Second Allocation, Waivers, and Alternative Requirements for Grantees Receiving Community Development Block Grant (CDBG) Disaster Recovery Funds in Response to Hurricane Sandy, 69104-69113 [2013-27506]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 78, Number 222 (Monday, November 18, 2013)]
[Notices]
[Pages 69104-69113]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-27506]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5696-N-06]


Second Allocation, Waivers, and Alternative Requirements for 
Grantees Receiving Community Development Block Grant (CDBG) Disaster 
Recovery Funds in Response to Hurricane Sandy

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

ACTION: Notice.

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SUMMARY: This Notice advises the public of a second allocation of 
Community Development Block Grant disaster recovery (CDBG-DR) funds 
appropriated by the Disaster Relief Appropriations Act, 2013 (Pub. L. 
113-2) for the purpose of assisting recovery in the most impacted and 
distressed areas identified in major disaster declarations due to 
Hurricane Sandy and other eligible events in calendar years 2011, 2012 
and 2013. This allocation provides $5.1 billion primarily to assist 
Hurricane Sandy recovery as well as recovery from Hurricane Irene and 
Tropical Storm Lee. The Notice also establishes requirements governing 
the use of these funds.

DATES: Effective Date: November 25, 2013.

FOR FURTHER INFORMATION CONTACT: Stan Gimont, Director, Office of Block 
Grant Assistance, Department of Housing and Urban Development, 451 7th 
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 Relay Service at 800-877-8339. Facsimile 
inquiries may be sent to Mr. Gimont at 202-401-2044. (Except for the 
``800'' number, these telephone numbers are not toll-free.) Email 
inquiries may be sent to disaster_recovery@hud.gov.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Allocation and Related Information
II. Use of Funds
III. Timely Expenditure
IV. Grant Amendment Process
V. Authority To Grant Waivers
VI. Applicable Rules, Statutes, Waivers, and Alternative 
Requirements
VII. Mitigation and Resilience Methods, Policies, and Procedures
VIII. Catalog of Federal Domestic Assistance
IX. Finding of No Significant Impact
Appendix A: Allocation Methodology

I. Allocation and Related Information

    The Disaster Relief Appropriations Act, 2013 (Pub. L. 113-2, 
approved January 29, 2013) (Appropriations Act) made available $16 
billion in Community Development Block Grant (CDBG) funds for necessary 
expenses related to disaster relief, long-term recovery, restoration of 
infrastructure and housing, and economic revitalization in the most 
impacted and distressed areas resulting from a major disaster declared 
pursuant to the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act of 1974 (42 U.S.C. 5121 et seq.) (Stafford Act), due to 
Hurricane Sandy and other eligible events in calendar years 2011, 2012, 
and 2013. The law provides that funds shall be awarded directly to a 
State or unit of general local government (UGLG) (hereafter local 
government) at the discretion of the Secretary. Unless noted otherwise, 
the term ``grantee'' refers to any jurisdiction receiving a direct 
award from HUD under this Notice.
    On March 1, 2013, the President issued a sequestration order 
pursuant to section 251A of the Balanced Budget and Emergency Deficit 
Control Act, as amended (2 U.S.C. 901a), and reduced funding for CDBG-
DR grants under the Appropriations Act to $15.18 billion. Through a 
Federal Register Notice published March 5, 2013, the Department 
allocated $5.4 billion for the areas most impacted by Hurricane Sandy 
(78 FR 14329). Subsequent notices allocated funds for major disasters 
occurring in 2011 and 2012 (excluding Hurricane Sandy) and a future 
notice will address funding for qualifying major disasters occurring in 
2013.
    To comply with statutory direction that funds be used for disaster-
related expenses in the most impacted and distressed areas, HUD 
computes allocations based on the best available data that cover all 
the eligible affected areas. The initial allocation to Hurricane Sandy 
grantees was based on unmet housing and economic revitalization needs. 
The data used to calculate the allocation did not include unmet 
infrastructure restoration needs as damage estimates were preliminary 
at that time. As more data regarding unmet infrastructure needs are now 
available, this Notice provides the following Round 2 awards totaling 
$5.1 billion:

                                      Table 1--Hurricane Sandy Allocations
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                       Grantee                         Second allocation   First allocation          Total
----------------------------------------------------------------------------------------------------------------
New York City.......................................      $1,447,000,000      $1,772,820,000      $3,219,820,000
New Jersey..........................................       1,463,000,000       1,829,520,000       3,292,520,000
New York State......................................       2,097,000,000       1,713,960,000       3,810,960,000

[[Page 69105]]

 
Connecticut.........................................          66,000,000          71,820,000         137,820,000
Maryland............................................          20,000,000           8,640,000          28,640,000
Rhode Island........................................          16,000,000           3,240,000          19,240,000
                                                     -----------------------------------------------------------
    Total...........................................       5,109,000,000       5,400,000,000      10,509,000,000
----------------------------------------------------------------------------------------------------------------

    To ensure funds provided under this Notice address unmet needs 
within the ``most impacted and distressed'' counties, each local 
government receiving a direct award under this Notice must expend its 
entire CDBG-DR award within its jurisdiction (e.g., New York City must 
expend all funds within New York City). State grantees may expend funds 
in any county that received a Presidential disaster declaration in 
2011, 2012, or 2013 subject to the limitations described in Table 2.
    Table 2 identifies a minimum percentage that must be spent in the 
HUD-identified Hurricane Sandy affected Most Impacted and Distressed 
counties. The opportunity for certain grantees to expend 20 percent of 
their allocations outside the most impacted and distressed counties 
identified by HUD enables those grantees to respond to highly localized 
distress identified via their own data.

                Table 2--Most Impacted and Distressed Counties Within Which Funds May Be Expended
----------------------------------------------------------------------------------------------------------------
                                  Counties from the                                      Minimum percentage that
                               following major declared                                    must be expended in
           Grantee              disasters are eligible    Hurricane Sandy most impacted    Hurricane Sandy most
                               for CDBG-DR funds  (FEMA      and distressed counties     impacted and distressed
                                   declaration No.)                                              counties
----------------------------------------------------------------------------------------------------------------
New York City...............  All Counties.............  All Counties..................                      100
New York....................  1957, 1993, 4020, 4031,    Nassau, Rockland, Suffolk,                           80
                               4085, 4111, 4129.          Westchester, and all Counties
                                                          in New York City (Bronx,
                                                          Kings, New York, Queens,
                                                          Richmond).
New Jersey..................  1954, 4021, 4033, 4039,    Atlantic, Bergen, Cape May,                          80
                               4048, 4070, 4086.          Essex, Hudson, Middlesex,
                                                          Monmouth, Ocean, Union.
Connecticut.................  1958, 4023, 4046, 4087,    Fairfield, New Haven..........                       80
                               4106.
Rhode Island................  4027, 4089, 4107.........  Washington....................                       80
Maryland....................  4034, 4038, 4075, 4091...  Somerset......................                       80
----------------------------------------------------------------------------------------------------------------

    This Notice builds upon the requirements of the Federal Register 
Notices published by the Department on March 5, 2013 (78 FR 14329), 
April 19, 2013 (78 FR 23578) and August 2, 2013 (78 FR 46999), referred 
to collectively in this Notice as the ``Prior Notices.'' The Prior 
Notices are available at:

https://www.gpo.gov/fdsys/pkg/FR-2013-03-05/pdf/2013-05170.pdf
https://www.gpo.gov/fdsys/pkg/FR-2013-04-19/pdf/2013-09228.pdf
https://www.gpo.gov/fdsys/pkg/FR-2013-08-02/pdf/2013-18643.pdf

    Executive Order 13632, published at 77 FR 74341, established the 
Hurricane Sandy Rebuilding Task Force, to ensure government-wide and 
region-wide coordination to help communities as they are making 
decisions about long-term rebuilding and to develop a comprehensive 
rebuilding strategy. Section 5(b) of Executive Order 13632 requires 
that HUD, ``as appropriate and to the extent permitted by law, align 
[the Department's] relevant programs and authorities'' with the 
Hurricane Sandy Rebuilding Strategy (the Rebuilding Strategy). 
Accordingly, this Notice is further informed by both the Rebuilding 
Strategy released by the Task Force on August 19, 2013 and Rebuild by 
Design (RBD), an initiative of the Hurricane Sandy Rebuilding Task 
Force and HUD. RBD is aimed at addressing structural and environmental 
vulnerabilities that Hurricane Sandy exposed in communities throughout 
the region and developing fundable solutions to better protect 
residents from future disasters. The Rebuilding Strategy and 
information about RBD can be found, respectively, at:

https://portal.hud.gov/hudportal/documents/huddoc?id=HSRebuildingStrategy.pdf
https://www.rebuildbydesign.org/what-is-rebuild-by-design/

II. Use of Funds

    The Appropriations Act requires funds to be used only for specific 
disaster recovery related purposes. Consistent with the Rebuilding 
Strategy, it is essential to build back stronger and more resilient. 
This allocation provides additional funds to Sandy-impacted grantees to 
support investments in mitigation and resilience and directs grantees 
to undertake comprehensive planning to promote regional resilience as 
part of the recovery effort.
    The Appropriations Act requires that prior to the obligation of 
CDBG-DR funds, a grantee shall submit a plan detailing the proposed use 
of funds, including criteria for eligibility and how the use of these 
funds will address disaster relief, long-term recovery, restoration of 
infrastructure and housing and economic revitalization in the most 
impacted and distressed areas. In an Action Plan for Disaster Recovery 
(Action Plan), grantees must describe uses and activities that: (1) Are 
authorized under title I of the Housing and Community Development Act 
of 1974 (42 U.S.C. 5301 et seq.) (HCD Act) or allowed by a waiver or 
alternative requirement published in this Notice and the prior Notices; 
and (2) respond to a disaster-related impact. HUD has previously 
approved an Action Plan for each grantee receiving an allocation of 
funds in this Notice. Grantees are now directed to submit a substantial 
Action Plan Amendment in order to access funds provided in this Notice. 
For more guidance on requirements for substantial Action Plan 
Amendments,

[[Page 69106]]

please see Sections IV and VI of this Notice.
    As provided by the HCD Act, funds may be used as a matching 
requirement, share, or contribution for any other federal program when 
used to carry out an eligible CDBG-DR activity. However, pursuant to 
the requirements of the Appropriations Act, CDBG-DR funds may not be 
used for expenses reimbursable by, or for which funds are made 
available by FEMA or the United States Army Corps of Engineers (USACE).
    Consistent with the allocation methodology in Appendix A of the 
Notice, the State of New York must either ensure that: (1) A portion of 
its allocation is used to address resiliency and local cost share 
requirements for damage to both the Metropolitan Transportation 
Authority infrastructure in New York City and the Port Authority of New 
York and New Jersey; or (2) must demonstrate that such resiliency needs 
and local cost share has otherwise been met. The State of New Jersey 
must undertake one of the same actions with regard to the Port 
Authority. New York City must review the methodology to inform an 
analysis to address the recovery and resilience needs of the New York 
City Housing Authority (NYCHA).

III. Timely Expenditure of Funds

    The Appropriations Act requires that funds be expended within two 
years of the date HUD obligates funds to a grantee and funds are 
obligated to a grantee upon HUD's signing of a grantee's CDBG-DR grant 
agreement. In its Action Plan, a grantee must demonstrate how funds 
will be fully expended within two years of obligation and HUD must 
obligate all funds not later than September 30, 2017. For any funds 
that the grantee believes will not be expended by the deadline and that 
it desires to retain, the grantee must submit a letter to HUD not less 
than 30 days in advance justifying why it is necessary to extend the 
deadline for a specific portion of funds. The letter must detail the 
compelling legal, policy, or operational challenges for any such 
waiver, and must also identify the date by when the specified portion 
of funds will be expended. The Office of Management and Budget has 
provided HUD with authority to act on grantee waiver requests but 
grantees are cautioned that such waivers may not be approved. Approved 
waivers will be published in the Federal Register. Funds remaining in 
the grantee's line of credit at the time of its expenditure deadline 
will be returned to the U.S. Treasury, or if before September 30, 2017, 
will be recaptured by HUD.

IV. Grant Amendment Process

    To access funds allocated by this Notice grantees must submit a 
substantial Action Plan Amendment to their approved Action Plan. Any 
substantial Action Plan Amendment submitted after the effective date of 
this Notice is subject to the following requirements:
     Grantee consults with affected citizens, stakeholders, 
local governments and public housing authorities to determine updates 
to its needs assessment; in addition, grantee prepares a comprehensive 
risk analysis (see section VI(2)(d) of this Notice);
     Grantee amends its citizen participation plan to reflect 
the requirements of this Notice (e.g., new requirement for a public 
hearing);
     Grantee publishes a substantial amendment to its 
previously approved Action Plan for Disaster Recovery on the grantee's 
official Web site for no less than 30 calendar days and holds at least 
one public hearing to solicit public comment;
     Grantee responds to public comment and submits its 
substantial Action Plan Amendment to HUD (with any additional 
certifications required by this Notice) no later than 120 days after 
the effective date of this Notice;
     HUD reviews the substantial Action Plan Amendment within 
60 days from date of receipt and approves the Amendment according to 
criteria identified in the Prior Notices and this Notice;
     HUD sends an Action Plan Amendment approval letter, 
revised grant conditions (may not be applicable to all grantees), 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 Amendment within 45 
days of the notification letter;
     Grantee ensures that the HUD-approved substantial Action 
Plan Amendment (and updated Action Plan) is posted on its official Web 
site;
     Grantee signs and returns the grant agreement;
     HUD signs the grant agreement and revises the grantee's 
line of credit amount (this triggers the two year expenditure deadline 
for any funds obligated by this grant agreement);
     If it has not already done so, grantee enters the 
activities from its published Action Plan Amendment into the Disaster 
Recovery Grant Reporting (DRGR) system and submits it to HUD within the 
system;
     The grantee may draw down funds from the line of credit 
after the Responsible Entity completes applicable environmental 
review(s) pursuant to 24 CFR part 58 (or paragraph A.20 under section 
VI of the March 5, 2013 Notice) and, as applicable, receives from HUD 
or the state an approved Request for Release of Funds and 
certification;
     Grantee amends its published Action Plan to include its 
projection of expenditures and outcomes within 90 days of the Action 
Plan Amendment approval as provided for in paragraph (3)(g) of Section 
VI of this Notice; and
     Grantee updates its full consolidated plan to reflect 
disaster-related needs no later than its Fiscal Year 2015 consolidated 
plan update.

V. Authority To Grant Waivers

    The Appropriations Act authorizes the Secretary to waive, or 
specify alternative requirements for, any provision of any statute or 
regulation that the Secretary administers in connection with HUD's 
obligation or use by the recipient of these funds (except for 
requirements related to fair housing, nondiscrimination, labor 
standards, and the environment). Waivers and alternative requirements 
are based upon a determination by the Secretary that good cause exists 
and that the waiver or alternative requirement is not inconsistent with 
the overall purposes of title I of the HCD Act. Regulatory waiver 
authority is also provided by 24 CFR 5.110, 91.600, and 570.5.

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

    This section of the Notice describes requirements imposed by the 
Appropriations Act, as well as applicable waivers and alternative 
requirements. For each waiver and alternative requirement described in 
this Notice, the Secretary has determined that good cause exists and 
the action is not inconsistent with the overall purpose of the HCD Act. 
The following requirements apply only to the CDBG-DR funds appropriated 
in the Appropriations Act.
    Grantees may request additional waivers and alternative 
requirements to address specific needs related to their recovery 
activities. Except where noted, waivers and alternative requirements 
described below apply to all grantees under this Notice. Under the 
requirements of the Appropriations Act, regulatory waivers are 
effective five days after publication in the Federal Register.
    1. Incorporation of general requirements, waivers, alternative

[[Page 69107]]

requirements, and statutory changes previously described. Grantees are 
advised that general requirements, waivers and alternative requirements 
provided for and subsequently clarified or modified in the Prior 
Notices, apply to all funds under this Notice, except as modified 
herein. These waivers and alternative requirements provide additional 
flexibility in program design and implementation to support resilient 
recovery following Hurricane Sandy, while also ensuring that statutory 
requirements unique to the Appropriations Act are met. Waivers or 
alternative requirements previously issued pursuant to specific grantee 
requests remain in effect under their initial terms.
    2. Action Plan for Disaster Recovery waiver and alternative 
requirement--Infrastructure Programs and Projects. Grantees are advised 
that HUD will assess the adequacy of a grantee's response to each of 
the elements outlined in this subsection as a basis for the approval of 
a substantial Action Plan Amendment that includes infrastructure 
programs and projects. However, grantees need not resubmit responses to 
elements approved by HUD unless warranted by changing conditions or if 
project-specific analysis is required.
    Section VI(A)(1) of the March 5, 2013 Notice (``Action Plan for 
Disaster Recovery waiver and alternative requirement''), as amended by 
the April 19, 2013 Notice, is modified to require:
    a. Applicability. The following guidance and criteria are 
applicable to all infrastructure programs and projects in an Action 
Plan Amendment submitted to HUD after the effective date of this 
Notice. Infrastructure programs and projects funded pursuant to the 
Prior Notices and submitted in an Action Plan Amendment after the 
effective date of this Notice are also subject to these requirements. 
The following guidance and criteria are based on recommendations of the 
Rebuilding Strategy.
    b. Definition of an Infrastructure Project and Related 
Infrastructure Projects.
    (1) Infrastructure Project: For purposes of this Notice, an 
infrastructure project is defined as an activity, or a group of related 
activities, designed by the grantee to accomplish, in whole or in part, 
a specific objective related to critical infrastructure sectors such as 
energy, communications, water and wastewater systems, and 
transportation, as well as other support measures such as flood 
control. This definition is rooted in the implementing regulations of 
the National Environmental Policy Act (NEPA) at 40 CFR part 1508 and 24 
CFR Part 58. Further, consistent with HUD's NEPA implementing 
requirements at 24 CFR 58.32(a), in responding to the requirements of 
this Notice, a grantee must group together and evaluate as a single 
infrastructure project all individual activities which are related to 
one another, either on a geographical or functional basis, or are 
logical parts of a composite of contemplated infrastructure-related 
actions.
    (2) Related Infrastructure Project: Consistent with 40 CFR part 
1508, infrastructure projects are ``related'' if they automatically 
trigger other projects or actions, cannot or will not proceed unless 
other projects or actions are taken previously or simultaneously, or 
are interdependent parts of a larger action and depend on the larger 
action for their justification.
    c. Impact and Unmet Needs Assessment. The March 5, 2013 Notice 
required grantees to consult with affected citizens, stakeholders, 
local governments and public housing authorities to determine the 
impact of Hurricane Sandy and any unmet disaster recovery needs. 
Grantees are required to update their impact and unmet needs 
assessments to address infrastructure projects, or any other projects 
or activities not previously considered, but for which an unmet need 
has become apparent.
    d. Comprehensive Risk Analysis. Each grantee must describe the 
science-based risk analysis it has or will employ to select, 
prioritize, implement, and maintain infrastructure projects or 
activities. At a minimum, the grantee's analysis must consider a broad 
range of information and best available data, including forward-looking 
analyses of risks to infrastructure sectors from climate change and 
other hazards, such as the Northeast United States Regional Climate 
Trends and Scenarios from the U.S. National Climate Assessment, the Sea 
Level Rise Tool for Sandy Recovery, or comparable peer-reviewed 
information, as well as the regional analysis developed in Phase 2 of 
the Rebuild by Design competition. The grantee should also consider 
costs and benefits of alternative investment strategies, including 
green infrastructure options. In addition, the grantee should include, 
to the extent feasible and appropriate, public health and safety 
impacts; direct and indirect economic impacts; social impacts; 
environmental impacts; cascading impacts and interdependencies within 
and across communities and infrastructure sectors; changes to climate 
and development patterns that could affect the project or surrounding 
communities; and impacts on and from other infrastructure systems. The 
analyses should, wherever possible, include both quantitative and 
qualitative measures and recognize the inherent uncertainty in 
predictive analysis. Grantees should work with other grantees to 
undertake regional risk baseline analyses, to improve consistency and 
cost-effectiveness.
    The description of the comprehensive risk analysis must be 
sufficient for HUD to determine if the analysis meets the requirements 
of this Notice.
    e. Resilience Performance Standards. Using the guidelines in the 
Rebuilding Strategy, grantees are required to identify and implement 
resilience performance standards that can be applied to each 
infrastructure project. The grantee must describe its plans for the 
development and application of resilience performance standards in any 
Action Plan Amendment submitted pursuant to this Notice.
    f. Green Infrastructure Projects or Activities. In any Action Plan 
Amendment submitted pursuant to this Notice, each grantee must describe 
its process for the selection and design of green infrastructure 
projects or activities, and/or how selected projects or activities will 
incorporate green infrastructure components. For the purposes of this 
Notice, green infrastructure is defined as the integration of natural 
systems and processes, or engineered systems that mimic natural systems 
and processes, into investments in resilient infrastructure. Green 
infrastructure takes advantage of the services and natural defenses 
provided by land and water systems such as wetlands, natural areas, 
vegetation, sand dunes, and forests, while contributing to the health 
and quality of life of those in recovering communities.
    In addition, the HCD Act authorizes public facilities activities 
that may include green infrastructure approaches that restore degraded 
or lost natural systems (e.g., wetlands and sand dunes ecosystems) and 
other shoreline areas to enhance storm protection and reap the many 
benefits that are provided by these systems. Protecting, retaining, and 
enhancing natural defenses should be considered as part of any coastal 
resilience strategy.
    g. Additional Requirements for Major Infrastructure Projects. 
Action Plan Amendments that propose a major infrastructure project will 
not be approved unless the project meets the criteria of this Notice. 
HUD approval is required for each major infrastructure project with 
such projects defined as having a total cost of $50 million or

[[Page 69108]]

more (including at least $10 million of CDBG-DR funds), or benefits 
multiple counties. Additionally, two or more related infrastructure 
projects that have a combined total cost of $50 million or more 
(including at least $10 million of CDBG-DR funds) must be designated as 
major infrastructure projects. Projects encompassed by this paragraph 
are herein referred to as ``Covered Projects.'' Prior to funding a 
Covered Project, the grantee must incorporate each of the following 
elements into its Action Plan (i.e., via a substantial Action Plan 
Amendment):
    (1) Identification/Description. A description of the Covered 
Project, including: Total project cost (illustrating both the CDBG-DR 
award as well as other federal resources for the project, such as 
funding provided by the Department of Transportation or FEMA), CDBG 
eligibility (i.e., a citation to the HCD Act, applicable Federal 
Register notice, or a CDBG regulation), how it will meet a national 
objective, and the project's connection to Hurricane Sandy or other 
disasters cited in this Notice.
    (2) Use of Impact and Unmet Needs Assessment, the Comprehensive 
Risk Analysis and the Rebuild by Design Collaborative Risk Analysis. A 
description of how the Covered Project is supported by the grantee's 
updated impact and unmet needs assessment, as well as the grantee's 
comprehensive risk analysis.
    The grantee must describe how Covered Projects address the risks, 
gaps, and vulnerabilities in the region as identified by the 
comprehensive risk analysis. Grantees must also describe how the 
collaborative risk analysis developed through the Rebuild by Design 
initiative has been or will be used for the evaluation of Covered 
Projects.
    (3) Transparent and Inclusive Decision Processes. A description of 
the transparent and inclusive processes that have been or will be used 
in the selection of a Covered Project(s), including accessible public 
hearings and other processes to advance the engagement of vulnerable 
populations. Grantees should demonstrate the sharing of decision 
criteria, the method of evaluating a project(s), and how all project 
stakeholders and interested parties were or are to be included to 
ensure transparency including, as appropriate, stakeholders and parties 
with an interest in environmental justice or accessibility.
    (4) Long-Term Efficacy and Fiscal Sustainability. A description of 
how the grantee plans to monitor and evaluate the efficacy and 
sustainability of Covered Projects, including how it will reflect 
changing environmental conditions (such as sea level rise or 
development patterns) with risk management tools, and/or alter funding 
sources if necessary.
    (5) Environmentally Sustainable and Innovative Investments. A 
description of how the Covered Project(s) will align with the 
commitment expressed in the President's Climate Action Plan to 
``identify and evaluate additional approaches to improve our natural 
defenses against extreme weather, protect biodiversity, and conserve 
natural resources in the face of a changing climate . . .''
    h. HUD Review of Covered Projects. HUD may disapprove any Action 
Plan Amendment that proposes a Covered Project that does not meet the 
above criteria. In the course of reviewing an Action Plan Amendment, 
HUD will advise grantees of the deficiency of a Covered Project, and 
grantees must revise their plans accordingly to secure HUD approval. In 
making its decision, HUD will consider input from other relevant 
federal agencies. Each grantee is encouraged to consult with the 
Regional Coordination Working Group prior to the inclusion of a Covered 
Project in its Action Plan. HUD will also submit any Covered Project(s) 
identified in an Action Plan to the Regional Coordination Working Group 
for comment, and will consider the group's views prior to approval or 
disapproval of the project(s). Consistent with the Rebuilding Strategy 
Infrastructure Resilience Guidelines, the goal of this coordination 
effort is to promote a regional and cross-jurisdictional approach to 
resilience in which neighboring communities and states come together 
to: identify interdependencies among and across geography and 
infrastructure systems; compound individual investments towards shared 
goals; foster leadership; build capacity; and share information and 
best practices on infrastructure resilience.
    3. Action Plan for Disaster Recovery waiver and alternative 
requirement--Housing, Business Assistance, and General Requirements. 
The Prior Notices are modified as follows:
    a. Public and assisted multifamily housing. In the March 5, 2013 
Notice, paragraph 1(a)(6) at 78 FR 14334, grantees were required to 
describe how funds would be used to address the rehabilitation, 
mitigation and new construction needs of each impacted Public Housing 
Authority (PHA) within its jurisdiction. In addition to this continuing 
requirement for PHAs, grantees under this Notice must now describe how 
they will address the rehabilitation, mitigation and new construction 
needs of other assisted multifamily housing developments impacted by 
the disaster, including HUD-assisted multifamily housing, low income 
housing tax credit (LIHTC) financed developments and other subsidized 
and tax credit-assisted affordable housing. For CDBG DR purposes, HUD-
assisted multifamily housing continues to be defined by paragraph 
VI.A.1.a. (1) of the March 5, 2013 Notice at 78 FR 14332. Grantees 
should focus on protecting vulnerable residents and should consider 
measures to protect vital infrastructure (e.g., HVAC and electrical 
equipment) from flooding. Grantees are strongly encouraged to provide 
assistance to PHAs and other assisted and subsidized multifamily 
housing to help them elevate critical infrastructure and rebuild to 
model resilient building standards. Examples of such standards include 
the I-Codes developed by the International Code Council (ICC), the 
Insurance Institute for Business and Home Safety (IBHS) FORTIFIED home 
programs, and standards under development by the American National 
Standards Institute (ANSI) and the American Society of Civil Engineers 
(ASCE).
    b. Liquid Fuel Supply Chain Assistance. The March 5, 2013 Notice, 
paragraph (d)(3) at 78 FR 14335, and paragraph 41 at 78 FR 14347, are 
amended, as necessary, to require the following: If a grantee provides 
CDBG-DR assistance to a small business in the liquid fuel supply chain, 
the award agreement must require the adoption of measures to mitigate 
impacts to the liquid fuel supply chain during future disasters. Risk 
mitigation measures should include processes or methods to ensure that 
fueling stations along critical evacuation routes remain functional, or 
quickly restore functionality, during power outages. This requirement 
applies to any small business in the liquid fuel supply chain that 
applies for CDBG-DR assistance after the effective date of this Notice. 
Grantees are reminded that pursuant to the March 5, 2013 Notice, 
grantees are prohibited from assisting businesses, including private 
utilities, that do not meet the definition of a small business as 
defined by SBA at 13 CFR part 121 and as further modified by this 
Notice. Please review the modified definition of a small business in 
paragraph 10 of this section of the Notice, particularly with regard to 
businesses covered by this section.
    c. Certification of proficient controls, processes and procedures. 
The

[[Page 69109]]

Appropriations Act requires the Secretary to certify, in advance of 
signing a grant agreement, that the grantee has in place proficient 
financial controls and procurement processes and has established 
adequate procedures to prevent any duplication of benefits as defined 
by section 312 of the Stafford Act, ensure timely expenditure of funds, 
maintain comprehensive Web sites regarding all disaster recovery 
activities assisted with these funds, and detect and prevent waste, 
fraud, and abuse of funds. Grantees submitted this certification 
pursuant to paragraph VI.E.42(q) of the March 5, 2013 Notice. In any 
Action Plan Amendment submitted after the effective date of this 
Notice, grantees are required to identify any material changes in its 
processes or procedures that could potentially impact the Secretary's 
or the grantee's prior certification. Grantees are advised that HUD may 
revisit any prior certification based on a review of an Action Plan 
Amendment submitted for this allocation of funds, as well as monitoring 
reports, audits by HUD's Office of the Inspector General, citizen 
complaints or other sources of information. As a result of HUD's 
review, the grantee may be required to submit additional documentation 
or take appropriate actions to sustain the certification.
    d. Certification of Resilience Standards. Paragraph 42 at 78 FR 
14347 of the March 5, 2013 Notice is amended to additionally require 
the grantee to certify that it will apply the resilience standards 
required in section VI (2)(e) of this Notice.
    e. Amending the Action Plan. Paragraph 1(k) at 78 FR 14337 of the 
March 5, 2013 Notice is amended, as necessary, to require each grantee 
to submit a substantial Action Plan Amendment to HUD within 120 days of 
the effective date of this Notice. All Action Plan Amendments submitted 
after the effective date of this Notice must be prepared in accordance 
with the Prior Notices, as modified by this Notice. In addition, they 
must budget all, or a portion, of the funds allocated under this 
Notice. Grantees are reminded that an Action Plan may be amended one or 
more times until it describes uses for 100 percent of the grantee's 
CDBG-DR award. The last date that grantees may submit an Action Plan 
Amendment is June 1, 2017 given that HUD must obligate all CDBG-DR 
funds not later than September 30, 2017. The requirement to expend 
funds within two years of the date of obligation will be enforced 
relative to the activities funded under each obligation, as applicable.
    f. HUD Review/Approval. Consistent with the requirements of section 
105(c) of the Cranston-Gonzalez National Affordable Housing Act, HUD 
will review each grantee's substantial Action Plan Amendment within 60 
days from the date of receipt. This timeframe allows HUD's federal 
partners to view the Amendment and provide feedback. The Secretary may 
disapprove an Amendment if it is determined that it does not meet the 
requirements of the Prior Notices, as amended by this Notice. Once an 
Amendment is approved, HUD will issue a revised grant agreement to the 
grantee.
    g. Projection of expenditures and outcomes. Paragraph 1(l) at 78 FR 
14337 of the March 5, 2013 Notice is amended, as necessary, to require 
each grantee to amend its Action Plan to update its projection of 
expenditures and outcomes within 90 days of its Action Plan Amendment 
approval. The projections must be based on each quarter's expected 
performance--beginning the quarter funds are available to the grantee 
and continuing each quarter until all funds are expended. Projections 
should include the entire amount allocated by this Notice. Amending the 
Action Plan to accommodate these changes is not considered a 
substantial amendment. Guidance on preparing the projections is 
available on HUD's Web site at: https://portal.hud.gov/hudportal/HUD?src=/program--offices/comm--planning/communitydevelopment/programs/
drsi/afwa.
    4. Citizen participation waiver and alternative requirement. 
Paragraph 3 at 78 FR 14338 of the March 5, 2013 Notice is modified to 
require grantees to publish substantial Action Plan Amendments for 
comment for 30 days prior to submission to HUD. Grantees are reminded 
of both the citizen participation requirements of that Notice and that 
HUD will monitor grantee compliance with those requirements and the 
alternative requirements of this Notice. In addition, this Notice 
establishes the requirement that at least one public hearing must held 
regarding any substantial Action Plan Amendment submitted after the 
effective date of this Notice, including any subsequent substantial 
amendment proposing or amending a Covered Project. Citizens and other 
stakeholders must have reasonable and timely access to these public 
hearings. Grantees are encouraged to conduct outreach to community 
groups, including those that serve minority populations, persons with 
limited English proficiency, and persons with disabilities, to 
encourage public attendance at the hearings and the submission of 
written comments concerning the Action Plan Amendment.
    The grantee must continue to make the Action Plan, any amendments, 
and all performance reports available to the public on its Web site and 
on request and the grantee must make these documents available in a 
form accessible to persons with disabilities and persons of limited 
English proficiency, in accordance with the requirements of the March 
5, 2013 Notice. Grantees are also encouraged to outreach to local 
nonprofit and civic organizations to disseminate substantial Action 
Plan Amendments submitted after the effective date of this Notice. 
During the term of the grant, the grantee must provide citizens, 
affected local governments, and other interested parties with 
reasonable and timely access to information and records relating to the 
Action Plan and to the grantee's use of grant funds. This objective 
should be achieved through effective use of the grantee's comprehensive 
Web site mandated by the Appropriations Act.
    5. Reimbursement of disaster recovery expenses. In addition to pre-
award requirements described in the March 5, 2013 Notice, grantees are 
subject to HUD's guidance issued July 30, 2013--``Guidance for Charging 
Pre-Award Costs of Homeowners, Businesses, and Other Qualifying 
Entities to CDBG Disaster Recovery Grants'' (CPD Notice 2013-05). The 
CPD Notice is available on the CPD Disaster Recovery Web site at: 
https://portal.hud.gov/hudportal/documents/huddoc?id=cdbg_preaward_notice.pdf.
    6. Duplication of benefits. In addition to the requirements 
described in the March 5, 2013 Notice and the Federal Register Notice 
published November 16, 2011 (76 FR 71060), grantees receiving an 
allocation under this Notice are subject to HUD's guidance issued July 
25, 2013--``Guidance on Duplication of Benefit Requirements and 
Provision of CDBG-DR Assistance''. This guidance is available on the 
CPD Disaster Recovery Web site at: https://portal.hud.gov/hudportal/HUD?src=/program offices/administration/hudclips/notices/cpd
    7. Eligibility of needs assessment and comprehensive risk analysis 
costs. Grantees may use CDBG-DR funds to update their impact and unmet 
needs assessments and to develop the comprehensive risk analysis for 
infrastructure projects required by this Notice, consistent with the 
overall 20 percent limitation on the use of funds for planning, 
management and administrative costs.

[[Page 69110]]

    8. Eligibility of mold remediation costs. Mold remediation is an 
eligible CDBG-DR rehabilitation activity (see the HCD Act, e.g., 42 
U.S.C. 5305(a)(4)). Like other eligible activities, however, the 
activity encompassing mold remediation must address a direct or 
indirect impact caused by the disaster.
    9. Eligibility of public services and assistance to impacted 
households. Grantees are reminded that households impacted by Hurricane 
Sandy and other qualifying events in 2011, 2012 and 2013, may be 
assisted as part of an eligible public service activity, subject to 
applicable CDBG regulations. Public service activities often address 
needs such as employment and training, child care, health, etc. Income 
payments, defined as a series of subsistence-type grant payments are 
made to an individual or family for items such as food, clothing, 
housing, or utilities, are generally ineligible for CDBG-DR assistance. 
However, per the CDBG regulations, grantees may make emergency grant 
payments for up to three consecutive months, to the provider of such 
items or services on behalf of an individual or family.
    Additionally, as provided by the HCD Act, funds for public services 
activities may be used as a matching requirement, share, or 
contribution for any other federal program when used to carry out an 
eligible CDBG-DR activity. However, the activity must still meet a 
national objective and address all applicable CDBG cross-cutting 
requirements.
    10. Small business assistance--Modification of the alternative 
requirement to allow use of the Employer Identification Number (EIN). 
In the March 5, 2013 Notice, the Department instituted an alternative 
requirement to the provisions at 42 U.S.C. 5305(a) prohibiting grantees 
from assisting businesses, including privately owned utilities, that do 
not meet the definition of a small business as defined by Small 
Business Administration (SBA) at 13 CFR part 121 in order to target 
assistance to the businesses most responsible for driving local and 
regional economies. To determine whether an entity is a small business 
under the SBA definition, the grantee must take into account all of its 
affiliations. Typically, companies that have common ownership or 
management are considered affiliated. Per the SBA regulations, if 
businesses are affiliated, the number of jobs and revenue for those 
businesses must be aggregated. However, this could preclude a number of 
small businesses from receiving assistance--particularly in cases where 
one or more persons have control (i.e., ownership or management) of 
multiple small businesses that each have separate employer 
identification numbers (EIN), file separate tax returns, or even 
operate in different industries. Thus, HUD is modifying its definition 
of a small business: Businesses must continue to meet the SBA 
requirements at 13 CFR part 121 to be eligible for CDBG-DR assistance, 
except that the size standards will only apply to each EIN. Businesses 
that share common ownership or management may be eligible for CDBG-DR 
assistance, as long as each business with a unique EIN meets the 
applicable SBA size standards.
    11. Eligibility of Local Disaster Recovery Manager costs. 
Consistent with the recommendation of the Rebuilding Strategy, grantees 
may use CDBG-DR funds to fill Local Disaster Recovery Manager (LDRM) 
positions, which are recommended by the National Disaster Recovery 
Framework. Additional information about the National Disaster Recovery 
Framework can be found at https://www.fema.gov/long-term-recovery. A 
LDRM may coordinate and manage the overall long-term recovery and 
redevelopment of a community, which includes the local administration 
and leveraging of multiple federally-funded projects and programs. A 
LDRM may also ensure that federal funds are used properly, and can help 
local governments address the need for long-term recovery coordination. 
For additional guidance, grantees should consult the CPD Notice 
``Allocating Staff Costs between Program Administration Costs vs. 
Activity Delivery Costs in the Community Development Block Grant (CDBG) 
Program for Entitlement Grantees, Insular Areas, Non-Entitlement 
Counties in Hawaii, and Disaster Recovery Grants,'' at: https://portal.hud.gov/huddoc/13-07cpdn.pdf.

VII. Mitigation and Resilience Methods, Policies, and Procedures

    Executive Order 13632 established the Hurricane Sandy Rebuilding 
Task Force. The Task Force was charged with identifying and working to 
remove obstacles to resilient rebuilding while taking into account 
existing and future risks and promoting the long-term sustainability of 
communities and ecosystems in the Sandy-affected region. The Task Force 
was further tasked with the development of a rebuilding strategy, which 
was released on August 19, 2013. The Executive Order directs HUD and 
other federal agencies, to the extent permitted by law, to align its 
relevant programs and authorities with the Rebuilding Strategy. The 
requirements set forth elsewhere in this Notice related to the 
selection of infrastructure projects and assistance to public and 
assisted multifamily housing reflect recommendations in the Rebuilding 
Strategy. To further address these recommendations, each grantee is 
strongly encouraged to incorporate the following components into its 
long term strategy for recovery from Hurricane Sandy, and to reflect 
the incorporation of these components, to the extent appropriate, in 
Action Plan Amendments.
    1. Regional environmental review and permitting; opportunities to 
expedite environmental review. To expedite environmental review and 
permitting for critical infrastructure projects in the Sandy-affected 
region, and ensure that the most complex projects are delivered as 
efficiently as possible, the Rebuilding Strategy recommended and 
federal agencies have created the Sandy Regional Infrastructure 
Permitting and Review Team. This interagency body will help to ensure 
that projects or activities funded by the Appropriations Act, including 
CDBG-DR funds, will incorporate best practices and align federal and 
state processes where appropriate. It is expected that this 
coordination will lead to considerable savings in time and cost. Where 
appropriate, grantees should identify opportunities to expedite and 
improve other types of review processes, including historic review and 
other environmental analyses, through programmatic agreements or 
consultation, and through participation in the Regional Coordination 
Working group referenced in Section VI (2) of this Notice. HUD will be 
providing additional guidance on the operation of both the Permitting 
and Review Team and the Regional Coordination Working Group.
    2. Small business assistance. To support small business recovery, 
grantees are encouraged to work with, and/or fund, small business 
assistance organizations that provide direct and consistent 
communication about disaster recovery resources to affected businesses. 
Selected organizations should have close relationships with local 
businesses and knowledge of their communities' needs and assets. In 
addition, grantees may support outreach efforts by a Community 
Development Finance Institution (CDFI) to small businesses in 
vulnerable communities.
    3. Energy Infrastructure. Where necessary for recovery, CDBG-DR 
funds may be used to support programs, projects and activities to 
enhance the resiliency of energy infrastructure. Energy infrastructure 
includes

[[Page 69111]]

electricity transmission and distribution systems, including customer-
owned generation where a significant portion of the generation is 
provided to the grid; and liquid and gaseous fuel distribution systems, 
both fixed and mobile. CDBG-DR recipients may use funds from this 
allocation for recovery investments that enhance the resiliency of 
energy infrastructure so as to limit potential damages and future 
disturbance and thus reduce the need for any future federal assistance 
under such an event. CDBG-DR funds may be used to support public-
private partnerships to enhance the resiliency of privately-owned 
energy infrastructure, if the CDBG-DR assisted activities meet a 
national objective and can be demonstrated to relate to recovery from 
the direct or indirect effects of Hurricane Sandy or other eligible 
disasters under this Notice. Such projects may include microgrids or 
energy banks that may provide funds to entities consistent with all 
applicable requirements. Grantees should review DOE's report, ``U.S. 
Energy Sector Vulnerabilities to Climate Change and Extreme Weather,'' 
available at: https://energy.gov/sites/prod/files/2013/07/f2/20130716-Energy%20Sector%20Vulnerabilities%20Report.pdf. This report assesses 
vulnerabilities and provides guidance on developing a new approach for 
electric grid operations. In developing this component of its long term 
recovery plan, grantees are reminded that pursuant to the March 5, 2013 
Notice, grantees are prohibited from assisting businesses that do not 
meet the definition of a small business as defined by SBA at 13 CFR 
part 121 and as further modified by this Notice. The March 5, 2013 
Notice also prohibits assistance to private utilities.
    4. Providing jobs to local workforce. In complying with Section 3 
of the Housing and Urban Development Act of 1968, grantees are 
encouraged to continue efforts, through specialized skills training 
programs and other initiatives, to: (a) Employ very-low and low-income 
individuals; and (2) award contracts to local businesses, for Hurricane 
Sandy rebuilding and rebuilding from other eligible disasters under 
this Notice (e.g., mold remediation and construction (including 
elevation), ecosystem and habitat restoration, green infrastructure and 
coastal engineering).
    5. Project labor agreements. Executive Order 13502 (Use of Project 
Labor Agreements for Federal Construction Projects) governs the use of 
project labor agreements for large-scale construction projects procured 
by the federal government. Similarly, grantees are encouraged to make 
use of Project Labor Agreements (PLAs) on large-scale construction 
projects in areas responding to disasters. Public housing authorities 
receiving CDBG-DR funds are governed by PLA requirements established by 
the Department's Office of Public and Indian Housing. Executive Order 
13502 can be found at: https://www.whitehouse.gov/the-press-office/executive-order-use-project-labor-agreementsfederal-construction-projects.
    6. Mitigating future risk. Grantees should include programs to 
implement voluntary buyout programs or elevate or otherwise flood-proof 
all structures that were impacted by the disaster (whether they are 
homes, businesses or utilities) to mitigate flood or sea level rise 
risk as indicated by relevant data sources. Reducing risk is essential 
to the economic well-being of communities and business and is therefore 
an essential part of any disaster recovery. Elevating at least one foot 
higher than the latest FEMA-issued base flood elevation or best 
available data (which includes advisory base flood elevation data), as 
required by the April 19, 2013 Notice has the added benefit of making 
flood insurance more affordable, particularly for economically 
disadvantaged home and business owners. The relevant data source and 
best available data under Executive Order 11988 is the latest FEMA data 
or guidance, which includes advisory data (such as Advisory Base Flood 
Elevations) or preliminary and final Flood Insurance Rate Maps. Thus, 
in addition to the elevation requirements of the April 19, 2013 Notice, 
the Department strongly encourages grantees to elevate all structures 
impacted by the disaster (including housing), even those requiring 
repairs of low or moderate damage, in addition to those requiring 
substantial rehabilitation in response to Hurricane Sandy. FEMA maps 
are available here: https://msc.fema.gov/webapp/wcs/stores/servlet/FemaWelcomeView?storeId=10001&catalogId=10001&langId=-1. Additional 
Hurricane Sandy-specific information can be found here: https://www.region2coastal.com/sandy/table.
    In addition, all rehabilitation projects should apply appropriate 
construction standards to mitigate risk, which may include: (a) Raising 
utilities or other mechanical devices above expected flood level; (b) 
wet flood proofing in a basement or other areas below ABFE/best 
available data + 1 foot; (c) using water resistant paints or other 
materials; or (d) dry flood proofing non-residential structures by 
strengthening walls, sealing openings, or using waterproof compounds or 
plastic sheeting on walls to keep water out.
    Grantees are reminded of the mandatory mitigation requirements 
described in the April 19, 2013 Notice. That is, reconstruction and 
substantial improvement projects located in a floodplain, according to 
the best available data as defined above, must be designed using the 
base flood elevation plus one foot as the baseline standard for lowest 
floor elevation. If higher elevations are required by locally adopted 
code or standards, those higher standards apply.
    In addition to the mandatory requirements of the April 19, 2013 
Notice, grantees may also engage in voluntary risk mitigation measures. 
For example, instead of elevating non-residential structures that are 
not critical actions, as defined at 24 CFR 55.2(b)(2), grantees may 
design and construct the project such that below the flood level, the 
structure is flood proofed to the level of the best available base 
flood data plus one foot. Flood proofing requires structures to be 
water tight with walls substantially impermeable to the passage of 
water and with structural components having the capability of resisting 
hydrostatic loads, hydrodynamic loads, the effects of buoyancy, or 
higher standards required by the FEMA National Flood Insurance Program 
as well as state and locally adopted codes.
    In undertaking mitigation activities, grantees are also encouraged 
to include projects identified that are ultimately identified through 
the Rebuild by Design initiative referenced in Section I of this 
Notice.
    7. Leveraging funds and evidence-based strategies. Grantees are 
encouraged, where appropriate, to leverage grant funds with public and 
private funding sources--including through infrastructure banks, 
Community Development Finance Institutions, and other intermediaries--
and to make use of evidence-based strategies, including social impact 
bonds and other pay-for-success strategies.

VIII. Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number for the disaster 
recovery grants under this Notice is as follows: 14.269.

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

[[Page 69112]]

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 
toll-free Federal Relay Service at 800-877-8339.

    Dated: November 12, 2013.
Mark Johnston,
Deputy Assistant Secretary for Special Needs Programs.

Appendix A--Allocation Methodology

    The first allocation of $5.4 billion for Disaster Recovery needs 
associated with Sandy was based on preliminary data associated with 
unmet housing and business needs. The second allocation of $5.1 
billion reflects updated housing and business unmet needs that have 
more complete information on insurance coverage, infrastructure data 
from FEMA, the Department of Transportation, and the Corps of 
Engineers.
    This allocation is calculated is based on relative share of 
needs HUD has estimated are required to rebuild to a higher standard 
consistent with CDBG program requirements and the goals set forth in 
the Hurricane Sandy Rebuilding Strategy.
    HUD calculates the cost to rebuild the most impacted and 
distressed homes, businesses, and infrastructure back to pre-
disaster conditions. From this base calculation, HUD calculates both 
the amount not covered by insurance and other federal sources to 
rebuild back to pre-disaster conditions as well as a ``resiliency'' 
amount which is calculated at 30 percent of the total basic cost to 
rebuild back the most distressed homes, businesses, and 
infrastructure to pre-storm conditions. The repair unmet needs are 
combined with the resiliency needs to calculate the total severe 
unmet needs estimated to achieve long-term recovery. The formula 
allocation is made proportional to those calculated severe unmet 
needs.

Available Data

    The ``best available'' data HUD staff have identified as being 
available to calculate unmet needs at this time for the targeted 
disasters come from the following data sources:
     FEMA Individual Assistance program data on housing unit 
damage;
     SBA for management of its disaster assistance loan 
program for housing repair and replacement;
     SBA for management of its disaster assistance loan 
program for business real estate repair and replacement as well as 
content loss;
     FEMA, Department of Transportation, and Corps of 
Engineers data on infrastructure; and
     Action Plans and supplemental data submitted by Sandy 
CDBG Grantees.

Calculating Unmet Housing Needs

    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. For unmet housing 
needs, the FEMA data are supplemented by Small Business 
Administration data from its Disaster Loan Program. HUD calculates 
``unmet housing needs'' as the number of housing units with unmet 
needs times the estimated cost to repair those units less repair 
funds already provided by FEMA, where:
     Each of the FEMA inspected owner units are categorized 
by HUD into one of five categories:
    [cir] Minor-Low: Less than $3,000 of FEMA inspected real 
property damage.
    [cir] Minor-High: $3,000 to $7,999 of FEMA inspected real 
property damage.
    [cir] Major-Low: $8,000 to $14,999 of FEMA inspected real 
property damage (if basement flooding only, damage categorization is 
capped at major-low).
    [cir] 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.
    [cir] 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.
    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 4 foot. Furthermore, a homeowner is determined to have unmet 
needs if they have received a FEMA grant to make home repairs. For 
homeowners with a FEMA grant and insurance for the covered event, 
HUD assumes that the unmet need ``gap'' is 20 percent of the 
difference between total damage and the FEMA grant.
     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:
    [cir] Minor-Low: Less than $1,000 of FEMA inspected personal 
property damage.
    [cir] Minor-High: $1,000 to $1,999 of FEMA inspected personal 
property damage.
    [cir] Major-Low: $2,000 to $3,499 of FEMA inspected personal 
property damage (if basement flooding only, damage categorization is 
capped at major-low).
    [cir] Major-High: $3,500 to $7,499 of FEMA inspected personal 
property damage or 4 to 6 feet of flooding on the first floor.
    [cir] 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 of 
$30,000 or less. Units are occupied by a tenant with income less 
than $30,000 are used to calculate likely unmet needs for affordable 
rental housing. For those units occupied by tenants with incomes 
under $30,000, HUD estimates unmet needs as 75 percent of the 
estimated repair cost.
     The median cost to fully repair a home for a specific 
disaster to code within each of the damage categories noted above is 
calculated using the average 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. 
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. If 
fewer than 100 SBA inspections are made for homes within a FEMA 
damage category, the estimated damage amount in the category for 
that disaster has a cap applied at the 75th percentile of all 
damaged units for that category for all disasters and has a floor 
applied at the 25th percentile.

Calculating Unmet Infrastructure Needs

     To proxy unmet infrastructure needs, HUD uses data from 
FEMA's Public Assistance program on the state match requirement. 
This allocation uses only a subset of the Public Assistance damage 
estimates reflecting the categories of activities most likely to 
require CDBG funding above the Public Assistance and state match 
requirement. Those activities are categories: C-Roads and Bridges; 
D-Water Control Facilities; E-Public Buildings; F-Public Utilities; 
and G-Recreational-Other. Categories A (Debris Removal) and B 
(Protective Measures) are largely expended immediately after a 
disaster and reflect interim recovery measures rather than the long-
term recovery measures for which CDBG funds are generally used. 
Because Public Assistance damage estimates are available only 
statewide (and not county), CDBG funding allocated by the estimate 
of unmet infrastructure needs are sub-allocated to New York City 
from the New York State total based on the distribution of initial 
project-level estimates obtained from FEMA.
    For the second round of CDBG-DR funding for Sandy recovery, HUD 
included three additional sources of information:
    1. US Army Corps of Engineers (USACE) Infrastructure Resilience 
Coordination. Many USACE Sandy projects require very high local cost 
shares. However, Federal requirements only allow grantees to no more 
than $250,000 of CDBG-DR funding towards local match requirements 
for these projects. As such, this calculation only includes $250,000 
per USACE project where local match is higher than that amount.
    2. DOT, Federal Highway Administration (FHWA) Sandy Recovery 
Grants--Emergency

[[Page 69113]]

Relief (ER). We include an estimate of the local cost share from 
this program. To calculate this estimate, we only include 20% of 
non-quick release Sandy ER project estimates as of July 2013.
    3. DOT, Federal Transit Administration (FTA) Transit Emergency 
Relief (ER). We include the 10% local cost share for these transit 
projects. Note, since much of the New York City transit damage is 
owned by a state organization, the Metropolitan Transportation 
Authority, New York State receives the vast majority of need from 
this grant. Also note that the State of New Jersey receives 66% of 
the local match requirement from the Port Authority's match 
requirement; New York State receives 34% of the Authority's match 
requirement.

Calculating Economic Revitalization Needs

     Based on SBA disaster loans to businesses, HUD used the 
sum of real property and real content loss of small businesses not 
receiving an SBA disaster loan. This is adjusted upward by the 
proportion of applications that were received for a disaster that 
content and real property loss were not calculated because the 
applicant had inadequate credit or income. For example, if a state 
had 160 applications for assistance, 150 had calculated needs and 10 
were denied in the pre-processing stage for not enough income or 
poor credit, the estimated unmet need calculation would be increased 
as (1 + 10/160) * calculated unmet real content loss.
     Because applications denied for poor credit or income 
are the most likely measure of needs requiring the type of 
assistance available with CDBG-DR funds, the calculated unmet 
business needs for each state are adjusted upwards by the proportion 
of total applications that were denied at the pre-process stage 
because of poor credit or inability to show repayment ability. 
Similar to housing, estimated damage is used to determine what unmet 
needs will be counted as severe unmet needs. Only properties with 
total real estate and content loss in excess of $30,000 are 
considered severe damage for purposes of identifying the most 
impacted areas.

    [cir] Category 1: real estate + content loss = below 12,000
    [cir] Category 2: real estate + content loss = 12,000-30,000
    [cir] Category 3: real estate + content loss = 30,000-65,000
    [cir] Category 4: real estate + content loss = 65,000-150,000
    [cir] Category 5: real estate + content loss = above 150,000

     To obtain unmet business needs, the amount for approved 
SBA loans is subtracted out of the total estimated damage Resiliency 
Needs.
    CDBG Disaster Recovery Funds are often used to not only support 
rebuilding to pre-storm conditions, but also to build back much 
stronger. For Sandy, HUD has required that grantees use their funds 
in a way that results in rebuilding back stronger so that future 
storms do less damage and recovery can happen faster. To calculate 
these resiliency costs, HUD multiplied it estimates of total repair 
costs for seriously damaged homes, small businesses, and 
infrastructure by 30 percent. Total repair costs are the repair 
costs including costs covered by insurance, SBA, FEMA, and other 
federal agencies. The resiliency estimate at 30 percent of damage is 
intended to reflect some of the unmet needs associated with building 
to higher standards such as elevating homes, voluntary buyouts, 
hardening, and other costs in excess of normal repair costs. Data on 
damage to public housing for purpose of calculating resiliency need 
was based on damage estimates from both FEMA and HUD's Office of 
Public and Indian Housing.

[FR Doc. 2013-27506 Filed 11-15-13; 8:45 am]
BILLING CODE 4210-67-P