Waivers Granted to and Alternative Requirements for the State of Louisiana's CDBG Disaster Recovery Grant Under the Department of Defense Emergency Supplemental Appropriations To Address Hurricanes in the Gulf of Mexico, and Pandemic Influenza Act, 2006, 34451-34457 [06-5383]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 71, Number 114 (Wednesday, June 14, 2006)]
[Notices]
[Pages 34451-34457]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-5383]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5051-N-04]


Waivers Granted to and Alternative Requirements for the State of 
Louisiana's CDBG Disaster Recovery Grant Under the Department of 
Defense Emergency Supplemental Appropriations To Address Hurricanes in 
the Gulf of Mexico, and Pandemic Influenza Act, 2006

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of waivers, alternative requirements, and statutory 
program requirements.

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SUMMARY: This notice describes additional waivers and alternative 
requirements applicable to the Community Development Block Grant (CDBG) 
disaster recovery grant provided to the State of Louisiana for the 
purpose of assisting in the recovery in the most impacted and 
distressed areas related to the consequences of Hurricanes Katrina and 
Rita in 2005. On February 13, 2006, HUD published an allocation and 
application notice applicable to this grant and four others under the 
same appropriation. As described in the Supplementary Information 
section of this notice, HUD is authorized by statute to waive statutory 
and regulatory requirements and specify alternative requirements for 
this purpose, upon the request of the state grantee. This notice

[[Page 34452]]

for the State of Louisiana also notes statutory provisions affecting 
program design and implementation.

DATES: Effective Date: June 14, 2006.

FOR FURTHER INFORMATION CONTACT: Jan C. Opper, Director, Disaster 
Recovery and Special Issues Division, Office of Block Grant Assistance, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Room 7286, Washington, DC 20410, telephone number (202) 708-3587. 
Persons with hearing or speech impairments may access this number via 
TTY by calling the Federal Information Relay Service at (800) 877-8339. 
Fax inquiries may be sent to Mr. Opper at (202) 401-2044. (Except for 
the ``800'' number, these telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION: 

Authority To Grant Waivers

    The Department of Defense, Emergency Supplemental Appropriations to 
Address Hurricanes in the Gulf of Mexico, and Pandemic Influenza Act, 
2006 (Pub. L. 109-148, approved December 30, 2005) (the 2006 Act) 
appropriates $11.5 billion in Community Development Block Grant funds 
for necessary expenses related to disaster relief, long-term recovery, 
and restoration of infrastructure directly related to the consequences 
of the covered disasters. The State of Louisiana received an allocation 
of $6,200,000,000 from this appropriation. The 2006 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 and guarantees, except for requirements 
related to fair housing, nondiscrimination, labor standards, and the 
environment, upon a request by the state and a finding by the Secretary 
that such a waiver would not be inconsistent with the overall purpose 
of the statute. The following waivers and alternative requirements are 
in response to written requests from the State of Louisiana. The 
Secretary is still considering additional requests related to the 
state's pending action plan amendment; any granted waivers related to 
those requests will be published later.
    The Secretary finds that the following waivers and alternative 
requirements, as described below, are not inconsistent with the overall 
purpose of 42 U.S.C. 5301 et seq., Title I of the Housing and Community 
Development Act of 1974, as amended (the 1974 Act); or of 42 U.S.C. 
12704 et seq., the Cranston-Gonzalez National Affordable Housing Act, 
as amended.
    Under the requirements of the Department of Housing and Urban 
Development Act, as amended (42 U.S.C. 3535(q)), regulatory waivers 
must be published in the Federal Register. The Department is also using 
this notice to provide information about other ways in which the 
requirements for this grant vary from regular CDBG program rules. 
Therefore, HUD is using this notice to make public alternative 
requirements and to note the applicability of disaster recovery-related 
statutory provisions. Compiling this information in a single notice 
creates a helpful resource for Louisiana grant administrators and HUD 
field staff. Waivers and alternative requirements regarding the common 
application and reporting process for all grantees under this 
appropriation were published in a prior notice (71 FR 7666, published 
February 13, 2006).
    Except as described in notices regarding this grant, the statutory 
and regulatory provisions governing the Community Development Block 
Grant program for states, including those at 24 CFR part 570, shall 
apply to the use of these funds.

Descriptions of Changes

    This section of the notice briefly describes the basis for each 
waiver and provides an explanation of related alternative requirements, 
if additional explanation is necessary. This Descriptions section also 
highlights some of the statutory items and alternative requirements 
described in the sections that follow.
    The waivers, alternative requirements, and statutory changes apply 
only to the CDBG supplemental disaster recovery funds appropriated in 
the 2006 Act and allocated to the State of Louisiana. These actions 
provide additional flexibility in program design and implementation and 
note statutory requirements unique to this appropriation.

Eligibility and National Objectives

    Eligibility--buildings for the general conduct of government. The 
state requested a limited waiver of the prohibition on funding 
buildings for the general conduct of government. HUD considered the 
request and agreed that it is consistent with the overall purposes of 
the 1974 Act for the state to be able to use the grant funds under this 
notice to fund the local and state government match for critical FEMA 
Public-Assistance projects that the state has selected in accordance 
with the method described in its Action Plan for Disaster Recovery and 
that the state has determined have substantial value in promoting 
disaster recovery.
    General planning activities use entitlement presumption. The annual 
state CDBG program requires that local government grant recipients for 
planning-only grants must document that the use of funds meets a 
national objective. In the state CDBG program, these planning grants 
are typically used for individual project plans. By contrast, planning 
activities carried out by entitlement communities are more likely to 
include non-project specific plans such as functional land use plans, 
historic preservation plans, comprehensive plans, development of 
housing codes, and neighborhood plans related to guiding long-term 
community development efforts comprising multiple activities funded by 
multiple sources. In the annual entitlement program, these more general 
stand-alone planning activities are presumed to meet a national 
objective under the requirements at 24 CFR 570.208(d)(4). The 
Department notes that almost all effective CDBG disaster 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. Therefore the Department is 
removing the eligibility requirement that CDBG disaster recovery 
assisted planning only grants or state directly administered planning 
activities that will guide recovery in accordance with the 
appropriations act must comply with the state CDBG program rules at 24 
CFR 570.483(b)(5) or (c)(3).
    Special economic development job retention activities. Under the 
public benefit implementing regulations, CDBG grantees are limited to a 
specified annual amount of CDBG assistance per job retained or created 
or amount of CDBG assistance per low- and moderate-income person to 
whom goods or services are provided by the assisted activity. Grantees 
must maintain documentation to show that a job is a retained job or a 
created job and that the job was made available to or taken by a low- 
and moderate-income person. This policy and the specified documentation 
work well and are suitable for relatively small-scale economic 
development programs of hundreds of thousands or a few millions of 
dollars and tens or hundreds of businesses. The State of Louisiana 
plans to undertake a special economic development portfolio whose size 
will exceed $200 million and serve thousands of businesses. The state 
has requested regulatory waivers related to public benefit 
documentation that will help it to implement the bridge loan

[[Page 34453]]

program's large-scale disaster recovery special economic development 
activities in a short timeframe.
    Eligibility--housing related. The waiver that allows new housing 
construction and payment of up to 100 percent of a housing down payment 
is necessary following major disasters in which large numbers of 
affordable housing units have been damaged or destroyed, as is the case 
in the disasters eligible under this notice.
    Compensation for disaster-related losses or housing incentives to 
resettle in Louisiana. The state plans to provide compensation to 
certain homeowners whose homes were damaged during the covered 
disasters, if the homeowners agree to meet the stipulations of the 
published program design. The state may also offer disaster recovery or 
mitigation housing incentives to promote housing development or 
resettlement in particular geographic areas. The Department is waiving 
the 1974 Act and associated regulations to make these uses of grant 
funds eligible.
    Eligibility--tourism. The state plans to provide disaster recovery 
grant assistance to support the tourism industry and promote travel to 
communities in the disaster-impacted areas and has requested an 
eligibility waiver for such activities. Tourism industry support, such 
as a national consumer awareness advertising campaign for an area in 
general, is ineligible for CDBG assistance. However, Congress did make 
such support eligible, within limits, for the CDBG disaster recovery 
funds appropriated for recovery of Lower Manhattan following the 
September 11, 2001, terrorist attacks, and HUD understands that such 
support can be a useful recovery tool in a damaged regional economy 
that depends on tourism for many of its jobs and tax revenues. However, 
because the State of Louisiana 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 regression analysis and other 
indirect means, the waiver will permit use of no more than $30 million 
for assistance for the tourism industry, the assisted activities must 
be designed to support tourism to the most impacted and distressed 
areas related to the effects of Hurricanes Katrina and Rita, and the 
waiver will expire two years after the date of this notice, after which 
previously ineligible support for the tourism industry, such as 
marketing a community as a whole, will again be ineligible for CDBG 
disaster recovery funding.
    Anti-pirating. The limited waiver of the anti-pirating requirements 
allows the flexibility to provide assistance to a business located in 
another state or market area within the same state if the business was 
displaced from a declared area within the state by the disaster and the 
business wishes to return. This waiver is necessary to allow a grantee 
affected by a major disaster to rebuild its employment base.

Program Income

    A combination of CDBG provisions limits the flexibility available 
to the state for the use of program income. Prior to 2002, program 
income earned on disaster grants has usually been program income in 
accordance with the rules of the regular CDBG program of the applicable 
state and has lost its disaster grant identity, thus losing use of the 
waivers and streamlined alternative requirements. Also, the state CDBG 
program rule and law are designed for a program in which the state 
distributes all funds rather than carrying out activities directly. The 
1974 Act specifically provides for a local government receiving CDBG 
grants from a state to retain program income if it uses the funds for 
additional eligible activities under the annual CDBG program. The 1974 
Act allows the state to require return of the program income to the 
state under certain circumstances. This notice waives the existing 
statute and regulations to give the state, in all circumstances, the 
choice of whether a local government receiving a distribution of CDBG 
disaster recovery funds and using program income for activities in the 
Action Plan may retain this income and use it for additional disaster 
recovery activities. In addition, this notice allows program income to 
the disaster grant generated by activities undertaken directly by the 
state or its agent(s) to retain the original disaster recovery grant's 
alternative requirements and waivers and to remain under the state's 
discretion until grant closeout, at which point any program income on 
hand or received subsequently will become program income to the state's 
annual CDBG program. The alternative requirements provide all the 
necessary conforming changes to the program income regulations.

Relocation Requirements

    The state plans to carry out voluntary acquisition and optional 
relocation activities (partly in a form sometimes called ``buyouts'') 
and has requested waivers related to acquisition and relocation 
requirements under the Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970, as amended, (42 U.S.C. 4601 et seq.) 
(the URA) and the replacement of housing and relocation assistance 
provisions under section 104(d) of the 1974 Act. The state asked that 
HUD permit the waivers to help promote the acquisition of property and 
the replacement of housing in a timely and efficient manner. The state 
believes that these waivers will have little impact on those persons 
whose property is voluntarily acquired or who are required to move 
permanently for a federally assisted project.
    CDBG funds are Federal financial assistance so their use in 
projects that involve acquisition of property necessary for a federally 
assisted project, or that involve acquisition, demolition, or 
rehabilitation that force a person to move permanently, are subject to 
the URA and the government wide implementing regulations found at 49 
CFR part 24. The URA provides assistance and protections to individuals 
and businesses affected by Federal or federally assisted projects. HUD 
is waiving the following URA requirements to help promote accessibility 
to suitable decent, safe, and sanitary housing for victims of 
Hurricanes Katrina and Rita:
     The acquisition requirements of the URA and implementing 
regulations so that they do not apply to an arm's length voluntary 
purchase carried out by a person that does not have the power of 
eminent domain, in connection with the purchase and occupancy of a 
principal residence by that person. According to the state, the failure 
to suspend these requirements would impede disaster recovery and may 
result in windfall payments.
     A limited waiver of the URA implementing regulations to 
the extent that they require grantees to provide URA financial 
assistance sufficient to reduce the displaced person's post-
displacement rent/utility cost to 30 percent of household income. The 
failure to suspend these one-size-fits-all requirements could impede 
disaster recovery. To the extent that a tenant has been paying rents in 
excess of 30 percent of household income without demonstrable hardship, 
rental assistance payments to reduce tenant costs to 30 percent would 
not be required.
     The URA and implementing regulations to the extent 
necessary to permit a grantee to meet all or a portion of a grantee's 
replacement housing financial assistance obligation to a displaced 
renter by offering rental

[[Page 34454]]

housing through a tenant-based rental assistance (TBRA) housing program 
subsidy (e.g., Section 8 rental voucher or certificate) provided that 
the renter is also provided referrals to suitable, available rental 
replacement dwellings where the owner is willing to participate in the 
TBRA program, and the period of authorized assistance is at least 42 
months. Failure to grant the waiver would impede disaster recovery 
whenever TBRA program subsidies are available but funds for cash 
relocation assistance are limited. The change provides access to an 
additional relocation resource option.
     The URA and implementing regulations to the extent that 
they require a grantee to offer a person displaced from a dwelling unit 
the option to receive a ``moving expense and dislocation allowance'' 
based on the current schedule of allowances prepared by the Federal 
Highway Administration, provided that the grantee establishes and 
offers the person a moving expense and dislocation allowance under a 
schedule of allowances that is reasonable for the jurisdiction and 
takes into account the number of rooms in the displacement dwelling, 
whether the person owns and must move the furniture, and, at a minimum, 
the kinds of expenses described in 49 CFR 24.301. Failure to suspend 
this provision would impede disaster recovery by requiring grantees to 
offer allowances that do not reflect current local labor and 
transportation costs. Persons displaced from a dwelling remain entitled 
to choose a payment for actual reasonable moving and related expenses 
if they find that approach preferable to the locally established moving 
expense and dislocation allowance.
    In addition to the URA waivers, HUD is waiving requirements of 
section 104(d) of the 1974 Act dealing with one-for-one replacement of 
low- and moderate-income housing units demolished or converted in 
connection with a CDBG-assisted development project for housing units 
damaged by one or more disasters. HUD is waiving this requirement 
because it does not take into account the large, sudden changes a major 
disaster may cause to the local housing stock, population, or local 
economy. Further, the requirement does not take into account the 
threats to public health and safety and to economic revitalization that 
may be caused by the presence of disaster-damaged structures that are 
unsuitable for rehabilitation. As it stands, the requirement would 
impede disaster recovery and discourage grantees from acquiring, 
converting, or demolishing disaster-damaged housing because of 
excessive costs that would result from replacing all such units within 
the specified timeframe. HUD is also waiving the relocation assistance 
requirements contained in section 104(d) of the 1974 Act to the extent 
they differ from those of the Uniform Relocation Assistance and Real 
Property Acquisition Policies Act of 1970 (42 U.S.C. 4601 et seq.). 
This change will simplify implementation while preserving statutory 
protections for persons displaced by Federal projects.
    The state has provided the following additional reason for these 
waivers related to its decision to administer policy for the funds 
under this notice and for FEMA mitigation funding through the same 
agencies. The statutory requirements of the URA are also applicable to 
the administration of FEMA assistance, and disparities in rental 
assistance payments for activities funded by HUD and that agency will 
thus be eliminated. FEMA is subject to the requirements of the URA. 
Pursuant to this authority, FEMA requires that rental assistance 
payments be calculated on the basis of the amount necessary to lease or 
rent comparable housing for a period of 42 months. HUD is also subject 
to these requirements, but is also covered by alternative relocation 
provisions authorized under 42 U.S.C. 5304(d)(2)(A)(iii) and (iv) and 
implementing regulations at 24 CFR 42.350. These alternative relocation 
benefits, available to low- and moderate-income displacees opting to 
receive them in certain HUD programs, require the calculation of 
similar rental assistance payments on the basis of 60 months, rather 
than 42 months, thereby creating a disparity between the available 
benefits offered by HUD and FEMA (although not always an actual cash 
difference). The waiver assures uniform and equitable treatment by 
allowing the URA benefits requirements to be the standard for 
assistance under this notice.

Timely Distribution of Funds

    The state CDBG program regulation regarding timely distribution of 
funds is at 24 CFR 570.494. This provision is designed to work in the 
context of an annual program in which almost all grant funds are 
distributed to units of general local government. Because the state may 
use disaster recovery grant funds to carry out activities directly, and 
because Congress expressly allowed this grant to be available until 
expended, HUD is waiving this requirement. However, HUD expects the 
State of Louisiana to expeditiously obligate and expend all funds, 
including any recaptured funds or program income, in carrying out 
activities in a timely manner.

Waivers and Alternative Requirements

    1. Program income alternative requirement. 42 U.S.C. 5304(j) and 24 
CFR 570.489(e) are waived to the extent that they conflict with the 
rules stated in the program income alternative requirement below. The 
following alternative requirement applies instead. a. Program income. 
(1) For the purposes of this subpart, ``program income'' is defined as 
gross income received by a state, a unit of general local government, a 
Tribe or a subrecipient of a unit of general local government or a 
Tribe that was generated from the use of CDBG funds, except as provided 
in paragraph (a)(2) of this section. When income is generated by an 
activity that is only partially assisted with CDBG funds, the income 
shall be prorated to reflect the percentage of CDBG funds used (e.g., a 
single loan supported by CDBG funds and other funds; a single parcel of 
land purchased with CDBG funds and other funds). Program income 
includes, but is not limited to, the following:
    (i) Proceeds from the disposition by sale or long-term lease of 
real property purchased or improved with CDBG funds;
    (ii) Proceeds from the disposition of equipment purchased with CDBG 
funds;
    (iii) Gross income from the use or rental of real or personal 
property acquired by the unit of general local government or tribe or 
subrecipient of a state, a tribe or a unit of general local government 
with CDBG funds; less the costs incidental to the generation of the 
income;
    (iv) Gross income from the use or rental of real property owned by 
a state, tribe or the unit of general local government or a 
subrecipient of a state, tribe or unit of general local government, 
that was constructed or improved with CDBG funds, less the costs 
incidental to the generation of the income;
    (v) Payments of principal and interest on loans made using CDBG 
funds;
    (vi) Proceeds from the sale of loans made with CDBG funds;
    (vii) Proceeds from the sale of obligations secured by loans made 
with CDBG funds;
    (viii) Interest earned on program income pending disposition of the 
income, but excluding interest earned on funds held in a revolving fund 
account;
    (ix) Funds collected through special assessments made against 
properties owned and occupied by households not of low and moderate 
income, where the special assessments are used to recover

[[Page 34455]]

all or part of the CDBG portion of a public improvement; and
    (x) Gross income paid to a state, tribe or a unit of general local 
government or subrecipient from the ownership interest in a for-profit 
entity acquired in return for the provision of CDBG assistance.
    (2) ``Program income'' does not include the following:
    (i) The total amount of funds which is less than $25,000 received 
in a single year that is retained by a unit of general local 
government, tribe or subrecipient;
    (ii) Amounts generated by activities eligible under section 
105(a)(15) of the Act and carried out by an entity under the authority 
of section 105(a)(15) of the Act;
    (3) The state may permit the unit of general local government or 
tribe which receives or will receive program income to retain the 
program income, subject to the requirements of paragraph (a)(3)(ii) of 
this section, or the state may require the unit of general local 
government or tribe to pay the program income to the state.
    (i) Program income paid to the state. Program income that is paid 
to the state or received by the state is treated as additional disaster 
recovery CDBG funds subject to the requirements of this notice and must 
be used by the state or distributed to units of general local 
government in accordance with the state's Action Plan for Disaster 
Recovery. To the maximum extent feasible, program income shall be used 
or distributed before the state makes additional withdrawals from the 
Treasury, except as provided in paragraph (b) of this section.
    (ii) Program income retained by a unit of general local government 
or Tribe.
    (A) Program income that is received and retained by the unit of 
general local government or Tribe before closeout of the grant that 
generated the program income is treated as additional disaster recovery 
CDBG funds and is subject to the requirements of this notice.
    (B) Program income that is received and retained by the unit of 
general local government or Tribe after closeout of the grant that 
generated the program income, but that is used to continue the disaster 
recovery activity that generated the program income, is subject to the 
waivers and alternative requirements of this notice.
    (C) All other program income is subject to the requirements of 42 
U.S.C. 5304(j) and subpart I of 24 CFR part 570.
    (D) The state shall require units of general local government or 
Tribes, to the maximum extent feasible, to disburse program income that 
is subject to the requirements of this notice before requesting 
additional funds from the state for activities, except as provided in 
paragraph (b) of this section.
    (b) Revolving funds.
    (1) The state may establish or permit units of general local 
government or Tribes to establish revolving funds to carry out 
specific, identified activities. A revolving fund, for this purpose, is 
a separate fund (with a set of accounts that are independent of other 
program accounts) established to carry out specific activities which, 
in turn, generate payments to the fund for use in carrying out such 
activities. These payments to the revolving fund are program income and 
must be substantially disbursed from the revolving fund before 
additional grant funds are drawn from the Treasury for revolving fund 
activities. Such program income is not required to be disbursed for 
non-revolving fund activities.
    (2) The state may also establish a revolving fund to distribute 
funds to units of general local government or Tribes to carry out 
specific, identified activities. A revolving fund, for this purpose, is 
a separate fund (with a set of accounts that are independent of other 
program accounts) established to fund grants to units of general local 
government to carry out specific activities which, in turn, generate 
payments to the fund for additional grants to units of general local 
government to carry out such activities. Program income in the 
revolving fund must be disbursed from the fund before additional grant 
funds are drawn from the Treasury for payments to units of general 
local government which could be funded from the revolving fund.
    (3) A revolving fund established by either the state or unit of 
general local government shall not be directly funded or capitalized 
with grant funds.
    (c) Transfer of program income. Notwithstanding other provisions of 
this notice, the state may transfer program income before closeout of 
the grant that generated the program income to its own annual CDBG 
program or to any annual CDBG-funded activities administered by a unit 
of general local government or Indian Tribe within the state.
    (d) Program income on hand at the state or its subrecipients at the 
time of grant closeout by HUD and program income received by the state 
after such grant closeout shall be program income to the most recent 
annual CDBG program grant of the state.
    2. Housing-related eligibility waivers. 42 U.S.C. 5305(a) is waived 
to the extent necessary to allow down payment assistance for up to 100 
percent of the down payment (42 U.S.C. 5305(a)(24)(D)) and to allow new 
housing construction.
    3. Compensation for loss of housing or incentives to resettle in 
Louisiana. 42 U.S.C. 5305(a) is waived to the extent necessary to make 
eligible incentives to resettle in Louisiana or compensation for loss 
of housing caused by the disaster and in accordance with the state's 
approved Action Plan and published program design.
    4. Planning requirements. For CDBG disaster recovery assisted 
planning activities that will guide recovery in accordance with the 
2006 Act, the state CDBG program rules at 24 CFR 570.483(b)(5) and 
(c)(3) are waived and the presumption at 24 CFR 570.208(d)(4) applies.
    5. Waiver to permit some activities in support of the tourism 
industry. 42 U.S.C. 5305(a) and 24 CFR 570.489(f) are waived to the 
extent necessary to make eligible use of no more than $30 million for 
assistance for the tourism industry, including promotion of a community 
or communities in general, provided the assisted activities are 
designed to support tourism to the most impacted and distressed areas 
related to the effects of Hurricanes Katrina and Rita. This waiver will 
expire two years after the date of this notice, after which previously 
ineligible support for the tourism industry, such as promotion of a 
community in general, will again be ineligible for CDBG funding.
    6. Waiver and modification of the anti-pirating clause to permit 
assistance to help a business return. 42 U.S.C. 5305(h) and 24 CFR 
570.482 are hereby waived only to allow the grantee to provide 
assistance under this grant to any business that was operating in the 
covered disaster area before the incident date of Hurricane Katrina or 
Rita, as applicable, and has since moved in whole or in part from the 
affected area to another state or to a labor market area within the 
same state to continue business.
    7. Waiver of one-for-one replacement of units damaged by disaster. 
a. One-for-one replacement requirements at 42 U.S.C. 5304(d)(2) and 
(d)(3), and 24 CFR 42.375(a) are waived for low- and moderate-income 
dwelling units (1) damaged by the disaster, (2) for which CDBG funds 
are used for demolition, and (3) which are not suitable for 
rehabilitation.
    b. Relocation assistance requirements at 42 U.S.C. 5304(d)(2)(A), 
and 24 CFR 42.359 are waived to the extent they differ from those of 
the URA and its implementing regulations at 49 CFR part 24.
    8. Uniform Relocation Act requirements. The state may apply the

[[Page 34456]]

following waivers to activities involving buyouts and other activities 
covered by the URA and related to disaster recovery housing activities 
assisted by the funds covered by this notice and included in an 
approved Action Plan.
    a. The requirements at 49 CFR 24.101(b)(2)(i)-(ii) are waived to 
the extent that they apply to an arm's length voluntary purchase 
carried out by a person that does not have the power of eminent domain, 
in connection with the purchase and occupancy of a principal residence 
by that person.
    b. The requirements at 49 CFR 24.2, 24.402(b)(2) and 24.404 are 
waived to the extent that they require the state to provide URA 
financial assistance sufficient to reduce the displaced person's post-
displacement rent/utility cost to 30 percent of household income. To 
the extent that a tenant has been paying rents in excess of 30 percent 
of household income without demonstrable hardship, rental assistance 
payments to reduce tenant costs to 30 percent would not be required. 
Before using this waiver, the state must establish a definition of 
``demonstrable hardship.''
    c. The requirements of sections 204 and 205 of the URA, and 49 CFR 
24.402(b) are waived to the extent necessary to permit a grantee to 
meet all or a portion of a grantee's replacement housing financial 
assistance obligation to a displaced renter by offering rental housing 
through a tenant-based rental assistance (TBRA) housing program subsidy 
(e.g., Section 8 rental voucher or certificate) provided that the 
renter is also provided referrals to suitable, available rental 
replacement dwellings where the owner is willing to participate in the 
TBRA program, and the period of authorized assistance is at least 42 
months.
    d. The requirements of section 202(b) of the URA and 49 CFR 24.302 
are waived to the extent that they require a grantee to offer a person 
displaced from a dwelling unit the option to receive a ``moving expense 
and dislocation allowance'' based on the current schedule of allowances 
prepared by the Federal Highway Administration, provided that the 
grantee establishes and offers the person a moving expense and 
dislocation allowance under a schedule of allowances that is reasonable 
for the jurisdiction and takes into account the number of rooms in the 
displacement dwelling, whether the person owns and must move the 
furniture, and, at a minimum, the kinds of expenses described in 49 CFR 
24.301.
    9. Public benefit for the bridge loan activities. For the state's 
bridge loan activities included in an approved Action Plan for Disaster 
Recovery and governed by the provisions of 24 CFR 570.482 and 483, 
public benefit standards at 42 U.S.C. 5305(e)(3) and 24 CFR 
570.482(f)(1), (2), (3), (4)(i), (5), (6) are waived, with the 
following alternative requirements. The grantee shall report and 
maintain documentation on the bridge-loan-assisted creation and 
retention of (a) total jobs, (b) number of jobs within certain salary 
ranges, and (c) types of jobs. Paragraph (g) of 24 CFR 570.482 is also 
waived to the extent its provisions are related to public benefit.
    10. Waiver of State CDBG requirement for timely distribution of 
funds. 24 CFR 570.494 regarding timely distribution of funds is waived.
    11. Buildings for the general conduct of government. 42 U.S.C. 
5305(a) and 24 CFR 507.207(a)(1) are waived to the extent necessary to 
allow the state to use the grant funds under this notice to fund the 
local and state government match for critical FEMA Public-Assistance 
projects that the state has selected in accordance with the method 
described in its Action Plan for Disaster Recovery and that the State 
has determined have substantial value in promoting disaster recovery.

Notes on Applicable Statutory Requirements

    12. Note on the eligibility of providing funds to Enterprise and 
LISC for certain purposes. The appropriations statute provides that the 
States of Louisiana and Mississippi may each use up to $20,000,000 
(with up to $400,000 each for technical assistance) from funds made 
available under this heading for LISC and the Enterprise Foundation for 
activities authorized by section 4 of the HUD Demonstration Act of 1993 
(Pub. L. 103-120, 42 U.S.C. 9816 note), as in effect immediately before 
June 12, 1997, and for activities authorized under section 11 of the 
Housing Opportunity Program Extension Act of 1996 (Pub. L. 104-120, 42 
U.S.C. 12805 note), including demolition, site clearance and 
remediation, and program administration.
    13. Notes on rules applicable to flood buyouts activities:
    a. Payment of pre-flood values for buyouts. HUD disaster recovery 
entitlement communities, state grant recipients, and Indian tribes have 
the discretion to pay pre-flood or post-flood values for the 
acquisition of properties located in a flood way or floodplain. In 
using CDBG disaster recovery funds for such acquisitions, the grantee 
must uniformly apply whichever valuation method it chooses.
    b. Ownership and maintenance of acquired property. Any property 
acquired with disaster recovery grants funds being used to match FEMA 
Section 404 Hazard Mitigation Grant Program funds is subject to section 
404(b)(2) of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, as amended, which requires that such property be 
dedicated and maintained in perpetuity for a use that is compatible 
with open space, recreational, or wetlands management practices. In 
addition, with minor exceptions, no new structure may be erected on the 
property and no subsequent application for Federal disaster assistance 
may be made for any purpose. The acquiring entity may want to lease 
such property to adjacent property owners or other parties for 
compatible uses in return for a maintenance agreement. Although Federal 
policy encourages leasing rather than selling such property, the 
property may be sold. In all cases, a deed restriction or covenant 
running with the land must require that the property be dedicated and 
maintained for compatible uses in perpetuity.
    c. Future Federal assistance to owners remaining in floodplain. (1) 
Section 582 of the National Flood Insurance Reform Act of 1994, as 
amended, (42 U.S.C. 5154(a)) (Section 582) prohibits flood disaster 
assistance in certain circumstances. In general, it provides that no 
Federal disaster relief assistance made available in a flood disaster 
area may be used to make a payment (including any loan assistance 
payment) to a person for repair, replacement, or restoration for damage 
to any personal, residential, or commercial property, if that person at 
any time has received flood disaster assistance that was conditional on 
the person first having obtained flood insurance under applicable 
Federal law and the person has subsequently failed to obtain and 
maintain flood insurance as required under applicable Federal law on 
such property. (Section 582 is self-implementing without regulations.) 
This means that a grantee may not provide disaster assistance for the 
above-mentioned repair, replacement, or restoration to a person that 
has failed to meet this requirement.
    (2) Section 582 also implies a responsibility for a grantee that 
receives CDBG disaster recovery funds or that, under 42 U.S.C. 5321, 
designates annually appropriated CDBG funds for disaster recovery. That 
responsibility is to inform property owners receiving disaster 
assistance that triggers the flood insurance purchase requirement that 
they have a statutory responsibility to

[[Page 34457]]

notify any transferee of the requirement to obtain and maintain flood 
insurance, and that the transferring owner may be liable if he or she 
fails to do so. These requirements are described below.
    (3) Duty to notify. In the event of the transfer of any property 
described in paragraph d below, the transferor shall, not later than 
the date on which such transfer occurs, notify the transferee in 
writing of the requirements to:
    (a) Obtain flood insurance in accordance with applicable Federal 
law with respect to such property, if the property is not so insured as 
of the date on which the property is transferred; and
    (b) Maintain flood insurance in accordance with applicable Federal 
law with respect to such property.
    Such written notification shall be contained in documents 
evidencing the transfer of ownership of the property.
    (4) Failure to notify. If a transferor fails to provide notice as 
described above and, subsequent to the transfer of the property:
    (a) The transferee fails to obtain or maintain flood insurance, in 
accordance with applicable Federal law, with respect to the property;
    (b) The property is damaged by a flood disaster; and
    (c) Federal disaster relief assistance is provided for the repair, 
replacement, or restoration of the property as a result of such damage. 
The transferor must reimburse the Federal Government in an amount equal 
to the amount of the Federal disaster relief assistance provided with 
respect to the property.
    d. The notification requirements apply to personal, commercial, or 
residential property for which Federal disaster relief assistance made 
available in a flood disaster area has been provided, prior to the date 
on which the property is transferred, for repair, replacement, or 
restoration of the property, if such assistance was conditioned upon 
obtaining flood insurance in accordance with applicable Federal law 
with respect to such property.
    e. The term ``Federal disaster relief assistance'' applies to HUD 
or other Federal assistance for disaster relief in ``flood disaster 
areas.'' The prohibition in subparagraph (1) above applies only when 
the new disaster relief assistance was given for a loss caused by 
flooding. It does not apply to disaster assistance caused by other 
sources (i.e., earthquakes, fire, wind, etc.). The term ``flood 
disaster area''' is defined in section 582(d)(2) to include an area 
receiving a Presidential declaration of a major disaster or emergency 
as a result of flood conditions.
    14. Non-Federal Cost Sharing of Army Corps of Engineers Projects. 
Public Law 105-276, title II, October 21, 1998, 112 Stat. 2478, 
provided in part that: ``For any fiscal year, of the amounts made 
available as emergency funds under the heading `Community Development 
Block Grants Fund' and notwithstanding any other provision of law, not 
more than $250,000 may be used for the non-Federal cost-share of any 
project funded by the Secretary of the Army through the Corps of 
Engineers.''

Finding of No Significant Impact

    A Finding of No Significant Impact 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 Finding of No Significant 
Impact 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 Seventh Street, SW., 
Room 10276, Washington, DC 20410-0500. Due to security measures at the 
HUD Headquarters building, please schedule an appointment to review the 
finding by calling the Regulations Division at (202) 708-3055 (this is 
not a toll-free number).

    Dated: May 26, 2006.
Pamela H. Patenaude,
Assistant Secretary for Community Planning and Development.
[FR Doc. 06-5383 Filed 6-9-06; 9:06 am]
BILLING CODE 4210-67-P