[Federal Register Volume 79, Number 106 (Tuesday, June 3, 2014)]
[Notices]
[Pages 31964-31973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-12709]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5696-N-09]


Second Allocation, Waivers, and Alternative Requirements for 
Grantees Receiving Community Development Block Grant (CDBG) 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 second allocation for the 
purpose of assisting recovery in the most impacted and distressed areas 
identified in major disaster declarations in calendar year 2013. This 
is the fifth allocation of Community Development Block Grant disaster 
recovery (CDBG-DR) funds under the Disaster Relief Appropriations Act, 
2013 (Pub. L. 113-2). In addition to an initial allocation for 
disasters occurring in 2013, 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 prior Federal Register Notices, 
the Department described the 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 
those notices.

DATES: Effective Date: June 9, 2014.

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, and Prevention of Fraud, Abuse, and 
Duplication of Benefits
IV. Grant Amendment Process
V. Applicable Rules, Statutes, Waivers, and Alternative Requirements
VI. Mitigation and Resilience Methods, Policies, and Procedures
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 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

[[Page 31965]]

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. To date, a 
total of $11.2 billion has been allocated-- $10.5 billion in response 
to Hurricane Sandy, $514 million in response to disasters occurring in 
2011 or 2012, and $128.5 million in response to 2013 disasters. This 
Notice advises the public of a second allocation for 2013 disasters-- 
$436.6 million is provided for the purpose of assisting recovery in the 
most impacted and distressed areas in Colorado, Illinois and Oklahoma. 
As the Appropriations Act requires funds to be awarded directly to a 
State or unit of general local government (hereinafter, local 
government), 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-
related expenses in the most impacted and distressed areas, HUD 
computes allocations based on the best available data that cover all 
the eligible affected areas. Based on further review of the impacts 
from Presidentially-declared disasters that occurred in 2013, and 
estimates of remaining unmet need, this Notice provides the following 
awards:

                              Table 1--Allocations for Disasters Occurring in 2013
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                                                                 Second             First
                          Grantee                              allocation        allocation           Total
----------------------------------------------------------------------------------------------------------------
State of Colorado.........................................      $199,300,000       $62,800,000      $262,100,000
State of Illinois.........................................         6,800,000         3,600,000        10,400,000
City of Chicago, IL.......................................        47,700,000         4,300,000        52,000,000
Cook County, IL...........................................        54,900,000        13,900,000        68,800,000
Du Page County, IL........................................        18,900,000         7,000,000        25,900,000
State of Oklahoma.........................................        83,100,000        10,600,000        93,700,000
City of Moore, OK.........................................        25,900,000        26,300,000        52,200,000
                                                           -----------------------------------------------------
    Total.................................................       436,600,000       128,500,000       565,100,000
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    As outlined in Table 2, to ensure 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 all funds 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 Du Page counties 
located within the city's jurisdiction). The State of Oklahoma may 
expend funds (from both the first and/or second allocations) in areas 
it identifies as most impacted within any county that was declared a 
major disaster in 2011, 2012 or 2013, but must spend at least $41.2 
million within Cleveland, and Creek Counties. The State of Illinois may 
expend funds in areas it identifies as most impacted within any county 
that was declared a major disaster in 2011, 2012 or 2013. The State of 
Colorado must expend at least 80 percent of its funds in the most 
impacted counties of Boulder, Weld and Larimer but may expend up to 
$52.4 million (combined first and second allocations) in other counties 
having a declared major disaster in 2011, 2012 or 2013. The following 
link provides access to maps showing declared disasters in each state, 
by year: http://www.fema.gov/disasters/grid/state-tribal-government. 
The opportunity for certain grantees to expend a portion of their 
allocations outside the most impacted and distressed counties 
identified by HUD enables those grantees to respond to highly localized 
distress identified via their own data. 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
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                                                     Minimum percentage
                                 Most impacted and      that must be
            Grantee                  distressed       expended in most
                                      counties          impacted and
                                                     distressed counties
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State of Colorado..............  Boulder, Weld and                    80
                                  Larimer.
State of Illinois..............  Cook and Du Page.                     0
City of Chicago................  City of Chicago;                    100
                                  portions of the
                                  city in Cook and
                                  Du Page.
Cook County....................  Cook.............                   100
Du Page County.................  Du Page..........                   100
State of Oklahoma..............  Cleveland , Creek                    44
City of Moore..................  City of Moore;                      100
                                  portions of the
                                  city in
                                  Cleveland.
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II. Use of Funds

    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 December 16, 2013 (76 FR 76154), 
referred to collectively in this Notice as the ``Prior Notices''. The 
Prior Notices can be accessed through the OneCPD Web site at https://www.onecpd.info/cdbg-dr/cdbg-dr-laws-regulations-and-federal-register-notices/. In addition, the following links provide direct access to the 
Prior Notices: 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, and http://www.gpo.gov/fdsys/pkg/FR-2013-12-16/pdf/2013-29834.pdf. The requirements of this Notice parallel

[[Page 31966]]

those established for other grantees receiving funds under the 
Appropriations Act in a Federal Register Notice published by the 
Department on November 18, 2013 (78 FR 69104) and located at: http://www.gpo.gov/fdsys/pkg/FR-2013-11-18/pdf/2013-27506.pdf
    As a reminder, the Appropriations Act requires funds to be used 
only for specific disaster-recovery related purposes. This allocation 
provides additional funds to areas impacted by disasters in 2011, 2012 
or 2013 for recovery, including mitigation and resilience as part of 
the recovery effort and directs grantees to undertake comprehensive 
planning to promote resilience as part of that effort. The law also 
requires that prior to the obligation of CDBG-DR 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. 
To access funds provide by the initial allocation, HUD has approved an 
Action Plan for each of the grantees identified as receiving funds in 
this Notice. Grantees are now directed to submit a substantial Action 
Plan Amendment in order to access funds provided in this Notice. For 
more guidance on requirements for substantial Action Plan Amendments, 
please see sections IV and V of this Notice.
    Note that, 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. However, 
pursuant to the requirements of the Appropriations Act, CDBG-DR funds 
may not be used for expenses reimbursable by, or for which funds are 
made available by FEMA or the United States Army Corps of Engineers 
(USACE).
    In addition, sections V and VI of this Notice incorporate 
information developed in response to Hurricane Sandy that are also 
being applied to these disasters. Executive Order 13632 (published in 
the Federal Register at 77 FR 74341) established the Hurricane Sandy 
Rebuilding Task Force (Task Force) to: (1) ensure government-wide and 
region-wide coordination was available to assist communities in making 
decisions about long-term rebuilding;-, and (2) develop a comprehensive 
rebuilding strategy. The Task Force released the Hurricane Sandy 
Rebuilding Strategy (the Rebuilding Strategy) on August 19, 2013. The 
Rebuilding Strategy can be found at http://portal.hud.gov/hudportal/documents/huddoc?id=HSRebuildingStrategy.pdf. In recognition of the 
increased risk the nation faces from extreme weather events, the 
Rebuilding Strategy provides recommendations for both rebuilding more 
resiliently in the Sandy-affected region and improving the ability of 
communities to withstand and recover effectively from disasters across 
the country.
    Section 5(b) of the executive order requires HUD, ``as appropriate 
and to the extent permitted by law, [to] align [the Department's] 
relevant programs and authorities'' with the Rebuilding Strategy. Thus, 
this Notice applies elements of the Rebuilding Strategy so that 
grantees may build back stronger and more resilient through 
comprehensive planning and investing in mitigation efforts.

III. Timely Expenditure of Funds

    The Appropriations Act requires that funds be expended within two 
years of the date HUD obligates funds to a grantee; and funds are 
obligated to a grantee upon HUD's signing of a grantee's CDBG-DR grant 
agreement. In its Action Plan, a grantee must demonstrate how funds 
will be fully expended within two years of obligation and 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 (OMB) 
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.

IV. Grant Amendment Process

    To access funds allocated by this Notice grantees must submit a 
substantial Action Plan Amendment to their approved Action Plan. Any 
substantial Action Plan Amendment submitted after the effective date of 
this Notice is subject to the following requirements:
     Grantee consults with affected citizens, stakeholders, 
local governments and public housing authorities to determine updates 
to its needs assessment; in addition, grantee prepares a comprehensive 
risk analysis (see section V.3.d. of this Notice);
     Grantee amends its citizen participation plan to reflect 
the requirements of this Notice (e.g., new requirement for a public 
hearing);
     Grantee publishes a substantial amendment to its 
previously approved Action Plan for Disaster Recovery on the grantee's 
official Web site for no less than 30 calendar days and holds at least 
one public hearing to solicit public comment;
     Grantee responds to public comment and submits its 
substantial Action Plan Amendment to HUD (with any additional 
certifications required by this Notice) no later than 120 days after 
the effective date of this Notice;
     HUD reviews the substantial Action Plan Amendment within 
60 days from date of receipt and approves the Amendment according to 
criteria identified in the Prior Notices and this Notice;
     HUD sends an Action Plan Amendment approval letter, 
revised grant conditions (may not be applicable to all grantees), and 
an amended unsigned grant agreement to the grantee. If the substantial 
Amendment is not approved, a letter will be sent identifying its 
deficiencies; the grantee must then re-submit the Amendment within 45 
days of the notification letter;
     Grantee ensures that the HUD-approved substantial Action 
Plan Amendment (and updated Action Plan) is posted on its official Web 
site;
     Grantee signs and returns the grant agreement;
     HUD signs the grant agreement and revises the grantee's 
line of credit amount;
     If it has not already done so, grantee enters the 
activities from its published Action Plan Amendment into the Disaster 
Recovery Grant Reporting (DRGR) system and submits it to HUD within the 
system;
     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 (or paragraph A.20 under section 
VI of the March 5, 2013 Notice) and, as applicable, receives from HUD 
or the state an approved Request for Release of Funds and 
certification;
     Grantee amends its published Action Plan to include its 
projection of expenditures and outcomes within 90

[[Page 31967]]

days of the Action Plan Amendment approval as provided for in paragraph 
4.g. of section V of this Notice; 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 HUD's 
obligation or 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 of the Notice describes requirements imposed by the 
Appropriations Act, as well as applicable waivers and alternative 
requirements. For each waiver and alternative requirement described in 
this Notice, the Secretary has determined that good cause exists and 
the action is not inconsistent with the overall purpose of the HCD Act. 
The following requirements apply only to the CDBG-DR funds allocated in 
this Notice. Grantees may request additional waivers and alternative 
requirements to address specific needs related to their recovery 
activities. Except where noted, waivers and alternative requirements 
described below apply to all grantees under this Notice. Under the 
requirements of the Appropriations Act, regulatory waivers are 
effective five days after publication in the Federal Register.
    1. Incorporation of general requirements, waivers, alternative 
requirements, and statutory changes previously described. Grantees are 
advised that general requirements, waivers and alternative requirements 
provided for and subsequently clarified or modified in the Prior 
Notices (published March 5, 2013, April 19, 2013, and December 16, 
2013) apply to all funds under this Notice, except as modified herein. 
However, waivers and alternative requirements specific to one or more 
grantees only apply to those grantees. These waivers and alternative 
requirements described in the Prior Notices and this Notice provide 
additional flexibility in program design and implementation to support 
resilient recovery following the 2013 disasters, while also ensuring 
that statutory requirements unique to the Appropriations Act are met.
    2. Eligible activities and uses of funds. Each grantee's Action 
Plan Amendment 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 this Notice or the Prior Notices; 
(2) meet a national objective; and (3) respond to a disaster-related 
impact in a county eligible for assistance. As described in the Prior 
Notices, eligible activities and uses typically fall under one of the 
following categories--housing, infrastructure, or economic 
revitalization.
    3. Action Plan for Disaster Recovery waiver and alternative 
requirement--Infrastructure Programs and Projects. Grantees are advised 
that HUD will assess the adequacy of a grantee's response to each of 
the elements outlined in this subsection as a basis for the approval of 
a substantial Action Plan Amendment that includes infrastructure 
programs and projects. Going forward, and with the submission of 
additional Action Plan Amendments that include an infrastructure 
program or project, grantees need not resubmit responses to elements 
approved by HUD unless warranted by changing conditions or if project-
specific analysis is required. Section VI(A)(1) of the March 5, 2013 
Notice (``Action Plan for Disaster Recovery waiver and alternative 
requirement''), as amended by the April 19, 2013 Notice, is modified to 
require:
    a. Applicability. The following guidance and criteria are 
applicable to all infrastructure programs and projects in an Action 
Plan Amendment submitted to HUD after the effective date of this 
Notice. Infrastructure programs and projects funded pursuant to the 
Prior Notices and submitted in an Action Plan Amendment after the 
effective date of this Notice are also subject to these requirements. 
However, projects scheduled to receive funding through FEMA's Public 
Assistance Grant Program, and for which funds have been obligated by 
FEMA on or before the effective date of this Notice, are not subject to 
these requirements.
    b. Definition of an Infrastructure Project and Related 
Infrastructure Projects.
    (1) Infrastructure Project: For purposes of this Notice, an 
infrastructure project is defined as an activity, or a group of related 
activities, designed by the grantee to accomplish, in whole or in part, 
a specific objective related to critical infrastructure sectors such as 
energy, communications, water and wastewater systems, and 
transportation, as well as other support measures such as flood 
control. This definition is rooted in the implementing regulations of 
the National Environmental Policy Act (NEPA) at 40 CFR part 1508 and 24 
CFR Part 58. Further, consistent with HUD's NEPA implementing 
requirements at 24 CFR 58.32(a), in responding to the requirements of 
this Notice, a grantee must group together and evaluate as a single 
infrastructure project all individual activities which are related to 
one another, either on a geographical or functional basis, or are 
logical parts of a composite of contemplated infrastructure-related 
actions. Grantees should also ensure that each infrastructure project 
is eligible pursuant to section 105(a)(2) of the Housing and Community 
Development Act.
    (2) Related Infrastructure Project: Consistent with 40 CFR part 
1508, infrastructure projects are ``related'' if they automatically 
trigger other projects or actions, cannot or will not proceed unless 
other projects or actions are taken previously or simultaneously, or 
are interdependent parts of a larger action and depend on the larger 
action for their justification.
    c. Impact and Unmet Needs Assessment. In Prior Notices, grantees 
were required to consult with affected citizens, stakeholders, local 
governments and public housing authorities to determine the impact of 
the 2013 disasters and any unmet disaster recovery needs. Grantees are 
required to update their impact and unmet needs assessments to address 
infrastructure projects, or any other projects or activities not 
previously considered, but for which an unmet need has become apparent.
    d. Comprehensive Risk Analysis. Each grantee must describe the 
science-based risk analysis it has or will employ to select, 
prioritize, implement, and maintain infrastructure projects or 
activities. At a minimum, the grantee's analysis must consider a broad 
range of information and best available data, including forward-looking 
analyses of risks to infrastructure sectors from climate change and 
other hazards, such as the Midwest, Great Plains and Southwest United 
States Regional Climate Trends and Scenarios from the U.S. National 
Climate Assessment or comparable peer-reviewed information. The grantee 
should also consider costs

[[Page 31968]]

and benefits of alternative investment strategies, including green 
infrastructure options. In addition, the grantee should include, to the 
extent feasible and appropriate, public health and safety impacts; 
direct and indirect economic impacts; social impacts; environmental 
impacts; cascading impacts and interdependencies within and across 
communities and infrastructure sectors; changes to climate and 
development patterns that could affect the project or surrounding 
communities; and impacts on and from other infrastructure systems. The 
analyses should, wherever possible, include both quantitative and 
qualitative measures and recognize the inherent uncertainty in 
predictive analysis. Grantees should work with other states and units 
of general local government to undertake regional risk baseline 
analyses, to improve consistency and cost-effectiveness.
    The description of the comprehensive risk analysis must be 
sufficient for HUD to determine if the analysis meets the requirements 
of this Notice. Where a grantee provides a local match (using CDBG-DR 
funds) for an infrastructure project that is covered by a comprehensive 
planning process required by another Federal agency (e.g., FEMA, the 
Department of Transportation, U.S. Army Corps of Engineers, 
Environmental Protection Agency, etc.) HUD does not require the grantee 
to repeat the analysis completed during that planning process as part 
of its comprehensive risk analysis. Rather, that process may be 
referenced and/or adopted to assist the grantee in meeting its 
responsibility to conduct the comprehensive risk analysis required by 
this Notice.
    e. Resilience Performance Standards. Grantees are required to 
identify and implement resilience performance standards that can be 
applied to each infrastructure project. The grantee must describe its 
plans for the development and application of resilience performance 
standards in any Action Plan Amendment submitted pursuant to this 
Notice.
    f. Green Infrastructure Projects or Activities. In any Action Plan 
Amendment submitted pursuant to this Notice, each grantee must describe 
its process for the selection and design of green infrastructure 
projects or activities, and/or how selected projects or activities will 
incorporate green infrastructure components. For the purposes of this 
Notice, green infrastructure is defined as the integration of natural 
systems and processes, or engineered systems that mimic natural systems 
and processes, into investments in resilient infrastructure. Green 
infrastructure takes advantage of the services and natural defenses 
provided by land and water systems such as wetlands, natural areas, 
vegetation, sand dunes, floodplains and forests, while contributing to 
the health and quality of life of those in recovering communities.
    In addition, the HCD Act authorizes public facilities activities 
that may include green infrastructure approaches that restore degraded 
or lost natural systems (e.g., wetlands and floodplain ecosystems) and 
other shoreline and riparian areas to enhance storm protection and reap 
the many benefits that are provided by these systems. This includes 
activities that provide greater floodplain space for floodwaters and 
recharge groundwater. Protecting, retaining, and enhancing natural 
defenses should be considered as part of any climate resilience 
strategy.
    g. Additional Requirements for Major Infrastructure Projects. 
Action Plan Amendments that propose a major infrastructure project will 
not be approved unless the project meets the criteria of this Notice. 
HUD approval is required for each major infrastructure project with 
such projects defined as having a total cost of $50 million or more 
(including at least $10 million of CDBG-DR funds), or physically 
located in more than one county. Additionally, two or more related 
infrastructure projects that have a combined total cost of $50 million 
or more (including at least $10 million of CDBG-DR funds) must be 
designated as major infrastructure projects. Projects encompassed by 
this paragraph are herein referred to as ``Covered Projects.'' Prior to 
funding a Covered Project, the grantee must incorporate each of the 
following elements into its Action Plan (i.e., via a substantial Action 
Plan Amendment):
    (1) Identification/Description. A description of the Covered 
Project, including: total project cost (illustrating both the CDBG-DR 
award as well as other federal resources for the project, such as 
funding provided by the Department of Transportation or FEMA), CDBG 
eligibility (i.e., a citation to the HCD Act, applicable Federal 
Register notice, or a CDBG regulation), how it will meet a national 
objective, and the project's connection to a disaster covered by this 
Notice.
    (2) Use of Impact and Unmet Needs Assessment and the Comprehensive 
Risk Analysis. A description of how the Covered Project is supported by 
the grantee's updated impact and unmet needs assessment, as well as the 
grantee's comprehensive risk analysis. The grantee must also describe 
how Covered Projects address the risks, gaps, and vulnerabilities in 
the region as identified by the comprehensive risk analysis.
    (3) Transparent and Inclusive Decision Processes. A description of 
the transparent and inclusive processes that have been or will be used 
in the selection of a Covered Project(s), including accessible public 
hearings and other processes to advance the engagement of vulnerable 
populations. Grantees should demonstrate the sharing of decision 
criteria, the method of evaluating a project(s), and how all project 
stakeholders and interested parties were or are to be included to 
ensure transparency including, as appropriate, stakeholders and parties 
with an interest in environmental justice or accessibility.
    (4) Long-Term Efficacy and Fiscal Sustainability. A description of 
how the grantee plans to monitor and evaluate the efficacy and 
sustainability of Covered Projects, including how it will reflect 
changing environmental conditions (such as development patterns) with 
risk management tools, and/or alter funding sources, if necessary.
    (5) Environmentally Sustainable and Innovative Investments. A 
description of how the Covered Project(s) will align with the 
commitment expressed in the President's Climate Action Plan to 
``identify and evaluate additional approaches to improve our natural 
defenses against extreme weather, protect biodiversity, and conserve 
natural resources in the face of a changing climate . . .''
    h. HUD Review of Covered Projects. HUD may disapprove any Action 
Plan Amendment that proposes a Covered Project that does not meet the 
above criteria. In the course of reviewing an Action Plan Amendment, 
HUD will advise grantees of the deficiency of a Covered Project, and 
grantees must revise their plans accordingly to secure HUD approval. In 
making its decision, HUD will seek input from other relevant federal 
agencies. Grantees are strongly encouraged to consult with federal 
agencies as proposals are developed for major infrastructure projects. 
The goal of this coordination effort is to promote a regional and 
cross-jurisdictional approach to resilience in which neighboring 
communities come together to: identify interdependencies among and 
across geography and infrastructure systems; compound individual 
investments towards shared goals; foster leadership; build capacity; 
and share information and best practices on infrastructure resilience.

[[Page 31969]]

    4. Action Plan for Disaster Recovery waiver and alternative 
requirement--Housing, Business Assistance, and General Requirements. 
The Prior Notices are modified as follows:
    a. Public and assisted multifamily housing. In the December 16, 
2013 Notice, grantees were required to describe how they would 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 was required to work with any 
impacted Public Housing Authority (PHA) located within its 
jurisdiction, to identify the unmet needs of damaged public housing. If 
unmet needs existed once funding became available to the grantee, the 
grantee was required to work with the impacted PHA(s) to identify 
necessary costs, and ensure adequate funding was dedicated to the 
recovery of the damaged public housing.
    In addition to the above, grantees under this Notice must now 
describe how they will address the rehabilitation, mitigation and new 
construction needs of other assisted multifamily housing developments 
impacted by the disaster, including HUD-assisted multifamily housing, 
low income housing tax credit (LIHTC)--financed developments and other 
subsidized and tax credit-assisted affordable housing. For CDBG-DR 
purposes, HUD-assisted multifamily housing continues to be defined by 
paragraph VI.A.1.a. (1) of the March 5, 2013 Notice at 78 FR 14332. 
Grantees should focus on protecting vulnerable residents and should 
consider measures to protect vital infrastructure (e.g., HVAC and 
electrical equipment) from flooding. Grantees are strongly encouraged 
to provide assistance to PHAs and other assisted and subsidized 
multifamily housing to help them elevate critical infrastructure and 
rebuild to model resilient building standards. Examples of such 
standards include the I-Codes developed by the International Code 
Council (ICC), the Insurance Institute for Business and Home Safety 
(IBHS) FORTIFIED home programs, and standards under development by the 
American National Standards Institute (ANSI) and the American Society 
of Civil Engineers (ASCE).
    b. Certification of proficient controls, processes and procedures. 
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. Grantees submitted this certification 
pursuant to the Prior Notices. In any Action Plan Amendment submitted 
after the effective date of this Notice, grantees are required to 
identify any material changes in its processes or procedures that could 
potentially impact the Secretary's or the grantee's prior 
certification. Grantees are advised that HUD may revisit any prior 
certification based on a review of an Action Plan Amendment submitted 
for this allocation of funds, as well as monitoring reports, audits by 
HUD's Office of the Inspector General, citizen complaints or other 
sources of information. As a result of HUD's review, the grantee may be 
required to submit additional documentation or take appropriate actions 
to sustain the certification.
    c. Certification of Resilience Standards. The Prior Notices are 
amended to additionally require the grantee to certify that it will 
apply the resilience standards required in section V.3.e of this 
Notice.
    d. Amending the Action Plan. The Prior Notices are amended, as 
necessary, to require each grantee to submit a substantial Action Plan 
Amendment to HUD within 120 days of the effective date of this Notice. 
All Action Plan Amendments submitted after the effective date of this 
Notice must be prepared in accordance with the Prior Notices, as 
modified by this Notice. In addition, they must budget all, or a 
portion, of the funds allocated under this Notice. Grantees are 
reminded that an Action Plan may be amended one or more times until it 
describes uses for 100 percent of the grantee's CDBG-DR award. The last 
date that grantees may submit an Action Plan Amendment is June 1, 2017 
given that HUD must obligate all CDBG-DR funds not later than September 
30, 2017. The requirement to expend funds within two years of the date 
of obligation will be enforced relative to the activities funded under 
each obligation, as applicable.
    e. HUD Review/Approval. Consistent with the requirements of section 
105(c) of the Cranston-Gonzalez National Affordable Housing Act, HUD 
will review each grantee's substantial Action Plan Amendment within 60 
days from the date of receipt. The Secretary may disapprove an 
Amendment if it is determined that it does not meet the requirements of 
the Prior Notices, as amended by this Notice. Once an Amendment is 
approved, HUD will issue a revised grant agreement to the grantee.
    f. Projection of expenditures and outcomes. The Prior Notices are 
amended, as necessary, to require each grantee to amend its Action Plan 
to update its projection of expenditures and outcomes within 90 days of 
its Action Plan Amendment approval. The projections must be based on 
each quarter's expected performance--beginning the quarter funds are 
available to the grantee and continuing each quarter until all funds 
are expended. Projections should include the entire amount allocated by 
this Notice. Amending the Action Plan to accommodate these changes is 
not considered a substantial amendment. Guidance on preparing the 
projections is available on HUD's OneCPD Web site at: https://www.onecpd.info/cdbg-dr/cdbg-dr-laws-regulations-and-federal-register-notices/.
    5. Citizen participation waiver and alternative requirement. The 
Prior Notices are modified to require grantees to publish substantial 
Action Plan Amendments for comment for 30 days prior to submission to 
HUD. Grantees are reminded of both the citizen participation 
requirements of those Notices and that HUD will monitor grantee 
compliance with those requirements and the alternative requirements of 
this Notice. In addition, this Notice establishes the requirement that 
at least one public hearing must be held regarding any substantial 
Action Plan Amendment submitted after the effective date of this 
Notice, including any subsequent substantial amendment proposing or 
amending a Covered Project. Citizens and other stakeholders must have 
reasonable and timely access to these public hearings. Grantees are 
encouraged to conduct outreach to community groups, including those 
that serve minority populations, persons with limited English 
proficiency, and persons with disabilities, to encourage public 
attendance at the hearings and the submission of written comments 
concerning the Action Plan Amendment.

[[Page 31970]]

    The grantee must continue to make the Action Plan, any amendments, 
and all performance reports available to the public on its Web site and 
on request and the grantee must make these documents available in a 
form accessible to persons with disabilities and persons of limited 
English proficiency, in accordance with the requirements of the Prior 
Notices. Grantees are also encouraged to outreach to local nonprofit 
and civic organizations to disseminate substantial Action Plan 
Amendments submitted after the effective date of this Notice. During 
the term of the grant, the grantee must provide citizens, affected 
local governments, and other interested parties with reasonable and 
timely access to information and records relating to the Action Plan 
and to the grantee's use of grant funds. This objective should be 
achieved through effective use of the grantee's comprehensive Web site 
mandated by the Appropriations Act.
    6. Reimbursement of disaster recovery expenses. In addition to pre-
award requirements described in the Prior Notices, grantees are subject 
to HUD's guidance issued July 30, 2013--``Guidance for Charging Pre-
Award Costs of Homeowners, Businesses, and Other Qualifying Entities to 
CDBG Disaster Recovery Grants'' (CPD Notice 2013-05)--as well as any 
subsequent updates to this guidance that HUD may issue. The CPD Notice 
is available on HUD's OneCPD Web site at: https://www.onecpd.info/resource/3138/notice-cpd-13-05-guidance-for-charging-pre-award-costs-to-cdbg-dr-grants/.
    7. Duplication of benefits. In addition to the requirements 
described in the Prior Notices and the Federal Register Notice 
published November 16, 2011 (76 FR 71060), grantees receiving an 
allocation under this Notice are subject to HUD's guidance issued July 
25, 2013--``Guidance on Duplication of Benefit Requirements and 
Provision of CDBG-DR Assistance''. This guidance is available on HUD's 
OneCPD Web site at: https://www.onecpd.info/resource/3137/cdbg-dr-duplication-of-benefit-requirements-and-provision-of-assistance-with-sba-funds/.
    8. Eligibility of needs assessment and comprehensive risk analysis 
costs. Grantees may use CDBG-DR funds to update their impact and unmet 
needs assessments and to develop the comprehensive risk analysis for 
infrastructure projects required by this Notice, consistent with the 
overall 20 percent limitation on the use of funds for planning, 
management and administrative costs.
    9. Eligibility of mold remediation costs. Mold remediation is an 
eligible CDBG-DR rehabilitation activity (see the HCD Act, e.g., 42 
U.S.C. 5305(a)(4)). Like other eligible activities, however, the 
activity encompassing mold remediation must address a direct or 
indirect impact caused by the disaster.
    10. Eligibility of public services and assistance to impacted 
households. Grantees are reminded that households impacted by 2013 
disasters may be assisted as part of an eligible public service 
activity, subject to applicable CDBG regulations. Public service 
activities often address needs such as employment and training, infant 
and child care and supportive services, counseling, education, 
healthcare, etc. Income payments, defined as a series of subsistence-
type grant payments are made to an individual or family for items such 
as food, clothing, housing, or utilities, are generally ineligible for 
CDBG-DR assistance. However, per the CDBG regulations, grantees may 
make emergency grant payments for up to three consecutive months, to 
the provider of such items or services on behalf of an individual or 
family.
    Additionally, as provided by the HCD Act, funds for public services 
activities 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. However, the activity must still meet a 
national objective and address all applicable CDBG cross-cutting 
requirements.
    11. Small business assistance--Modification of the alternative 
requirement to allow use of the Employer Identification Number (EIN). 
In the March 5, 2013 Notice, the Department instituted an alternative 
requirement to the provisions at 42 U.S.C. 5305(a) prohibiting grantees 
from assisting businesses, including privately owned utilities, that do 
not meet the definition of a small business as defined by Small 
Business Administration (SBA) at 13 CFR part 121 in order to target 
assistance to the businesses most responsible for driving local and 
regional economies. To determine whether an entity is a small business 
under the SBA definition, the grantee must take into account all of its 
affiliations. Typically, companies that have common ownership or 
management are considered affiliated. Per the SBA regulations, if 
businesses are affiliated, the number of jobs and revenue for those 
businesses must be aggregated. However, this could preclude a number of 
small businesses from receiving assistance--particularly in cases where 
one or more persons have control (i.e., ownership or management) of 
multiple small businesses that each have separate employer 
identification numbers (EIN), file separate tax returns, or even 
operate in different industries. Thus, HUD is modifying its definition 
of a small business: Businesses must continue to meet the SBA 
requirements at 13 CFR part 121 to be eligible for CDBG-DR assistance, 
except that the size standards will only apply to each EIN. Businesses 
that share common ownership or management may be eligible for CDBG-DR 
assistance, as long as each business with a unique EIN meets the 
applicable SBA size standards.
    12. Eligibility of Local Disaster Recovery Manager costs. 
Consistent with the recommendation of the Rebuilding Strategy, grantees 
may use CDBG-DR funds to fill Local Disaster Recovery Manager (LDRM) 
positions, which are recommended by the National Disaster Recovery 
Framework. Additional information about the National Disaster Recovery 
Framework can be found at http://www.fema.gov/long-term-recovery. A 
LDRM may coordinate and manage the overall long-term recovery and 
redevelopment of a community, which includes the local administration 
and leveraging of multiple federally-funded projects and programs. A 
LDRM may also ensure that federal funds are used properly, and can help 
local governments address the need for long-term recovery coordination. 
For additional guidance, grantees should consult the CPD Notice 
``Allocating Staff Costs between Program Administration Costs vs. 
Activity Delivery Costs in the Community Development Block Grant (CDBG) 
Program for Entitlement Grantees, Insular Areas, Non-Entitlement 
Counties in Hawaii, and Disaster Recovery Grants,'' at: http://portal.hud.gov/huddoc/13-07cpdn.pdf.
    13. Waiver to permit some activities in support of the tourism 
industry (State of Colorado only). The State of Colorado has requested 
a waiver to allow the State to use up to $500,000 in CDBG-DR funds to 
support its tourism industry and promote travel to communities in the 
flood-impacted areas. Tourism is the primary economic contributor to 
the State of Colorado economy and provides a valuable source of 
business revenue, taxes and employment. Preliminary Needs Assessment 
data indicate that after the floods, of the $19.7 million in Small 
Business Administration Loans given to date, 16.25 percent were awarded 
to businesses with NAICS codes within the lodging and restaurant 
industries. These range from hotel, lodges, motels, full-service 
restaurants,

[[Page 31971]]

limited-service restaurants, and specialty food shops. The lodging and 
restaurant industries are heavily dependent on tourism dollars, and 
serve as early indicators of a larger, long-term tourism-related impact 
that the State is already witnessing unfold. In addition, the tourism 
industry in the impacted areas employs many individuals who are of low- 
and moderate-income; some of these jobs have been lost as a result of 
the devastating floods. According to estimates, the Estes Park Local 
Marketing District (consisting of Estes Park, Drake, Glen Haven and 
rural areas) has 1,338 direct tourism jobs with an average income per 
job of $23,650. In addition, there are another 409 indirect and induced 
jobs with an average income of $36,978 per job. Major visitor draws, 
like the Rocky Mountain National Park (RMNP) and the community of Estes 
Park have already seen a significant negative impact to their tourism 
dollars. In just September and October of 2013, RMNP experienced a loss 
of 427,376 visitors. The estimated financial impact of this loss is 
more than $118 million.
    The Estes Park community serves as a gateway to the RMNP. Tourism 
to the region is promoted by a quasi-governmental entity, funded in 
part through tax dollars, known as Visit Estes Park. However, its 
reliance on tax dollars to fund their efforts has severely minimized 
its ability to promote tourism to the area. The area now finds itself 
in a worsening economic cycle, from which it could take decades to 
recover, if ever, without the injection of much-needed cash into the 
regional economy brought in by tourism.
    Tourism industry support, such as a national consumer awareness 
advertising campaign for an area in general, is ineligible for CDBG 
assistance. However, HUD understands that such support can be a useful 
recovery tool in a damaged regional economy that depends on tourism for 
many of its jobs and tax revenues and has granted similar waivers for 
several CDBG-DR disaster recovery efforts. As the State of Colorado is 
proposing advertising and marketing activities for this specific 
program, rather than direct assistance to tourism-dependent businesses, 
and because the measures of long-term benefit from the proposed 
activities must be derived using indirect means, 42 U.S.C. 5305(a) is 
waived only to the extent necessary to make eligible use of no more 
than $500,000 for assistance for the tourism industry. CDBG-DR funds 
may be used to promote a community or communities in general, provided 
the assisted activities are designed to support tourism to the most 
impacted and distressed areas related to the 2013 floods. This waiver 
will expire two years after it first draws CDBG-DR funds under this 
allocation.

VII. Mitigation and Resilience Methods, Policies, and Procedures

    Executive Order 13632 established the Hurricane Sandy Rebuilding 
Task Force. The Task Force was charged with identifying and working to 
remove obstacles to resilient rebuilding while taking into account 
existing and future risks and promoting the long-term sustainability of 
communities and ecosystems in the Sandy-affected region. The Task Force 
was further tasked with the development of a rebuilding strategy, which 
was released on August 19, 2013. The Executive Order directs HUD and 
other federal agencies, to the extent permitted by law, to align its 
relevant programs and authorities with the Rebuilding Strategy. The 
requirements set forth elsewhere in this Notice related to the 
selection of infrastructure projects and assistance to public and 
assisted multifamily housing reflect recommendations in the Rebuilding 
Strategy. To further address these recommendations, each grantee is 
strongly encouraged to incorporate the following components into its 
long- term strategy for recovery from eligible disasters under this 
Notice, and to reflect the incorporation of these components, to the 
extent appropriate, in Action Plan Amendments.
    1. Small business assistance. To support small business recovery, 
grantees are encouraged to work with, and/or fund, small business 
assistance organizations that provide direct and consistent 
communication about disaster recovery resources to affected businesses. 
Selected organizations should have close relationships with local 
businesses and knowledge of their communities' needs and assets. In 
addition, grantees may support outreach efforts by a Community 
Development Finance Institution (CDFI) to small businesses in 
vulnerable communities.
    2. Energy Infrastructure. Where necessary for recovery, CDBG-DR 
funds may be used to support programs, projects and activities to 
enhance the resilience of energy infrastructure. Energy infrastructure 
includes electricity transmission and distribution systems, including 
customer-owned generation where a significant portion of the generation 
is provided to the grid; and liquid and gaseous fuel distribution 
systems, both fixed and mobile. CDBG-DR recipients may use funds from 
this allocation for recovery investments that enhance the resilience of 
energy infrastructure so as to limit potential damages and future 
disturbance and thus reduce the need for any future federal assistance 
under such an event. CDBG-DR funds may be used to support public-
private partnerships to enhance the resiliency of privately-owned 
energy infrastructure, if the CDBG-DR assisted activities meet a 
national objective and can be demonstrated to relate to recovery from 
the direct or indirect effects of eligible disasters under this Notice. 
Such projects may include microgrids or energy banks that may provide 
funds to entities consistent with all applicable requirements. Grantees 
should review DOE's report, ``U.S. Energy Sector Vulnerabilities to 
Climate Change and Extreme Weather,'' available at: http://energy.gov/sites/prod/files/2013/07/f2/20130716-Energy%20Sector%20Vulnerabilities%20Report.pdf. This report assesses 
vulnerabilities and provides guidance on developing a new approach for 
electric grid operations. In developing this component of their long-
term recovery plans, grantees are reminded that pursuant to the March 
5, 2013 Notice, grantees are prohibited from assisting businesses that 
do not meet the definition of a small business as defined by SBA at 13 
CFR part 121 and as further modified by this Notice. The March 5, 2013 
Notice also prohibits assistance to private utilities.
    3. Providing jobs to local workforce. Grantees are reminded that 
they are required to comply with section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u) and implementing regulations 
at 24 CFR part 135, and to certify to such compliance. In addition to 
complying with Section 3, grantees are encouraged to undertake 
specialized skills, training programs and other initiatives to: (a) 
Employ very-low and low-income individuals; and (b) award contracts to 
local businesses for rebuilding from eligible disasters under this 
Notice and mitigate against future risk (e.g., mold remediation and 
construction (including elevation), ecosystem and habitat restoration, 
water conservation efforts and green infrastructure) and for 
professional services related to Section 3 covered projects (e.g., 
architecture, site preparation, engineering, accounting, etc.).
    4. Project labor agreements. Executive Order 13502 (Use of Project 
Labor Agreements for Federal Construction Projects) governs the use of 
project labor agreements for large-scale construction projects procured 
by the federal government. Similarly, grantees are encouraged to make 
use of Project Labor Agreements (PLAs) on large-scale

[[Page 31972]]

construction projects in areas responding to disasters. Executive Order 
13502 can be found at: http://www.whitehouse.gov/the-press-office/executive-order-use-project-labor-agreements-federal-construction-projects.
    5. Mitigating future risk. Grantees should include programs to 
implement voluntary buyout programs or elevate or otherwise flood-proof 
all structures that were impacted by the disaster (whether they are 
homes, businesses or utilities) to mitigate flood risk as indicated by 
relevant data sources. Reducing risk is essential to the economic well-
being of communities and business and is therefore an essential part of 
any disaster recovery, including elevating at least one foot higher 
than the latest FEMA-issued base flood elevation or best available data 
as required by the April 19, 2013 Notice. The relevant data source and 
best available data under Executive Order 11988 is the latest FEMA data 
or guidance, which includes advisory data (such as Advisory Base Flood 
Elevations) or preliminary and final Flood Insurance Rate Maps. Thus, 
in addition to the elevation requirements of the April 19, 2013 Notice, 
the Department strongly encourages grantees to elevate, relocate or 
remove all structures impacted by the disaster (including housing), 
even those requiring repairs of low or moderate damage, in addition to 
those requiring substantial improvements. FEMA maps are available here: 
https://msc.fema.gov/webapp/wcs/stores/servlet/FemaWelcomeView?storeId=10001&catalogId=10001&langId=-1.
    In addition, all rehabilitation projects should apply appropriate 
construction standards to mitigate risk, which may include: (a) Raising 
utilities or other mechanical devices above expected flood level; (b) 
wet flood proofing in a basement or other areas below the Advisory Base 
Flood Elevation/best available data plus one foot; (c) using water 
resistant paints or other materials; or (d) dry flood proofing non-
residential structures by strengthening walls, sealing openings, or 
using waterproof compounds or plastic sheeting on walls to keep water 
out.
    Grantees are reminded of the mandatory mitigation requirements 
described in the April 19, 2013 Notice. That is, reconstruction and 
substantial improvement projects located in a floodplain, according to 
the best available data as defined above, must be designed using the 
base flood elevation plus one foot as the baseline standard for lowest 
floor elevation (or alternatively, for non-critical non-residential 
structures, for floodproofing). If higher elevations are required by 
locally adopted code or standards, those higher standards apply.
    In addition to the mandatory requirements of the April 19, 2013 
Notice, grantees may also engage in voluntary risk mitigation measures. 
For example, grantees may assist in floodproofing non-residential 
structures that are not critical actions (as defined at 24 CFR 
55.2(b)(3)) in accordance with the floodproofing standards of the April 
19, 2013 Notice, where the structures were impacted by the disaster but 
the needed repairs do not constitute a substantial improvement. Flood 
proofing requires structures to be water tight with walls substantially 
impermeable to the passage of water and with structural components 
having the capability of resisting hydrostatic loads, hydrodynamic 
loads, the effects of buoyancy, or higher standards required by the 
FEMA National Flood Insurance Program as well as state and locally 
adopted codes.
    6. Leveraging funds and evidence-based strategies. Grantees are 
encouraged, where appropriate, to leverage grant funds with public and 
private funding sources--including through infrastructure banks, 
Community Development Finance Institutions, and other intermediaries--
and to make use of evidence-based strategies, including social impact 
bonds and other pay-for-success strategies.

VIII. 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.

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 27, 2014.
Clifford Taffett,
Assistant Secretary for Community Planning and Development (Acting).

Appendix A--Allocation Methodology

    The first allocation for Disaster Recovery needs associated with 
2013 disasters was based on preliminary data. The second allocation 
reflects updated housing and business unmet needs that have more 
complete information on insurance coverage and updated 
infrastructure repair costs from FEMA. This allocation is calculated 
based on relative share of needs HUD has estimated are required to 
rebuild to a higher standard consistent with CDBG program 
requirements and the goals set forth in the Hurricane Sandy 
Rebuilding Strategy. The methodology used to allocate these funds 
was designed to provide funding to cover a level of estimated unmet 
severe repair and resiliency recovery needs at the same proportional 
level as has been provided through the two allocations for Sandy 
recovery.
    HUD calculates the cost to rebuild the most impacted and 
distressed homes, businesses, and infrastructure back to pre-
disaster conditions. From this base calculation, HUD calculates both 
the amount not covered by insurance and other federal sources to 
rebuild back to pre-disaster conditions as well as a ``resiliency'' 
amount which is calculated at 30 percent of the total basic cost to 
rebuild back the most distressed homes, businesses, and 
infrastructure to pre-disaster conditions. The estimated cost to 
repair unmet needs are combined with the resiliency needs to 
calculate the total severe unmet needs estimated to achieve long-
term recovery. The formula allocation is made proportional to those 
calculated severe unmet needs.

Available Data

    The ``best available'' data HUD staff have identified as being 
available to calculate unmet needs at this time for all disasters in 
2011, 2012, and 2013 in each state meeting HUD's Most Impacted 
threshold comes 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 data on infrastructure.
    These funds are only allocated to states where the aggregate of 
their severe housing and business unmet needs (excluding resiliency) 
associated with disasters in 2011, 2012, and 2013 exceed $25 million 
from counties with $10 million or more in severe housing and 
business unmet needs.

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

[[Page 31973]]

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 (if basement flooding only, damage categorization is 
capped at major-low).
    [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 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-low'' or higher. That is, they 
have a real property FEMA inspected damage of $8,000 or flooding 
over 4 foot. Furthermore, a homeowner is determined 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 assumes that the unmet need ``gap'' is 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 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.
    [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 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-low'' 
or higher. That is, they have a FEMA personal property damage 
assessment of $2,000 or greater or flooding over 4 foot. 
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 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 median 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, 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. 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 proxy unmet infrastructure needs, HUD uses data from 
FEMA's Public Assistance program on the state match requirement. 
This allocation uses only a subset of the Public Assistance damage 
estimates reflecting the categories of activities most likely to 
require CDBG funding above the Public Assistance and state match 
requirement. Those activities are categories: C-Roads and Bridges; 
D-Water Control Facilities; E-Public Buildings; F-Public Utilities; 
and G-Recreational-Other. Categories A (Debris Removal) and B 
(Protective Measures) are largely expended immediately after a 
disaster and reflect interim recovery measures rather than the long-
term recovery measures for which CDBG funds are generally used. 
Because Public Assistance damage estimates are available only 
statewide (and not county), CDBG funding allocated by the estimate 
of unmet infrastructure needs are sub-allocated to non-state 
grantees based on the share of housing and business unmet needs in 
each of the local jurisdictions.

Calculating Economic Revitalization Needs

     Based on SBA disaster loans to businesses, HUD used the 
sum of real property and real content loss of small businesses not 
receiving an SBA disaster loan. This is adjusted upward by the 
proportion of applications that were received for a disaster that 
content and real property loss were not calculated because the 
applicant had inadequate credit or income. For example, if a state 
had 160 applications for assistance, 150 had calculated needs and 10 
were denied in the pre-processing stage for not enough income or 
poor credit, the estimated unmet need calculation would be increased 
as (1 + 10/160) * calculated unmet real content loss.
     Because applications denied for poor credit or income 
are the most likely measure of needs requiring the type of 
assistance available with CDBG-DR funds, the calculated unmet 
business needs for each state are adjusted upwards by the proportion 
of total applications that were denied at the pre-process stage 
because of poor credit or inability to show repayment ability. 
Similar to housing, estimated damage is used to determine what unmet 
needs will be counted as severe unmet needs. Only properties with 
total real estate and content loss in excess of $30,000 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 to 
$30,000.
    [cir] Category 3: real estate + content loss = $30,000 to 
$65,000.
    [cir] Category 4: real estate + content loss = $65,000 to 
$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.

Resiliency Needs

    CDBG Disaster Recovery Funds are often used to not only support 
rebuilding to pre-storm conditions, but also to build back much 
stronger. For the disasters covered by this Notice, HUD has required 
that grantees use their funds in a way that results in rebuilding 
back stronger so that future disasters do less damage and recovery 
can happen faster. To calculate these resiliency costs, HUD 
multiplied it estimates of total repair costs for seriously damaged 
homes, small businesses, and infrastructure by 30 percent. Total 
repair costs are the repair costs including costs covered by 
insurance, SBA, FEMA, and other federal agencies. The resiliency 
estimate at 30 percent of damage is intended to reflect some of the 
unmet needs associated with building to higher standards such as 
elevating homes, voluntary buyouts, hardening, and other costs in 
excess of normal repair costs.

[FR Doc. 2014-12709 Filed 6-2-14; 8:45 am]
BILLING CODE 4210-67-P