[Federal Register Volume 78, Number 103 (Wednesday, May 29, 2013)]
[Notices]
[Pages 32262-32269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-12683]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5696-N-03]


Allocations, Waivers, and Alternative Requirements for Grantees 
Receiving Community Development Block Grant Disaster Recovery Funds in 
Response to Disasters Occurring in 2011 or 2012

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

ACTION: Notice.

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SUMMARY: This Notice advises the public of a $514,012,000 allocation 
for the purpose of assisting recovery in the most impacted and 
distressed areas declared a major disaster in 2011 or 2012. This is the 
second allocation of Community Development Block Grant disaster 
recovery (CDBG-DR) funds appropriated by the Disaster Relief 
Appropriations Act, 2013 (Pub. L. 113-2). The first allocation provided 
$5,400,000,000 to the areas most impacted by Hurricane Sandy. In HUD's 
Federal Register notice published on March 5, 2013, at 78 FR 14329, HUD 
described that allocation and its applicable waivers and alternative 
requirements, relevant statutory provisions, the grant award process, 
criteria for Action Plan approval, and eligible disaster recovery 
activities. Subsequently, HUD published a notice on April 19, 2013, at 
78 FR 23578, which provided additional waivers and alternative 
requirements to Hurricane Sandy grantees, and clarified or modified 
guidance provided in the March 5, 2013, notice. For grantees receiving 
an allocation under this Notice, published in today's Federal Register 
many of the requirements described in the prior notices will apply. 
Additionally, this Notice modifies an alternative requirement for 
grantees in receipt of an allocation under section 239 of the 
Department of Housing and Urban Development Appropriations Act, 2012 
(Pub. L. 112-55, approved November 18, 2011); allocations published in 
the Federal Register on April 16, 2012, at 77 FR 22583.

DATES: Effective Date: June 3, 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. Allocation
II. Use of Funds
III. Timely Expenditure of Funds, and Prevention of Fraud, Abuse, 
and Duplication of Benefits
IV. Overview of Grant Process
V. Applicable Rules, Statutes, Waivers, and Alternative Requirements
VI. Duration of Funding
VII. Catalog of Federal Domestic Assistance
VIII. Finding of No Significant Impact
    Appendix A: Allocation Methodology

I. Allocation

    The Disaster Relief Appropriations Act, 2013 (Pub. L. 113-2, 
approved January 29, 2013) (Appropriations Act) made 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 
pursuant to section 251A of the Balanced Budget and Emergency Deficit 
Control Act, as amended (2 U.S.C. 901a), and reduced funding for CDBG-
DR grants under the Appropriations Act to $15.18 billion. Through the 
March 5, 2013, Notice, HUD allocated $5.4 billion for the areas most 
impacted by Hurricane Sandy (see 78 FR 14329). Of the remaining $9.78 
billion, this Notice allocates $514,012,000 for the purpose of 
assisting recovery in the most impacted and distressed areas declared a 
major disaster in 2011 or 2012. As the Appropriations Act requires 
funds to be awarded directly to a State, or unit of general local 
government (hereinafter, local government), at the discretion of the 
Secretary, the term ``grantee'' refers to any jurisdiction receiving a 
direct award from HUD under this Notice.
    To comply with statutory direction that funds be used for disaster 
recovery-related expenses in the most impacted and distressed areas, 
HUD computes allocations based on the best available data that cover 
all of the eligible affected areas. Based on a review of the impacts 
from Presidentially-declared disasters that occurred in 2011 or 2012 
(excluding Hurricane Sandy), and estimates of remaining unmet need, 
this Notice, published in today's Federal Register, provides the 
following awards:

[[Page 32263]]



      Table 1--Allocations For Disasters Occurring in 2011 or 2012
------------------------------------------------------------------------
              State                     Grantee            Allocation
------------------------------------------------------------------------
Alabama.........................  State of Alabama...        $49,157,000
Alabama.........................     City of                  43,932,000
                                      Tuscaloosa.
Alabama.........................     City of                  17,497,000
                                      Birmingham.
Alabama.........................     Jefferson County          9,142,000
Louisiana.......................  State of Louisiana.         66,398,000
Louisiana.......................     Jefferson Parish         16,453,000
Louisiana.......................     City of New              15,031,000
                                      Orleans.
Louisiana.......................     St. Tammany               8,896,000
                                      Parish.
Massachusetts...................  Commonwealth of              7,210,000
                                   Massachusetts.
Massachusetts...................     City of                  21,896,000
                                      Springfield.
Missouri........................  State of Missouri..         11,844,000
Missouri........................     City of Joplin..        113,276,000
North Dakota....................  State of North               6,576,000
                                   Dakota.
North Dakota....................     City of Minot...         35,056,000
Pennsylvania....................  Commonwealth of             29,986,000
                                   Pennsylvania.
Pennsylvania....................     Luzerne County..          9,763,000
Pennsylvania....................     Dauphin County..          7,632,000
Tennessee.......................  State of Tennessee.         13,810,000
Tennessee.......................     Shelby County...          7,464,000
Texas...........................  State of Texas.....          5,061,000
Vermont.........................  State of Vermont...         17,932,000
                                 ---------------------------------------
    Total.......................  ...................        514,012,000
------------------------------------------------------------------------

    To ensure funds provided under this Notice address unmet needs 
within the ``most impacted and distressed'' counties or parishes, each 
local government receiving a direct award under this Notice must expend 
its entire CDBG-DR award within its jurisdiction (e.g., Shelby County 
must expend all funds within Shelby County; the City of Joplin must 
expend all funds in the portions of Jasper and Newton counties located 
within the city's jurisdiction). State grantees may expend funds in any 
county or parish that received a Presidential disaster declaration in 
2011 or 2012, but must expend a minimum amount in counties or parishes 
considered most impacted and distressed, as shown in Table 2:

                         Table 2--Counties and Parishes Eligible for CDBG-DR Assistance
----------------------------------------------------------------------------------------------------------------
                                                                                               Minimum amount to
                                                                                                 expend in most
                                                                        Most impacted and         impacted and
            State grantee                  FEMA  disaster  No.       distressed counties and       distressed
                                                                             parishes             counties and
                                                                                                    parishes
----------------------------------------------------------------------------------------------------------------
Alabama..............................  1971, 4052, 4082...........  Tuscaloosa, Jefferson,           $25,211,400
                                                                     Dekalb, Cullman,
                                                                     Franklin, Marion.
Louisiana............................  4015, 4041, 4080...........  St. John the Baptist,             45,042,400
                                                                     Plaquemines, Jefferson,
                                                                     Orleans, St. Tammany.
Massachusetts........................  1959, 1994, 4028, 4051,      Hampden..................          1,388,800
                                        4097.
Missouri.............................  1961, 1980, 4012...........  Jasper, Newton...........                  0
North Dakota.........................  1981, 1986.................  Ward.....................                  0
Pennsylvania.........................  4003, 4025, 4030...........  Luzerne, Bradford,                20,509,800
                                                                     Dauphin, Columbia,
                                                                     Newton.
Tennessee............................  1965, 1974, 1978, 1979,      Shelby...................          9,555,200
                                        4005, 4060.
Texas................................  1999, 4029.................  Bastrop..................          4,048,800
Vermont..............................  1995, 4001, 1022, 4043,      Windsor, Washington,              14,345,600
                                        4066.                        Windham.
----------------------------------------------------------------------------------------------------------------

    A detailed explanation of HUD's allocation methodology is provided 
at Appendix A. Grantees with additional questions regarding the 
counties and parishes identified as the most impacted and distressed 
should contact the HUD Community Development and Planning (CPD) 
Representative assigned to their grant.

II. Use of Funds

    The Appropriations Act requires funds to be used only for specific 
disaster recovery-related purposes. The Appropriations Act also 
requires that prior to the obligation of funds, a

[[Page 32264]]

grantee shall submit a plan detailing the proposed use of funds, 
including criteria for eligibility and how the use of these funds will 
address disaster relief, long-term recovery, restoration of 
infrastructure and housing and economic revitalization in the most 
impacted and distressed areas. Thus, in an Action Plan for Disaster 
Recovery, each grantee must describe uses and activities that: (1) Are 
authorized under title I of the Housing and Community Development Act 
of 1974 (42 U.S.C. 5301 et seq.) (HCD Act), or allowed by a waiver or 
alternative requirement published in an applicable Federal Register 
notice; and (2) respond to a disaster-related impact. To help meet 
these requirements, grantees must conduct an assessment of community 
impacts and unmet needs to guide the development and prioritization of 
planned recovery activities. Detailed information on the needs 
assessment, eligible CDBG-DR activities, and the development of an 
Action Plan is included in the March 5, 2013, notice. The subsequent 
noticepublished on April 19, 2013, clarifies and/or modifies 
information provided in the March 5, 2013, notice. For grantees 
receiving an allocation under this Notice, many of the requirements 
described in those prior notices will apply (see section V of this 
Notice: ``Applicable Rules, Statutes, Waivers, and Alternative 
Requirements''). Links to the prior notices, the text of the 
Appropriations Act, and additional guidance prepared by HUD for CDBG-DR 
grants, are available on HUD's Web site under the Office of Community 
Planning and Development, Disaster Recovery Assistance (hereinafter 
referred to as the CPD Disaster Recovery Web site): http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/communitydevelopment/programs/drsi.
    Each grantee receiving an allocation under this Notice must submit 
an initial Action Plan no later than 90 days after the effective date 
of this Notice. However, grantees are encouraged to submit their Action 
Plans as soon as possible. HUD will only approve Action Plans that meet 
the specific criteria identified in the March 5, 2013, notice, as 
modified by the April 19, 2013, notice (see section V of this Notice: 
``Applicable Rules, Statutes, Waivers, and Alternative Requirements'')
    Finally, as provided by the HCD Act, funds may be used as a 
matching requirement, share, or contribution for any other Federal 
program when used to carry out an eligible CDBG-DR activity. This 
includes programs or activities administered by the Federal Emergency 
Management Agency (FEMA) or the U.S. Army Corps of Engineers (USACE) 
(as provided at 42 U.S.C. 5305); however, the amount of CDBG-DR used as 
matching funds for USACE-funded projects may not exceed $250,000. In 
addition, per the Appropriations Act, CDBG-DR funds may not be used for 
expenses reimbursable by, or for which funds are made available by, 
either FEMA or USACE.

III. Timely Expenditure of Funds and Prevention of Waste, Fraud, Abuse, 
and Duplication of Benefits

    To ensure the timely expenditure of funds, section 904(c) under 
Title IX of the Appropriations Act requires that all funds be expended 
within two years of the date HUD obligates funds to a grantee (funds 
are obligated to a grantee upon HUD's signing of the grantee's CDBG-DR 
grant agreement). Action Plans must demonstrate how funds will be fully 
expended within two years of obligation. For any funds that the grantee 
believes will not be expended by the deadline and that it wishes to 
retain, it must submit a letter to HUD not less than 30 days in advance 
of the deadline justifying why it is necessary to extend the deadline 
for a specific portion of funds. The letter must detail the compelling 
legal, policy, or operational challenges for any such waiver, and must 
also identify the date by when the specified portion of funds will be 
expended. HUD will forward the request to the Office of Management and 
Budget (OMB) and publish any approved waivers in the Federal Register 
once granted. Waivers to extend the expenditure deadline may be granted 
by OMB in accordance with guidance to be issued by OMB, but grantees 
are cautioned that such waivers may not be approved. Funds remaining in 
the grantee's line of credit at the time of the 24-month expenditure 
deadline will be returned to the U.S. Treasury, or if before September 
30, 2017, will be recaptured by HUD. The Appropriations Act requires 
that HUD obligate all funds not later than September 30, 2017. Grantees 
must continue to meet the requirements for Federal cash management at 
24 CFR 85.20(a)(7).
    In addition to the above, the Appropriations Act requires the 
Secretary to certify, in advance of signing a grant agreement, that the 
grantee has in place proficient financial controls and procurement 
processes and has established adequate procedures to prevent any 
duplication of benefits as defined by section 312 of the Stafford Act, 
ensure timely expenditure of funds, maintain comprehensive Web sites 
regarding all disaster recovery activities assisted with these funds, 
and detect and prevent waste, fraud, and abuse of funds. HUD guidance 
to assist in preventing a duplication of benefits is provided in a 
notice published in the Federal Register on November 16, 2011, at 76 FR 
71060. To provide a basis for the Secretary to make the certification, 
each grantee must submit documentation to HUD demonstrating its 
compliance with the above requirements. Grantees must submit the 
required documentation listed in paragraph A.1.i. under section VI of 
the March 5, 2013, Notice. Additional information is available in 
section III of March 5, 2013, Notice and on HUD's CPD Disaster Recovery 
Web site (see ``Guide for Review of Financial Management'' and 
``Certification Checklist'').
    Additionally, grantees must submit to HUD a projection of 
expenditures and outcomes to ensure funds are expended in a timely 
manner, and to track proposed versus actual performance (guidance on 
the preparation of the projections is available on HUD's CPD Disaster 
Recovery Web site). Grantees are also required to ensure all contracts 
(with subrecipients, recipients, and contractors) clearly stipulate the 
period of performance or the date of completion. In addition, grantees 
must enter expected completion dates for each activity in HUD's 
Disaster Recovery Grant Reporting (DRGR) system. When target dates are 
not met, grantees are required to explain why in the activity 
narrative. Therefore, all grantees must comply with all reporting, 
procedural, and monitoring requirements described in section VI. A. 
Grant Administration, in the March 5, 2013, Notice. HUD will institute 
risk analysis and on-site monitoring of grantee management as well as 
collaborate with the HUD Office of Inspector General to plan and 
implement oversight of these funds.

IV. Overview of Grant Process

    To begin expenditure of CDBG-DR funds, the following expedited 
steps are necessary:
     Grantee adopts citizen participation plan for disaster 
recovery in accordance with the requirements of this Notice and the 
March 5, 2013, Notice;
     Grantee consults with stakeholders, including required 
consultation with affected, local governments and public housing 
authorities;
     Within 30 days of the effective date of this Notice (or 
when the grantee submits its Action Plan, whichever is sooner), grantee 
submits evidence that it has in place proficient financial controls and 
procurement processes and has established adequate procedures to

[[Page 32265]]

prevent any duplication of benefits as defined by section 312 of the 
Stafford Act, ensure timely expenditure of funds, maintain 
comprehensive Web sites regarding all disaster recovery activities 
assisted with these funds, and detect and prevent waste, fraud, and 
abuse of funds;
     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 effective date of this Notice;
     HUD expedites review of Action Plan (allotted 45 days from 
date of receipt; however, completion of review is anticipated much 
sooner) and approves the Plan according to criteria identified in the 
March 5, 2013, Notice;
     HUD sends an Action Plan approval letter, grant 
conditions, and signed grant agreement to the grantee. If the Action 
Plan is not approved, a letter will be sent identifying its 
deficiencies; the grantee must then re-submit the Action Plan within 45 
days of the notification letter;
     Grantee ensures that the HUD-approved Action Plan is 
posted on its official Web site;
     Grantee signs and returns the fully executed grant 
agreement;
     HUD establishes the proper amount in a line of credit for 
the grantee;
     Grantee requests and receives 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 within the system (funds can be drawn from the line of credit only 
for activities that are established in DRGR);
     The grantee may draw down funds from the line of credit 
after the Responsible Entity completes applicable environmental 
review(s) pursuant to 24 CFR part 58 and, as applicable, under the 
clarifying note in paragraph 20.a at 78 FR 14343, receives from HUD or 
the State an approved Request for Release of Funds and certification;
     Grantee begins to draw down funds within 60 days of 
receiving access to its line of credit;
     Grantee amends its published Action Plan to include its 
projection of expenditures and outcomes within 90 days of the Action 
Plan approval; and
     Grantee updates its full consolidated plan to reflect 
disaster-related needs no later than its Fiscal Year 2015 consolidated 
plan update.

V. 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 HCD Act. 
Regulatory waiver authority is also provided by 24 CFR 5.110, 91.600, 
and 570.5.
    This section describes the rules, statutes, waivers, and 
alternative requirements that apply to grantees receiving an allocation 
under this Notice. It also clarifies requirements and other information 
provided in the April 16, 2012, Notice --applicable to all CDBG-DR 
grantees in receipt of an allocation under section 239 of the 
Department of Housing and Urban Development Appropriations Act, 2012 
(Pub. L. 112-55, approved November 18, 2011). Grantees may request 
additional waivers and alternative requirements from HUD 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. Incorporation of waivers, alternative requirements, and 
statutory changes previously described. The waivers and alternative 
requirements provided in the March 5, 2013, Notice, as clarified or 
modified by the April 19, 2013, Notice apply to each grantee receiving 
an allocation of funds under this Notice, except as modified herein. 
These waivers and alternative requirements provide additional 
flexibility in program design and implementation to support full 
recovery following the disasters of 2011 and 2012, while also ensuring 
that statutory requirements unique to the Appropriations Act are met. 
The following clarifications or modifications apply to grantees in 
receipt of an allocation under this Notice:
    a. All submission deadlines regarding the Secretary's certification 
or the Action Plan, referenced in this Notice or previous notices, are 
triggered by the effective date of this Notice.
    b. Paragraph 1(a)(1) of the March 5, 2013, Notice, at 78 FR 14333 
is hereby amended by striking the contacts listed for other Federal 
agencies. Grantees seeking updated information about assistance 
provided by other Federal agencies or remaining unmet needs should 
contact their CPD Representative.
    c. Paragraph 1(a)(6) of the March 5, 2013, Notice, at 78 FR 14334 
is hereby amended by deleting that paragraph and replacing it in its 
entirety with the following: A description of how the grantee will 
identify and address (if needed) the rehabilitation (as defined at 24 
CFR 570.202), reconstruction, and replacement of the following types of 
housing affected by the disaster: Public housing (including 
administrative offices), HUD-assisted housing (defined at subparagraph 
(1) of the March 5, 2013, Notice, at 78 FR 14332), McKinney-Vento 
funded shelters and housing for the homeless--including emergency 
shelters and transitional and permanent housing for the homeless, and 
private market units receiving project-based assistance or with tenants 
that participate in the Section 8 Housing Choice Voucher Program. As 
part of this requirement, each grantee must work with any impacted 
Public Housing Authority (PHA), located within its jurisdiction, to 
identify the unmet needs of damaged public housing. If unmet needs 
exist once funding under this Notice becomes available to the grantee, 
the grantee must work directly with the impacted PHA(s) to identify 
necessary costs, and ensure adequate funding is dedicated to the 
recovery of the damaged public housing. Grantees are reminded that 
public housing is eligible for FEMA Public Assistance; thus, they must 
ensure that there is no duplication of benefits when using CDBG-DR 
funds to assist public housing.
    d. Paragraph 1(l) of the March 5, 2013, Notice, at 78 FR 14337 is 
hereby amended by adding the following to the existing language: 
Grantees that have previously projected expenditures and outcomes, in a 
format consistent with prior guidance issued by HUD, may use and update 
those projections with HUD approval. HUD will work with the grantee to 
determine the most efficient way of submitting these projections while 
still ensuring transparency. Revised projections must still be 
incorporated into the published Action Plan within 90 days of the 
Action Plan approval.
    e. Any waiver or alternative requirement (described in the March 5, 
2013, or April 19, 2013, Notices) that is restricted to one or more 
grantees cited by the waiver or alternative

[[Page 32266]]

requirement, is only applicable to the cited grantee(s).
    2. Acquisition of real property and flood buyouts. To ensure 
consistency between allocations of CDBG-DR funds, and to give grantees 
greater flexibility to respond to disaster recovery needs, paragraph 27 
of the April 16, 2012, Notice, at 77 FR 22594 is hereby amended by 
deleting that paragraph and replacing it in its entirety with the 
following:
    ``27. Acquisition of real property and flood buyouts. Grantees 
under this notice are able to carry out 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.
    a. Buyout requirements:
    (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 (e.g., a 
park, campground, or outdoor recreation area); (b) a rest room; (c) a 
flood control structure that the local floodplain manager approves in 
writing before the commencement of the construction of the structure;
    (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 in perpetuity;
    (4) Grantees have the discretion to determine an appropriate 
valuation method (including the use of pre-flood value or post-flood 
value as a basis for property value). However, in using CDBG-DR funds 
for buyouts, the grantee must uniformly apply whichever valuation 
method it chooses;
    (5) All buyout activities must be classified using the ``buyout'' 
activity type in the DRGR system; and
    (6) Any State grantee implementing a buyout program or activity 
must consult with affected UGLGs.
    b. Redevelopment of acquired properties.
    (1) Properties purchased through a buyout program may not typically 
be redeveloped, with a few exceptions. See subparagraph a(2), above.
    (2) Grantees may redevelop an acquired property if: (a) the 
property is not acquired through a buyout program, and (b) the purchase 
price is based on the property's post-flood fair market value (the pre-
flood value may not be used). In addition to the purchase price, 
grantees may opt to provide relocation assistance to the owner of a 
property that will be redeveloped if the property is purchased by the 
grantee or subgrantee through voluntary acquisition, and the owner's 
need for additional assistance is documented.
    (3) In carrying out acquisition activities, grantees must ensure 
they are in compliance with their long-term redevelopment plans.''
    c. The language in this paragraph that replaces language in the 
April 16, 2012, Notice at 77 FR 22594 applies to buyout acquisitions 
contracted after the effective date of this Notice.

VI. Duration of Funding

    The Appropriations Act requires that HUD obligate all funds 
provided under Chapter 9, Community Development Fund, not later than 
September 30, 2017. Concurrently, section 904(c) of the Appropriations 
Act requires that all funds be expended within two years of the date 
HUD obligates funds. Therefore, each grantee must expend all funds 
within two years of the date HUD signs the grant agreement with the 
grantee. Note that if a grantee amends its Action Plan to program 
additional funds that HUD has allocated to it, the grant agreement must 
also be revised. The requirement for each grantee to expend funds 
within two years is triggered by each amendment to the grant agreement. 
That is, each grant amendment has its own expenditure deadline. 
Pursuant to section 904(c) of the Appropriations Act, grantees or HUD 
may request waivers of the two-year expenditure deadline from the 
Office of Management and Budget. For any funds that the grantee 
believes will not be expended by the deadline and that it desires to 
retain, it must submit a letter to HUD not less than 30 days in advance 
of the deadline justifying why it is necessary to extend the deadline 
for a specific portion of funds. The letter must detail the compelling 
legal, policy, or operational challenges for any such waiver, and must 
also identify the date by when the specified portion of funds will be 
expended. Funds remaining in the grantee's line of credit at the time 
of this expenditure deadline will be returned to the U.S. Treasury.

VII. Catalog of Federal Domestic Assistance

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

VIII. 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: May 22, 2013.
Mark Johnston,
Deputy Assistant Secretary for Special Needs Programs.

Appendix A--Allocation Methodology

Pub.lic Law 113-2 states:
    For an additional amount for ``Community Development Fund'', 
$16,000,000,000, to remain available until September 30, 2017, 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 (42 U.S.C. 5121 et 
seq.) due to Hurricane Sandy and other eligible events in calendar 
years 2011, 2012, and 2013, for activities authorized under title I 
of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 
et seq.):
    Provided, That funds shall be awarded directly to the State or 
unit of general local government as a grantee at the discretion of 
the Secretary of Housing and Urban Development:
    Provided further, That the Secretary shall allocate to grantees 
not less than 33 percent of the funds provided under this heading 
within 60 days after the enactment of this division based on the 
best available data:
    Provided further, That prior to the obligation of funds, a 
grantee shall submit a plan to the Secretary for approval detailing

[[Page 32267]]

the proposed use of all funds, including criteria for eligibility 
and how the use of these funds will address long-term recovery and 
restoration of infrastructure and housing and economic 
revitalization in the most impacted and distressed areas:
    The legislation specifies that the CDBG-DR funds are to be used 
``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'' and further specifies that the funds are not 
to be used for activities reimbursable by or for which funds are 
made available by FEMA or the Corps of Engineers.
    The language also calls for HUD to use ``best available'' data 
to make its allocation. For this allocation, similar to prior 
allocations, HUD made a determination of unmet needs by estimating 
unmet needs related to the main intended uses of the funds:

 ``restoration of . . . housing''. HUD made an estimate with 
best available data on the amount of housing damage not likely to be 
covered by insurance, SBA disaster loans, or FEMA housing 
assistance. To target the ``most impacted and distressed areas'', 
the calculation limits the need calculation only to homes with high 
levels of individual damage (see below) in counties and parishes 
with severe housing and business needs of $10 million or greater.
 ``economic revitalization''. HUD made an estimate with best 
available data on the amount of damage to businesses declined for an 
SBA loan, usually because of inadequate credit or income to support 
the needed loan amount.
 ``restoration of infrastructure''. HUD calculated 
infrastructure need as the match required to address the FEMA 
estimates for repair of permanent infrastructure in the FEMA Public 
Assistance program (categories C to G).
 ``in the most impacted and distressed areas''. To target 
the funds to the most impacted and distressed areas, HUD limited its 
calculation to ``severe needs in areas of concentrated damage'':
    [cir] Severe Needs: Only homes and businesses categorized as 
severe or major-high damage were included in the calculation (see 
below).
    [cir] Concentration: Only counties and parishes with greater 
than $10 million in severe housing and business needs were included 
for the calculation. The $10 million threshold was established 
looking at a ``natural break'' in the distribution of impacted 
counties or parishes when ordered form most to least severe needs. 
Note, if a county or parish had been designated as ``most impacted'' 
in the 2012 allocation, it is included even if the adjusted 
methodology calculated a lower amount with the new data.
    [cir] Overall size of the need: Again using the concept of a 
natural break, HUD established an aggregate of $25 million or more 
of severe unmet housing, business, and infrastructure needs in 
counties and parishes with over $10 million in severe housing and 
business needs to be eligible to receive a grant.

Methodology for Calculating Unmet Needs

Available Data

    The ``best available'' data HUD staff identified as being 
available to calculate unmet needs at this time for the targeted 
disasters come from the following data sources:

 FEMA Individual Assistance program data on housing unit 
damage;
 SBA for management of its disaster assistance loan program 
for housing repair and replacement;
 SBA for management of its disaster assistance loan program 
for business real estate repair and replacement as well as content 
loss; and
 FEMA Public Assistance program data on public 
infrastructure damage;

Calculating Unmet Housing Needs

    The core data on housing damage for both the unmet housing needs 
calculation and the concentrated damage 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 calculated 
``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, where:

 Each of the FEMA inspected owner units were categorized by 
HUD into one of five categories:
[cir] Minor-Low: Less than $3,000 of FEMA inspected real property 
damage
[cir] Minor-High: $3,000 to $7,999 of FEMA inspected real property 
damage
[cir] Major-Low: $8,000 to $14,999 of FEMA inspected real property 
damage
[cir] Major-High: $15,000 to $28,800 of FEMA inspected real property 
damage and/or 4 to 6 feet of flooding on the first floor.
[cir] Severe: Greater than $28,800 of FEMA inspected real property 
damage or determined destroyed and/or 6 or more feet of flooding on 
the first floor.
    To ensure funds are used in ``most impacted'' areas as required 
by statute, homes were included in the calculation if they were 
categorized as having sustained ``major-high'' or ``severe'' damage. 
That is, they have a real property FEMA inspected damage of $15,000 
or flooding over 4 foot. Furthermore, for purposes of this 
calculation, a homeowner is assumed to have unmet needs if they have 
received a FEMA grant to make home repairs. For homeowners with a 
FEMA grant and insurance for the covered event, HUD assumed an unmet 
need ``gap'' of 20 percent of the difference between total damage 
and the FEMA grant.

 FEMA does not inspect rental units for real property damage 
so personal property damage was used as a proxy for unit damage. 
Each of the FEMA inspected renter units were categorized by HUD into 
one of five categories:
    [cir] Minor-Low: Less than $1,000 of FEMA inspected personal 
property damage
    [cir] Minor-High: $1,000 to $1,999 of FEMA inspected personal 
property damage
    [cir] Major-Low: $2,000 to $3,499 of FEMA inspected personal 
property damage
    [cir] Major-High: $3,500 to $7,499 of FEMA inspected personal 
property damage or 4 to 6 feet of flooding on the first floor.
    [cir] Severe: Greater than $7,500 of FEMA inspected personal 
property damage or determined destroyed and/or 6 or more feet of 
flooding on the first floor.
    For rental properties, to ensure funds are allocated to ``most 
impacted'' areas as required by statute, homes were included in the 
calculation if they were categorized as having sustained ``major-
high'' or ``severe'' damage. That is, they received a FEMA personal 
property damage assessment of $3,400 or greater or flooding over 4 
feet. Furthermore, landlords were presumed to have adequate 
insurance coverage unless the unit was occupied by a renter with 
income of $30,000 or less. Units occupied by a tenant with income 
less than $30,000 were used to calculate likely unmet needs for 
affordable rental housing. For those units occupied by tenants with 
incomes under $30,000, HUD estimated unmet needs as 75 percent of 
the estimated repair cost.
     The average cost to fully repair a home for a specific 
disaster within each of the damage categories noted above is 
calculated using the average real property damage repair costs 
determined by the Small Business Administration for its disaster 
loan program for the subset of homes inspected by both SBA and FEMA. 
Because SBA inspects for full repair costs, HUD presumed that SBA 
assessments reflect the full cost to repair the home. SBA estimates 
generally exceed the FEMA estimates of the cost to make the home 
habitable. If fewer than 100 SBA inspections were made for homes 
within a FEMA damage category, HUD applied a cap to the estimated 
damage amount in the category for that disaster at the 75th 
percentile of all damaged units for that category for all disasters 
and applied a floor at the 25th percentile.

Calculating Unmet Infrastructure Needs

     To best proxy unmet infrastructure needs, HUD used data 
from FEMA's Public Assistance program on the state match requirement 
(usually 25 percent of the estimated public assistance needs). This 
allocation methodology used 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 at the county or parish level), estimates of 
unmet infrastructure needs were sub-allocated to counties, parishes, 
and local jurisdictions based on each jurisdiction's proportion of 
unmet housing and business needs.

[[Page 32268]]

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 was adjusted upward by the 
proportion of applications that were received for a disaster for 
which SBA did not calculate content and real property loss 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 a 
likely indication of applicants requiring the type of assistance 
available with CDBG recovery funds, the calculated unmet business 
needs for each state were 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 was used to determine what unmet needs 
would be used to identify most impacted areas. Only properties with 
total real estate and content loss in excess of $65,000 are 
categorized as having sustained severe damage and counted for 
purposes of identifying the most impacted areas.
    [cir] Category 1: real estate + content loss = below 12,000
    [cir] Category 2: real estate + content loss = 12,000-30,000
    [cir] Category 3: real estate + content loss = 30,000-65,000
    [cir] Category 4: real estate + content loss = 65,000-150,000
    [cir] 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 or parish level, HUD 
estimates the distribution of needs to local entitlement 
jurisdictions based on the distribution of all unmet housing needs.

Methodology for Determining the Amount a Grantee Must Expend in Most 
Impacted and Distressed Counties or Parishes

    In total, 80 percent of the funds allocated in to state must be 
expended in the most impacted counties or parishes. In states where 
there are direct grantees, HUD requires the direct grantee to spend 
100 percent of their funds in the most impacted county or parish, 
thus reducing the share of funds the state needs to expend in the 
most impacted county or parish. For example, because of the large 
grant to Joplin, there is no minimum requirement for the State of 
Missouri. In contrast, Vermont which has no direct grantees, must 
spend 80 percent of its funds in the most impacted counties of 
Windsor, Washington, and Windham. See the below table for further 
explanation:

----------------------------------------------------------------------------------------------------------------
                                                                                                Percent spent in
                                                                               80% of Total      most impacted
                                                                             state allocation    county(ies) or
                                                                                                   parish(es)
----------------------------------------------------------------------------------------------------------------
MO...........................  Direct Grantees.........        113,276,000  .................                100
                               State Grant.............         11,844,000  .................                  0
                                                        --------------------------------------------------------
    Total....................  ........................        125,120,000        100,096,000  .................
----------------------------------------------------------------------------------------------------------------
AL...........................  Direct Grantees.........         70,571,000  .................                100
                               State Grant.............         49,157,000  .................                 51
                                                        --------------------------------------------------------
    Total....................  ........................        119,728,000         95,782,400  .................
----------------------------------------------------------------------------------------------------------------
ND...........................  Direct Grantees.........         35,056,000  .................                100
                               State Grant.............          6,576,000  .................                  0
                                                        --------------------------------------------------------
    Total....................  ........................         41,632,000         33,305,600  .................
----------------------------------------------------------------------------------------------------------------
LA...........................  Direct Grantees.........         40,380,000  .................                100
                               State Grant.............         66,398,000  .................                 68
                                                        --------------------------------------------------------
    Total....................  ........................        106,778,000         85,422,400  .................
----------------------------------------------------------------------------------------------------------------
PA...........................  Direct Grantees.........         17,395,000  .................                100
                               State Grant.............         29,986,000  .................                 68
                                                        --------------------------------------------------------
    Total....................  ........................         47,381,000         37,904,800  .................
----------------------------------------------------------------------------------------------------------------
TX...........................  Direct Grantees.........  .................  .................                100
                               State Grant.............          5,061,000  .................                 80
                                                        --------------------------------------------------------
    Total....................  ........................          5,061,000          4,048,800  .................
----------------------------------------------------------------------------------------------------------------
TN...........................  Direct Grantees.........          7,464,000  .................                100
                               State Grant.............         13,810,000  .................                 69
                                                        --------------------------------------------------------
    Total....................  ........................         21,274,000         17,019,200  .................
----------------------------------------------------------------------------------------------------------------
MA...........................  Direct Grantees.........         21,896,000  .................                100
                               State Grant.............          7,210,000  .................                 19
                                                        --------------------------------------------------------
    Total....................  ........................         29,106,000         23,284,800  .................
----------------------------------------------------------------------------------------------------------------
VT...........................  Direct Grantees.........  .................  .................                100
                               State Grant.............         17,932,000  .................                 80
                                                        --------------------------------------------------------
    Total....................  ........................         17,932,000         14,345,600  .................
----------------------------------------------------------------------------------------------------------------


[[Page 32269]]

[FR Doc. 2013-12683 Filed 5-28-13; 8:45 am]
BILLING CODE 4210-67-P