Notice2022-27548
Request for Information Community Development Block Grant Disaster Recovery (CDBG-DR) Formula
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 20, 2022
Issuing agencies
Housing and Urban Development Department
Abstract
The U.S. Department of Housing and Urban Development (HUD) seeks public input on the methodology HUD uses to calculate Community Development Block Grant-Disaster Recovery (CDBG-DR) allocation amounts. This Request for Information (RFI) is to solicit feedback to inform how the Department can improve the allocation formula in the event Congress appropriates funds for CDBG-DR in the future.
Full Text
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<title>Federal Register, Volume 87 Issue 243 (Tuesday, December 20, 2022)</title>
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[Federal Register Volume 87, Number 243 (Tuesday, December 20, 2022)]
[Notices]
[Pages 77855-77864]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27548]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6337-N-01]
Request for Information Community Development Block Grant
Disaster Recovery (CDBG-DR) Formula
AGENCY: Office of the Assistant Secretary for Policy Development and
Research (PD&R), Department of Housing and Urban Development (HUD).
ACTION: Request for information.
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[[Page 77856]]
SUMMARY: The U.S. Department of Housing and Urban Development (HUD)
seeks public input on the methodology HUD uses to calculate Community
Development Block Grant-Disaster Recovery (CDBG-DR) allocation amounts.
This Request for Information (RFI) is to solicit feedback to inform how
the Department can improve the allocation formula in the event Congress
appropriates funds for CDBG-DR in the future.
DATES: Comments are requested on or before February 21, 2023. Late-
filed comments will be considered to the extent practicable.
ADDRESSES: Interested persons are invited to submit comments responsive
to this Request for Information (RFI). All submissions must refer to
the docket number and title of the RFI. Comments may include written
data, views, or arguments. Each individual or organization is
encouraged to submit only one response and to limit their submissions
to 10 pages in 12-point or larger font, with a page number provided on
each page. Commenters are encouraged to identify the number of the
specific question or questions to which they are responding. Responses
should include the name of the person(s) or organization(s) filing the
comment but should not include any personally identifiable information.
There are two methods for submitting public comments.
1. Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
<a href="http://www.regulations.gov">http://www.regulations.gov</a>.
2. Submission of Comments by Mail. Comments may be submitted by
mail to the Regulations Division, Office of General Council, Department
of Housing and Urban Development, 451 7th Street SW, Room 10276,
Washington, DC 20410-0500.
HUD strongly encourages commenters to submit their feedback and
recommendations electronically. Electronic submission of comments
allows the commenter maximum time to prepare and submit a response,
ensures timely receipt by HUD, and enables HUD to make comments
immediately available to the public. Comments submitted electronically
through the <a href="http://www.regulations.gov">http://www.regulations.gov</a> website can be viewed by other
commenters and interested members of the public. Commenters should
follow the instructions provided on that site to submit comments
electronically.
Note: To receive consideration as public comments, comments
must be submitted through one of the two methods specified above.
Again, all submissions must refer to the docket number and title of
the notice.
Public Inspection of Public Comments. All comments and
communications properly submitted to HUD will be available for public
inspection and copying between 8 a.m. and 5 p.m. weekdays at the above
address. Due to security measures at the HUD Headquarters building, an
advance appointment to review the public comments must be scheduled by
calling the Regulations Division at (202) 708-3055 (this is not a toll-
free number). HUD welcomes and is prepared to receive calls from
individuals who are deaf or hard of hearing, as well as individuals
with speech or communication disabilities. To learn more about how to
make an accessible telephone call, please visit <a href="https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs">https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs</a>. Copies of all
comments submitted are available for inspection and downloading at
<a href="http://www.regulations.gov">http://www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Todd Richardson, Office of Policy
Development and Research, Department of Housing and Urban Development,
451 7th Street SW, Room 8138, Washington, DC 20410-0500; telephone
number (202) 402-5706 (this is not a toll-free number). HUD welcomes
and is prepared to receive calls from individuals who are deaf or hard
of hearing, as well as individuals with speech or communication
disabilities. To learn more about how to make an accessible telephone
call, please visit <a href="https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs">https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs</a>.
SUPPLEMENTARY INFORMATION:
I. History of CDBG-DR Formula Allocations
Congress has periodically funded CDBG-DR grants through emergency
appropriations acts since 1993. The CDBG-DR program is not authorized
through standing statute, but instead was created through these
emergency appropriations premised on the authorized Community
Development Block Grant (CDBG) program. While the CDBG-DR grants are
largely subject to the statutes and regulations governing the CDBG
program, each appropriation act that makes CDBG-DR funds available
imposes disaster-specific requirements and includes broad waiver and
alternative requirement authority that enables the Secretary to adjust
requirements to support resilient recovery for an individual disaster
or a set of disasters.
One component of the overall process for CDBG-DR is the method for
allocating the funds. With very few exceptions, HUD has allocated funds
by formula because this method is the best way to satisfy statutory
requirements. The language Congress uses in appropriations acts
directing HUD to develop the formula and the formula itself have
evolved over time. This evolution has depended on the type of
disasters, the amount of funding available, policy priorities of
different Administrations, and the data available immediately after a
disaster to support a speedy and equitable allocation.
After each CDBG-DR formula allocation, HUD has published as an
Appendix to the Federal Register Notice describing the methodology used
to make the allocations. Those Notices are available at this website:
<a href="https://www.hud.gov/program_offices/comm_planning/cdbg-dr/regulations">https://www.hud.gov/program_offices/comm_planning/cdbg-dr/regulations</a>.
This request for information is seeking comment on the current
methodology as a way to inform future allocations if and when
appropriations acts make additional CDBG-DR funds available.
II. Overview of Current Methodology
As noted above, the CDBG-DR formula has evolved over time. To
facilitate comment, this RFI is based on the formula used to allocate
funds made available by The Disaster Relief Supplemental Appropriations
Act, 2022 (Pub. L. 117-43), which was approved September 30, 2021, and
funded most impacted and distressed areas resulting from major
disasters occurring in 2020 and 2021.
To enable assessment of comments based on consistent language, HUD
seeks comment on the methodology and choice of data for the most recent
2021 formula allocations.
Guiding Features of the Statutory Text
Each appropriation of CDBG-DR funds stands alone. The key
components of the statutory language for the most recent formula
allocations were:
<bullet> Purpose: ``necessary expenses for activities authorized
under title I of the Housing and Community Development Act of 1974 (42
U.S.C. 5301 et seq.) related to disaster relief, long-term recovery,
restoration of infrastructure and housing, economic revitalization, and
mitigation, in the most impacted and distressed areas resulting from a
major disaster that occurred in 2020 or 2021 pursuant to the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121
et seq.):''
[[Page 77857]]
<bullet> Eligible grantees: ``Provided, That amounts made available
under this heading in this Act shall be awarded directly to the State,
unit of general local government, or Indian tribe (as such term is
defined in section 102 of the Housing and Community Development Act of
1974 (42 U.S.C. 5302)) at the discretion of the Secretary:''
<bullet> Data: ``Provided further, That the Secretary shall
allocate, using the best available data,''
The timing of the appropriation and statutory language permitted
funding disasters that had occurred in 2020 and 2021, as well as
disasters that had not yet occurred in 2021--essentially a ``go
forward'' basis. The language further provided that if there were
available funds, they should be allocated for both unmet needs and
mitigation at the same time:
<bullet> Total unmet needs. ``[A]n amount equal to the total
estimate for unmet needs for qualifying disasters under this heading in
this Act:''
<bullet> Mitigation. ``Provided further, That any final allocation
for the total estimate for unmet need made available under the
preceding proviso shall include an additional amount of 15 percent of
such estimate for additional mitigation:''
The most recently used formula applying this statutory direction
was designed with the following goals:
<bullet> Allocate the funds as quickly as possible.
<bullet> Use best available data that is consistently collected for
eligible disasters.
<bullet> Allocate directly to local governments instead of states
when the disaster is concentrated in one or a small number of
communities regularly ``entitled'' under the non-disaster CDBG program.
HUD is seeking comments on several specific components of the
formula. This section of the Notice describes each component and
Section IV will refer back to these components in identifying the
specific information requested in connection with each.
Component 1. Eligible Disasters for Funding
The statutory language directs HUD to limit CDBG-DR allocations to
those areas that were most impacted and distressed from a
Presidentially declared major disaster. HUD has implemented this
directive by limiting CDBG-DR formula allocations to grantees with
major disasters that meet these standards:
(1) FEMA's Individual and Households Program (IHP) designation. HUD
has limited allocations to those disasters where FEMA had determined
the damage was sufficient to declare the disaster as eligible to
receive IHP funding.
(2) Concentrated housing damage. HUD has limited its estimate of
serious unmet housing need to counties and zip codes with high levels
of damage, collectively referred to as ``most impacted areas.'' For the
most recent allocation, HUD defined most impacted areas as either most
impacted counties--counties exceeding $10 million in serious unmet
housing needs--or most impacted Zip Codes--Zip Codes with $2 million or
more of serious unmet housing needs. The calculation of serious unmet
housing needs is described below.
Component 2. Basic Formula for Unmet Needs
``Unmet needs'' means that the needs are not met by other sources
of financial assistance, including Federal assistance and insurance.
Further, grantees are required to prevent the duplication of benefits
received from other sources when carrying out eligible activities.
At the formula level, HUD considers the following other recovery
resources that are directed at long-term disaster recovery: insurance,
Small Business Administration (SBA) disaster loans, and FEMA IHP and
Public Assistance. All of these forms of assistance are typically
available for recovery before CDBG-DR is allocated. The CDBG-DR formula
is designed to roughly estimate the recovery gaps not served by these
sources.
The current formula does not assume that it is possible to measure
all unmet needs. Instead, the formula has evolved to be a common
``measuring stick.'' By using similar data and approach to defining
unmet needs and which areas are ``most impacted and distressed,'' it is
possible to evaluate the funding being provided to current major
disasters against allocations made for prior year disasters as
``apples-to-apples.''
The formula depends on information gleaned from the federal
programs that respond immediately after a disaster occurs--FEMA and
SBA--in order to calculate unmet needs for the CDBG-DR formula
allocation. Unlike the other programs that are applicant driven, CDBG-
DR is a block grant that allots money for grantees to develop their own
plans to reflect the recovery gaps. Fundamentally, the formula is not
intended to define the specific plan beyond the singular goal of
notifying grantees how much funding they will receive for recovery
activities.
For disasters that meet the most impacted threshold described in
Component 1 above, the unmet need allocations are based on the
following factors summed together:
(1) Housing Need.
(a) Repair estimates for seriously damaged owner-occupied units
without insurance (excluding households with incomes above either the
national median or 120 percent of area median income, whichever is
greater, if they are without hazard insurance or--if a flooding event--
were in the 1 percent annual chance floodplain and did not carry flood
insurance) in most impacted areas after FEMA and SBA repair grants or
loans; and
(b) Repair estimates for seriously damaged rental units occupied by
very low-income or poverty renters in most impacted areas.
(2) Economic Revitalization Need. Repair and content loss estimates
for small businesses with serious damage denied by SBA.
(3) Public Infrastructure Need. The estimated local cost share for
Public Assistance Category C to G projects.
Component 3. Methods for Estimating Serious Unmet Needs for Housing
HUD used FEMA IHP program data on housing-unit damage as of
February 10, 2022, to calculate unmet needs for housing for 2020 and
2021 qualifying disasters. HUD generally calculates damage estimates
for unmet needs at least 60 to 90 days after the disaster is declared a
major disaster to allow sufficient time for the vast majority of FEMA
and SBA housing inspections to be completed.
The core data on housing damage for both the unmet housing needs
and concentrated damage calculations are based on home inspection data
for FEMA's IHP program and SBA's disaster loan program. HUD calculates
``unmet housing needs'' as the number of housing units with unmet needs
times the estimated cost to repair those units less repair funds
already provided by FEMA, SBA, and insurance.
Each of the FEMA inspected owner-occupied units are categorized by
HUD into one of five categories:
<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
[[Page 77858]]
or determined destroyed and/or 6 or more feet of flooding on the first
floor.
When owner-occupied properties also have a personal property
inspection or only have a personal property inspection, HUD reviews the
personal property damage amounts such that if the personal property
damage places the home into a higher need category over the real
property assessment, the personal property amount is used. The personal
property-based need categories for owner-occupied units are defined as
follows:
<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 were determined to have a high level of
damage if they have damage of ``major-low'' or higher. That is, the
unit has a FEMA inspected real property damage of $8,000 or above,
personal property damage $3,500 or above, or flooding 1 foot or above
on the first floor. This threshold, like most other thresholds
discussed in this formula, were established for the Hurricane Sandy
allocation and have been used since that time.
Furthermore, a homeowner whose flooded home was located outside the
1 percent annual chance floodplain is determined to have unmet needs if
they reported damage and no flood insurance to cover that damage. For
homes located inside the 1 percent annual chance floodplain, homeowners
without flood insurance with flood damage with incomes below the
greater of national median or 120 percent of area median income are
determined to have unmet needs. For non-flood damage, homeowners
without hazard insurance with incomes below the greater of the national
median or 120 percent of area median income are included as having
unmet needs. The unmet need categories for these types of homeowners
are defined as above for real and personal property damage.
FEMA does not inspect rental units for real property damage so
personal property damage is used as a proxy for rental unit damage.
Each of the FEMA-inspected renter units are categorized by HUD into one
of five categories:
<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 unit is occupied by a renter with income less than
the greater of the Federal poverty level or 50 percent of the area
median income. Units occupied by a tenant with income less than the
greater of the poverty level or 50 percent of the area median income
are used to calculate likely unmet needs for affordable rental housing.
HUD includes only these low-income renter households in its calculation
for unmet rental housing needs.
The average cost to fully repair a housing unit to code for a
specific disaster within each of the damage categories noted above is
calculated using the median real property damage repair costs
determined by SBA for its disaster loan program based on a match
comparing FEMA and SBA inspections by each of the FEMA damage
categories described above.
In general, FEMA inspects nearly all of the housing units that have
unmet needs, but those inspections are not to estimate the total cost
to bring a house back to code, but rather to determine the level of
assistance required to return the home to safe and sanitary living
conditions. For the most severe disasters, there is a maximum amount of
FEMA Individual Assistance of $35,500 and often that is the calculated
damage amount for destroyed housing units. SBA, on the other hand, only
inspects the homes of survivors that apply for SBA disaster loans and
might be income and credit eligible for such a loan. The overlap
between the SBA inspections and FEMA inspections is what HUD uses to
calculate a multiplier of expected unmet needs by FEMA damage category,
as described below.
If there are 20 or more non-mobile home SBA inspections that
overlap with FEMA inspections for a specific damage level for an
individual disaster, the median SBA inspected amount is used as HUD's
base.
Using disaster 4611 (Hurricane Ida in Louisiana) as an example:
<bullet> There were 1,763 homes that had both a FEMA inspection
showing the homes had ``major-low'' damage and an SBA inspection. We
establish as a ``base'' the median estimated real estate loss for those
matches. In the case of DR-4611, that is $50,846.
<bullet> Next, we look at the SBA data to see how many of the
uninsured homeowners were approved for an SBA loan and for how much. As
the chart shows, just 5 percent of the uninsured owners with major-low
damage were approved for an SBA real estate disaster loan, at a median
amount of $34,500. We multiply $34,500 times 5 percent to get $1,682,
which we subtract from our base multiplier. In addition, 82 percent of
uninsured major-low damage owners received a FEMA repair grant at a
median amount of $9,630. Thus, an additional $7,915 (82 percent x
$9,630) is subtracted from the multiplier.
<bullet> If the calculated amount falls within the minimum and
maximum range (see below), it is the value used for the multiplier. In
addition, a ``higher'' damage category cannot get a smaller multiplier
than a lower damage category.
[[Page 77859]]
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Major-low damage Major-high damage Severe damage
DR-4611 -----------------------------------------------------------------------------------------------
Calculated Calculated Calculated
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SBA median estimated real estate loss................... $50,846 $50,846 $64,121 $64,121 $82,523 $82,523
SBA median amount approved.............................. $34,500 .............. $48,550 .............. $63,700 ..............
% of unmet damage approved.............................. 5% -$1,682 5% -$2,423 5% -$3,401
FEMA Median Repair Grant................................ $9,630 .............. $17,203 .............. $31,740 ..............
% of unmet damage approved.............................. 82% -$7,915 78% -$13,376 74% -$23,483
ESTIMATED CDBG-DR UNMET MULTIPLIER...................... .............. $41,249 .............. $48,322 .............. $55,639
N =..................................................... 1,763 .............. 948 .............. 382 ..............
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The exception is for mobile homes and other manufactured housing.
We have calculated a separate multiplier that is the same for all
manufactured homes damaged in all disasters of 2020 and 2021.
Multipliers for manufactured homes are below.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Major-low damage Major-high damage Severe Damage
Manufactured housing -----------------------------------------------------------------------------------------------
Estimate Calculation Estimate Calculation Estimate Calculation
--------------------------------------------------------------------------------------------------------------------------------------------------------
SBA median estimated real estate loss................... $60,143 $60,143 $79,621 $79,621 $92,843 $92,843
SBA median amount approved.............................. $52,550 .............. $75,000 .............. $78,100 ..............
% of unmet damage approved.............................. 4% -$2,206 4% -$3,000 7% -$5,111
FEMA Median Repair Grant................................ $11,027 .............. $20,997 .............. $35,319 ..............
% of unmet damage approved.............................. 76% -$8,366 78% -$16,432 57% -$20,137
ESTIMATED CDBG-DR UNMET MULTIPLIER...................... .............. $49,571 .............. $60,189 .............. $67,594
N =..................................................... 889 .............. 345 .............. 468 ..............
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For disasters and damage categories that have fewer than 20 matched
SBA units, there is a ``waterfall'' review. No damage category can get
less than the first quartile estimated amounts for all disasters of
2020 and 2021, nor get more than the third quartile amount for all
disasters of 2020 and 2021. The minimums and maximums are below.
------------------------------------------------------------------------
Minimum Maximum
HUD damage categories multiplier multiplier
------------------------------------------------------------------------
Major-Low............................... $22,971 $57,452
Major-High.............................. 33,714 82,582
Severe.................................. 36,592 134,503
------------------------------------------------------------------------
For cases not meeting the 20-unit match threshold, the median for
all disasters of the same type in 2020 and 2021 is used, subject to the
minimum and maximum multipliers above.
----------------------------------------------------------------------------------------------------------------
Multipliers by disaster type
Disaster type -----------------------------------------------
Major-low Major-high Severe
----------------------------------------------------------------------------------------------------------------
Dam/Levee Break................................................. $33,007 $47,078 $47,078
Earthquake...................................................... 27,141 33,714 134,503
Fire............................................................ 22,971 82,582 134,503
Flood........................................................... 47,074 57,856 64,513
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Multipliers by disaster type
Disaster type -----------------------------------------------
Major-low Major-high Severe
----------------------------------------------------------------------------------------------------------------
Hurricane....................................................... $36,800 $45,952 $45,952
Severe Ice Storm................................................ 33,528 33,714 36,592
Severe Storm(s)................................................. 22,971 37,299 37,299
Tornado......................................................... 52,961 82,582 134,503
----------------------------------------------------------------------------------------------------------------
[[Page 77860]]
Component 4. Methods for Estimating Serious Unmet Economic
Revitalization Needs
Based on SBA disaster loans to businesses using data for 2021
disasters from as of date February 22, 2022, HUD calculated the median
real estate and content loss by the following damage categories for
each state:
<bullet> Minor-Low: real estate + content loss = below $12,000.
<bullet> Minor-High: real estate + content loss = $12,000-$29,999.
<bullet> Major-Low: real estate + content loss = $30,000-$64,999.
<bullet> Major-High: real estate + content loss = $65,000-$149,999.
<bullet> Severe: real estate + content loss = $150,000 and above.
For properties with real estate and content loss of $30,000 or
more, HUD calculates the estimated amount of unmet needs for small
businesses by multiplying the median damage estimates for the
categories above by the number of small businesses denied an SBA loan,
including those denied a loan prior to inspection due to inadequate
credit or income (or a loan application decision had not yet been
made), under the assumption that damage among those denied at pre-
inspection have the same distribution of damage as those denied after
inspection.
Using DR-4611 (Hurricane Ida) as an example:
<bullet> Column (B) below shows that 1,834 businesses applied for
an SBA disaster loan, were inspected, and had combined real estate and
content loss of $30,000 or more (i.e., Major-Low damage or higher).
Column (C) shows the median combined inspected loss estimate for each
category.
<bullet> Of the 1,834 inspected with damage, column D shows 1,031
were denied an SBA disaster loan or did not yet have a decision based
on the best available data at the time of the allocation.
<bullet> However, not all of the businesses applying for a disaster
loan receive an inspection. An inspection will not be initiated if a
business does not meet some basic SBA requirements, such as credit
score. Among all business applicants for a disaster loan in DR-4611,
the count of the denied not-inspected divided by the count of all
denied loans equals 2.14. Thus, assuming the distribution of need of
those not inspected is the same as for those inspected, we estimate the
total number of businesses likely needing assistance is 2.14 (column E)
times the denied inspected loans (column D).
<bullet> The calculated unmet need are the total businesses HUD
estimated were denied by SBA (column F) times the SBA median real
estate and content damage of those inspected (column C).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Weighting to
Number Median real Inspected and capture denied Total businesses Estimated total
HUD damage category inspected estate and denied (or no prior to denied (or no unmet need
content damage decision) inspection decision)
(A) (B) (C) (D) (E) (F = E * D) (G = C * F)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Major-Low......................................... 906 $42,606 496 2.14 1,059 $45,125,639
Major-High........................................ 582 90,697 326 2.14 696 63,136,289
Severe............................................ 346 236,949 209 2.14 446 105,747,953
-----------------------------------------------------------------------------------------------------
Total:........................................ 1,834 .............. 1,031 .............. 2,202 $214,009,881
--------------------------------------------------------------------------------------------------------------------------------------------------------
Component 5. Methods for Estimating Unmet Infrastructure Needs
Unmet infrastructure data depends on the estimating skills of FEMA
Public Assistance staff. FEMA's Public Assistance program has several
categories of assistance. For each of these categories, FEMA staff
develop estimates to support budgeting of Disaster Relief Fund
resources. These estimates are intended to reflect the cost to repair
to pre-disaster conditions. Over time these estimates will change as
FEMA and local governments agree on what is to be covered and not
covered.
<bullet> Category A: Debris removal
<bullet> Category B: Emergency protective measures
<bullet> Category C: Roads and bridges
<bullet> Category D: Water control facilities
<bullet> Category E: Public buildings and contents
<bullet> Category F: Public utilities
<bullet> Category G: Parks, recreational, and other facilities
Categories A and B are the short-term emergency expenses, while
Categories C to G are the long-term permanent work. Because CDBG-DR can
only be used for unmet needs and many needs for short-term emergency
expenses are met before CDBG-DR funds are allocated, the unmet need
calculation only uses Categories C to G.
For each of these categories, the Stafford Act expects that the
impacted communities contribute a local share. For most disasters this
local share is 25 percent of the cost to repair back to pre-disaster
conditions; however, based on a determination by the FEMA Administrator
that a lower cost share is needed, the local cost share might be less.
Whether this adjusted cost share is factored into the CDBG-DR formula
depends on timing of FEMA's decision regarding a particular adjustment
request and the timing of the allocation calculation.
HUD's estimate of infrastructure unmet need is simply the estimated
cost share for Categories C to G using the best available data from
FEMA at the time of the allocation.
To calculate 2021 unmet needs for infrastructure projects, HUD
obtained FEMA cost estimates as of February 10, 2022, of the expected
local cost share to repair the permanent public infrastructure
(Categories C to G) to their pre-storm condition.
Component 6. Allocation Calculation
For the formula allocation, HUD calculates total unmet recovery
needs for eligible disasters as the aggregate of:
<bullet> Serious unmet housing needs or owners and renters in most
impacted counties (including those made eligible through zip code most
impacted status);
<bullet> Serious unmet economic revitalization needs; and
<bullet> Unmet infrastructure need.
Component 7. Mitigation
Since Hurricane Sandy, CDBG-DR allocations have often included a
specific component or separate allocation for mitigation or resilience
activities. This calculation has also evolved over time. For disasters
occurring between 2011 to 2013, mitigation/resilience was funded
through a variety of means--(i) the basic formula estimating additional
mitigation/resilience need was equal to 30 percent of the total
estimated unmet needs; (ii) the Rebuild by Design competition, which
provided additional formula allocations to support winning projects;
and (iii) the National Disaster Resilience competition, which awarded
[[Page 77861]]
funding through a Notice of Funding Opportunity.
After Hurricanes Harvey, Irma, and Maria in 2017, Congress
indicated that HUD should fund mitigation for all disasters of 2015 to
2017 with the funds remaining after allocating for 100 percent of unmet
needs, proportional to the unmet needs. This same approach was used for
2018 disasters, per Congressional direction; 2019 disasters received no
mitigation specific funding.
New for the 2020 and 2021 allocations was to make mitigation
allocations simultaneously to unmet needs allocations at 15 percent of
the unmet need calculation, per Congressional direction.
Component 8. When Appropriations Are Less Than Calculated Unmet Needs
CDBG-DR funds are usually tied to either a set of disasters or a
time period. The amount appropriated can be more or less than what HUD
calculates for unmet needs for areas above the threshold (as defined in
Component 1). When funds are less than the calculated unmet needs, they
are allocated in proportion to the unmet needs across the eligible
disasters, which means the amount of unmet needs HUD funds through
CDBG-DR has varied throughout the last 29 years.
Congress appropriated funds for the 2020 and 2021 disasters in
September 2021 with specific instructions that the allocations for 2020
disasters be made as total unmet needs along with mitigation, within 30
days of appropriation. This direction resulted in a scenario where 100
percent of the 2020 disaster needs plus mitigation were met, but not
enough resources were available to do the same for 2021 disasters. HUD
managed this by allocating the remaining funds proportional to the
combined unmet and mitigation needs for 2021 disasters, which resulted
in each 2021 grantee receiving 60.4 percent of their total calculated
unmet needs and mitigation.
Component 9. Local Allocations
Congress provides the Secretary with authority to decide whether
allocations should be made directly to states, local governments, or
Indian tribes. In 2020, the grants were made only to the states, while
for 2021 grants were made to a combination of states and local
governments. The approach for making the 2021 local allocations took
place after calculating the disaster level allocation amounts at the
state level. HUD calculated the share of serious unmet housing needs
for entitlement areas (i.e., those metropolitan cities and urban
counties that receive regular CDBG grants) and proportionally allocated
among the entitlement areas and the impacted areas in the state outside
of entitlement areas (state balance) proportional to each area's share
of serious unmet housing need in its most impacted areas. If
entitlement areas represent 70 percent or more of the serious unmet
housing need in a state from a particular disaster and the calculated
award amount does not exceed their regular CDBG grant by 20 times or
more, then local allocations were made to qualifying entitlement areas
instead of the state.
Component 10. Minimum Amount To Be Spent in Most Impacted and
Distressed Areas
Congress has called for CDBG-DR funds to be targeted to the most
impacted and distressed areas. As noted above, the housing funds are
allocated based strictly on only those counties ($10 million) or zip
codes ($2 million) with enough homes with serious damage to meet the
minimum dollar thresholds. The business estimates and infrastructure
estimates are for the full disaster area of the state or entitlement
area.
With each formula allocation, HUD specifies the areas that it has
determined to be most impacted and distressed (e.g., counties, zip
codes) for each grantee and requires that a minimum of 80 percent of
the amount allocated benefit the recovery in counties containing these
areas.
Component 11. Data Provided to CDBG-DR Grantees for Developing Action
Plans
Under a current Computer Matching Agreement between HUD and FEMA,
HUD may enter a data sharing agreement with grantees to provide to
grantees the FEMA Individual Assistance data it used to develop the
formula allocations. Note that HUD provides raw FEMA data to CDBG-DR
grantees and not the final data resulting from HUD's allocation
calculations.
HUD does not have a Computer Matching Agreement with SBA, so
grantees must work directly with SBA to obtain its data. HUD does not
currently have the authority to make this data publicly available.
III. Purpose of This Request for Information
Congress has been considering various legislation that would
formally authorize CDBG-DR as a program. In the event Congress
authorizes the program, this Request for Information would inform that
rule development.
If the program is not formally authorized, HUD anticipates that
Congress will likely continue to make supplemental appropriations for
disasters and that they would expect HUD to continue to allocate funds
by formula. This Request for Information could inform improvements to
the allocation formula in the event Congress appropriates funds for
CDBG-DR in the future.
IV. Specific Information Requested
General Questions
Question 1. Given the policy objective of quickly allocating funds
so that state and local officials can speedily develop programs to
address their most serious unmet needs for disaster recovery, are there
other ways HUD might allocate CDBG-DR funds beyond the methodology
described above?
Discussion. HUD has long relied on the data from FEMA and SBA to
make formula calculations. With advances in technology and other public
and private data sources, there may be other approaches HUD could
consider.
Question 2. If Congress appropriates funds in advance of disasters
occurring in a specified time period, should disasters be funded as
soon as practicable after they occur, or should HUD hold back funding
until all disasters in a year are known so each receives an equal share
of the remaining funding relative to their needs?
Discussion. For the 2020 and 2021 disasters, at the direction of
Congress, HUD fully funded the disasters of 2020 and then partially
funded all of the eligible 2021 disasters due to limited funding.
The remaining questions refer back to the current formula
components discussed in Section II of this request for information.
Component 1. Specific Questions. Eligible Disasters for Assistance
Question 3. How should HUD determine the disasters that are
eligible for CDBG-DR assistance and the areas that are most impacted
and distressed from a Presidentially declared major disaster? Is HUD's
approach effective or including rural and Tribal areas that are most
impacted and distressed? Given the complexity of program
implementation, should a grantee not only meet most impacted and
distressed standard but also have an aggregate amount of unmet need
above a minimum grant threshold?
Discussion. We are seeking comments on if the current methodology
is overly targeted or not targeted enough in terms of disasters that
should receive these
[[Page 77862]]
funds. In general, the motivating disasters that Congress appropriates
funding for tend to be very large disasters that communities are
otherwise financially unable to address. The current methodology has
grown more inclusive over time such that many disasters that might be
considered smaller disasters are now receiving funding in addition to
larger disasters. CDBG-DR funds often require a great deal of local
investment in new management and financial capacity for the funds to be
used effectively. HUD experience has been that communities with
relatively small disasters face significant challenges in establishing
new recovery programs.
In addition, HUD's current definition for concentrated housing
damage is a measure of damage to homes occupied by very low-income
renters and uninsured homeowners. For some disasters, this approach is
consistent with lower income areas, while for other disasters like
flooding and earthquake events, this approach targets large numbers of
likely higher income households without insurance for those specific
disasters. As such, the CDBG-DR requirement for serving 70 percent low-
and-moderate income (LMI) households can become difficult for grantees
if they have largely been funded based on serious damage of higher
income homeowners that are eligible for, but did not receive, SBA
disaster loans.
Items of specific interest:
<bullet> Should there be additional thresholds that capture
concentration of damage? Examples of such thresholds might include a
minimum percentage of impacted homeowners or renters in a Census Tract,
a minimum percentage of LMI population impacted by the event, or a
minimum percentage of LMI households residing in the impacted area
prior to the event.
<bullet> Should the damage threshold for ``most impacted'' serious
housing damage be raised so that it excludes ``major-low''?
<bullet> Are serious unmet housing needs for counties at $10
million or zip codes at $2 million the appropriate thresholds for
``most impacted and distressed''? Do disaster thresholds based on
monetary damages disadvantage certain households and might there be a
different way to determine most impacted and distressed areas?
Particularly as it relates to rural and Tribal areas.
<bullet> Should the income of the area(s) impacted be factored into
determining eligibility? For example, HUD could include only data on
damage in low-and-moderate income areas when calculating most impacted
eligibility.
Component 2. Specific Questions. Basic Formula for Unmet Needs
Question 4. Are there are other unmet needs that HUD should be
factoring into the formula calculation beyond housing, economic
revitalization, and infrastructure?
Discussion. Questions under later components speak to the specific
data and approach for calculating housing, economic revitalization, and
infrastructure unmet needs, which relate to the CDBG-DR purposes of
``restoration of infrastructure and housing'' and ``economic
revitalization.'' This question is more basic and could reflect the
other purposes of CDBG-DR grants, including the more general purposes
of ``disaster relief'' and ``long-term recovery''. We note that CDBG-DR
appropriations acts typically dictate how HUD will calculate the
additional allocation amount for the ``mitigation'' purpose, but
respondents may also include comments related to calculating mitigation
allocations. HUD notes that any portion of the CDBG-DR grant can be
used for mitigation/resilience purposes, beyond the amount calculated
as the mitigation plus up. In answering this question, respondents
should indicate what data HUD might consider. Note that the data
generally needs to be consistently available for all areas and
disasters.
Question 5. Should HUD establish a minimum number of days to have
passed after a Presidential Disaster declaration, or some other metric,
before calculating unmet needs?
Discussion. The current formula uses administrative data from FEMA
and SBA that takes time for both agencies to collect as they implement
their programs. Key elements of their data include home inspections and
eligibility determinations. As a rule of thumb, HUD has generally held
off allocations for 60 to 90 days after a disaster before calculating
unmet needs. Is there some other metric HUD should use before making
allocations?
Component 3. Specific Questions. Housing Unmet Needs
Question 6. Should HUD continue to exclude certain homeowners with
incomes above 120 percent of area median income from consideration of
unmet needs?
Discussion. The current formula is built around the idea that
homeowners with higher income should carry hazard insurance in all
cases and flood insurance if in a floodplain.
Question 7. For homeowner occupied units, in addition to uninsured
households, should HUD consider the unmet need of insured applicants
denied SBA loans? Is there another data source or characteristic HUD
should consider to measure the unmet needs of insured applicants?
Discussion. Increasingly we are informed that insurance is
inadequate for recovery and mitigation and limiting the allocation to
just the uninsured homeowners is leaving a large recovery gap in
assistance for lower income households. FEMA Individual Assistance data
are limited in some disasters because inspections are not completed for
insured properties. A potential additional source of data are
households that are denied SBA loans, similar to the approach used for
economic revitalization unmet needs in component 4.
Question 8. For homeowner occupied units, are the FEMA Verified
Loss breaks the correct breaks for assessing disaster severity? Should
these be modified to reflect FEMA program updates?
Question 9. Is there an alternative to personal property damage
that HUD might consider for measuring damage to rental housing? For
renter occupied units, are the FEMA personal property breaks currently
used the right breaks for assessing disaster severity? Should these be
modified to reflect FEMA program changes?
Discussion. HUD uses personal property damage as a proxy for likely
housing unit damage. FEMA benefit calculations have changed over time
and its methodology for both determining amount of FEMA Verified Loss
for homeowners and personal property loss has varied from disaster to
disaster. The thresholds HUD uses were developed over a decade ago.
Question 10. For renter occupied units, is it a reasonable
assumption that damage to housing occupied by renters less than the
greater of poverty or 50 percent of AMI reflects a likely loss of
affordable housing?
Discussion. The data HUD gets for the formula allocation has no
information on insurance coverage for landlords, so HUD has established
a series of proxies for likely loss of affordable housing. CDBG-DR is
generally intended to target households below 70 percent of AMI. The
first proxy is measuring rental damage (discussed above) using personal
property damage as a proxy for unit damage; and the second proxy is the
unit being occupied by a renter less than the greater of poverty or 50
percent of AMI with the assumption that if housing either will not be
replaced, or
[[Page 77863]]
if it is replaced it will no longer be affordable after repair, and
thus there is a need for replacement affordable housing.
Question 11. Is there a simpler approach for calculating the
multipliers used for unmet needs?
Discussion. HUD's matching to SBA data is generally only effective
for very large disasters; most other disasters are subject to the
disaster specific multipliers. HUD could indicate on its website each
year a multiplier schedule by disaster type. A downside to this
approach is that it does not capture local variation in cost that the
current approach does capture for large disasters. The upside is more
transparency and a simpler formula.
Question 12. Are there other options--beyond using the homeowner
multiplier--for how the multiplier for rental units could be calculated
when determining unmet housing needs?
Discussion. HUD currently uses the same multiplier for rental units
as owner-occupied units in the same damage category. The goal for
allocating the funds for owners and renters, however, are very
different. The goal for homeowners is to help them repair their home so
they can return to that home or cover some of the cost for buyouts if
needed. For renters, there is a presumption that damaged very low-
income renter housing either will not be repaired, or, if it is, it
will no longer be as affordable as pre-disaster. As such, the formula
reflects an assumption that the most likely use of funds to support
recovery of rental housing markets is to support creation of housing
affordable for renters with income less than 50 percent of AMI.
Component 4. Specific Questions. Methods for Estimating Serious Unmet
Economic Revitalization Needs
Question 13. Are there other factors and/or data sources HUD might
consider beyond SBA business loan denials when determining unmet
economic revitalization needs?
Discussion. Examples for consideration include taking into account
a community's pre-disaster economic distress or the nature of the
disaster (e.g., existing economic distress can lead to significant
displacement during a disaster that may delay economic recovery) or
data from other federal agencies such as the Economic Development
Administration at the Department of Commerce.
Question 14. Should HUD establish a higher or lower standard for
inclusion of businesses with serious unmet need?
Discussion. HUD has not changed the damage thresholds in over a
decade.
Question 15. How can HUD better target the calculation of unmet
economic revitalization needs for lower income households and other
vulnerable populations in the most impacted and distressed areas?
Discussion. The current method is targeting funds to businesses not
meeting income or credit requirements of SBA. It does not take into
account the location of the business, such as if it is located in a
low-mod area.
Component 5. Specific Questions. Methods for Estimating Unmet
Infrastructure Needs
Question 16. Are there other data or factors HUD might consider for
measuring unmet infrastructure needs?
Should HUD establish a minimum amount of time (e.g. not less than
60 days) after a disaster to calculate CDBG-DR allocations so they are
based on consistent, accurate FEMA PA damage estimates?
Discussion. HUD may be unaware of other sources of data on public
infrastructure needs besides FEMA Public Assistance. Further, the
current approach tends to provide more for places that had more
infrastructure pre-disaster, which may disadvantage communities with
inadequate infrastructure pre-disaster due to the low incomes or
historical disinvestment in the community pre-disaster.
Question 17. How can HUD better target the calculation of unmet
infrastructure needs for lower income households and other vulnerable
populations in the most impacted and distressed areas? Should HUD pro-
rate the estimate of infrastructure needs based on the fraction of
damaged homes with unmet needs located in LMI areas?
Discussion. The current methodology for determining infrastructure
need does not factor in the income or other demographics of the
impacted area. CDBG-DR must be predominantly used for activities that
benefit low- and moderate-income persons. For infrastructure
investments to satisfy the low-mod area benefit national objective
criteria, usually the investment needs to be in a primarily residential
area where at least 51 percent of the residents are low- and moderate-
income persons. Some grantees in the past have had difficulty meeting
the low-mod benefit requirements for their infrastructure funds.
Component 6. Specific Questions. Allocation Calculation
Question 18. How can CDBG-DR allocation methodology be modified to
allocate resources equitably and adequately address disaster-related
needs, including the needs of the most impacted, vulnerable
populations, and underserved communities?
Component 7. Specific Questions. Mitigation
Question 19. How should HUD factor mitigation into the CDBG-DR
formula? Should the mitigation multiplier be different by type of
disaster?
Discussion. Congress has tried several different methods; feedback
on grantee and subgrantee experiences with HUD's different ways of
implementing those methods would be beneficial. The cost to mitigate
against future risk needed in a fire zone is very different than
mitigation needed in flood zone. Using a single multiplier such as 15
percent does not take this into consideration.
Question 20. Should there be a separate calculation of mitigation
needs that is independent of the unmet need calculation? If so, what
should that calculation be?
Discussion. Depending on the disaster, mitigation and potential
resilience costs may be significantly more or less than a simple
proportional allocation relative to unmet needs.
Component 8. Specific Questions. Amount of Funding
Question 21. If resources are limited, should a certain type or
types of unmet need be prioritized over others in determining an
allocation? For example, housing only.
Discussion. The current policy of insufficient funding is to
allocate proportional to the unmet needs of eligible grantees or to
fully fund disasters as they occur until funding runs out leaving later
disasters with no funding. This question seeks comments on how to
allocate funding when less is appropriated than calculated unmet needs.
Component 9. Specific Questions. Allocations to Local Governments and
Indian Tribes
Question 22. What criteria should HUD use when determining if an
allocation should be made directly to local governments and Indian
tribes (as that term is defined under section 102(a) of the Housing and
Community Development Act of 1974) versus the full allocation to a
state government? Should HUD take into account grantee capacity when
deciding on either providing a direct grant and/or amount of the grant?
Discussion. The research on this topic is inconclusive \1\. Local
and tribal
[[Page 77864]]
government leaders often petition HUD for direct allocations while
state leaders argue there is greater efficiency, management capacity,
and more program consistency when it is a single allocation to the
state.
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\1\ Martin, Carlos, et al. ``Housing Recovery and CDBG-DR: A
Review of the Timing and Factors Associated with Housing Activities
in HUD's Community Development Block Grant for Disaster Recovery
Program.'' HUD User. April 2019. <a href="https://www.huduser.gov/portal/publications/HousingRecovery-CDBG-DR.html">https://www.huduser.gov/portal/publications/HousingRecovery-CDBG-DR.html</a>.
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Question 23. Are there revisions to HUD's allocation methodology
that should be considered to capture tribal recovery needs more
effectively? Please see the RFI requesting information on the CDBG-DR
program published elsewhere in today's Federal Register.
Component 10. Specific Questions. Minimum Amount To Be Spent in Most
Impacted Areas
Question 24. Currently at least, 80 percent of CDBG-DR funds must
be spent to benefit the most impacted and distressed area designated by
HUD, and up to 20 percent may be spent in area designed by the grantee
as most impacted and distressed areas; is this the right amount?
Discussion. The 80 percent standard was based on analysis of how
funds were allocated for allocations to 2011 disasters prior to
Hurricane Sandy funding. The standard has not changed since that time.
Note that 100 percent of CDBG-DR grants must be expended in a most
impacted and distressed area, with a minimum of 80 percent in HUD
defined most impacted areas and up to 20 percent in areas identified by
grantees. Please see the RFI requesting information on the CDBG-DR
program published elsewhere in today's Federal Register that solicits
public comment on this topic.
Component 11. Specific Questions. Data Provided to CDBG-DR Grantees for
Developing Action Plans
Question 25. In addition to the raw data provided by FEMA to HUD
for the formula calculation, should HUD provide to CDBG-DR grantees and
the public a set of pre-scripted tables and maps to assist with
development of Action Plans? What other information would be helpful
for developing Action Plans?
Discussion. A significant amount of analysis goes into developing
the formula allocations. HUD could prepare some basic tables and maps
to inform the public and grantees on who was impacted, where they were
impacted, and what the nature of the damage is.
V. Response Guidance
For comments submitted by mail responses should not exceed 50
pages. Please provide the following information at the start of your
response to this RFI: Company/institution name (if applicable); contact
information, including address, phone number, and email address. Do not
submit Confidential Business Information (CBI) in your response to this
RFI. Responses identified as containing CBI will not be reviewed and
will be discarded.
Please identify each answer by responding to a specific question or
topic if applicable. You may answer as many or as few questions as you
wish. To help you prepare your comments, please see the How Do I
Prepare Effective Comments segment of the Commenting on HUD Rules web
page, <a href="https://www.hud.gov/program_offices/general_counsel/Commenting-On-HUD-Rules#1">https://www.hud.gov/program_offices/general_counsel/Commenting-On-HUD-Rules#1</a>. While that web page is written for commenting on
regulatory proposals, these tips are generally applicable to this RFI.
Solomon J. Greene,
Principal Deputy Assistant Secretary for Policy Development and
Research.
[FR Doc. 2022-27548 Filed 12-19-22; 8:45 am]
BILLING CODE P
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</html>Indexed from Federal Register on December 20, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.