[Federal Register Volume 83, Number 157 (Tuesday, August 14, 2018)]
[Notices]
[Pages 40314-40325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17365]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6109-N-01]
Allocations, Common Application, Waivers, and Alternative
Requirements for Community Development Block Grant Disaster Recovery
Grantees
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Notice.
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SUMMARY: On April 10, 2018, HUD allocated nearly $28 billion in
Community Development Block Grant disaster recovery (CDBG-DR) funds
appropriated by the Further Additional Supplemental Appropriations for
Disaster Relief Requirements Act, 2018. HUD allocated $10.03 billion
for the purpose of assisting in addressing unmet needs from disasters
that occurred in 2017; $2 billion for improved electrical power systems
in areas impacted by Hurricane Maria; and $15.9 billion for mitigation
activities. This notice applies only to the $10.03 billion allocated
for long-term recovery from disasters that occurred in 2017. A future
notice will specify the requirements and process for the electrical
power systems funding and the mitigation funds.
This $10.03 billion allocation for addressing unmet recovery needs
supplements the $7.4 billion in CDBG-DR funds appropriated by the
Supplemental Appropriations for Disaster Relief Requirements Act, 2017,
which allocated funds to Texas, Florida, Puerto Rico, and the U.S.
Virgin Islands in response to qualifying disasters in 2017. In HUD's
Federal Register notice published on February 9, 2018 (the ``Prior
Notice''), HUD described those allocations, applicable waivers and
alternative requirements, relevant statutory and regulatory
requirements, the grant award process, criteria for action plan
approval, and eligible disaster recovery activities.
DATES: Applicability Date: August 20, 2018.
FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Acting
Director, Office of Block Grant Assistance, Department of Housing and
Urban Development, 451 7th Street SW, Room 10166, Washington, DC 20410,
telephone number 202-708-3587. Persons with hearing or speech
impairments may access this number via TTY by calling the Federal Relay
Service at 800-877-8339. Facsimile inquiries may be sent to Ms. Kome at
202-708-0033. (Except for the ``800'' number, these telephone numbers
are not toll-free.) Email inquiries may be sent to
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Allocations
II. Use of Funds
III. Overview of Grant Process
A. Appropriations Act (Pub. L. 115-123) Initial Action Plan
Process
B. Prior Appropriation (Pub. L. 115-56) Substantial Action Plan
Amendment Process
IV. Applicable Rules, Statutes, Waivers, and Alternative
Requirements
A. Grant Administration
B. Housing
C. Infrastructure
D. Economic Revitalization
V. Duration of Funding
VI. Catalog of Federal Domestic Assistance
VII. Finding of No Significant Impact
Appendix A: Allocation Methodology
I. Allocations
The Further Additional Supplemental Appropriations for Disaster
Relief Requirements Act, 2018 (Division B, Subdivision 1 of the
Bipartisan Budget Act of 2018), approved February 9, 2018 (Pub. L. 115-
123) (the ``Appropriations Act''), appropriated nearly $28 billion in
CDBG-DR funds. Of this amount, up to $16 billion is available to
address unmet disaster recovery needs through activities authorized
under title I of the Housing and Community Development Act of 1974 (42
U.S.C. 5301 et seq.) (HCD Act) related to disaster relief, long-term
recovery, restoration of infrastructure and housing, economic
revitalization, and mitigation in the ``most impacted and distressed''
areas (identified by HUD using the best available data) resulting from
a major declared disaster that occurred in 2017. Amounts allocated for
these purposes supplement $7.4 billion in CDBG-DR funds appropriated on
September 8, 2017, by the Supplemental Appropriations for Disaster
Relief Requirements, 2017 (Pub. L. 115-56) (the ``Prior
Appropriation''). HUD allocated the first $7.4 billion in the Prior
Notice (83 FR 5844, February 9, 2018). This notice amends the Prior
Notice to ensure consistency across allocations for the same qualifying
disasters, and to give effect to requirements of the Appropriations
Act, including that funds allocated under the Prior Notice are subject
to the terms and conditions applicable to CDBG-DR funds under the
Appropriations Act.
Based on the remaining unmet needs allocation methodology outlined
in Appendix A, this notice allocates $10,030,484,000 for unmet disaster
recovery needs under the Appropriations Act. The allocation amounts for
unmet recovery needs included in Table 1 exclude the $2 billion set-
aside for Puerto Rico and the Virgin Islands for electrical system
improvements. The Appropriations Act further provided that of the
nearly $28 billion, HUD must allocate not less than $12 billion for
mitigation activities undertaken by grantees receiving an allocation of
CDBG-DR funds for recovery from 2015, 2016, or 2017 disasters. On April
10, 2018, HUD announced that after addressing remaining 2017 unmet
needs, HUD would allocate an additional $3.9 billion for mitigation,
bringing the amount designated for mitigation to $15.9 billion. A
subsequent notice will govern the allocations for mitigation and the
allocations for electrical power system enhancements and improvements.
In accordance with the Appropriations Act, $10,000,000 of the total
amounts appropriated under the Act will be transferred to the
Department's Office of Community Planning and Development (CPD),
Program Office Salaries and Expenses, for necessary costs of
administering and overseeing CDBG-DR funds made available under the
Appropriations Act and $15,000,000 is to be transferred to the CPD
office to provide necessary capacity building and technical assistance
to grantees. The Appropriations Act also provides $10,000,000 to the
Department's Office of the Inspector General for oversight of the
appropriated CDBG-DR funds.
Although the Prior Notice requires each grantee to primarily
consider and address its unmet housing recovery needs, grantees under
this notice and the Prior Notice may also propose an allocation of
funds that includes unmet economic revitalization and infrastructure
needs that are unrelated to unmet housing needs after the grantee
demonstrates in its needs assessment that there is no remaining unmet
[[Page 40315]]
housing need or that the remaining unmet housing need will be addressed
by other sources of funds. The law provides that grants shall be
awarded directly to a State, local government, or Indian tribe at the
discretion of the Secretary. To comply with statutory direction that
funds be used for disaster-related expenses in the most impacted and
distressed areas, HUD allocates funds using the best available data
that cover all eligible affected areas.
Pursuant to the Appropriations Act, HUD has identified the most
impacted and distressed 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. For Puerto Rico
and the U.S. Virgin Islands, all components of each territory are
considered most impacted and distressed as defined in Table 1. For all
other grantees, at least 80 percent of all allocations provided to the
grantee under the Prior Notice and this notice must address unmet
disaster needs within the HUD-identified most impacted and distressed
areas, as identified in the last column of Table 1. These grantees may
determine where to use the remaining 20 percent of their allocation,
but that portion of the allocation may only be used to address unmet
disaster needs in those areas that the grantee determines are ``most
impacted and distressed'' and that received a presidential major
disaster declaration pursuant to the disaster numbers listed in Table
1.
Based on further review of the impacts from the eligible disasters,
and estimates of unmet need, Table 1 shows the areas and the minimum
amount of funds from the combined allocations under the Appropriations
Act and the Prior Appropriation that must be expended in the HUD-
identified most impacted and distressed areas. For some grantees funded
under the Prior Appropriation, updated data and methodology led to
additional areas being defined as most impacted and distressed.
Therefore, the most impacted and distressed areas identified in Table 1
of this notice amend the Prior Notice to replace the most impacted and
distressed areas identified in Table 1 of the Prior Notice. The areas
are listed alphabetically by county/municipio/island and numerically by
Zip Code and govern all CDBG-DR funds allocated for unmet needs from
the 2017 disasters identified in Table 1.
Table 1--Allocations for Unmet Needs Under Public Laws 115-56 and 115-123
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Allocation
under Public Unmet needs Combined Minimum combined amount from
Law 115-56 allocation allocation for Public Law 115-56 and Public Law
Disaster No. Grantee (covered by under Public unmet needs 115-123 that must be expended
previous Law 115-123 (Pub. L. 115- for unmet needs recovery in the
Notice 83 FR (covered by 56 and Pub. L. HUD-identified ``most impacted
5844) this Notice) * 115-123) * and distressed'' areas listed
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4344 and 4353............................ State of California........ $0 $124,155,000 $124,155,000 (No less than $99,324,000)
Sonoma and Ventura counties;
93108, 94558, 95422, 95470, and
95901 Zip Codes.
4337 and 4341............................ State of Florida........... 615,922,000 157,676,000 773,598,000 (No less than $618,878,400)
Brevard, Broward, Clay,
Collier, Duval, Hillsborough,
Lee, Miami-Dade, Monroe,
Orange, Osceola, Palm Beach,
Polk, St. Lucie, and Volusia
counties; 32084, 32091, 32136,
32145, 32771, 33440, 33523,
33825, 33870, 33935, and 34266
Zip Codes.
4294, 4297, and 4338..................... State of Georgia........... 0 37,943,000 37,943,000 (No less than $30,354,400)
31520, 31548, and 31705 Zip
Codes.
4317..................................... State of Missouri.......... 0 58,535,000 58,535,000 (No less than $46,828,000)
63935, 63965, 64850, 65616, and
65775 Zip Codes.
4336 and 4339............................ Commonwealth of Puerto Rico 1,507,179,000 8,220,783,000 9,727,962,000 ($9,727,962,000) All components
of Puerto Rico.***
4332..................................... State of Texas **.......... 5,024,215,000 652,175,000 5,676,390,000 (No less than $4,541,112,000)
Aransas, Brazoria, Chambers,
Fayette, Fort Bend, Galveston,
Hardin, Harris, Jasper,
Jefferson, Liberty, Montgomery,
Newton, Nueces, Orange,
Refugio, San Jacinto, San
Patricio, Victoria, and Wharton
counties; 75979, 77320, 77335,
77351, 77414, 77423, 77482,
77493, 77979, and 78934 Zip
Codes.
4335 and 4340............................ U.S. Virgin Islands........ 242,684,000 779,217,000 1,021,901,000 ($1,021,901,000) All components
of the U.S. Virgin Islands.
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* The $2 billion required for electric grid enhancements and improvements are considered unmet needs for allocation purposes, but the allocation and use
of the funds will be governed by a forthcoming notice and thus are not included in this table.
** State of Texas has also received $57.8 million for disaster recovery in respect to Hurricane Harvey from Public Law 115-31 that is not reflected
here.
*** The areas defined as most impacted in HUD's formula calculation include more than 68 of Puerto Rico's 78 municipios as Most Impacted Counties and
all 10 municipios that are non-Most Impacted Counties do each have a Most Impacted Zip Code. This results in nearly 100% coverage of Puerto Rico both
in terms of geography and population, so for program implementation purposes, HUD has determined to include all areas of Puerto Rico as Most Impacted.
Grantees may use up to 5 percent of the total combined grant award
for grant administration. Therefore, for grantees other than Puerto
Rico and the U.S. Virgin Islands, HUD will include 80 percent of a
grantee's expenditures for grant administration in its determination
that 80 percent of the total award has been expended in the most
impacted and distressed areas identified in Table 1. Additionally, for
grantees other than Puerto Rico and U.S. Virgin Islands, expenditures
for planning activities may be counted towards a grantee's 80 percent
[[Page 40316]]
expenditure requirement, provided that the grantee describes in its
action plan how those planning activities benefit the HUD-identified
most impacted and distressed areas.
II. Use of Funds
Unless otherwise indicated, funds allocated under this notice and
under the Prior Notice are subject to the requirements of this notice
and the Prior Notice (as amended). This notice outlines additional
requirements imposed by Public Laws 115-141 and 115-123 that apply to
funds allocated under this notice and the Prior Notice. These
requirements are outlined in section IV.A.1 and 2 of this notice.
The Appropriations Act requires that prior to the obligation of
CDBG-DR funds by the Secretary, a grantee shall submit a plan to HUD
for approval detailing the proposed use of all funds. The plan must
include the criteria for eligibility, and how the use of these funds
will address long-term recovery and restoration of infrastructure and
housing, and economic revitalization in the most impacted and
distressed areas. This notice requires the grantee to submit an action
plan that addresses unmet recovery needs related to the applicable
disasters. Therefore, the action plan submitted in response to this
notice must describe uses and activities that: (1) Are authorized under
title I of the Housing and Community Development Act of 1974 (HCD Act)
or allowed by a waiver or alternative requirement (see section IV
below); and (2) respond to disaster-related impacts to infrastructure,
housing, and economic revitalization in the most impacted and
distressed areas. Additionally, grantees may include disaster related
preparedness and mitigation measures as part of assisted activities as
authorized pursuant to paragraph A.2.c.(4) of section VI of the Prior
Notice. Grantees must conduct an assessment of community impacts and
unmet needs to inform the plan and guide the development and
prioritization of planned recovery activities, pursuant to paragraph
A.2.a. in section VI of the Prior Notice, as amended in this notice.
An alternative requirement established by the Prior Notice
authorized the U.S. Virgin Islands to administer a CDBG-DR allocation
in accordance with the regulatory and statutory provisions governing
the State CDBG program, as modified by applicable waivers and
alternative requirements. Therefore, all references to States and State
grantees in this notice and the Prior Notice include the U.S. Virgin
Islands.
III. Overview Grant Process
A. Appropriations Act (Pub. L. 115-123) Initial Action Plan Process
Grantees receiving an initial allocation under this notice for
disasters occurring in 2017 (California, Georgia, and Missouri) must
submit an action plan per the requirements in section VI.A.2. of the
Prior Notice not later than 120 days after the applicability date of
this notice. All requirements of the Prior Notice related to the action
plan submission apply except the public comment period, which has been
extended to no less than 30 calendar days under this notice. Grantees
must publish the action plan in a manner that affords citizens,
affected local governments, and other interested parties a reasonable
opportunity to examine the contents and provide feedback. The manner of
publication must include, at a minimum, prominent posting on the
grantee's official website for not less than 30 calendar days for
public comment. These grantees must also submit the Financial
Management and Grant Compliance submissions and the Pre-Award
Implementation Plan per section VI.A.1 of the Prior Notice within 60
days of the applicability date of this notice.
B. Prior Appropriation (Pub. L. 115-56) Substantial Amendment Process
To Incorporate Additional Funds
Each grantee that received an allocation pursuant to the Prior
Appropriation (Texas, Florida, Puerto Rico, and U.S. Virgin Islands) is
required to submit a substantial amendment amending the initial action
plan that was submitted in response to the Prior Notice. The
substantial amendment must be submitted not later than 90 days after
the initial action plan is approved in whole or in part by HUD or not
later than 90 days after the applicability date of this notice,
whichever comes later. The substantial amendment must include the
additional allocation of funds and address the requirements of this
notice. For the Commonwealth of Puerto Rico, the substantial amendment
must be reviewed for consistency with the Commonwealth's 12- and 24-
month economic and disaster recovery plan required by Section 21210 of
Public Law 115-123, the Commonwealth's fiscal plan, and CDBG-DR
eligibility. The certification of financial controls and procurement
processes and the Department's determination of the adequacy of the
grantee's implementation and capacity assessment pursuant to the Prior
Notice, shall remain in effect for this allocation. Provided, however,
that grantees shall be required to update the Financial Management and
Grant Compliance submissions and the Pre-Award Implementation Plan per
section VI.A.1 of the Prior Notice to reflect any material changes in
the submissions.
Additionally, each grantee that received an allocation under the
Prior Notice must meet the following requirements to amend the initial
action plan. These steps are only applicable to the substantial
amendment process to add the additional allocation under this notice.
Grantee must consult with affected citizens, stakeholders,
local governments, and public housing authorities to determine updates
to its needs assessment;
Grantee must amend its initial action plan to update its
impact and needs assessment, modify or create new activities, or
reprogram funds. Each amendment must be highlighted, or otherwise
identified within the context of the entire action plan. The beginning
of every substantial amendment must include a: (1) Section that
identifies exactly what content is being added, deleted, or changed;
(2) chart or table that clearly illustrates where funds are coming from
and where they are moving to; and (3) a revised budget allocation table
that reflects all funds;
Grantee must publish the substantial amendment to its
previously approved action plan for disaster recovery in a manner that
affords citizens, affected local governments, and other interested
parties a reasonable opportunity to examine the amendment's contents
and provide feedback. The manner of publication must include, at a
minimum, prominent posting on the grantee's official website for not
less than 30 calendar days for public comment (see section VI.A.4.e of
the Prior Notice for details about the website requirements);
Grantee must respond to public comment and submit its
substantial amendment to HUD no later than 90 days after the grantee's
initial action plan is approved in whole or in part by HUD or not later
than 90 days after the applicability date of this notice, whichever
comes later. The substantial amendment submitted to HUD must also be
prominently posted on the grantee's official website;
HUD will review the substantial amendment within 45 days
from date of receipt and determine whether to approve the substantial
amendment per criteria identified in this notice and the Prior Notice;
HUD will send a substantial amendment approval letter,
revised
[[Page 40317]]
grant conditions, and an amended unsigned grant agreement to the
grantee. If the substantial amendment is not approved, a letter will be
sent identifying its deficiencies; the grantee must then re-submit the
substantial amendment within 45 days of the notification letter;
Grantee must ensure that the HUD-approved substantial
amendment and initial HUD-approved action plan are posted prominently
on its official website. Each grantee's current version of its entire
action plan must be accessible for viewing as a single document at any
given point in time, rather than the public or HUD having to view and
cross-reference changes among multiple amendments;
Grantee must enter the activities from its published
substantial amendment into the Disaster Recovery Grant Reporting (DRGR)
system and submit the updated DRGR action plan (revised to reflect the
substantial amendment) to HUD within the DRGR system;
Grantee must sign and return the grant agreement to HUD;
HUD will sign the grant agreement and revise the grantee's
CDBG-DR line of credit amount to reflect the total amount of available
funds;
Grantee may draw down CDBG-DR funds from its line of
credit after the Responsible Entity completes applicable environmental
review(s) pursuant to 24 CFR part 58, or adopts another Federal
agency's environmental review as authorized under the Appropriations
Act and the Prior Appropriation, and, as applicable, receives from HUD
the Authority to Use Grant Funds (AUGF) form and certification;
Grantee must amend and submit its projection of CDBG-DR
expenditures and performance outcomes with the substantial amendment.
IV. Applicable Rules, Statutes, Waivers, and Alternative Requirements
This section of the notice describes rules, statutes, waivers, and
alternative requirements that apply to allocations under this notice or
the Prior Notice. The Secretary has determined that good cause exists
for each waiver and alternative requirement established in this notice,
and for the extension of waivers and alternative requirements in the
Prior Notice to allocations made under this notice, and that the
waivers and alternative requirements are not inconsistent with the
overall purpose of the HCD Act.
Grantees may request additional waivers and alternative
requirements from the Department as needed to address specific needs
related to their recovery activities. Waivers and alternative
requirements are effective five (5) days after they are published in
the Federal Register.
A. Grant Administration
1. Applicability of waivers, alternative requirements, and other
requirements. All funds allocated under the Prior Notice and this
notice are subject to the requirements of this notice and the Prior
Notice. The waivers, alternative requirements, and other provisions of
the Prior Notice, as amended, are also incorporated and made applicable
to funds allocated under this notice. The waivers and alternative
requirements provide additional flexibility in program design and
implementation to support full and swift recovery following the
disasters, while also ensuring that statutory requirements under the
Appropriations Act, the Prior Appropriation, as well as requirements in
Public Laws 115-141 and 115-72, made applicable by the terms of the
Appropriations Act and the Prior Appropriation, are met.
2. Additional requirements and modifications of requirements in the
Prior Notice. The following clarifications or modifications apply to
all grantees in receipt of an allocation under this notice and to funds
allocated under the Prior Notice:
a. Substantial amendments for grantees receiving an allocation of
funds under the Prior Notice. Grantees that received an allocation
under the Prior Notice (Texas, Florida, Puerto Rico, and U.S. Virgin
Islands) must submit a substantial amendment, including an updated
needs assessment, per the requirements outlined in this notice, in
addition to meeting the requirements for substantial amendments under
the Prior Notice.
b. Action plan and other submission requirements for grantees
receiving an initial allocation under this notice. Grantees that did
not receive an allocation under the Prior Notice (California, Georgia,
and Missouri) shall be subject to deadlines for the submission of
financial controls and procurement processes, implementation plans, and
action plans, as established in the Prior Notice, which shall be based
upon the applicability date of this notice. Grantees that did not
receive an allocation under the Prior Notice must submit an action plan
not later than 120 days after the applicability date of this notice.
c. Cost or price analysis. References in the Prior Notice to ``an
evaluation of the cost and price of a product or service'' and to the
``evaluation of the cost or price of a product or service'' shall be
read to require ``an evaluation of the cost or price of a product or
service.''
d. Additional requirements for the comprehensive disaster recovery
website. The Prior Notice requires all grantees to maintain a
comprehensive disaster recovery website. The Appropriations Act
requires that certain content be included on a CDBG-DR grantee's
website. These requirements apply to funds allocated under this notice
and the Prior Notice. Each grantee must maintain on its comprehensive
disaster recovery website information containing common reporting
criteria established by the Department that permits individuals and
entities awaiting assistance and the general public to see how all
grant funds are used, including copies of all relevant procurement
documents, grantee administrative contracts, and details of ongoing
procurement processes, as determined by the Secretary. HUD will post
guidance related to this requirement on the HUD exchange website.
e. Working capital to aid in recovery. The Appropriations Act
provides that grantees may establish grant programs to assist small
businesses for working capital purposes to aid in recovery with funds
allocated under this notice or the Prior Notice. This proviso does not
establish a new eligible activity. All funds to assist small businesses
for working capital must be expended for eligible CDBG activities that
meet a national objective and the other requirements applicable to the
use of funds.
f. Underwriting. Notwithstanding section 105(e)(1) of the HCD Act,
no funds allocated under this notice or the Prior Notice may be
provided to a for-profit entity for an economic development project
under section 105(a)(17) unless such project has been evaluated and
selected in accordance with guidelines developed by HUD pursuant to
section 105(e)(2) for evaluating and selecting economic development
projects. States 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 Part 570.
https://www.ecfr.gov/cgi-bin/text-idx?SID=88dced3d630ad9fd8ab91268dd829f1e&mc=true&node=ap24.3.570_1913.a&rgn=div9.
g. Limitation on use of funds for eminent domain. No funds
allocated under this notice or the Prior Notice
[[Page 40318]]
may 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. Any use of funds for mass transit, railroad,
airport, seaport or highway projects, as well as utility projects which
benefit or serve the general public (including energy-related,
communication-related, water-related, and wastewater-related
infrastructure), 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 projects for the removal of an
immediate threat to public health and safety or brownfields as defined
in the Small Business Liability Relief and Brownfields Revitalization
Act (Pub. L. 107-118) shall be considered a public use for purposes of
eminent domain.
3. Citizen participation waiver and alternative requirement.
Section VI.A.4 of the Prior Notice established citizen participation
requirements for input on grantee action plans and substantial
amendments. To ensure adequate citizen participation and access to
action plans and substantial amendments, the Department is deleting and
replacing the first paragraph in section VI.A.4 and the entirety of
section VI.A.4.a of the Prior Notice with the following to extend the
minimum amount of time grantees are required to publish action plans
and substantial amendments for public comment from 14 calendar days to
at least 30 calendar days. These paragraphs shall apply to initial
action plans and all substantial amendments submitted pursuant to this
notice.
``4. Citizen participation waiver and alternative requirement. To
permit a more streamlined process and ensure disaster recovery grants
are awarded in a timely manner, provisions of 42 U.S.C. 5304(a)(2) and
(3), 42 U.S.C. 12707, 24 CFR 570.486, 24 CFR 1003.604, and 24 CFR
91.115(b) and (c), with respect to citizen participation requirements,
are waived and replaced by the requirements below. The streamlined
requirements do not mandate public hearings but do require the grantee
to provide a reasonable opportunity (at least 30 days) for citizen
comment and ongoing citizen access to information about the use of
grant funds. The streamlined citizen participation requirements for a
grant under this notice are:
a. Publication of the action plan, opportunity for public comment,
and substantial amendment criteria. Before the grantee adopts the
action plan for this grant or any substantial amendment to the action
plan, the grantee will publish the proposed plan or amendment. The
manner of publication must include prominent posting on the grantee's
official website and must afford citizens, affected local governments,
and other interested parties a reasonable opportunity to examine the
plan or amendment's contents. The topic of disaster recovery should be
navigable by citizens from the grantee's (or relevant agency's)
homepage. Grantees are also encouraged to notify affected citizens
through electronic mailings, press releases, statements by public
officials, media advertisements, public service announcements, and/or
contacts with neighborhood organizations. Plan publication efforts must
meet the effective communications requirements of 24 CFR 8.6 and other
fair housing and civil rights requirements, such as the effective
communication requirements under the Americans with Disabilities Act.
Grantees are responsible for ensuring that all citizens have equal
access to information about the programs, including persons with
disabilities and limited English proficiency (LEP). Each grantee must
ensure that program information is available in the appropriate
languages for the geographic areas to be served and take appropriate
steps to ensure effective communications with persons with disabilities
pursuant to 24 CFR 8.6 and other fair housing and civil rights
requirements, such as the effective communication requirements under
the Americans with Disabilities Act. Since State grantees under this
notice may make grants throughout the State, including to entitlement
communities, States should carefully evaluate the needs of persons with
disabilities and those with limited English proficiency. For assistance
in ensuring that this information is available to LEP populations,
recipients should consult the Final Guidance to Federal Financial
Assistance Recipients Regarding Title VI, Prohibition Against National
Origin Discrimination Affecting Limited English Proficient Persons,
published on January 22, 2007, in the Federal Register (72 FR 2732) and
at: https://www.lep.gov/guidance/HUD_guidance_Jan07.pdf
Subsequent to publication of the action plan, the grantee must
provide a reasonable time frame (again, no less than 30 days) and
method(s) (including electronic submission) for receiving comments on
the plan or substantial amendment. In its action plan, each grantee
must specify criteria for determining what changes in the grantee's
plan constitute a substantial amendment to the plan. At a minimum, the
following modifications will constitute a substantial amendment: A
change in program benefit or eligibility criteria; the addition or
deletion of an activity; or the allocation or reallocation of a
monetary threshold specified by the grantee in its action plan. The
grantee may substantially amend the action plan if it follows the same
procedures required in this notice for the preparation and submission
of an action plan for disaster recovery.''
4. Cost Verification. Section VI.A.2.a of the Prior Notice
established the requirements for contents of action plans submitted in
response to the Prior Notice and this notice. To further strengthen the
ability of grantees to demonstrate that project costs funded with CDBG-
DR are necessary and reasonable, section VI.A.2.a of the Prior Notice
is amended by adding a new paragraph (14) to read as follows. This
requirement shall apply to the substantial amendment submitted by
Puerto Rico, Texas, Florida, and the U.S. Virgin Islands pursuant to
section IV.A.2.a of this notice:
``14. A description of the grantee's controls for assuring that
construction costs are reasonable and consistent with market costs at
the time and place of construction. The method and degree of analysis
may vary dependent upon the circumstances surrounding a particular
project (e.g., project type, risk, costs), but the description must
address controls for housing projects involving eight or more units
(whether new construction, rehabilitation, or reconstruction), economic
revitalization projects (involving, construction, rehabilitation or
reconstruction), and infrastructure projects. HUD may issue guidance to
grantees and may require a grantee to verify cost reasonableness from
an independent and qualified third-party architect, civil engineer, or
construction manager.''
5. Additional Specific Criteria and Conditions to Mitigate Risk.
HUD is required to design an internal control plan for disaster relief
funding based on standard guidance issued by the Director of the Office
of Management and Budget on March 30, 2018, to address known internal
control risks related to disaster funding provided under the
Appropriations Act and the Prior Appropriation. Both the
[[Page 40319]]
Appropriations Act and the Prior Appropriation also require the
Secretary to certify in advance of signing a grant agreement, that the
grantee has proficient financial controls and procurement processes,
and has established adequate procedures to prevent any duplication of
benefits as defined by section 312 of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C. 5155), ensure timely
expenditure of funds, maintain comprehensive websites regarding all
disaster recovery activities assisted with these funds, and detect and
prevent waste, fraud, and abuse of funds. Additionally, 2 CFR 200.205
requires the Department to assess the risk of each grantee and 2 CFR
200.207(a) provides that specific conditions may be placed on the grant
award based upon that assessment of risk. To ensure the effective
implementation of the internal controls discussed above, the Department
is adding a new paragraph VI.A.32 to the Prior Notice. This paragraph
will also apply to funds provided under this notice as well as the
Prior Notice:
``32. Additional Criteria and Specific Conditions to Mitigate Risk.
To ensure the effective implementation of the internal control plan
required under the Appropriations Act and grantee implementation of the
financial controls, procurement processes, and other procedures that
are the subject of the certification by the Secretary, the Department
has and may continue to establish specific criteria and conditions for
each grant award as provided for at 2 CFR 200.205 and 200.207(a),
respectively, to mitigate the risk of the grant. The Secretary shall
specify any such criteria and the resulting conditions in the grant
conditions governing the award. These criteria may include, but need
not be limited to, a consideration of the internal control framework
established by the grantee to ensure compliant implementation of its
financial controls, procurement processes and payment of funds to
eligible entities, as well as the grantee's risk management strategy
for information technology systems established to implement CDBG-DR
funded programs. Additionally, the Secretary may amend the grant
conditions to mitigate risk of a grant award at any point at which the
Secretary determines a condition to be required to protect the Federal
financial interest or to advance recovery.''
6. Clarification of Waiver of Section 414 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.).
The Prior Notice established a waiver associated with Section 414 of
the Stafford Act for homeowner occupants and tenants displaced because
of the disaster. The waiver is applicable to ``CDBG-DR funded projects
commencing more than one year after the date of the Presidentially
declared disaster.'' The Department is amending this provision to
clarify the point at which a project is determined to have
``commenced,'' by amending paragraph VI.A.23.f of the Prior Notice by
replacing it in its entirety with the following:
``f. Waiver of Section 414 of the Stafford Act. Section 414 of the
Stafford Act (42 U.S.C. 5181) provides that ``Notwithstanding any other
provision of law, no person otherwise eligible for any kind of
replacement housing payment under the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970 (Pub. L. 91-646) [42
U.S.C. 4601 et seq.] [``URA''] shall be denied such eligibility as a
result of his being unable, because of a major disaster as determined
by the President, to meet the occupancy requirements set by [the
URA].'' Accordingly, homeowner occupants and tenants displaced from
their homes as a result of the identified disasters and who would have
otherwise been displaced as a direct result of any acquisition,
rehabilitation, or demolition of real property for a federally funded
program or project may become eligible for a replacement housing
payment notwithstanding their inability to meet occupancy requirements
prescribed in the URA. Section 414 of the Stafford Act (including its
implementing regulation at 49 CFR 24.403(d)(1)), is waived to the
extent that it would apply to real property acquisition, rehabilitation
or demolition of real property for a CDBG- DR funded project commencing
more than one year after the date of the latest applicable
Presidentially declared disaster undertaken by the grantees, or
subrecipients, provided that the project was not planned, approved, or
otherwise underway prior to the disaster. For purposes of this
paragraph, a CDBG-DR funded project shall be determined to have
commenced on the earliest of: (1) The date of an approved Request for
Release of Funds and certification, or (2) the date of completion of
the site-specific review when a program utilizes Tiering, or (3) the
date of sign-off by the approving official when a project converts to
exempt under 24 CFR 58.34(a)(12). The Department has surveyed other
Federal agencies' interpretation and implementation of Section 414 and
found varying views and strategies for long-term, post-disaster
projects involving the acquisition, rehabilitation, or demolition of
disaster-damaged housing. The Secretary has the authority to waive
provisions of the Stafford Act and its implementing regulations that
the Secretary administers in connection with the obligation of funds
made available by this notice, or the grantees' use of these funds. The
Department has determined that good cause exists for a waiver and that
such waiver is not inconsistent with the overall purposes of title I of
the HCD Act.
(1) The waiver will simplify the administration of the disaster
recovery process and reduce the administrative burden associated with
the implementation of Stafford Act Section 414 requirements for
projects commencing more than one year after the date of the
Presidentially declared disaster considering most of such persons
displaced by the disaster will have returned to their dwellings or
found another place of permanent residence.
(2) This waiver does not apply with respect to persons that meet
the occupancy requirements to receive a replacement housing payment
under the URA nor does it apply to persons displaced or relocated
temporarily by other HUD-funded programs or projects. Such persons'
eligibility for relocation assistance and payments under the URA is not
impacted by this waiver.''
7. Clarification of the Environmental Review requirements. The
Prior Notice provided guidance on the adoption of another Federal
agency's environmental review for CDBG-DR projects as permitted by the
Prior Appropriation. The Appropriations Act goes beyond the Prior
Appropriation and authorizes recipients of CDBG-DR funds under the
Appropriations Act that use such funds to supplement Federal assistance
provided under section 408(c)(4) of the Stafford Act to adopt, without
review or public comment, any environmental review, approval, or permit
performed by a Federal agency to satisfy responsibilities with respect
to environmental review, approval or permit. Accordingly, the
Department is amending paragraph VI.A.24.b of the Prior Notice by
replacing it in its entirety with the following:
``b. Adoption of another agency's environmental review. In
accordance with the Appropriations Act, grant recipients of Federal
funds that use such funds to supplement Federal assistance provided
under section 408(c)(4) as well as sections 402, 403, 404, 406, 407 or
502 of the Stafford Act may adopt, without review or public comment,
any environmental review, approval, or
[[Page 40320]]
permit performed by a Federal agency, and such adoption shall satisfy
the responsibilities of the recipient with respect to such
environmental review, approval, or permit that is required by the HCD
Act. The grant recipient must notify HUD in writing of its decision to
adopt another agency's environmental review. The grant recipient must
retain a copy of the review in the grantee's environmental records.''
8. Low- and moderate-income national objective standard
(Commonwealth of Puerto Rico only). Section 102(a)(20) of the HCD Act
defines ``persons of low and moderate income'' and ``low- and moderate
income persons.'' Subparagraph (B) of this definition authorizes the
Secretary to establish for any area percentages of median income that
are higher or lower than the percentages defined as ``low- and
moderate-income'' under 102(a)(20)(A), if the Secretary finds such
variations to be necessary because of unusually high or low family
incomes in such areas. Due to the unusually low incomes in Puerto Rico,
residents that meet the CDBG program definition of ``low- and moderate-
income'' by having incomes of 80 percent AMI or less, also remain below
the Federal poverty level. Therefore, the Department is increasing the
income limits for low- and moderate-income persons in Puerto Rico,
which will be listed in income tables posted on the HUD Exchange
website. Under this adjustment, Puerto Rico may use these alternative
income limits when determining that activities undertaken with CDBG-DR
funds meet the low- and moderate-income benefit CDBG national objective
criteria. These income limits apply only to the use of CDBG-DR funds
under this notice and the Prior Notice.
B. Housing
9. Modification of Affordability Periods. The Prior Notice imposed
a twenty-year (20-year) affordability period for all rental properties
assisted with CDBG-DR funds under the Prior Appropriation. The
Department, however, is amending this requirement to apply the
affordability requirements to rental projects as defined below. The
Department is amending paragraph VI.B.34 of the Prior Notice by
replacing it in its entirety with the following:
``34. Addressing Unmet Affordable Rental Housing Needs. The grantee
must identify in its action plan how it will address the
rehabilitation, reconstruction, replacement, and new construction of
rental housing that is affordable to low- and moderate-income
households in the most impacted and distressed areas and ensure that
adequate funding from all available sources, including CDBG-DR grant
funds, are dedicated to addressing the unmet needs identified in its
action plan pursuant to paragraph A.2.a.(3) of section VI of this
notice. To meet the low- and moderate-income housing national
objective, affordable rental housing funded under this notice must be
rented to a low- and moderate-income person at affordable rents. This
notice requires grantees to impose the following minimum affordability
periods enforced with recorded use restrictions, covenants, deed
restrictions, or other mechanisms to ensure that rental housing remains
affordable for the required period of time:
------------------------------------------------------------------------
Minimum
period of
Rental housing activity affordability
(years)
------------------------------------------------------------------------
Rehabilitation or reconstruction of multi-family rental 15
projects with eight or more units......................
New construction multi-family rental projects with five 20
or more units..........................................
------------------------------------------------------------------------
The action plan must, at a minimum, provide (1) a definition of
``affordable rents''; (2) the income limits for tenants of rental
housing that is rehabilitated, reconstructed or constructed with CDBG-
DR funds; and (3) a minimum affordability period of fifteen (15) years
for the rehabilitation or reconstruction of multi-family rental
projects with eight or more units, and a minimum affordability period
of twenty (20) years for the new construction of multi-family rental
units with five or more units. If a rental project that requires
rehabilitation or reconstruction is subject to existing affordability
requirements associated with other funding sources, grantees may
provide in their action plan that the 15-year affordability period
required under this notice may run concurrently (or overlap) with the
affordability requirements associated with such other funding.
10. Affordability Period for New Construction of Single-Family LMI
Homeowner Housing. Grantees receiving funds under this notice are
required to implement a minimum five-year affordability period on all
newly constructed single-family housing that is to be made available
for low- and moderate-income homeownership. This requirement for an
affordability period does not apply to the rehabilitation or
reconstruction of single-family housing. This notice requires grantees
to develop and impose affordability (i.e., resale and recapture)
restrictions for single-family housing newly constructed with CDBG-DR
funds and made available for affordable homeownership to low- and
moderate-income persons, and to enforce those restrictions through
recorded deed restrictions, covenants, or other similar mechanisms, for
a period not less than five years. Grantees shall establish resale or
recapture requirements for housing funded pursuant to this paragraph
and shall outline those requirements in the action plan or substantial
amendment in which the activity is proposed. The resale and recapture
provisions must clearly describe the terms of the resale and recapture
provisions, the specific circumstances under which these provisions
will be used, and how the provisions will be enforced.
11. CDBG-DR Housing Assistance and FEMA's Permanent and Semi-
Permanent Housing Programs. The Prior Appropriation and the
Appropriations Act prohibit the use of CDBG-DR funds for activities
that are reimbursable by FEMA and the U.S. Army Corps of Engineers. In
addition, paragraph VI.A.25 of the Prior Notice requires grantees to
ensure that CDBG-DR funds are not used to duplicate funding provided by
these agencies or any other potential sources of assistance. As with
all sources of FEMA assistance, grantees are reminded that in
jurisdictions in which FEMA has implemented its Permanent or Semi-
Permanent Housing program, grantees must ensure that CDBG-DR funds are
not used in violation of the above two prohibitions. Grantees must also
establish policies and procedures to provide for the repayment of a
CDBG-DR award when assistance is subsequently provided for that same
purpose from FEMA or other sources.
[[Page 40321]]
12. Rehabilitation and Reconstruction Cost-Effectiveness. In its
Federal Register notice allocating additional CDBG-DR funds for
Louisiana floods and 2016 disasters (82 FR 5591), the Department
required grantees receiving funds under that notice to consider cost-
effectiveness of residential rehabilitation or reconstruction projects
relative to other alternatives. In this notice, the Department is
similarly requiring each grantee to establish policies and procedures
to assess the cost-effectiveness of each proposed project undertaken to
assist a household under any residential rehabilitation or
reconstruction program funded under this notice or the Prior Notice.
The policies and procedures must address criteria for determining when
the cost of the rehabilitation or reconstruction of the unit will not
be cost-effective relative to other means of assisting the property-
owner, such as buyout or acquisition of the property, or the
construction of area-wide protective infrastructure, rather than
individual building mitigation solutions designed to protect individual
structures (such as elevating an existing structure). For example, as
the grantee in designing its program, it might choose as comparison
criteria the rehabilitation costs derived from the RS Means Residential
Cost Data and costs to buyout or acquire the property as a means of
determining whether to fund a rehabilitation project. A grantee may
also consider offering different housing alternatives, as appropriate,
such as manufactured housing options. A grantee may find it necessary
to provide exceptions on a case-by-case basis to the maximum amount of
assistance or cost effectiveness criteria and must describe the process
it will use to make such exceptions in its policies and procedures.
Each grantee must adopt policies and procedures that communicate how it
will analyze the circumstances under which an exception is needed, how
it will demonstrate that the amount of assistance is necessary and
reasonable, and how the grantee will make reasonable accommodations to
provide accessibility features necessary to accommodate an occupant
with a disability. All CDBG-DR expenditures remain subject to the cost
principles in 2 CFR part 200, subpart E--Cost Principles, including the
requirement that costs be necessary and reasonable for the performance
of the grantee's CDBG-DR grant.
C. Infrastructure
13. Infrastructure planning and design. CDBG-DR allocations
provided for under this notice are informed in part by the Department's
assessment of unmet infrastructure needs and accordingly, the
Department is establishing infrastructure planning and design
requirements for grantees subject to the provisions of this notice and
the Prior Notice. For funds allocated pursuant to the Prior Notice and
this notice, the Department is requiring grantees to address long-term
recovery and hazard mitigation planning in the action plan or
substantial amendment, whichever is applicable under this notice. Each
grantee must include a description of how the grantee plans to:
a. Promote sound, sustainable long-term recovery planning informed
by a post-disaster evaluation of hazard risk, especially land-use
decisions that reflect responsible flood plain management and take into
account future possible extreme weather events and other natural
hazards and long-term risks;
b. Adhere to the elevation requirements established in paragraph
B.32.e of section VI of the Prior Notice;
c. Coordinate with local and regional planning efforts to ensure
consistency, including how the grantee will promote community-level
and/or regional (e.g., multiple local jurisdictions) post-disaster
recovery and mitigation planning;
d. For infrastructure allocations, the grantee must also describe:
i. How mitigation measures will be integrated into rebuilding
activities and the extent to which infrastructure activities funded
through this grant will achieve objectives outlined in regionally or
locally established plans and policies that are designed to reduce
future risk to the jurisdiction;
ii. How infrastructure activities will be informed by a
consideration of the costs and benefits of the project;
iii. How the grantee will seek to ensure that infrastructure
activities will avoid disproportionate impact on vulnerable populations
as referenced in paragraph A.2.a(4) of section VI in the Prior Notice
and create opportunities to address economic inequities facing local
communities;
iv. How the grantee will align investments with other planned state
or local capital improvements and infrastructure development efforts,
and will work to foster the potential for additional infrastructure
funding from multiple sources, including existing state and local
capital improvement projects in planning, and the potential for private
investment; and
v. The extent to which the grantee will employ adaptable and
reliable technologies to guard against premature obsolescence of
infrastructure.
Grantees are encouraged to review the additional guidance on
predevelopment principles are described in the Federal Resource Guide
for Infrastructure Planning and Design: (http://portal.hud.gov/hudportal/documents/huddoc?id=BAInfraResGuideMay2015.pdf)
14. Discipline and Accountability in the Environmental Review and
Permitting of Infrastructure Projects. Executive Order 13807, signed by
the President on August 15, 2017, establishes a coordinated,
predictable, and transparent process for the review and permitting of
infrastructure projects. In addition, the Federal Permitting
Improvement Steering Council has issued a standard operating procedure
to coordinate Federal agency reporting on the environmental review and
permitting of covered projects pursuant to the Fixing America's Surface
Transportation Act (FAST-41) (Pub. L. 114-94). Under FAST-41, a covered
project is defined as any activity in the United States that requires
authorization or environmental review by a Federal agency involving
construction of infrastructure for renewable or conventional energy
production, electricity transmission, surface transportation, aviation,
ports and waterways, water resource projects, broadband, pipelines,
manufacturing, or any other sector as determined by a majority vote of
the Council that (1) is subject to National Environmental Policy Act of
1969 (NEPA); is likely to require a total investment of more than
$200,000,000; and does not qualify for abbreviated authorization or
environmental review processes under any applicable law; or (2) is
subject to NEPA and the size and complexity of which, in the opinion of
the Council, make the project likely to benefit from enhanced oversight
and coordination, including a project likely to require authorization
from or environmental review involving more than two Federal agencies;
or the preparation of an environmental impact statement under NEPA.
CDBG-DR grantees may choose to participate in reporting on their
environmental review and permitting of covered projects under FAST-41.
15. CDBG-DR Funds as Match for FEMA 428 Public Assistance Projects.
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 Stafford Act. Grantees may
use CDBG-DR funds as a matching requirement, share, or contribution for
Public Assistance Projects financed pursuant to Section 428, but as in
other instances in which grantee use CDBG-
[[Page 40322]]
DR funds to meet local matching requirements, 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.
D. Economic Revitalization
16. Waiver to permit tourism marketing (U.S. Virgin Islands only).
The U.S. Virgin Islands has requested a waiver to allow the Territory
to use up to $5,000,000 in CDBG-DR funds to promote travel to disaster-
impacted areas. Tourism is the primary economic contributor to the U.S.
Virgin Island's economy, estimated to account for between 30 and 80
percent of the Territory's economy. The U.S. Virgin Islands indicated
that for several weeks following the disasters, airports and seaports
remained closed and due to damage to hotels and a perception that the
islands have been completely decimated, tourism has remained low. The
Territory indicates that many of its largest hotels will not reopen
until late 2019 or 2020, with weekly accommodation capacity dropping
from 23,000 in February 2017 to 13,000 in February 2018. The
Territory's request also notes that the decline in tourism has had a
particularly adverse impact on low- and moderate-income residents that
depend on the industry for employment.
The Territory has documented a sharp decline in visitors to the
islands, with a corresponding decline in visitor spending and Territory
revenues. Prior to the disasters, the Territory reported total monthly
visitor expenditures of $84.8 million in October 2016, contrasted to
total tourist spending of $49.8 million and lost excursionist spending
of $71.1 million in October 2017, after the storms. The Territory
estimates that total tourism-related losses caused by the 2017
disasters are expected to approach $1 billion in the 12 months
following the storms, amounting to almost 70% of the total revenue
generated by tourism in 2016.
Tourism industry support, such as a national and international
consumer awareness advertising campaign for an area in general, is
ineligible for CDBG assistance. However, HUD recognizes that such
support can be a useful recovery tool in a damaged regional economy
that depends on tourism for most of its jobs and tax revenues. In the
past, HUD has granted tourism waivers for several CDBG-DR disaster
recovery efforts. As the U.S. Virgin Islands is proposing advertising
and marketing activities rather than direct assistance to tourism-
dependent businesses, and because the measures of long-term benefit
from the proposed activities must be derived using indirect means, 42
U.S.C. 5305(a) is waived only to the extent necessary to make eligible
use of no more than $5,000,000 for assistance to promote the Territory
in general or specific components of the islands. Additionally, no
elected officials shall appear in tourism marketing materials financed
with CDBG-DR funds. Given the importance of tourism to the overall
economy, HUD is authorizing this use of funds without regard to unmet
housing need. This waiver will expire two years after the Territory
first draws CDBG-DR funds under the allocation provided in the Prior
Notice. In providing similar waivers for other CDBG-DR grantees, the
Department has often identified issues in the procurement of tourism
marketing services, with grantees adding CDBG-DR funds to existing
tourism marketing contracts procured with other sources of funds. In
providing this waiver, HUD advises the Territory to ensure that
contracts funded pursuant to this waiver with CDBG-DR funds comply with
applicable procurement requirements. The grantee must also develop
metrics to demonstrate the impact of CDBG-DR expenditures on the
tourism sector of the economy and shall identify those metrics in the
initial substantial amendment submitted pursuant to this notice.
17. Waiver to permit tourism and business marketing (Commonwealth
of Puerto Rico only). The Commonwealth of Puerto Rico has requested a
waiver to allow the Commonwealth to use up to $15,000,000 in CDBG-DR
funds to promote travel and to attract new businesses to disaster-
impacted areas. Puerto Rico's request indicated that prior to the
storms, tourism accounted for 8 percent of the economy. One month after
the disasters, however, one third of the island's hotels remained
shuttered and beaches remained closed for swimming due to possible
water contamination. The Commonwealth's request notes that insular
areas of the island have been particularly slow to recover to historic
levels of tourism activity. Puerto Rico anticipates the addition of
over 2,000 tourist accommodations this year and accordingly, seeks to
use CDBG-DR funds to target outreach efforts through a marketing
campaign to reach potential visitors that may not be aware of the pace
of recovery in the island's tourist areas.
The Commonwealth's waiver request includes the proposed use of
CDBG-DR funds to also market the island to new businesses. Puerto Rico
notes that its declining economic conditions prior to the storms, as
reflected through the largest-ever federal bankruptcy by a local
government, were exacerbated by the disasters. The top five economic
sectors with reported losses to the U.S. Small Business Administration
as result of the storms include real estate, accommodations and food
services, health care, retail trade, and manufacturing. Unemployment in
February 2016 was reported at 10.6%, with a decline in jobs in non-farm
industries from 871,200 jobs in September 2017 to 848,300 jobs in
February 2018. The Commonwealth's request notes that the unprecedented
federal investment in the island's damaged housing stock and
infrastructure also presents an opportunity to introduce and re-
introduce businesses across the nation and around the world to Puerto
Rico as an attractive location for new business investment.
Tourism and business advertising campaigns for an area in general,
are ineligible for CDBG-DR assistance. However, HUD recognizes that
such support can be a useful recovery tool in a damaged regional
economy that depends on tourism and seeks to attract new business
investment to generate new jobs and tax revenues. HUD has previously
granted similar waivers for several CDBG-DR disaster recovery efforts.
As the Commonwealth of Puerto Rico is proposing advertising and
marketing activities rather than direct assistance to tourism-dependent
and other businesses, and because the measures of long-term benefit
from the proposed activities must be derived using indirect means, 42
U.S.C. 5305(a) is waived only to the extent necessary to make eligible
use of no more than $15,000,000 for assistance to promote the
Commonwealth in general or specific communities. No elected officials
shall appear in tourism or business marketing materials financed with
CDBG-DR funds. Given the importance of tourism to the overall economy,
HUD is authorizing this use of funds without regard to unmet housing
need. This waiver will expire two years after the Commonwealth first
draws CDBG-DR funds under the allocation provided in the Prior Notice.
In providing similar waivers for other CDBG-DR grantees, the Department
has often identified issues in the procurement of tourism and business
marketing services, with grantees adding CDBG-DR funds to existing
tourism and business marketing contracts procured with other sources of
funds. In providing this waiver, HUD
[[Page 40323]]
advises the Commonwealth to ensure that contracts funded pursuant to
this waiver with CDBG-DR funds comply with applicable procurement
requirements. The grantee must also develop metrics to demonstrate the
impact of CDBG-DR expenditures on the tourism and other sectors of the
economy and shall identify those metrics in the initial substantial
amendment submitted pursuant to this notice.
V. Duration of Funding
The law, as amended, requires that funds provided under the
Appropriations Act and Prior Appropriation be expended within two years
of the date that HUD obligates funds to a grantee, but also authorizes
the Office of Management and Budget (OMB) to provide a waiver of this
requirement. OMB has waived this requirement for a combined total of
$35,390,000,000 of CDBG-DR funds appropriated under the Prior
Appropriation and the Appropriations Act. Notwithstanding the OMB
waiver, however, the provision of the Prior Notice that requires each
grantee to expend 100 percent of its total allocation of CDBG-DR funds
on eligible activities within six years of HUD's initial obligation of
funds remains in effect. For grantees receiving an allocation of funds
under the Prior Notice, the six-year expenditure deadline commences
with initial obligation of funds provided under the Prior Notice. For
grantees receiving an initial allocation of funds under this Notice,
the six-year expenditure deadline commences with the initial obligation
of funds provided under this notice. Further, consistent with 31 U.S.C.
1555 and OMB Circular No. A-11, if the Secretary or the President
determines that the purposes for which the appropriation has been made
have been carried out and no disbursements have been made against the
appropriation for two consecutive fiscal years, any remaining
unobligated balance will be made unavailable for obligation or
expenditure.
VI. Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers for the disaster
recovery grants under this notice are as follows: 14.228 for State CDBG
grantees.
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 for public inspection between 8 a.m. and 5 p.m. weekdays in
the Regulations Division, Office of General Counsel, Department of
Housing and Urban Development, 451 7th Street SW, Room 10276,
Washington, DC 20410-0500. 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). Hearing- or speech-impaired
individuals may access this number through TTY by calling the Federal
Relay Service at 800-877-8339 (this is a toll-free number).
Dated: August 8, 2018.
Neal J. Rackleff,
Assistant Secretary.
Appendix A--Detailed Methodology (for Federal Notice Appendix)
Allocation of CDBG-DR Funds to Most Impacted and Distressed Areas Due
to 2017 Federally Declared Disasters and Allocation of Mitigation Funds
for 2015, 2016, and 2017 Federally Declared Disasters
Background
The Bipartisan Budget Act of 2018, Public Law 115-123, enacted
on February 9, 2018, appropriated $28,000,000,000 through the
Community Development Block Grant disaster recovery (CDBG-DR)
program. The statutory text related to the allocation is as follows:
For an additional amount for ``Community Development Fund'',
$28,000,000,000, to remain available until expended, for necessary
expenses for activities authorized under title I of the Housing and
Community Development Act of 1974 (42 U.S.C. 5301 et seq.) related
to disaster relief, long-term recovery, restoration of
infrastructure and housing, economic revitalization, and mitigation
in the most impacted and distressed areas resulting from a major
declared disaster that occurred in 2017 (except as otherwise
provided under this heading) pursuant to the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et
seq.): Provided, That funds 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) at the discretion of the Secretary: Provided further, That
of the amounts made available under this heading, up to
$16,000,000,000 shall be allocated to meet unmet needs for grantees
that have received or will receive allocations under this heading
for major declared disasters that occurred in 2017 or under the same
heading of Division B of Public Law 115-56, except that, of the
amounts made available under this proviso, no less than
$11,000,000,000 shall be allocated to the States and units of local
government affected by Hurricane Maria, and of such amounts
allocated to such grantees affected by Hurricane Maria,
$2,000,000,000 shall be used to provide enhanced or improved
electrical power systems: Provided further, That to the extent
amounts under the previous proviso are insufficient to meet all
unmet needs, the allocation amounts related to infrastructure shall
be reduced proportionally based on the total infrastructure needs of
all grantees: Provided further, That of the amounts made available
under this heading, no less than $12,000,000,000 shall be allocated
for mitigation activities to all grantees of funding provided under
this heading, section 420 of division L of Public Law 114-113,
section 145 of division C of Public Law 114-223, section 192 of
division C of Public Law 114-223 (as added by section 101(3) of
division A of Public Law 114-254), section 421 of division K of
Public Law 115-31, and the same heading in division B of Public Law
115-56, and that such mitigation activities shall be subject to the
same terms and conditions under this subdivision, as determined by
the Secretary: Provided further, That all such grantees shall
receive an allocation of funds under the preceding proviso in the
same proportion that the amount of funds each grantee received or
will receive under the second proviso of this heading or the
headings and sections specified in the previous proviso bears to the
amount of all funds provided to all grantees specified in the
previous proviso: Provided further, That of the amounts made
available under the second and fourth provisos of this heading, the
Secretary shall allocate to all such grantees an aggregate amount
not less than 33 percent of each such amounts of funds provided
under this heading within 60 days after the enactment of this
subdivision based on the best available data (especially with
respect to data for all such grantees affected by Hurricanes Harvey,
Irma, and Maria), and shall allocate no less than 100 percent of the
funds provided under this heading by no later than December 1, 2018:
. . . Provided further, That of the amounts made available under
this heading, up to $15,000,000 shall be made available for capacity
building and technical assistance, including assistance on
contracting and procurement processes, to support States, units of
general local government, or Indian tribes (and their subrecipients)
that receive allocations pursuant to this heading, received disaster
recovery allocations under the same heading in Public Law 115-56, or
may receive similar allocations for disaster recovery in future
appropriations Acts: Provided further, That of the amounts made
available under this heading, up to $10,000,000 shall be
transferred, in aggregate, to ``Department of Housing and Urban
Development--Program Office Salaries and Expenses--Community
Planning and Development'' for necessary costs, including
information technology costs, of administering and overseeing the
obligation and expenditure of amounts under this heading:
Further, under the General Provisions of the Act in Section
21102:
Any funds made available under the heading ``Community
Development Fund''
[[Page 40324]]
under this subdivision that remain available, after the other funds
under such heading have been allocated for necessary expenses for
activities authorized under such heading, shall be used for
additional mitigation activities in the most impacted and distressed
areas resulting from a major declared disaster that occurred in
2014, 2015, 2016 or 2017: Provided, That such remaining funds shall
be awarded to grantees of funding provided for disaster relief under
the heading ``Community Development Fund'' in this subdivision,
section 420 of division L of Public Law 114-113, section 145 of
division C of Public Law 114-223, section 192 of division C of
Public Law 114-223 (as added by section 101(3) of division A of
Public Law 114-254), section 421 of division K of Public Law 115-31,
and the same heading in division B of Public Law 115-56 subject to
the same terms and conditions under this subdivision and such Acts
respectively: Provided further, That each such grantee shall receive
an allocation from such remaining funds in the same proportion that
the amount of funds such grantee received under this subdivision and
under the Acts specified in the previous proviso bears to the amount
of all funds provided to all grantees specified in the previous
proviso.
The methodology for allocating these funds has two core parts:
Unmet Needs: Up to $16 billion for the remaining unmet
needs of communities most impacted by a disaster in 2017. After
factoring in the $35 million set-aside for HUD expenses, up to
$15.965 billion is available for unmet needs, of which no less than
$11 billion is provided to communities impacted by Hurricane Maria,
specifically the Commonwealth of Puerto Rico and United States
Virgin Islands. These funds are allocated based on a calculation of
unmet needs as described below after taking into account the $7.458
billion of CDBG-DR previously allocated for 2017 disasters.
Mitigation: No less than $12 billion for mitigation
activities for grantees who have received CDBG-DR funding under this
appropriation or earlier appropriations covering disasters in 2015,
2016, and 2017. This allocation is based on each grantee's
proportional share of total funds allocated for all of the eligible
disasters.
Allocating for remaining unmet needs of 2017
Most impacted and distressed areas
As with prior CDBG-DR appropriations, HUD is not obligated to
allocate funds for all major disasters declared in 2017. 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 jurisdictions with major disasters that meet
three standards:
(1) Individual Assistance/IHP designation. HUD has limited
allocations to those disasters where FEMA had determined the damage
was sufficient to declare the disaster as eligible to receive
Individual and Households Program (IHP) funding.
(2) Concentrated damage. HUD has limited its estimate of serious
unmet housing need to counties and Zip Codes with high levels of
damage, collectively referred to as ``most impacted areas''. For
this allocation, HUD is defining most impacted areas as either most
impacted counties--counties exceeding $10 million in serious unmet
housing needs--and most impacted Zip Codes--Zip Codes with $2
million or more of serious unmet housing needs. The calculation of
serious unmet housing needs is described below.
(3) Disasters meeting the most impacted threshold. Only 2017
disasters that meet this requirement for most impacted damage are
funded:
a. One or more most impacted county
b. An aggregate of most impacted Zip Codes of $10 million or
greater
For disasters that meet the most impacted threshold described
above, the unmet need allocations are based on the following factors
summed together less previous CDBG-DR allocations for the 2017
disasters unmet needs:
(1) Repair estimates for seriously damaged owner-occupied units
without insurance (with some exceptions) in most impacted areas
after FEMA and SBA repair grants or loans;
(2) Repair estimates for seriously damaged rental units occupied by
renters with income less than 50 percent of Area Median Income in
most impacted areas;
(3) Repair and content loss estimates for small businesses with
serious damage denied by SBA;
(4) The estimated local cost share for Public Assistance Category C
to G projects;
(5) $2 billion for Maria-impacted disasters for improvements to the
electric grid; and
(6) An amount to ensure that Maria impacted disasters do not receive
less than $11 billion from Public Law 115-123, with the split
between the eligible disasters in Puerto Rico and the Virgin Islands
based on their relative share of needs as calculated under number 1
to 5 above.
Methods for estimating unmet needs for housing
The data HUD staff have identified as being available to
calculate unmet needs for qualifying disasters come from the FEMA
Individual Assistance program data on housing-unit damage as of
February 22, 2018.
The core data on housing damage for both the unmet housing needs
calculation and the concentrated damage are based on home inspection
data for FEMA's Individual Assistance program. HUD calculates
``unmet housing needs'' as the number of housing units with unmet
needs times the estimated cost to repair those units less repair
funds already provided by FEMA and SBA. Puerto Rico and the Virgin
Island owner damage is calculated based on both real property and
personal property inspections based on findings by HUD that this
likely is a more accurate estimate of serious homeowner damage in
those areas. For the continental U.S., HUD finds its traditional
approach of just using real property damage assessments for owner-
occupied units continues to be effective.
Each of the FEMA inspected owner units are categorized by HUD
into one of five categories:
Minor-Low: Less than $3,000 of FEMA inspected real property
damage.
Minor-High: $3,000 to $7,999 of FEMA inspected real
property damage.
Major-Low: $8,000 to $14,999 of FEMA inspected real
property damage and/or 1 to 4 feet of flooding on the first floor.
Major-High: $15,000 to $28,800 of FEMA inspected real
property damage and/or 4 to 6 feet of flooding on the first floor.
Severe: Greater than $28,800 of FEMA inspected real
property damage or determined destroyed and/or 6 or more feet of
flooding on the first floor.
For the Virgin Islands and Puerto Rico, the damage grouping
would be the higher damage categorization based on the calculation
above or:
Minor-Low: Less than $2,500 of FEMA inspected personal
property damage.
Minor-High: $2,500 to $3,499 of FEMA inspected personal
property damage.
Major-Low: $3,500 to $4,999 of FEMA inspected personal
property damage or 1 to 4 feet of flooding on the first floor.
Major-High: $5,000 to $8,999 of FEMA inspected personal
property damage or 4 to 6 feet of flooding on the first floor.
Severe: Greater than $9,000 of FEMA inspected personal
property damage or determined destroyed and/or 6 or more feet of
flooding on the first floor.
To meet the statutory requirement of ``most impacted'' in this
legislative language, homes are determined to have a high level of
damage if they have damage of ``major-low'' or higher. That is, they
have a real property FEMA inspected damage of $8,000 or flooding
over 1 foot.
Furthermore, a homeowner is determined to have unmet needs if
they reported damage and no insurance to cover that damage and was
outside the 1% risk flood hazard area; for homeowners inside the
flood hazard area, only homeowners without insurance below 120% of
Area Median Income are determined to have unmet needs. Homeowners
without hazard insurance with non-flood damage with incomes below
the greater of national median or 120% of Area Median Income are
included as having unmet needs.
FEMA does not inspect rental units for real property damage so
personal property damage is used as a proxy for unit damage. Each of
the FEMA inspected renter units are categorized by HUD into one of
five categories:
Minor-Low: Less than $1,000 of FEMA inspected personal
property damage.
Minor-High: $1,000 to $1,999 of FEMA inspected personal
property damage.
Major-Low: $2,000 to $3,499 of FEMA inspected personal
property damage or 1 to 4 feet of flooding on the first floor.
Major-High: $3,500 to $7,499 of FEMA inspected personal
property damage or 4 to 6 feet of flooding on the first floor.
[[Page 40325]]
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.
For rental properties, 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 personal property damage
assessment of $2,000 or greater or flooding over 1 foot.
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 Area
Median Income. Units occupied by a tenant with income less than the
greater of the Federal poverty level or 50 percent of 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 Small Business Administration for its disaster
loan program for the subset of homes inspected by both SBA and FEMA
for each eligible disaster. Because SBA is inspecting for full
repair costs, it is presumed to reflect the full cost to repair the
home, which is generally more than the FEMA estimates on the cost to
make the home habitable.
For each household determined to have unmet housing needs (as
described above), their estimated average unmet housing need less
assistance from FEMA and SBA provided for repair to homes with
serious unmet needs. No unmet housing need cost multiplier can be
less than the 25th percentile estimate across all disasters of 2017.
Those minimum cost multipliers are: $40,323 for major damage (low);
$55,812 for major damage (high); and $77,252 for severe damage. The
multipliers used for each disaster is shown below.
----------------------------------------------------------------------------------------------------------------
Serious Unmet Housing Need Multipliers
-----------------------------------------------
Major-Low Major-High Severe
----------------------------------------------------------------------------------------------------------------
California...................................................... $40,323 $55,812 $124,481
Florida......................................................... $42,837 $56,113 $79,096
Georgia......................................................... $40,323 $55,812 $77,252
Missouri........................................................ $40,323 $66,545 $100,947
Puerto Rico..................................................... $40,323 $55,812 $77,252
Texas........................................................... $56,342 $75,414 $101,390
Virgin Islands.................................................. $80,142 $97,672 $116,351
----------------------------------------------------------------------------------------------------------------
Methods for estimating unmet economic revitalization needs
Based on SBA disaster loans to businesses as of 3-22-2018, HUD
calculates the median real estate and content loss by the following
damage categories for each state:
Category 1: real estate + content loss = below 12,000
Category 2: real estate + content loss = 12,000-30,000
Category 3: real estate + content loss = 30,000-65,000
Category 4: real estate + content loss = 65,000-150,000
Category 5: real estate + content loss = above 150,000
For properties with real estate and content loss of $30,000 or
more, HUD calculates the estimated amount of unmet needs for small
businesses by multiplying the median damage estimates for the
categories above by the number of small businesses denied an SBA
loan, including those denied a loan prior to inspection due to
inadequate credit or income (or a decision had not been made), under
the assumption that damage among those denied at pre-inspection have
the same distribution of damage as those denied after inspection.
Methods for estimating unmet infrastructure needs
To calculate unmet needs for infrastructure projects, HUD is
using data obtained from FEMA as of March 30, 2018, showing the
amount FEMA estimates will be needed to repair the permanent public
infrastructure (Categories C to G) to their pre-storm condition. HUD
uses these data to calculate two infrastructure unmet needs:
The estimated local cost share for Public Assistance
Category C to G projects.
An allocation of $2 billion for Maria affected disasters
(Puerto Rico and the Virgin Islands) for ``enhanced or improved
electrical power systems.'' This is allocated between Puerto Rico
and the Virgin Islands based on their relative share of total
estimated Category F Public Assistance cost to repair public
utilities.
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 serious unmet recovery needs as the aggregate of:
Serious unmet housing needs in most impacted counties less
amounts of CDBG-DR previously allocated for serious unmet housing
needs
Serious unmet business needs less amounts of CDBG-DR
previously allocated for serious business needs
FEMA Public Assistance Category C to G local cost share and
the $2 billion additional amount for enhanced or improved electrical
power systems in Puerto Rico and the Virgin Islands
Prior allocations for 2017 disasters are subtracted from this
amount. Because this results in less than $11 billion being
allocated to Maria affected disasters (Puerto Rico and the Virgin
Islands) from Public Law 115-123, an additional amount is added to
those two grantees to reach $11 billion based on their relative
share of needs as calculated under the three bullets above.
This results in an estimate of unmet needs to be allocated from
Public Law 115-123 of $12.031 billion, allowing $3.935 billion to be
allocated to mitigation.
Allocating for mitigation
The allocation of $15.935 billion in mitigation funds (the $12
billion appropriated for mitigation plus the $3.935 billion
remaining after allocation of 100% of unmet needs) is allocated
proportionally based on each grantee's relative share of the $22.425
billion of CDBG-DR funds allocated for unmet needs to disasters
occurring in 2015, 2016, and 2017. For example, the combination of
all grants to Puerto Rico for unmet needs represents 52 percent of
the $22.425 billion allocated for unmet needs. As a result, Puerto
Rico receives 52 percent of the $15.935 billion made available for
mitigation funding.
[FR Doc. 2018-17365 Filed 8-13-18; 8:45 am]
BILLING CODE 4210-67-P