[Federal Register Volume 87, Number 118 (Tuesday, June 21, 2022)]
[Notices]
[Pages 36869-36876]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-13179]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6316-N-01]


Waivers and Alternative Requirements for Community Development 
Block Grant Disaster Recovery (CDBG-DR) and Community Development Block 
Grant Mitigation (CDBG-MIT) Grantees

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

ACTION: Notice.

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SUMMARY: This notice governs Community Development Block Grant disaster 
recovery (CDBG-DR) and Community Development Block Grant mitigation 
(CDBG-MIT) funds awarded under several appropriations acts identified 
in the Table of Contents. Specifically, this notice provides waivers 
and establishes alternative requirements for certain CDBG-DR grantees 
that have submitted waiver requests for grants provided under the 
public laws cited in this notice.

DATES: Applicability Date: June 27, 2022.

FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Director, 
Office of Block Grant Assistance, U.S. Department of Housing and Urban 
Development, 451 7th Street SW, Room 7282, Washington, DC 20410, 
telephone number 202-708-3587. Persons with hearing or speech 
impairments may access this number via TTY by calling the toll-free 
Federal Relay Service at 800-877- 8339. Facsimile inquiries may be sent 
to Ms. Kome at 202-708-0033. (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. Authority to Grant Waivers
II. Public Law 107-38, 107-73, 107-117, 107-206 Waivers and 
Alternative Requirements
III. Public Law 113-2 Waivers and Alternative Requirements
IV. Public Law 115-254 and 116-20 Waivers and Alternative 
Requirements
V. Public Law 115-123 and 116-20 Waivers and Alternative 
Requirements
VI. Public Law 115-56, 115-123, 115-254, 116-20 Grant Requirements
VII. Public Law 115-56 and 115-123 Waivers and Alternative 
Requirements
VIII. Public Law 115-56, 115-123, and 116-20 Waivers and Alternative 
Requirements
IX. Public Law 116-20 Waivers and Alternative Requirements
X. Flexibilities for Grants Under Recent Appropriations Acts 
(Affects Multiple Grantees)
XI. Finding of No Significant Impact (FONSI)

I. Authority To Grant Waivers

    Each of the appropriations acts cited in the Table of Contents 
authorize the Secretary to waive, or specify alternative requirements 
for, any provision of any statute or regulation that the Secretary 
administers in connection with the obligation by the Secretary or use 
by the recipient of grant funds, except for requirements related to 
fair housing, nondiscrimination, labor standards, and the environment. 
HUD may also exercise its regulatory waiver authority under 24 CFR 
5.110, 91.600, and 570.5.
    All waivers and alternative requirements authorized in this notice 
are based upon a determination by the Secretary that good cause exists, 
and that the waiver or alternative requirement is not inconsistent with 
the overall purposes of title I of the Housing and Community 
Development Act of 1974 (42 U.S.C. 5301 et seq.) (HCDA). The good cause 
for each waiver and alternative requirement is summarized in this 
notice.

II. Public Law 107-38, 107-73, 107-117, 107-206 Waivers and Alternative 
Requirements

    Waiver to Allow the Lower Manhattan Development Corporation (LMDC) 
To Transfer Remaining Property Acquired and Cleared With CDBG-DR Funds 
in Exchange for Other Property Interests.
    Provisions of four public laws (the 9/11 Appropriations Acts) 
govern the CDBG-DR funds provided in response to the terrorist attacks 
of September 11, 2001: Public Law 107-38, 107-73, 107-117, and 107-206. 
These 9/11 Appropriations Acts have funded three CDBG-DR grants: $700 
million awarded to the New York State Development Corporation d/b/a 
Empire State Development (ESD); and two grants of $2.0 billion and $783 
million, respectively, awarded to LMDC. ESD is a political subdivision 
and public benefit corporation of the State of New York and LMDC is a 
subsidiary of ESD. LMDC administers CDBG-DR funds allocated to the 
organization for emergency expenses and economic revitalization in 
response to the September 11, 2001, terrorist attacks in New York City. 
LMDC is charged with assisting New York City in recovering from the 
terrorist attacks on the World Trade Center (WTC), in part by working 
with the Port Authority of New York and New Jersey (Port Authority).
    Previously, in the January 17, 2017 Federal Register notice (82 FR 
4911), the Department granted a waiver of 24 CFR 570.489(j) for good 
cause and

[[Page 36870]]

established an alternative requirement ``to the extent necessary to 
allow LMDC to transfer the portions of 130 and 140 Liberty Street 
necessary to finalize the WTC Vehicle Security Center, Liberty Park, 
and the St. Nicholas National Shrine at the World Trade Center to the 
Port Authority without reimbursing the CDBG-DR program for the fair 
market value of the properties . . . [and] to permit LMDC to acquire 
from the Port Authority property on the World Trade Center site, via 
long-term lease and purchase, sufficient to carry out the memorial and 
cultural facilities on the World Trade Center site that are 
contemplated in the GPP and LMDC's applicable Action Plan, as 
amended.'' (82 FR 4913).
    The January 2017 waiver and alternative requirement contemplated 
several property exchanges that were consistent with LMDC's approved 
CDBG-DR action plan and amendments. LMDC used CDBG-DR funds to acquire 
and clear real property identified in the World Trade Center Memorial 
and Cultural Program General Project Plan (GPP) as 130 Liberty Street 
and 140 Liberty Street. Specifically, to enable LMDC to fully implement 
its Memorial Program and to enable the Port Authority to pursue its 
Redevelopment Program, LMDC and the Port Authority would exchange real 
property interests. The Port Authority would provide LMDC or its 
designee with a lease (up to 99 years) and purchase option for Port 
Authority-owned property that would be used for memorial and cultural 
facilities that are part of LMDC's Memorial Program. The overall 
exchange would allow the LMDC to facilitate use of what was originally 
Port Authority property for the Memorial Museum and a performing arts 
center.
    The January 2017 waiver and alternative requirement permitted an 
exchange for the portion of the 130 and 140 Liberty Street necessary 
for the WTC Vehicle Security Center, and it also contemplated that HUD 
would need to extend the waiver for additional activities. It provided 
that ``HUD must waive certain regulations applicable to the reuse of 
130 and 140 Liberty Street to facilitate the current exchange between 
LMDC and the Port Authority and future development of the rest of the 
130 Liberty Street site. The current transfer of property to the Port 
Authority explicitly excludes that portion of 130 Liberty Street that 
is labeled as ``Tower 5'' on Attachment 1 to the GPP as LMDC will 
retain the Tower 5 site for future transfer and redevelopment.'' (82 FR 
4912).
    Since January 2017, LMDC and the Port Authority have solidified 
their plans for the second phase of the property transfer. Therefore, 
for the reasons described in this notice and in the January 2017 
notice, the Department has determined that good cause exists to extend 
the January 2017 waiver and alternative requirement modifying 24 CFR 
570.489(j) to encompass the second phase of the proposed property 
exchanges between LMDC and the Port Authority for the remainder of 130 
and 140 Liberty Street (the Tower 5 site). LMDC and its designees will 
receive the Port Authority-owned properties to be used for memorial and 
cultural facilities that are part of LMDC's Memorial Program (as 
described in the January 2017 waiver and alternative requirement). 
Specifically, LMDC's designee, the National September 11 Memorial & 
Museum (further known as The World Trade Center Memorial Foundation, 
Inc.) will obtain a lease and purchase option for the Memorial Museum 
site and a different LMDC designee received a similar lease (up to 99 
years) and purchase option for the site of a performing arts center.
    To complete the property transfer, LMDC will transfer fee title of 
the Tower 5 site to the ESD, and ESD will facilitate payment of 
compensation to the Port Authority for land that the Port Authority 
provided for the memorial and cultural facilities. ESD will lease the 
Tower 5 site to a developer. The Port Authority will receive 
compensation in the form of rent paid under a 99-year ground lease for 
the Tower 5 site by a developer (equal to the value of the originally 
planned commercial use of the Tower 5 site plus 25 percent of any rent 
paid in excess of that amount) and the remainder interest at the end of 
the lease term.
    As outlined in the January 2017 waiver and alternative requirement, 
the Department finds that the properties involved in this transfer 
present unique valuation difficulties. A restricted appraisal report 
and opinion letter by an appraiser engaged by LMDC estimates that the 
parcels subject to the exchange are of proximate value. The restricted 
appraisal report and opinion letter nonetheless also notes the 
difficulties in establishing current fair market valuations of the 
various parts of this transaction. In addition, the strong desire of 
all parties (including HUD) to facilitate and conclude redevelopment 
progress on and adjacent to the World Trade Center site more than 
twenty years after the events of September 11, 2001, creates a 
situation in which this waiver and alternative requirement represent 
the most practical and feasible path forward.
    For the reasons described in this notice and in the January 2017 
notice, HUD finds that good cause exists to waive 24 CFR 570.489(j) and 
to expand the alternative requirement previously given to the extent 
necessary to permit LMDC to transfer fee title to the Tower 5 site to 
ESD and to permit ESD to compensate the Port Authority as described 
above. As a condition of this waiver and alternative requirement, if 
the rental income from the Tower 5 site's development exceeds the value 
of the originally planned commercial use of the Tower 5 site, 75 
percent of the excess will be paid to LMDC and designated as program 
income and 25 percent of the excess will be paid to the Port Authority. 
Following closeout of LMDC's grant, LMDC's share will be paid to the 
City in accordance with 67 FR 36017. For purposes of this waiver and 
alternative requirement, HUD has determined that amounts paid to the 
Port Authority do not constitute program income to the CDBG-DR grant.
    Additionally, the property acquired by LMDC or its designees on the 
World Trade Center site will be subject to CDBG-DR programmatic 
requirements upon transfer to LMDC or its designee. HUD recognizes the 
phased nature of the transactions contemplated by various parties 
pursuant to this alternative requirement. However, as part of this 
alternative requirement, if LMDC does not acquire property that is 
sufficient to carry out the memorial and cultural facilities on the 
World Trade Center site as contemplated in the GPP and LMDC's 
applicable action plan, as amended, before LMDC closes out its grants, 
HUD may pursue appropriate remedial actions. This expanded waiver and 
alternative requirement are necessary to facilitate and conclude LMDC's 
use of CDBG-DR funds for its Memorial Program.

III. Public Law 113-2 Waivers and Alternative Requirements

    Clarification on Citizen participation waiver and alternative 
requirement (CDBG-DR grantees only).
    This waiver applies to certain grantees that received an allocation 
of funds appropriated under the Disaster Relief Appropriations Act, 
2013 (Pub. L. 113-2), which ultimately made available $15.2 billion in 
CDBG-DR funds for necessary expenses related to disaster relief, long-
term recovery, restoration of infrastructure and housing, and economic 
revitalization due to Hurricane Sandy and other eligible events in 
calendar years 2011, 2012, and 2013. The Department's Federal Register 
notices for Public Law 113-2 included requirements for CDBG-

[[Page 36871]]

DR grantees that must be followed for substantial amendments to a CDBG-
DR action plan. Section VI.4. of the November 18, 2013 notice (78 FR 
69104) and Section V.5 of the June 3, 2014 notice (79 FR 31964) require 
grantees to hold a public hearing on a substantial action plan 
amendment and to also publish the substantial action plan amendment for 
public comment for 30 days prior to submission to HUD. For recent 
allocations, HUD has not required grantees to hold public hearings for 
substantial action plan amendments, and this additional requirement 
adds administrative burden on grantees that have expended most of the 
funds allocated under Pub. L. 113-2. For these reasons, HUD has 
determined there is good cause to remove the requirement from both 
Section VI.4. of the November 18, 2013 notice and Section V.5. of the 
June 3, 2014 notice that requires public hearings on substantial action 
plan amendments. Grantees are still required to follow the remaining 
requirements for citizen participation and public comment for 
substantial action plan amendments in Section VI.4. of the November 18, 
2013 notice, and Section V.5. of the June 3, 2014 notice, including 
posting the amendments for 30 days for public comment.

IV. Public Law 115-254 and 116-20 Waivers and Alternative Requirements

    IV.A. Base Flood Elevation Requirement and Reimbursement in the 
``Homeowner Reimbursement Program'' (State of Texas only).
    The Department has awarded the State of Texas $46,400,000 of CDBG-
DR funds under Public Law 115-254 and $26,513,000 of CDBG-DR funds 
under Public Law 116-20, for recovery from disasters occurring in 2018; 
and $227,510,000 of CDBG-DR funds under Public Law 116-20 for recovery 
from disasters occurring in 2019. These funds have been provided for 
necessary expenses related to disaster relief, long term recovery, 
restoration of infrastructure and housing, economic revitalization, and 
mitigation due to a qualified disaster. This waiver and alternative 
requirement modifies the requirements for CDBG-DR funds awarded to the 
State of Texas under Public Laws 115-254 and 116-20. The State of Texas 
has submitted a request and justification for the waiver and 
alternative requirements provided herein to facilitate the use of the 
funds.
    The state is implementing a Homeowner Reimbursement Program 
designed to assist homeowners in recovering up to $50,000 in out-of-
pocket expenses paid by the homeowner for residential rehabilitation 
due to the disasters occurring in 2018 and 2019. To be eligible for 
this program, the state's rules require the home be the owner's primary 
residence and the eligible rehabilitation must have been completed 
prior to the program's application launch date of April 24, 2021. 
Because the state's response and recovery efforts commenced on the 
dates of the disasters and before CDBG-DR assistance was available, 
some homeowners participating in the state's Homeowner Reimbursement 
Program may have rehabilitated their homes to meet FEMA program 
requirements and local elevation requirements, rather than the CDBG-DR 
program requirements.
    Some homeowners seeking assistance from the state's Homeowner 
Reimbursement Program elevated their homes to meet the requirements of 
their municipalities but did not elevate their homes to meet HUD's 
requirement that residential structures be elevated to at least two 
feet above base flood elevation . Because these homeowners did not 
anticipate receiving CDBG-DR assistance, the state is requesting a 
waiver to reimburse homeowners that are otherwise eligible for 
assistance but elevated their homes to comply with FEMA program 
requirements and the local jurisdiction's elevation requirements, which 
may be lower than the HUD-mandated standard to elevate to base flood 
elevation plus two feet.
    HUD's February 9, 2018 Federal Register notice provides that: ``All 
structures, defined at 44 CFR 59.1, designed principally for 
residential use and located in the 100-year (or 1 percent annual 
chance) floodplain that receive assistance for new construction, repair 
of substantial damage, or substantial improvement, as defined at 24 CFR 
55.2(b)(10), must be elevated with the lowest floor, including the 
basement, at least two feet above the base flood elevation.'' (83 FR 
5861).
    Based on the reasons stated above, HUD finds that good cause exists 
to waive the provision of the Federal Register notice requiring the two 
feet above base flood elevation for homeowners seeking reimbursement in 
the state's Homeowner Reimbursement Program, and to establish an 
alternative requirement to permit the state to reimburse those 
homeowners for costs of rehabilitation completed before the program's 
application launch date, subject to the following requirements:
     The homeowner complied with applicable FEMA requirements 
and the elevation requirement of the local jurisdiction.
     The activity is eligible under title I of the HCDA or by 
waiver and is consistent with all other requirements of CPD notice 15-
07: Guidance for Charging Pre-Application Costs of Homeowners, 
Businesses, and Other Qualifying Entities to CDBG Disaster Recovery 
Grants.
     The activity meets a CDBG-DR national objective and 
otherwise complies with CDBG-DR requirements not waived by this 
section.
     For each grant, the state uses not less than 70 percent of 
the aggregate CDBG-DR grant for activities that benefit low- and 
moderate-income persons.
    The state must ensure that all costs charged to this program and to 
the CDBG-DR grants are necessary and reasonable expenses related to 
disaster recovery.
    IV.B. Requirement to Primarily Consider and Address Unmet Housing 
Recovery Needs (The Northern Mariana Islands only).
    The Department has awarded $188,652,000 of CDBG-DR funds under 
Public Law 115-254 and $65,672,000 under Public Law 116-20, for a 
combined allocation of $254,324,000 to the Commonwealth of the Northern 
Mariana Islands (CNMI) for recovery from 2018 disasters.
    The CNMI has requested that HUD ease restrictions in existing 
notices to allow for the use of CDBG-DR funds for the rehabilitation 
and reconstruction of the Northern Marianas College (NMC) by modifying 
the requirements in the February 9, 2018 notice at 83 FR 5844, August 
14, 2018 notice at 83 FR 40314, and then re-stated in the January 27, 
2020 notice at 85 FR 4682, that each grantee primarily consider and 
address its unmet housing recovery needs. Specifically, the January 27, 
2020, notice states that, ``Pursuant to the Prior Notices, each grantee 
receiving an allocation for a 2018 or 2019 disaster is required to 
primarily consider and address its unmet housing recovery needs. These 
grantees may, however, propose the use of funds for unmet economic 
revitalization and infrastructure needs unrelated to the grantee's 
unmet housing needs if the grantee demonstrates in its needs assessment 
that there is no remaining unmet housing need or that the remaining 
unmet housing need will be addressed by other sources of funds.''
    NMC lost 37 out of its 39 classrooms as a result of Super Typhoon 
Yutu in 2018. The college offers a number of degrees, as well as Adult 
Basic Education, Workforce Development and Certificate Training. A 
number of other federal agencies are also providing funding for NMC 
campus projects, including a Student Center funded

[[Page 36872]]

through the U.S. Department of Education, a Workforce Development and 
Training Center and a Center for Research Extension and Development 
funded through the Economic Development Authority, and a Gymnasium and 
Collateral Equipment/Content funded by FEMA. The construction of NMC's 
classrooms, as a public college, would otherwise be CDBG-DR eligible 
and is critical to the CNMI and its residents for many reasons. As the 
only public college on the island, the improvements will encourage 
enrollment growth, prevent outmigration, improve access to quality 
education on the island, and strengthen the position of the college for 
purposes of accreditation. CNMI also indicates any loss of NMC students 
would adversely impact the CNMI economy and community.
    Based on these reasons, HUD has determined that good cause exists 
to modify the provisions in the February 9, 2018 notice (83 FR 5849), 
the August 14, 2018 notice (83 FR 40314), and re-stated in the January 
27, 2020 notice at 85 FR 4682, that require a grantee to primarily 
consider and address its unmet housing recovery needs with its CDBG-DR 
funds or demonstrate there is no remaining unmet housing need or that 
the remaining unmet housing need will be addressed by other sources of 
funds. HUD is modifying those provisions for CNMI only, so that the 
grantee is subject to the following requirements: without regard to the 
housing priority identified in the notices cited above, CNMI may use 
amounts consistent with the amount in the CNMI's action plan and 
substantial amendments submitted to and approved by HUD to rehabilitate 
and reconstruct buildings for classrooms at NMC and complement the 
already significant other Federal investments in the reconstruction of 
the college. These amounts are subject to other applicable 
requirements, including the requirement that CDBG-DR funds may not be 
used for activities reimbursable by or for which funds are made 
available by FEMA or the US Army Corps of Engineers (USACE). As with 
other activities, the grantee must verify whether FEMA or USACE funds 
are available prior to awarding CDBG-DR funds to this activity. The 
housing priority remains in place for all other activities carried out 
by CNMI.
    IV.C. Extension of Waiver and Alternative Requirement Related to 
Tourism and Business Marketing (The Northern Marianas only).
    The Commonwealth of the Northern Marianas (CNMI) has submitted a 
request for an extension of HUD's previously granted waiver and 
alternative requirement authorizing activities related to tourism and 
business marketing, to revise the expiration date for the waiver and 
alternative requirement to December 31, 2023. The previously granted 
waiver and alternative requirement would expire January 11, 2023. 
Accordingly, HUD hereby grants the waiver and alternative requirement 
described in this notice for a revised expiration date of December 31, 
2023.
    In section VIII.A. of the Federal Register notice published on 
September 28, 2020 (85 FR 60821), the Department granted CNMI a waiver 
of 42 U.S.C. 5305(a) to the extent necessary to create a new eligible 
activity and use up to $10,000,000 of CDBG-DR funds for tourism and 
marketing activities to promote travel and to attract new businesses to 
disaster-impacted areas (without regard to housing need), consistent 
with the amount in CNMI's action plan and substantial amendments 
submitted to and approved by HUD. HUD required the waiver and 
alternative requirement to expire two years after CNMI's first draw of 
its CDBG-DR funds allocated in the Federal Register notice published on 
January 27, 2020 (85 FR 4681).
    Tourism is a significant part of CNMI's economy and was severely 
impacted by Super Typhoon Yutu and further impacted by the COVID-19 
pandemic. The current expiration date of the waiver and alternative 
requirements limits the ability of CNMI to use the CDBG-DR funds during 
its peak tourism season in 2023, interrupting economic development 
gains made by CNMI in its use of CDBG-DR funds for disaster recovery. 
As a result, the Secretary has determined that good cause exists to 
extend the waiver and alternative requirement described above, so that 
CNMI may continue to carry out tourism and marketing activities 
permitted by the waiver and alternative requirement until December 31, 
2023. The cap on the activity costs remains unchanged. The grantee can 
expend no more than $10,000,000 on activities authorized by the 
extended waiver and alternative requirement. HUD may further extend the 
waiver and alternative requirements administratively, if requested by 
CNMI, for good cause.

V. Public Law 115-123 and 116-20 Waivers and Alternative Requirements

    Amendment to the One-for-One Replacement Housing Alternative 
Requirements for CDBG-MIT Grants.
    The Department's August 30, 2019 Federal Register notice (84 FR 
45838) and its January 6, 2021 notice (86 FR 561) included waivers and 
alternative requirements for grantees that received a CDBG-MIT 
allocation under Public Laws 115-123 or 116-20. The August 30, 2019 
notice included a one-for-one replacement housing waiver and 
alternative requirement for CDBG-MIT grantees and this notice modifies 
that requirement. Section V.A.22.a. of the notice (84 FR 45859) waives 
the one-for-one replacement requirements at section 104(d)(2)(A)(i) and 
(ii) and (d)(3) of the HCDA and 24 CFR 42.375 in connection with CDBG-
MIT funds for lower income dwelling units that are damaged by the 
disaster and not suitable for rehabilitation, as defined by the 
grantee. This waiver and alternative requirement was limited to only 
disaster-damaged lower-income units that are demolished or converted 
and not suitable for rehabilitation. The Department, however, 
recognizes that the purposes of the CDBG-MIT grants are forward looking 
and are generally not for purposes of recovery from a previous 
disaster. CDBG-MIT funds are instead to be used to address current and 
future risks to lessen the impact of future disasters. With that 
purpose in mind, grantees are not required to demonstrate that their 
CDBG-MIT activities ``tie-back'' to the specific disaster and address a 
specific unmet recovery need for which funds were allocated. CDBG-MIT 
grantees therefore may be undertaking activities that remove housing 
units that are not damaged by a previous disaster but still constitute 
an eligible use of CDBG-MIT funds, because those activities must meet 
the requirement that they are moving people or property out of harm's 
way or otherwise lessening the impact of future disasters on residents 
of those units.
    CDBG-MIT grantees are required to document how all activities 
funded by their CDBG-MIT grant meet the definition of mitigation 
activities, which as stated in the August 30, 2019 notice means those 
activities that increase resilience to disasters and reduce or 
eliminate the long-term risk of loss of life, injury, damage to and 
loss of property, and suffering and hardship, by lessening the impact 
of future disasters. Grantees are prohibited from funding activities 
with CDBG-MIT funds that fail to meet the definition of mitigation 
activities in the August 30, 2019 notice. Based on the goals and 
requirements of the CDBG-MIT funds and articulated in the August 30, 
2019 notice, there is good cause to amend the one-for-one replacement 
alternative requirements for CDBG-MIT grants. Accordingly, HUD is 
deleting the provisions of the previous waiver and alternative

[[Page 36873]]

requirement and replacing the paragraph at V.A.22.a. in its entirety. 
This new language will not apply retroactively and will only apply to 
the eligible CDBG-MIT activities identified below, as of the 
applicability date of this notice.
    V.A.22.a. Section 104(d) one-for-one replacement.
    One-for-one replacement housing requirements at section 
104(d)(2)(A)(i) and (ii) and (d)(3) of the Housing and Community 
Development Act of 1974 (HCDA) and 24 CFR 42.375 are waived for all 
demolished or converted lower-income dwelling units that are CDBG-MIT 
eligible to permanently move people and/or property out of harm's way 
as part of a housing mitigation activity, such as a buyout, that 
addresses a risk identified in a grantee's risk-based Mitigation Needs 
Assessment. This waiver exempts lower-income dwelling units that meet 
the grantee's definition of ``not suitable for replacement'' from the 
one-for-one replacement requirements, since CDBG-MIT grantees may be 
undertaking activities that remove housing units that are not damaged 
by a previous disaster but still are necessary to address mitigation 
risk. Before carrying out activities that may be subject to the one-
for-one replacement requirements, the grantee must define ``not 
suitable for replacement'' in its action plan or in policies and 
procedures governing these activities. When working to move people and/
or property out of harm's way, requiring replacement housing units to 
be located within the same neighborhood can be inconsistent with the 
purposes of the CDBG-MIT grants and is not always feasible because 
these areas have been identified to have current and future disaster 
risks, as described in the grantee's Mitigation Needs Assessment. HUD 
is providing this waiver in recognition that grantees are using CDBG-
MIT funds for mitigation needs based on a Mitigation Needs Assessment 
that identifies and analyzes all significant current and future 
disaster risks as the basis for undertaking the proposed demolition or 
conversion activities consistent with the goals of the CDBG-MIT funds.
    Even when using CDBG-MIT funds, grantees must reassess post-
disaster population and housing needs relative to the Mitigation Needs 
Assessment to determine the appropriate type and amount of lower-income 
dwelling units to rehabilitate or reconstruct. Grantees must include 
this analysis in their program files with a description of how CDBG-MIT 
funds or other sources, including CDBG-DR funds, will be used to 
address housing and mitigation needs for residents of lower-income 
dwelling units. Grantees should note that the demolition and/or 
disposition of public housing units continue to be subject to section 
18 of the United States Housing Act of 1937, as amended, and 24 CFR 
part 970.

VI. Public Law 115-56, 115-123, 115-254, and 116-20 Grant Requirements

    Certification and Supporting Documentation for CDBG-DR and CDBG-MIT 
Grants for Disasters Occurring in 2015 through 2019.
    Typically, appropriations acts require 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, 42 U.S.C. 5155, to 
ensure timely expenditure of funds, maintain a comprehensive website 
regarding all disaster recovery activities assisted with these funds, 
and detect and prevent waste, fraud, and abuse of funds. To enable the 
Secretary to make this certification, each grantee must submit to HUD 
the certification documentation described in the applicable Federal 
Register notice governing the funds.
    Over the life of a grant, HUD expects a grantee to modify and 
update its policies and procedures to implement effective recovery 
programs. In Federal Register notices published on February 9, 2018 at 
83 FR 5844, August 14, 2018 at 83 FR 40314, August 30, 2019 at 84 FR 
47528, January 27, 2020 at 85 FR 4681, and January 6, 2021 at 86 FR 561 
and 86 FR 569, HUD describes the necessary steps each grantee must 
complete for the Secretary's certification for CDBG-DR and CDBG-MIT 
funds provided in response to qualifying disasters occurring in 2015 
through 2019. For all CDBG-DR funds subject to the February 9, 2018 
notice, HUD requires grantees to ``adhere to the controls, processes, 
and procedures described in the grantee's financial controls and 
procurement processes documentation submitted in response to the 
certification, unless amended with HUD's approval'' (83 FR 5846). 
Additionally, the January 27, 2020 notice requires grantees to 
``implement the CDBG-DR grant consistent with the controls, processes, 
and procedures as certified by HUD'' (85 FR 4686). For all CDBG-MIT 
funds subject to the August 30, 2019 notice, HUD states that ``failure 
to implement a CDBG-MIT grant in accordance with a grantee's approved 
financial certification . . . shall constitute a performance 
deficiency'' (84 FR 45863).
    HUD has determined that it is not necessary nor prudent for the 
agency to approve every change made to the supporting documentation 
submitted to support the Secretary's certification during the life of 
the grant or to require the grantee to implement funds per the initial 
submission. Instead, HUD is now establishing a modified requirement for 
all CDBG-DR and CDBG-MIT grantees subject to the notices cited in the 
previous paragraph. In lieu of submitting all changes for approval, a 
grantee must notify HUD of any substantial changes made to the 
supporting documentation submitted to support the Secretary's 
certification after the grant agreement has been signed by HUD and the 
grantee. Over the life of the grant, HUD will monitor the grantee for 
compliance with its submission and any updates made by the grantee. All 
updates must be retained and identified in the grantee's files, 
together with dates of applicability, so that HUD can determine which 
policies and procedures the grantee was following at any point in time. 
The grantee is required to adhere to its supporting documentation, as 
amended, until the closeout of the grant. HUD finds this change to be 
necessary to expedite recovery once the Secretary has completed a 
certification based on the grantee's supporting documentation, and a 
grant agreement has been signed by both parties.

VII. Public Law 115-56 and 115-123 Waivers and Alternative Requirements

    Base Flood Elevation Requirement and Reimbursement in the 
``Homeowner Reimbursement Program'' (State of Texas--Harris County and 
City of Houston Only).
    The Department awarded $5,024,215,000 under Public Law 115-56 and 
$652,175,000 under Public Law 115-123 to the State of Texas for 
recovery from Hurricane Harvey for necessary expenses related to 
disaster relief, long term recovery, restoration of infrastructure and 
housing, economic revitalization, and mitigation. This section of the 
notice specifies waivers and alternative requirements and modifies 
requirements for CDBG-DR funds awarded to the State of Texas under 
Public Laws 115-56 and 115-123. In the Federal Register notice 
published on September 28, 2020 at 85 FR 60825, the Department provided 
a waiver and alternative requirement permitting the State of Texas to 
reimburse homeowners that are otherwise eligible for assistance but who 
elevated their homes to comply with the local jurisdiction's freeboard 
requirements, which may be lower than

[[Page 36874]]

the HUD-mandated standard to elevate to base flood elevation plus 2 
feet (the ``September 2020 waiver''). The State of Texas has submitted 
a request to extend the September 2020 waiver to also include two local 
governments awarded funds by the state: Harris County and the City of 
Houston, as described below.
    The state awarded funds to Harris County and the City of Houston to 
develop their own disaster recovery programs. Both Harris County and 
the City of Houston are implementing homeowner reimbursement programs: 
Harris County's Homeowner Reimbursement Program and the City of 
Houston's Reimbursement Option in their Harvey Homeowner Assistance 
Program. These programs are designed to assist homeowners in recovering 
out-of-pocket expenses paid by the homeowner for residential 
rehabilitation due to Hurricane Harvey. Both programs' eligibility 
requirements require that the home be the owner's primary residence and 
the eligible rehabilitation costs must have been incurred prior to the 
owner's application to the program or December 31, 2020, whichever is 
earlier. Because the state, county, and city's Hurricane Harvey 
response and recovery efforts commenced on the date of the disaster and 
before CDBG-DR assistance was available, some homeowners participating 
in these homeowner reimbursement programs may have repaired their homes 
to meet FEMA's program requirements and the local jurisdiction's 
elevation requirements, rather than HUD's Federal Register notice 
requirements. The elevation requirements in the Federal Register notice 
require that residential structures be elevated to at least 2 feet 
above base flood elevation. Because the homeowners did not anticipate 
receiving CDBG-DR assistance, the state is requesting that HUD extend 
the September 28, 2020 waiver to include its subrecipients' 
reimbursement programs.
    Based on the reasons cited above, HUD finds that good cause exists 
to modify the September 2020 waiver to include homeowners seeking 
reimbursement in the Harris County and City of Houston's homeowner 
reimbursement programs and permit the city and county to reimburse 
those homeowners for costs of rehabilitation incurred before 
application of the homeowner to the program or December 31, 2020, 
whichever is earlier, subject to the following requirements:
     The homeowner's reimbursed rehabilitation costs complied 
with the elevation requirement of the local jurisdiction.
     The activity is eligible under title I of the HCDA or by 
waiver and is consistent with CPD-15-07: Guidance for Charging Pre-
Application Costs of Homeowners, Businesses, and Other Qualifying 
Entities to CDBG Disaster Recovery Grants.
     The activity meets a CDBG-DR national objective and 
otherwise complies with CDBG-DR requirements not waived by this 
section.
     The state uses not less than 70 percent of the aggregate 
CDBG-DR grant for activities that benefit low- and moderate-income 
persons.
    The state must ensure that all costs charged to this program and to 
the CDBG-DR grant are necessary and reasonable expenses related to 
disaster recovery.

VIII. Public Law 115-56, 115-123, and 116-20 Waivers and Alternative 
Requirements

    Buildings for the General Conduct of Government Waiver and 
Alternative Requirement (Commonwealth of Puerto Rico only).
    The Department awarded $1,507,179,000 of CDBG-DR funds under Public 
Law 115-56, $8,220,783,000 of CDBG-DR funds and $8,285,284,000 of CDBG-
MIT funds under Public Law 115-123, and $277,853,230 of CDBG-DR funds 
under Public Law 116-20 to the Commonwealth of Puerto Rico for recovery 
from Hurricanes Irma and Maria for necessary expenses related to 
disaster relief, long term recovery, restoration of infrastructure and 
housing, economic revitalization, and mitigation.
    With these funds, Puerto Rico is implementing its Non-Federal Match 
Program (NFMP) designed to assist in the local non-Federal cost share 
of infrastructure projects across all 78 municipalities that are 
eligible under FEMA Public Assistance Category of Work E (buildings). 
Puerto Rico is also implementing a Community Revitalization Program 
(CRP) to reinvigorate its urban centers and key community programs. 
Included in both programs is a group of projects that are considered 
buildings for the general conduct of government, as defined in 42 
U.S.C. 5302(a)(21). The subject buildings often function as both city 
halls and government centers, which provide important recovery-related 
services, such as permit evaluation and coordination and may also 
include facilities that are designed to detect public health threats 
and support local and regional emergency response that primarily serves 
low- and moderate-income areas.
    To implement the above programs and to assist in the recovery of 
its 78 municipalities, Puerto Rico has requested a waiver of 42 U.S.C. 
5305(a)(2), which prohibits acquisition, construction, reconstruction, 
or installation of buildings for the general conduct of government as 
eligible public facilities activities. The Secretary has determined 
that there is good cause to grant this waiver as these buildings are 
necessary for these municipalities to adequately address critical 
infrastructure needs created by the disaster, help disaster recovery by 
reinvigorating its urban centers and key community programs, and help 
coordinate resilience and mitigation efforts across Puerto Rico. 
Therefore, HUD is waiving the prohibition on buildings for the general 
conduct of government at 42 U.S.C. 5305(a)(2) and associated 
regulations at 24 CFR 570.207(a) to permit the Commonwealth of Puerto 
Rico to carry out the construction, reconstruction, and rehabilitation 
of public improvements or facilities on buildings for the general 
conduct of government within the NFMP or CRP programs, subject to the 
following requirements. All CDBG-DR funded activities must address a 
direct or indirect impact from the major disaster in a most impacted 
and distressed area resulting from the major disaster. The grantee is 
prohibited from using CDBG-DR or CDBG-MIT funds for buildings that do 
not provide services all year around and is prohibited from using funds 
for buildings that are used exclusively as emergency operations 
centers.

IX. Public Law 116-20 Waivers and Alternative Requirements for the 
Commonwealth of Puerto Rico

    Aligning requirements for the Commonwealth of Puerto Rico's 2019 
CDBG-DR allocation with the requirements of its 2020 CDBG-DR allocation 
(Commonwealth of Puerto Rico only).
    The Department allocated the Commonwealth of Puerto Rico 
$36,424,000 under Public Law 116-20 for recovery from earthquakes 
(``2019 CDBG-DR Grant'') and $184,626,000 under Public Law 117-43 for 
recovery from earthquakes and Tropical Storm Isaias (``2020 CDBG-DR 
Grant'') for necessary expenses related to disaster relief, long term 
recovery, restoration of infrastructure and housing, economic 
revitalization, and mitigation.
    HUD has described the relevant statutory and regulatory 
requirements, including all applicable waivers and alternative 
requirements, that apply to Puerto Rico's 2019 CDBG-DR Grant in

[[Page 36875]]

the following Federal Register notices (``PR's Prior Notices''): 
February 9, 2018 at 83 FR 5844, August 14, 2018 at 83 FR 40314, 
February 19, 2019 at 84 FR 4836, June 20, 2019 at 84 FR 28848, January 
27, 2020 at 85 FR 4681,1 August 17, 2020 at 85 FR 50041, and September 
28, 2020 at 85 FR 60821, and January 6, 2021 at 86 FR 569.
    Though HUD allocated some of the 2020 CDBG-DR funds for the same 
major disaster assisted by the 2019 CDBG-DR Grant, HUD established 
different requirements for the use of the 2020 CDBG-DR Grant in the 
February 3, 2022 Federal Register notice at 87 FR 6364, which includes 
a CDBG-DR Consolidated Notice as Appendix B (the ``Consolidated 
Notice''). The February 3, 2022 notice (including the Consolidated 
Notice) describes the waivers and alternative requirements, applicable 
statutory and regulatory requirements, the grant award process, 
criteria for action plan approval, and eligible disaster recovery 
activities for the use of the 2020 CDBG-DR Grant funds.
    To ease the administrative burden of managing two grants that are 
tied to the same disaster, HUD has determined that there is good cause 
to allow Puerto Rico to manage these grants under a single action plan 
and a single set of requirements (to the extent permitted by governing 
appropriations acts). Implementing this change will allow the grantee 
to follow a single set of requirements and submit a single action plan 
for the uses of both the existing 2019 CDBG-DR Grant under Public Law 
116-20 and the new 2020 CDBG-DR Grant under Public Law 117-43, while 
each grant remains separate, with separate financial controls, and some 
other distinctions.
    To do this, HUD is imposing the following modifications of the 
requirements of PR's Prior Notices for the 2019 CDBG-DR grant:
    1. Puerto Rico must submit its action plan for the 2020 CDBG-DR 
Grant in accordance with the Consolidated Notice at section III.C.1. 
(87 FR 6379) using the Public Action Plan in the Disaster Recovery 
Grant Reporting (DRGR) system. Even though section III.C.1. is written 
for the 2020 CDBG-DR grant, under the terms of the waiver and 
alternative requirement, the Grantee's Public Action Plan shall also 
describe the use of all grant funds for the 2019 CDBG-DR grant in its 
Public Action Plan required by section III.C.1. of the Consolidated 
Notice. Together, the description of the use of funds allocated for 
2020 disasters and the use of funds under the 2019 CDBG-DR Grant shall 
be described in a single action plan (the Public Action Plan) that 
substantially amends the 2019 CDBG-DR action plan. Puerto Rico will 
then be able to download the single action plan and post it for public 
comment on its disaster recovery website to meet the public comment 
requirements for 2019 and 2020 disasters. The deadline for that 
submission is 120 days after the applicability date of the February 3, 
2022 notice. Based on the requirements in the February 3, 2022 notice, 
Puerto Rico may submit its Public Action Plan (a single document that 
describes the use of 2020 CDBG-DR Grant and 2019 CDBG-DR Grant), 
earlier than that date or may request an extension of the submission 
deadline to submit at a later date, if HUD approves the request.
    2. Once the Public Action Plan that contains a description of all 
2019 and 2020 CDBG-DR funds is approved, Puerto Rico's use of all grant 
funds must be consistent with the Public Action Plan. Upon HUD's 
approval of the Public Action Plan, the action plan that described the 
use of the 2019 CDBG-DR grant shall only be relevant to costs charged 
to the 2019 CDBG grant before the date of approval of the Public Action 
Plan.
    3. Once the Public Action Plan is approved, except as identified 
below, Puerto Rico's 2019 CDBG-DR grant will no longer be subject to 
any provisions in PR's Prior Notices and the use of 2019 and 2020 CDBG-
DR Grants shall be subject to the requirements of February 3, 2022 
notice (including the Consolidated Notice) provisions, as may be 
amended from time to time. The exceptions are as follows:
    a. The 2019 CDBG-DR Grant is not subject to the following 
provisions of the February 3, 2022 Notice (including the Consolidated 
Notice) that implement statutory authorities specific to Public Law 
117-43 or are related to requirements that were previously met: Section 
I (Allocations), requirements in section II (Use of Funds) related to 
the CDBG-DR mitigation set-aside, III. (Requirements Related to 
Administrative Funds), IV.A.2. (CDBG-DR mitigation set-aside), IV.A.3. 
(Interchangeability of Disaster Funds), and the provisions of the 
Consolidated Notice that direct grantees to make pre-award submissions 
(section III.A. ``Pre-Award Evaluation of Management and Oversight of 
Funds'' of the Consolidated Notice (87 FR 6376).
    b. PR's Prior Notices (as modified by section VII of this notice) 
continue to govern all requirements for the 2017 Unmet Infrastructure 
Needs Grant and the following requirements for the 2019 CDBG-DR grant: 
HUD's allocations for 2019 disasters and allocation methodology, the 
requirements that governed the grantee's pre-grant submissions to 
support the Secretary's certifications, the grantee's submissions 
describing its implementation plan and capacity assessment, the 
identified major disasters and MID areas for the 2019 CDBG-DR Grant, 
and the use of administrative funds across multiple grants (section 
IV.B.3. of the notice published Jan. 27, 2020).

X. Flexibilities for Grants Under Recent Appropriations Acts (Affects 
Multiple Grantees)

    Recent appropriations acts have provided CDBG-DR grantees with 
additional flexibilities. This section notifies grantees, the public, 
and oversight entities of these flexibilities. The new statutory 
authorities supersede any requirements to the contrary in Federal 
Register notices or grant agreements governing awards that are subject 
to the new statutory provisions.
    Public Law 117-43 authorizes the Secretary to permit grantees that 
received funds under Public Law 117-43 and under prior or future 
appropriations for activities related to unmet recovery needs in the 
MID areas resulting from a major disaster to use those funds 
interchangeably and without limitation for the same activities related 
to unmet recovery needs in the MID areas resulting from another major 
disaster in Public Law 117-43 or in prior or future appropriation acts, 
when the MID areas overlap and when the use of the funds will address 
unmet recovery needs of both major disasters. The Secretary authorized 
this use of funds and implemented this requirement for all grantees 
that received a grant under Public Law 117-43. This authorization is 
published in section IV.A.3. of the Federal Register notice published 
on February 3, 2022 at 87 FR 6368 and in section IV.A.3. of the Federal 
Register notice published on May 24, 2022 at 87 FR 31643.
    Under these authorizations, grantees may use CDBG-DR funds that 
they were awarded under Public Law 117-43 and under prior and future 
appropriations acts interchangeably and without limitation for eligible 
activities authorized by title I of the HCDA, as modified by applicable 
waivers and alternative requirements, if:
    (a) The activities support recovery in the overlapping portions of 
MID areas resulting from major disasters assisted under both 
appropriations (if applicable Federal Register notices do not specify 
MID areas for a major disaster, the MID areas are those areas covered 
by the President's major disaster declaration); and

[[Page 36876]]

    (b) The use of the funds will address unmet recovery needs of both 
major disasters. Consistent with Congressional intent to increase the 
speed of recovery and ease administrative burdens, HUD will evaluate 
whether the use of funds in the overlapping MID areas will address 
unmet recovery needs of both major disasters at the highest reasonable 
level. For CDBG-DR grants, this will be evaluated at the action plan 
level (not by evaluating unmet needs of individual beneficiaries). 
Accordingly, before using funds for a disaster other than the major 
disaster for which the funds were awarded, a CDBG-DR grantee must 
describe in its action plan that governs the use of the funds how the 
combined use of all funds under both appropriations will address unmet 
recovery needs of both major disasters.
    Public Law 117-43 also provides flexibility for grantees receiving 
funds under Public Law 117-43 and under prior or future acts to use 
grant funds for administrative costs across multiple grants. HUD 
implemented this requirement for all grantees affected by the provision 
in section III.A.2. of the Federal Register notice published on 
February 3, 2022, at 87 FR 6367 and in section III.A.2. of the Federal 
Register notice published on May 24, 2022, at 87 FR 31642.
    Public Law 116-20 authorized grantees that received grants under 
Public Laws 114-113, 114-223, 114-254, 115-31, 115-56, 115-123, 115-
254, and 116-20 or any future act to use eligible administrative funds 
(up to 5 percent of each grant plus up to 5 percent of program income 
generated by the grant) appropriated by these acts for the cost of 
administering any of these grants without regard to the particular 
disaster appropriation from which such funds originated. HUD 
implemented this requirement for all affected grantees in section 
IV.B.3. of the Federal Register notice published on January 27, 2020, 
at 85 FR 4686. This flexibility is also codified at 42 U.S.C. 5122 
note.
    Section 432 of the Transportation, Housing and Urban Development, 
and Related Agencies Appropriations Act, 2022 (Pub. L. 117-103) 
extended the expenditure deadline to September 30, 2025, for grants 
made available under Public Law 113-2.

XI. 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 online on HUD's CDBG-DR website. 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).

Adrianne Todman,
Deputy Secretary.
[FR Doc. 2022-13179 Filed 6-17-22; 8:45 am]
BILLING CODE 4210-67-P