Allocations, Common Application, Waivers, and Alternative Requirements for Community Development Block Grant Disaster Recovery Grantees, 36812-36826 [2017-16411]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 82, Number 150 (Monday, August 7, 2017)]
[Notices]
[Pages 36812-36826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-16411]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6039-N-01]


Allocations, Common Application, Waivers, and Alternative 
Requirements for Community Development Block Grant Disaster Recovery 
Grantees

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

ACTION: Notice.

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SUMMARY: This notice provides guidance on issues arising from Community 
Development Block Grant disaster recovery (CDBG-DR) funds.

[[Page 36813]]

Specifically, this notice allocates additional funds for 2015 and 2016 
disasters; establishes an allocation framework for disasters that occur 
in 2017 and later; provides waivers for previously funded National 
Disaster Resilience Competition grants and for grantees that received 
certain CDBG-DR funding; provides a waiver for Rebuild By Design 
activities; and establishes an alternative requirement that creates new 
national objective criteria for grantees undertaking CDBG-DR buyouts 
and housing incentives.

DATES: This notice will apply on: August 14, 2017.

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. 2015 and 2016 Allocations
    A. Background
    B. Use of Funds
    C. Grant Amendment Process
    D. Applicable Rules, Statutes, Waivers, and Alternative 
Requirements
    E. Duration of Funding
II. Waivers and Alternative Requirements for CDBG-DR Funds 
Appropriated by Public Law 114-223, 114-254 and 115-31 (Applicable 
only to the State of Louisiana)
III. Allocation Framework for Disasters in 2017 or Later
    A. Background
    B. Use of Funds
IV. Public Law 113-2 Waivers and Alternative Requirements
    A. Background
    B. Applicable Rules, Statutes, Waivers, and Alternative 
Requirements
V. New LMI National Objective Criteria for Buyouts and Housing 
Incentives (Applicable to Multiple Appropriations)
VI. Catalog of Federal Domestic Assistance
VII. Finding of No Significant Impact
Appendix A: Allocation Methodology

I. 2015 and 2016 Allocations

A. Background

    Since December 2015, four different public laws have been enacted 
that have provided CDBG-DR appropriations to address major declared 
disasters that occurred in 2015, 2016, 2017, and later. Table 1 lists 
these various public laws, the related Federal Register notices that 
govern the funds, grantees that have received allocations, and amounts 
provided to those grantees.
[GRAPHIC] [TIFF OMITTED] TN07AU17.021

    Each of the public laws identified above provides CDBG-DR funds for 
necessary expenses for activities authorized under title I of the 
Housing and Community Development Act of 1974 (HCDA) 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 qualifying major disaster declared by 
the President pursuant to the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act of 1974 (Stafford Act) (42 U.S.C. 5121 et 
seq.).
    CDBG-DR grants under each appropriation are governed by one or more 
Federal Register notices that contain the requirements, applicable 
waivers, and alternative requirements that apply to the use of the 
funds. Congress requires that HUD publish waivers and alternative 
requirements in the Federal Register.
    This Federal Register notice sets out the requirements, waivers, 
and alternative requirements that govern the funds appropriated under 
Public Law 115-31. Throughout this notice, references to Federal 
Register notices will be to the date the notices were published as 
noted in Table 1.
    Under Public Law 115-31, Congress appropriated $400 million in 
CDBG-DR funding to address remaining unmet needs (as defined by HUD) 
arising from qualifying major disasters that occurred

[[Page 36814]]

in 2015 and 2016, and for qualifying major disasters that occur in 2017 
or later, until the funds are fully allocated. Congress required that 
HUD, in distributing the $400 million, use the allocation methodologies 
identified in June 17, 2016, and January 18, 2017, Federal Register 
notices for disasters occurring in 2015 and 2016, respectively.
    Table 1, under the column labeled Public Law 115-31, reflects the 
allocation of funds appropriated by that act for qualifying disasters 
in 2015 and 2016 (inclusive of the amounts announced on May 18, 2017). 
In HUD's June 17, 2016, Federal Register notice, HUD described the 
allocation and applicable waivers and alternative requirements, 
relevant statutory and regulatory requirements, grant award process, 
criteria for Action Plan approval, and eligible disaster recovery 
activities for the qualifying 2015 disasters. Grantees receiving an 
allocation of funds under this Federal Register notice for qualifying 
2015 disasters are subject to the authority and conditions of Public 
Law 114-113 and the requirements, waivers, and alternative requirements 
provided in the June 17, 2016, notice.
    In HUD's November 21, 2016, and January 18, 2017, Federal Register 
notices, HUD described the allocation and applicable waivers and 
alternative requirements, relevant statutory and regulatory 
requirements, grant award process, criteria for Action Plan approval, 
and eligible disaster recovery activities for the qualifying 2016 
disasters. Grantees receiving allocations of funds under these Federal 
Register notices for qualifying 2016 disasters are subject to the 
authority and conditions of Public Law 114-223 and 114-254 and the 
requirements, waivers and alternative requirements provided in the 
November 21, 2016, and January 18, 2017, Federal Register notices.
    HUD is allocating the funds for the 2015 and 2016 disasters based 
on updated data HUD received from the Federal Emergency Management 
Agency (FEMA), and the Small Business Administration (SBA). HUD's 
allocations match the difference between HUD's 100 percent estimate of 
the serious unmet needs for repair in most impacted counties after 
taking into consideration other resources, including insurance, FEMA, 
SBA and the amounts previously allocated. HUD's methodology for 
allocation as specified in the June 17, 2016, and January 18, 2017, 
notices does not include additional funds for resilience activities. 
Detailed explanations of HUD's allocation methodologies for qualifying 
disasters from 2015 and 2016, are provided at Appendix A in the June 
17, 2016 notice and Appendix A of the January 18, 2017 notice, 
respectively.

   Table 2--Qualifying 2015 and 2016 Disasters and ``Most Impacted and
                           Distressed'' Areas
------------------------------------------------------------------------
                                                     Minimum amount that
                                                       must be expended
                                                     for recovery in the
       FEMA disaster No.              Grantee           HUD-identified
                                                     ``most impacted and
                                                      distressed'' areas
------------------------------------------------------------------------
                             2015 Disasters
------------------------------------------------------------------------
4241..........................  Lexington County     Lexington County
                                 (Urban County), SC.  Urban County
                                                      Jurisdiction
                                                      ($5,038,000).
4241..........................  Columbia, SC.......  Columbia
                                                      ($6,166,000).
4241..........................  Richland County, SC  Richland County
                                                      Urban County
                                                      Jurisdiction
                                                      ($7,254,000).
4241..........................  State of South       Charleston,
                                 Carolina.            Dorchester,
                                                      Florence,
                                                      Georgetown and
                                                      Clarendon Counties
                                                      * ($23,896,800).
4223, 4245....................  Houston, TX........  City of Houston
                                                      ($20,532,000).
4223, 4245....................  San Marcos, TX.....  City of San Marcos
                                                      ($8,714,000).
4223, 4245, 4272..............  State of Texas.....  Harris, Hays,
                                                      Hidalgo, and
                                                      Travis Counties
                                                      ($12,511,200).
------------------------------------------------------------------------
                             2016 Disasters
------------------------------------------------------------------------
4263, 4277....................  State of Louisiana.  East Baton Rouge,
                                                      Livingston,
                                                      Ascension,
                                                      Tangipahoa,
                                                      Ouachita,
                                                      Lafayette,
                                                      Lafayette,
                                                      Vermilion, Acadia,
                                                      Washington, and
                                                      St. Tammany
                                                      Parishes
                                                      ($41,148,000).
4273..........................  State of West        Kanawha,
                                 Virginia.            Greenbrier, Clay,
                                                      and Nicholas
                                                      Counties **
                                                      ($36,476,000).
4266, 4269, 4272..............  State of Texas.....  Harris, Newton,
                                                      Montgomery, Fort
                                                      Bend, and Brazoria
                                                      Counties
                                                      ($13,304,800).
4285..........................  State of North       Robeson,
                                 Carolina.            Cumberland,
                                                      Edgecombe, and
                                                      Wayne Counties
                                                      ($30,380,800).
4286..........................  State of South       Marion and Horry
                                 Carolina.            Counties
                                                      ($23,824,800).
4280, 4283....................  State of Florida...  St. Johns County
                                                      ($47,468,000).
------------------------------------------------------------------------
* Based on data presented by the grantee, HUD has approved the addition
  of Clarendon County to the 2015 South Carolina ``most impacted and
  distressed'' areas.
** Based on data presented by the grantee, HUD has approved the addition
  of Clay and Nicholas Counties to the 2016 West Virginia ``most
  impacted and distressed'' areas.

    Use of funds for all grantees is limited to unmet recovery needs 
from the major disasters identified in Table 2. Table 2 shows the HUD-
identified ``most impacted and distressed'' areas impacted by the 
identified disasters. At least 80 percent of the total funds provided 
to each grantee under this notice must address unmet needs within the 
HUD-identified ``most impacted and distressed'' areas, as identified in 
Table 2. Grantees may spend the remaining 20 percent in the HUD-
identified areas or areas the grantee determines to be ``most impacted 
and distressed.''

B. Use of Funds

    Public Law 115-31 requires funds to be used only for specific 
disaster recovery related purposes. This allocation provides funds to 
2015 and 2016 CDBG-DR grantees for authorized disaster recovery 
efforts. Grantees allocated funds under this notice for 2015 and 2016 
disasters must submit a

[[Page 36815]]

substantial Action Plan Amendment as outlined below.

C. Grant Amendment Process

    To receive funds allocated by this notice, 2015 and 2016 grantees 
(listed in Table 1) must submit a substantial Action Plan Amendment to 
their approved Action Plan and meet the following requirements:
     Grantee must consult with affected citizens, stakeholders, 
local governments and public housing authorities to determine updates 
to its needs assessment;
     Grantee must amend its Action Plan to update its needs 
assessment, modify or create new activities, or reprogram funds. Each 
amendment must be highlighted, or otherwise identified within the 
context of the entire Action Plan. The beginning of every Action Plan 
Amendment must include a: (1) Section that identifies exactly what 
content is being added, deleted, or changed; (2) chart or table that 
clearly illustrates where funds are coming from and where they are 
moving to; and (3) a revised budget allocation table that reflects the 
entirety of all funds;
     Grantee must publish a substantial amendment to its 
previously approved Action Plan for Disaster Recovery prominently (see 
section VI.A.4.a of the November 21, 2016, notice and section VI.A.3.a 
of the June 17, 2016, notice) on the grantee's official Web site for no 
less than 14 calendar days. The manner of publication must include 
prominent posting on the grantee's official Web site and must afford 
citizens, affected local governments, and other interested parties a 
reasonable opportunity to examine the amendment's contents and provide 
feedback;
     Grantee must respond to public comment and submit its 
substantial Action Plan Amendment to HUD no later than 90 days after 
the effective date of this notice;
     HUD will review the substantial Action Plan Amendment 
within 45 days from date of receipt and determine whether to approve 
the Amendment per criteria identified in this notice and all applicable 
prior notices;
     HUD will send 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 must ensure that the HUD approved substantial 
Action Plan Amendment (and original Action Plan) is posted prominently 
on its official Web Site;
     Grantee must enter the activities from its published 
Action Plan Amendment into the Disaster Recovery Grant Reporting (DRGR) 
system and submit the updated DRGR Action Plan to HUD within the 
system;
     Grantee must sign and return the grant agreement to HUD;
     HUD will sign the grant agreement and revise the grantee's 
line of credit amount;
     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 adopts another Federal agency's 
environmental review where authorized under provisions incorporated by 
reference in Public Law 115-31, and, as applicable, receives a response 
from HUD or the state that approves the grantee's Request for Release 
of Funds and certification;
     Grantee must amend its published Action Plan to include 
its projection of expenditures and outcomes within 90 days of the 
Action Plan Amendment approval.

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

    Awards under this notice will be subject to the waivers and 
alternative requirements provided in the notices governing the award of 
CDBG-DR funds for 2015 and 2016disasters, as identified in Table 1. 
These waivers and alternative requirements provide additional 
flexibility in program design and implementation to support full and 
swift recovery following the disasters, while also ensuring that 
statutory requirements are met. Grantees may request additional waivers 
and alternative requirements from the Department as needed to address 
specific needs related to their recovery activities. Waivers and 
alternative requirements are effective five days after they are 
published in the Federal Register.

E. Duration of Funding

    Public Law 115-31 provides that these funds will remain available 
until expended. However, consistent with 31 U.S.C. 1555 and OMB 
Circular A-11, if the Secretary or the President determines that the 
purposes for which the appropriation has been made have been carried 
out and no disbursements have been made against the appropriation for 
two consecutive fiscal years, any remaining balance will be made 
unavailable for obligation or expenditure. Consistent with the June 17, 
2016, November 21, 2016, and January 18, 2017 notices, the provisions 
at 24 CFR 570.494 and 24 CFR 570.902 regarding timely distribution of 
funds are waived and replaced with alternative requirements under this 
notice. Grantees must expend 100 percent of their allocation of CDBG-DR 
funds on eligible activities within 6 years of HUD's execution of the 
grant agreement.

II. Waivers and Alternative Requirements for CDBG-DR Funds Appropriated 
by Public Law 114-223, 114-254 and 115-31 (Applicable Only to the State 
of Louisiana)

    This section of the notice provides a waiver for the state of 
Louisiana, which has received CDBG-DR allocations pursuant to Public 
Law 114-223, 114-254 and 115-31. The state of Louisiana was allocated 
$1,656,972,000 in CDBG-DR funds under Public Law 114-223 and 114-254 
and HUD has approved the state's use of these CDBG-DR funds for three 
main recovery programs: Housing (86 percent), economic development (4 
percent), and infrastructure (6 percent). These programs were developed 
to address the most urgent and significant unmet needs of those areas 
impacted by the eligible 2016 disasters. This notice allocates 
$51,435,000 to Louisiana pursuant to Public Law 115-31, bringing the 
total amount allocated to the state for 2016 disasters to 
$1,708,407,000.
    1. Waiver of the 70 percent overall benefit requirement (State of 
Louisiana only). The overall benefit requirement set by the HCDA 
requires that 70 percent of the aggregate of the grantee's CDBG 
program's funds be used to support activities benefitting low- and 
moderate-income persons. It can be difficult for grantees working in 
disaster recovery to meet the overall benefit test, because disasters 
do not always affect low- and moderate-income areas and, therefore, 
this requirement can in some cases limit grantees' ability to assist 
the most damaged areas.
    The November 21, 2016, notice maintained the 70 percent overall 
benefit requirement for all grantees receiving funds under these public 
laws, but provided the state of Louisiana and all other grantees with 
additional flexibility to request a lower overall benefit requirement. 
Specifically, that notice allows a grantee to request to further reduce 
its overall benefit requirement if it submitted a justification that, 
at a minimum: (a) Identifies the planned activities that meet the needs 
of its low- and moderate-income population; (b) describes proposed 
activity(ies) and/or program(s) that will be affected by the 
alternative

[[Page 36816]]

requirement, including their proposed location(s) and role(s) in the 
grantee's long-term disaster recovery plan; (c) describes how the 
activities/programs identified in (b) prevent the grantee from meeting 
the 70 percent requirement; and (d) demonstrates that low- and 
moderate-income (LMI) persons' disaster-related needs have been 
sufficiently met and that the needs of non-LMI persons or areas are 
disproportionately greater, and that the jurisdiction lacks other 
resources to serve them.
    The state of Louisiana submitted a request to establish a lower 
overall benefit requirement based on the above criteria. In its 
request, the state contends that out of the 57,600 households that 
suffered major or severe damage during the flooding in 2016, only 44 
percent were low-and and moderate-income (LMI) persons. The State's 
request notes that due to the persistent flooding that occurs in these 
communities, offering assistance to all households in the areas 
affected by the storm, and not just LMI households, will help the 
impacted neighborhoods with critical rebuilding needs.
    Accordingly, the state will target its CDBG-DR funds to households 
with major or severe damage that did not have flood insurance at the 
time of the storms (36,510 households). The state indicates that 53 
percent of those households qualify as LMI, and that 65 percent of the 
funds for the state's homeowner program will benefit those LMI 
households. The state also estimates that 100 percent of its housing 
rental funds will benefit LMI households, and 50 percent of the funds 
allocated for infrastructure and economic development activities will 
also meet the LMI national objective. The state designed its program so 
that those in greatest need are provided with the greatest level of 
assistance, by covering 100 percent of unmet needs for households 
earning less than 120 percent of area median income (AMI) and covering 
50 percent of unmet needs for households above 120 percent of AMI. This 
approach prioritizes the unmet needs of LMI households and encourages 
higher income households to leverage personal or private funds.
    To enable the state to undertake the activities it has deemed most 
critical for its recovery, and to ensure that LMI households are 
sufficiently served and/or assisted, HUD is granting a waiver and 
alternative requirement to reduce the overall benefit requirement from 
70 percent to not less than 55 percent of the state's allocation of 
CDBG-DR funds. This means that the state must use at least 55 percent 
of its CDBG-DR allocations under Public Law 114-223, 114-254 and 115-31 
to benefit LMI households (or not less than $939,623,850.00).
    Based on the analysis submitted by the state, the Secretary finds a 
compelling need for this reduction due to the circumstances outlined in 
the state's request. In particular, HUD notes that the areas most 
damaged by the storms have limited LMI populations; that all of the 
state's recovery programs will have some component that will 
specifically benefit LMI households; that the persistent nature of 
flooding has led the state to focus on the importance of rebuilding 
communities in a holistic manner; and that the state will prioritize 
the unmet needs of LMI households in its homeowner recovery programs. 
HUD does not see evidence that reduction to the 50 percent level sought 
by the state is necessary given its approved program design and early 
data with respect to its applicant pools. HUD, however, does advise the 
state to maintain its current program design and targeting strategy to 
ensure that projected LMI benefit levels are achieved and the state 
continues to demonstrate that low- and moderate-income persons' 
disaster-related needs have been sufficiently met.
    This is a limited waiver modifying 42 U.S.C. 5301(c), 42 U.S.C. 
5304(b)(3)(A), 24 CFR 570.484, and 570.200(a)(3) only to the extent 
necessary to reduce the low- and moderate-income overall benefit 
requirement that the state of Louisiana must meet when carrying out 
activities identified in its approved action from 70 percent to not 
less than 55 percent of the state's allocations of CDBG-DR funds under 
Public Law 114-223, 114-254 and 115-31.
    2. Waiver of Section 414 of the Stafford Act, 42 U.S.C. 5181 (State 
of Louisiana only). The state of Louisiana has requested a waiver of 
section 414 of the Stafford Act, as amended, for rehabilitation or 
reconstruction activities. This notice grants the State's request and 
specifies alternative requirements.
    Section 414 of the Stafford Act (42 U.S.C. 5181) provides that 
``Notwithstanding any other provision of law, no person otherwise 
eligible for any kind of replacement housing payment under the Uniform 
Relocation Assistance and Real Property Acquisition Policies Act of 
1970 (Pub. L. 91-646) [42 U.S.C. 4601 et seq.] [``URA''] shall be 
denied such eligibility as a result of his being unable, because of a 
major disaster as determined by the President, to meet the occupancy 
requirements set by [the URA]''. Accordingly, tenants displaced from 
their homes as a result of the identified disaster and who would have 
otherwise been displaced as a direct result of any acquisition, 
rehabilitation, or demolition, of real property for a federally 
assisted project or program may become eligible for a replacement 
housing payment notwithstanding their inability to meet occupancy 
requirements prescribed in the URA.
    Section 414 of the Stafford Act (including its implementing 
regulation at 49 CFR 24.403(d)(1)), is waived to the extent that it 
would apply to the CDBG-DR funded rehabilitation and reconstruction 
activities undertaken by the state of Louisiana, or its subrecipients, 
for its grants under Public Law 114-223, Public Law 114-254 and Public 
Law 115-31; provided that the activities were not planned, approved, or 
otherwise underway prior to the disaster.
    The Department has surveyed other federal agencies' interpretation 
and implementation of Section 414 and found varying views and 
strategies for long-term, post-disaster projects involving the 
acquisition, rehabilitation, or demolition of disaster-damaged housing. 
Under the CDBG-DR supplemental appropriations, the Secretary has the 
authority 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 the use by the 
recipient of these funds. The Department, in special cases, has 
previously granted a waiver and provided alternative requirements of 
Section 414 to CDBG-DR grantees, including the Gulf States impacted by 
disasters in 2005 and 2008 (see 72 FR 48804) and the 2011 floods in the 
city of Minot, North Dakota (see 79 FR 60490).
    The severe floods of 2016 damaged Louisiana's affordable rental 
housing stock. According to the State, approximately 28,470 rental 
units were damaged by the floods, resulting in lower vacancies, 
increased rental rates and further exacerbating the housing cost burden 
among low- and moderate-income renters. Many of the damaged rental 
housing units have since been vacated by tenants who have found 
permanent housing elsewhere.
    The state of Louisiana's CDBG-DR Action Plan for recovery from the 
2016 floods identifies this rental housing need and contains several 
programs geared toward the repair and increase of the affordable rental 
housing stock by using CDBG-DR funds to reconstruct or rehabilitate 
rental units that were damaged by the floods and to create new rental 
housing by providing funding for multi-family developments.

[[Page 36817]]

    Existing CDBG-DR funding is only sufficient to bring less than six 
percent of disaster-impacted rental units into decent, safe, and 
sanitary condition. With a potential pool of 1,500 units eligible for 
rehabilitation or reconstruction, a strict interpretation of Section 
414 of the Stafford Act and 49 CFR 24.403(d)(1) would pose a 
significant administrative burden and add delays to achieving overall 
program goals within the timeframe set forth by the applicable notices 
governing the use of the CDBG-DR funds. Additionally, the State has 
demonstrated that replacement housing payments for persons initially 
displaced by the disaster will reduce funds available for improving 
long-term housing affordability and sustainability.
    The State has identified a relatively small population of 
households currently in need of continued temporary housing assistance 
of some form related to the flooding events, and the State's CDBG-DR 
Action Plan attempts to addresses this need by funding programs 
designed to assist the needs of persons who are homeless or at risk of 
becoming homeless due to the 2016 floods.
    The Department's basis for this waiver and alternative requirements 
are unique to the State of Louisiana as documented in its request to 
the Department. The Department has considered the State's request and 
determined that good cause exists for a waiver and alternative 
requirements and that such waiver and alternative requirements are not 
inconsistent with the overall purposes of title I of the HCD Act.
    1. The State's proposal maximizes its ability to increase the 
overall supply of affordable rental units. Such units will have 
affordability requirements for low-income persons.
    2. The waiver will simplify the administration of the disaster 
recovery process and reduce the administrative burden associated with a 
strict interpretation of Stafford Act Section 414 requirements on the 
potential pool of 1,500 units eligible for rehabilitation or 
reconstruction.
    3. This waiver does not apply to persons that meet the occupancy 
requirements to receive a replacement housing payment under the URA nor 
does it apply to persons displaced by other HUD-funded disaster 
recovery programs or projects. Such persons' eligibility for relocation 
assistance and payments under the URA is not impacted.
    Due to the specific circumstances of Louisiana's recovery process, 
the Department is providing a waiver of Section 414 of the Stafford Act 
and its implementing regulation at 49 CFR 24.403(d)(1), and 
establishing alternative requirements. For rehabilitation or 
reconstruction activities in support of bringing damaged rental units 
back into productive use, the State must adhere to the alternative 
requirements specified in this notice.
    For tenants that have vacated housing units damaged by the 2016 
floods, the State of Louisiana must:
    1. Establish a publicly available re-housing plan for its rental 
housing programs that includes, at minimum, the following:
    a. A rental registry containing information concerning the 
availability of all of the units assisted through its rental housing 
programs so that displaced low- and moderate-income households and 
other interested households may apply to live in these units;
    b. Contact information and a description of any eligibility and 
applicable application process, including any deadlines;
    c. Information on market rate rental units for non-LMI households 
displaced by the disaster;
    d. A description of services to be made available, including, at 
minimum, outreach efforts to eligible persons and housing counseling 
providing information about available housing resources.
    2. Establish and implement operating procedures to ensure that a 
good faith effort is made to contact each former residential tenants to 
inform them of the availability of their previous unit and other 
available units rehabilitated under the program.
    3. Offer low- and moderate-income former tenants preferred status 
in the residential application process for the unit from which they 
were displaced and for other rental units repaired or created with 
CDBG-DR funds.
    The State's request for waiver and alternative requirements 
indicates that landlords participating in the rental repair programs 
will be required to keep the restored units affordable for 5 to 20 
years after initial occupancy. The State's policies and procedures 
governing each rental repair program must detail any imposed 
affordability requirements for that program.
    This waiver has no effect on URA eligibility for relocation 
assistance and payments for existing tenant occupants of dwelling units 
who may be displaced or relocated temporarily as a direct result of a 
CDBG-DR activity.

III. Allocation Framework for Disasters in 2017 or Later

A. Background

    After addressing remaining unmet need for 2015 and 2016 disasters, 
$57,800,000 in CDBG-DR funding remains available to be allocated for 
major disasters occurring in 2017 or later. Public Law 115-31 specifies 
that the funds allocated for disasters in 2017 or later are subject to 
the same authority and conditions as those applicable to CDBG-DR funds 
appropriated by Public Law 114- 223 and, therefore, these funds are 
also subject to the requirements of the November 21, 2016 notice, 
except the major disaster may occur in calendar year 2017 or later 
until such funds are fully allocated.
    For 2017 and later disasters, HUD will use the methodology 
specified in Appendix A to the January 18, 2017 notice for determining 
if a disaster meets the minimum qualifications for funding using the 
limits established by that notice. For disasters that meet the minimum 
qualification, HUD will allocate the lesser of 100 percent of serious 
unmet needs as defined in the January 18, 2017 notice or remaining 
funds available from Public Law 115-31.
    HUD will not evaluate a disaster for qualification to receive CDBG-
DR funds until:
    (i) The major disaster has been declared eligible for FEMA's Public 
Assistance (PA) Program and Individual and Households (IHP) Program;
    (ii) FEMA has approved Individual Assistance applications totaling 
at least $13 million in IHP financial assistance for the declared 
disaster in a single county; and
    (iii) four months have passed since the disaster declaration that 
made IHP available, or the IHP registration period is closed, whichever 
comes first.
    These criteria do not assure CDBG-DR eligibility, but they will 
lead HUD to acquire the data necessary to determine eligibility, and if 
eligible, calculate a formula allocation. HUD will allocate funds to 
2017 disasters using the best available data at that time.

B. Use of Funds

    Grantees receiving an allocation of funds for 2017 and later 
disasters pursuant to a subsequent notice are subject to the 
requirements of the November 21, 2016 notice, as amended, which require 
that prior to the obligation of CDBG-DR funds, a grantee shall submit a 
plan to HUD for approval detailing the proposed use of all funds, 
including criteria for eligibility, and how the use of these funds will 
address

[[Page 36818]]

long-term recovery and restoration of infrastructure and housing and 
economic revitalization in the most impacted and distressed areas. This 
Action Plan for disaster recovery must describe uses and activities 
that: (1) Are authorized under title I of the Housing and Community 
Development Act of 1974 (HCDA) or allowed by a waiver or alternative 
requirement; and (2) respond to disaster-related impact to 
infrastructure, housing, and economic revitalization in the most 
impacted and distressed areas. To inform the plan, grantees must 
conduct an assessment of community impacts and unmet needs to guide the 
development and prioritization of planned recovery activities, pursuant 
to paragraph A.2.a. in section VI of the November 21, 2016 notice, as 
amended.
    Pursuant to the November 21, 2016 notice, each grantee receiving an 
allocation of funds for 2017 or later disasters in a subsequent notice 
is also required to expend 100 percent of its allocation of CDBG-DR 
funds on eligible activities within 6 years of HUD's execution of the 
grant agreement.
    Grantees receiving an allocation of funds for 2017 or later 
disasters pursuant to a subsequent notice will be subject to the grant 
process provided for in section V of the November 21, 2016 notice.

IV. Public Law 113-2 Waivers and Alternative Requirements

A. Background

    This section of the notice authorizes waivers and alternative 
requirements for certain grantees that received an allocation of funds 
appropriated under Public Law 113-2, which ultimately made available 
$15.2 billion in CDBG-DR funds for necessary expenses related to 
disaster relief, long-term recovery, restoration of infrastructure and 
housing, and economic revitalization due to Hurricane Sandy and other 
eligible events in calendar years 2011, 2012, and 2013. The full amount 
of the appropriation has been allocated as follows: $13 billion in 
response to Hurricane Sandy, $514 million in response to disasters 
occurring in 2011 or 2012, $655 million in response to 2013 disasters, 
and $1 billion for the National Disaster Resilience Competition (NDRC).
    This section of the notice specifies waivers and alternative 
requirements and modifies requirements for grantees that received 
awards under the NDRC (CDBG-NDR grantees), described in the Federal 
Register notice published by the Department on June 7, 2016 (81 FR 
36557). The requirements of the June 7, 2016 notice continue to apply 
to these grantees, except as modified by this notice.\1\
---------------------------------------------------------------------------

    \1\ Links to the June 7, 2016 notice, the text of Public Law 
113-2, and additional guidance prepared by the Department for CDBG-
DR grants, are available on the HUD Exchange Web site: https://www.hudexchange.info/programs/cdbg-dr/resilient-recovery/.
---------------------------------------------------------------------------

    This section of the notice also provides a waiver of the low- and 
moderate-income overall benefit requirement for the City of Moore, OK, 
and the State of New York, which have each received a CDBG-DR award 
pursuant to Public Law 113-2. This section of the notice also modifies 
the process for the publication of the expenditure extensions approved 
by the Department under Public Law 113-2. This section of the notice 
additionally authorizes grantees receiving an allocation of CDBG-DR 
funds for Rebuild by Design projects to exclude expenditures of that 
allocation from the calculation of the grantee's overall low- and 
moderate-income benefit.

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

    Public Law 113-2 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 HCDA. Regulatory waiver 
authority is also provided by 24 CFR 5.110, 91.600, and 570.5.
    For the waivers and alternative requirements described in this 
section of notice, the Secretary has determined that good cause exists 
and that the waivers and alternative requirements are not inconsistent 
with the overall purposes of title I of the HCDA. Grantees under Public 
Law 113-2 may request waivers and alternative requirements from the 
Department as needed to address specific needs related to their 
recovery activities. Under the requirements of Public Law 113-2, 
waivers must be published in the Federal Register no later than 5 days 
before the effective date of such waiver.
    1. Urgent need national objective certification requirements for 
CDBG-NDR grantees. The June 7, 2016 notice provided CDBG-NDR grantees 
with a waiver and alternative requirement to the certification 
requirements for the documentation of the urgent need national 
objective at 24 CFR 570.208(c) and 570.483(d), waiving the 
certification requirements until 24 months after the date the 
Department obligates funds to a grantee, and alternatively requiring 
each CDBG-NDR grantee to document how all programs and/or activities 
funded under the urgent need national objective respond to a disaster-
related impact identified by the grantee. Elsewhere, this notice 
describes the extension of the expenditure deadline that the Department 
is authorized to provide to all CDBG-NDR grantees, allowing them to 
expend funds until September 30, 2022. For CDBG-NDR grantees funding 
activities that will satisfy the urgent need national objective, an 
extension of the existing alternative requirement to the standard 
urgent need certification requirement is also required, to ensure that 
the CDBG-NDR project can meet the urgent need national objective on a 
timeframe that coincides with an extended expenditure deadline.
    Each CDBG-NDR grantee was required to document how all programs 
and/or activities funded under the urgent need national objective 
respond to a disaster-related impact. For activities that meet the 
urgent need national objective, grantees were required to reference in 
their Action Plan the type, scale, and location of the disaster-related 
impacts that each project, program, and/or activity will address. 
Without an extension of the prior waiver and alternative requirement to 
the certification requirements for documentation of the urgent need 
national objective, HUD's extension of the 24-month expenditure 
deadline could penalize grantees whose successful applications relied 
on the availability of the alternative urgent need national objective 
criteria.
    Grantees documented urgent needs in their initial applications, and 
the grantees will expend funds to meet these urgent needs throughout 
the grant period. Therefore, section 3.V.A.1.d. of the June 7, 2016 
notice is modified to add the following alternative requirement for 
CDBG-NDR grantees: ``Notwithstanding the two year limitation on the use 
of the urgent need national objective referenced in paragraph one of 
this section, for activities designed to respond to disaster-related 
impacts that pose a serious and immediate threat to the health or 
welfare of the community, and which were adequately documented within 
the grantee's initial Action Plan, the grantee may continue to use the 
alternative certification of the urgent

[[Page 36819]]

need national objective until the end of the extended expenditure 
deadline approved by the Department, provided that the grantee updates 
the needs assessment of its Action Plan as new or more detailed/
accurate disaster-related impacts are known.''
    As a reminder, Action Plans must be amended, as necessary, to 
ensure that an updated needs assessment is included for each project, 
program, or CDBG-eligible activity undertaken with CDBG-NDR funds. This 
alternative requirement does not contemplate new projects or activities 
that were not documented as meeting an urgent need within a grantee's 
initial Action Plan. Amendments to a CDBG-NDR Action Plan that describe 
additional projects or activities will trigger the substantial 
amendment requirements described in paragraph V.A.1.g.(i) in the June 
7, 2016 notice and new projects or activities intended to meet the 
urgent need national objective may require a separate waiver from HUD 
to permit use of the alternative urgent need certification.
    2. Revision of substantial amendment requirements for CDBG-NDR 
grantees. The June 7, 2016 notice specified the changes to an Action 
Plan that would constitute a substantial amendment, and described the 
process required for CDBG-NDR grantees to make a substantial amendment 
to an approved Action Plan. The June 7, 2016 notice indicated that HUD 
would review the proposed change(s) against the rating factors and 
threshold criteria and consider whether the revised Action Plan, 
inclusive of the proposed change, would continue to score in the 
fundable range for the NDRC. The June 7, 2016 notice also stated that 
HUD would only approve a substantial amendment if the revised score 
remains within the fundable range of CDBG-NDR scores. However, all NDR 
awards funded scaled and scoped versions of proposals in NDR 
applications, because the Department could not fully fund all the 
proposed activities described in applications that scored within the 
initial fundable range. Accordingly, determining whether a change to a 
grantee's Action Plan would fall within the initial fundable range of 
CDBG-NDR scores is not an accurate method of determining whether a 
revised project would still be fundable. To address this and to further 
clarify the criteria and process for amendments to CDBG-NDR Action 
Plans, the Department is amending the third paragraph of section 3.I.B. 
of the June 7, 2016 notice by replacing it in its entirety with the 
following:
    ``A grantee may amend the Action Plan, but must receive prior HUD 
approval for substantial amendments to the plan. Before making any 
substantial amendment to the Action Plan, a grantee must follow the 
same citizen participation requirements required by the NOFA for the 
preparation and submission of an NDRC application, FR-5800-N-29A2 
(NOFA). Additional information about citizen participation requirements 
can be found in section 3.V.A.3 below.''
    Additionally, the Department is also amending section 3.V.A.1. of 
the June 7, 2016 notice by replacing it with the following:
    ``1. Application for CDBG-NDR Waiver and Alternative Requirement. 
The requirements for CDBG actions plans, located at 42 U.S.C. 
12705(a)(2), 42 U.S.C. 5304(a)(1), 42 U.S.C. 5304(m), 42 U.S.C. 
5306(d)(2)(C)(iii), and 24 CFR 91.220 and 91.320 are waived for funds 
provided under the NOFA. Instead, HUD required each grantee to submit 
an application for CDBG-NDR, and the Applicant's Phase 1 and Phase 2 
submissions for this competition together constitute an Action Plan 
required under Public Law 113-2. HUD notes that 24 CFR 570.304 and 24 
CFR 570.485, to the extent they govern annual formula CDBG grant 
approvals, do not apply to National Disaster Resilience Competition 
(NDRC) allocations, but the standard of review of certifications 
continues to apply to grantee certifications. HUD will monitor the 
grantee's activities and use of funds for consistency with its approved 
Action Plan and all other requirements, including performance and 
timeliness. Per the Appropriations Act, and in addition to the 
requirements at 24 CFR 91.500, the Secretary may disapprove a 
substantial amendment to an Action Plan (application) if it is 
determined that the amended application does not satisfy all the 
required elements included in this notice at 3.V.A.1.g.(i). However, in 
reviewing substantial amendments, HUD will not penalize grantees for 
scaling and scoping decisions made by HUD as part of the NDRC award 
selection process.''
    The Appropriations Act, as used in the June 7, 2016 notice, refers 
to Public Law 113-2.
    Additionally, the Department is also amending section 3.V.A.1.g. of 
the June 7, 2016 notice by replacing it in its entirety with the 
following:
    ``(g) Action Plan Amendments, Submission to HUD, Treatment of 
Leverage, Partners, and BCA. A grantee is encouraged to work with its 
HUD representative before making any amendments to its Action Plan to 
determine whether the amendment would constitute a substantial 
amendment and to ensure that the proposed change complies with all 
applicable requirements.
    (i) Substantial Amendments. The following modifications constitute 
a substantial amendment requiring HUD approval: Any change to the 
funded portions of the application that HUD determines, based generally 
on the guidelines of the NOFA (as adjusted for HUD's scaling and 
scoping of the award), would present a significant change to the 
grantee's capacity to carry out the grant (including loss of a partner 
without addressing lost capacity through replacement or contingency 
plan identified in the application); any change to the funded portions 
of the application that HUD determines, based generally on the 
guidelines of the NOFA (as adjusted for HUD's scaling and scoping of 
the award), would undermine the grantee's soundness of approach 
(including the benefit cost analysis); any change to the Most Impacted 
and Distressed target area(s) (a revised area must meet Most Impacted 
and Distressed threshold requirements in the NOFA, including Appendix G 
to the NOFA); any change in program benefit, beneficiaries, or 
eligibility criteria, and the allocation or reallocation of more than 
10 percent of the grant award; any change to the leverage that was 
pledged and approved in the grantee's grant agreement; or the addition 
or deletion of an eligible activity.
    Amendments that do not fall within the definition of substantial 
amendment are referred to as `nonsubstantial amendments.' A grantee 
must notify HUD at least 10 business days before a nonsubstantial 
amendment becomes effective.
    For substantial amendments, grantees must complete the citizen 
participation requirements of this notice, at section 3.V.A.3, before 
HUD can approve the amendment. In addition to reviewing Action Plans 
against the criteria at 24 CFR 91.500, HUD will review and approve a 
substantial amendment to an Action Plan if the amendment results in an 
Action Plan that HUD determines: (i) Can be reasonably carried out by 
the grantee and that the grantee has addressed any loss in capacity due 
to dissolved partners that are not replaced; (ii) may differ from the 
previously approved Action Plan but does not significantly deviate from 
the scope and objectives of the previously approved Action Plan or the 
purpose of the NDRC; (iii) satisfies all of the required elements 
identified in the NOFA (as adjusted for HUD's scaling and scoping of 
the

[[Page 36820]]

award), this amended section 3.V.A.1.g. and elsewhere in the June 7, 
2016 notice, including Tie-back requirements, and does not fund 
activities identified in section III.C.2. of the NOFA as ineligible; 
(iv) demonstrates (through an updated BCA, if requested) that the 
benefits to the grantee's community and to the United States continue 
to justify the costs of the award; and (v) does not differ in the 
amount of leverage identified in the grantee's grant agreement 
(substitution of leverage sources is permitted).
    To allow HUD to make this determination, a grantee must submit 
adequate documentation that demonstrates the following: capacity of the 
grantee and partners to implement the funded activities, any changes to 
partners who will assist in the amended activity, scope and 
beneficiaries of the funded activities, the direct and supporting 
leverage committed by the grantee, and an updated BCA (if requested). 
Grantees are encouraged to work with their HUD representatives before 
making any amendment to an Action Plan. As indicated in the NOFA, if a 
grantee makes or proposes to make a substantial amendment to its 
project, HUD reserves the right to disapprove the amendment or amend 
the grantee's award and reduce the grant amount or recapture the grant, 
as necessary.
    (ii) Information for Substantial and Nonsubstantial Amendments. If 
the grantee proposes to amend its Action Plan, each proposed amendment 
must be highlighted, or otherwise identified, within the context of the 
approved Action Plan and be submitted to HUD. All amendments must 
comply with provisions of this notice, including Tie-back requirements. 
Grantees may not amend an Action Plan to include funding for ineligible 
activities identified in section III.C.2 of the NOFA. The beginning of 
every proposed amendment must include a section that identifies exactly 
what content is being added, deleted, or changed, and whether the 
grantee believes that the proposed amendment would result in a 
significant change to the grantee's capacity or soundness of approach. 
This section must also include a chart or table that clearly 
illustrates where funds are coming from and to where they are moving. 
The amendment must include a revised budget allocation table that 
reflects the entirety of all funds, as amended. A grantee's most recent 
version of its approved NDR application and its DRGR Action Plan must 
be accessible for viewing as a single document, at any given point in 
time, rather than requiring the public or HUD to view and cross-
reference changes among multiple amendments. Requirements for the full 
expenditure of CDBG-NDR funds by a date established by HUD will 
continue to be enforced under any amendment to the Action Plan. Every 
amendment to the Action Plan (substantial and nonsubstantial) must be 
numbered sequentially and posted on the grantee's website. The 
Department will acknowledge receipt of a proposed amendment via email 
or letter within 5 business days of receipt. HUD may seek additional 
information from the grantee to determine whether a proposed amendment 
is a substantial amendment.
    (iii) Amendments that may affect the BCA previously accepted by 
HUD. If requested by HUD, a grantee must submit an update to its BCA to 
support a request for a substantial amendment.
    (iv) Leverage Accepted by HUD. Grantees are required to show, 
through quarterly reports, evidence that firmly committed leverage 
resources in the amount required by the grant terms and conditions have 
been received and used for the intended purposes. A grantee may not 
propose an amendment to reduce the amount of leverage pledged and 
identified in the grant agreement. Sources of leverage funds, however, 
may be substituted after grant award with HUD approval, if the dollar 
amount of leverage is equal to or greater than the total amount of 
leverage required by the grant terms and conditions. Substitution of a 
leverage source in the same amount committed and identified in the 
grant terms and conditions is a nonsubstantial amendment. Section 
3.V.A.2.e describes additional DRGR leverage reporting requirements.
    (v) Partners Accepted by HUD. The NOFA permitted a grantee to 
identify a partner in its application that the grantee would be 
otherwise required by program requirements to competitively procure. A 
grantee is not required to secure the services of any partner by 
competitive procurement if the partner is duly documented and 
identified in the initial approved Action Plan for the CDBG-NDR grant. 
The Department has granted permission for single source procurement of 
these partners, pursuant to 2 CFR 200.320(f)(3) (cited in the NOFA as 
24 CFR 85.36(d)(4)(i)(C), which has since been superseded by the 
Uniform Requirements) and advised state grantees that have not adopted 
the local government procurement requirements in 2 CFR part 200 to 
review state requirements associated with single source procurement and 
to follow all applicable procurement requirements. In many cases, this 
will entail the grantee undertaking a cost analysis prior to making 
payments to such a partner, and the grantee will be responsible for 
ensuring compliance with requirements that all CDBG-NDR costs be 
necessary and reasonable (for local government grantees, see 2 CFR 
200.323, for state governments that have not adopted 2 CFR 200.323, see 
state procurement requirements applicable to single source 
procurements). If a partner dissolves the partnership after award and 
before activities are complete, a grantee should make its best effort 
to replace the partner with a similarly skilled partner, if the 
grantee's approved CDBG-NDR application was rated and ranked based on 
the capacity of the dissolved partner. If the grantee is not able to 
replace the lost capacity of a partner by following a contingency plan 
included in its approved CDBG-NDR application, the grantee must 
complete a substantial amendment to its Action Plan that addresses the 
lost capacity. If a grantee proposes to add a partner that would 
otherwise have to be procured as a contractor after the award or if the 
partner was identified in the approved CDBG-NDR application but was 
found by HUD to lack sufficient documentation, then that selection of 
that partner would not be covered by the single-source permission above 
and would be subject to procurement requirements under 2 CFR part 200 
or state law, as applicable. Additionally, as required by Appendix D to 
the NOFA, the grantee shall execute a written subrecipient agreement, 
developer agreement, contract, or other agreement, as applicable, with 
each partner regarding the use of the CDBG-NDR funds, before disbursing 
any CDBG-NDR funds to the partner. The written agreement must conform 
with all CDBG-NDR requirements and shall require the partner to comply 
with all applicable CDBG-NDR requirements, including those found in 
Disaster Relief Appropriations Act, 2013 (Pub. L. 113- 2), title I of 
the HCDA (42 U.S.C. 5302 et seq.), the CDBG program regulations at 24 
CFR part 570, this amended June 7, 2016 notice, and any other 
applicable Federal Register notices, and commitments made in the 
grantee's Phase 1 and Phase 2 approved CDBG-NDR applications.''
    Additionally, the Department is also amending the first paragraph 
of section 3.V.A.3.a. of the June 7, 2016 notice by replacing it in its 
entirety with the following:

    a. Publication of the Action Plan, Access to Information, and 
Substantial Amendments: At all times, the grantee must maintain a 
public Web site that contains the latest versions of its Action 
Plan, including the DRGR Action Plan and the version as

[[Page 36821]]

submitted to HUD for the competition and including the following 
portions: Executive summary; Factor narratives; Eligibility; 
national objective; overall benefit; and schedule responses, 
threshold requirements documentation, and all exhibits (A-G) (but of 
the attachments, only Attachments D and F must be published); and 
opportunity for public comment, hearing, and substantial amendment 
criteria. Before the grantee submits a proposed substantial 
amendment, the grantee must publish the proposed submission, 
including a section that identifies exactly what content is being 
added, deleted, or changed, and whether the grantee believes that 
the proposed amendment would result in a significant change to the 
grantee's capacity or soundness of approach; a chart or table that 
clearly illustrates where funds are coming from and to where they 
are moving; and a revised budget allocation table that reflects the 
entirety of all funds, as amended.

    3. Projection of Expenditures and Outcomes. The June 7, 2016 notice 
specified the time frames for grantees to report and update the 
projection of expenditures and performance outcomes for CDBG-NDR 
grants. As grantees have refined and finalized outcomes for each CDBG-
NDR grant, the Department has determined that further clarification of 
the time frames for initially reporting and updating grantee 
projections of expenditures and outcomes is required. Accordingly, 
Section 3.II.B(9) of the June 7, 2016 notice is amended by replacing it 
in its entirety with the following:

    (9) Continuing responsibility related to certification. After 
materials necessary to support the Secretary's certification are 
submitted and the grant agreement is signed, grantees have 
continuing responsibilities for maintaining the certification. HUD 
may request an update to the grantee's certification submission each 
time the grantee submits a substantial Action Plan Amendment, or if 
HUD has reason to believe the grantee has made material changes to 
grantee's support for its certifications.
    Grantees must submit to the Department for approval an update to 
the program schedule (projection of expenditures) and milestones 
(outcomes) included in the approved CDBG-NDR application response to 
the Phase 2 Factor 3 Soundness of Approach rating factor. The 
projections must be based on each quarter's expected performance--
beginning the quarter that funds are available to the grantee and 
continuing each quarter until all funds are expended. Each grantee 
must also include these projected expenditures and outcomes in the 
initial activity set-up in DRGR. Within 90 days of HUD's approval of 
the initial DRGR Action Plan, the projections entered into DRGR (as 
contained in the DRGR Action Plan) must be amended to reflect any 
subsequent changes, updates, or revision of the projections. Any 
subsequent changes, updates, or revision of the projections must 
receive written approval from HUD. Amending Action Plans solely to 
accommodate changes to the timeline for projected expenditures does 
not fall within the definition of substantial amendment and is not 
subject to citizen participation requirements.
    Guidance on the preparation of projections is available on HUD's 
Web site under the headings Office of Community Planning and 
Development, Disaster Recovery Assistance (https://www.hudexchange.info/resource/3685/cdbg-dr-grantee-projections-of-expenditures-and-outcomes/). The projections will enable HUD, the 
public, and the grantee to track proposed versus actual performance. 
HUD will make the DRGR Action Plan and performance reports available 
on the DRGR public Web site (https://drgr.hud.gov/public/).
    Additionally, following execution of a grant agreement, the DRGR 
Action Plan that reflects the components funded through the CDBG-NDR 
grant must be posted on the grantee's Web site.
    Additional information on the DRGR reporting system requirements 
can be found in section 3.V.A.2. below.
    Grantees are also required to ensure all agreements (with 
subrecipients, recipients, and contractors) clearly state the period 
of performance or the date of completion. In addition, grantees must 
enter expected completion dates for each activity in the DRGR 
system. When target dates are not met, grantees are required to 
explain why in the activity narrative in the system.
    Other reporting, procedural, and monitoring requirements are 
discussed under ``Grant Administration'' in section 3.V.A. of this 
amended June 7, 2016 notice. The Department will institute risk 
analysis and on-site monitoring of grantee management as well as 
collaborate with the HUD Office of Inspector General to plan and 
implement oversight of these funds.

    In addition to the above changes, HUD is modifying the last 
paragraph of section 3.IV of the June 7, 2106 notice, by replacing it 
in its entirety with the following:

     ``Grantee amends its published Action Plan (the DRGR 
Action Plan) to include any updates to its projection of 
expenditures and outcomes within 90 days of HUD's approval of the 
initial DRGR Action Plan.''

    4. Waiver of Limitation on Planning Costs (State of New Jersey 
only). The Department is modifying the alternative requirement in the 
June 7, 2016 notice which imposes a 20 percent limit on planning and 
administrative costs, and is imposing an alternative requirement for 
the state of New Jersey to accommodate activities to be funded under 
the state's approved CDBG-NDR Action Plan. The June 7, 2016 notice 
waived section 106(d) of the HCDA (42 U.S.C. 5306(d)) and 24 CFR 
570.489(a)(1)(i), (ii), and (iii) for states and provided an 
alternative requirement that limits CDBG-NDR grantees to using no more 
than 20 percent of the total grant amount on a combination of planning 
and general administrative costs (see paragraph V.A.10.b.(1) of the 
June 7, 2016 notice). The state submitted a Phase 2 application to HUD 
for the NDRC on October 27, 2015, describing an array of recovery and 
resilience activities that included both infrastructure and planning 
activities. In January 2016, the Department made a CDBG-NDR award of 
$15 million to the state for two proposed planning-only projects, a 
Regional Resiliency Planning (RRP) Grant Program and a best practices 
toolkit. As part of its RRP Grant Program, the state proposed to invest 
CDBG-NDR funds in a program evaluation that investigates the efficacy 
of its grant program and facilitates replication of the program in 
other communities. Because the entirety of the state's CDBG-NDR award 
is for the purpose of planning-only activities, HUD is modifying the 
limitation described in the June 7, 2016 notice for the state of New 
Jersey only, and imposing the following alternative requirement:

    To ensure that the state of New Jersey can devote the full 
amount of CDBG-NDR grant funds to both of its approved planning-only 
projects, the Department is waiving section 106(d) of the HCDA (42 
U.S.C. 5306(d)) and 24 CFR 570.489(a)(1)(i), (ii), and (iii) to 
remove the limitation on planning expenses for this grant, thereby 
permitting the state to expend 100 percent of its CDBG-NDR grant on 
planning and administration expenses. Additionally, to ensure that 
the state devotes a minimum amount of its funds to local level 
planning activities as described in its approved CDBG-NDR Action 
Plan, the Department is requiring that at least 80 percent of the 
$10 million provided for the RRP in the state's Action Plan ($8 
million) be expended on local planning grants.
    As a reminder, the state must continue to limit its general 
administrative costs for the CDBG-NDR grant to 5 percent of its 
total grant award, as provided in Public Law 113-2 and the June 7, 
2016 notice. The state must also adhere to the program funding 
amounts in the state's grant agreement terms and conditions, as 
amended.

    5. Waiver of Limitation on Planning Costs (State of Connecticut 
only). The Department is modifying the alternative requirement in the 
June 7, 2016 notice which imposes a 20 percent limit on planning and 
administrative costs, and is imposing an alternative requirement for 
the state of Connecticut to accommodate activities to be funded under 
the state's approved CDBG-NDR Action Plan. The June 7, 2016 notice 
waived section 106(d) of the HCDA (42 U.S.C. 5306(d)) and 24 CFR 
570.489(a)(1)(i), (ii), and (iii) for states and provides an 
alternative requirement that limits CDBG-NDR grantees to using no more 
than 20 percent of the total

[[Page 36822]]

grant amount on a combination of planning and general administrative 
costs (see paragraph V.A.10.b.(1) of the June 7, 2016 notice). The 
state submitted a Phase 2 application to HUD for the NDRC on October 
27, 2015, describing an array of recovery and resilience activities 
that included both infrastructure and planning activities. In January 
2016, the Department made a CDBG-NDR award of $54,277,359 to the state 
for infrastructure and the following planning activities: Bridgeport 
South End Design Guidelines ($330,000), Bridgeport South End District 
Energy Feasibility ($350,000), Connecticut Connections Coastal 
Resilience Plan ($8,203,323), and the State Agencies Fostering 
Resilience (SAFR) program ($3,500,000), which includes both 
administration and planning expenses.
    The sum of planning projects funded under this award is 
$12,383,323, or 22.8 percent of the total grant award amount, and the 
maximum allowable amount that can be used for general administrative 
expenses is 5 percent of the grant total or $2,713,868. In order to 
allow the state to fully fund its selected projects and properly 
administer its grant award, HUD is modifying the limitation described 
in the June 7, 2016 notice for the state of Connecticut, and imposing 
the following alternative requirement:

    The Department is waiving section 106(d) of the HCDA (42 U.S.C. 
5306(d)) and 24 CFR 570.489(a)(1)(i), (ii), and (iii) to increase 
the limitation on planning and general administration expenses for 
this grant to 27.8 percent or $15,097,191.
    As a reminder, the state of Connecticut must continue to limit 
its general administrative costs for the CDBG-NDR grant to 5 percent 
of its total grant award, as provided in the Appropriations Act and 
the June 7, 2016 notice. The state must also adhere to the program 
funding amounts in the state's grant agreement terms and conditions, 
as amended. The Appropriations Act referenced in the amended June 7, 
2016 notice is Public Law 113-2.

    6. Waiver for Eligible Activity (Commonwealth of Virginia only). 
The Department awarded the Commonwealth of Virginia CDBG-NDR funds to 
develop a Coastal Resilience Lab and Accelerator Center (the Center) 
that supports new business initiatives aimed at addressing flood risk. 
Many of the Center's components, however, are not otherwise CDBG-
eligible activities. Accordingly, the Commonwealth requested and the 
Department is granting a waiver and establishing an alternative 
requirement to create a CDBG-eligible activity that comprises all the 
components proposed for the Center.
    The Commonwealth's approved Action Plan states that the Center will 
``serve as the nexus for technological and organizational innovation 
around community revitalization, water management, resilience 
measurement,'' and will ``focus on generating economic growth by 
assisting entrepreneurs skilled at identifying problems, matching them 
with potential solutions, working with companies to create product, and 
moving product quickly to market.'' To this end, the Commonwealth will 
use its CDBG-NDR grant to fund specific components of the project 
including the design plan for the operations of the Center, training, 
office space, and capital investment for emerging businesses focused on 
regional resilience solutions, targeted workforce development and 
support, public outreach, and sharing best practices.
    In rare instances when necessary to achieve recovery goals, HUD has 
previously granted waivers and alternative requirements to allow a 
grantee to treat a large complex project as a single eligible activity 
with multiple components that contribute to long-term recovery. HUD's 
approval of the Commonwealth's application through the NDRC is intended 
to support the creation of a new regional industry cluster to serve as 
a model for other communities that want to support businesses in this 
field.
    HUD has determined that many of the proposed project components in 
the Commonwealth's application, including the development of a public 
facility, support for small businesses through training and capital, 
supporting workforce development, public engagement, and knowledge 
dissemination are already eligible CDBG activities. Therefore, to 
streamline implementation of the Center and its programs and allow the 
Commonwealth to proceed with valuable project components that are not 
eligible CDBG activities, HUD is waiving section 105(a) (42 U.S.C. 
5305(a)) and establishing an alternative requirement only to the extent 
necessary to create a new eligible activity for the Commonwealth's 
CDBG-NDR grant, referred to as the Center, comprised of the activities 
outlined in the Commonwealth's approved Action Plan for its CDBG-NDR 
grant. However, HUD reminds grantees that the following provision in 
the June 7, 2016 notice remains in effect: ``When CDBG-NDR grantees 
provide funds to for-profit businesses, such funds may only be provided 
to a small business, as defined by the SBA under 13 CFR part 121. CDBG-
NDR funds may not be used to directly assist a privately-owned utility 
for any purpose''.

    7. Waiver and alternative requirement for low- and moderate-income 
area benefit activities (State of California only). The Department 
awarded the State of California CDBG-NDR funds to develop a Community 
and Watershed Resilience Program in response to the 2013 Rim Fire that 
was the third largest wildfire in California's history. The program 
will finance the development of a biomass facility and wood products 
campus in Tuolumne county as well as a forest and watershed health 
component focused on forest restoration efforts, rangeland 
improvements, and biomass removal and thinning throughout the region. 
The program also includes the establishment of a community resilience 
center that will offer business incubator and job training services, 
while also serving as an emergency evacuation center for the broader 
community.
    The state's approved CDBG-NDR application noted that the most 
impacted and distressed area with remaining unmet disaster recovery 
needs to be served by the project encompasses the non-entitlement 
jurisdictions of Tuolumne, Mariposa and Calaveras counties, where 38 
percent of the residents are low- and moderate-income (LMI). The 
state's application indicated that if CDBG-NDR funds were awarded for 
the program, the state would require a waiver that would permit 
activities carried out in areas with an LMI percentage of not less than 
38 percent to qualify under the low- and moderate-income area benefit 
national objective.
    Subsequent to the award and in response to HUD's scoping and 
scaling of the project, the state submitted a revised request to the 
Department, seeking a waiver and alternative requirement that would 
allow the state to apply exception criteria that recognizes that few, 
if any communities within the service area have 51 percent or more low- 
and moderate-income residents, per the requirements of 42 U.S.C. 
5305(c)(2)(A), allowing the state to use a 38 percent LMI threshold to 
qualify activities under the LMI area benefit national objective. In 
its request, the state contends that the very nature of the initiatives 
financed with CDBG-NDR funds means that communities beyond the 
identified service area will also realize benefits, through reduced 
risks associated with wildfires, improved watersheds and new economic 
opportunities arising from efforts to commercialize the area's biomass.
    Based on the state's request and the fact that the approved project 
has a combined LMI population that is not

[[Page 36823]]

greater than 38 percent of the area, HUD is granting a limited waiver 
modifying 42 U.S.C. 5305(c)(2)(A)(i), to the extent necessary to permit 
the state to use a percentage of not less than 38 percent to qualify 
activities under the low- and moderate-income area benefit national 
objective.
    8. Waiver of the 50 percent overall benefit requirement (City of 
Moore, OK only). The primary objective of the HCDA is the ``development 
of viable urban communities, by providing decent housing and a suitable 
living environment and expanding economic opportunities, principally 
for persons of low and moderate income.'' 42 U.S.C. 5301(c). To carry 
out this objective, the statute requires that 70 percent of the 
aggregate of the grantee's CDBG program's funds be used to support 
activities benefitting low- and moderate-income persons. This target 
can be difficult for many CDBG-DR grantees to reach as a disaster 
impacts entire communities--regardless of income. Further, it may limit 
grantees' ability to provide assistance to the most damaged areas of 
need. Therefore, as described by the December 16, 2013 Federal Register 
notice (78 FR 76154), the city of Moore, Oklahoma, in addition to the 
other grantees under Public Law 113-2 received a waiver and alternative 
requirement reducing the amount of the city's CDBG-DR funds that must 
be used for activities that benefit LMI persons to 50 percent. 
Additional flexibility was provided in the March 5, 2013 Federal 
Register notice (78 FR 14329). It allowed a grantee to request to 
further reduce its overall benefit requirement if it submitted a 
justification that, at a minimum: (a) Identifies the planned activities 
that meet the needs of its low- and moderate-income population; (b) 
describes proposed activity(ies) and/or program(s) that will be 
affected by the alternative requirement, including their proposed 
location(s) and role(s) in the grantee's long-term disaster recovery 
plan; (c) describes how the activities/programs identified in (b) 
prevent the grantee from meeting the 50 percent requirement; and (d) 
demonstrates that the needs of non-low and moderate-income persons or 
areas are disproportionately greater, and that the jurisdiction lacks 
other resources to serve them. Upon HUD's review of the justification, 
the request can be granted only if the Secretary finds a compelling 
need to reduce the overall benefit below 50 percent.
    In response to the above, the city of Moore submitted a 
justification addressing the required criteria. The EF-5 tornado that 
struck Moore in 2013 also destroyed several affordable housing 
developments in the city which have not been replaced. The city council 
adopted a plan in March of 2013 that included infrastructure projects 
in support of a new affordable housing development project that will 
bring much needed LMI affordable units to the city. In order to carry 
out these activities the city acquired land in a closed mobile home 
park which will allow it to replace a portion of the LMI affordable 
rental housing destroyed by the EF-5 tornado. Demolition of the 
remaining structures and asbestos abatement has been completed and a 
Planned Unit Development (PUD) design for the site has been adopted. 
The SW 17th/Janeway Master Redevelopment plan will be a mixed use, 
mixed income urban village which will be built at an overall cost of 
$36-$40 million. This redevelopment will include the use of $13.5 
million in CDBG-DR grant funds and provides for 170 affordable LMI 
units and 30 market rate units. The city council approved the master 
plan and PUD in October 2016, and staff are currently developing a 
Request for Proposals to solicit development bids. After the completion 
of the SW 17th/Janeway development, the city expects that the percent 
of LMI residents in the block group which contains the development will 
rise to 57.2 percent, well above the 51 percent required to classify a 
project under the low/mod area benefit (LMA) national objective.
    Through its Infrastructure Recovery and Implementation Plan (IRIP), 
designed in 2014, the city identified several flood control and 
drainage projects that will support the development of SW 17th/Janeway 
and its affordable housing units, and thus will directly benefit the 
LMI residents that return to the area. Currently, there are three 
infrastructure projects associated with the Round Rock development that 
will not meet the area benefit test that requires at least 51 percent 
of the residents in the area are LMI using the most current HUD FY 2016 
data. The three projects include the Little River Sewer Interceptor 
project, the S. Telephone Road Improvements project, and the Little 
River Channel and Greenway project totaling over $7.6 million in CDBG-
DR investments. While these projects will directly benefit the new 
housing development, they will also benefit other block groups within 
the city. Without this waiver, the city could carry out these 
activities under the national objective of Urgent Need, but because of 
the large number of CDBG-DR funds dedicated to these activities, the 
city would then not be able to meet its 50 percent LMI overall benefit 
requirement. Hence, the city cannot carry out these infrastructure 
activities without a waiver.
    To enable the city to undertake these infrastructure activities it 
has deemed most critical for its recovery, and to ensure that LMI 
residents are adequately served and/or assisted, HUD is granting a 
limited waiver and alternative requirement to reduce the overall 
benefit from 50 percent to not less than 42 percent. Based on the 
city's justification, the Secretary has found a compelling need for 
this reduction due to the circumstances outlined in Moore's request. In 
particular, HUD notes that these projects will all directly serve the 
new housing development that will provide 170 units of affordable LMI 
housing, prioritizing the needs of those LMI residents because these 
three projects will ensure that the redevelopment site is no longer in 
a FEMA floodway, will repair and replace sewage lines that will service 
the development, and install traffic control lights and widen an 
intersection to handle the increased density the development will 
bring. The city has identified these infrastructure projects as a top 
priority to ensure the success of the SW 17th/Janeway redevelopment and 
this waiver will allow LMI persons to live there safely. This is a 
limited waiver modifying 42 U.S.C. 5301(c), 42 U.S.C. 5304(b)(3)(A), 24 
CFR 570.484, and 570.200(a)(3) only to the extent necessary to reduce 
the low- and moderate-income overall benefit requirement that the city 
must meet when carrying out activities with funds appropriated under 
Public Law 113-2 from 50 percent to not less than 42 percent.
    9. Waiver of the 50 percent overall benefit requirement (New York 
State, only). As described in the March 5, 2013 notice, the state of 
New York and all other grantees under Public Law 113-2 received a 
waiver and alternative requirement requiring that at least 50 percent 
of CDBG-DR grant funds must be used for activities that benefit low- 
and moderate-income persons.
    The state of New York has submitted a justification to HUD to 
reduce the overall benefit requirement for funds provided under Public 
Law 113-2. HUD has allocated $4,416,882,000 in CDBG-DR funds to the 
state pursuant to Public Law 113-2, including $185 million for projects 
identified by HUD through the Rebuild by Design competition. The 
state's CDBG-DR grant is administered by the Governor's Office of Storm 
Recovery (GOSR).

[[Page 36824]]

    GOSR's approved action plan allocates its CDBG-DR grant to four 
main recovery programs: Housing (58 percent), economic development (3 
percent), community reconstruction (18 percent) and infrastructure (21 
percent). These programs were developed by GOSR to address the most 
urgent and significant unmet needs of those areas impacted by the 
storms that are eligible under Public Law 113-2--Hurricanes Sandy and 
Irene. In its request, GOSR contends that it has engaged in extensive 
and continued outreach to all persons and businesses impacted by the 
storms to inform the state's citizens of the availability of recovery 
programs and how to apply, and that all eligible applicants will 
receive assistance. Significantly, GOSR's analysis of the geographic 
areas most impacted by the storms demonstrates that the storms did not 
damage areas with significant LMI populations. Because HUD requires 
grantees receiving funds under Public Law 113-2 to spend at least 80 
percent of each grant in the HUD identified most impacted counties, it 
is very difficult for the state to meet both this requirement and the 
requirement that at least 50 percent of the expended funds benefit LMI 
populations.
    GOSR has submitted an extensive data analysis to illustrate that 
the demographics of the communities most impacted by the storms are 
generally not comprised of LMI block groups. GOSR's data illustrates 
that, outside of the five counties that comprise New York City, the 
storms impacted communities in which only about 20 percent of the 
population resides in LMI block groups. GOSR has reported that while 
there are 3.96 million people living in the state's most impacted 
counties (Nassau, Westchester, Suffolk, and Rockland), only 34 percent 
of those residents are LMI persons and only 25 percent of the block 
groups are considered LMI.
    The state uses this data to illustrate its difficulty in meeting 
the LMI area benefit national objective, particularly as it relates to 
infrastructure. Many of the state's infrastructure projects are large 
in scale and have widespread positive impacts for persons of all income 
levels, including LMI persons, but it is nearly impossible for those 
projects to meet the LMI area benefit criteria. For example, one of the 
state's largest investments, the $101 million Bay Park Wastewater 
Treatment Plant project, benefits a service area that includes more 
than 370 block groups. Even though this project benefits many thousands 
of LMI residents within these block groups (approximately 135,000 LMI 
persons), there are not enough LMI persons to meet the 51 percent test 
for an LMI area benefit activity.
    Given these challenges, the state has proposed allocating 
additional funds to initiatives that further address unmet needs of LMI 
persons, including the reallocation of $50,000,000 of Community 
Reconstruction (CR) funds to projects within the city of New York that 
will meet the applicable LMI area benefit criteria.
    To enable the state to undertake the activities it has deemed most 
critical for its recovery, and to ensure that LMI households are 
adequately served and/or assisted, HUD is granting a waiver and 
alternative requirement to reduce the overall benefit requirement for 
the state's grant from 50 percent to not less than 35 percent of the 
state's allocation of CDBG-DR funds, excluding the $185 million 
allocated by HUD for Rebuild by Design projects and, consistent with 
existing program requirements and subject to the requirements in 
paragraph 10, below. This means that the state must use at least 35 
percent of its CDBG-DR allocation (excluding RBD) under Public Law 113-
2 to benefit LMI persons.
    Based on the analysis submitted by the state, the Secretary has 
found a compelling need for this reduction due to the particular 
circumstances outlined in the state's request. In particular, HUD notes 
that the areas most damaged by the storms have limited LMI populations; 
that the infrastructure projects being undertaken by the state will 
nonetheless directly serve large populations of LMI persons; that the 
state has done significant outreach to communities in the most impacted 
counties and will serve all eligible applicants that have applied for 
assistance; and that the state will reallocate at least $50,000,000 of 
Community Reconstruction funds to increase the number of LMI persons 
served. This is a limited waiver modifying 42 U.S.C. 5301(c), 42 U.S.C. 
5304(b)(3)(A), 24 CFR 570.484, and 570.200(a)(3) only to the extent 
necessary to reduce the low- and moderate-income overall benefit 
requirement that the state must meet when carrying out activities 
identified in its approved action with funds appropriated under Public 
Law 113-2 from 50 percent to not less than 35 percent.
    10. Rebuild By Design Exception to Overall Benefit Requirement. In 
the October 16, 2014, Federal Register notice (79 FR 62182), HUD 
allocated $930,000,000 of CDBG-DR funds made available under Public Law 
113-2, for the implementation of six proposals selected through the 
HUD-sponsored Rebuild by Design (RBD) competition. The RBD allocation 
was included as part of the larger allocation of CDBG-DR funds under 
Public Law 113-2 for long term recovery from Hurricane Sandy. Four 
grantees received an RBD allocation as part of their CDBG-DR grant for 
Hurricane Sandy recovery: The state of New York, the city of New York, 
the state of Connecticut, and the state of New Jersey.
    The proposals selected through the Rebuild by Design Competition 
were identified prior to the development and approval of action plans 
for grantees receiving an allocation of CDBG-DR funds under Public Law 
113-2. The October 16, 2014, notice notes that the individual proposals 
were selected to address the structural and environmental 
vulnerabilities that Hurricane Sandy exposed in communities throughout 
the region and to provide fundable solutions to better protect 
residents from future disasters. The notice also requires that projects 
funded with the RBD allocation reflect the proposals selected through 
the Rebuild by Design Competition to the greatest extent practicable 
and appropriate.
    The RBD proposals were selected by HUD and the RBD allocation was 
included as part of each grantee's overall CDBG-DR allocation for 
Hurricane Sandy recovery, however, HUD recognizes that as the location 
and scope of an RBD project is further refined, the RBD portion of a 
grantee's overall CDBG-DR allocation may prevent certain grantees from 
meeting the requirement of the March 5, 2013, notice that at least 50 
percent of each grantee's overall allocation of CDBG-DR funds be 
expended to meet the LMI national objective. Accordingly, the Secretary 
has found a compelling need for this waiver based on the facts 
presented above. In particular, HUD's selection of RBD projects within 
defined geographic areas may limit the ability of grantees to meet an 
LMI national objective within that defined area. This is a limited 
waiver and alternative requirement to modify 42 U.S.C. 5301(c), 42 
U.S.C. 5304(b)(3)(A), 24 CFR 570.484, and 570.200(a)(3) only to the 
extent necessary to allow the four grantees receiving an allocation of 
CDBG-DR funds specifically for RBD projects, to either include or 
exclude the expenditure of its RBD allocation in the calculation of the 
grant's overall LMI benefit. If a grantee chooses to exclude the 
expenditures of its RBD allocation from its overall benefit 
calculation, it is required to notify HUD and the public through a non-
substantial amendment to its approved action plan.

[[Page 36825]]

    11. Publication of Approved Expenditure Extension Requests. 
Pursuant to the requirements of section 904(c) under title IX of Public 
Law 113-2, CDBG-DR and CDBG-NDR funds must be expended within 24 months 
following obligation, unless an extension is provided. The Office of 
Management and Budget (OMB) granted the Department a waiver of the 
statute's two-year expenditure timeline, recognizing that certain 
disaster recovery activities satisfy the OMB criteria for activities 
that are long-term by design where it is impracticable to expend funds 
within the 24-month period and achieve program missions. HUD may grant 
extensions for activities that satisfy the OMB criteria. The Federal 
Register notice published by the Department on May 11, 2015 (80 FR 
26942) and the June 7, 2016 notice established the process and 
requirements for extension of the deadline for the expenditure of funds 
under Public Law 113-2, including the requirement that HUD publish its 
approval of the extension of grantee expenditure deadlines in the 
Federal Register. In order to provide the public with more timely 
information about the expenditure deadlines for funds provided under 
Public Law 113-2, the Department is amending both the May 11, 2015 
notice and the June 7, 2016 notice, respectively, to provide for the 
publication of expenditure deadline extensions on the Department's Web 
site.
    Accordingly, the last bullet of Section VI of the May 11, 2015 
notice is amended to read:

     ``If approved, HUD will publish the extension approval 
on its web site at: https://www.hudexchange.info/programs/cdbg-dr/. 
HUD will consolidate grantee extension approvals for publication. 
Therefore, extension approval is effective as of the date of the 
extension approval letter, rather than as of the date the approval 
is published on the HUD web site.''

    The first paragraph Section II.A.2 of the June 7, 2016 notice is 
also amended to read:
    ``For any portion of funds that the grantee believes will not be 
expended by the deadline and that it desires to retain, the NOFA 
required the Grantee to submit a letter to HUD justifying why it is 
necessary to extend the deadline for a specific portion of the funds. 
Appendix E of the NOFA also required Applicants to submit extension 
requests with the application if the Applicant submitted a schedule 
that indicated time needed for completion of the proposal exceeds 24 
months. Some Applicants submitted extension requests to HUD within 
their applications and such extensions were considered within the 
application review process. If granted, any extensions will be 
published on the HUD web site at: https://www.hudexchange.info/programs/cdbg-dr/. Under the NOFA, grantees that did not submit an 
extension request with their Applications are eligible to request an 
extension prior to the expiration of the twenty-four month deadline for 
the expenditure of obligated funds. As required by Appendix E of the 
NOFA, the extension request must justify the need for the extension, 
detail the compelling legal, policy or operational challenges 
necessitating the extension, and identify the date when funds covered 
by the extension will be expended. The Grantee must justify how, under 
the proposed schedule, the Project will proceed in a timely manner. For 
example, large and complex infrastructure Projects are likely to 
require more than 24 months to complete. An extension request for such 
a Project should justify the new timeline for any proposed extension by 
comparing it to completion deadlines for other similarly sized 
Projects.''

V. New LMI National Objective Criteria for Buyouts and Housing 
Incentives (Applicable to Multiple Appropriations)

    Historically, various Federal Register notices published by HUD 
have authorized CDBG-DR grantees to carry out ``buyouts,'' which have 
been generally limited to the acquisition of properties located in a 
floodway or floodplain or Disaster Risk Reduction Area for pre-or post-
flood value for the purpose of reducing risk from future disasters. 
These notices also generally prohibit redevelopment of property 
acquired through buyouts. Certain previous CDBG-DR Federal Register 
notices also waive 42 U.S.C. 5305(a) and associated regulations to 
allow grantees to offer housing incentives to resettle beneficiaries 
who were in disaster-affected communities. As described in those 
notices, housing incentives are usually offered to encourage households 
to relocate to a suitable housing development or to an area promoted by 
the community's comprehensive recovery plan, and may be in addition to 
acquisition or buyout awards.
    In this notice, HUD is establishing an alternative requirement to 
clarify the criteria under which buyout activities and housing 
incentives can meet an LMI national objective. Grantees authorized to 
use housing incentives as described above, must continue to comply with 
the other eligibility requirements of applicable Federal Register 
notices governing those incentives--specifically, the requirement that 
grantees ``providing housing incentives must maintain documentation, at 
least at a programmatic level, describing how the amount of assistance 
was determined to be necessary and reasonable. In addition, the 
incentives must be in accordance with the grantee's approved Action 
Plan and published program design(s). Note that this waiver does not 
permit a compensation program. Additionally, a grantee may require the 
incentive to be used for a particular purpose by the household 
receiving the assistance.''
    The CDBG regulations limit activities that meet the LMI national 
objective to only the activities meeting the four established criteria 
in 24 CFR 570.208(a)(1) through (4) and 570.483(b)(1) through (4). 
Prior Federal Register notices have advised grantees of the criteria 
under which a buyout activity can meet a LMI housing (LMH) national 
objective (80 FR 72102). Notwithstanding that guidance, however, HUD 
has determined that providing CDBG-DR grantees with an additional 
method to demonstrate how buyouts and housing incentives can assist LMI 
households, beyond those described in the previous notices, will ensure 
that grantees and HUD can account for and assess the benefit that CDBG-
DR assistance may have on LMI households when buyouts and housing 
incentives are used in long term recovery. Given the primary objective 
of the HCDA to assist low- and moderate income persons, the Secretary 
has determined that there is good cause to establish an alternative 
requirement under which CDBG-DR grantees are authorized to qualify the 
assistance provided to LMI persons through buyout and housing incentive 
programs, due to the benefits received by the individuals that receive 
buyout and housing incentive awards that allow them to move from areas 
that are likely to be affected by future disasters.
    In addition to the existing criteria at 24 CFR 570.208(a)(1)-(4) 
and 570.483(b)(1)-(4), HUD is establishing an alternative requirement 
to include two new LMI national objective criteria for buyouts (LMB) 
and housing incentives (LMHI) that benefit LMI households that use 
CDBG-DR funding provided by Public Law 113-2, 114-113, 114-223, 114-254 
and 115-31.
    For a buyout award or housing incentive to meet the new LMB and 
LMHI national objectives, grantees must demonstrate the following:
    (1) The CDBG-DR funds have been provided for an eligible buyout 
activity that benefits LMI households by

[[Page 36826]]

supporting their move from high risk areas. The following activities 
shall qualify under this criterion, and must also meet the eligibility 
criteria of the notices governing the use of the CDBG-DR funds:
    (a) Low/Mod Buyout (LMB). When CDBG-DR funds are used for a buyout 
award to acquire housing owned by a qualifying LMI household, where the 
award amount is greater than the pre-disaster fair market value of that 
property;
    (b) Low/Mod Housing Incentive (LMHI). When CDBG-DR funds are used 
for a housing incentive award, tied to the voluntary buyout or other 
voluntary acquisition of housing owned by a qualifying LMI household, 
for which the housing incentive is for the purpose of moving outside of 
the affected floodplain or to a lower-risk area; or when the housing 
incentive is for the purpose of providing or improving residential 
structures that, upon completion, will be occupied by an LMI household.
    (2) Activities that meet the above criteria will be considered to 
benefit low and moderate income persons unless there is substantial 
evidence to the contrary.
    Any activities that meet the newly established national objective 
criteria described above will count towards the calculation of a CDBG-
DR grantee's overall LMI benefit to comply with the primary objective 
described in 24 CFR 570.200(a)(3) and 24 CFR 570.484(b).
    Grantees receiving an allocation of CDBG-DR funds pursuant to the 
following appropriations acts must specifically request a waiver and 
alternative requirement from HUD in order apply the new national 
objective criteria established in this section of the notice: Public 
Law 109-148, 109-234, and 110-116 (Katrina, Rita, and Wilma); Public 
Law 110-252 and 110-328 (2008 Disasters), Public Law 111-112 (2010 
disasters), and Public Law 112-55 (2011 disasters).

VI. Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers for the disaster 
recovery grants under this notice are as follows: 14.218; 14.228; and 
14.269.

VII. Finding of No Significant Impact

    A Finding of No Significant Impact (FONSI) with respect to the 
environment has been made in accordance with HUD regulations at 24 CFR 
part 50, which implement section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is 
available for public inspection between 8 a.m. and 5 p.m. weekdays in 
the Regulations Division, Office of General Counsel, Department of 
Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500. Due to security measures at the HUD 
Headquarters building, an advance appointment to review the docket file 
must be scheduled by calling the Regulations Division at 202-708-3055 
(this is not a toll-free number). Hearing- or speech-impaired 
individuals may access this number through TTY by calling the Federal 
Relay Service at 800-877-8339 (this is a toll-free number).

    Dated: July 31, 2017.
Janet Golrick,
Acting Deputy Secretary.
[FR Doc. 2017-16411 Filed 8-4-17; 8:45 am]
 BILLING CODE 4210-67-P