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Notice2022-02209

Allocations for Community Development Block Grant Disaster Recovery and Implementation of the CDBG-DR Consolidated Waivers and Alternative Requirements Notice

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Published

February 3, 2022

Issuing agencies

Housing and Urban Development Department

Abstract

On October 29, 2021, HUD allocated over $2 billion in Community Development Block Grant Disaster Recovery (CDBG-DR) funds appropriated by the Disaster Relief Supplemental Appropriations Act, 2022. This Allocation Announcement Notice imposes HUD's CDBG-DR Consolidated Notice ("Consolidated Notice") (Appendix B) and any amendments to the Consolidated Notice only on CDBG-DR grants for disasters occurring in 2020, as identified herein. The Consolidated Notice, as amended by this Allocation Announcement Notice, includes waivers and alternative requirements, relevant regulatory requirements, the grant award process, criteria for action plan approval, and eligible disaster recovery activities.

Full Text

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[Federal Register Volume 87, Number 23 (Thursday, February 3, 2022)]
[Notices]
[Pages 6364-6392]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-02209]

[[Page 6363]]

Vol. 87

Thursday,

No. 23

February 3, 2022

Part IV

Department of Housing and Urban Development

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Allocations for Community Development Block Grant Disaster Recovery and
Implementation of the CDBG-DR Consolidated Waivers and Alternative
Requirements Notice; Notice

Federal Register / Vol. 87 , No. 23 / Thursday, February 3, 2022 /
Notices

[[Page 6364]]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6303-N-01]

Allocations for Community Development Block Grant Disaster
Recovery and Implementation of the CDBG-DR Consolidated Waivers and
Alternative Requirements Notice

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

ACTION: Notice.

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SUMMARY: On October 29, 2021, HUD allocated over $2 billion in
Community Development Block Grant Disaster Recovery (CDBG-DR) funds
appropriated by the Disaster Relief Supplemental Appropriations Act,
2022. This Allocation Announcement Notice imposes HUD's CDBG-DR
Consolidated Notice (``Consolidated Notice'') (Appendix B) and any
amendments to the Consolidated Notice only on CDBG-DR grants for
disasters occurring in 2020, as identified herein. The Consolidated
Notice, as amended by this Allocation Announcement Notice, includes
waivers and alternative requirements, relevant regulatory requirements,
the grant award process, criteria for action plan approval, and
eligible disaster recovery activities.

DATES: Applicability Date: February 8, 2022.

FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Director,
Office of Block Grant Assistance, Department of Housing and Urban
Development, 451 7th Street SW, Room 10166, Washington, DC 20410,
telephone number 202-708-3587. Persons with hearing or speech
impairments may access this number via TTY by calling the Federal Relay
Service at 800-877-8339. Facsimile inquiries may be sent to Ms. Kome at
202-708-0033. (Except for the ``800'' number, these telephone numbers
are not toll-free). Email inquiries may be sent to
<a href="/cdn-cgi/l/email-protection#4125283220323524331e3324222e37243338012934256f262e37">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Allocations
II. Use of Funds
III. Overview of Grant Process
A. Requirements Related to Administrative Funds
IV. Applicable Rules, Statutes, Waivers, and Alternative
Requirements
A. Grant Administration
V. Duration of Funding
VI. Catalog of Federal Domestic Assistance
VII. Finding of No Significant Impact
Appendix A: Allocation Methodology
Appendix B: CDBG-DR Consolidated Notice

I. Allocations

The Disaster Relief Supplemental Appropriations Act, 2022 (Pub. L.
117-43) approved September 30, 2021 (the ``Appropriations Act'') makes
available $5,000,000,000 in Community Development Block Grant Disaster
Recovery (CDBG-DR) funds. These CDBG-DR funds are for necessary
expenses for activities authorized under title I of the Housing and
Community Development Act of 1974 (42 U.S.C. 5301 et seq.) (HCDA)
related to disaster relief, long-term recovery, restoration of
infrastructure and housing, economic revitalization, and mitigation in
the ``most impacted and distressed'' (MID) areas resulting from a
qualifying major disaster in 2020 or 2021. HUD allocated over $2
billion in CDBG-DR funds from the Appropriations Act to assist in long-
term recovery from disasters occurring in 2020. The Appropriations Act
requires HUD to include with any final allocation for the total
estimate of unmet need an additional amount of 15 percent of that
estimate for mitigation activities that reduce risk in the MID areas
(see Table 1).
In accordance with the Appropriations Act, $5,500,000 of the total
amounts appropriated under the Act will be transferred to the
Department's Office of Community Planning and Development (CPD),
Program Office Salaries and Expenses, for necessary costs of
administering and overseeing CDBG-DR funds, including information
technology costs. Additionally, in accordance with the Appropriations
Act, up to $7,000,000 shall be made available for capacity building and
technical assistance, including assistance on contracting and
procurement, to support existing and future CDBG-DR grantees and their
subrecipients. HUD will allocate the remaining funds appropriated for
CDBG-DR grants from the Appropriations Act when HUD receives the best
available data for major disasters occurring in 2020 or 2021.
The Appropriations Act provides that grants shall be awarded
directly to a state, local government, or Indian tribe at the
discretion of the Secretary.
Pursuant to the Appropriations Act, HUD has identified the MID
areas based on the best available data for all eligible affected areas.
A detailed explanation of HUD's allocation methodology is provided in
Appendix A of this notice. At least 80 percent of all allocations
provided to each grantee must address unmet disaster needs or
mitigation activities in the HUD-identified MID areas, as identified in
the last column of Table 2. Each grantee may determine where to use the
remaining 20 percent of their allocation, but that portion of the
allocation may only be used to address unmet disaster needs or
mitigation activities in those areas that the grantee determines are
``most impacted and distressed'' and that received a presidential major
disaster declaration identified by the FEMA disaster numbers listed in
column one of Table 1. Detailed requirements around MID areas are
provided in section II.A.3. of the Consolidated Notice.
Based on further review of the impacts from the eligible disasters,
and estimates of unmet need, HUD is making the following allocations:

Table 1--Allocations for Unmet Needs and Mitigation Activities Under Public Law 117-43 for Disasters Occuring in 2020
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Allocation for CDBG-DR mitigation Total allocated
unmet needs under set-aside amounts under this notice
FEMA Disaster No. State Grantee this notice from from Public Law 117- from Public Law
Public Law 117-43 43 117-43
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4563, 4573..................... Alabama.................... State of Alabama........... $271,071,000 $40,661,000 $311,732,000
4558, 4569..................... California................. State of California........ 201,046,000 30,157,000 231,203,000
4564........................... Florida.................... State of Florida........... 98,427,000 14,764,000 113,191,000
4557........................... Iowa....................... State of Iowa.............. 49,513,000 7,427,000 56,940,000
4559, 4570..................... Louisiana.................. State of Louisiana......... 521,853,000 78,278,000 600,131,000
4547........................... Michigan................... State of Michigan.......... 52,085,000 7,813,000 59,898,000
4576........................... Mississippi................ State of Mississippi....... 24,757,000 3,713,000 28,470,000
4562........................... Oregon..................... State of Oregon............ 367,205,000 55,081,000 422,286,000
4473, 4560..................... Puerto Rico................ Commonwealth of Puerto Rico * 155,794,000 28,832,000 184,626,000
4476, 4541..................... Tennessee.................. State of Tennessee......... 37,165,000 5,575,000 42,740,000
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Totals..................... ........................... ........................... 1,778,916,000 272,301,000 2,051,217,000
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* Puerto Rico was allocated $36,424,000 from Public Law 116-20 (see 86 FR 569) for unmet needs related to one of the qualifying disasters listed in the
first column (FEMA disaster no. 4473). The grantee's CDBG mitigation set-aside in the fifth column was calculated as 15 percent of the total estimate
for unmet needs allocated for this disaster (which includes the portions of unmet need funded by Public Law 116-20 and by Public Law 117-43). The
grantee's final allocation in the sixth column represents the total estimate for unmet needs for Puerto Rico's qualifying disasters under Public Law
117-43, including the additional amount for the CDBG mitigation set-aside.

Table 2--Most Impacted and Distressed Areas for Disasters Occuring in 2020
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Minimum amount
under this notice
from Public Law 117-
43 that must be
Grantee expended in the HUD- ``Most Impacted and Distressed'' areas
identified ``most
impacted and
distressed'' areas
listed herein
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State of Alabama....................... $249,385,600 Baldwin and Mobile Counties; 36502 (Escambia
County).
State of California.................... 184,962,400 Butte, Napa, Santa Cruz, Los Angeles, and Siskiyou
Counties; 95448 (Sonoma County), 95688 (Solano
County), 93602 (Fresno County), 93664 (Fresno
County), 94558 (Napa County), 94574 (Napa
County), 95404 (Sonoma County), 95409 (Sonoma
County), and 96047 (Shasta County).
State of Florida....................... 90,552,800 Escambia County; 32583 (Santa Rosa County).
State of Iowa.......................... 45,552,000 Linn County.
State of Louisiana..................... 480,104,800 Beauregard Parish, Caddo Parish, Calcasieu Parish,
Cameron Parish, Ouachita Parish, Rapides Parish
and Calcasieu Parish; 70546 (Jefferson Davis
Parish), 70570 (St. Landry Parish), 71446 (Vernon
Parish), 71457 (Natchitoches Parish), 71463
(Allen Parish), 70501 (Lafayette Parish), 70510
(Vermillion Parish), 70526 (Acadia Parish), 70546
(Jefferson Davis Parish), 70570 (St. Landry
Parish), 70578 (Acadia Parish), 71302 (Rapides
Parish), and 71463 (Allen Parish).
State of Michigan...................... 47,918,400 Midland and Saginaw Counties; 48612 (Gladwin
County).
State of Mississippi................... 22,776,000 Harrison County.
State of Oregon........................ 337,828,800 Clackamas, Douglas, Jackson, Lane, Lincoln, and
Marion Counties; 97358 (Linn County).
Commonwealth of Puerto Rico............ 147,700,800 Guanica, Ponce, and Yauco; 00624 (Penuelas
Municipio), 00656 (Guayanilla Municipio), 00667
(Lajas Municipio), and 00680 (Mayaguez
Municipio).
State of Tennessee..................... 34,192,000 37208 (Davidson County), 38501 (Putnam County),
and 37421 (Hamilton County).
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II. Use of Funds

Unless otherwise indicated, funds allocated under this notice from
Public Law 117-43 are subject to the requirements of this Allocation
Announcement Notice and the Consolidated Notice, included as Appendix
B, as amended by this Allocation Announcement Notice. This Allocation
Announcement Notice outlines additional requirements imposed by the
Appropriations Act that apply only to funds allocated under this
notice.
The Appropriations Act requires that prior to the obligation of
CDBG-DR funds by the Secretary, a grantee shall submit a plan to HUD
for approval detailing the use of funds. The plan must include the
criteria for eligibility, and how the use of these funds will address
long-term recovery and restoration of infrastructure and housing,
economic revitalization, and mitigation in the MID areas. This notice
requires the grantee to submit an action plan that addresses unmet
recovery needs and mitigation activities related to the disasters
identified in Table 1. Therefore, the action plan submitted in response
to this notice must describe uses and activities that: (1) Are
authorized under title I of the HCDA or allowed by a waiver or
alternative requirement; and (2) respond to disaster-related impacts to
infrastructure, housing, economic revitalization, and mitigation in the
MID areas. Requirements related to action plans are provided in section
III.C. of the Consolidated Notice.
In accordance with the Appropriations Act, grantees must spend 15
percent of the amount of each grant, as outlined in Table 1, for
mitigation activities as described in section IV.A.2. of this notice.
Grantees must also incorporate mitigation measures into its recovery
activities as required under section II.A.2. in the Consolidated
Notice. Grantees must conduct an assessment of community impacts and
unmet needs to inform the plan and guide the development and
prioritization of planned recovery activities, pursuant to section
III.C.1.a. of the Consolidated Notice. Additionally, with regard to the
15 percent of funds provided for mitigation activities, grantees must
also prepare a mitigation needs assessment to inform their mitigation
activities, as described in section IV.A.2.a. of this notice.
To comply with the statutory requirement in the Appropriations Act,
grantees shall not use CDBG-DR funds for activities reimbursable by or
for which funds are made available by the Federal Emergency Management
Agency (FEMA) or the U.S. Army Corps of Engineers (USACE). Grantees
must verify whether FEMA or USACE funds are available prior to awarding
CDBG-DR funds to specific activities or beneficiaries. Grantees may use
CDBG-DR funds as the non-Federal match as described in section II.C.3.
of the Consolidated Notice.

III. Overview of Grant Process

A. Requirements Related to Administrative Funds

III.A.1. Action plan submittal for program administrative costs.
The Appropriations Act allows grantees receiving an award under this
notice to access funding for program

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administrative costs prior to the Secretary's certification of
financial controls and procurement processes, and adequate procedures
for proper grant management. To implement this authority, the following
alternative requirement will replace the alternative requirement in the
Consolidated Notice at III.C.1.
If a grantee chooses to access funds for program administrative
costs prior to the Secretary's certification, it must first prepare an
action plan describing its use of funds for program administrative
costs, subject to the five percent cap on the use of grant funds for
such costs. Instead of following requirements in section III.C.1. of
the Consolidated Notice, which require grantees to use the Public
Action Plan in HUD's Disaster Recovery Grant Reporting (DRGR) system to
submit their action plans, grantees will follow a different process to
access funds for program administrative costs prior to the Secretary's
certification.
As part of the process of accessing funds for these costs, grantees
must submit to HUD an action plan describing their use of funds for
program administrative costs. The action plan will be developed outside
of DRGR and must include all proposed uses of funds for program
administrative costs incurred prior to a final action plan being
submitted and approved. The action plan for program administrative
costs must also include the criteria for eligibility and the amount to
be budgeted for that activity. If a grantee chooses to submit the
action plan for program administrative costs, the grantee should
calculate its need to cover program administrative costs over the life
of the grant and consider how much of its available program
administrative funds may be reasonably budgeted at this very early
stage of its grant lifecycle.
III.A.1.a. Publication of the action plan for program
administrative costs and opportunity for public comment. The grantee
must publish the proposed action plan for program administrative costs,
and substantial amendments to the plan, for public comment. To permit a
more streamlined process and ensure that grants for program
administrative costs are awarded in a timely manner in order to allow
grantees to more rapidly design and launch recovery activities,
provisions of 42 U.S.C. 5304(a)(2) and (3), 42 U.S.C. 12707, 24 CFR
570.486, 24 CFR 1003.604, 24 CFR 91.105(b) through (d), and 24 CFR
91.115(b) through (d), with respect to citizen participation
requirements, are waived and replaced by the alternative requirements
in section III.A.1. that apply only to action plans for program
administrative costs and substantial amendments to these plans.
Additionally, for these action plans only, grantees are not subject to
the Consolidated Notice action plan requirements in sections
III.B.2.i., III.C.2., III.C.3., III.C.6., and III.D.1.a.-c.
The manner of publication of the action plan for program
administrative costs must include prominent posting on the grantee's
official disaster recovery website and must afford residents, affected
local governments, and other interested parties a reasonable
opportunity to review the contents of the plan or substantial
amendment. Subsequent to publication of the action plan or substantial
amendment to that plan, the grantee must provide a reasonable time
frame (no less than seven days) and multiple methods (including
electronic submission) for receiving comments on the action plan or
substantial amendment for program administrative costs. At a minimum,
the topic of disaster recovery on the grantee's website, including the
posted action plan or substantial amendment, must be navigable by
interested parties from the grantee homepage and must link to the
disaster recovery website as required by section III.D.1.e. of the
Consolidated Notice. The grantee's records must demonstrate that it has
notified affected parties through electronic mailings, press releases,
statements by public officials, media advertisements, public service
announcements, and/or contacts with neighborhood organizations.
Grantees are not required to hold any public hearings on the proposed
action plan or substantial amendment for program administrative costs.
The grantee must consider all oral and written comments on the
action plan or any substantial amendment. Any updates or changes made
to the action plan in response to public comments should be clearly
identified in the action plan. A summary of comments on the plan or
amendment, and the grantee's response to each, must be included with
the action plan or substantial amendment. Grantee responses shall
address the substance of the comment rather than merely acknowledge
that the comment was received.
After the grantee responds to public comments, it will then submit
its action plan or substantial amendment for program administrative
costs (which includes Standard Form 424 (SF-424)) to HUD for approval,
there is no due date for this plan as it may be submitted any time
prior to the grantee's Public Action Plan. HUD will review the action
plan or substantial amendment for program administrative costs within
15 days from date of receipt and determine whether to approve the
action plan or substantial amendment to that plan per the criteria
identified in this notice.
III.A.1.b. Certifications waiver and alternative requirement.
Sections 104(b)(4), (c), and (m) of the HCDA (42 U.S.C. 5304(b)(4), (c)
& (m)), sections 106(d)(2)(C) & (D) of the HCDA (42 U.S.C.
5306(d)(2)(C) & (D)), and section 106 of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12706), and regulations at 24 CFR
91.225 and 91.325 are waived and replaced with the following
alternative. Each grantee choosing to submit an action plan for program
administrative costs must make the following certifications listed in
section III.F.7. of the Consolidated Notice and include them with the
submission of this plan: Paragraphs b., c., d., g., i., j., k., l., p.,
and q. Additionally, HUD is waiving section 104 and section 106 of the
HCDA and section 210 of the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970 (42 U.S.C. 4630) only to the
extent necessary to allow grantees to receive a portion of their
allocation as a grant for program administrative costs before
submitting other statutorily required certifications. Each grantee must
make all certifications included in section III.F.7. of the
Consolidated Notice and submit them to HUD when it submits its Public
Action Plan in DRGR described in III.C.1.
III.A.1.c. Submission of the action plan for program administrative
costs in DRGR. After HUD's approval of the action plan for program
administrative costs, the grantee enters the activities from its
approved action plan into the DRGR system if it has not previously done
so and submits its DRGR action plan to HUD (funds can be drawn from the
line of credit only for activities that are established in the DRGR
system). HUD will provide additional guidance (``Fact Sheet'') with
screenshots and step-by-step instructions describing the submittal
process for this DRGR action plan for program administrative costs.
This process will allow a grantee to access funds for program
administrative costs while the grantee begins developing its Public
Action Plan in DRGR as provided in section III.C.1. of the Consolidated
Notice.
III.A.1.d. Incorporation of the action plan for program
administrative costs into the Public Action Plan. The grantee shall
describe the use of all grant funds for administrative costs in the
Public Action Plan required by section III.C.1. Use of grant funds for
administrative

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costs before approval of the Public Action Plan must be consistent with
the action plan for administrative costs. Once the Public Action Plan
is approved, the 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 for administrative costs shall only be relevant to
administrative costs charged to the grant before the date of approval
of the Public Action Plan.
III.A.2. Use of administrative funds across multiple grants. The
Appropriations Act authorizes special treatment of grant administrative
funds. Grantees that are receiving awards under this notice, and that
have received CDBG-DR or CDBG-MIT grants in the past or in any future
acts, may use eligible administrative funds (up to five percent of each
grant award plus up to five percent of program income generated by the
grant) appropriated by these acts for the cost of administering any
CDBG-DR or CDBG-MIT grant without regard to the particular disaster
appropriation from which such funds originated. If the grantee chooses
to exercise this authority, the grantee must have appropriate financial
controls to comply with the requirement that the amount of grant
administration expenditures for each CDBG-DR or CDBG-MIT grant will not
exceed five percent of the total grant award for each grant (plus five
percent of program income generated by the grant), review and modify
its financial management policies and procedures regarding the tracking
and accounting of administration costs, as necessary, and address the
adoption of this treatment of administrative costs in the applicable
portions of its Financial Management and Grant Compliance submissions
as referenced in section III.A.1. of the Consolidated Notice. Grantees
are reminded that all uses of funds for program administrative
activities must qualify as an eligible administration cost.

IV. Applicable Rules, Statutes, Waivers, and Alternative Requirements

The Appropriations Act authorizes the Secretary to waive or specify
alternative requirements for any provision of any statute or regulation
that the Secretary administers in connection with the obligation by the
Secretary, or use by the recipient, of these funds, except for
requirements related to fair housing, nondiscrimination, labor
standards, and the environment. This section of the notice and the
Consolidated Notice describe rules, statutes, waivers, and alternative
requirements that apply to allocations under this notice. For each
waiver and alternative requirement in this notice and incorporated
through the Consolidated Notice, the Secretary has determined that good
cause exists, and the waiver or alternative requirement is not
inconsistent with the overall purpose of title I of the HCDA. The
waivers and alternative requirements provide flexibility in program
design and implementation to support full and swift recovery following
eligible disasters, while ensuring that statutory requirements are met.
Grantees may request additional waivers and alternative
requirements from the Department as needed to address specific needs
related to their recovery and mitigation activities. Grantees should
work with the assigned CPD representative to request any additional
waivers or alternative requirements from HUD headquarters. Waivers and
alternative requirements described below apply to all grantees under
this notice. Under the requirements of the Appropriations Act, waivers
and alternative requirements are effective five days after they are
published in the Federal Register or on the website of the Department.

A. Grant Administration

IV.A.1. Duplication of Benefits (DOB). HUD published a Federal
Register notice on June 20, 2019, titled, ``Updates to Duplication of
Benefits Requirements Under the Stafford Act for Community Development
Block Grant (CDBG) Disaster Recovery Grantees'' (84 FR 28836) (``2019
DOB Notice''), which revised the DOB requirements that apply to CDBG-DR
grants for disasters declared between January 1, 2015 and December 31,
2021. To comply with the Stafford Act and the Appropriations Act,
grantees must prevent the duplication of benefits and must have
adequate policies and procedures for this purpose. Accordingly,
grantees that received funds for disasters occurring in 2020 must
follow all requirements in the 2019 DOB Notice and the requirements
located in section IV.A. of the Consolidated Notice.
IV.A.2. CDBG-DR mitigation set-aside. The Appropriations Act
requires HUD to include in any allocation of CDBG-DR funds for unmet
needs an additional amount of 15 percent for mitigation activities
(``CDBG-DR mitigation set-aside''). Grantees should consult Table 1 for
the amount allocated specifically for the CDBG-DR mitigation set-aside.
For purposes of grants under this notice, mitigation activities are
defined as 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.
In the grantee's action plan, it must identify how the proposed use
of the CDBG-DR mitigation set-aside will: (1) Meet the definition of
mitigation activities; (2) address the current and future risks as
identified in the grantee's mitigation needs assessment in the MID
areas; (3) be CDBG-eligible activities under title I of the HCDA or
otherwise eligible pursuant to a waiver or alternative requirement; and
(4) meet a national objective.
Unlike recovery activities where grantees must demonstrate that
their activities ``tie-back'' to the specific disaster and address a
specific unmet recovery need for which the CDBG-DR funds were
appropriated, activities funded by the CDBG-DR mitigation set-aside do
not require such a ``tie-back'' to the specific qualified disaster that
has served as the basis for the grantee's allocation. Instead, grantees
must demonstrate that activities funded by the CDBG-DR mitigation set-
aside meet the provisions included as (1) through (4) in the prior
paragraph, to be eligible. Grantees must report activities as a ``MIT''
activity type in DRGR so that HUD and the public can determine that the
grantee has met the expenditure requirement for the CDBG-DR mitigation
set-aside.
Grantees may also meet the requirement of the CDBG-DR mitigation
set-aside by including eligible recovery activities that both address
the impacts of the disaster (i.e., have ``tie-back'' to the specific
qualified disaster), and incorporate mitigation measures into the
recovery activities. In section II.A.2.b. of the Consolidated Notice,
grantees are instructed to incorporate mitigation measures when
carrying out activities to construct, reconstruct, or rehabilitate
residential or non-residential structures with CDBG-DR funds as part of
activities eligible under 42 U.S.C. 5305(a) (including activities
authorized by waiver and alternative requirement). Additionally, in
section II.A.2.c. of the Consolidated Notice, grantees are required to
establish resilience performance metrics for those activities.
If grantees wish to count those activities towards the grantee's
CDBG-DR mitigation set-aside, grantees must: (1.) Document how those
activities and the incorporated mitigation measures will meet the
definition of mitigation, as provided above; and (2.) Report those
activities as a ``MIT'' activity type in DRGR so they are easily
tracked.
IV.A.2.a. Mitigation needs assessment. In addition to the
requirements prescribed in section III.C.1.a of the

[[Page 6368]]

Consolidated Notice that grantees must develop an impact and unmet
needs assessment, grantees receiving an award under this Allocation
Announcement Notice must also include in their action plan a mitigation
needs assessment to inform the activities funded by the CDBG-DR
mitigation set-aside. Each grantee must assess the characteristics and
impacts of current and future hazards identified through its recovery
from the qualified disaster and any other Presidentially declared
disaster. Mitigation solutions designed to be resilient only for
threats and hazards related to a prior disaster can leave a community
vulnerable to negative effects from future extreme events related to
other threats or hazards. When risks are identified among other
vulnerabilities during the framing and design of mitigation projects,
implementation of those projects can enhance protection and save lives,
maximize the utility of scarce resources, and benefit the community
long after the projects are complete.
Accordingly, each grantee receiving a CDBG-DR allocation under this
notice must conduct a risk-based assessment to inform the use of its
CDBG-DR mitigation set-aside considering identified current and future
hazards. Grantees must assess their mitigation needs in a manner that
effectively addresses risks to indispensable services that enable
continuous operation of critical business and government functions, and
are critical to human health and safety or economic security. In the
mitigation needs assessment, each grantee must cite data sources and
must, at a minimum, use the risks identified in the current FEMA-
approved state or local Hazard Mitigation Plan (HMP). If a jurisdiction
is currently updating an expired HMP, the grantee's agency
administering the CDBG-DR funds must consult with the agency
administering the HMP update to identify the risks that will be
included in the assessment. Mitigation needs evolve over time and
grantees are to amend the mitigation needs assessment and action plan
as conditions change, additional mitigation needs are identified, and
additional resources become available.
IV.A.2.b. Connection of programs and projects to the mitigation
needs assessment. Grantees are required by section III.C.1.b. of the
Consolidated Notice to describe the connection between identified unmet
needs and the allocation of CDBG-DR resources. In a similar fashion,
the plan must provide a clear connection between a grantee's mitigation
needs assessment and its proposed activities in the MID areas funded by
the CDBG-DR mitigation set-aside (or outside in connection to the MID
areas as described in section II.A.3. of the Consolidated Notice). To
maximize the impact of all available funds, grantees are encouraged to
coordinate and align these funds with other projects funded with CDBG-
DR and CDBG-MIT funds, as well as other disaster recovery activities
funded by FEMA, USACE, the U.S. Forest Service, and other agencies as
appropriate. Grantees are encouraged to fund planning activities that
complement FEMA's Building Resilient Infrastructure and Communities
(BRIC) program and to upgrade mapping, data, and other capabilities to
better understand evolving disaster risks.
IV.A.3. Interchangeability of disaster funds. The Appropriations
Act gives the Secretary authority to authorize grantees that receive an
award in this Allocation Announcement Notice and under prior
appropriations to use those funds interchangeably and without
limitation for the same activities related to unmet recovery needs in
the MID areas resulting from a major disaster in the Appropriation Act
or in a prior or future appropriation acts, when the MID areas overlap
and when the use of the funds will address unmet recovery needs of
major disasters in the Appropriation Act or in any prior or future
appropriation acts.
Based on this authority, the Secretary authorizes grantees
receiving a CDBG-DR grant under the Appropriation Act and prior or
future appropriations acts for activities authorized under title I of
the HCDA for a specific qualifying disaster(s) to use these funds
interchangeably and without limitation for the same activities in MID
areas resulting from a major disaster in a prior or future
appropriation acts, as long as the MID areas overlap, and the
activities address unmet needs of both disasters.
Grantees are reminded that expanding the eligible beneficiaries of
activities in an action plan funded by any prior or future acts to
include those impacted by the specific qualifying disaster(s) in this
notice requires the submission of a substantial action plan amendment
in accordance with section III.C.6. of the Consolidated Notice.
Additionally, all waivers and alternative requirements associated with
a CDBG-DR grant apply to the use of the funds provided by that grant,
regardless of which disaster the funded activity will address.
For example, if a grantee is receiving funds under this notice for
a disaster occurring in 2020 and the MID areas for the 2020 disaster
overlap with the MID areas for a disaster that occurred in 2017, the
grantee may choose to use the funds allocated under this notice to
address unmet needs of both the 2017 disaster and the 2020 disaster. In
doing so, the grantee must follow the rules and requirements outlined
in this notice. However, if the grantee chooses to use its CDBG-DR
grant awarded due to a disaster that occurred in 2017 to address unmet
needs of both that disaster and the 2020 disaster, the grantee must
follow the rules and requirements outlined in the Federal Register
notices applicable to its CDBG-DR grant for 2017 disasters.

V. Duration of Funding

The Appropriations Act makes the funds available for obligation by
HUD until expended. HUD waives the provisions at 24 CFR 570.494 and 24
CFR 570.902 regarding timely distribution and expenditure of funds, and
establishes an alternative requirement providing that each grantee must
expend 100 percent of its allocation within six years of the date HUD
signs the grant agreement. HUD may extend the period of performance
administratively, if good cause for such an extension exists at that
time, as requested by the grantee, and approved by HUD. When the period
of performance has ended, HUD will close out the grant and any
remaining funds not expended by the grantee on appropriate programmatic
purposes will be recaptured by HUD.

VI. Federal Assistance Listings (Formerly Known as the CFDA Number)

The Catalog of Federal Domestic Assistance numbers for the disaster
recovery grants under this notice are as follows: 14.218; 14.228.

VII. 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

[[Page 6369]]

Regulations Division at 202-708-3055 (this is not a toll-free number).

James Arthur Jemison II,
Principal Deputy Assistant Secretary for Community Planning and
Development.

Appendix A--Detailed Methodology

Allocation of CDBG-DR Funds to Most Impacted and Distressed Areas Due
to Presidentially Declared Disasters Occurring in 2020

Background

Public Law No: 117-43 on 9/30/2021 (the Disaster Relief
Supplemental Appropriations Act, 2022) appropriated $5 billion for
CDBG-Disaster Recovery (CDBG-DR) funds for disasters occurring in
2020 and 2021. The statutory text related to the allocation is as
follows:
``For an additional amount for ``Community Development Fund'',
$5,000,000,000, to remain available until expended, for 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.): 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: Provided
further, That the Secretary shall allocate, using the best available
data, an amount equal to the total estimate for unmet needs for
qualifying disasters under this heading in this Act: 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: Provided further, That of the amounts made available
under this heading in this Act, no less than $1,610,000,000 shall be
allocated for major declared disasters that occurred in 2020 within
30 days of the date of enactment of this Act:''

Most Impacted and Distressed Areas

As with prior CDBG-DR appropriations, HUD is not obligated to
allocate funds for all major disasters occurring in the statutory
timeframes. HUD is directed to use the funds ``in the most impacted
and distressed areas.'' HUD has implemented this directive by
limiting CDBG-DR formula allocations to grantees with major
disasters that meet three standards:
(1) Individual Assistance/IHP designation. HUD has limited
allocations to those disasters where the Federal Emergency
Management Agency (FEMA) had determined the damage was sufficient to
declare the disaster as eligible to receive Individual and
Households Program (IHP) funding.
(2) Concentrated 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
this allocation, HUD is defining most impacted areas as either most
impacted counties--counties exceeding $10 million in serious unmet
housing needs--and 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.
For disasters that meet the most impacted threshold described
above, the unmet need allocations are based on the following factors
summed together:
(1) Repair estimates for seriously damaged owner-occupied units
without insurance (with some exceptions) in most impacted areas
after FEMA and Small Business Administration (SBA) repair grants or
loans; an estimate for homeowners served by FEMA's Permanent Housing
Construction program is also deducted from the homeowner unmet need
estimate;
(2) Repair estimates for seriously damaged rental units occupied
by very low-income renters in most impacted areas;
(3) Repair and content loss estimates for small businesses with
serious damage denied by SBA; and
(4) The estimated local cost share for Public Assistance
Category C to G projects.

Methods for Estimating Serious Unmet Needs for Housing

The data HUD uses to calculate unmet needs for 2020 qualifying
disasters come from the FEMA Individual Assistance program data on
housing-unit damage as of September 30, 2021, and reflect disasters
occurring in 2020.
The core data on housing damage for both the unmet housing needs
calculation and the concentrated damage are based on home inspection
data for FEMA's Individual Assistance program 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 and SBA.
Each of the FEMA inspected owner units are categorized by HUD
into one of five categories:
<bullet> Minor-Low: Less than $3,000 of FEMA inspected real
property damage.
<bullet> Minor-High: $3,000 to $7,999 of FEMA inspected real
property damage.
<bullet> 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.
<bullet> 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.
<bullet> Severe: Greater than $28,800 of FEMA inspected real
property damage or determined destroyed and/or 6 or more feet of
flooding on the first floor.
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:
<bullet> Minor-Low: Less than $2,500 of FEMA inspected personal
property damage.
<bullet> Minor-High: $2,500 to $3,499 of FEMA inspected personal
property damage.
<bullet> 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.
<bullet> 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.
<bullet> 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 are determined to have a high level of
damage if they have damage of ``major-low'' or higher. That is, they
have 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.
Furthermore, a homeowner with flooding outside the 1 percent
risk flood hazard area is determined to have unmet needs if they
reported damage and no flood insurance to cover that damage. For
homeowners inside the 1 percent risk flood hazard area, homeowners
without flood insurance with flood damage 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 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 unit damage. Each of
the FEMA-inspected renter units are categorized by HUD into one of
five categories:
<bullet> Minor-Low: Less than $1,000 of FEMA inspected personal
property damage.
<bullet> Minor-High: $1,000 to $1,999 of FEMA inspected personal
property damage or determination of ``Moderate'' damage by the FEMA
inspector.
<bullet> 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.
<bullet> 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.
<bullet> 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

[[Page 6370]]

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.
The average cost to fully repair a home for a specific disaster
to code within each of the damage categories noted above is
calculated using the median real property damage repair costs
determined by the SBA for its disaster loan program based on a fuzzy
match at the block group level comparing FEMA and SBA inspections.
Minimum multipliers are not less than the 25th percentile for
all Individual Assistance (IA) eligible disasters combined in each
disaster year at the time of the allocation calculation, and maximum
multipliers are not more than the 75th percentile for all IA
eligible disasters combined in each disaster year with data
available as of the allocation. Because SBA is inspecting for full
repair costs, their estimate is presumed to reflect the full cost to
repair the home, which is generally more than the FEMA estimates on
the cost to make the home habitable. If there is a match of fewer
than 10 SBA inspections to FEMA inspections for any damage category
in a block group, the minimum multiplier is used.
For each household determined to have serious unmet housing
needs (as described above), their estimated average unmet housing
need is equal to the average cost to fully repair a home to code
less assistance from FEMA and SBA provided for repair to the home,
based on the home's damage category (noted above) unless a FEMA
inspection exceeds the multiplier, in which case the FEMA inspection
is used (capped at the maximum noted above).

Methods for Estimating Serious Unmet Economic Revitalization Needs

Based on SBA disaster loans to businesses using data for 2020
disasters from as of date September 28, 2021, HUD calculates the
median real estate and content loss by the following damage
categories for each state:

<bullet> Category 1: Real estate + content loss = below $12,000
<bullet> Category 2: Real estate + content loss = $12,000-$29,999
<bullet> Category 3: Real estate + content loss = $30,000-$64,999
<bullet> Category 4: Real estate + content loss = $65,000-$149,999
<bullet> Category 5: 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 decision had not been made), under
the assumption that damage among those denied at pre-inspection have
the same distribution of damage as those denied after inspection.

Methods for Estimating Unmet Infrastructure Needs

To calculate 2020 unmet needs for infrastructure projects, HUD
obtained FEMA cost estimates as of September 28, 2021, of the
expected local cost share to repair the permanent public
infrastructure projects (Categories C to G) to pre-disaster
condition.

Allocation Calculation for Unmet Needs

Once eligible entities are identified using the above criteria,
the allocation to individual grantees represents their proportional
share of the estimated unmet needs. For the formula allocation, HUD
calculates total unmet recovery needs for eligible 2020 disasters as
the aggregate of:
<bullet> Serious unmet housing needs in most impacted counties;
<bullet> Serious unmet business needs; and
<bullet> Unmet infrastructure need.

Allocation Calculation for Mitigation

Per the statute, mitigation is calculated at 15 percent of the
sum of total unmet needs above.

Adjustment for Previous Unmet Need Allocation and Final Allocation

If a disaster has previously received CDBG-DR funding for a
portion of the unmet needs calculated for the disaster, which is the
case for Puerto Rico that had received 2019 disaster funding for the
earthquakes that occurred in both 2019 and 2020, then the amount
allocated from 2020 funds reflects the total unmet needs calculated
above, the 15 percent mitigation for the total unmet needs, less the
CDBG-DR funding previously received.

Appendix B--The Consolidated Notice

CDBG-DR Consolidated Notice Waivers and Alternative Requirements

Table of Contents

I. Waivers and Alternative Requirements
II. Eligible Activities
A. Clarification of Disaster-Related Activities
B. Housing and Related Floodplain Issues
C. Infrastructure (Public Facilities, Public Improvements)
D. Economic Revitalization
III. Grant Administration
A. Pre-Award Evaluation of Management and Oversight of Funds
B. Administration, Planning, and Financial Management
C. Action Plan for Disaster Recovery Waiver and Alternative
Requirement
D. Citizen Participation Requirements
E. Program Income
F. Other General Waivers and Alternative Requirements
G. Ineligible Activities in CDBG-DR
IV. Other Program Requirements
A. Duplication of Benefits
B. Procurement
C. Use of the ``Upper Quartile'' or ``Exception Criteria''
D. Environmental Requirements
E. Flood Insurance Requirements
F. URA, Section 104(d) and Related CDBG Program Requirements
V. Performance Reviews
A. Timely Distribution and Expenditure of Funds
B. HUD's Review of Continuing Capacity
C. Grantee Reporting Requirements in the DRGR System

I. Waivers and Alternative Requirements

CDBG-DR grantees that are subject to this Consolidated Notice,
as indicated in each Federal Register notice that announces
allocations of the appropriated CDBG-DR funds (``Allocation
Announcement Notice''), must comply with all waivers and alternative
requirements in the Consolidated Notice, unless expressly made
inapplicable (e.g., a waiver that applies to states only does not
apply to units of general local governments and Indian tribes).
Except as described in applicable waivers and alternative
requirements, the statutory and regulatory provisions governing the
CDBG program (and for Indian tribes, the Indian CDBG program) shall
apply to grantees receiving a CDBG-DR allocation. Statutory
provisions (title I of the HCDA) that apply to all grantees can be
found at 42 U.S.C. 5301 et seq. and regulatory requirements, which
differ for each type of grantee, are described in each of the three
paragraphs below.
Except as modified, the State CDBG program rules shall apply to
state grantees receiving a CDBG-DR allocation. Applicable State CDBG
program regulations are found at 24 CFR part 570, subpart I. For
insular areas, HUD waives the provisions of 24 CFR part 570, subpart
F and imposes the following alternative requirement: Insular areas
shall administer their CDBG-DR allocations in accordance with the
regulatory and statutory provisions governing the State CDBG
program, as modified by the Consolidated Notice.
Except as modified, statutory and regulatory provisions
governing the Entitlement CDBG Program shall apply to unit of
general local government grantees (often referred to as local
government grantees in appropriations acts). Applicable Entitlement
CDBG Program regulations are found at 24 CFR part 570, as described
in 570.1(a).
Except as modified, CDBG-DR grants made by HUD to Indian tribes
shall be subject to the statutory provisions in title I of the HCDA
that apply to Indian tribes and the regulations in 24 CFR part 1003
governing the Indian CDBG program, except those requirements in part
1003 related to the funding application and selection process.
References to the action plan in the above regulations shall
refer to the action plan required by the Consolidated Notice and not
to the consolidated plan action plan required by 24 CFR part 91. All
references pertaining to timelines and/or deadlines are in terms of
calendar days unless otherwise noted.

II. Eligible Activities

II.A. Clarification of Disaster-Related Activities

CDBG-DR funds are provided for necessary expenses for activities
authorized under title I of the HCDA related to disaster relief,
long-term recovery, restoration of infrastructure and housing,
economic revitalization, and mitigation of risk associated with
activities

[[Page 6371]]

carried out for these purposes, in the ``most impacted and
distressed'' areas (identified by HUD or the grantee) resulting from
a major disaster. All CDBG-DR funded activities must address an
impact of the disaster for which funding was allocated. Accordingly,
each activity must: (1) Address a direct or indirect impact from the
disaster in a most impacted and distressed area; (2) be a CDBG-
eligible activity (or be eligible under a waiver or alternative
requirement); and (3) meet a national objective. When appropriations
acts provide an additional allocation amount for mitigation of
hazard risks that does not require a connection to the qualifying
major disaster, requirements for the use of those funds will be
included in the Allocation Announcement Notice.
II.A.1. Documenting a Connection to the Disaster. Grantees must
maintain records that document how each funded activity addresses a
direct or indirect impact from the disaster. Grantees may do this by
linking activities to a disaster recovery need that is described in
the impact and unmet needs assessment in the action plan
(requirements for the assessment are addressed in section
III.C.1.a.). Sufficient documentation of physical loss must include
damage or rebuilding estimates, insurance loss reports, images, or
similar information that documents damage caused by the disaster.
Sufficient documentation for non-physical disaster-related impacts
must clearly show how the activity addresses the disaster impact,
e.g., for economic development activities, data about job loss or
businesses closing after the disaster or data showing how pre-
disaster economic stressors were aggravated by the disaster; or for
housing activities, a post-disaster housing analysis that describes
the activities that are necessary to address the post-disaster
housing needs.
II.A.2. Resilience and hazard mitigation. The Consolidated
Notice will help to improve long-term community resilience by
requiring grantees to fully incorporate mitigation measures that
will protect the public, including members of protected classes,
vulnerable populations, and underserved communities, from the risks
identified by the grantee among other vulnerabilities. This approach
will better ensure the revitalization of the community long after
the recovery projects are complete.
Accordingly, HUD is adopting the following alternative
requirement to section 105(a): Grantees may carry out the activities
described in section 105(a), as modified by waivers and alternative
requirements, to the extent that the activities comply with the
following:
II.A.2.a. Alignment with mitigation plans. Grantees must ensure
that the mitigation measures identified in their action plan will
align with existing hazard mitigation plans submitted to the Federal
Emergency Management Agency (FEMA) under section 322 of the Robert
T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5165) or other state, local, or tribal hazard mitigation plans.
II.A.2.b. Mitigation measures. Grantees must incorporate
mitigation measures when carrying out activities to construct,
reconstruct, or rehabilitate residential or non-residential
structures with CDBG-DR funds as part of activities eligible under
42 U.S.C. 5305(a) (including activities authorized by waiver and
alternative requirement). To meet this alternative requirement,
grantees must demonstrate that they have incorporated mitigation
measures into CDBG-DR activities as a construction standard to
create communities that are more resilient to the impacts of
recurring natural disasters and the impacts of climate change. When
determining which mitigation measures to incorporate, grantees
should design and construct structures to withstand existing and
future climate impacts expected to occur over the service life of
the project.
II.A.2.c. Resilience performance metrics. Before carrying out
CDBG-DR funded activities to construct, reconstruct, or rehabilitate
residential or non-residential structures, the grantee must
establish resilience performance metrics for the activity,
including: (1) An estimate of the projected risk to the completed
activity from natural hazards, including those hazards that are
influenced by climate change (e.g., high winds destroying newly
built homes), (2) identification of the mitigation measures that
will address the projected risks (e.g., using building materials
that are able to withstand high winds), and (3) an assessment of the
benefit of the grantee's measures through verifiable data (e.g., 10
newly built homes will withstand high winds up to 100 mph).
II.A.3. Most impacted and distressed (MID) areas. Funds must be
used for costs related to unmet needs in the MID areas resulting
from qualifying disasters. HUD allocates funds using the best
available data that cover the eligible affected areas and identifies
MID areas. Grantees are required to use 80 percent of all CDBG-DR
funds to benefit the HUD-identified MID areas. The HUD-identified
MID areas and the minimum dollar amount that must be spent to
benefit those areas will be identified for each grantee in the
applicable Allocation Announcement Notice. If a grantee seeks to add
other areas to the HUD-identified MID area, the grantee must contact
its CPD Representative or CPD Specialist and submit the request with
a data-driven analysis that illustrates the basis for designating
the additional area as most impacted and distressed as a result of
the qualifying disaster.
Grantees may use up to five percent of the total grant award for
grant administration. Therefore, HUD will include 80 percent of a
grantee's expenditures for grant administration in its determination
that 80 percent of the total award has benefited the HUD-identified
MID area. Expenditures for planning activities may also be counted
towards the HUD-identified MID area requirement, if the grantee
describes in its action plan how those planning activities benefit
those areas.
HUD may identify an entire jurisdiction or a ZIP code as a MID
area. If HUD designates a ZIP code as a MID area for the purposes of
allocating funds, the grantee may expand program operations to the
whole county or counties that overlap with the HUD designated ZIP
code. A grantee must indicate the decision to expand eligibility to
the whole county or counties in its action plan.
Grantees must determine where to use the remaining amount of the
CDBG-DR grant, but that portion of the allocation may only be used
to address unmet needs and that benefit those areas that the grantee
determines are most impacted and distressed (``grantee-identified
MID areas'') within areas that received a presidential major
disaster declaration identified by the disaster numbers listed in
the applicable Allocation Announcement Notice. The grantee must use
quantifiable and verifiable data in its analysis, as referenced in
its action plan, to identify the MID areas where it will use the
remaining amount of CDBG-DR funds.
Grantee expenditures for eligible unmet needs outside of the
HUD-identified or grantee-identified MID areas are allowable,
provided that the grantee can demonstrate how the expenditure of
CDBG-DR funds outside of the MID areas will address unmet needs
identified within the HUD-identified or grantee-identified MID area
(e.g., upstream water retention projects to reduce downstream
flooding in the HUD-identified MID area).

II.B. Housing Activities and Related Floodplain Issues

Grantees may use CDBG-DR funds for activities that may include,
but are not limited to, new construction, reconstruction, and
rehabilitation of single-family or multifamily housing,
homeownership assistance, buyouts, and rental assistance. The
broadening of eligible CDBG-DR activities related to housing under
the HCDA is necessary following major disasters in which housing,
including large numbers of affordable housing units, have been
damaged or destroyed. The following waivers and alternative
requirements will assist grantees in addressing the full range of
unmet housing needs arising from a disaster.
II.B.1. New housing construction waiver and alternative
requirement. 42 U.S.C. 5305(a) and 24 CFR 570.207(b)(3) are waived
to the extent necessary to permit new housing construction, subject
to the following alternative requirement. When a CDBG-DR grantee
carries out a new housing construction activity, 24 CFR 570.202
shall apply and shall be read to extend to new construction in
addition to rehabilitation assistance. Private individuals and
entities must remain compliant with federal accessibility
requirements as well as with the applicable site selection
requirements of 24 CFR 1.4(b)(3) and 8.4(b)(5).
II.B.2. Construction standards for new construction,
reconstruction, and rehabilitation. HUD is adopting an alternative
requirement to require grantees to adhere to the applicable
construction standards in II.B.2.a. through II.B.2.d. when carrying
out activities to construct, reconstruct, or rehabilitate
residential structures with CDBG-DR funds as part of activities
eligible under 42 U.S.C. 5305(a) (including activities authorized by
waiver and alternative requirement). For purposes of the
Consolidated Notice, the terms ``substantial damage'' and
``substantial improvement'' shall be as defined in 44 CFR 59.1
unless otherwise noted.
II.B.2.a. Green and resilient building standard for new
construction and

[[Page 6372]]

reconstruction of housing. Grantees must meet the Green and
Resilient Building Standard, as defined in this subparagraph, for:
(i) All new construction and reconstruction (i.e., demolishing a
housing unit and rebuilding it on the same lot in substantially the
same manner) of residential buildings and (ii) all rehabilitation
activities of substantially damaged residential buildings, including
changes to structural elements such as flooring systems, columns, or
load-bearing interior or exterior walls.
The Green and Resilient Building Standard requires that all
construction covered by the paragraph above and assisted with CDBG-
DR funds meet an industry-recognized standard that has achieved
certification under (i) Enterprise Green Communities; (ii) LEED (New
Construction, Homes, Midrise, Existing Buildings Operations and
Maintenance, or Neighborhood Development); (iii) ICC-700 National
Green Building Standard Green+Resilience; (iv) Living Building
Challenge; or (v) any other equivalent comprehensive green building
program acceptable to HUD. Additionally, all such covered
construction must achieve a minimum energy efficiency standard, such
as (i) ENERGY STAR (Certified Homes or Multifamily High-Rise); (ii)
DOE Zero Energy Ready Home; (iii) EarthCraft House, EarthCraft
Multifamily; (iv) Passive House Institute Passive Building or
EnerPHit certification from the Passive House Institute US (PHIUS),
International Passive House Association; (v) Greenpoint Rated New
Home, Greenpoint Rated Existing Home (Whole House or Whole Building
label); (vi) Earth Advantage New Homes; or (vii) any other
equivalent energy efficiency standard acceptable to HUD. Grantees
must identify, in each project file, which of these Green and
Resilient Building Standards will be used for any building subject
to this paragraph. However, grantees are not required to use the
same standards for each project or building.
II.B.2.b. Standards for rehabilitation of nonsubstantially
damaged residential buildings. For rehabilitation other than the
rehabilitation of substantially damaged residential buildings
described in section II.B.2.a. above, grantees must follow the
guidelines specified in the HUD CPD Green Building Retrofit
Checklist.
Grantees must apply these guidelines to the extent applicable
for the rehabilitation work undertaken, for example, the use of mold
resistant products when replacing surfaces such as drywall. Products
and appliances replaced as part of the rehabilitation work, must be
ENERGY STAR-labeled, WaterSense-labeled, or Federal Energy
Management Program (FEMP)-designated products or appliances.
II.B.2.c. Elevation standards for new construction,
reconstruction, and rehabilitation of substantial damage, or
rehabilitation resulting in substantial improvements. The following
elevation standards apply to new construction, rehabilitation of
substantial damage, or rehabilitation resulting in substantial
improvement of residential structures located in an area delineated
as a special flood hazard area or equivalent in FEMA's data sources.
24 CFR 55.2(b)(1) provides additional information on data sources,
which apply to all floodplain designations. All structures, defined
at 44 CFR 59.1, designed principally for residential use, and
located in the one percent annual chance (or 100-year) floodplain,
that receive assistance for new construction, reconstruction,
rehabilitation of substantial damage, or rehabilitation that results
in 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 one percent annual chance floodplain elevation
(base flood elevation). Mixed-use structures with no dwelling units
and no residents below two feet above base flood elevation, must be
elevated or floodproofed, in accordance with FEMA floodproofing
standards at 44 CFR 60.3(c)(3)(ii) or successor standard, up to at
least two feet above base flood elevation.
All Critical Actions, as defined at 24 CFR 55.2(b)(3), within
the 500-year (or 0.2 percent annual chance) floodplain must be
elevated or floodproofed (in accordance with FEMA floodproofing
standards at 44 CFR 60.3(c)(2)-(3) or successor standard) to the
higher of the 500-year floodplain elevation or three feet above the
100-year floodplain elevation. If the 500-year floodplain is
unavailable, and the Critical Action is in the 100-year floodplain,
then the structure must be elevated or floodproofed (in accordance
with FEMA floodproofing standards at 44 CFR 60.3(c)(2)-(3) or
successor standard) at least three feet above the 100-year
floodplain elevation. Critical Actions are defined as ``any activity
for which even a slight chance of flooding would be too great,
because such flooding might result in loss of life, injury to
persons or damage to property.'' For example, Critical Actions
include hospitals, nursing homes, emergency shelters, police
stations, fire stations, and principal utility lines.
In addition to other requirements in this section, grantees must
comply with applicable state, local, and tribal codes and standards
for floodplain management, including elevation, setbacks, and
cumulative substantial damage requirements. Grantees using CDBG-DR
funds as the non-Federal match in a FEMA-funded project may apply
the alternative requirement for the elevation of structures
described in section III.F.6. Structures that are elevated must meet
federal accessibility standards.
II.B.2.d. Broadband infrastructure in housing. Any substantial
rehabilitation, as defined by 24 CFR 5.100, reconstruction, or new
construction of a building with more than four rental units must
include installation of broadband infrastructure, except where the
grantee documents that: (i) The location of the new construction or
substantial rehabilitation makes installation of broadband
infrastructure infeasible; (ii) the cost of installing broadband
infrastructure would result in a fundamental alteration in the
nature of its program or activity, or in an undue financial burden;
or (iii) the structure of the housing to be substantially
rehabilitated makes installation of broadband infrastructure
infeasible.
II.B.3. Applicable affordability periods for new construction of
affordable rental housing. To meet the low- and moderate-income
housing national objective, rental housing assisted with CDBG-DR
funds must be rented to low- and moderate-income (LMI) households at
affordable rents, and a grantee must define ``affordable rents'' in
its action plan. Because the waiver and alternative requirement in
II.B.1. authorizes the use of grant funds for new housing
construction, HUD is imposing the following alternative requirement
to modify the low- and moderate-income housing national objective
criteria in 24 CFR 570.208(a)(3) and 570.483(b)(3) for activities
involving the new construction of affordable rental housing of five
or more units. For activities that will construct five or more
units, in addition to other applicable criteria in 24 CFR
570.208(a)(3) and 570.483(b)(3), in its action plan, a grantee must
define the affordability standards, including ``affordable rents,''
the enforcement mechanisms, and applicable timeframes, that will
apply to the new construction of affordable rental housing, i.e.,
when the activity will result in construction of five or more units,
the affordability requirements described in the action plan apply to
the units that will be occupied by LMI households. The minimum
timeframes and other related requirements acceptable for compliance
with this alternative requirement are the HOME Investment
Partnerships Program (HOME) requirements at 24 CFR 92.252(e),
including the table listing the affordability periods at the end of
24 CFR 92.252(e). Therefore, the grantee must adopt and implement
enforceable affordability standards that comply with or exceed
requirements at 24 CFR 92.252(e)(1) for the new construction of
affordable rental housing in structures containing five or more
units.
II.B.4. Affordability period for new construction of homes built
for LMI households. In addition to alternative requirements in
II.B.1., the following alternative requirement applies to activities
to construct new single-family units for homeownership that will
meet the LMI housing national objective criteria. Grantees must
establish affordability restrictions on all newly constructed
single-family housing (for purposes of the Consolidated Notice,
single-family housing is defined as four units or less), that, upon
completion, will be purchased and occupied by LMI homeowners. The
minimum affordability period acceptable for compliance are the HOME
requirements at 24 CFR 92.254(a)(4). If a grantee applies other
standards, the periods of affordability applied by a grantee must
meet or exceed the applicable HOME requirements in 24 CFR
92.254(a)(4) and the table of affordability periods directly
following that provision. Grantees shall establish resale or
recapture requirements for housing funded pursuant to this paragraph
and shall describe those requirements in the action plan or
substantial amendment in which the activity is proposed. The resale
or recapture requirements must clearly describe the terms of resale
or recapture and the specific circumstances under which resale or
recapture will be used. Affordability restrictions must be
enforceable and imposed by recorded deed restrictions, covenants, or
other similar mechanisms. The affordability

[[Page 6373]]

restrictions, including the affordability period requirements in
this paragraph do not apply to housing units newly constructed or
reconstructed for an owner-occupant to replace the owner-occupant's
home that was damaged by the disaster.
II.B.5. Homeownership assistance waiver and alternative
requirement. 42 U.S.C. 5305(a)(24) is waived and replaced with the
following alternative requirement:
``Provision of direct assistance to facilitate and expand
homeownership among persons at or below 120 percent of area median
income (except that such assistance shall not be considered a public
service for purposes of 42 U.S.C. 5305(a)(8)) by using such
assistance to--
(A) subsidize interest rates and mortgage principal amounts for
homebuyers with incomes at or below 120 percent of area median
income;
(B) finance the acquisition of housing by homebuyers with
incomes at or below 120 percent of area median income that is
occupied by the homebuyers;
(C) acquire guarantees for mortgage financing obtained by
homebuyers with incomes at or below 120 percent of area median
income from private lenders, meaning that if a private lender
selected by the homebuyer offers a guarantee of the mortgage
financing, the grantee may purchase the guarantee to ensure
repayment in case of default by the homebuyer. This subparagraph
allows the purchase of mortgage insurance by the household but not
the direct issuance of mortgage insurance by the grantee;
(D) provide up to 100 percent of any down payment required from
homebuyers with incomes at or below 120 percent of area median
income; or
(E) pay reasonable closing costs (normally associated with the
purchase of a home) incurred by homebuyers with incomes at or below
120 percent of area median income.''
While homeownership assistance, as described above, may be
provided to households with incomes at or below 120 percent of the
area median income, HUD will only consider those funds used for
households with incomes at or below 80 percent of the area median
income to qualify as meeting the LMI person benefit national
objective.
II.B.6. Limitation on emergency grant payments--interim mortgage
assistance. 42 U.S.C. 5305(a)(8), 24 CFR 570.201(e), 24 CFR
570.207(b)(4), and 24 CFR 1003.207(b)(4) are modified to extend
interim mortgage assistance (IMA) to qualified individuals from
three months to up to twenty months. IMA must be used in conjunction
with a buyout program, or the rehabilitation or reconstruction of
single-family housing, during which mortgage payments may be due but
the home is not habitable. A grantee using this alternative
requirement must document, in its policies and procedures, how it
will determine that the amount of assistance to be provided is
necessary and reasonable.
II.B.7. Buyout activities. CDBG-DR grantees may carry out
property acquisition for a variety of purposes, but buyouts are a
type of acquisition for the specific purpose of reducing the risk of
property damage. HUD has determined that creating a new activity and
alternative requirement for buyouts is necessary for consistency
with the application of other Federal resources commonly used for
this type of activity. Therefore, HUD is waiving 42 U.S.C. 5305(a)
and establishing an alternative requirement only to the extent
necessary to create a new eligible activity for buyouts. The term
``buyouts'' means the acquisition of properties located in a
floodway, floodplain, or other Disaster Risk Reduction Area that is
intended to reduce risk from future hazards. Grantees can designate
a Disaster Risk Reduction Area, as defined below.
Grantees carrying out buyout activities must establish an open
space management plan or equivalent, if one has not already been
established, before implementation. The plan must establish full
transparency about the planned use of acquired properties post-
buyout, or the process by which the planned use will be determined
and enforced.
Buyout activities are subject to all requirements that apply to
acquisition activities generally including but not limited to, the
Uniform Relocation Assistance and Real Property Acquisition Policies
Act of 1970 (URA) (42 U.S.C. 4601, et seq.) and its implementing
regulations at 49 CFR part 24, subpart B, unless waived or modified
by alternative requirements. Only acquisitions that meet the
definition of a ``buyout'' are subject to the post-acquisition land
use restrictions imposed by the alternative requirement (II.B.7.a.
below). The key factor in determining whether the acquisition is a
buyout is whether the intent of the purchase is to reduce risk of
property damage from future flooding or other hazards in a floodway,
floodplain, or a Disaster Risk Reduction Area. A grantee that will
buyout properties in a Disaster Risk Reduction Area must establish
criteria in its policies and procedures to designate an area as a
Disaster Risk Reduction Area for the buyout, pursuant to the
following requirements:
(1) The area has been impacted by the hazard that has been
caused or exacerbated by the disaster for which the grantee received
its CDBG-DR allocation;
(2) the hazard identified must be a predictable environmental
threat to the safety and well-being of program beneficiaries,
including members of protected classes, vulnerable populations, and
underserved communities, as evidenced by the best available data
(e.g., FEMA Repetitive Loss Data, EPA's Environmental Justice
Screening and Mapping Tool, HHS's climate change related guidance
and data, etc.) and science (such as engineering and structural
solutions propounded by FEMA, USACE, other federal agencies, etc.);
and
(3) the area must be clearly delineated so that HUD and the
public may easily determine which properties are located within the
designated area.
Grantees may only redevelop an acquired property if the property
is not acquired through a buyout program (i.e., the purpose of
acquisition was something other than risk reduction). When
acquisitions are not acquired through a buyout program, the purchase
price must be consistent with 2 CFR part 200, subpart E--Cost
Principles (``cost principles'') and the pre-disaster fair market
value may not be used.
II.B.7.a. Buyout requirements:
(i) Property to be acquired or accepted must be located within a
floodway, floodplain, or Disaster Risk Reduction Area.
(ii) Any property acquired or accepted must be dedicated and
maintained in perpetuity for a use that is compatible with open
space, recreational, floodplain and wetlands management practices,
or other disaster-risk reduction practices.
(iii) No new structure will be erected on property acquired or
accepted under the buyout program other than:
(a) A public facility that is open on all sides and functionally
related to a designated open space (e.g., a park, campground, or
outdoor recreation area);
(b) a restroom; or
(c) a flood control structure, provided that:
(1) The structure does not reduce valley storage, increase
erosive velocities, or increase flood heights on the opposite bank,
upstream, or downstream; and
(2) the local floodplain manager approves the structure, in
writing, before commencement of construction of the structure.
(iv) After the purchase of a buyout property with CDBG-DR funds,
the owner of the buyout property (including subsequent owners) is
prohibited from making any applications to any Federal entity in
perpetuity for additional disaster assistance for any purpose
related to the property acquired through the CDBG-DR funded buyout,
unless the assistance is for an allowed use as described in
paragraph (ii) above. The entity acquiring the property may lease or
sell it to adjacent property owners or other parties for compatible
uses that comply with buyout requirements in return for a
maintenance agreement.
(v) A deed restriction or covenant running with the property
must require that the buyout property be dedicated and maintained
for compatible uses that comply with buyout requirements in
perpetuity.
(vi) Grantees must choose from one of two valuation methods
(pre-disaster value or post-disaster value) for a buyout program (or
a single buyout activity). The grantee must apply its valuation
method for all buyouts carried out under the program. If the grantee
determines the post-disaster value of a property is higher than the
pre-disaster value, a grantee may provide exceptions to its
established valuation method on a case-by-case basis. The grantee
must describe the process for such exceptions and how it will
analyze the circumstances to permit an exception in its buyout
policies and procedures. Each grantee must adopt policies and
procedures on how it will demonstrate that the amount of assistance
for a buyout is necessary and reasonable.
(vii) All buyout activities must be classified using the
``buyout'' activity type in the Disaster Recovery and Grant
Reporting (DRGR) system.
(viii) Any state grantee implementing a buyout program or
activity must consult with local or tribal governments within the
areas in which buyouts will occur.

[[Page 6374]]

II.B.8. Safe housing incentives in disaster-affected
communities. The limitation on eligible activities in section 42
U.S.C. 5305(a) is waived and HUD is establishing the following
alternative requirement to establish safe housing incentives as an
eligible activity. A safe housing incentive is any incentive
provided to encourage households to relocate to suitable housing in
a lower risk area or in an area promoted by the community's
comprehensive recovery plan. Displaced persons must receive any
relocation assistance to which they are entitled under other legal
authorities, such as the URA, section 104(d) of the HCDA, or those
described in the Consolidated Notice. The grantee may offer safe
housing incentives in addition to the relocation assistance that is
legally required.
Grantees must maintain documentation, at least at a programmatic
level, describing how the grantee determined the amount of
assistance for the incentive was necessary and reasonable, how the
incentive meets a national objective, and that the incentives are in
accordance with the grantee's approved action plan and published
program design(s). A grantee may require the safe housing incentive
to be used for a particular purpose by the household receiving the
assistance. However, this waiver does not permit a compensation
program meaning that funds may not be provided to a beneficiary to
compensate the beneficiary for an estimated or actual amount of loss
from the declared disaster. Grantees are prohibited from offering
housing incentives to a homeowner as an incentive to induce the
homeowner to sell a second home, consistent with the prohibition and
definition of second home in section II.B.12.
II.B.9. National objectives for buyouts and safe housing
incentives. Activities that assist LMI persons and meet the criteria
for the national objectives described below, including in II.B.10.,
will be considered to benefit LMI persons unless there is
substantial evidence to the contrary and will count towards the
calculation of a grantee's overall LMI benefit requirement as
described in section III.F.2. The grantee shall appropriately ensure
that activities that meet the criteria for any of the national
objectives below do not benefit moderate-income persons to the
exclusion of low-income persons.
When undertaking buyout activities, to demonstrate that a buyout
meets the low- and moderate-income housing (LMH) national objective,
grantees must meet all requirements of the HCDA, and applicable
regulatory criteria described below. 42 U.S.C. 5305(c)(3) provides
that any assisted activity that involves the acquisition of property
to provide housing shall be considered to benefit LMI persons only
to the extent such housing will, upon completion, be occupied by
such persons. In addition, 24 CFR 570.483(b)(3), 24 CFR
570.208(a)(3), and 24 CFR 1003.208(c) apply the LMH national
objective to an eligible activity carried out for the purpose of
providing or improving permanent residential structures that, upon
completion, will be occupied by LMI households.
A buyout program that merely pays homeowners to leave their
existing homes does not guarantee that those homeowners will occupy
a new residential structure. Therefore, acquisition-only buyout
programs cannot satisfy the LMH national objective criteria.
To meet a national objective that benefits a LMI person, buyout
programs can be structured in one of the following ways:
(1) The buyout activity combines the acquisition of properties
with another direct benefit--LMI housing activity, such as down
payment assistance--that results in occupancy and otherwise meets
the applicable LMH national objective criteria;
(2) The activity meets the low- and moderate-income area (LMA)
benefit criteria and documents that the acquired properties will
have a use that benefits all the residents in a particular area that
is primarily residential, where at least 51 percent of the residents
are LMI persons. Grantees covered by the ``exception criteria'' as
described in section IV.C. of the Consolidated Notice may apply it
to these activities. To satisfy LMA criteria, grantees must define
the service area based on the end use of the buyout properties; or
(3) The program meets the criteria for the low- and moderate-
income limited clientele (LMC) national objective by restricting
buyout program eligibility to exclusively LMI persons and benefiting
LMI sellers by acquiring their properties for more than current fair
market value (in accordance with the valuation requirements in
section II.B.7.a.(vi)).
II.B.10. For LMI Safe Housing Incentive (LMHI). The following
alternative requirement establishes new LMI national objective
criteria that apply to safe housing incentive (LMHI) activities that
benefit LMI households. HUD has determined that providing CDBG-DR
grantees with an additional method to demonstrate how safe housing
incentive activities benefit LMI households will ensure that
grantees and HUD can account for and assess the benefit that CDBG-DR
assistance for these activities has on LMI households.
The LMHI national objective may be used when a grantee uses
CDBG-DR funds to carry out a safe housing incentive activity that
benefits one or more LMI persons. To meet the LMHI national
objective, the incentive must be (a.) tied to the voluntary
acquisition of housing (including buyouts) owned by a qualifying LMI
household and made to induce a move outside of the affected
floodplain or disaster risk reduction area to a lower-risk area or
structure; or (b.) for the purpose of providing or improving
residential structures that, upon completion, will be occupied by a
qualifying LMI household and will be in a lower risk area.
II.B.11. Redevelopment of acquired properties. Although
properties acquired through a buyout program may not be redeveloped,
grantees may redevelop other acquired properties. For non-buyout
acquisitions, HUD has not permitted the grantee to base acquisition
cost on pre-disaster fair market value. The acquisition cost must
comply with applicable cost principles and with the acquisition
requirements at 49 CFR 24, Subpart B, as revised by the Consolidated
Notice waivers and alternative requirements. In addition to the
purchase price, grantees may opt to provide optional relocation
assistance, as allowable under Section 104 and 105 of the HCDA (42
U.S.C. 5304 and 42 U.S.C. 5305) and 24 CFR 570.606(d), and as
expanded by section IV.F.5. of the Consolidated Notice, to the owner
of a property that will be redeveloped if: (a.) The property is
purchased by the grantee or subrecipient through voluntary
acquisition; and (b.) the owner's need for additional assistance is
documented. Any optional relocation assistance must provide equal
relocation assistance within each class of displaced persons,
including but not limited to providing reasonable accommodation
exceptions to persons with disabilities. See 24 CFR 570.606(d) for
more information on optional relocation assistance. In addition,
tenants displaced by these voluntary acquisitions may be eligible
for URA relocation assistance. In carrying out acquisition
activities, grantees must ensure they are in compliance with the
long-term redevelopment plans of the community in which the
acquisition and redevelopment is to occur.
II.B.12. Alternative requirement for housing rehabilitation--
assistance for second homes. HUD is instituting an alternative
requirement to the rehabilitation provisions at 42 U.S.C. 5305(a)(4)
as follows: Properties that served as second homes at the time of
the disaster, or following the disaster, are not eligible for
rehabilitation assistance or safe housing incentives. This
prohibition does not apply to acquisitions that meet the definition
of a buyout. A second home is defined for purposes of the
Consolidated Notice as a home that is not the primary residence of
the owner, a tenant, or any occupant at the time of the disaster or
at the time of application for CDBG-DR assistance. Grantees can
verify a primary residence using a variety of documentation
including, but not limited to, voter registration cards, tax
returns, homestead exemptions, driver's licenses, and rental
agreements. Acquisition of second homes at post-disaster fair market
value is not prohibited.

II.C. Infrastructure (Public Facilities, Public Improvements),
Match, and Elevation of Non-Residential Structures

HUD is adopting an alternative requirement to require grantees
to adhere to the applicable construction standards and requirements
in II.C.1., II.C.2. and II.C.4., which apply only to those eligible
activities described in those paragraphs.
II.C.1. Infrastructure planning and design. All newly
constructed infrastructure that is assisted with CDBG-DR funds must
be designed and constructed to withstand extreme weather events and
the impacts of climate change. To satisfy this requirement, the
grantee must identify and implement resilience performance metrics
as described in section II.A.2.
For purposes of this requirement, an infrastructure activity
includes any activity or group of activities (including acquisition
or site or other improvements), whether carried out on public or
private land, that assists the development of the physical assets
that are designed to provide or support

[[Page 6375]]

services to the general public in the following sectors: Surface
transportation, including roadways, bridges, railroads, and transit;
aviation; ports, including navigational channels; water resources
projects; energy production and generation, including from
renewable, nuclear, and hydro sources; electricity transmission;
broadband; pipelines; stormwater and sewer infrastructure; drinking
water infrastructure; schools, hospitals, and housing shelters; and
other sectors as may be determined by the Federal Permitting
Improvement Steering Council. For purposes of this requirement, an
activity that falls within this definition is an infrastructure
activity regardless of whether it is carried out under sections
105(a)(2), 105(a)(4), 105(a)(14), another section of the HCDA, or a
waiver or alternative requirement established by HUD. Action plan
requirements related to infrastructure activities are found in
section III.C.1.e. of the Consolidated Notice.
II.C.2. Elevation of nonresidential structure. Nonresidential
structures, including infrastructure, assisted with CDBG-DR funds
must be elevated to the standards described in this paragraph or
floodproofed, in accordance with FEMA floodproofing standards at 44
CFR 60.3(c)(3)(ii) or successor standard, up to at least two feet
above the 100-year (or one percent annual chance) floodplain. All
Critical Actions, as defined at 24 CFR 55.2(b)(3), within the 500-
year (or 0.2 percent annual chance) floodplain must be elevated or
floodproofed (in accordance with FEMA floodproofing standards at 44
CFR 60.3(c)(2)-(3) or successor standard) to the higher of the 500-
year floodplain elevation or three feet above the 100-year
floodplain elevation. If the 500-year floodplain or elevation is
unavailable, and the Critical Action is in the 100-year floodplain,
then the structure must be elevated or floodproofed at least three
feet above the 100-year floodplain elevation. Activities subject to
elevation requirements must comply with applicable federal
accessibility mandates.
In addition to the other requirements in this section, the
grantee must comply with applicable state, local, and tribal codes
and standards for floodplain management, including elevation,
setbacks, and cumulative substantial damage requirements. Grantees
using CDBG-DR funds as the non-Federal match in a FEMA-funded
project may apply the alternative requirement for the elevation of
structures described in section IV.D.5.
II.C.3. CDBG-DR funds as match. As provided by the HCDA, grant
funds may be used to satisfy a match requirement, share, or
contribution for any other Federal program when used to carry out an
eligible CDBG-DR activity. This includes programs or activities
administered by the FEMA or the U.S. Army Corps of Engineers
(USACE). By law, (codified in the HCDA as a note to section 105(a))
only $250,000 or less of CDBG-DR funds may be used for the non-
Federal cost-share of any project funded by USACE. Appropriations
acts prohibit the use of CDBG-DR funds for any activity reimbursable
by, or for which funds are also made available by FEMA or USACE.
In response to a disaster, FEMA may implement, and grantees may
elect to follow, alternative procedures for FEMA's Public Assistance
Program, as authorized pursuant to Section 428 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (``Stafford
Act''). Like other projects, grantees may use CDBG-DR funds as a
matching requirement, share, or contribution for Section 428 Public
Assistance Projects. For all match activities, grantees must
document that CDBG-DR funds have been used for the actual costs
incurred for the assisted project and for costs that are eligible,
meet a national objective, and meet other applicable CDBG
requirements.
II.C.4. Requirements for flood control structures. Grantees that
use CDBG-DR funds to assist flood control structures (i.e., dams and
levees) are prohibited from using CDBG-DR funds to enlarge a dam or
levee beyond the original footprint of the structure that existed
before the disaster event, without obtaining pre-approval from HUD
and any Federal agencies that HUD determines are necessary based on
their involvement or potential involvement with the levee or dam.
Grantees that use CDBG-DR funds for levees and dams are required to:
(1) Register and maintain entries regarding such structures with the
USACE National Levee Database or National Inventory of Dams; (2)
ensure that the structure is admitted in the USACE PL 84-99 Program
(Levee Rehabilitation and Inspection Program); (3) ensure the
structure is accredited under the FEMA National Flood Insurance
Program; (4) enter the exact location of the structure and the area
served and protected by the structure into the DRGR system; and (5)
maintain file documentation demonstrating that the grantee has
conducted a risk assessment before funding the flood control
structure and documentation that the investment includes risk
reduction measures.

II.D. Economic Revitalization and Section 3 Requirements on
Economic Opportunities

CDBG-DR funds can be used for CDBG-DR eligible activities
related to economic revitalization. The attraction, retention, and
return of businesses and jobs to a disaster-impacted area is
critical to long-term recovery. Accordingly, for CDBG-DR purposes,
economic revitalization may include any CDBG-DR eligible activity
that demonstrably restores and improves the local economy through
job creation and retention or by expanding access to goods and
services. The most common CDBG-DR eligible activities to support
economic revitalization are outlined in 24 CFR 570.203 and 570.204
and sections 105(a)(14), (15), and (17) of the HCDA.
Based on the U.S. Change Research Program's Fourth National
Climate Assessment, climate-related natural hazards, extreme events,
and natural disasters disproportionately affect LMI individuals who
belong to underserved communities because they are less able to
prepare for, respond to, and recover from the impacts of extreme
events and natural hazards, or are members of communities that have
experienced significant disinvestment and historic discrimination.
Therefore, HUD is imposing the following alternative requirement:
When funding activities under section 105(a) of the HCDA that
support economic revitalization, grantees must prioritize those
underserved communities that have been impacted by the disaster and
that were economically distressed before the disaster, as described
further below in II.D.1.
The term ``underserved communities'' refers to populations
sharing a particular characteristic, as well as geographic
communities, that have been systematically denied a full opportunity
to participate in aspects of economic, social, and civic life.
Underserved communities that were economically distressed before the
disaster include, but are not limited to, those areas that were
designated as a Promise Zone, Opportunity Zone, a Neighborhood
Revitalization Strategy Area, a tribal area, or those areas that
meet at least one of the distress criteria established for the
designation of an investment area of Community Development Financial
Institution at 12 CFR 1805.201(b)(3)(ii)(D).
Grantees undertaking an economic revitalization activity must
maintain supporting documentation to demonstrate how the grantee has
prioritized underserved communities for purposes of its activities
that support economic revitalization, as described below in II.D.1.
II.D.1. Prioritizing economic revitalization assistance--
alternative requirement. When funding activities outlined in 24 CFR
570.203 and 570.204 and sections 105(a)(14), (15), and (17) of the
HCDA, HUD is instituting an alternative requirement in addition to
the other requirements in these provisions to require grantees to
prioritize assistance to disaster-impacted businesses that serve
underserved communities and spur economic opportunity for
underserved communities that were economically distressed before the
disaster.
II.D.2. National objective documentation for activities that
support economic revitalization. 24 CFR 570.208(a)(4)(i)&(ii), 24
CFR 570.483(b)(4)(i)&(ii), 24 CFR 570.506(b)(5)&(6), and 24 CFR
1003.208(d) are waived to allow the grantees under the Consolidated
Notice to identify the LMI jobs benefit by documenting, for each
person employed, the name of the business, type of job, and the
annual wages or salary of the job. HUD will consider the person
income-qualified if the annual wages or salary of the job is at or
under the HUD-established income limit for a one-person family. This
method replaces the standard CDBG requirement--in which grantees
must review the annual wages or salary of a job in comparison to the
person's total household income and size (i.e., the number of
persons). Thus, this method streamlines the documentation process by
allowing the collection of wage data for each position created or
retained from the assisted businesses, rather than from each
individual household.
II.D.3. Public benefit for activities that support economic
revitalization. When applicable, the public benefit provisions set
standards for individual economic development activities (such as a
single loan to a business) and for the aggregate of all economic
development activities. Economic

[[Page 6376]]

development activities support economic revitalization. Currently,
public benefit standards limit the amount of CDBG assistance per job
retained or created, or the amount of CDBG assistance per LMI person
to whom goods or services are provided by the activity. These dollar
thresholds can impede recovery by limiting the amount of assistance
the grantee may provide to a critical activity.
HUD waives the public benefit standards at 42 U.S.C. 5305(e)(3),
24 CFR 570.482(f)(1), (2), (3), (4)(i), (5), and (6), and
570.209(b)(1), (2), (3)(i), (4), and 24 CFR 1003.302(c) for all
economic development activities. Paragraph (g) of 24 CFR 570.482 and
paragraph (c) and (d) under 570.209 are also waived to the extent
these provisions are related to public benefit. However, grantees
that choose to take advantage of this waiver in lieu of complying
with public benefit standards under the existing regulatory
requirements shall be subject to the following condition: Grantees
shall collect and maintain documentation in the project file on the
creation and retention of total jobs; the number of jobs within
appropriate salary ranges, as determined by the grantee; the average
amount of assistance provided per job, by activity or program; and
the types of jobs. Additionally, grantees shall report the total
number of jobs created and retained and the applicable national
objective in the DRGR system.
II.D.4. Clarifying note on Section 3 worker eligibility and
documentation requirements. Section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701u) (Section 3) applies to
CDBG-DR activities that are Section 3 projects, as defined at 24 CFR
75.3(a)(2). The purpose of Section 3 is to ensure that economic
opportunities, most importantly employment, generated by certain HUD
financial assistance shall be directed to low- and very low-income
persons, particularly those who are recipients of government
assistance for housing or residents of the community in which the
Federal assistance is spent. CDBG-DR grantees are directed to HUD's
guidance published in CPD Notice 2021-09, ``Section 3 of the Housing
and Urban Development Act of 1968, as amended by the Housing and
Community Development Act of 1992, final rule requirements for CDBG,
CDBG-CV, CDBG-DR, CDBG-Mitigation (CDBG-MIT), NSP, Section 108, and
RHP projects,'' as amended (<a href="https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-09cpdn.pdf">https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-09cpdn.pdf</a>). All direct recipients of CDBG-DR funding
must report Section 3 information through the DRGR system.
II.D.5. Waiver and modification of the job relocation clause to
permit assistance to help a business return. CDBG requirements
prevent program participants from providing assistance to a business
to relocate from one labor market area to another if the relocation
is likely to result in a significant loss of jobs in the labor
market from which the business moved. This prohibition can be a
critical barrier to reestablishing and rebuilding a displaced
employment base after a major disaster. Therefore, 42 U.S.C.
5305(h), 24 CFR 570.210, 24 CFR 570.482(h), and 24 CFR 1003.209, are
waived to allow a grantee to provide assistance to any business that
was operating in the disaster-declared labor market area before the
incident date of the applicable disaster and has since moved, in
whole or in part, from the affected area to another state or to
another labor market area within the same state to continue
business.
II.D.6. Underwriting. Notwithstanding section 105(e)(1) of the
HCDA, no CDBG-DR funds may be provided to a for-profit entity for an
economic development project under section 105(a)(17) of the HCDA
unless such project has been evaluated and selected in accordance
with guidelines developed by HUD pursuant to section 105(e)(2) of
the HCDA for evaluating and selecting economic development projects.
Grantees and their subrecipients are required to comply with the
underwriting guidelines in Appendix A to 24 CFR part 570 if they are
using grant funds to provide assistance to a for-profit entity for
an economic development project under section 105(a)(17) of the
HCDA. The underwriting guidelines are found at Appendix A of 24 CFR
part 570.
II.D.7. Limitation on use of funds for eminent domain. CDBG-DR
funds may not be used to support any Federal, state, or local
projects that seek to use the power of eminent domain, unless
eminent domain is employed only for a public use. For purposes of
this paragraph, public use shall not be construed to include
economic development that primarily benefits private entities. The
following shall be considered a public use for the purposes of
eminent domain: Any use of funds for (1) mass transit, railroad,
airport, seaport, or highway projects; (2) utility projects that
benefit or serve the general public, including energy related,
communication-related, water related, and wastewater-related
infrastructure; (3) other structures designated for use by the
general public or which have other common-carrier or public-utility
functions that serve the general public and are subject to
regulation and oversight by the government; and (4) projects for the
removal of an immediate threat to public health and safety,
including the removal of a brownfield as defined in the Small
Business Liability Relief and Brownfields Revitalization Act (Pub.
L. 107-118).

III. Grant Administration

III.A. Pre-Award Evaluation of Management and Oversight of Funds

III.A.1. Certification of financial controls and procurement
processes, and adequate procedures for proper grant management.
Appropriations acts require that the Secretary certify 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, to
maintain a comprehensive website regarding all disaster recovery
activities assisted with these funds, and to detect and prevent
waste, fraud, and abuse of funds.
III.A.1.a. Documentation requirements. To enable the Secretary
to make this certification, each grantee must submit to HUD the
certification documentation listed below. This information must be
submitted within 60 days of the applicability date of the Allocation
Announcement Notice, or with the grantee's submission of its action
plan in DRGR as described in section III.C.1, whichever date is
earlier. If required by appropriations acts, grant agreements will
not be executed until the Secretary has issued a certification for
the grantee. For each of the items (1) through (6) below
(collectively referred to as the ``Financial Management and Grant
Compliance Certification Requirements'') the grantee must certify to
the accuracy of its submission when submitting the Financial
Management and Grant Compliance Certification Checklist (the
``Certification Checklist''). The Certification Checklist is a
document that incorporates all of the Financial Management and Grant
Compliance Certification Requirements. Not all of the requirements
in (1) through (6) below are appropriate or applicable to Indian
tribes. Therefore, Indian tribes that receive an allocation directly
from HUD may request an alternative method to document support for
the Secretary's certification.
(1) Proficient financial management controls. A grantee has
proficient financial management controls if each of the following
criteria is satisfied:
(a) The grantee agency administering this grant submits its most
recent single audit and consolidated annual financial report (CAFR),
which in HUD's determination indicates that the grantee has no
material weaknesses, deficiencies, or concerns that HUD considers to
be relevant to the financial management of CDBG, CDBG-DR, or CDBG-
MIT funds. If the single audit or CAFR identified weaknesses or
deficiencies, the grantee must provide documentation satisfactory to
HUD showing how those weaknesses have been removed or are being
addressed.
(b) The grantee has completed and submitted the certification
documentation required in the applicable Certification Checklist.
The grantee's documentation must demonstrate that the standards meet
the requirements in the Consolidated Notice and the Certification
Checklist.
(2) Each grantee must provide HUD its procurement processes for
review, so HUD may evaluate the grantee's processes to determine
that they are based on principles of full and open competition. A
grantee's procurement processes must comply with the procurement
requirements at section IV.B.
(a) A state grantee has proficient procurement processes if HUD
determines that its processes uphold the principles of full and open
competition and include an evaluation of the cost or price of the
product or service, and if its procurement processes reflect that
it:
(i) Adopted 2 CFR 200.318 through 200.327;
(ii) follows its own state procurement policies and procedures
and establishes requirements for procurement processes for local
governments and subrecipients based on full and open competition
pursuant to 24 CFR 570.489(g), and the requirements for the state,
its local governments, and subrecipients include evaluation of the
cost or price of the product or service; or
(iii) adopted 2 CFR 200.317, meaning that it will follow its own
state procurement

[[Page 6377]]

processes and evaluate the cost or price of the product or service,
but impose 2 CFR 200.318 through 200.327 on its subrecipients.
(b) A local government grantee has proficient procurement
processes if the processes are consistent with the specific
applicable procurement standards identified in 2 CFR 200.318 through
200.327. When the grantee provides a copy of its procurement
processes, it must indicate the sections that incorporate these
provisions.
(c) An Indian tribe grantee has proficient procurement processes
if its procurement standards are consistent with procurement
requirements in 2 CFR part 200 imposed by 24 CFR 1003.501, and
additional procurement requirements in 1003.509(e) and 1003.510.
(3) Duplication of benefits. A grantee has adequate policies and
procedures to prevent the duplication of benefits (DOB) if the
grantee submits and identifies a uniform process that reflects the
requirements in section IV.A of the Consolidated Notice, including:
(a) Determining all disaster assistance received by the grantee
or applicant and all reasonably identifiable financial assistance
available to the grantee or applicant, as applicable, before
committing funds or awarding assistance;
(b) determining a grantee's or an applicant's unmet need(s) for
CDBG-DR assistance before committing funds or awarding assistance;
and
(c) requiring beneficiaries to enter into a signed agreement to
repay any duplicative assistance if they later receive additional
assistance for the same purpose for which the CDBG-DR award was
provided. The grantee must identify a method to monitor compliance
with the agreement for a reasonable period (i.e., a time period
commensurate with risk) and must articulate this method in its
policies and procedures, including the basis for the period during
which the grantee will monitor compliance. This agreement must also
include the following language: ``Warning: Any person who knowingly
makes a false claim or statement to HUD or causes another to do so
may be subject to civil or criminal penalties under 18 U.S.C. 2,
287, 1001 and 31 U.S.C. 3729.''
Policies and procedures of the grantee submitted to support the
certification must provide that before the award of assistance, the
grantee will use the best, most recent available data from FEMA, the
Small Business Administration (SBA), insurers, and any other sources
of local, state, and Federal sources of funding to prevent the
duplication of benefits.
(4) Timely expenditures. A grantee has adequate policies and
procedures to determine timely expenditures if it submits policies
and procedures that indicate the following to HUD: How it will track
and document expenditures of the grantee and its subrecipients (both
actual and projected reported in performance reports); how it will
account for and manage program income; how it will reprogram funds
in a timely manner for activities that are stalled; and how it will
project expenditures of all CDBG-DR funds within the period provided
for in section V.A.
(5) Comprehensive disaster recovery website. A grantee has
adequate policies and procedures to maintain a comprehensive
accessible website if it submits policies and procedures indicating
to HUD that the grantee will have a separate web page dedicated to
its disaster recovery activities assisted with CDBG-DR funds that
includes the information described at section III.D.1.d.-e. The
procedures must also indicate the frequency of website updates. At
minimum, grantees must update their website quarterly.
(6) Procedures to detect and prevent fraud, waste, and abuse. A
grantee has adequate procedures to detect and prevent fraud, waste,
and abuse if it submits procedures that indicate:
(a) How the grantee will verify the accuracy of information
provided by applicants;
(b) the criteria to be used to evaluate the capacity of
potential subrecipients;
(c) the frequency with which the grantee will monitor other
agencies of the grantee that will administer CDBG-DR funds, and how
it will monitor subrecipients, contractors, and other program
participants, and why monitoring is to be conducted and which items
are to be monitored;
(d) it has or will hire an internal auditor that provides both
programmatic and financial oversight of grantee activities, and has
adopted policies that describes the auditor's role in detecting
fraud, waste, and abuse, which policies must be submitted to HUD;
(e) (i) for states or grantees subject to the same requirements
as states, a written standard of conduct and conflicts of interest
policy that complies with the requirements of 24 CFR 570.489(g) and
(h) and subparagraph III.A.1.a(2)(a) of the Consolidated Notice,
which policy includes the process for promptly identifying and
addressing such conflicts;
(ii) for units of general local government or grantees subject
to the same requirements as units of general local government, a
written standard of conduct and conflicts of interest policy that
complies with 24 CFR 570.611 and 2 CFR 200.318, as applicable, which
includes the process for promptly identifying and addressing such
conflicts;
(iii) for Indian tribes, a written standard of conduct and
conflicts of interest policy that complies with 24 CFR 1003.606, as
applicable; and
(f) it assists in investigating and taking action when fraud
occurs within the grantee's CDBG-DR activities and/or programs. All
grantees receiving CDBG-DR funds for the first time shall attend and
require subrecipients to attend fraud related training provided by
HUD OIG, when offered, to assist in the proper management of CDBG-DR
grant funds. Instances of fraud, waste, and abuse should be referred
to the HUD OIG Fraud Hotline (phone: 1-800-347-3735 or email:
<a href="/cdn-cgi/l/email-protection#dab2b5aeb6b3b4bf9ab2afbeb5b3bdf4bdb5ac">[email&#160;protected]</a>).
Following a disaster, property owners and renters are frequently
the targets of persons fraudulently posing as government employees,
creditors, mortgage servicers, insurance adjusters, and contractors.
The grantee's procedures must address how the grantee will make
CDBG-DR beneficiaries aware of the risks of contractor fraud and
other potentially fraudulent activity that can occur in communities
recovering from a disaster. Grantees must provide CDBG-DR
beneficiaries with information that raises awareness of possible
fraudulent activity, how the fraud can be avoided, and what local or
state agencies to contact to take action and protect the grantee and
beneficiary investment. The grantee's procedures must address the
steps it will take to assist a CDBG-DR beneficiary if the
beneficiary experiences contractor or other fraud. If the
beneficiary is eligible for additional assistance as a result of the
fraudulent activity and the creation of remaining unmet need, the
procedures must also address what steps the grantee will follow to
provide the additional assistance.
III.A.1.b. Relying on prior submissions--financial management
and grant compliance certification requirements. This section only
applies once a grantee has received a CDBG-DR grant through an
Allocation Announcement Notice that makes the Consolidated Notice
applicable. After that original grant, if a CDBG-DR grantee is
awarded a subsequent CDBG-DR grant, HUD will rely on the grantee's
prior submissions provided in response to the Financial Management
and Grant Compliance Certification Requirements in the Consolidated
Notice. HUD will continue to monitor the grantee's submissions and
updates made to policies and procedures during the normal course of
business. The grantee must notify HUD of any substantial changes
made to these submissions.
If a CDBG-DR grantee is awarded a subsequent CDBG-DR grant, and
it has been more than three years since the executed grant agreement
for the original CDBG-DR grant or a subsequent grant is equal to or
greater than ten times the amount of the original CDBG-DR grant,
grantees must update and resubmit the documentation required by
paragraph III.A.1.a. with the completed Certification Checklist to
enable the Secretary to certify that the grantee has in place
proficient financial controls and procurement processes, and
adequate procedures for proper grant management. However, the
Secretary may require any CDBG-DR grantee to update and resubmit the
documentation required by paragraph III.A.1.a., if there is good
cause to require it.
III.A.2. Implementation plan. HUD requires each grantee to
demonstrate that it has sufficient capacity to manage the CDBG-DR
funds and the associated risks. Grantees must evidence their
management capacity through their implementation plan submissions.
These submissions must meet the criteria below and must be submitted
within 120 days of the applicability date of the governing
Allocation Announcement Notice or with the grantee's submission of
its action plan, whichever is earlier, unless the grantee has
requested, and HUD has approved an extension of the submission
deadline.
III.A.2.a. To enable HUD to assess risk as described in 2 CFR
200.206, the grantee will submit an implementation plan to HUD. The
implementation plan must describe the grantee's capacity to carry
out the recovery

[[Page 6378]]

and how it will address any capacity gaps. HUD will determine that
the grantee has sufficient management capacity to adequately reduce
risk if the grantee submits implementation plan documentation that
addresses (1) through (3) below:
(1) Capacity assessment. The grantee identifies the lead agency
responsible for implementation of the CDBG-DR award and indicates
that the head of that agency will report directly to the chief
executive officer of the jurisdiction. The grantee has conducted an
assessment of its capacity to carry out CDBG-DR recovery efforts and
has developed a timeline with milestones describing when and how the
grantee will address all capacity gaps that are identified. The
assessment must include a list of any open CDBG-DR findings and an
update on the corrective actions undertaken to address each finding.
(2) Staffing. The grantee must submit an organizational chart of
its department or division and must also provide a table that
clearly indicates which personnel or organizational unit will be
responsible for each of the Financial Management and Grant
Compliance Certification Requirements identified in section
III.A.1.a. along with staff contact information, if available (i.e.,
personnel responsible for conducting DOB analysis, timely
expenditure, website management, monitoring and compliance, and
financial management). The grantee must also submit documentation
demonstrating that it has assessed staff capacity and identified
positions for the purpose of: Case management in proportion to the
applicant population; program managers who will be assigned
responsibility for each primary recovery area; staff who have
demonstrated experience in housing, infrastructure (as applicable),
and economic revitalization (as applicable); staff responsible for
procurement/contract management, regulations implementing Section 3
of the Housing and Urban Development Act of 1968, as amended (24 CFR
part 75) (Section 3), fair housing compliance, and environmental
compliance. An adequate plan must also demonstrate that the internal
auditor and responsible audit staff report independently to the
chief elected or executive officer or board of the governing body of
any designated administering entity.
The grantee's implementation plan must describe how it will
provide technical assistance for any personnel that are not employed
by the grantee at the time of action plan submission, and to fill
gaps in knowledge or technical expertise required for successful and
timely recovery. State grantees must also include how it plans to
provide technical assistance to subgrantees and subrecipients,
including units of general local government.
(3) Internal and interagency coordination. The grantee's plan
must describe how it will ensure effective communication between
different departments and divisions within the grantee's
organizational structure that are involved in CDBG-DR-funded
recovery efforts, mitigation efforts, and environmental review
requirements, as appropriate; between its lead agency and
subrecipients responsible for implementing the grantee's action
plan; and with other local and regional planning efforts to ensure
consistency. The grantee's submissions must demonstrate how it will
consult with other relevant government agencies, including the State
Hazard Mitigation Officer (SHMO), State or local Disaster Recovery
Coordinator, floodplain administrator, and any other state and local
emergency management agencies, such as public health and
environmental protection agencies, that have primary responsibility
for the administration of FEMA or USACE funds.
III.A.2.b. Relying on prior submissions--Implementation plan.
This section only applies once a grantee has received a CDBG-DR
grant through an Allocation Announcement Notice that makes the
Consolidated Notice applicable. After that original grant, if a
CDBG-DR grantee is awarded a subsequent CDBG-DR grant, HUD will rely
on the grantee's implementation plan submitted for its original
CDBG-DR grant unless it has been more than three years since the
executed grant agreement for the original CDBG-DR grant or the
subsequent grant is equal to or greater than ten times the amount of
its original CDBG-DR grant.
If a CDBG-DR grantee is awarded a subsequent CDBG-DR grant, and
it has been more than three years since the executed grant agreement
for its original CDBG-DR grant or a subsequent grant is equal to or
greater than ten times the amount of the original CDBG-DR grant, the
grantee is to update and resubmit its implementation plan to reflect
any changes to its capacity, staffing, and coordination.

III.B. Administration, Planning, and Financial Management

III.B.1. Grant administration and planning.
III.B.1.a. Grantee responsibilities. Each grantee shall
administer its award in compliance with all applicable laws and
regulations and shall be financially accountable for the use of all
awarded funds. CDBG-DR grantees must comply with the recordkeeping
requirements of 24 CFR 570.506 and 24 CFR 570.490, as amended by the
Consolidated Notice waivers and alternative requirements. All
grantees must maintain records of performance in DRGR, as described
elsewhere in the Consolidated Notice.
III.B.1.b. Grant administration cap. Up to five percent of the
grant (plus five percent of program income generated by the grant)
can be used for administrative costs by the grantee, units of
general local government, or subrecipients. Thus, the total of all
costs classified as administrative for a CDBG-DR grant must be less
than or equal to the five percent cap (plus five percent of program
income generated by the grant). The cap for administrative costs is
subject to the combined technical assistance and administrative cap
for state grantees as discussed in section III.B.2.a.
III.B.1.c. Use of funds for administrative costs across multiple
grants. The Additional Supplemental Appropriations for Disaster
Relief Act, 2019 (Pub. L. 116-20) authorized special treatment for
eligible administrative costs for grantees that received awards
under Public Laws 114-113, 114-223, 114-254, 115-31, 115-56, 115-
123, 115-254, 116-20, or any future act. The Consolidated Notice
permits grantees to use eligible administrative funds (up to five
percent of each grant award plus up to five percent of program
income generated by the grant) for the cost of administering any of
these grants awarded under the identified Public Laws (including
future Acts) without regard to the particular disaster appropriation
from which such funds originated. To exercise this authority, the
grantee must ensure that it has appropriate financial controls to
guarantee that the amount of grant administration expenditures for
each of the aforementioned grants will not exceed five percent of
the total grant award for each grant (plus five percent of program
income generated by the grant). The grantee must review and modify
any financial management policies and procedures regarding the
tracking and accounting of administration costs as necessary.
III.B.1.d. Planning expenditures cap. Both state and local
government grantees are limited to spending a maximum of fifteen
percent of their total grant amount on planning costs. Planning
costs subject to the 15 percent cap are those defined in 42 U.S.C.
5305(a)(12) and more broadly in 24 CFR 570.205.
III.B.2. State grantees only.
III.B.2.a. Combined technical assistance and administrative cap
(state grantees only). The provisions of 42 U.S.C. 5306(d) and 24
CFR 570.489(a)(1)(i) and (iii), and 24 CFR 570.489(a)(2) shall not
apply to the extent that they cap administration and technical
assistance expenditures, limit a state's ability to charge a nominal
application fee for grant applications for activities the state
carries out directly, and require a dollar-for-dollar match of state
funds for administrative costs exceeding $100,000. 42 U.S.C.
5306(d)(5) and (6) are waived and replaced with the alternative
requirement that the aggregate total for administrative and
technical assistance expenditures must not exceed five percent of
the grant, plus five percent of program income generated by the
grant.
III.B.2.b. Planning-only activities (state grantees only). The
State CDBG Program requires that, for planning-only grants, local
government grant recipients must document that the use of funds
meets a national objective. In the CDBG Entitlement Program, these
more general planning activities are presumed to meet a national
objective under the requirements at 24 CFR 570.208(d)(4). HUD notes
that almost all effective recoveries in the past have relied on some
form of area-wide or comprehensive planning activity to guide
overall redevelopment independent of the ultimate source of
implementation funds. To assist state grantees, HUD is waiving the
requirements at 24 CFR 570.483(b)(5) and (c)(3), which limit the
circumstances under which the planning activity can meet a low- and
moderate-income or slum-and-blight national objective. Instead, as
an alternative requirement, 24 CFR 570.208(d)(4) applies to states
when funding disaster recovery-assisted, planning-only grants, or
when directly administering planning activities that guide disaster
recovery. In addition, 42 U.S.C. 5305(a)(12) is waived to the extent
necessary so the types of planning activities

[[Page 6379]]

that states may fund or undertake are expanded to be consistent with
those of CDBG Entitlement grantees identified at 24 CFR 570.205.
III.B.2.c. Direct grant administration and means of carrying out
eligible activities (state grantees only). Requirements at 42 U.S.C.
5306(d) are waived to allow a state to use its disaster recovery
grant allocation directly to carry out state-administered activities
eligible under the Consolidated Notice, rather than distribute all
funds to local governments. Pursuant to this waiver and alternative
requirement, the standard at 24 CFR 570.480(c) and the provisions at
42 U.S.C. 5304(e)(2) will also include activities that the state
carries out directly. Activities eligible under the Consolidated
Notice may be carried out by a state, subject to state law and
consistent with the requirement of 24 CFR 570.200(f), through its
employees, through procurement contracts, or through assistance
provided under agreements with subrecipients. State grantees
continue to be responsible for civil rights, labor standards, and
environmental protection requirements, for compliance with 24 CFR
570.489(g) and (h), and subparagraph III.A.1.a.(2)(a) of the
Consolidated Notice relating to conflicts of interest, and for
compliance with 24 CFR 570.489(m) relating to monitoring and
management of subrecipients.
A state grantee may also carry out activities in tribal areas. A
state must coordinate with the Indian tribe with jurisdiction over
the tribal area when providing CDBG-DR assistance to beneficiaries
in tribal areas. State grantees carrying out projects in tribal
areas, either directly or through its employees, through procurement
contracts, or through assistance provided under agreements with
subrecipients, must obtain the consent of the Indian tribe with
jurisdiction over the tribal area to allow the state grantee to
carry out or to fund CDBG-DR projects in the area.
III.B.2.d. Waiver and alternative requirement for distribution
to CDBG metropolitan cities and urban counties (state grantees
only). 42 U.S.C. 5302(a)(7) (definition of ``nonentitlement area'')
and related provisions of 24 CFR part 570, including 24 CFR 570.480,
are waived to permit state grantees to distribute CDBG-DR funds to
units of local government and Indian tribes.
III.B.2.e. Use of subrecipients (state grantees only). Paragraph
III.B.2.c. provides a waiver and alternative requirement that a
state may carry out activities directly, including through
assistance provided under agreements with subrecipients. Therefore,
when states carry out activities directly through subrecipients, the
following alternative requirements apply: The state is subject to
the definition of subrecipients at 24 CFR 570.500(c) and must adhere
to the requirements for agreements with subrecipients at 24 CFR
570.503. Additionally, 24 CFR 570.503(b)(4) is modified to require
the subrecipient to comply with applicable uniform requirements, as
described in 24 CFR 570.502, except that the subrecipient shall
follow procurement requirements imposed by the state in accordance
with subparagraph III.A.1.a.(2) of the Consolidated Notice. When 24
CFR 570.503 applies, notwithstanding 24 CFR 570.503(b)(5)(i), units
of general local government that are subrecipients are defined as
recipients under 24 CFR part 58 and are therefore responsible
entities that assume environmental review responsibilities, as
described in III.F.5. Grantees are reminded that they are
responsible for providing on-going oversight and monitoring of
subrecipients and are ultimately responsible for subrecipient
compliance with all CDBG-DR requirements.
III.B.2.f. Recordkeeping (state grantees only). When a state
carries out activities directly, 24 CFR 570.490(b) is waived and the
following alternative provision shall apply: A state grantee shall
establish and maintain such records as may be necessary to
facilitate review and audit by HUD of the state's administration of
CDBG-DR funds, under 24 CFR 570.493 and reviews and audits by the
state under III.B.2.h. Consistent with applicable statutes,
regulations, waivers and alternative requirements, and other Federal
requirements, the content of records maintained by the state shall
be sufficient to: (a) Enable HUD to make the applicable
determinations described at 24 CFR 570.493; (b) make compliance
determinations for activities carried out directly by the state; and
(c) show how activities funded are consistent with the descriptions
of activities proposed for funding in the action plan and/or DRGR
system. For fair housing and equal opportunity purposes, and as
applicable, such records shall include data on the racial, ethnic,
and gender characteristics of persons who are applicants for,
participants in, or beneficiaries of the program.
III.B.2.g. Change of use of real property (state grantees only).
This alternative requirement conforms the change of use of real
property rule to the waiver allowing a state to carry out activities
directly. For purposes of these grants, all references to ``unit of
general local government'' in 24 CFR 570.489(j), shall be read as
``state, local governments, or Indian tribes (either as
subrecipients or through a method of distribution), or other state
subrecipient.''
III.B.2.h. Responsibility for review and handling of
noncompliance (state grantees only). This change is in conformance
with the waiver allowing a state to carry out activities directly.
24 CFR 570.492 is waived, and the following alternative requirement
applies for any state receiving a direct award: The state shall make
reviews and audits, including on-site reviews of any local
governments or Indian tribes (either as subrecipients or through a
method of distribution) designated public agencies, and other
subrecipients, as may be necessary or appropriate to meet the
requirements of section 104(e)(2) of the HCDA, as amended, and as
modified by the Consolidated Notice. In the case of noncompliance
with these requirements, the state shall take such actions as may be
appropriate to prevent a continuance of the deficiency, mitigate any
adverse effects or consequences, and prevent a recurrence. The state
shall establish remedies for noncompliance by any subrecipients,
designated public agencies, or local governments.
III.B.2.i. Consultation (state grantees only). Currently, the
HCDA and regulations require a state grantee to consult with
affected local governments in nonentitlement areas of the state in
determining the state's proposed method of distribution. HUD is
waiving 42 U.S.C. 5306(d)(2)(C)(iv), 42 U.S.C. 5306(d)(2)(D), 24 CFR
91.325(b)(2), and 24 CFR 91.110, and imposing an alternative
requirement that states receiving an allocation of CDBG-DR funds
consult with all disaster-affected local governments (including any
CDBG-entitlement grantees), Indian tribes, and any public housing
authorities in determining the use of funds. This approach ensures
that a state grantee sufficiently assesses the recovery needs of all
areas affected by the disaster.

III.C. Action Plan for Disaster Recovery Waiver and Alternative
Requirement

Requirements for CDBG actions plans, located at 42 U.S.C.
5304(a)(1), 42 U.S.C. 5304(m), 42 U.S.C. 5306(a)(1), 42 U.S.C.
5306(d)(2)(C)(iii), 42 U.S.C. 12705(a)(2), and 24 CFR 91.220 and
91.320, are waived for CDBG-DR grants. Instead, grantees must submit
to HUD an action plan for disaster recovery which will describe
programs and activities that conform to applicable requirements as
specified in the Consolidated Notice and the applicable Allocation
Announcement Notice. HUD will monitor the grantee's actions and use
of funds for consistency with the plan, as well as meeting the
performance and timeliness objectives therein. The Secretary will
disapprove all action plans that are substantially incomplete if it
is determined that the plan does not satisfy all of the required
elements identified in the Consolidated Notice and the applicable
Allocation Announcement Notice.
III.C.1. Action plan. The grantee's action plan must identify
the use of all funds--including criteria for eligibility and how the
uses address long-term recovery needs, restoration of infrastructure
and housing, economic revitalization, and the incorporation of
mitigation measures in the MID areas. HUD created the Public Action
Plan in DRGR which is a function that allows grantees to develop and
submit their action plans for disaster recovery directly into DRGR.
Grantees must use HUD's Public Action Plan in DRGR to develop all
CDBG-DR action plans and substantial amendments submitted to HUD for
approval. The Public Action Plan is different from the DRGR Action
Plan, which is a comprehensive description of projects and
activities in DRGR.
The grantee must describe the steps it will follow to make the
action plan, substantial amendments, performance reports, and other
relevant program materials available in a form accessible to persons
with disabilities and those with limited English proficiency (LEP).
All grantees must include sufficient information in its action plan
so that all interested parties will be able to understand and
comment on the action plan. The action plan (and subsequent
amendments) must include a single chart or table that illustrates,
at the most practical level, how all funds are budgeted (e.g., by
program, subrecipient, grantee-administered activity, or other

[[Page 6380]]

category). The grantee must certify, as required by section
III.F.7., that activities to be undertaken with CDBG-DR funds are
consistent with its action plan.
The action plan must contain:
III.C.1.a. An impact and unmet needs assessment. Each grantee
must develop an impact and unmet needs assessment to understand the
type and location of community needs and to target limited resources
to those areas with the greatest need. CDBG-DR grantees must conduct
an impact and unmet needs assessment to inform the use of the grant.
Grantees must cite data sources in the impact and unmet needs
assessment. At a minimum, the impact and unmet needs assessment
must:
<bullet> Evaluate all aspects of recovery including housing
(interim and permanent, owner and rental, single family and
multifamily, affordable and market rate, and housing to meet the
needs of persons who were experiencing homelessness pre-disaster),
infrastructure, and economic revitalization needs, while also
incorporating mitigation needs into activities that support recovery
as required in section II.A.2.;
<bullet> Estimate unmet needs to ensure CDBG-DR funds meet needs
that are not likely to be addressed by other sources of funds by
accounting for the various forms of assistance available to, or
likely to be available to, affected communities (e.g., projected
FEMA funds) and individuals (e.g., estimated insurance) and, using
the most recent available data, estimating the portion of need
unlikely to be addressed by insurance proceeds, other Federal
assistance, or any other funding sources;
<bullet> Assess whether public services (e.g., housing
counseling, legal advice and representation, job training, mental
health, and general health services) are necessary to complement
activities intended to address housing, infrastructure, and economic
revitalization and how those services would need to be made
accessible to individuals with disabilities including, but not
limited to, mobility, sensory, developmental, emotional, cognitive,
and other impairments;
<bullet> Describe the extent to which expenditures for planning
activities, including the determination of land use goals and
policies, will benefit the HUD-identified MID areas, as described in
section II.A.3.;
<bullet> Describe disaster impacts geographically by type at the
lowest level practicable (e.g., county/parish level or lower if
available for states, and neighborhood or census tract level for
cities); and
<bullet> Take into account the costs and benefits of
incorporating hazard mitigation measures to protect against the
specific identified impacts of future extreme weather events and
other natural hazards. This analysis should factor in historical and
projected data on risk that incorporates best available science
(e.g., the most recent National Climate Assessment).
Disaster recovery needs evolve over time and grantees must amend
the impact and unmet needs assessment and action plan as additional
needs are identified and additional resources become available. At a
minimum, grantees must revisit and update the impact and unmet needs
assessment when moving funds from one program to another through a
substantial amendment.
III.C.1.b. Connection of programs and projects to unmet needs.
The grantee must describe the connection between identified unmet
needs and the allocation of CDBG-DR resources. The plan must provide
a clear connection between a grantee's impact and unmet needs
assessment and its proposed programs and projects in the MID areas
(or outside in connection to the MID areas as described in section
II.A.3). Such description must demonstrate a reasonably
proportionate allocation of resources relative to areas and
categories (i.e., housing, economic revitalization, and
infrastructure) of greatest needs identified in the grantee's impact
and unmet needs assessment or provide an acceptable justification
for a disproportional allocation, while also incorporating hazard
mitigation measures to reduce the impacts of recurring natural
disasters and the long-term impacts of climate change. Grantee
action plans may provide for the allocation of funds for
administration and planning activities and for public service
activities, subject to the caps on such activities as described in
the Consolidated Notice.
III.C.1.c. Public housing, affordable rental housing, and
housing for vulnerable populations. Each grantee must include a
description of how it has analyzed, identified, and will address
(with CDBG-DR or other sources) the disaster-related rehabilitation,
reconstruction, and new construction needs in the MID-area of the
types of housing described below. Specifically, a grantee must
assess and describe how it will address unmet needs in the following
types of housing, subject to the applicable HUD program
requirements: Public housing, affordable rental housing (including
both subsidized and market rate affordable housing), and housing for
vulnerable populations (See Section III.C.1.c.iii below), including
emergency shelters and permanent housing for persons experiencing
homelessness, in the areas affected by the disaster. Grantees must
coordinate with local public housing authorities (PHA) in the MID
areas to ensure that the grantee's representation in the action plan
reflects the input of those entities as well as coordinating with
State Housing Finance agencies to make sure that all funding sources
that are available and opportunities for leverage are noted in the
action plan.
(i) Public housing: Describe unmet public housing needs of each
disaster-impacted PHA within its jurisdiction, if applicable. The
grantee must work directly with impacted PHAs in identifying
necessary and reasonable costs and ensuring that adequate funding
from all available sources is dedicated to addressing the unmet
needs of damaged public housing (e.g., FEMA, insurance, and funds
available from programs administered by HUD's Office of Public and
Indian Housing).
(ii) Affordable rental housing: Describe unmet affordable rental
housing needs for LMI households as a result of the disaster or
exacerbated by the disaster, including private market units
receiving project-based rental assistance or with tenants that
participate in the Section 8 Housing Choice Voucher Program, and any
other housing that is assisted under a HUD program in the MID areas.
Identify funding to specifically address these unmet needs for
affordable rental housing to LMI households. If a grantee is
proposing an allocation of CDBG-DR funds for affordable rental
housing needs, the action plan must, at a minimum, meet the
requirements described in II.B.3.
(iii) Housing for vulnerable populations: Describe how CDBG-DR
or other funding sources available will promote housing for
vulnerable populations, as defined in section III.C.1.d., in the MID
area, including how it plans to address: (1) Transitional housing,
including emergency shelters and housing for persons experiencing
homelessness, permanent supportive housing, and permanent housing
needs of individuals and families (including subpopulations) that
are experiencing or at risk of experiencing homelessness; (2) the
prevention of low-income individuals and families with children
(especially those with incomes below thirty percent of the area
median) from becoming homeless; (3) the special needs of persons who
are not experiencing homelessness but require supportive housing
(i.e., elderly, frail elderly, persons with disabilities (mental,
physical, developmental, etc.), victims of domestic violence,
persons with alcohol or other substance-use disorder, persons with
HIV/AIDS and their families, and public housing residents, as
identified in 24 CFR 91.315(e)).
III.C.1.d. Fair housing, civil rights data, and advancing
equity. The grantee must use its CDBG-DR funds in a manner that
complies with its fair housing and nondiscrimination obligations,
including title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d
et seq., the Fair Housing Act, 42 U.S.C. 3601-19, Section 504 of the
Rehabilitation Act of 1973, 29 U.S.C. 794, the Americans with
Disabilities Act of 1990, 42 U.S.C. 12131 et seq., and Section 109
of the HCDA, 42 U.S.C. 5309. To ensure that the activities performed
in connection with the action plan will comply with these
requirements, the grantee must provide an assessment of whether its
planned use of CDBG-DR funds will have an unjustified discriminatory
effect on or failure to benefit racial and ethnic minorities in
proportion to their communities' needs, particularly in racially and
ethnically concentrated areas of poverty, and how it will address
the recovery needs of impacted individuals with disabilities.
Grantees should also consider the impact of their planned use of
CDBG-DR funds on other protected class groups under fair housing and
civil rights laws, vulnerable populations, and other historically
underserved communities. For purposes of the Consolidated Notice,
HUD defines vulnerable populations as a group or community whose
circumstances present barriers to obtaining or understanding
information or accessing resources. In the action plan, grantees
should identify those populations (i.e., which protected class,
vulnerable population, and historically underserved groups were
considered) and how those groups can be expected to benefit from the
activities set forth in the plan

[[Page 6381]]

consistent with the civil rights requirements set forth above.
To perform such an assessment, grantees must include data for
the HUD-identified and grantee-identified MID areas that identifies
the following information, as it is available:
<bullet> Racial and ethnic make-up of the population, including
relevant sub-populations depending on activities and programs
outlined in the plan (this would include renters and homeowners if
eligibility is dependent on housing tenure) and the specific sub-
geographies in the MID areas in which those programs and activities
will be carried out;
<bullet> LEP populations, including number and percentage of
each identified group;
<bullet> Number and percentage of persons with disabilities;
<bullet> Number and percentage of persons belonging to Federally
protected classes under the Fair Housing Act (race, color, national
origin, religion, sex--which includes sexual orientation and gender
identity--familial status, and disability) and other vulnerable
populations as determined by the grantee;
<bullet> Indigenous populations and tribal communities,
including number and percentage of each identified group;
<bullet> Racially and ethnically concentrated areas and
concentrated areas of poverty; and
<bullet> Historically distressed and underserved communities;
Grantees must explain how the use of funds will reduce barriers
that individuals may face when enrolling in and accessing CDBG-DR
assistance, for example, barriers imposed by a lack of outreach to
their community or by the lack of information in non-English
languages or accessible formats for individuals with different types
of disabilities.
Grantees are strongly encouraged to include examples of how
their proposed allocations, selection criteria, and other actions
can be expected to advance equity for protected class groups.
Grantees are strongly encouraged to explain and provide examples of
how their actions can be expected to advance the following
objectives:
<bullet> Equitably benefit protected class groups in the MID
areas, including racial and ethnic minorities, and sub geographies
in the MID areas in which residents belonging to such groups are
concentrated;
<bullet> To the extent consistent with purposes and uses of
CDBG-DR funds, overcome prior disinvestment in infrastructure and
public services for protected class groups, and areas in which
residents belonging to such groups are concentrated, when addressing
unmet needs;
<bullet> Enhance for individuals with disabilities in the MID
areas (a) the accessibility of disaster preparedness, resilience, or
recovery services, including the accessibility of evacuation
services and shelters; (b) the provision of critical disaster-
related information in accessible formats; and/or (c) the
availability of integrated, accessible housing and supportive
services.
Grantees must identify the proximity of natural and
environmental hazards (e.g., industrial corridors, sewage treatment
facilities, waterways, EPA superfund sites, brownfields, etc.) to
affected populations in the MID area, including members of protected
classes, vulnerable populations, and underserved communities and
explore how CDBG-DR activities may mitigate environmental concerns
and increase resilience among these populations to protect against
the effects of extreme weather events and other natural hazards.
Grantees must also describe how their use of CDBG-DR funds is
consistent with their obligation to affirmatively further fair
housing. HUD regulations at 24 CFR 5.151 provide that affirmatively
furthering fair housing means taking meaningful actions, in addition
to combating discrimination, that overcome patterns of segregation
and foster inclusive communities free from barriers that restrict
access to opportunity based on protected characteristics.
Specifically, affirmatively furthering fair housing means taking
meaningful actions that, taken together, address significant
disparities in housing needs and in access to opportunity, replacing
segregated living patterns with truly integrated and balanced living
patterns, transforming racially or ethnically concentrated areas of
poverty into areas of opportunity, and fostering and maintaining
compliance with civil rights and fair housing laws.
State and local government grantees must submit a certification
to AFFH in accordance with 24 CFR 5.150, et seq. CDBG-DR grantees
must also comply with the recordkeeping requirements of 24 CFR
570.506 and 24 CFR 570.490(b), as amended by the Consolidated
Notice.
III.C.1.e. Infrastructure. In its action plan, each grantee must
include a description of how it plans to meet the requirements of
the Consolidated Notice, including how it will: Promote sound,
sustainable long-term recovery planning as described in this
section; adhere to the elevation requirements established in section
II.C.2.; and coordinate with local and regional planning efforts as
described in section III.B.2.i and III.D.1.a. All infrastructure
investments must be designed and constructed to withstand chronic
stresses and extreme events by identifying and implementing
resilience performance metrics as described in section II.A.2.c.
If a grantee is allocating funds for infrastructure, its
description must include:
(1) How it will address the construction or rehabilitation of
disaster-related systems (e.g., storm water management systems) or
other disaster-related community-based mitigation systems (e.g.,
using FEMA's community lifelines). State grantees carrying out
infrastructure activities must work with units of general local
government and Indian tribes in the MID areas to identify the unmet
needs and associated costs of needed disaster-related infrastructure
improvements;
(2) How mitigation measures and strategies to reduce natural
hazard risks, including climate-related risks, will be integrated
into rebuilding activities;
(3) The extent to which CDBG-DR funded infrastructure activities
will achieve objectives outlined in regionally or locally
established plans and policies that are designed to reduce future
risk to the jurisdiction;
(4) How the grantee will evaluate the costs and benefits in
selecting infrastructure projects to assist with CDBG-DR funds;
(5) How the grantee will align infrastructure investments with
other planned federal, state, or local capital improvements and
infrastructure development efforts, and will work to foster the
potential for additional infrastructure funding from multiple
sources, including state and local capital improvement projects in
planning, and the potential for private investment;
(6) How the grantee will employ adaptable and reliable
technologies to prevent premature obsolescence of infrastructure;
and
(7) How the grantee will invest in restoration of infrastructure
and related long-term recovery needs within historically underserved
communities that lacked adequate investments in housing,
transportation, water, and wastewater infrastructure prior to the
disaster.
III.C.1.f. Minimize Displacement. A description of how the
grantee plans to minimize displacement of persons or entities, and
assist any persons or entities displaced, and ensure accessibility
needs of displaced persons with disabilities. Specifically, grantees
must detail how they will meet the Residential Anti-displacement and
Relocation Assistance Plan (RARAP) requirements in section IV.F.7.
Grantees must indicate to HUD whether they will be amending an
existing RARAP or creating a new RARAP specific to CDBG-DR. Grantees
must meet the requirements related to the RARAP prior to
implementing any activity with CDBG-DR grant funds, such as buyouts
and other disaster recovery activities. Grantees must seek to
minimize displacement or adverse impacts from displacement,
consistent with the requirements of Section IV.F of the Consolidated
Notice, Section 104(d) of the HCDA (42 U.S.C. 5304(d)) and
implementing regulations at 24 CFR part 42, and 24 CFR 570.488 or 24
CFR 570.606, as applicable. Grantees must describe how they will
plan and budget for relocation activities in the action plan.
III.C.1.g. Allocation and award caps. The grantee must provide a
budget for the full amount of the allocation that is reasonably
proportionate to its unmet needs (or provide an acceptable
justification for disproportional allocation) and is consistent with
the requirements to integrate hazard mitigation measures into all
its programs and projects. The grantee shall provide a description
of each disaster recovery program or activity to be funded,
including the CDBG-DR eligible activities and national objectives
associated with each program and the eligibility criteria for
assistance. The grantee shall also describe the maximum amount of
assistance (i.e., award cap) available to a beneficiary under each
of the grantee's disaster recovery programs. A grantee may find it
necessary to provide exceptions on a case-by-case basis to the
maximum amount of assistance and must describe the process it will
use to make such exceptions in its action plan. At a minimum, each
grantee must adopt policies and procedures that communicate how it
will analyze the circumstances under which an

[[Page 6382]]

exception is needed and how it will demonstrate that the amount of
assistance is necessary and reasonable. Each grantee must also
indicate in its action plan that it will make exceptions to the
maximum award amounts when necessary, to comply with federal
accessibility standards or to reasonably accommodate a person with
disabilities.
III.C.1.h. Cost controls and warranties. The grantee must
provide a description of the standards to be established for
construction contractors performing work in the jurisdiction and the
mechanisms to be used by the grantee to assist beneficiaries in
responding to contractor fraud, poor quality work, and associated
issues. Grantees must require a warranty period post-construction
with a formal notification to beneficiaries on a periodic basis
(e.g., 6 months and one month before expiration date of the
warranty). Each grantee must also describe its controls for assuring
that construction costs are reasonable and consistent with market
costs at the time and place of construction.
III.C.1.i. Resilience planning. Resilience is defined as a
community's ability to minimize damage and recover quickly from
extreme events and changing conditions, including natural hazard
risks. At a minimum, the grantee's action plan must contain a
description of how the grantee will: (a) Emphasize high quality
design, durability, energy efficiency, sustainability, and mold
resistance; (b) support adoption and enforcement of modern and/or
resilient building codes that mitigate against natural hazard risks,
including climate-related risks (e.g., sea level rise, high winds,
storm surge, flooding, volcanic eruption, and wildfire risk, where
appropriate and as may be identified in the jurisdiction's rating
and identified weaknesses (if any) in building code adoption using
FEMA's Nationwide Building Code Adoption Tracking (BCAT) portal),
and provide for accessible building codes and standards, as
applicable; (c) establish and support recovery efforts by funding
feasible, cost-effective measures that will make communities more
resilient against a future disaster; (d) make land-use decisions
that reflect responsible and safe standards to reduce future natural
hazard risks, e.g., by adopting or amending an open space management
plan that reflects responsible floodplain and wetland management and
takes into account continued sea level rise, if applicable, and (e)
increase awareness of the hazards in their communities (including
for members of protected classes, vulnerable populations, and
underserved communities) through outreach to the MID areas.
While the purpose of CDBG-DR funds is to recover from a
Presidentially declared disaster, integrating hazard mitigation and
resilience planning with recovery efforts will promote a more
resilient and sustainable long-term recovery. The action plan must
include a description of how the grantee will promote sound,
sustainable long-term recovery planning informed by a post-disaster
evaluation of hazard risk, including climate-related natural hazards
and the creation of resilience performance metrics as described in
paragraph II.A.2.c. of the Consolidated Notice. This information
should be based on the history of FEMA and other federally-funded
disaster mitigation efforts and, as appropriate, take into account
projected increases in sea level, the frequency and intensity of
extreme weather events, and worsening wildfires. Grantees must use
the FEMA-approved Hazard Mitigation Plan (HMP), Community Wildfire
Protection Plan (CWPP), or other resilience plans to inform the
evaluation, and it should be referenced in the action plan.
III.C.2. Additional action plan requirements for states. For
state grantees, the action plan must describe how the grantee will
distribute grant funds, either through specific programs and
projects the grantee will carry out directly (through employees,
contractors, or through subrecipients), or through a method of
distribution of funds to local governments and Indian tribes (as
permitted by III.B.2.d.). The grantee shall describe how the method
of distribution to local governments or Indian tribes, or programs/
projects carried out directly, will result in long-term recovery
from specific impacts of the disaster.
All states must include in their action plan the information
outlined in (1) through (7) below (in addition to other information
required by section III.C.). For states using a method of
distribution, if some required information is unknown when the
grantee is submitting its action plan to HUD (e.g., the list of
programs or activities required by III.C.1.g. or the projected use
of CDBG-DR funds by responsible entity as required by subparagraph
(5) below), the grantee must update the action plan through a
substantial amendment once the information is known. If necessary to
comply with a statutory requirement that a grantee shall submit a
plan detailing the proposed use of all funds prior to HUD's
obligation of grant funds, HUD may obligate only a portion of grant
funds until the substantial amendment providing the required
information is submitted and approved by HUD.
(1) How the impact and unmet needs assessment informs funding
determinations, including the rationale behind the decision(s) to
provide funds to most impacted and distressed areas.
(2) When funds are subgranted to local governments or Indian
tribes (either as subrecipients or through a method of
distribution), all criteria used to allocate and award the funds
including the relative importance of each criterion (including any
priorities). If the criteria are unknown when the grantee is
submitting the initial action plan to HUD, the grantee must update
the action plan through a substantial amendment once the information
is known. The substantial amendment must be submitted and approved
before distributing the funds to a local government or Indian tribe.
(3) How the distribution and selection criteria will address
disaster-related unmet needs in a manner that does not have an
unjustified discriminatory effect based on race or other protected
class and ensure the participation of minority residents and those
belonging to other protected class groups in the MID areas. Such
description should include an assessment of who may be expected to
benefit, the timing of who will be prioritized, and the amount or
proportion of benefits expected to be received by different
communities or groups (e.g., the proportion of benefits going to
different locations within the MID or to homeowners versus renters).
(4) The threshold factors and recipient or beneficiary grant
size limits that are to be applied.
(5) The projected uses for the CDBG-DR funds, by responsible
entity, activity, and geographic area.
(6) For each proposed program and/or activity, its respective
CDBG activity eligibility category (or categories), national
objective(s), and what disaster-related impact is addressed, as
described in section II.A.1.
(7) When applications are solicited for programs carried out
directly, all criteria used to select applications for funding,
including the relative importance of each criterion, and any
eligibility requirements. If the criteria are unknown when the
grantee is submitting the initial action plan to HUD, the grantee
must update the action plan through a substantial amendment once the
information is known. The substantial amendment must be submitted
and approved before selecting applications.
III.C.3. Additional action plan requirements for local
governments. For local governments grantees, the action plan shall
describe specific programs and/or activities they will carry out.
The action plan must also describe:
(1) How the impact and unmet needs assessment informs funding
determinations, including the rationale behind the decision(s) to
provide funds to most impacted and distressed areas.
(2) All criteria used to select applications (including any
priorities), including the relative importance of each criterion,
and any eligibility requirements. If the criteria are unknown when
the grantee is submitting the initial action plan to HUD, the
grantee must update the action plan through a substantial amendment
once the information is known. The substantial amendment must be
submitted and approved before selecting applications.
(3) How the distribution and selection criteria will address
disaster-related unmet needs in a manner that does not have an
unjustified discriminatory effect and ensures the participation of
minority residents and those belonging to other protected class
groups in the MID areas, including with regards to who may benefit,
the timing of who will be prioritized, and the amount or proportion
of benefits expected to be received by different communities or
groups (e.g., the proportion of benefits going to different
locations within the MID or to homeowners versus renters).
(4) The threshold factors and grant size limits that are to be
applied.
(5) The projected uses for the CDBG-DR funds, by responsible
entity, activity, and geographic area.
(6) For each proposed program and/or activity, its respective
CDBG activity eligibility category (or categories), national
objective(s), and what disaster-related impact is addressed, as
described in section II.A.1. of the Consolidated Notice.

[[Page 6383]]

III.C.4. Waiver of 45-day review period for CDBG-DR action plans
to 60 days. HUD may disapprove an action plan or substantial action
plan amendment if it is incomplete. HUD works with grantees to
resolve or provide additional information during the review period
to avoid the need to disapprove an action plan or substantial action
plan amendments. There are several issues related to the action plan
as submitted that can be fully resolved via further discussion and
revision during an extended review period, rather than through HUD
disapproval of the plan, which in turn would require grantees to
take additional time to revise and resubmit their respective plan.
Therefore, the Secretary has determined that good cause exists and
waives 24 CFR 91.500(a) to extend HUD's action plan review period
from 45 days to 60 days.
The action plan (including SF-424 and certifications) must be
submitted to HUD for review and approval using DRGR. By submitting
required standard forms (that must be submitted with the action
plan), the grantee is providing assurances that it will comply with
statutory requirements, including, but not limited to civil rights
requirements. Applicants and recipients are required to submit
assurances of compliance with federal civil rights requirements. A
grantee will use DRGR's upload function to include the SF 424
(including SF 424B and SF 424D, as applicable) and certifications
with its action plan. Grantees receiving an allocation are required
to submit an action plan within 120 days of the applicability date
of the Allocation Announcement Notice, unless the grantee has
requested, and HUD has approved an extension of the submission
deadline. HUD will then review each action plan within 60 days from
the date of receipt.
During its review, HUD typically provides grantees with comments
on the submitted plan to avoid the need to disapprove an action plan
and offers a grantee the opportunity to make updates to the action
plan during the first forty-five days of HUD's initial sixty-day
review period. If a grantee wants to make updates to the action
plan, HUD will reject the Public Action Plan in DRGR to return the
plan to the grantee. Then, once the grantee resubmits the plan, HUD
reviews the revised plan within the initial sixty-day period. HUD is
establishing an alternative process that offers a grantee the option
to voluntarily provide a revised action plan, updated to respond to
HUD's comments, no later than day forty-five in HUD's sixty-day
review. A grantee is not required to participate in the revisions of
the action plan during this time, but with the understanding that an
action plan may be determined to be substantially incomplete. The
Secretary may disapprove an action plan as substantially incomplete
if HUD determines that the action plan does not meet the
requirements of the Consolidated Notice and the applicable
Allocation Announcement Notice.
III.C.5. Obligation and expenditure of funds. Once HUD approves
the action plan and approves certifications if required by
appropriations acts, it will then sign a grant agreement obligating
allocated funds to the grantee. The grantee will continue the action
plan process in DRGR to draw funds (see section V.C.1.).
The grantee must meet the applicable environmental requirements
before the use or commitment of funds for each activity. After the
Responsible Entity (1) completes environmental review(s) pursuant to
24 CFR part 58 and receives from HUD an approved Request for Release
of Funds and certification (as applicable), or (2) adopts another
Federal agency's environmental review, approval, or permit and
receives from HUD (or the state) an approved Request for Release of
Funds and certification (as applicable), the grantee may draw down
funds from the line of credit for an activity. The disbursement of
grant funds must begin no later than 180 calendar days after HUD
executes a grant agreement with the grantee. Failure to draw funds
within this timeframe may result in HUD's review of the grantee's
certification of its financial controls, procurement processes, and
capacity, and may result in the imposition of any corrective actions
deemed appropriate by HUD pursuant to 24 CFR 570.495, 24 CFR
570.910, or 24 CFR 1003.701.
III.C.6. Amending the action plan. The grantee must amend its
action plan to update its needs assessment, modify or create new
activities, or reprogram funds, as necessary, in the DRGR system.
Each amendment must be published on the grantee's official website
and describe the changes within the context of the entire action
plan. A grantee's current version of its entire action plan must be
accessible for viewing as a single document at any given point in
time, rather than require the public or HUD to view and cross-
reference changes among multiple amendments. HUD's DRGR system will
include the capabilities necessary for a grantee to sufficiently
identify the changes for each amendment. When a grantee has finished
amending the content in the Public Action Plan, the grantee will
click ``Submit Plan'' in the DRGR system. The DRGR system will
prompt the grantee to select the ``Public Action Plan'' and identify
the amendment type (substantial or nonsubstantial). The grantee will
complete this cover page to describe each amendment. At a minimum,
the grantee must: (1) Identify exactly what content is being added,
deleted, or changed; (2) clearly illustrate where funds are coming
from and where they are moving to; and (3) include a revised budget
allocation table that reflects the entirety of all funds, as
amended.
III.C.6.a. Substantial amendment. In its action plan, each
grantee must specify criteria for determining what changes in the
grantee's plan constitute a substantial amendment to the plan. At a
minimum, the following modifications will constitute a substantial
amendment: A change in program benefit or eligibility criteria; the
addition or deletion of an activity; a proposed reduction in the
overall benefit requirement, as outlined in III.F.2.; or the
allocation or reallocation of a monetary threshold specified by the
grantee in their action plan. For all substantial amendments, the
grantee must follow the same procedures required for the preparation
and submission of an action plan for disaster recovery, with the
exception of the public hearing requirements described in section
III.D.1.b. and the consultation requirements described in section
III.D.1.a., which are not required for substantial amendments. A
substantial action plan amendment shall require a 30-day public
comment period.
III.C.6.b. Nonsubstantial amendment. The grantee must notify
HUD, but is not required to seek public comment, when it makes any
plan amendment that is not substantial. Although nonsubstantial
amendments do not require HUD's approval to become effective, the
DRGR system must approve the amendment to change the status of the
Public Action Plan to ``reviewed and approved.'' The DRGR system
will automatically approve the amendment by the fifth day, if not
completed by HUD sooner.
III.C.7. Projection of expenditures and outcomes. Each grantee
must submit projected expenditures and outcomes with the action
plan. The projections must be based on each quarter's expected
performance--beginning with the first quarter funds are available to
the grantee and continuing each quarter until all funds are
expended. The grantee will use DRGR's upload feature to include
projections and accomplishments for each program created.

III.D. Citizen Participation Requirements

III.D.1. Citizen participation waiver and alternative
requirement. To permit a more streamlined process and ensure
disaster recovery grants are awarded in a timely manner, provisions
of 42 U.S.C. 5304(a)(2) and (3), 42 U.S.C. 12707, 24 CFR 570.486, 24
CFR 1003.604, 24 CFR 91.105(b) through (d), and 24 CFR 91.115(b)
through (d), with respect to citizen participation requirements, are
waived and replaced by the alternative requirements in this section.
The streamlined requirements require the grantee to include public
hearings on the proposed action plan and provide a reasonable
opportunity (at least 30 days) for citizen comment.
The grantee must follow a detailed citizen participation plan
that satisfies the requirements of 24 CFR 91.115 or 91.105 (except
as provided for in notices providing waivers and alternative
requirements). Each local government receiving assistance from a
state grantee must follow a detailed citizen participation plan that
satisfies the requirements of 24 CFR 570.486 (except as provided for
in notices providing waivers and alternative requirements).
In addition to the requirements above, the streamlined citizen
participation alternative requirements for CDBG-DR grants are as
follows:
III.D.1.a. Requirement for consultation during plan preparation.
All grantees must consult with states, Indian tribes, local
governments, Federal partners, nongovernmental organizations, the
private sector, and other stakeholders and affected parties in the
surrounding geographic area, including organizations that advocate
on behalf of members of protected classes, vulnerable populations,
and underserved communities impacted by the disaster, to ensure
consistency of the action plan with applicable regional
redevelopment plans. A grantee must consult with other relevant
government agencies, including state and

[[Page 6384]]

local emergency management agencies that have primary responsibility
for the administration of FEMA funds, if applicable.
III.D.1.b. Publication of the action plan and opportunity for
public comment. Following the creation of the action plan or
substantial amendment in DRGR and before the grantee submits the
action plan or substantial amendment to HUD, the grantee must
publish the proposed plan or amendment for public comment. The
manner of publication must include prominent posting on the
grantee's official disaster recovery website and must afford
citizens, affected local governments, and other interested parties a
reasonable opportunity to review the plan or substantial amendment.
Grantees shall consider if there are potential barriers that may
limit or prohibit vulnerable populations or underserved communities
and individuals affected by the disaster from providing public
comment on the grantee's action plan or substantial amendment. If
the grantee identifies barriers that may limit or prohibit equitable
participation, the grantee must take reasonable measures to increase
coordination, communication, affirmative marketing, targeted
outreach, and engagement with underserved communities and
individuals, including persons with disabilities and persons with
LEP.
At a minimum, the topic of disaster recovery on the grantee's
website must be navigable by all interested parties from the grantee
homepage and must link to the disaster recovery website required by
section III.D.1.e. The grantee's records must demonstrate that it
has notified affected citizens through electronic mailings, press
releases, statements by public officials, media advertisements,
public service announcements, and/or contacts with neighborhood
organizations.
Additionally, the CDBG-DR grantee must convene at least one
public hearing on the proposed action plan after it has published on
its website to solicit public comment and before submittal of the
action plan to HUD. If the grantee holds more than one public
hearing, it must hold each hearing in a different location within
the MID area in locations that the grantee determines will promote
geographic balance and maximum accessibility. The minimum number of
public hearings a grantee must convene on the action plan to obtain
interested parties' views and to respond to comments and questions
shall be determined by the amount of the grantee's CDBG-DR
allocation: (1) CDBG-DR grantees with allocations under $500 million
are required to hold at least one public hearing in a HUD-identified
MID area; and (2) CDBG-DR grantees with allocations over $500
million or more shall convene at least two public hearings in HUD-
identified MID areas.
Grantees may convene public hearings virtually (alone, or in
concert with an in-person hearing). All in-person hearings must be
held in facilities that are physically accessible to persons with
disabilities. HUD's implementing regulations for Section 504 of the
Rehabilitation Act (24 CFR part 8, subpart C) provide that where
physical accessibility is not achievable, grantees must give
priority to alternative methods of product or information delivery
that offer programs and activities to qualified individuals with
disabilities in the most integrated setting appropriate. When
conducting a virtual hearing, the grantee must allow questions in
real time, with answers coming directly from the grantee
representatives to all ``attendees.''
For both virtual and in person hearings, grantees must update
their citizen participation plans to provide that hearings be held
at times and locations convenient to potential and actual
beneficiaries, with accommodation for persons with disabilities and
appropriate auxiliary aids and services to ensure effective
communication, and specify how they will meet these requirements.
See 24 CFR 8.6 for HUD's regulations about effective communication.
Grantees must also provide meaningful access for individuals with
LEP at both in-person and virtual hearings. In their citizen
participation plan, state and local government grantees shall
identify how the needs of non-English speaking residents will be met
in the case of virtual and in-person public hearings where a
significant number of non-English speaking residents can be
reasonably expected to participate. In addition, for both virtual or
in-person hearings, the grantee shall provide reasonable
notification and access for citizens in accordance with the
grantee's certifications at III.F.7.g., timely responses to all
citizen questions and issues, and public access to all questions and
responses.
III.D.1.c. Consideration of public comments. The grantee must
provide a reasonable time frame (no less than 30 days) and method(s)
(including electronic submission) for receiving comments on the
action plan or substantial amendment. The grantee must consider all
oral and written comments on the action plan or any substantial
amendment. Any updates or changes made to the action plan in
response to public comments should be clearly identified in the
action plan. A summary of comments on the plan or amendment, and the
grantee's response to each, must be included (e.g., uploaded) in
DRGR with the action plan or substantial amendment. Grantee
responses shall address the substance of the comment rather than
merely acknowledge that the comment was received.
III.D.1.d. Availability and accessibility of documents. The
grantee must make the action plan, any substantial amendments, vital
documents, and all performance reports available to the public on
its website. See the following guidance for more information on
vital documents: <a href="https://www.lep.gov/guidance/HUD_guidance_Jan07.pdf">https://www.lep.gov/guidance/HUD_guidance_Jan07.pdf</a>. In addition, the grantee must make these
documents available in a form accessible to persons with
disabilities and those with LEP. Grantees must take reasonable steps
to ensure meaningful access to their programs and activities by LEP
persons, including members of protected classes, vulnerable
populations, and individuals from underserved communities. In their
citizen participation plan, state and local government grantees
shall describe their procedures for assessing their language needs
and identify any need for translation of notices and other vital
documents. At a minimum, the citizen participation plan shall
require that the state or local government grantee take reasonable
steps to provide language assistance to ensure meaningful access to
participation by non-English-speaking residents of the grantee's
jurisdiction.
III.D.1.e. Public website. The grantee must maintain a public
website that permits individuals and entities awaiting assistance
and the general public to see how all grant funds are used and
administered. The website must include copies of all relevant
procurement documents and, except as noted in the next paragraph,
all grantee administrative contracts, details of ongoing procurement
processes, and action plans and amendments. The public website must
be accessible to persons with disabilities and individuals with LEP.
To meet this requirement, each grantee must make the following
items available on its website: The action plan created using DRGR
(including all amendments); each performance report (as created
using the DRGR system); citizen participation plan; procurement
policies and procedures; all contracts, as defined in 2 CFR 200.22,
that will be paid with CDBG-DR funds (including, but not limited to,
subrecipients' contracts); and a summary including the description
and status of services or goods currently being procured by the
grantee or the subrecipient (e.g., phase of the procurement,
requirements for proposals, etc.). Contracts and procurement actions
that do not exceed the micro-purchase threshold, as defined in 2 CFR
200.1, are not required to be posted to a grantee's website.
III.D.1.f. Application status. The grantee must provide multiple
methods of communication, such as websites, toll-free numbers, TTY
and relay services, email address, fax number, or other means to
provide applicants for recovery assistance with timely information
to determine the status of their application.
III.D.1.g. Citizen complaints. The grantee will provide a timely
written response to every citizen complaint. The grantee response
must be provided within fifteen working days of the receipt of the
complaint, or the grantee must document why additional time for the
response was required. Complaints regarding fraud, waste, or abuse
of government funds should be forwarded to the HUD OIG Fraud Hotline
(phone: 1-800-347-3735 or email: <a href="/cdn-cgi/l/email-protection#a6cec9d2cacfc8c3e6ced3c2c9cfc188c1c9d0">[email&#160;protected]</a>).
III.D.1.h. General requirements. For plan publication, the
comprehensive disaster recovery website and vital documents must
ensure effective communication for individuals with disabilities, as
required by 24 CFR 8.6 and the Americans with Disabilities Act, as
applicable. In addition to ensuring the accessibility of the
comprehensive disaster recovery website and vital documents, this
obligation includes the requirement to provide auxiliary aids and
services where necessary to ensure effective communication with
individuals with disabilities, which may take the form of the
furnishing of the above referenced materials in alternative formats
(24 CFR 8.6(a)(1)). When required by III.D.1.d., grantees must take
reasonable steps to ensure meaningful access for individuals with
LEP.

[[Page 6385]]

III.E. Program Income

III.E.1. Program income waiver and alternative requirement. For
state and unit of general local government grantees, HUD is waiving
all applicable program income rules at 42 U.S.C. 5304(j), 24 CFR
570.489(e), 24 CFR 570.500, and 24 CFR 570.504 and providing the
alternative requirement described below. Program income earned by
Indian tribes that receive an allocation from HUD will be governed
by the regulations at 24 CFR 1003.503 until grant closeout and not
by the waivers and alternative requirements in this Consolidated
Notice. Program income earned by Indian tribes that are
subrecipients of state grantees or local government grantees will be
subject to the program income requirements for subrecipients of
those grantees.
III.E.1.a. Definition of program income. ``Program income'' is
defined as gross income generated from the use of CDBG-DR funds,
except as provided in III.E.1.b., and received by a state, local
government, Indian tribe receiving funds from a grantee, or their
subrecipients. When income is generated by an activity that is only
partially assisted with CDBG-DR funds, the income shall be prorated
to reflect the percentage of CDBG-DR funds used (e.g., a single loan
supported by CDBG-DR funds and other funds, or a single parcel of
land purchased with CDBG-DR funds and other funds). If CDBG funds
are used with CDBG-DR funds on an activity, any income earned on the
CDBG portion would not be subject to the waiver and alternative
requirement in the Consolidated Notice.
Program income includes, but is not limited to, the following:
(i) Proceeds from the disposition by sale or long-term lease of
real property purchased or improved with CDBG-DR funds.
(ii) Proceeds from the disposition of equipment purchased with
CDBG-DR funds.
(iii) Gross income from the use or rental of real or personal
property acquired by a state, local government, or subrecipient
thereof with CDBG-DR funds, less costs incidental to generation of
the income.
(iv) Gross income from the use or rental of real property owned
by a state, local government, or subrecipient thereof, that was
constructed or improved with CDBG-DR funds, less costs incidental to
generation of the income.
(v) Payments of principal and interest on loans made using CDBG-
DR funds.
(vi) Proceeds from the sale of loans made with CDBG-DR funds.
(vii) Proceeds from the sale of obligations secured by loans
made with CDBG-DR funds.
(viii) Interest earned on program income pending disposition of
the income, including interest earned on funds held in a revolving
fund account.
(ix) Funds collected through special assessments made against
nonresidential properties and properties owned and occupied by non-
LMI households, where the special assessments are used to recover
all or part of the CDBG-DR portion of a public improvement.
(x) Gross income paid to a state, local government, or
subrecipient thereof, from the ownership interest in a for-profit
entity in which the income is in return for the provision of CDBG-DR
assistance.
III.E.1.b. Program income--does not include:
(i) The total amount of funds that is less than $35,000 received
in a single year and retained by a state, local government, or a
subrecipient thereof.
(ii) Amounts generated by activities eligible under section
105(a)(15) of the HCDA and carried out by an entity under the
authority of section 105(a)(15) of the HCDA.
III.E.1.c. Retention of program income. State grantees may
permit a local government that receives or will receive program
income to retain the program income but are not required to do so.
III.E.1.d. Program income--use, close out, and transfer.
(i) Program income received (and retained, if applicable) before
or after closeout of the grant that generated the program income,
and used to continue disaster recovery activities, is treated as
additional CDBG-DR funds subject to the requirements of the
Consolidated Notice and must be used in accordance with the
grantee's action plan for disaster recovery. To the maximum extent
feasible, program income shall be used or distributed before
additional withdrawals from the U.S. Treasury are made, except as
provided in III.E.1.e. below.
(ii) In addition to the alternative requirements dealing with
program income required above, the following rules apply:
(1) A state or local government grantee may transfer program
income to its annual CDBG program before closeout of the grant that
generated the program income. In addition, state grantees may
transfer program income before closeout to any annual CDBG-funded
activities carried out by a local government within the state.
(2) Program income received by a grantee, or received and
retained by a subrecipient, after closeout of the grant that
generated the program income, may also be transferred to a grantee's
annual CDBG award.
(3) In all cases, any program income received that is not used
to continue the disaster recovery activity will not be subject to
the waivers and alternative requirements of the Consolidated Notice.
Rather, those funds will be subject to the state or local government
grantee's regular CDBG program rules. Any other transfer of program
income not specifically addressed in the Consolidated Notice may be
carried out if the grantee first seeks and then receives HUD's
approval.
III.E.1.e. Revolving funds. State and local government grantees
may establish revolving funds to carry out specific, identified
activities. State grantees may also establish a revolving fund to
distribute funds to local governments or tribes to carry out
specific, identified activities. A revolving fund, for this purpose,
is a separate fund (with a set of accounts that are independent of
other program accounts) established to carry out specific
activities. These activities must generate payments used to support
similar activities going forward. These payments to the revolving
fund are program income and must be substantially disbursed from the
revolving fund before additional grant funds are drawn from the U.S.
Treasury for payments that could be funded from the revolving fund.
Such program income is not required to be disbursed for nonrevolving
fund activities. A revolving fund established by a CDBG-DR grantee
shall not be directly funded or capitalized with CDBG-DR grant
funds, pursuant to 24 CFR 570.489(f)(3).

III.F. Other General Waivers and Alternative Requirements

III.F.1. Consolidated Plan waiver. HUD is temporarily waiving
the requirement for consistency with the consolidated plan
(requirements at 42 U.S.C. 12706, 24 CFR 91.225(a)(5), and 24 CFR
91.325(a)(5)), because the effects of a major disaster alter a
grantee's priorities for meeting housing, employment, and
infrastructure needs. In conjunction, 42 U.S.C. 5304(e) is also
waived, to the extent that it would require HUD to annually review
grantee performance under the consistency criteria. These waivers
apply only for 24 months after the applicability date of the
grantee's applicable Allocation Announcement Notice. If the grantee
is not scheduled to submit a new three-to five-year consolidated
plan within the next two years, the grantee must update its existing
three-to five-year consolidated plan to reflect disaster-related
needs no later than 24 months after the applicability date of the
grantee's applicable Allocation Announcement Notice.
III.F.2. Overall benefit requirement. The primary objective of
the HCDA is the ``development of viable urban communities, by
providing decent housing and a suitable living environment and
expanding economic opportunities, principally for persons of low and
moderate income'' (42 U.S.C. 5301(c)). Consistent with the HCDA,
this notice requires grantees to comply with the overall benefit
requirements in the HCDA and 24 CFR 570.484, 24 CFR 570.200(a)(3),
and 24 CFR 1003.208, which require that 70 percent of funds be used
for activities that benefit LMI persons. For purposes of a CDBG-DR
grant, HUD is establishing an alternative requirement that the
overall benefit test shall apply only to the grant of CDBG-DR funds
described in the Allocation Announcement Notice and related program
income.
A grantee may seek to reduce the overall benefit requirement
below 70 percent of the total grant, but must submit a substantial
amendment as provi

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