Notice2023-25875
Allocations for Community Development Block Grant Disaster Recovery and Implementation of the CDBG-DR Consolidated Waivers and Alternative Requirements Notice
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
November 27, 2023
Issuing agencies
Housing and Urban Development Department
Abstract
This Allocation Announcement Notice allocates $142 million of CDBG-DR funds appropriated by the Disaster Relief Supplemental Appropriations Act, 2023 for major disasters occurring in 2022 and 2023. This notice identifies grant requirements for these funds, including requirements in HUD's CDBG-DR Consolidated Notice ("Consolidated Notice") found in appendix B, and a limited number of amendments to the Consolidated Notice that apply to CDBG-DR grants for disasters occurring in 2022 and January 2023. 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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<title>Federal Register, Volume 88 Issue 226 (Monday, November 27, 2023)</title>
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[Federal Register Volume 88, Number 226 (Monday, November 27, 2023)]
[Notices]
[Pages 82982-83017]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25875]
[[Page 82981]]
Vol. 88
Monday,
No. 226
November 27, 2023
Part III
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. 88 , No. 226 / Monday, November 27, 2023 /
Notices
[[Page 82982]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6428-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, U.S. Department of Housing and Urban Development (HUD).
ACTION: Notice.
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SUMMARY: This Allocation Announcement Notice allocates $142 million of
CDBG-DR funds appropriated by the Disaster Relief Supplemental
Appropriations Act, 2023 for major disasters occurring in 2022 and
2023. This notice identifies grant requirements for these funds,
including requirements in HUD's CDBG-DR Consolidated Notice
(``Consolidated Notice'') found in appendix B, and a limited number of
amendments to the Consolidated Notice that apply to CDBG-DR grants for
disasters occurring in 2022 and January 2023. 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: December 4, 2023.
FOR FURTHER INFORMATION CONTACT: Tennille Smith Parker, Director,
Office of Disaster Recovery, Department of Housing and Urban
Development, 451 7th Street SW, Room 7282, Washington, DC 20410,
telephone number 202-708-3587 (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>. Facsimile inquiries may be sent
to Ms. Parker at 202-708-0033 (this is not a toll-free number). Email
inquiries may be sent to <a href="/cdn-cgi/l/email-protection#43272a3022303726311c3126202c3526313a032b36276d242c35"><span class="__cf_email__" data-cfemail="bcd8d5cfddcfc8d9cee3ced9dfd3cad9cec5fcd4c9d892dbd3ca">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Allocations
II. Use of Funds
A. Allocations of CDBG-DR Funds for Smaller Grants
III. Overview of Grant Process
A. Requirements Related to Administrative Funds
IV. Applicable Rules, Statutes, Waivers, and Alternative
Requirements
A. Grant Administration
B. Clarifications to the Consolidated Notice
V. Duration of Funding
VI. Assistance Listing Numbers (Formerly Known as the CFDA Number)
VII. Finding of No Significant Impact
Appendix A: Allocation Methodology
Appendix B: CDBG-DR Consolidated Notice
I. Allocations
The Disaster Relief Supplemental Appropriations Act, 2023 (Pub. L.
117-328, Division N, Title X) approved December 29, 2022, makes
available $3,000,000,000 in 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 that occurred in 2022 or later until such
funds are fully allocated. The Federal Register notice published on May
18, 2023 (88 FR 32046) announced $2,837,849,000 from Public Law 117-328
to address recovery needs and mitigation activities for major disasters
that occurred in 2022. Based on the unmet needs allocation methodology
outlined in appendix A, this notice announces the remaining allocations
of $142,151,000 from Public Law 117-328 (the ``Appropriations Act'')
for disasters occurring in 2022 and January 2023. 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).
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 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. All of the grantees within this notice must
use at least 80 percent of their allocations to address unmet disaster
needs or mitigation activities in the HUD-identified MID areas, as
identified in the last column of table 2. These grantees may use the
remaining 20 percent of their allocation to address unmet disaster
needs or mitigation activities in those areas that the grantee
determines are ``most impacted and distressed'' within an area that
received a Presidential major disaster declaration identified by the
Federal Emergency Management Agency (FEMA) disaster numbers listed in
column two of table 1. However, these grantees are not precluded from
spending 100 percent of their allocation in the HUD-identified MID
areas if they choose to do so. Detailed requirements related to MID
areas are provided in section II.A.3. of the Consolidated Notice.
Based on a review of the impacts from the eligible disasters, and
estimates of unmet need, HUD made the following allocations for
disasters occurring in 2022 and January 2023:
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\1\ Total Unmet Needs for DR 4652 were calculated at $16,961,434
before adjusting for the special Congressional appropriations for
the Hermits Creek/Calf Canyon Fire (the ``Hermit's Peak/Calf Canyon
Fire Assistance Act,'' Public Law 117-180, 136 Stat. 2114 (2022)).
As such, HUD has calculated the mitigation for this disaster as 15
percent of those total unmet needs. The allocation for unmet needs
is reduced to $1,587,000 to reflect that the special appropriation
is anticipated to address many of the calculated unmet needs.
Table 1--Allocations for Unmet Needs and Mitigation Activities Under Public Law 117-328 for Disasters Occurring in 2022 and 2023
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Total
Allocation for CDBG-DR allocated
FEMA unmet needs mitigation set- under this
Year disaster State Grantee from Public aside amounts notice from
No. Law 117-328 from Public Public Law 117-
Law 117-328 328
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2022.................................. 4652 New Mexico............... State of New Mexico..... \1\ $1,587,000 $2,544,000 $4,131,000
2023.................................. 4684 Alabama.................. State of Alabama........ 9,046,000 1,357,000 10,403,000
2023.................................. 4683 California............... State of California..... 100,019,000 15,003,000 115,022,000
2023.................................. 4685 Georgia.................. State of Georgia........ 10,952,000 1,643,000 12,595,000
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Totals............................ ........... ......................... ........................ 120,017,000 18,003,000 142,151,000
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Table 2--Most Impacted and Distressed Areas for Disasters Occurring in 2022 and 2023
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Minimum amount from Public
Law 117-328 that must be
expended in the HUD- ``Most impacted and distressed''
Grantee identified ``most impacted areas
and distressed'' areas in
column 3
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State of New Mexico.......................... $3,304,800 87742 and 87745 (San Miguel County).
State of Alabama............................. 8,322,400 36703 (Dallas County).
State of California.......................... 92,017,600 Merced, Santa Cruz, San Luis Obispo
Counties; 95220 (San Joaquin
County), 93001 (Ventura County).
State of Georgia............................. 10,076,000 30223 (Spalding County).
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II. Use of Funds
This Allocation Announcement Notice outlines requirements that
apply to grantees receiving funds under this notice. Funds for
disasters occurring in 2022 and 2023 announced in this notice are
subject to the requirements of this Allocation Announcement Notice and
the Consolidated Notice, included as appendix B, as amended. HUD makes
amendments to the Consolidated Notice in this Allocation Announcement
Notice to reflect the terms of the Appropriations Act. However, the
Consolidated Notice in appendix B is the same Consolidated Notice
included as appendix B in previous Allocation Announcements Notices
published in the Federal Register (87 FR 6364, 87 FR 31636, 88 FR 3198,
and 88 FR 32046). Sections III.A.1, III.A.1.a, and III.A.1.b of this
Allocation Announcement Notice include instructions for a grantee
submitting an early action plan for program administrative costs and
will replace the alternative requirement in the Consolidated Notice at
III.C.1 for purposes of accessing funds for program administrative
costs prior to the Secretary's certification.
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 FEMA or the U.S. USACE 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.
II.A. Allocations of CDBG-DR Funds for Smaller Grants
Paragraph III.C.1.b of the Consolidated Notice requires that CDBG-
DR action plans ``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.'' Additionally,
paragraph III.C.1.g of the Consolidated Notice requires grantees to
``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.''
HUD recognizes that grantees receiving a relatively small
allocation of funds for 2022 and 2023 disasters in this notice may most
effectively advance recovery by more narrowly targeting these limited
recovery and mitigation resources. Accordingly, for grantees receiving
an allocation of less than $20 million for 2022 and 2023 disaster(s)
announced in this notice, HUD will consider the small size of the grant
and HUD's allocation methodology as acceptable justification for a
grantee to propose a disproportional allocation when the grantee is
allocating funds to address unmet affordable rental housing needs
caused by or exacerbated by the disaster(s). Grantees exercising this
option must continue to comply with the applicable requirements of this
notice and the Consolidated Notice, including the CDBG-DR mitigation
set-aside requirement in section IV.A.2 of this notice.
III. Overview of Grant Process
III.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 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 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
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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), and (m)), sections 106(d)(2)(C) and (D) of the HCDA (42 U.S.C.
5306(d)(2)(C) and (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(a)-(c) and (d)(1) of the HCDA
(42 U.S.C. 5304), section 106(c)(1) and (d) of the HCDA (42 U.S.C.
5306), section 210 of the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4630),
section 305 of the URA (42 U.S.C. 4655), and regulations at 24 CFR
91.225(a)(2), (6), and (7), 91.225(b)(7), 91.325(a)(2), (6), and (7),
49 CFR 24.4(a), and 24 CFR 42.325 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 has previously provided additional guidance (``Fact
Sheet'') with screenshots and step-by-step instructions describing the
submittal process for this DRGR action plan for program administrative
costs.\2\ 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.
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\2\ The Fact Sheet describing the process to submit an action
plan for program administrative costs in DRGR can be viewed at
<a href="https://files.hudexchange.info/resources/documents/DRGR-Fact-Sheet-PL117-43-Appropriation-Grantees.pdf">https://files.hudexchange.info/resources/documents/DRGR-Fact-Sheet-PL117-43-Appropriation-Grantees.pdf</a>.
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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 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 authorize special treatment of grant administrative
funds. Grantees that are receiving awards under this notice, and that
have received CDBG-DR or Community Development Block Grant mitigation
(CDBG-MIT) grants in the past or in any
[[Page 82985]]
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 this act 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 each 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. The 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.
IV.A. Grant Administration
IV.A.1. Duplication of Benefits (DOB). Grantees that received funds
for disasters occurring in 2022 and 2023 must follow the requirements
located in section IV.A. of the Consolidated Notice and the DOB
requirements described in this section. The Federal Register notice
published on June 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''), revised the DOB requirements that apply to CDBG-DR grants
for disasters declared between January 1, 2016, and December 31, 2021.
For these disasters, the 2019 DOB Notice also implemented temporary
changes to the treatment of loans made by the Disaster Recovery Reform
Act of 2018 (DRRA) (division D of Pub. L. 115-254), which sunsets on
October 5, 2023.
This DRRA loan exception does not apply to disasters occurring in
2022 and 2023, therefore, subsidized loans may be a duplication of
benefits for CDBG-DR grants announced in this notice (depending on a
grantee's DOB analysis). Without the DRRA loan exception, most
subsidized loans duplicate CDBG-DR funds for the same purpose (there
are limited exceptions for declined, cancelled, or subsidized short-
term loans to pay for eligible costs before CDBG-DR funds became
available, as described in section IV.A.1. of the Consolidated Notice).
Therefore, HUD's time-limited policy in the 2019 DOB Notice to permit
reimbursement of costs paid with the proceeds of subsidized loans does
not apply after the DRRA loan exception sunsets. Additionally, because
the DRRA loan exception never applied to disasters occurring in 2022 or
later, grantees receiving CDBG-DR funds for those disasters are not
able to reimburse the costs paid by subsidized loans, including SBA
loans, unless the exceptions in section IV.A.1.a. of the Consolidated
Notice applies. These grantees must follow the duplication of benefits
requirements described below and in section IV.A. of the Consolidated
Notice.
This section of the notice describes the applicable laws and
requirements related to DOB, including the general framework to
calculate DOB. Section IV.A. of the Consolidated Notice describes the
exceptions for when a subsidized loan that is cancelled or declined is
not considered a duplication of benefits.
IV.A.1.(a). The Stafford Act. The Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C. 5121-5207) (Stafford
Act) is the primary legal authority establishing the framework for the
Federal government to provide disaster and emergency assistance.
Section 312 of the Stafford Act directs Federal agencies that
provide disaster assistance to assure that people, businesses, or other
entities do not receive financial assistance that duplicates any part
of their disaster loss covered by insurance or another source (42
U.S.C. 5155(a)). Section 312 also makes recipients of Federal disaster
assistance liable for repayment of the amount of Federal disaster
assistance that duplicates benefits available for the same purpose from
another source (42 U.S.C. 5155(c)).
The Stafford Act also provides that when assistance covers only a
part of the recipient's disaster needs, additional assistance to cover
needs not met by other sources will not cause a DOB (42 U.S.C.
5155(b)(3)). CDBG-DR assistance may only pay for eligible activities to
address unmet needs. This section advises grantees on the calculation
of unmet needs through a duplication of benefits analysis.
IV.A.1.(b). CDBG-DR Appropriations Act and Federal Register
Notices. CDBG-DR funds are made available for ``necessary expenses'' by
the Appropriations Act that contain statutory requirements on the use
of the grant funds. Grantees are subject to the requirements of the
Appropriations Act, this notice, and the Consolidated Notice.
Since 2013, as a condition of making any CDBG-DR grant, the
Secretary must certify that the grantee has established adequate
procedures to prevent DOB. To meet this requirement, grantees must
submit DOB policies to HUD for review before HUD will award non-
administrative funds. ``Adequate'' procedures are those that meet the
requirements that HUD established in this notice, in the Consolidated
Notice, and as reflected in the related checklists that are available
online. HUD requires grantees to establish DOB policies that
incorporate certain steps before committing or awarding assistance.
Typically, the steps include determining
[[Page 82986]]
the total need for assistance, verifying the total assistance available
from all sources of disaster assistance (using recent data available
from FEMA, SBA, and other sources), excluding non-duplicative
assistance from total assistance to calculate DOB, reducing the total
award by the amount of the DOB, and obtaining an agreement from
applicants to repay duplicative assistance.
This notice and the Consolidated Notice also require CDBG-DR
grantees to consider projected sources of disaster assistance in the
needs assessment that is part of an action plan for disaster recovery.
Consideration of other potential sources of assistance when planning
for the use of grant funds helps to limit the possibility of
duplication between CDBG-DR and other assistance.
IV.A.1.(c). Necessary and Reasonable Requirements. The Uniform
Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards in subpart E of 2 CFR part 200 (the Cost Principles)
applicable to all CDBG-DR grantees and their subrecipients require that
costs are necessary and reasonable. The Cost Principles are made
applicable to states by 24 CFR 570.489(p) and to local governments
through 24 CFR 570.502. State grantees are also subject to 24 CFR
570.489(d), which requires that states shall have fiscal and
administrative requirements to ensure that grant funds are used ``for
reasonable and necessary costs of operating programs.''
Under the Cost Principles, a cost assigned to a grant ``is
reasonable if, in its nature and amount, it does not exceed that which
would be incurred by a prudent person under the circumstances
prevailing at the time the decision was made to incur the cost'' (2 CFR
200.404).
Grantees must consider factors described at 2 CFR 200.404(a)
through (e) when determining which types and amounts of cost items are
necessary and reasonable. Based on these factors, HUD generally
presumes that if a cost has been paid by another source, charging it to
the Federal award violates the necessary and reasonable standard unless
grant requirements permit reimbursement.
IV.A.1.(d). Basic Duplication of Benefits Calculation Framework.
The Stafford Act requires a fact specific inquiry into assistance
received by each applicant. This notice refers to the subject of a DOB
review as an ``applicant'' or ``CDBG-DR applicant'' and uses the term
``applicant'' to include individuals, businesses, households, or other
entities that apply to the grantee or a subrecipient for CDBG-DR
assistance, as well as entities that use CDBG-DR assistance for an
activity without submitting an application (e.g., the department or
agency of the grantee administering the grant, other state or local
departments or agencies, or local governments).
A grantee is prohibited from making a blanket determination that
CDBG-DR assistance under one of its programs or activities does not
duplicate another category or source of assistance. The grantee must
conduct an individualized review of each applicant to determine that
the amount of assistance will not cause a DOB by exceeding the unmet
needs of that applicant. A review specific to each applicant is
necessary because assistance available to each applicant varies widely
based on individual insurance coverage, eligibility for various sources
of assistance, and other factors.
This section establishes the primary considerations that must be
part of a DOB analysis when providing CDBG-DR assistance, and a
framework for analyzing need and avoiding DOB when calculating awards.
CDBG-DR grantees have discretion to develop policies and procedures
that tailor their DOB analyses to their own programs and activities so
long as the grantee's policies and procedures are consistent with the
requirements of this notice. If the grantee modifies its DOB procedures
after the Secretary certifies that the grantee's DOB procedures are
adequate, the grantee's modified procedures must meet standards HUD
adopts to determine adequacy.
IV.A.1.(d)(i). Assess Applicant Need. A grantee must determine an
applicant's total need. Total need is calculated based on need
estimates at a point in time; total need is the current need. However,
if the grantee's action plan permits CDBG-DR assistance to reimburse
costs of CDBG-DR eligible activities undertaken by the applicant before
submitting an application the total need also includes these costs.
Generally, total need is calculated without regard to the grantee's
program-specific caps on the amount of assistance.
For rehabilitation, reconstruction, or new construction activities,
the need can be reasonably documented using construction cost
estimates.
For recovery programs of the grantee that do not entail physical
rebuilding, such as special economic development activities to provide
an affected business with working capital, the total need will be
determined by the requirements or parameters of the program or
activity. For special economic development activities, total need
should be guided by standard underwriting guidelines (when required by
section II.D.6. of the Consolidated Notice, CDBG-DR grantees and
subrecipients must comply with the underwriting guidelines in appendix
A to 24 CFR part 570 when assisting a for-profit entity as part of a
special economic development project).
The grantee's assessment of total need must consider in-kind
donations of materials or services that are known to the grantee at the
time it calculates need and makes the award. In-kind donations are non-
cash contributions, such as donations of professional services, use of
construction equipment, or contributions of building materials. In-kind
donations are not ``financial assistance'' that creates a DOB under the
Stafford Act, but they do reduce the amount of CDBG-DR assistance for
unmet need because the donated goods or services reduce activity costs.
IV.A.1.(d)(ii). Identify Total Assistance. To calculate DOB,
grantees are required to identify ``total assistance.'' For this
notice, total assistance includes all reasonably identifiable financial
assistance available to an applicant.
Total assistance includes resources such as cash awards, insurance
proceeds, grants, and loans received by or available to each CDBG-DR
applicant, including awards under local, state, or Federal programs,
and from private or nonprofit charity organizations. At a minimum, the
grantee's efforts to identify total assistance must include a review to
determine whether the applicant received FEMA, SBA, insurance, and any
other major forms of assistance (e.g., state disaster assistance
programs) generally available to applicants.
Total assistance does not include personal assets such as money in
a checking or savings account (excluding insurance proceeds or disaster
assistance deposited into the applicant's account); retirement
accounts; credit cards and lines of credit; in-kind donations (although
these non-cash contributions known to the grantee reduce total need);
and private loans.
For this notice, a private loan is a loan that is not provided by
or guaranteed by a governmental entity, and that requires the CDBG-DR
applicant (the borrower) to repay the full amount of the loan
(principal and interest) under typical commercial lending terms, e.g.,
the loan is not forgivable. For DOB calculations, private loans are not
financial assistance and need not be considered in the DOB calculation,
regardless of whether the borrower is a person or entity.
By contrast, subsidized loans for the same purpose are to be
included in the
[[Page 82987]]
DOB calculation unless an exception applies (see sections IV.A.1.a. or
IV.A.1.b. of the Consolidated Notice).
Total assistance includes available assistance. Assistance is
available if an applicant: (1) would have received it by acting in a
reasonable manner, or in other words, by taking the same practical
steps toward funding recovery as would disaster survivors faced with
the same situation but not eligible to receive CDBG-DR assistance; or
(2) has received the assistance and has legal control over it.
Available assistance includes reasonably anticipated assistance that
has been awarded and accepted but has not yet been received. For
example, if a local government seeks CDBG-DR assistance to fund part of
a project that also has been awarded FEMA Hazard Mitigation Grant
Program (HMGP) assistance, the entire HMGP award must be included in
the calculation of total assistance even if FEMA obligates the first
award increment for the project, but subsequent increments remain
unfunded until certain project milestones are met.
Applicants for CDBG-DR assistance are expected to seek insurance or
other assistance to which they are legally entitled under existing
policies and contracts, and to behave reasonably when negotiating
payments to which they may be entitled. For example, it may be
reasonable for an applicant to elect to receive an immediate lump sum
insurance settlement based on estimated cost of rehabilitation instead
of waiting for a longer period of time for the insurance company to
calculate reimbursement based on actual replacement costs, even if the
reimbursement based on actual costs would exceed the lump sum insurance
settlement.
HUD generally considers assistance to be available if it is awarded
to the applicant but is administered by another party instead of being
directly deposited with the applicant. For example, if an entity
administering homeowner rehabilitation assistance pays a contractor
directly to complete the rehabilitation, the assistance is still
considered available to the applicant.
By contrast, funds that are not available to an applicant must be
excluded from the final CDBG-DR award calculation. For example,
insurance or rehabilitation assistance received by a previous owner of
a disaster damaged housing unit is not available to a current owner
that acquired the unit by sale or transfer (including a current owner
that inherited the unit as a result of the death of the previous owner)
unless the current owner is a co-recipient of that assistance.
Funds are not available to an applicant if the applicant does not
have legal control of the funds when they are received. For example, if
a homeowner's mortgage requires insurance proceeds to be applied to
reduce the unpaid mortgage principal, then the lender/mortgage holder
(not the homeowner) has legal control over those funds. The homeowner
is legally obligated to use insurance proceeds for the purpose of
reducing the unpaid mortgage principal and does not have a choice in
using them for any other purpose, such as to rehabilitate the house.
Under these circumstances, insurance proceeds do not reduce CDBG-DR
rehabilitation assistance eligibility.
Alternatively, if a lender requires use of insurance for
rehabilitation, or a disaster-affected homeowner chooses to apply
insurance proceeds received for damage to the building to reduce an
unpaid mortgage principal, these insurance proceeds are treated as a
DOB and reduce the amount of CDBG-DR funds the grantee may provide for
rehabilitation.
IV.A.1.(d)(iii). Exclude Non-Duplicative Amounts. Once a grantee
has determined the total need and the total assistance, it determines
which sources it must exclude as non-duplicative for the DOB
calculation. Grantees must exclude amounts that are: (1) provided for a
different purpose; or (2) provided for the same purpose (eligible
activity), but for a different, allowable use (cost). Below, each of
these categories is explained in greater detail.
IV.A.1.(d)(iii)(1). Funds for a Different Purpose. Any assistance
provided for a different purpose than the CDBG-DR eligible activity, or
a general, non-specific purpose (e.g., ``disaster relief/recovery'')
and not used for the same purpose must be excluded from total
assistance when calculating the amount of the DOB.
Insurance proceeds for damage or destruction of a building are for
the same purpose as CDBG-DR assistance to rehabilitate or reconstruct
that building. On the other hand, grantees may exclude, as non-
duplicative, insurance provided for a different purpose (e.g.,
insurance proceeds for loss of contents and personal property, or
insurance proceeds for loss of buildings (such as a detached garage)
that the grantee has determined it will not assist with CDBG-DR funds).
However, a grantee may treat all insurance proceeds as duplicative if
it is impractical to identify the portion of insurance proceeds that
are non-duplicative because they are for a different purpose than the
CDBG-DR assistance.
Similarly, CDBG-DR assistance paid to a homeowner as a housing
incentive for the purpose of inducing the homeowner to sell the home to
the grantee (e.g., in conjunction with a buyout) are for a different
purpose than funds provided for interim housing (e.g., temporary
assistance for rental housing during a period when a household is
unable to reside in its home). In such a case, interim housing
assistance may be excluded from the final DOB calculation as non-
duplicative of funds paid for the housing incentive.
IV.A.1.(d)(iii)(2). Funds for Same Purpose, Different Allowable
Use. Assistance provided for the same purpose as the CDBG-DR purpose
(the CDBG-DR eligible activity) must be excluded when calculating the
amount of the DOB if the applicant can document that actual specific
use of the assistance was an allowable use of that assistance and was
different than the use (cost) of the CDBG-DR assistance (e.g., the
purpose is housing rehabilitation, the use of the other assistance was
roof replacement and the use of the CDBG-DR assistance is
rehabilitation of the interior of the house). Grantees are advised to
consult with HUD to determine what documentation is appropriate in this
circumstance. As a starting point, grantees should consider whether the
source of the assistance requires beneficiaries to maintain
documentation of how the assistance was used.
Whether the use of the non-CDBG-DR assistance is an allowable use
depends on the rules imposed by the source that provided the
assistance. For example, assume that a CDBG-DR grantee is administering
a homeowner rehabilitation program and an applicant to the program can
document that he/she previously received and used FEMA funds for
interim housing costs (i.e., rent). If FEMA permitted the applicant to
use its assistance for the general purpose of meeting any housing need,
the CDBG-DR grantee can exclude the FEMA assistance used for interim
housing as non-duplicative of the CDBG-DR assistance for
rehabilitation.
If, on the other hand, FEMA limited the use of FEMA funds to
housing rehabilitation, then the full amount of the FEMA assistance
must be considered for the specific purpose of housing rehabilitation
and cannot be excluded if the applicant used those funds for interim
housing. If interim housing is not an allowable use, the amount of the
FEMA housing rehabilitation assistance used for interim housing is
considered a DOB. If
[[Page 82988]]
the grantee thinks the actual use of the FEMA assistance may be
allowable, the CDBG-DR grantee should contact FEMA for clarification.
Assistance provided for the purpose of housing rehabilitation,
including assistance provided for temporary or minor rehabilitation, is
for the same purpose as CDBG-DR rehabilitation assistance. However, the
grantee can exclude assistance used for different costs of the
rehabilitation, which are a different allowable use (rehabilitation
costs not assisted with CDBG-DR). For example, if the other assistance
is used for minor or temporary rehabilitation which enabled the
applicant family to live in their home instead of moving to temporary
housing until rehabilitation can be completed, the grantee can
undertake remaining work necessary to complete rehabilitation. The
grantee's assessment of total need at the time of application may
include the costs of replacing temporary materials with permanent
construction and of completing mold remediation by removing drywall
installed with other assistance. These types of costs to modify
partially completed rehabilitation that the grantee determines are
necessary to comply with the requirements of CDBG-DR assistance do not
duplicate other assistance used for the partial rehabilitation.
Grantees are encouraged to contact HUD for further guidance in
cases when it is unclear whether non-CDBG-DR assistance for the same
general purpose can be excluded from the DOB calculation because it was
used for a different allowable use.
IV.A.1.(d)(iv). Identify DOB Amount and Calculate the Total CDBG-DR
Award. The total DOB is calculated by subtracting non-duplicative
exclusions from total assistance. Therefore, to calculate the total
maximum amount of the CDBG-DR award, the grantee must: (1) identify
total need; (2) identify total assistance; (3) subtract exclusions from
total assistance to determine the amount of the DOB; and (4) subtract
the amount of the DOB from the amount of the total need to determine
the maximum amount of the CDBG-DR award.
Three considerations may change the maximum amount of the CDBG-DR
award.
First, the grantee may impose a program cap that limits the amount
of assistance an applicant is eligible to receive, which may reduce the
potential CDBG-DR assistance available to the applicant.
Second, the grantee may increase the amount of an award if the
applicant agrees to repay duplicative assistance it receives in the
future (unless prohibited by a statutory order of assistance, as in the
requirement to use FEMA or USACE assistance before CDBG-DR assistance
discussed in sections II. and. IV.A.1.(f)). Section 312(b) of the
Stafford Act permits a grantee to provide CDBG-DR assistance to an
applicant who is or may be entitled to receive assistance that would be
duplicative if: (1) the applicant has not received the other assistance
at the time the CDBG-DR grantee makes its award; and (2) the applicant
agrees to repay the CDBG-DR grantee for any duplicative assistance once
it is received. The agreement to repay from future funds may enable a
faster recovery in cases when other sources of assistance are delayed
(e.g., due to insurance litigation). HUD requires all grantees to enter
into agreements with applicants before the applicant receives CDBG-DR
assistance.
Third, the applicant's CDBG-DR award may increase if a reassessment
shows that the applicant has additional unmet need.
IV.A.1.(d)(v). Reassess Unmet Need When Necessary. Although long-
term recovery is a process, disaster recovery needs are calculated at
points in time. As a result, a subsequent change in an applicant's
circumstances can affect that applicant's remaining unmet need, meaning
the need that was not met by CDBG-DR and other sources of assistance.
Oftentimes, unmet need does not become apparent until after CDBG-DR
assistance has been provided. Examples may include: a subsequent
disaster that causes further damage to a partially rehabilitated home
or business; an increase in the cost of construction materials;
vandalism; contractor fraud; or theft of materials. Unmet need may also
change if other resources become available to pay for costs of the
activity (such as FEMA or USACE), and reduce the need for CDBG-DR.
To the extent that an original disaster recovery need was not fully
met or was exacerbated by factors beyond the control of the applicant,
the grantee may provide additional CDBG-DR funds to meet the increased
unmet need.
Grantees must be able to identify and document additional unmet
need, for example, by completing a professional inspection to verify
the revised estimate of costs to rehabilitate or reconstruct damaged
property.
IV.A.1.(e). Special Considerations. The potential for DOB arises
most frequently under homeowner rehabilitation programs but is not
limited solely to that type of activity. The following examples do not
form an exhaustive list of all CDBG-DR funded programs or activities.
They are included to illustrate instances when duplicative assistance
can occur when assisting other recovery activities:
1. Assistance to businesses. Many grantees carry out economic
revitalization programs that provide working capital assistance to
businesses. Generally, working capital assistance is calculated after
assessing a business's ability to use its current assets to pay its
current liabilities. The grantee's DOB analysis must consider total
assistance, which includes all sources of financial assistance
available to the applicant to pay a portion of liabilities that will
become due. For example, a downtown business alliance might award
business recovery grants from its funds to cover some of the same
liabilities. Even if the downtown business alliance does not call its
assistance ``working capital'' assistance, the amount the business
received from the downtown business alliance to pay the same costs as
the CDBG-DR funds is a DOB. Therefore, a grantee's basis for
calculating CDBG-DR economic development assistance and the purposes
for which the applicant can use the assistance should be clearly
identified so that grantees can prevent a DOB. As discussed above,
assets such as cash and cash equivalents (excluding deposits of
insurance proceeds or other disaster assistance), inventories, short-
term investments and securities, accounts receivable, and other assets
of the business are not financial assistance, although those assets may
be relevant to underwriting.
2. Assistance for infrastructure. State grantees may assist state
or local government entities by providing funding to restore
infrastructure (public facilities and improvements) after a disaster.
CDBG-DR funds used directly by state and local governments for public
facilities and improvements, or other purposes are also subject to the
DOB requirements of the Stafford Act. For example, a wastewater
treatment facility owned by a local government may need to be
rehabilitated. In this instance, total assistance, for a DOB analysis,
would not only include any other Federal assistance available to
rehabilitate the facility, but it must also include any local funds
that are available for this activity. And if local funds were
previously designated or planned for the activity, but are no longer
available, the grantee should document that the local government
recipient does not have funds set aside for the activity in any capital
improvement plan (or similar document showing planned use of funds).
3. Payments made under the Uniform Relocation Assistance and Real
Property Acquisition Policies Act (URA).
[[Page 82989]]
Grantees may provide a displaced person (as defined under 24 CFR
570.606) with rental assistance payments under the URA or provide
temporary relocation assistance (as described in 49 CFR part 24,
appendix A, 49 CFR 24.2(a)(9)(ii)(D)) to persons temporary relocated as
a result of a project. Relocation payments made under the URA, as well
as under CDBG's optional relocation assistance provisions of 24 CFR
570.606(d), are subject to DOB requirements in this notice and the
Consolidated Notice, as well as DOB requirements under the URA that
prohibit payments for the same ``purpose and effect'' as another
payment to a displaced person (49 CFR 24.3). To comply with CDBG-DR DOB
requirements, before issuance of rental assistance payments required by
the URA, grantees must complete a DOB analysis. For example, a CDBG-DR
grantee must check FEMA assistance data to determine that FEMA did not
provide rental assistance payments during the same time period (under
the URA or as part of a FEMA Individual Assistance Award). Please note
that while you cannot duplicate assistance for the same purpose,
advisory services and the provision of notices required under the URA
are not subject to this analysis because they are not financial
assistance to the person, and therefore must be provided in accordance
with the URA.
Subsidized Loans. For this notice, subsidized loans (including
forgivable loans) are loans other than private loans. Subsidized loans
are assistance that must be included in the DOB analysis unless an
exception applies. Section IV.A. of the Consolidated Notice discusses
these exceptions and related requirements for the treatment of
subsidized loans in a duplication of benefits analysis. The full amount
of a subsidized loan available to the applicant for the same purpose as
CDBG-DR assistance is assistance that must be included in the DOB
calculation unless one of the exceptions in IV.A.1. of the Consolidated
Notice applies. A subsidized loan is available when it is accepted,
meaning that the borrower has signed a note or other loan document that
allows the lender to advance loan proceeds. Both SBA and FEMA provide
subsidized loans for disaster recovery. Note that the statutory order
of assistance provision pertaining to assistance from FEMA and USACE
applies to grants and subsidized loans made by these agencies.
Subsidized loans may also be available from other sources.
IV.A.1.(f). Order of Assistance. CDBG-DR appropriations acts
generally include a statutory order of assistance for Federal agencies.
Although the language may vary among appropriations, the statutory
order of assistance typically provides that CDBG-DR funds may not be
used for activities reimbursable by or for which funds are made
available by FEMA or USACE. This means that grantees must verify
whether FEMA or USACE funds are available for an activity (i.e., the
application period is open) or the costs are reimbursable by FEMA or
USACE (i.e., the grantee will receive FEMA or USACE assistance to
reimburse the costs of the activity) before awarding CDBG-DR assistance
for costs of carrying out the same activity. If FEMA or USACE are
accepting applications for the activity, the applicant must seek
assistance from those sources before receiving CDBG-DR assistance. If
the applicant's costs for the activity will be reimbursed by FEMA or
USACE, the grantee cannot provide the CDBG-DR assistance for those
costs. In the event that FEMA or USACE assistance is awarded after
CDBG-DR to pay the same costs, it is the CDBG-DR grantee's
responsibility to recapture CDBG-DR assistance that duplicates
assistance from FEMA or USACE.
Under the Stafford Act, a Federal agency that provides duplicative
assistance must collect that assistance. For CDBG-DR grants, the
grantee is required to collect duplicative assistance it provides. A
grantee that does not collect duplicative CDBG-DR assistance that it
provides may resolve this noncompliance by reimbursing its program
account with non-Federal funds in the amount of the duplication and
reprograming the use of the funds in accordance with applicable
requirements to avoid other corrective or remedial actions.
FEMA regulations at 44 CFR 206.191 set forth a delivery sequence
that establishes which source of assistance is duplicative for certain
programs. CDBG-DR assistance is not listed in FEMA's sequence, but as a
practical matter, CDBG-DR assistance duplicates other sources received
before CDBG-DR assistance for the same purpose and portion of need. Any
amount received from other sources before the CDBG-DR assistance that
is determined to be duplicative must be collected by the grantee. The
mandatory agreement to repay (discussed in section IV.A.1.(i)below) can
be used to prevent duplication by assistance that is available, but not
yet received. If the duplicative assistance is received after CDBG-DR,
the grantee must collect the DOB or contact HUD if it has questions
about whether another Federal agency is responsible for collecting the
duplication.
IV.A.1.(g). Multiple Disasters. When multiple disasters occur in
the same location, and the applicant has not recovered from the first
disaster at the time of a second disaster, the assistance provided in
response to the second disaster may duplicate assistance for the same
purpose and need as assistance provided after the first disaster. HUD
recognizes that in this scenario, DOB calculations can be complicated.
Damage from a second disaster, for example, may destroy work funded and
completed in response to the first disaster. The second disaster may
also damage or destroy receipts and other documentation of how
applicants expended assistance provided after the first disaster.
Therefore, HUD is adopting the following policy that is applicable
to circumstances when two disasters occur in the same area, and the
applicant has not fully recovered from the first disaster before the
second disaster occurs: Applicants are not required to maintain
documentation related to the use of public disaster assistance
(Federal, state, and local) beyond the period required by the agency
that provided the assistance. If documentation cannot be provided, the
grantee may accept a self-certification regarding how the applicant
used the other agency's assistance, provided that the applicant is
advised of the criminal and civil penalties that apply in cases of
false claims and fraud, and the grantee determines that the applicant's
total need is consistent with data the grantee has about the nature of
damage caused by the disasters (e.g., flood inundation levels). For
example, a second disaster strikes three years after an agency provided
assistance in response to the first disaster, and that agency required
applicants to maintain documentation for two years, the grantee may
accept a self-certification regarding how the applicant used the other
agency's assistance.
IV.A.1.(h). Recordkeeping. The grantee must document compliance
with DOB requirements. Policies and procedures for DOB may be specific
for each program funded by the CDBG-DR grantee and should be
commensurate with risk. Grantees should be especially careful to
sufficiently document the DOB analysis for activities they are carrying
out directly. Insufficient documentation on DOB can lead to findings,
which can be difficult to resolve if records are missing, inadequate,
or inaccurate to demonstrate compliance with DOB requirements.
[[Page 82990]]
When documenting its DOB analysis, grantees cannot rely on
certification alone for proof of other sources of funds for the same
purpose (unless authorized by this notice, see section IV.A.1.(g).
above). Any certification by an applicant must be based on supporting
evidence that will be kept available for inspection by HUD. For
example, if an applicant certifies that other sources of funds were
received and expended for a different purpose than the CDBG-DR funds,
grantees must substantiate this assertion with an additional source of
information (e.g., physical inspections, credit card statements, work
estimates, contractor invoices, flood inundation records, or receipts).
For these reasons, HUD recommends that as soon as possible after a
disaster, grantees advise the public and potential applicants to retain
all receipts that document expenditures for recovery needs. Grantees
should consult their CPD specialist or CPD representative with
questions about the sufficiency of documentation.
IV.A.1.(i). Agreement to Repay. The Stafford Act requires grantees
to ensure that applicants agree to repay all duplicative assistance to
the agency providing that Federal assistance. To address any potential
DOB, each applicant must also enter into an agreement with the CDBG-DR
grantee to repay any assistance later received for the same purpose for
which the CDBG-DR funds were provided. This agreement can be in the
form of a subrogation agreement or similar document and must be signed
by every applicant before the grantee disburses any CDBG-DR assistance
to the applicant.
In its policies and procedures, the grantee must establish a method
to monitor each applicant's compliance with the agreement for a
reasonable period after project completion (i.e., a time period
commensurate with risk). Additionally, section III.A.1. of the
Consolidated Notice requires a grantee's agreement to also include the
following language: ``Warning: Any person who knowingly makes a false
claim or statement to HUD may be subject to civil or criminal penalties
under 18 U.S.C. 287, 1001 and 31 U.S.C. 3729.''
IV.A.1.(j). Collecting a Duplication. If a potential DOB is
discovered after CDBG-DR assistance has been provided, the grantee must
reassess the applicant's need at that time (see section IV.A.1.(d)(v)
above). If additional need is not demonstrated, CDBG-DR funds shall be
recaptured to the extent they are in excess of the remaining need and
duplicate other assistance received by the applicant for the same
purpose. However, this determination may depend on what sources of
assistance were last received by the applicant.
If a grantee fails to recapture funds from an applicant, HUD may
impose corrective actions pursuant to 24 CFR 570.495 and 570.910, and
Federal Register notices, as applicable. Also, HUD reminds grantees
that the Stafford Act states that ``A person receiving Federal
assistance for a major disaster or emergency shall be liable to the
United States to the extent that such assistance duplicates benefits
available to the person for the same purpose from another source.'' A
grantee's failure to collect duplication of benefits does not remove an
applicant's potential liability to the United States. A grantee that
does not collect duplicative CDBG-DR assistance that it provides,
should review HUD's guidance in the second paragraph of section
IV.A.1.(f). above.
The grantee may refer to any relevant guidance or the debt
collection procedures in place for the state or local government. HUD
is available to provide guidance to grantees in establishing or
revising the grantee's duplication of benefits policies and procedures.
CDBG-DR grantees awarded funds for disasters occurring in 2022 or
later can find the additional DOB requirements 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 fulfilled the 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 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
[[Page 82991]]
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 or future
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 Appropriations Act
or in prior or future appropriation acts, when the MID areas overlap
and when the use of the funds will address unmet recovery needs of
major disasters in the Appropriations Act or in any prior or future
appropriation acts.
Based on this authority, the Secretary authorizes grantees
receiving a CDBG-DR grant under the Appropriations Act and prior or
future appropriation 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 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 2023 and the MID areas for the 2023 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 2023 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 2023 disaster, the grantee must
follow the rules and requirements outlined in the Federal Register
notices applicable to its CDBG-DR grant for 2017 disasters.
IV.A.4. Assistance to utilities. The Appropriations Act provides
that funds ``may be used by a grantee to assist utilities as part of a
disaster-related eligible activity under section 105(a) of the Housing
and Community Development Act of 1974 (42 U.S.C. 5305(a)).''
Accordingly, paragraph III.G.3 of the Consolidated Notice does not
apply to funds under the Appropriations Act, and HUD is adding a
modified alternative requirement that applies in lieu of paragraph
III.G.3.
While it is possible that not every CDBG-DR assisted utility will
serve predominantly low- and moderate-income (LMI) populations, HUD
recognizes that LMI populations would benefit especially from the
increased resilience and recovery of private utilities. HUD also
recognizes that privately-owned, for-profit utilities have a means of
obtaining private investment or otherwise recapturing costs from
ratepayers. Therefore, HUD's alternative requirement below includes
basic safeguards that HUD has determined are necessary to ensure that
costs comply with the certification to give maximum feasible priority
to activities that benefit LMI persons and that costs are necessary and
reasonable and do not duplicate other financial assistance. The
modified alternative requirement also makes clear that assistance to
utilities is subject to all other requirements that apply to the use of
funds, consistent with the requirement in the Appropriations Act that
funds must be for an ``eligible activity under section 105(a).'' If a
grantee needs to submit a substantial amendment to add any activity
based on these new alternative requirements, they must follow section
III.C.6.a in the Consolidated Notice.
For grants made in response to 2022 and 2023 disasters under the
Appropriations Act, the following alternative requirement applies:
A grantee may assist private for-profit, non-profit, or publicly
owned utilities as part of disaster-related activities that are
eligible under section 105(a) of the HCDA, or otherwise made eligible
through a waiver or alternative requirement, provided that the grantee
complies with the following:
1. The funded activity must comply with applicable CDBG-DR
requirements, including the requirements that the assisted activity
will meet a national objective, the activity will address an unmet
recovery need or a risk identified in the grantee's mitigation needs
assessment, and if the assistance is provided to a for-profit entity
for an economic development project under section 105(a)(17), the
grantee must first comply with the underwriting requirements in section
II.D.6 of the Consolidated Notice.
2. Each grantee must carry out the grant consistent with the
grantee's certification that:
[[Page 82992]]
``With respect to activities expected to be assisted with CDBG-DR
funds, the action plan has been developed so as to give the maximum
feasible priority to activities that will benefit low- and moderate-
income families.''
To fortify compliance with the existing certification, if the
grantee carries out activities that assist privately-owned, for-profit
utilities, the grantee must prioritize assistance to for-profit
utilities that will benefit areas where at least 51 percent of the
residents are LMI persons and demonstrate how assisting the private,
for-profit utility will benefit those areas.
3. The grantee must determine that the costs of the activity to
assist a utility are necessary and reasonable and that they do not
duplicate other financial assistance. To fortify these requirements and
achieve a targeted use of funds and to safeguard against the potential
over-subsidization when assistance is used to carry out activities that
benefit private, for-profit utilities, the grantee must document that
the level of assistance provided to a private, for-profit utility
addresses only the actual identified needs of the utility.
Additionally, the grantee must establish policies and procedures to
ensure that the CDBG-DR funds that assist private, for-profit utilities
reflect the actual identified financing needs of the assisted
businesses by establishing a mix of financing terms (loan, forgivable
loan, and/or grant) for each assisted private, for-profit utility,
based on the business's financial capacity, in order to ensure that
assistance is based on actual identified need.
IV.B. Clarifications to the Consolidated Notice
IV.B.1. Reimbursement Requirements for Grants Under the
Appropriations Act. This section sets out requirements for 2022 and
2023 disasters under the Appropriations Act. In paragraph III.F.5 of
the Consolidated Notice, HUD permits grantees to charge to grants the
pre-award and pre-application costs of homeowners, renters, businesses,
and other qualifying entities for eligible costs these applicants have
incurred in response to an eligible disaster covered under a grantee's
applicable Allocation Announcement Notice. In addition to other
requirements, paragraph III.F.5 stipulates that grantees may charge the
eligible pre-application costs to the grant only if (1) the person or
private entity incurred the expenses within one year after the
applicability date of the grantee's Allocation Announcement Notice (or
within one year after the date of the disaster, whichever is later);
and (2) the person or entity pays for the cost before the date on which
the person or entity applies for CDBG-DR assistance.
Congress may enact multiple supplemental appropriations of CDBG-DR
funds for disasters occurring in the same year and HUD may then publish
multiple notices announcing CDBG-DR grants for the same disaster. For
example, HUD announced CDBG-DR grants for disasters occurring in 2022
and 2023 in this notice. If Congress appropriates additional funds for
2022 and 2023 disasters in a future appropriations act, grantees may
find it difficult to track expenses incurred within one year after the
applicability date of this notice and another Allocation Announcement
Notice, given that funds for disasters occurring in 2022 and 2023 would
be announced in different notices. To avoid confusion and to apply a
uniform time frame to reimbursement of all pre-application costs for
2022 and 2023 disasters, the requirement in III.F.5.(1) in the
Consolidated Notice that states, ``The person or private entity
incurred the expenses within one year after the applicability date of
the grantee's Allocation Announcement Notice (or within one year after
the date of the disaster, whichever is later)'' shall not apply, and
instead, grantees shall comply with the following alternative to that
requirement in III.F.5.(1): ``The person or private entity incurred the
expenses within one year after the applicability date of the notice
that announced the initial allocation of CDBG-DR funds (or within one
year after the date of the disaster, whichever is later).'' For
grantees receiving an allocation for a 2022 and 2023 disaster, the
notice that announced the initial allocation of CDBG-DR funds is this
notice.
IV.B.2. Clarification of the green and resilient building standard.
Paragraph II.B.2.a. of the Consolidated Notice requires that all
covered construction (new construction, reconstruction, and
rehabilitation) that is assisted with CDBG-DR funds meet an industry-
recognized standard that has achieved certain certifications described
in the notice. In the Consolidated Notice, HUD updated its building
standards to support the adoption and enforcement of modern and
resilient codes and inadvertently omitted a standard.
Accordingly, HUD clarifies that paragraph II.B.2.a. in the
Consolidated Notice allows a grantee to use either the ICC-700 National
Green Building Standard (NGBS) Green or NGBS Green+ Resilience
standard, among other industry-recognized standards. For grants made in
response to disasters occurring in 2022 and 2023, this notice replaces
paragraph II.B.2.a. in the Consolidated Notice with the following text:
II.B.2.a. Green and resilient building standard for new
construction and 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 (NGBS) Green or NGBS Green+ Resilience; (iv) Living
Building Challenge; or (v) any other equivalent comprehensive green
building program acceptable to HUD.
IV.B.3. Clarification of the Use of ``Uncapped'' Income Limits. The
Quality Housing and Work Responsibility Act of 1998 (Title V of Pub. L.
105-276) enacted a provision that directs the Department to grant
exceptions to at least 10 jurisdictions that are currently ``capped'
under HUD's low and moderate-income limits. Under this exception,
several CDBG entitlement grantees may use ``uncapped'' income limits
that reflect 80 percent of the actual median income for the area. Each
year, HUD publishes guidance on its website identifying which grantees
may use uncapped limits.
Accordingly, HUD clarifies that, the annual uncapped income limits
published by HUD applies to CDBG-DR funded activities in jurisdictions
covered by the uncapped limits, including jurisdictions that receive
disaster recovery funds from a state CDBG-DR grantee. This alternative
requirement applies to grants made in response to disasters occurring
in 2022 and 2023 that are subject to this notice (including
requirements identified as a ``Consolidated Notice'' incorporated in
this notice as appendix B).
[[Page 82993]]
V. Duration of Funding
The Appropriations Act made the funds available for obligation by
HUD until expended. HUD waives the provisions at 24 CFR 570.494 and
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 time period in this
alternative requirement and associated grant 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. Assistance Listing Numbers (Formerly Known as the CFDA Number).
The Assistance Listing Numbers (formerly known as 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 at <a href="https://www.hud.gov/program_offices/comm_planning/cdbg-dr">https://www.hud.gov/program_offices/comm_planning/cdbg-dr</a>. Due to security measures at the
HUD Headquarters building, an advance appointment to review the docket
file must be scheduled by calling the Regulations Division at 202-708-
3055 (this is not a toll-free number). 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>.
Adrianne Todman,
Deputy Secretary.
Appendix A
Allocation of CDBG-DR Funds to Most Impacted and Distressed Areas Due
to Presidentially Declared Disasters Occurring in 2022 and 2023
Background
The Disaster Relief Supplemental Appropriations Act, 2023 (Pub.
L. 117-328, Division N, Title X) (approved on December 29, 2022)
appropriated $3 billion of CDBG-DR for disasters ``that occurred in
2022 or later until such funds are fully allocated''. The law
instruct HUD that the funds are ``for the same purposes and under
the same terms and conditions as funds appropriated under such
heading in title VIII of the Disaster Relief Supplemental
Appropriations Act, 2022 (division B of Pub. L. 117-43)'' except
that such amounts shall be for major disasters that occurred in 2022
or later until such funds are fully allocated and the fourth,
twentieth, and twenty-first provisos under such heading in the
Disaster Relief Supplemental Appropriations Act, 2022 shall not
apply.
The statutory text related to the allocation in Public Law 117-
43 is as follows:
``. . . 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 . . . 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: ''
Under a prior Notice, $2,837,849,000 of the funds allocated
under Public Law 117-328 had been awarded. Of the remaining
$162,151,000, $20 million is set aside for capacity building, HUD
Administration, and Inspector General expenses, leaving $142,151,000
for allocations to additional disasters. Total unmet needs and
mitigation needs for one disaster in 2022 (New Mexico) is calculated
as discussed in a special section below at $4.131 million. In
addition, for three disasters (California, Alabama, and Georgia)--
all declared in January 2023--unmet needs and additional mitigation
amounts were calculated at $241.728 million. HUD chose to allocate
57.10 percent of the unmet needs and additional mitigation amounts
of each 2023 disaster to stay within the $138.020 million available
after taking into account the $4.131 million for the 2022 New Mexico
disaster ($138.020 million/$241.728 million = 57.10%).
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 these standards:
(1) Individual and Households Program (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 IHP funding.
(2) Concentrated damage. HUD has limited its estimate of serious
unmet housing need to counties and/or counties with 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;
(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 qualifying
disasters declared between November 1, 2022 and January 30, 2023
come from the FEMA IHP data on housing-unit damage as of April 6,
2023 and reflect disasters occurring in 2022 and/or 2023 and
declared after October 30, 2022 and before January 30, 2023. The New
Mexico (DR 4652) estimates uses the same data as discussed in the
prior Federal Register Notice for 2022 disasters (88 FR 32046).
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 IHP 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 estimated to be provided by FEMA and SBA.
[[Page 82994]]
Each of the FEMA IHP 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 six 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 one 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 one 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 IHP 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 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 match
comparing FEMA and SBA inspections by each of the FEMA damage
categories described above.
If there is a match of 20 or more SBA inspections to FEMA
inspections for any damage category, the median damage estimate for
the SBA properties is used less the estimated average FEMA IHP
repair grant and average SBA disaster loan grant weighted on take-up
rates, which are generally high for IHP and low and for SBA. Except
that no matched multiplier can be less than the 25th percentile for
all IHP eligible disasters combined in eligible disaster years at
the time of the allocation calculation or more than the 75th
percentile for all IHP eligible disasters combined with data
available as of the allocation.
If there is a match of fewer than 20 SBA inspections to FEMA
inspections within individual damage categories, these multipliers
are used which are based on the 2020 and 2021 disaster years:
------------------------------------------------------------------------
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
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
------------------------------------------------------------------------
A separate multiplier is applied to mobile homes for all
disaster types. Where there are fewer than 20 mobile homes for a
match for a disaster, the mobile home multipliers are $49,571 for
major-low, $60,189 for major-high, and $67,594 for severe. If there
are 20 or more matches for a specific disaster's mobile homes, that
specific disaster multiplier is used.
Methods for Estimating Serious Unmet Economic Revitalization Needs
Based on SBA disaster loans to businesses using data from as of
April 5, 2023, HUD calculates the median real estate and content
loss by the following damage categories for each disaster:
<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.
[[Page 82995]]
Methods for Estimating Unmet Infrastructure Needs
To calculate unmet needs for infrastructure projects, HUD
received FEMA cost estimates on April 6, 2023, of the expected local
cost share to repair the permanent public infrastructure (Categories
C to G) to their pre-storm condition.
Allocation Calculation
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 disasters as the
aggregate of:
<bullet> Serious unmet housing needs in most impacted and distressed
areas;
<bullet> Serious unmet business needs; and
<bullet> Unmet infrastructure need.
Mitigation is calculated as 15 percent of the unmet need
calculation, and then rounded to the nearest $1,000.\3\
---------------------------------------------------------------------------
\3\ Correction. In the Federal Register notice published on
Thursday, May 18, 2023, at 88 FR 32046, HUD makes the following
correction: On page 32059, in the Sub-Disaster Allocations for Local
Governments section of appendix A, for DR 4673 FL the unmet need
value reads as ``$100 million'' but should read as ``$125 million.''
---------------------------------------------------------------------------
Adjustments for 2022 Disaster--DR 4652 (New Mexico)
When HUD made its March 2023 announcement for 2022 disasters, we
had not made an allocation for the 2022 wildfires in New Mexico (DR
4652) because of separate appropriations ($3.95 billion appropriated
in the ``Continuing Appropriations Act, 2023,'' Public Law 117-180,
136 Stat. 2114 (2022), and the ``Disaster Relief Supplemental
Appropriations Act, 2023'' Public Law 117-328, 136 STAT. 4459
(2022)) to a claims fund (the ``Hermit's Peak/Calf Canyon Fire
Assistance Act,'' Public Law 117-180, 136 Stat. 2114 (2022))
administered by FEMA for the Hermit's Peak/Calf Canyon Fire which
was the larger fire covered by DR 4652. At the time we were seeking
more information from the state and FEMA on how those claims funds
could be used.
Absent the special appropriation, HUD had determined for this
disaster $16.961 million in total unmet needs and $2.544 million in
mitigation (15% of the unmet needs). A great deal of what HUD
calculates for unmet needs would be covered by the claims fund.
According to FEMA,\4\ ``covered losses will include but are not
limited to uninsured and uncompensated property loss; business and
financial loss; and some heightened risk reduction to minimize
impacts from heightened risks caused by the wildfires.''
Individuals, businesses, non-federal government, Indian Tribes, and
Not-for-Profit entities are eligible. (See 44 CFR part 296).
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\4\ https://www.fema.gov/disaster/current/hermits-peak/
frequently-asked-
questions#:~:text=An%20additional%20%241.45%20billion%20was,business
%20loss%20or%20financial%20loss.
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According to 44 CFR 296.21, claims can be made for:
<bullet> Loss of property (examples: property loss, decrease in
value of real property, damage to physical infrastructure, lost
subsistence, cost reforestation, other.)
<bullet> Business loss (examples: damage to tangible assets or
inventory, business interruption loss, overhead, employee wages,
loss of business net income, other.)
<bullet> Financial loss (examples: increased mortgage interest cost,
insurance deductible, temporary living or relocation expenses, lost
wages or personal income, emergency staffing, debris removal and
clean-up, other.)
<bullet> Personal injury (examples: general damages, medical
expenses, injury-related lost wages/personal income
But there are items that are not eligible under the claims fund,
including replacing lost affordable rental housing, business and
infrastructure needs outside of the Hermits Peak/Calf Canyon fire
claims fund area, and mitigation. As such, HUD has calculated this
grant as the total unmet needs $16.961 million, plus mitigation
based on the total unmet needs (15% of $16.961 million = $2.544
million), less the amount expected to be covered by the claims fund
$15.374 million, resulting in an allocation of $4.131 million.
Pro-Rata Allocation for January 2023 Disasters
Consistent with long-standing practice when unmet needs for
CDBG-DR exceed funding available, the allocation among eligible
grantees is made proportionally. That is, the overall amount
available--$138.020 million in funding--is divided by the total
estimated unmet need and mitigation for the three disasters--
$241.728 million to arrive at 57.1%. Each of the three grantees is
being allocated 57.1 percent of their unmet needs and mitigation
rounded to the nearest $1,000.
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 Sec. 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
[[Page 82996]]
mitigation of risk associated with activities 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 82997]]
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) and (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) and (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 restrictions, including
the affordability
[[Page 82998]]
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.
II.B.8. Safe housing incentives in disaster-affected
communities.
[[Page 82999]]
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 part 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
[[Page 83000]]
that are designed to provide or support 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) and (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) and (ii),
24 CFR 570.483(b)(4)(i) and (ii), 24 CFR 570.506(b)(5) and (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 83001]]
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 Sec. 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 83002]]
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#99f1f6edf5f0f7fcd9f1ecfdf6f0feb7fef6ef"><span class="__cf_email__" data-cfemail="472f28332b2e2922072f3223282e2069202831">[email protected]</span></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 83003]]
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 83004]]
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 83005]]
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 g
[…truncated; see source link]Indexed from Federal Register on November 27, 2023.
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.