[Federal Register Volume 87, Number 243 (Tuesday, December 20, 2022)]
[Notices]
[Pages 77855-77864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27548]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6337-N-01]


Request for Information Community Development Block Grant 
Disaster Recovery (CDBG-DR) Formula

AGENCY: Office of the Assistant Secretary for Policy Development and 
Research (PD&R), Department of Housing and Urban Development (HUD).

ACTION: Request for information.

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[[Page 77856]]

SUMMARY: The U.S. Department of Housing and Urban Development (HUD) 
seeks public input on the methodology HUD uses to calculate Community 
Development Block Grant-Disaster Recovery (CDBG-DR) allocation amounts. 
This Request for Information (RFI) is to solicit feedback to inform how 
the Department can improve the allocation formula in the event Congress 
appropriates funds for CDBG-DR in the future.

DATES: Comments are requested on or before February 21, 2023. Late-
filed comments will be considered to the extent practicable.

ADDRESSES: Interested persons are invited to submit comments responsive 
to this Request for Information (RFI). All submissions must refer to 
the docket number and title of the RFI. Comments may include written 
data, views, or arguments. Each individual or organization is 
encouraged to submit only one response and to limit their submissions 
to 10 pages in 12-point or larger font, with a page number provided on 
each page. Commenters are encouraged to identify the number of the 
specific question or questions to which they are responding. Responses 
should include the name of the person(s) or organization(s) filing the 
comment but should not include any personally identifiable information.
    There are two methods for submitting public comments.
    1. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov.
    2. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Council, Department 
of Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500.
    HUD strongly encourages commenters to submit their feedback and 
recommendations electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a response, 
ensures timely receipt by HUD, and enables HUD to make comments 
immediately available to the public. Comments submitted electronically 
through the http://www.regulations.gov website can be viewed by other 
commenters and interested members of the public. Commenters should 
follow the instructions provided on that site to submit comments 
electronically.

    Note:  To receive consideration as public comments, comments 
must be submitted through one of the two methods specified above. 
Again, all submissions must refer to the docket number and title of 
the notice.

    Public Inspection of Public Comments. All comments and 
communications properly submitted to HUD will be available for public 
inspection and copying between 8 a.m. and 5 p.m. weekdays at the above 
address. Due to security measures at the HUD Headquarters building, an 
advance appointment to review the public comments must be scheduled by 
calling the Regulations Division at (202) 708-3055 (this is not a toll-
free number). HUD welcomes and is prepared to receive calls from 
individuals who are deaf or hard of hearing, as well as individuals 
with speech or communication disabilities. To learn more about how to 
make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. Copies of all 
comments submitted are available for inspection and downloading at 
http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Todd Richardson, Office of Policy 
Development and Research, Department of Housing and Urban Development, 
451 7th Street SW, Room 8138, Washington, DC 20410-0500; telephone 
number (202) 402-5706 (this is not a toll-free number). HUD welcomes 
and is prepared to receive calls from individuals who are deaf or hard 
of hearing, as well as individuals with speech or communication 
disabilities. To learn more about how to make an accessible telephone 
call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:

I. History of CDBG-DR Formula Allocations

    Congress has periodically funded CDBG-DR grants through emergency 
appropriations acts since 1993. The CDBG-DR program is not authorized 
through standing statute, but instead was created through these 
emergency appropriations premised on the authorized Community 
Development Block Grant (CDBG) program. While the CDBG-DR grants are 
largely subject to the statutes and regulations governing the CDBG 
program, each appropriation act that makes CDBG-DR funds available 
imposes disaster-specific requirements and includes broad waiver and 
alternative requirement authority that enables the Secretary to adjust 
requirements to support resilient recovery for an individual disaster 
or a set of disasters.
    One component of the overall process for CDBG-DR is the method for 
allocating the funds. With very few exceptions, HUD has allocated funds 
by formula because this method is the best way to satisfy statutory 
requirements. The language Congress uses in appropriations acts 
directing HUD to develop the formula and the formula itself have 
evolved over time. This evolution has depended on the type of 
disasters, the amount of funding available, policy priorities of 
different Administrations, and the data available immediately after a 
disaster to support a speedy and equitable allocation.
    After each CDBG-DR formula allocation, HUD has published as an 
Appendix to the Federal Register Notice describing the methodology used 
to make the allocations. Those Notices are available at this website: 
https://www.hud.gov/program_offices/comm_planning/cdbg-dr/regulations.
    This request for information is seeking comment on the current 
methodology as a way to inform future allocations if and when 
appropriations acts make additional CDBG-DR funds available.

II. Overview of Current Methodology

    As noted above, the CDBG-DR formula has evolved over time. To 
facilitate comment, this RFI is based on the formula used to allocate 
funds made available by The Disaster Relief Supplemental Appropriations 
Act, 2022 (Pub. L. 117-43), which was approved September 30, 2021, and 
funded most impacted and distressed areas resulting from major 
disasters occurring in 2020 and 2021.
    To enable assessment of comments based on consistent language, HUD 
seeks comment on the methodology and choice of data for the most recent 
2021 formula allocations.

Guiding Features of the Statutory Text

    Each appropriation of CDBG-DR funds stands alone. The key 
components of the statutory language for the most recent formula 
allocations were:
     Purpose: ``necessary expenses for activities authorized 
under title I of the Housing and Community Development Act of 1974 (42 
U.S.C. 5301 et seq.) related to disaster relief, long-term recovery, 
restoration of infrastructure and housing, economic revitalization, and 
mitigation, in the most impacted and distressed areas resulting from a 
major disaster that occurred in 2020 or 2021 pursuant to the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 
et seq.):''

[[Page 77857]]

     Eligible grantees: ``Provided, That amounts made available 
under this heading in this Act shall be awarded directly to the State, 
unit of general local government, or Indian tribe (as such term is 
defined in section 102 of the Housing and Community Development Act of 
1974 (42 U.S.C. 5302)) at the discretion of the Secretary:''
     Data: ``Provided further, That the Secretary shall 
allocate, using the best available data,''
    The timing of the appropriation and statutory language permitted 
funding disasters that had occurred in 2020 and 2021, as well as 
disasters that had not yet occurred in 2021--essentially a ``go 
forward'' basis. The language further provided that if there were 
available funds, they should be allocated for both unmet needs and 
mitigation at the same time:
     Total unmet needs. ``[A]n amount equal to the total 
estimate for unmet needs for qualifying disasters under this heading in 
this Act:''
     Mitigation. ``Provided further, That any final allocation 
for the total estimate for unmet need made available under the 
preceding proviso shall include an additional amount of 15 percent of 
such estimate for additional mitigation:''
    The most recently used formula applying this statutory direction 
was designed with the following goals:
     Allocate the funds as quickly as possible.
     Use best available data that is consistently collected for 
eligible disasters.
     Allocate directly to local governments instead of states 
when the disaster is concentrated in one or a small number of 
communities regularly ``entitled'' under the non-disaster CDBG program.
    HUD is seeking comments on several specific components of the 
formula. This section of the Notice describes each component and 
Section IV will refer back to these components in identifying the 
specific information requested in connection with each.

Component 1. Eligible Disasters for Funding

    The statutory language directs HUD to limit CDBG-DR allocations to 
those areas that were most impacted and distressed from a 
Presidentially declared major disaster. HUD has implemented this 
directive by limiting CDBG-DR formula allocations to grantees with 
major disasters that meet these standards:
    (1) FEMA's Individual and Households Program (IHP) designation. HUD 
has limited allocations to those disasters where FEMA had determined 
the damage was sufficient to declare the disaster as eligible to 
receive IHP funding.
    (2) Concentrated housing damage. HUD has limited its estimate of 
serious unmet housing need to counties and zip codes with high levels 
of damage, collectively referred to as ``most impacted areas.'' For the 
most recent allocation, HUD defined most impacted areas as either most 
impacted counties--counties exceeding $10 million in serious unmet 
housing needs--or most impacted Zip Codes--Zip Codes with $2 million or 
more of serious unmet housing needs. The calculation of serious unmet 
housing needs is described below.

Component 2. Basic Formula for Unmet Needs

    ``Unmet needs'' means that the needs are not met by other sources 
of financial assistance, including Federal assistance and insurance. 
Further, grantees are required to prevent the duplication of benefits 
received from other sources when carrying out eligible activities.
    At the formula level, HUD considers the following other recovery 
resources that are directed at long-term disaster recovery: insurance, 
Small Business Administration (SBA) disaster loans, and FEMA IHP and 
Public Assistance. All of these forms of assistance are typically 
available for recovery before CDBG-DR is allocated. The CDBG-DR formula 
is designed to roughly estimate the recovery gaps not served by these 
sources.
    The current formula does not assume that it is possible to measure 
all unmet needs. Instead, the formula has evolved to be a common 
``measuring stick.'' By using similar data and approach to defining 
unmet needs and which areas are ``most impacted and distressed,'' it is 
possible to evaluate the funding being provided to current major 
disasters against allocations made for prior year disasters as 
``apples-to-apples.''
    The formula depends on information gleaned from the federal 
programs that respond immediately after a disaster occurs--FEMA and 
SBA--in order to calculate unmet needs for the CDBG-DR formula 
allocation. Unlike the other programs that are applicant driven, CDBG-
DR is a block grant that allots money for grantees to develop their own 
plans to reflect the recovery gaps. Fundamentally, the formula is not 
intended to define the specific plan beyond the singular goal of 
notifying grantees how much funding they will receive for recovery 
activities.
    For disasters that meet the most impacted threshold described in 
Component 1 above, the unmet need allocations are based on the 
following factors summed together:
    (1) Housing Need.
    (a) Repair estimates for seriously damaged owner-occupied units 
without insurance (excluding households with incomes above either the 
national median or 120 percent of area median income, whichever is 
greater, if they are without hazard insurance or--if a flooding event--
were in the 1 percent annual chance floodplain and did not carry flood 
insurance) in most impacted areas after FEMA and SBA repair grants or 
loans; and
    (b) Repair estimates for seriously damaged rental units occupied by 
very low-income or poverty renters in most impacted areas.
    (2) Economic Revitalization Need. Repair and content loss estimates 
for small businesses with serious damage denied by SBA.
    (3) Public Infrastructure Need. The estimated local cost share for 
Public Assistance Category C to G projects.

Component 3. Methods for Estimating Serious Unmet Needs for Housing

    HUD used FEMA IHP program data on housing-unit damage as of 
February 10, 2022, to calculate unmet needs for housing for 2020 and 
2021 qualifying disasters. HUD generally calculates damage estimates 
for unmet needs at least 60 to 90 days after the disaster is declared a 
major disaster to allow sufficient time for the vast majority of FEMA 
and SBA housing inspections to be completed.
    The core data on housing damage for both the unmet housing needs 
and concentrated damage calculations are based on home inspection data 
for FEMA's IHP program and SBA's 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, SBA, and insurance.
    Each of the FEMA inspected owner-occupied units are categorized by 
HUD into one of five categories:
     Minor-Low: Less than $3,000 of FEMA inspected real 
property damage.
     Minor-High: $3,000 to $7,999 of FEMA inspected real 
property damage.
     Major-Low: $8,000 to $14,999 of FEMA inspected real 
property damage and/or 1 to 3.9 feet of flooding on the first floor.
     Major-High: $15,000 to $28,800 of FEMA inspected real 
property damage and/or 4 to 5.9 feet of flooding on the first floor.
     Severe: Greater than $28,800 of FEMA inspected real 
property damage

[[Page 77858]]

or determined destroyed and/or 6 or more feet of flooding on the first 
floor.
    When owner-occupied properties also have a personal property 
inspection or only have a personal property inspection, HUD reviews the 
personal property damage amounts such that if the personal property 
damage places the home into a higher need category over the real 
property assessment, the personal property amount is used. The personal 
property-based need categories for owner-occupied units are defined as 
follows:
     Minor-Low: Less than $2,500 of FEMA inspected personal 
property damage.
     Minor-High: $2,500 to $3,499 of FEMA inspected personal 
property damage.
     Major-Low: $3,500 to $4,999 of FEMA inspected personal 
property damage or 1 to 3.9 feet of flooding on the first floor.
     Major-High: $5,000 to $9,000 of FEMA inspected personal 
property damage or 4 to 5.9 feet of flooding on the first floor.
     Severe: Greater than $9,000 of FEMA inspected personal 
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 were determined to have a high level of 
damage if they have damage of ``major-low'' or higher. That is, the 
unit has a FEMA inspected real property damage of $8,000 or above, 
personal property damage $3,500 or above, or flooding 1 foot or above 
on the first floor. This threshold, like most other thresholds 
discussed in this formula, were established for the Hurricane Sandy 
allocation and have been used since that time.
    Furthermore, a homeowner whose flooded home was located outside the 
1 percent annual chance floodplain is determined to have unmet needs if 
they reported damage and no flood insurance to cover that damage. For 
homes located inside the 1 percent annual chance floodplain, homeowners 
without flood insurance with flood damage with incomes below the 
greater of national median or 120 percent of area median income are 
determined to have unmet needs. For non-flood damage, homeowners 
without hazard insurance with incomes below the greater of the national 
median or 120 percent of area median income are included as having 
unmet needs. The unmet need categories for these types of homeowners 
are defined as above for real and personal property damage.
    FEMA does not inspect rental units for real property damage so 
personal property damage is used as a proxy for rental unit damage. 
Each of the FEMA-inspected renter units are categorized by HUD into one 
of five categories:
     Minor-Low: Less than $1,000 of FEMA inspected personal 
property damage.
     Minor-High: $1,000 to $1,999 of FEMA inspected personal 
property damage or determination of ``Moderate'' damage by the FEMA 
inspector.
     Major-Low: $2,000 to $3,499 of FEMA inspected personal 
property damage or 1 to 3.9 feet of flooding on the first floor or 
determination of ``Major'' damage by the FEMA inspector.
     Major-High: $3,500 to $7,500 of FEMA inspected personal 
property damage or 4 to 5.9 feet of flooding on the first floor.
     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 or determination of ``Destroyed'' by the 
FEMA inspector.
    To meet the statutory requirement of ``most impacted'' for rental 
properties, 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 1 
foot or above on the first floor.
    Furthermore, landlords are presumed to have adequate insurance 
coverage unless the unit is occupied by a renter with income less than 
the greater of the Federal poverty level or 50 percent of the area 
median income. Units occupied by a tenant with income less than the 
greater of the poverty level or 50 percent of the area median income 
are used to calculate likely unmet needs for affordable rental housing. 
HUD includes only these low-income renter households in its calculation 
for unmet rental housing needs.
    The average cost to fully repair a housing unit to code for a 
specific disaster within each of the damage categories noted above is 
calculated using the median real property damage repair costs 
determined by SBA for its disaster loan program based on a match 
comparing FEMA and SBA inspections by each of the FEMA damage 
categories described above.
    In general, FEMA inspects nearly all of the housing units that have 
unmet needs, but those inspections are not to estimate the total cost 
to bring a house back to code, but rather to determine the level of 
assistance required to return the home to safe and sanitary living 
conditions. For the most severe disasters, there is a maximum amount of 
FEMA Individual Assistance of $35,500 and often that is the calculated 
damage amount for destroyed housing units. SBA, on the other hand, only 
inspects the homes of survivors that apply for SBA disaster loans and 
might be income and credit eligible for such a loan. The overlap 
between the SBA inspections and FEMA inspections is what HUD uses to 
calculate a multiplier of expected unmet needs by FEMA damage category, 
as described below.
    If there are 20 or more non-mobile home SBA inspections that 
overlap with FEMA inspections for a specific damage level for an 
individual disaster, the median SBA inspected amount is used as HUD's 
base.
    Using disaster 4611 (Hurricane Ida in Louisiana) as an example:
     There were 1,763 homes that had both a FEMA inspection 
showing the homes had ``major-low'' damage and an SBA inspection. We 
establish as a ``base'' the median estimated real estate loss for those 
matches. In the case of DR-4611, that is $50,846.
     Next, we look at the SBA data to see how many of the 
uninsured homeowners were approved for an SBA loan and for how much. As 
the chart shows, just 5 percent of the uninsured owners with major-low 
damage were approved for an SBA real estate disaster loan, at a median 
amount of $34,500. We multiply $34,500 times 5 percent to get $1,682, 
which we subtract from our base multiplier. In addition, 82 percent of 
uninsured major-low damage owners received a FEMA repair grant at a 
median amount of $9,630. Thus, an additional $7,915 (82 percent x 
$9,630) is subtracted from the multiplier.
     If the calculated amount falls within the minimum and 
maximum range (see below), it is the value used for the multiplier. In 
addition, a ``higher'' damage category cannot get a smaller multiplier 
than a lower damage category.

[[Page 77859]]



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                                                                 Major-low damage                Major-high damage                 Severe damage
                         DR-4611                         -----------------------------------------------------------------------------------------------
                                                                            Calculated                      Calculated                      Calculated
--------------------------------------------------------------------------------------------------------------------------------------------------------
SBA median estimated real estate loss...................         $50,846         $50,846         $64,121         $64,121         $82,523         $82,523
SBA median amount approved..............................         $34,500  ..............         $48,550  ..............         $63,700  ..............
% of unmet damage approved..............................              5%         -$1,682              5%         -$2,423              5%         -$3,401
FEMA Median Repair Grant................................          $9,630  ..............         $17,203  ..............         $31,740  ..............
% of unmet damage approved..............................             82%         -$7,915             78%        -$13,376             74%        -$23,483
ESTIMATED CDBG-DR UNMET MULTIPLIER......................  ..............         $41,249  ..............         $48,322  ..............         $55,639
N =.....................................................           1,763  ..............             948  ..............             382  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The exception is for mobile homes and other manufactured housing. 
We have calculated a separate multiplier that is the same for all 
manufactured homes damaged in all disasters of 2020 and 2021. 
Multipliers for manufactured homes are below.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Major-low damage                Major-high damage                 Severe Damage
                  Manufactured housing                   -----------------------------------------------------------------------------------------------
                                                             Estimate       Calculation      Estimate       Calculation      Estimate       Calculation
--------------------------------------------------------------------------------------------------------------------------------------------------------
SBA median estimated real estate loss...................         $60,143         $60,143         $79,621         $79,621         $92,843         $92,843
SBA median amount approved..............................         $52,550  ..............         $75,000  ..............         $78,100  ..............
% of unmet damage approved..............................              4%         -$2,206              4%         -$3,000              7%         -$5,111
FEMA Median Repair Grant................................         $11,027  ..............         $20,997  ..............         $35,319  ..............
% of unmet damage approved..............................             76%         -$8,366             78%        -$16,432             57%        -$20,137
ESTIMATED CDBG-DR UNMET MULTIPLIER......................  ..............         $49,571  ..............         $60,189  ..............         $67,594
N =.....................................................             889  ..............             345  ..............             468  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------

    For disasters and damage categories that have fewer than 20 matched 
SBA units, there is a ``waterfall'' review. No damage category can get 
less than the first quartile estimated amounts for all disasters of 
2020 and 2021, nor get more than the third quartile amount for all 
disasters of 2020 and 2021. The minimums and maximums are below.

------------------------------------------------------------------------
                                              Minimum         Maximum
          HUD damage categories             multiplier      multiplier
------------------------------------------------------------------------
Major-Low...............................         $22,971         $57,452
Major-High..............................          33,714          82,582
Severe..................................          36,592         134,503
------------------------------------------------------------------------

    For cases not meeting the 20-unit match threshold, the median for 
all disasters of the same type in 2020 and 2021 is used, subject to the 
minimum and maximum multipliers above.

----------------------------------------------------------------------------------------------------------------
                                                                           Multipliers by disaster type
                          Disaster type                          -----------------------------------------------
                                                                     Major-low      Major-high        Severe
----------------------------------------------------------------------------------------------------------------
Dam/Levee Break.................................................         $33,007         $47,078         $47,078
Earthquake......................................................          27,141          33,714         134,503
Fire............................................................          22,971          82,582         134,503
Flood...........................................................          47,074          57,856          64,513
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                           Multipliers by disaster type
                          Disaster type                          -----------------------------------------------
                                                                     Major-low      Major-high        Severe
----------------------------------------------------------------------------------------------------------------
Hurricane.......................................................         $36,800         $45,952         $45,952
Severe Ice Storm................................................          33,528          33,714          36,592
Severe Storm(s).................................................          22,971          37,299          37,299
Tornado.........................................................          52,961          82,582         134,503
----------------------------------------------------------------------------------------------------------------


[[Page 77860]]

Component 4. Methods for Estimating Serious Unmet Economic 
Revitalization Needs

    Based on SBA disaster loans to businesses using data for 2021 
disasters from as of date February 22, 2022, HUD calculated the median 
real estate and content loss by the following damage categories for 
each state:
     Minor-Low: real estate + content loss = below $12,000.
     Minor-High: real estate + content loss = $12,000-$29,999.
     Major-Low: real estate + content loss = $30,000-$64,999.
     Major-High: real estate + content loss = $65,000-$149,999.
     Severe: real estate + content loss = $150,000 and above.
    For properties with real estate and content loss of $30,000 or 
more, HUD calculates the estimated amount of unmet needs for small 
businesses by multiplying the median damage estimates for the 
categories above by the number of small businesses denied an SBA loan, 
including those denied a loan prior to inspection due to inadequate 
credit or income (or a loan application decision had not yet been 
made), under the assumption that damage among those denied at pre-
inspection have the same distribution of damage as those denied after 
inspection.
    Using DR-4611 (Hurricane Ida) as an example:
     Column (B) below shows that 1,834 businesses applied for 
an SBA disaster loan, were inspected, and had combined real estate and 
content loss of $30,000 or more (i.e., Major-Low damage or higher). 
Column (C) shows the median combined inspected loss estimate for each 
category.
     Of the 1,834 inspected with damage, column D shows 1,031 
were denied an SBA disaster loan or did not yet have a decision based 
on the best available data at the time of the allocation.
     However, not all of the businesses applying for a disaster 
loan receive an inspection. An inspection will not be initiated if a 
business does not meet some basic SBA requirements, such as credit 
score. Among all business applicants for a disaster loan in DR-4611, 
the count of the denied not-inspected divided by the count of all 
denied loans equals 2.14. Thus, assuming the distribution of need of 
those not inspected is the same as for those inspected, we estimate the 
total number of businesses likely needing assistance is 2.14 (column E) 
times the denied inspected loans (column D).
     The calculated unmet need are the total businesses HUD 
estimated were denied by SBA (column F) times the SBA median real 
estate and content damage of those inspected (column C).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Weighting to
                                                        Number        Median real    Inspected and  capture denied   Total businesses   Estimated total
                HUD damage category                    inspected      estate and     denied (or no     prior to       denied (or no        unmet need
                                                                    content damage     decision)      inspection        decision)
(A)                                                            (B)             (C)             (D)             (E)        (F = E * D)        (G = C * F)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Major-Low.........................................             906         $42,606             496            2.14              1,059        $45,125,639
Major-High........................................             582          90,697             326            2.14                696         63,136,289
Severe............................................             346         236,949             209            2.14                446        105,747,953
                                                   -----------------------------------------------------------------------------------------------------
    Total:........................................           1,834  ..............           1,031  ..............              2,202       $214,009,881
--------------------------------------------------------------------------------------------------------------------------------------------------------

Component 5. Methods for Estimating Unmet Infrastructure Needs

    Unmet infrastructure data depends on the estimating skills of FEMA 
Public Assistance staff. FEMA's Public Assistance program has several 
categories of assistance. For each of these categories, FEMA staff 
develop estimates to support budgeting of Disaster Relief Fund 
resources. These estimates are intended to reflect the cost to repair 
to pre-disaster conditions. Over time these estimates will change as 
FEMA and local governments agree on what is to be covered and not 
covered.

 Category A: Debris removal
 Category B: Emergency protective measures
 Category C: Roads and bridges
 Category D: Water control facilities
 Category E: Public buildings and contents
 Category F: Public utilities
 Category G: Parks, recreational, and other facilities

    Categories A and B are the short-term emergency expenses, while 
Categories C to G are the long-term permanent work. Because CDBG-DR can 
only be used for unmet needs and many needs for short-term emergency 
expenses are met before CDBG-DR funds are allocated, the unmet need 
calculation only uses Categories C to G.
    For each of these categories, the Stafford Act expects that the 
impacted communities contribute a local share. For most disasters this 
local share is 25 percent of the cost to repair back to pre-disaster 
conditions; however, based on a determination by the FEMA Administrator 
that a lower cost share is needed, the local cost share might be less. 
Whether this adjusted cost share is factored into the CDBG-DR formula 
depends on timing of FEMA's decision regarding a particular adjustment 
request and the timing of the allocation calculation.
    HUD's estimate of infrastructure unmet need is simply the estimated 
cost share for Categories C to G using the best available data from 
FEMA at the time of the allocation.
    To calculate 2021 unmet needs for infrastructure projects, HUD 
obtained FEMA cost estimates as of February 10, 2022, of the expected 
local cost share to repair the permanent public infrastructure 
(Categories C to G) to their pre-storm condition.

Component 6. Allocation Calculation

    For the formula allocation, HUD calculates total unmet recovery 
needs for eligible disasters as the aggregate of:
     Serious unmet housing needs or owners and renters in most 
impacted counties (including those made eligible through zip code most 
impacted status);
     Serious unmet economic revitalization needs; and
     Unmet infrastructure need.

Component 7. Mitigation

    Since Hurricane Sandy, CDBG-DR allocations have often included a 
specific component or separate allocation for mitigation or resilience 
activities. This calculation has also evolved over time. For disasters 
occurring between 2011 to 2013, mitigation/resilience was funded 
through a variety of means--(i) the basic formula estimating additional 
mitigation/resilience need was equal to 30 percent of the total 
estimated unmet needs; (ii) the Rebuild by Design competition, which 
provided additional formula allocations to support winning projects; 
and (iii) the National Disaster Resilience competition, which awarded

[[Page 77861]]

funding through a Notice of Funding Opportunity.
    After Hurricanes Harvey, Irma, and Maria in 2017, Congress 
indicated that HUD should fund mitigation for all disasters of 2015 to 
2017 with the funds remaining after allocating for 100 percent of unmet 
needs, proportional to the unmet needs. This same approach was used for 
2018 disasters, per Congressional direction; 2019 disasters received no 
mitigation specific funding.
    New for the 2020 and 2021 allocations was to make mitigation 
allocations simultaneously to unmet needs allocations at 15 percent of 
the unmet need calculation, per Congressional direction.

Component 8. When Appropriations Are Less Than Calculated Unmet Needs

    CDBG-DR funds are usually tied to either a set of disasters or a 
time period. The amount appropriated can be more or less than what HUD 
calculates for unmet needs for areas above the threshold (as defined in 
Component 1). When funds are less than the calculated unmet needs, they 
are allocated in proportion to the unmet needs across the eligible 
disasters, which means the amount of unmet needs HUD funds through 
CDBG-DR has varied throughout the last 29 years.
    Congress appropriated funds for the 2020 and 2021 disasters in 
September 2021 with specific instructions that the allocations for 2020 
disasters be made as total unmet needs along with mitigation, within 30 
days of appropriation. This direction resulted in a scenario where 100 
percent of the 2020 disaster needs plus mitigation were met, but not 
enough resources were available to do the same for 2021 disasters. HUD 
managed this by allocating the remaining funds proportional to the 
combined unmet and mitigation needs for 2021 disasters, which resulted 
in each 2021 grantee receiving 60.4 percent of their total calculated 
unmet needs and mitigation.

Component 9. Local Allocations

    Congress provides the Secretary with authority to decide whether 
allocations should be made directly to states, local governments, or 
Indian tribes. In 2020, the grants were made only to the states, while 
for 2021 grants were made to a combination of states and local 
governments. The approach for making the 2021 local allocations took 
place after calculating the disaster level allocation amounts at the 
state level. HUD calculated the share of serious unmet housing needs 
for entitlement areas (i.e., those metropolitan cities and urban 
counties that receive regular CDBG grants) and proportionally allocated 
among the entitlement areas and the impacted areas in the state outside 
of entitlement areas (state balance) proportional to each area's share 
of serious unmet housing need in its most impacted areas. If 
entitlement areas represent 70 percent or more of the serious unmet 
housing need in a state from a particular disaster and the calculated 
award amount does not exceed their regular CDBG grant by 20 times or 
more, then local allocations were made to qualifying entitlement areas 
instead of the state.

Component 10. Minimum Amount To Be Spent in Most Impacted and 
Distressed Areas

    Congress has called for CDBG-DR funds to be targeted to the most 
impacted and distressed areas. As noted above, the housing funds are 
allocated based strictly on only those counties ($10 million) or zip 
codes ($2 million) with enough homes with serious damage to meet the 
minimum dollar thresholds. The business estimates and infrastructure 
estimates are for the full disaster area of the state or entitlement 
area.
    With each formula allocation, HUD specifies the areas that it has 
determined to be most impacted and distressed (e.g., counties, zip 
codes) for each grantee and requires that a minimum of 80 percent of 
the amount allocated benefit the recovery in counties containing these 
areas.

Component 11. Data Provided to CDBG-DR Grantees for Developing Action 
Plans

    Under a current Computer Matching Agreement between HUD and FEMA, 
HUD may enter a data sharing agreement with grantees to provide to 
grantees the FEMA Individual Assistance data it used to develop the 
formula allocations. Note that HUD provides raw FEMA data to CDBG-DR 
grantees and not the final data resulting from HUD's allocation 
calculations.
    HUD does not have a Computer Matching Agreement with SBA, so 
grantees must work directly with SBA to obtain its data. HUD does not 
currently have the authority to make this data publicly available.

III. Purpose of This Request for Information

    Congress has been considering various legislation that would 
formally authorize CDBG-DR as a program. In the event Congress 
authorizes the program, this Request for Information would inform that 
rule development.
    If the program is not formally authorized, HUD anticipates that 
Congress will likely continue to make supplemental appropriations for 
disasters and that they would expect HUD to continue to allocate funds 
by formula. This Request for Information could inform improvements to 
the allocation formula in the event Congress appropriates funds for 
CDBG-DR in the future.

IV. Specific Information Requested

General Questions

    Question 1. Given the policy objective of quickly allocating funds 
so that state and local officials can speedily develop programs to 
address their most serious unmet needs for disaster recovery, are there 
other ways HUD might allocate CDBG-DR funds beyond the methodology 
described above?
    Discussion. HUD has long relied on the data from FEMA and SBA to 
make formula calculations. With advances in technology and other public 
and private data sources, there may be other approaches HUD could 
consider.
    Question 2. If Congress appropriates funds in advance of disasters 
occurring in a specified time period, should disasters be funded as 
soon as practicable after they occur, or should HUD hold back funding 
until all disasters in a year are known so each receives an equal share 
of the remaining funding relative to their needs?
    Discussion. For the 2020 and 2021 disasters, at the direction of 
Congress, HUD fully funded the disasters of 2020 and then partially 
funded all of the eligible 2021 disasters due to limited funding.
    The remaining questions refer back to the current formula 
components discussed in Section II of this request for information.

Component 1. Specific Questions. Eligible Disasters for Assistance

    Question 3. How should HUD determine the disasters that are 
eligible for CDBG-DR assistance and the areas that are most impacted 
and distressed from a Presidentially declared major disaster? Is HUD's 
approach effective or including rural and Tribal areas that are most 
impacted and distressed? Given the complexity of program 
implementation, should a grantee not only meet most impacted and 
distressed standard but also have an aggregate amount of unmet need 
above a minimum grant threshold?
    Discussion. We are seeking comments on if the current methodology 
is overly targeted or not targeted enough in terms of disasters that 
should receive these

[[Page 77862]]

funds. In general, the motivating disasters that Congress appropriates 
funding for tend to be very large disasters that communities are 
otherwise financially unable to address. The current methodology has 
grown more inclusive over time such that many disasters that might be 
considered smaller disasters are now receiving funding in addition to 
larger disasters. CDBG-DR funds often require a great deal of local 
investment in new management and financial capacity for the funds to be 
used effectively. HUD experience has been that communities with 
relatively small disasters face significant challenges in establishing 
new recovery programs.
    In addition, HUD's current definition for concentrated housing 
damage is a measure of damage to homes occupied by very low-income 
renters and uninsured homeowners. For some disasters, this approach is 
consistent with lower income areas, while for other disasters like 
flooding and earthquake events, this approach targets large numbers of 
likely higher income households without insurance for those specific 
disasters. As such, the CDBG-DR requirement for serving 70 percent low-
and-moderate income (LMI) households can become difficult for grantees 
if they have largely been funded based on serious damage of higher 
income homeowners that are eligible for, but did not receive, SBA 
disaster loans.
    Items of specific interest:
     Should there be additional thresholds that capture 
concentration of damage? Examples of such thresholds might include a 
minimum percentage of impacted homeowners or renters in a Census Tract, 
a minimum percentage of LMI population impacted by the event, or a 
minimum percentage of LMI households residing in the impacted area 
prior to the event.
     Should the damage threshold for ``most impacted'' serious 
housing damage be raised so that it excludes ``major-low''?
     Are serious unmet housing needs for counties at $10 
million or zip codes at $2 million the appropriate thresholds for 
``most impacted and distressed''? Do disaster thresholds based on 
monetary damages disadvantage certain households and might there be a 
different way to determine most impacted and distressed areas? 
Particularly as it relates to rural and Tribal areas.
     Should the income of the area(s) impacted be factored into 
determining eligibility? For example, HUD could include only data on 
damage in low-and-moderate income areas when calculating most impacted 
eligibility.

Component 2. Specific Questions. Basic Formula for Unmet Needs

    Question 4. Are there are other unmet needs that HUD should be 
factoring into the formula calculation beyond housing, economic 
revitalization, and infrastructure?
    Discussion. Questions under later components speak to the specific 
data and approach for calculating housing, economic revitalization, and 
infrastructure unmet needs, which relate to the CDBG-DR purposes of 
``restoration of infrastructure and housing'' and ``economic 
revitalization.'' This question is more basic and could reflect the 
other purposes of CDBG-DR grants, including the more general purposes 
of ``disaster relief'' and ``long-term recovery''. We note that CDBG-DR 
appropriations acts typically dictate how HUD will calculate the 
additional allocation amount for the ``mitigation'' purpose, but 
respondents may also include comments related to calculating mitigation 
allocations. HUD notes that any portion of the CDBG-DR grant can be 
used for mitigation/resilience purposes, beyond the amount calculated 
as the mitigation plus up. In answering this question, respondents 
should indicate what data HUD might consider. Note that the data 
generally needs to be consistently available for all areas and 
disasters.
    Question 5. Should HUD establish a minimum number of days to have 
passed after a Presidential Disaster declaration, or some other metric, 
before calculating unmet needs?
    Discussion. The current formula uses administrative data from FEMA 
and SBA that takes time for both agencies to collect as they implement 
their programs. Key elements of their data include home inspections and 
eligibility determinations. As a rule of thumb, HUD has generally held 
off allocations for 60 to 90 days after a disaster before calculating 
unmet needs. Is there some other metric HUD should use before making 
allocations?

Component 3. Specific Questions. Housing Unmet Needs

    Question 6. Should HUD continue to exclude certain homeowners with 
incomes above 120 percent of area median income from consideration of 
unmet needs?
    Discussion. The current formula is built around the idea that 
homeowners with higher income should carry hazard insurance in all 
cases and flood insurance if in a floodplain.
    Question 7. For homeowner occupied units, in addition to uninsured 
households, should HUD consider the unmet need of insured applicants 
denied SBA loans? Is there another data source or characteristic HUD 
should consider to measure the unmet needs of insured applicants?
    Discussion. Increasingly we are informed that insurance is 
inadequate for recovery and mitigation and limiting the allocation to 
just the uninsured homeowners is leaving a large recovery gap in 
assistance for lower income households. FEMA Individual Assistance data 
are limited in some disasters because inspections are not completed for 
insured properties. A potential additional source of data are 
households that are denied SBA loans, similar to the approach used for 
economic revitalization unmet needs in component 4.
    Question 8. For homeowner occupied units, are the FEMA Verified 
Loss breaks the correct breaks for assessing disaster severity? Should 
these be modified to reflect FEMA program updates?
    Question 9. Is there an alternative to personal property damage 
that HUD might consider for measuring damage to rental housing? For 
renter occupied units, are the FEMA personal property breaks currently 
used the right breaks for assessing disaster severity? Should these be 
modified to reflect FEMA program changes?
    Discussion. HUD uses personal property damage as a proxy for likely 
housing unit damage. FEMA benefit calculations have changed over time 
and its methodology for both determining amount of FEMA Verified Loss 
for homeowners and personal property loss has varied from disaster to 
disaster. The thresholds HUD uses were developed over a decade ago.
    Question 10. For renter occupied units, is it a reasonable 
assumption that damage to housing occupied by renters less than the 
greater of poverty or 50 percent of AMI reflects a likely loss of 
affordable housing?
    Discussion. The data HUD gets for the formula allocation has no 
information on insurance coverage for landlords, so HUD has established 
a series of proxies for likely loss of affordable housing. CDBG-DR is 
generally intended to target households below 70 percent of AMI. The 
first proxy is measuring rental damage (discussed above) using personal 
property damage as a proxy for unit damage; and the second proxy is the 
unit being occupied by a renter less than the greater of poverty or 50 
percent of AMI with the assumption that if housing either will not be 
replaced, or

[[Page 77863]]

if it is replaced it will no longer be affordable after repair, and 
thus there is a need for replacement affordable housing.
    Question 11. Is there a simpler approach for calculating the 
multipliers used for unmet needs?
    Discussion. HUD's matching to SBA data is generally only effective 
for very large disasters; most other disasters are subject to the 
disaster specific multipliers. HUD could indicate on its website each 
year a multiplier schedule by disaster type. A downside to this 
approach is that it does not capture local variation in cost that the 
current approach does capture for large disasters. The upside is more 
transparency and a simpler formula.
    Question 12. Are there other options--beyond using the homeowner 
multiplier--for how the multiplier for rental units could be calculated 
when determining unmet housing needs?
    Discussion. HUD currently uses the same multiplier for rental units 
as owner-occupied units in the same damage category. The goal for 
allocating the funds for owners and renters, however, are very 
different. The goal for homeowners is to help them repair their home so 
they can return to that home or cover some of the cost for buyouts if 
needed. For renters, there is a presumption that damaged very low-
income renter housing either will not be repaired, or, if it is, it 
will no longer be as affordable as pre-disaster. As such, the formula 
reflects an assumption that the most likely use of funds to support 
recovery of rental housing markets is to support creation of housing 
affordable for renters with income less than 50 percent of AMI.

Component 4. Specific Questions. Methods for Estimating Serious Unmet 
Economic Revitalization Needs

    Question 13. Are there other factors and/or data sources HUD might 
consider beyond SBA business loan denials when determining unmet 
economic revitalization needs?
    Discussion. Examples for consideration include taking into account 
a community's pre-disaster economic distress or the nature of the 
disaster (e.g., existing economic distress can lead to significant 
displacement during a disaster that may delay economic recovery) or 
data from other federal agencies such as the Economic Development 
Administration at the Department of Commerce.
    Question 14. Should HUD establish a higher or lower standard for 
inclusion of businesses with serious unmet need?
    Discussion. HUD has not changed the damage thresholds in over a 
decade.
    Question 15. How can HUD better target the calculation of unmet 
economic revitalization needs for lower income households and other 
vulnerable populations in the most impacted and distressed areas?
    Discussion. The current method is targeting funds to businesses not 
meeting income or credit requirements of SBA. It does not take into 
account the location of the business, such as if it is located in a 
low-mod area.

Component 5. Specific Questions. Methods for Estimating Unmet 
Infrastructure Needs

    Question 16. Are there other data or factors HUD might consider for 
measuring unmet infrastructure needs?
    Should HUD establish a minimum amount of time (e.g. not less than 
60 days) after a disaster to calculate CDBG-DR allocations so they are 
based on consistent, accurate FEMA PA damage estimates?
    Discussion. HUD may be unaware of other sources of data on public 
infrastructure needs besides FEMA Public Assistance. Further, the 
current approach tends to provide more for places that had more 
infrastructure pre-disaster, which may disadvantage communities with 
inadequate infrastructure pre-disaster due to the low incomes or 
historical disinvestment in the community pre-disaster.
    Question 17. How can HUD better target the calculation of unmet 
infrastructure needs for lower income households and other vulnerable 
populations in the most impacted and distressed areas? Should HUD pro-
rate the estimate of infrastructure needs based on the fraction of 
damaged homes with unmet needs located in LMI areas?
    Discussion. The current methodology for determining infrastructure 
need does not factor in the income or other demographics of the 
impacted area. CDBG-DR must be predominantly used for activities that 
benefit low- and moderate-income persons. For infrastructure 
investments to satisfy the low-mod area benefit national objective 
criteria, usually the investment needs to be in a primarily residential 
area where at least 51 percent of the residents are low- and moderate-
income persons. Some grantees in the past have had difficulty meeting 
the low-mod benefit requirements for their infrastructure funds.

Component 6. Specific Questions. Allocation Calculation

    Question 18. How can CDBG-DR allocation methodology be modified to 
allocate resources equitably and adequately address disaster-related 
needs, including the needs of the most impacted, vulnerable 
populations, and underserved communities?

Component 7. Specific Questions. Mitigation

    Question 19. How should HUD factor mitigation into the CDBG-DR 
formula? Should the mitigation multiplier be different by type of 
disaster?
    Discussion. Congress has tried several different methods; feedback 
on grantee and subgrantee experiences with HUD's different ways of 
implementing those methods would be beneficial. The cost to mitigate 
against future risk needed in a fire zone is very different than 
mitigation needed in flood zone. Using a single multiplier such as 15 
percent does not take this into consideration.
    Question 20. Should there be a separate calculation of mitigation 
needs that is independent of the unmet need calculation? If so, what 
should that calculation be?
    Discussion. Depending on the disaster, mitigation and potential 
resilience costs may be significantly more or less than a simple 
proportional allocation relative to unmet needs.

Component 8. Specific Questions. Amount of Funding

    Question 21. If resources are limited, should a certain type or 
types of unmet need be prioritized over others in determining an 
allocation? For example, housing only.
    Discussion. The current policy of insufficient funding is to 
allocate proportional to the unmet needs of eligible grantees or to 
fully fund disasters as they occur until funding runs out leaving later 
disasters with no funding. This question seeks comments on how to 
allocate funding when less is appropriated than calculated unmet needs.

Component 9. Specific Questions. Allocations to Local Governments and 
Indian Tribes

    Question 22. What criteria should HUD use when determining if an 
allocation should be made directly to local governments and Indian 
tribes (as that term is defined under section 102(a) of the Housing and 
Community Development Act of 1974) versus the full allocation to a 
state government? Should HUD take into account grantee capacity when 
deciding on either providing a direct grant and/or amount of the grant?
    Discussion. The research on this topic is inconclusive \1\. Local 
and tribal

[[Page 77864]]

government leaders often petition HUD for direct allocations while 
state leaders argue there is greater efficiency, management capacity, 
and more program consistency when it is a single allocation to the 
state.
---------------------------------------------------------------------------

    \1\ Martin, Carlos, et al. ``Housing Recovery and CDBG-DR: A 
Review of the Timing and Factors Associated with Housing Activities 
in HUD's Community Development Block Grant for Disaster Recovery 
Program.'' HUD User. April 2019. https://www.huduser.gov/portal/publications/HousingRecovery-CDBG-DR.html.
---------------------------------------------------------------------------

    Question 23. Are there revisions to HUD's allocation methodology 
that should be considered to capture tribal recovery needs more 
effectively? Please see the RFI requesting information on the CDBG-DR 
program published elsewhere in today's Federal Register.

Component 10. Specific Questions. Minimum Amount To Be Spent in Most 
Impacted Areas

    Question 24. Currently at least, 80 percent of CDBG-DR funds must 
be spent to benefit the most impacted and distressed area designated by 
HUD, and up to 20 percent may be spent in area designed by the grantee 
as most impacted and distressed areas; is this the right amount?
    Discussion. The 80 percent standard was based on analysis of how 
funds were allocated for allocations to 2011 disasters prior to 
Hurricane Sandy funding. The standard has not changed since that time. 
Note that 100 percent of CDBG-DR grants must be expended in a most 
impacted and distressed area, with a minimum of 80 percent in HUD 
defined most impacted areas and up to 20 percent in areas identified by 
grantees. Please see the RFI requesting information on the CDBG-DR 
program published elsewhere in today's Federal Register that solicits 
public comment on this topic.

Component 11. Specific Questions. Data Provided to CDBG-DR Grantees for 
Developing Action Plans

    Question 25. In addition to the raw data provided by FEMA to HUD 
for the formula calculation, should HUD provide to CDBG-DR grantees and 
the public a set of pre-scripted tables and maps to assist with 
development of Action Plans? What other information would be helpful 
for developing Action Plans?
    Discussion. A significant amount of analysis goes into developing 
the formula allocations. HUD could prepare some basic tables and maps 
to inform the public and grantees on who was impacted, where they were 
impacted, and what the nature of the damage is.

V. Response Guidance

    For comments submitted by mail responses should not exceed 50 
pages. Please provide the following information at the start of your 
response to this RFI: Company/institution name (if applicable); contact 
information, including address, phone number, and email address. Do not 
submit Confidential Business Information (CBI) in your response to this 
RFI. Responses identified as containing CBI will not be reviewed and 
will be discarded.
    Please identify each answer by responding to a specific question or 
topic if applicable. You may answer as many or as few questions as you 
wish. To help you prepare your comments, please see the How Do I 
Prepare Effective Comments segment of the Commenting on HUD Rules web 
page, https://www.hud.gov/program_offices/general_counsel/Commenting-On-HUD-Rules#1. While that web page is written for commenting on 
regulatory proposals, these tips are generally applicable to this RFI.

Solomon J. Greene,
Principal Deputy Assistant Secretary for Policy Development and 
Research.
[FR Doc. 2022-27548 Filed 12-19-22; 8:45 am]
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