[Federal Register Volume 80, Number 5 (Thursday, January 8, 2015)]
[Notices]
[Pages 1039-1043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-00109]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5696-N-13]


Third Allocation, Waivers, and Alternative Requirements for 
Grantees Receiving Community Development Block Grant Disaster Recovery 
(CDBG-DR) 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 third allocation of 
Community Development Block Grant disaster recovery (CDBG-DR) funds 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 seventh allocation of 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, and specifies that funds 
allocated through this notice are subject to all requirements in the 
notice published on June 3, 2014 (79 FR 31964).

DATES: Effective Date: January 13, 2015.

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 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. Grant Amendment Process
IV. Catalog of Federal Domestic Assistance
V. 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 disaster recovery (CDBG-
DR) funds for necessary expenses related to disaster relief, long-term 
recovery, restoration of infrastructure and housing, and economic 
revitalization in the most impacted and distressed areas resulting from 
a major disaster declared pursuant to the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act of 1974 (42 U.S.C. 5121 et seq.) 
(Stafford Act), due to Hurricane Sandy and other eligible events in 
calendar years 2011, 2012, and 2013.
    On March 1, 2013, the President issued a sequestration order 
pursuant to section 251A of the Balanced Budget and Emergency Deficit 
Control Act, as amended (2 U.S.C. 901a), and reduced funding for CDBG-
DR grants under the Appropriations Act to $15.18 billion. To date, a 
total of $15.1 billion has been allocated or set aside: $13 billion in 
response to Hurricane Sandy, $514 million in response to disasters 
occurring in 2011 or 2012, $565 million in response to 2013 disasters, 
and $1 billion set aside for the National Disaster Resilience 
Competition. This Notice advises the public of a third allocation for 
2013 disasters--$89.8 million is provided for the purpose of assisting 
recovery in the most impacted and distressed areas in Colorado, the 
city of Chicago, Illinois, Cook County, Illinois, and Du Page County, 
Illinois. 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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               Grantee                 This allocation   Second allocation   First allocation        Total
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State of Colorado...................        $58,246,000       $199,300,000        $62,800,000       $320,346,000

[[Page 1040]]

 
State of Illinois...................  .................          6,800,000          3,600,000         10,400,000
City of Chicago, IL.................         11,075,000         47,700,000          4,300,000         63,075,000
Cook County, IL.....................         14,816,000         54,900,000         13,900,000         83,616,000
Du Page County, IL..................          5,626,000         18,900,000          7,000,000         31,526,000
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
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    Total...........................         89,763,000        436,600,000        128,500,000        654,863,000
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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 Colorado must 
expend at least 80 percent of its funds in the most impacted counties 
of Boulder, Weld, and Larimer but may expend 20 percent (approximately 
$64 million from the combined first, second, and third allocations) in 
other State-identified most impacted and distressed area within 
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
                                                           that must be
              Grantee                 Most impacted and     expended in
                                    distressed  counties   most impacted
                                                          and distressed
                                                             counties
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State of Colorado.................  Boulder, Weld and                 80
                                     Larimer.
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
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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), December 16, 2013 (76 FR 76154), June 3, 
2014 (79 FR 31964), and July 11, 2014 (79 FR40133) referred to 
collectively in this Notice as the ``Prior Notices''. The Prior Notices 
can be accessed through the HUD Exchange Web site at https://www.hudexchange.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, http://www.gpo.gov/fdsys/pkg/FR-2013-12-16/pdf/2013-29834.pdf, http://www.gpo.gov/fdsys/pkg/FR-2014-06-03/pdf/2014-12709.pdf, and http://www.gpo.gov/fdsys/pkg/FR-2014-07-11/pdf/2014-16316.pdf.
    The requirements of this Notice parallel 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. Additionally, the funds allocated in 
this Notice are bound by all of the same requirements as those found in 
the Federal Register Notice published by the Department on June 3, 2014 
(79 FR 31964), including the two year expenditure deadline located at: 
http://www.gpo.gov/fdsys/pkg/FR-2014-06-03/pdf/2014-12709.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 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 provided by the prior allocations, HUD approved an Action Plan 
and Action Plan amendments for each of the grantees identified as 
receiving funds under 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 section III 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.

[[Page 1041]]

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).

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 the June 3, 2014 Notice);
     Grantee amends its citizen participation plan to reflect 
the requirements of the June 3, 2014 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 or Prior Notices) 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;
     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 days of the Action 
Plan Amendment approval as provided for in paragraph 4.f. of section V 
of the June 3, 2014 Notice; and
     If not already completed, grantee updates its full 
consolidated plan to reflect disaster-related needs no later than its 
Fiscal Year 2015 consolidated plan update.

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: December 31, 2014.
Clifford Taffett,
General Deputy Assistant Secretary for Community Planning and 
Development.

CDBG-DR Allocation Methodology--2013 Disasters Third Tranche

    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 
flooded homes, businesses, and infrastructure to pre-disaster 
conditions; 10 percent for other disaster types (ie. tornadoes, severe 
storms, fires). 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. This calculation of housing, 
business, and infrastructure needs is used to determine the relative 
share of funding among eligible disasters.

Statutory Language for the Allocation

    Public Law 113-2 (January 29, 2013) provides the following language 
on how the Secretary shall allocate the funds: ``For an additional 
amount for ``Community Development Fund'', $16,000,000,000,\1\ to 
remain available until September 30, 2017, for necessary expenses 
related to disaster relief, long-term recovery, restoration of 
infrastructure and housing, and economic revitalization in the most 
impacted and distressed areas resulting from a major disaster declared 
pursuant to the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5121 et seq.) due to Hurricane Sandy and 
other eligible events in calendar years 2011, 2012, and 2013, for 
activities authorized under title I of the Housing and Community 
Development Act of 1974 (42 U.S.C. 5301 et seq.): Provided, That funds 
shall be awarded directly to the State or unit of general local 
government as a grantee at the discretion of the Secretary of Housing 
and Urban Development: Provided further, That the Secretary shall 
allocate to grantees not less than 33 percent of the funds provided 
under this heading within 60 days after the enactment of this division 
based on the best available data:''
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    \1\ $15.2 billion after sequestration.
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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 meeting HUD's Most Impacted and Distressed 
threshold comes from the following data sources:
     FEMA Individual Assistance program data on housing unit 
damage;

[[Page 1042]]

     SBA for management of its disaster assistance loan program 
for housing repair and replacement;
     SBA for management of its disaster assistance loan program 
for business real estate repair and replacement as well as content 
loss; and
     FEMA Public Assistance, Department of Transportation 
Federal Transit Administration and Federal Highway Administration, 
Corps of Engineers, and US Department of Agriculture Emergency 
Watershed Restoration data on infrastructure.
    These funds are only allocated toward disasters in 2011, 2012, and 
2013 determined by HUD to be most impacted and distressed disasters.\2\
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    \2\ A Most Impacted disaster for non-Sandy disasters is a 
disaster where the severe housing and business unmet needs 
(excluding resiliency) exceed $25 million from counties with greater 
than $10 million in unmet housing and business severe needs 
(excluding resiliency and area construction cost adjustment).
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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 (extracted January 2014). 
For unmet housing needs, the FEMA data are supplemented by Small 
Business Administration data from its Disaster Loan Program (extracted 
January 2014). 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 and 
distressed'' 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 and distressed'' 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 
(extracted January 2014). This allocation uses only a subset of the 
Public Assistance damage estimates reflecting the categories of 
activities most likely to require CDBG-DR 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-DR 
funds are generally used.
    For the third round of CDBG-DR funding for Sandy recovery, HUD also 
includes data from the USDA Emergency Watershed Repair Program 
(extracted May 2014). For most impacted disasters in 2011, 2012, and 
2013 that have not received supplemental funding to address watershed 
repairs, HUD includes the estimated unmet repair costs calculated by 
USDA in the unmet repair needs calculation.

Calculating Economic Revitalization (Small Business) Needs

     Based on SBA disaster loans to businesses (extracted 
January 2014), 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-

[[Page 1043]]

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 and distressed 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 DR 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 its estimates of total 
repair costs for seriously damaged homes, small businesses, and 
infrastructure by 30 percent for flooding disasters and 10 percent for 
other disasters.\3\ Total repair costs are the repair costs including 
costs covered by insurance, SBA, FEMA, and other federal agencies. The 
resiliency estimate 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.
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    \3\ The 30 percent multiplier for flooding disasters is the 
approximate additional cost to elevate a newly constructed home; the 
10 percent multiplier is the approximate additional cost to add a 
safe room.
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Housing and Small Business Construction Cost Adjustment

    For grantees with housing construction costs above the national 
average, HUD increases their estimated housing and business 
construction costs using the same Marshall & Swift regional cost 
adjustment multipliers as used for HUD's annual calculation of Total 
Development Costs developed for HUD's public housing repair programs. 
No estimate of damage is reduced by the multiplier (ie. if the Marshall 
& Swift adjustment is less than 1, the adjustment is set at 1).

[FR Doc. 2015-00109 Filed 1-7-15; 8:45 am]
BILLING CODE 4210-67-P