[Federal Register Volume 78, Number 241 (Monday, December 16, 2013)]
[Notices]
[Pages 76154-76160]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-29834]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5696-N-07]


Allocations, Waivers, and Alternative Requirements for Grantees 
Receiving Community Development Block Grant Disaster Recovery Funds in 
Response to Disasters Occurring in 2013

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 $128,500,000 allocation 
for the purpose of assisting recovery in the most impacted and 
distressed areas in Colorado, Illinois and Oklahoma declared a major 
disaster in 2013. This is the fourth allocation of Community 
Development Block Grant disaster recovery (CDBG-DR) funds under the 
Disaster Relief Appropriations Act, 2013 (Pub. L. 113-2). Prior 
allocations addressed the areas most impacted by Hurricane Sandy, as 
well as the areas most impacted by disasters occurring in 2011 or 2012. 
In Federal Register Notices, the Department has described those 
allocations, relevant statutory provisions, the grant award process, 
criteria for Action Plan approval, eligible disaster recovery 
activities, and applicable waivers and alternative requirements. This 
Notice builds upon the requirements of the Federal Register Notices 
published by the Department on March 5, 2013 (78 FR 14329), April 19, 
2013 (78 FR 23578) and August 2, 2013 (78 FR 46999), referred to 
collectively in this Notice as the ``Prior Notices.'' The Prior Notices 
are available at: http://www.gpo.gov/fdsys/pkg/FR-2013-03-05/pdf/2013-05170.pdf http://www.gpo.gov/fdsys/pkg/FR-2013-04-19/pdf/2013-09228.pdf 
http://www.gpo.gov/fdsys/pkg/FR-2013-08-02/pdf/2013-18643.pdf.
    For grantees receiving an allocation under this Notice, many of the 
requirements described in the Prior Notices will apply, with some minor 
modifications.

DATES: Effective Date: December 23, 2013.

FOR FURTHER INFORMATION CONTACT: Stan Gimont, Director, 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. 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 
billion in Community Development Block Grant (CDBG) funds for necessary 
expenses related to disaster relief, long-term

[[Page 76155]]

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. A total of 
$10.5 billion has been allocated for the areas most impacted by 
Hurricane Sandy. This Notice advises the public of a $128,500,000 
allocation for the purpose of assisting recovery in the most impacted 
and distressed areas in Colorado, Illinois and Oklahoma declared a 
major disaster in 2013. 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 have occurred in 2013, and 
estimates of remaining unmet need, this Notice provides the following 
awards:

          Table 1--Allocations For Disasters Occurring in 2013
------------------------------------------------------------------------
              State                      Grantee           Allocation
------------------------------------------------------------------------
Colorado........................  State of Colorado...       $62,800,000
Illinois........................  State of Illinois...         3,600,000
Illinois........................  City of Chicago.....         4,300,000
Illinois........................  Cook County.........        13,900,000
Illinois........................  Du Page County......         7,000,000
Oklahoma........................  State of Oklahoma...        10,600,000
Oklahoma........................  City of Moore.......        26,300,000
                                                       -----------------
    Total.......................  ....................       128,500,000
------------------------------------------------------------------------

    As outlined in Table 2, to ensure that funds provided under this 
Notice address unmet needs within the ``most impacted and distressed'' 
counties, each local government receiving a direct award under this 
Notice must expend its entire CDBG-DR award within its jurisdiction 
(e.g., Cook County must expend its entire award within Cook County, 
excluding the city of Chicago; the city of Chicago must expend all 
funds in the city of Chicago including the portions of Cook and DuPage 
counties located within the city's jurisdiction). The State of Oklahoma 
may expend funds in any county that was declared a major disaster in 
2013, but must spend at least $3,220,000 within Cleveland County. The 
State of Illinois may expend funds in any county that was declared a 
major disaster in 2013. The State of Colorado must expend at least 80% 
of its funds in the most impacted counties of Boulder, Weld and Larimer 
but may expend up to $12,560,000 in other counties having a declared 
major disaster in 2013. A detailed explanation of HUD's allocation 
methodology is provided at Appendix A.

TABLE 2--Most Impacted and Distressed Counties Within Which Funds May be
                                Expended
------------------------------------------------------------------------
                                                            Minimum
                                                        percentage that
                                  Most impacted and     must be expended
            Grantee              distressed counties    in most impacted
                                                         and distressed
                                                            counties
------------------------------------------------------------------------
State of Colorado.............  Boulder, Weld and                   80
                                 Larimer.
State of Illinois.............  Cook and DuPage......                0
City of Chicago...............  City of Chicago and                100
                                 the portions of the
                                 City of Chicago in
                                 Cook and DuPage.
Cook County...................  Cook County..........              100
DuPage County.................  DuPage...............              100
State of Oklahoma.............  Cleveland............               30.4
City of Moore.................  City of Moore and the              100
                                 portions of the City
                                 of Moore in
                                 Cleveland.
------------------------------------------------------------------------

II. Use of Funds

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

[[Page 76156]]

included in the Prior Notices. For grantees receiving an allocation 
under this Notice, the requirements described in the Prior Notices will 
apply, except as modified by this Notice (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 the Department 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 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'').
    CDBG-DR 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). 
Note, the amount of CDBG-DR as matching funds for USACE-funded projects 
may not exceed $250,000. However, the Appropriations Act prohibits 
CDBG-DR funds being 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

    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. HUD must obligate all funds not later than September 30, 
2017. For any funds that the grantee believes will not be expended by 
the deadline and that it desires to retain, the grantee must submit a 
letter to HUD not less than 30 days in advance 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. The Office of 
Management and Budget has provided HUD with authority to act on grantee 
waiver requests but grantees are cautioned that such waivers may not be 
approved. Approved waivers will be published in the Federal Register. 
Funds remaining in the grantee's line of credit at the time of its 
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 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. Departmental guidance to 
assist in preventing a duplication of benefits is provided in a notice 
published in the Federal Register on November 16, 2011 (76 FR 71060). 
The Department has also issued guidance that addresses the duplication 
of benefits and disaster recovery assistance provided by the U.S. Small 
Business Administration. That guidance is available at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/communitydevelopment/programs/dri. To provide a basis for the Secretary 
to make the certification, each grantee must submit documentation to 
the Department 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 the March 5, 
2013, Notice and on HUD's CPD Disaster Recovery Web site (see ``Guide 
for Review of Financial Management'' and ``Certification Checklist'').
    All grantees must comply with the reporting, procedural, and 
monitoring requirements described in section VI. A. Grant 
Administration, in the March 5, 2013, Notice. HUD requires grantees to 
submit 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. Finally, 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. 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 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 
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 unsigned 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

[[Page 76157]]

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 signs the grant agreement and 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 in the March 5, 2013, Notice, 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 
obligation (funds are obligated when HUD signs the grant agreement);
     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. Grantees may request additional waivers and 
alternative requirements from the Department as needed to address 
specific needs related to their recovery activities. The Appropriations 
Act requires that regulatory waivers 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 2013, 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 VI.A.1.a.(1) of the March 5, 2013, Notice is hereby 
amended by striking the contacts listed for other Federal agencies at 
78 FR 14333. Grantees seeking updated information about assistance 
provided by other Federal agencies or remaining unmet needs should 
contact their CPD Representative.
    c. Paragraph VI.A.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 VI.A.1.(j) of the March 5, 2013, Notice, at 78 FR 
14337, is hereby amended. The disbursement of grant funds must begin 
within 60 days after funds have been obligated. Funds are obligated the 
day HUD signs the grant agreement.
    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 requirement, is only 
applicable to the cited grantee(s).
    2. Modifications to the notice published May 29, 2013 (78 FR 
32262)--for grantees in receipt of CDBG-DR funds for disasters that 
occurred in 2011 or 2012.
    a. In regards to Table 2--Counties and Parishes Eligible for CDBG-
DR Assistance, Wyoming County is added as a most impacted and 
distressed county within the Commonwealth of Pennsylvania. The 
reference to Newton County is deleted.
    b. In regards to Table 1--Allocations for Disasters Occurring in 
2011 or 2012, the State of Louisiana's grant is reduced to $64,379,084, 
while the award to St. Tammany Parish is increased to $10,914,916. As a 
result, Table 2--Counties and Parishes Eligible for CDBG-DR Assistance, 
is modified to require the State to spend a minimum of $43,023,484 in 
the parishes determined to be the most impacted and distressed.

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

[[Page 76158]]

meaning that each grant amendment has its own expenditure deadline.

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: December 9, 2013.
 Mark Johnston,
Deputy Assistant Secretary for Special Needs Programs.

Appendix A--Allocation Methodology

Background

Public Law 113-2 states:

    For an additional amount . . . 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 
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 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 (see below for more details).
     ``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 (see below for more details).
     ``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 (see below for more details).
     ``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 for 
more details).
[cir] Concentration: Only counties and parishes with greater than 
$10 million in severe housing and business needs were included for 
the calculation.

    HUD's calculates the CDBG-DR grants in this Notice by summing an 
estimate of severe unmet needs in the most impacted and distressed 
communities using ``best available data''. The final allocation is 
equal to 70% of the grantee's total estimate of severe ``unmet 
needs,'' a proportion similar to other grantees funded through PL 
113-2.

Methodology for Calculating Unmet Needs

Available Data

    The ``best available'' data HUD staff have 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;
     FEMA Public Assistance data and preliminary 
infrastructure assessments for Oklahoma by HUD staff.

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 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, where:
     Each of the FEMA-inspected owner units are 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.
[cir] Note, if a FEMA-inspected unit only had basement flooding and 
$15,000 or more of FEMA-inspected real property damage, the unit is 
categorized as Major-Low damage

    To meet the statutory requirement of ``most impacted'' in this 
legislative language, homes are determined to have a high level of 
damage if they have damage of ``major-high'' or ''severe''. That is, 
the homeowner has real property FEMA-inspected damage of $15,000 or 
flooding over 4 feet. Furthermore, a homeowner is determined to have 
unmet needs if s/he has received a FEMA grant to make home repairs. 
For homeowners with a FEMA grant and insurance for the covered 
event, HUD assumes that the unmet need ``gap'' is 20 percent of the 
difference between total damage and the FEMA grant.
    Since data for the Colorado disaster was preliminary at the time 
of this allocation, assumptions are made about the likely percent of 
damage not covered by insurance for homeowners with pending FEMA 
applications. This is assumed to increase by severity of damage to 
the home. The assumptions applied to ascertain the range of 
allocations were 50 percent for homes with major-high damage; and 70 
percent for homes with severe damage in Colorado.
     FEMA does not inspect rental units for real property 
damage so personal property damage is used as a proxy for unit 
damage. Each of the FEMA-inspected renter units are 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 (if basement flooding only, damage categorization is 
capped at major-low)
[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.

[[Page 76159]]

[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.
[cir] Note, if a FEMA-inspected unit only had basement flooding and 
$3,500 or more of FEMA-inspected personal property damage, the unit 
is categorized as Major-Low damage.

    For rental properties, to meet the statutory requirement of 
``most impacted'' in this legislative language, homes are determined 
to have a high level of damage if they have damage of ``major-high'' 
or ``severe''. That is, they have a FEMA personal property damage 
assessment of $3,500 or greater or flooding over 4 feet. 
Furthermore, landlords are presumed to have adequate insurance 
coverage unless the unit is occupied by a renter with income of 
$30,000 or less. Units that are occupied by a tenant with income 
less than $30,000 are used to calculate likely unmet needs for 
affordable rental housing. For those units occupied by tenants with 
incomes under $30,000, HUD estimates unmet needs as 75 percent of 
the estimated repair cost.
     The average cost to fully repair a home for a specific 
disaster to code 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 is inspecting for full repair costs up to what is 
required in existing local building codes, it is presumed to reflect 
the full cost to repair the home, which is generally more than the 
FEMA estimates on the cost to make the home habitable. Note that SBA 
estimates do not cover resiliency costs above and beyond what is 
required in existing local building codes. If fewer than 100 SBA 
inspections are made for homes within a FEMA damage category, the 
estimated damage amount 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 has a floor applied at the 25th 
percentile.

Calculating Unmet 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 at the county level), estimates of 
unmet infrastructure needs were sub-allocated to counties and local 
jurisdictions based on each jurisdiction's proportion of unmet 
housing and business needs.
     At the time of this allocation, data from the FEMA 
Public Assistance program were not yet available for Oklahoma. 
Therefore, this allocation relies on early HUD field staff estimates 
for total damages to infrastructure, equipment, parks, and public 
buildings. We then assume insurance coverage of 60% (roughly the 
same coverage as seen in FEMA assisted owner-occupants in this 
disaster) and a state match requirement of 25% from the FEMA Public 
Assistance program.

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. 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 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.
     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.

[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

     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 unmet housing 
needs, when necessary.
     Since data for the Colorado disaster was preliminary at 
the time of this allocation, HUD deflates the estimate of unmet 
business needs by 15% to account for expected SBA denial rates.

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

    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 $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. Oklahoma must spend a minimum of 
$3,220,000 within Cleveland County to ensure 80 percent of the 
combined total of all the funds awarded within the state is spent in 
the ``most impacted'' county. The State of Colorado must spend a 
minimum of $50,240,000 within Boulder, Weld, and Larimer Counties to 
meet this requirement. Because of the large grant to entitlement 
communities in Illinois relative to the State grant, there is no 
minimum requirement for the State of Illinois.
    The principle behind the 80 percent rule is that each State 
received its 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 2013. See the below table for 
further explanation:

----------------------------------------------------------------------------------------------------------------
                                                                                     Minimum %       Minimum $
                                       Direct/state grantee           CDBG-DR      spent in most   spent in most
             State                         designation              Allocation       impacted        impacted
                                                                                    county(ies)     county(ies)
----------------------------------------------------------------------------------------------------------------
CO.............................  State Grant....................      62,800,000              80     $50,240,000
                                                                 -----------------------------------------------
                                    Total.......................      62,800,000  ..............      50,240,000
----------------------------------------------------------------------------------------------------------------
IL.............................  Direct Grantees................      25,200,000             100      25,200,000

[[Page 76160]]

 
                                 State Grant....................       3,600,000               0               0
                                                                 -----------------------------------------------
                                    Total.......................      28,800,000  ..............      25,200,000
----------------------------------------------------------------------------------------------------------------
OK.............................  Direct Grantees................      26,300,000             100      26,300,000
                                 State Grant....................      10,600,000            30.4       3,220,000
                                                                 -----------------------------------------------
                                    Total.......................      36,900,000  ..............      29,520,000
----------------------------------------------------------------------------------------------------------------

[FR Doc. 2013-29834 Filed 12-13-13; 8:45 am]
BILLING CODE 4210-67-P