by an entity under the authority 
of section 105(a)(15) of the Act;
    (c) Payments of principal and interest made by a subgrantee 
carrying out a CDBG-DR activity for a unit of general local government, 
toward a loan from the local government to the subgrantee, to the 
extent that program income received by the subgrantee is used for such 
payments;
    (d) The following classes of interest, which must be remitted to 
HUD for transmittal to the Department of the Treasury, and will not be 
reallocated under section 106(c) or (d) of the Act:
    (i) Interest income from loans or other forms of assistance 
provided with CDBG-DR funds that are used for activities determined by 
HUD to be not eligible under Sec.  570.482 or section 105(a) of the 
Act, to fail to meet a national objective in accordance with the 
requirements of Sec.  570.483, or to fail substantially to meet any 
other requirement of this subpart or the Act;
    (ii) Interest income from deposits of amounts reimbursed to a 
state's CDBG-DR program account prior to the state's disbursement of 
the reimbursed funds for eligible purposes; and
    (iii) Interest income received by units of general local government 
on deposits of grant funds before disbursement of the funds for 
activities, except that the unit of general local government may keep 
interest payments of up to $100 per year for administrative expenses 
otherwise permitted to be paid with CDBG-DR funds.
    (e) Proceeds from the sale of real property purchased or improved 
with CDBG-DR funds, if the proceeds are received more than 5 years 
after expiration of the grant agreement between the state and the unit 
of general local government.
* * * * *
    6. Assistance to businesses, including privately-owned utilities. 
Paragraph 1(d)(3) at 78 FR 14335 is hereby amended to be consistent 
with the alternative requirement as stated in paragraph 41 at 78 FR 
14347. While Paragraph 41 discussed both small businesses and private 
utilities, the paragraph at 1(d)(3) only discussed small busineses. 
Thus, grantees in receipt of an allocation under the Appropriations Act 
are subject to the following: when CDBG-DR funds are provided to for-
profit businesses, such funds may only be provided to a small business, 
as defined by the SBA under 13 CFR part 121. CDBG-DR funds may not be 
used to assist a privately-owned utility for any purpose.
    7. Modification of certification. Paragraph 42(n) at 78 FR 14348 is 
replaced with the following: The grantee will not use grant funds for 
any activity in an area delineated as a special flood hazard area or 
equivalent in FEMA's most recent and current data source unless it also 
ensures that the action is

[[Page 23581]]

designed or modified to minimize harm to or within the floodplain. The 
grantee further certifies that at a minimum, actions to minimize harm 
will include elevating or floodproofing new construction and 
substantial improvements to one foot above the base flood elevation and 
otherwise acting in accordance with Executive Order 11988 and 24 CFR 
part 55. The relevant data source for this provision is the latest 
issued FEMA data or guidance, which includes advisory data (such as 
Advisory Base Flood Elevations) or preliminary and final Flood 
Insurance Rate Maps.
    Grantees that have provided this certification in compliance with 
the previous Notice must resubmit the revised language to the 
Department within thirty (30) days of the effective date of this 
Notice.

III. Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number for the disaster 
recovery grants under this Notice are as follows: 14.269.

IV. 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 15, 2013.
Mark Johnston,
Deputy Assistant Secretary for Special Needs Programs.
[FR Doc. 2013-09228 Filed 4-18-13; 8:45 am]
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