Allocations, Common Application, Waivers, and Alternative Requirements for 2017 Disaster Community Development Block Grant Disaster Recovery Grantees, 5844-5869 [2018-02693]

Download as PDF 5844 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR–6066–N–01] Allocations, Common Application, Waivers, and Alternative Requirements for 2017 Disaster Community Development Block Grant Disaster Recovery Grantees Office of the Assistant Secretary for Community Planning and Development, HUD. ACTION: Notice. AGENCY: This notice allocates $7.39 billion in Community Development Block Grant disaster recovery (CDBG– DR) funds appropriated by the Supplemental Appropriations for Disaster Relief Requirements, 2017, for the purpose of assisting in long-term recovery from 2017 disasters. This notice describes applicable waivers and alternative requirements, relevant statutory provisions for grants provided under this notice, the grant award process, criteria for action plan approval, and eligible disaster recovery activities. Given the extent of damage to housing in the eligible disaster areas and the very limited data at present regarding unmet infrastructure and economic revitalization needs, this notice requires each grantee to primarily consider and address its unmet housing recovery needs. DATES: Applicability Date: February 14, 2018. FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Acting Director, Office of Block Grant Assistance, Department of Housing and Urban Development, 451 7th Street SW, Room 10166, Washington, DC 20410, telephone number 202–708–3587. Persons with hearing or speech SUMMARY: impairments may access this number via TTY by calling the Federal Relay Service at 800–877–8339. Facsimile inquiries may be sent to Ms. Kome at 202–401–2044. (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. Allocations II. Use of Funds III. Management and Oversight of Funds IV. Authority To Grant Waivers V. Overview of Grant Process VI. Applicable Rules, Statutes, Waivers, and Alternative Requirements A. Grant Administration B. Housing and Related Floodplain Issues C. Infrastructure D. Economic Revitalization E. Certifications and Collection of Information VII. Duration of Funding VIII. Catalog of Federal Domestic Assistance IX. Finding of No Significant Impact Appendix A—Allocation of CDBG–DR Funds to Most Impacted and Distressed Areas Due to 2017 Federally Declared Disasters I. Allocations The Supplemental Appropriations for Disaster Relief Requirements, 2017 (Pub. L. 115–56), approved September 8, 2017 (Appropriations Act) makes available $7.4 billion in Community Development Block Grant disaster recovery (CDBG– DR) funds for necessary expenses for activities authorized under title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.) (HCD Act) related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the ‘‘most impacted and distressed’’ areas (identified by HUD using the best available data) resulting from a major disaster declared in 2017. This notice allocates $7,390,000,000 in CDBG–DR funds to assist in long-term recovery from 2017 disasters. In addition to the funds allocated in this notice, and in accordance with the Appropriations Act, $10,000,000 will be transferred to the Department’s Office of Community Planning and Development (CPD), Program Office Salaries and Expenses, for necessary costs of administering and overseeing CDBG–DR funds made available under the Appropriations Act. This notice requires each grantee to primarily consider and address its unmet housing recovery needs. A grantee may also allocate funds to address unmet economic revitalization and infrastructure needs, but in doing so, the grantee must identify how unmet housing needs will be addressed or how its economic revitalization or infrastructure activities will contribute to the long-term recovery and restoration of housing in the most impacted and distressed areas. The law provides that grants shall be awarded directly to a State, local government, or Indian tribe at the discretion of the Secretary.1 Any award of funds provided pursuant to the Appropriations Act to Indian tribes will be provided pursuant to the requirements of the Indian Community Development Block Grant program. To comply with statutory direction that funds be used for disaster-related expenses in the most impacted and distressed areas, HUD allocates funds using the best available data that cover all of the eligible affected areas. Based on further review of the impacts from the eligible disasters, and estimates of unmet need, HUD is making the following allocations: TABLE 1—ALLOCATIONS UNDER PUBLIC LAW 115–56 Grantee Allocation Minimum amount that must be expended for recovery in the HUD-identified ‘‘most impacted and distressed’’ areas 4332 .................. State of Texas ................. $5,024,215,000 4337 .................. sradovich on DSK3GMQ082PROD with NOTICES2 Disaster No. State of Florida ................ 615,922,000 ($4,019,372,000) Harris, Jefferson, Orange, Galveston, Fort Bend, Brazoria, Montgomery, Liberty, Hardin, Chambers, Aransas, Wharton, San Patricio, San Jacinto, Nueces, and Victoria Counties; 78945, 77423, 77612, 78934, 75956, 77632, 75979, 77414, 77335, 78377, and 77979 Zip Codes. ($492,737,600) Monroe, Miami-Dade, Duval, Lee, Polk, Collier, Brevard, Broward, Orange, and Volusia counties; 32068, 34266, 32136, and 32091 Zip Codes. 1 Section 306(a) of division A, title III of the Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2017 (Pub. L. VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 115–72, approved October 26, 2017) amended the Appropriations Act to permit the Secretary to award PO 00000 Frm 00002 Fmt 4701 Sfmt 4703 grants directly to a State, unit of general local government, or Indian tribe. E:\FR\FM\09FEN2.SGM 09FEN2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices 5845 TABLE 1—ALLOCATIONS UNDER PUBLIC LAW 115–56—Continued Disaster No. Grantee 4336, 4339 ........ Commonwealth of Puerto Rico. 4335, 4340 ........ United States Virgin Islands. Total * ......... Minimum amount that must be expended for recovery in the HUD-identified ‘‘most impacted and distressed’’ areas Allocation 1,507,179,000 242,684,000 .......................................... ($1,205,743,200) Toa Baja, Canovanas, San Juan, Arecibo, Ponce, Bayamon, Caguas, Humacao, Vega Baja, Mayaguez, Corozal, Anasco, Toa Alta, Guayama, Naranjito, Juana Diaz, Salinas, Morovis, Carolina, Aguada, Yabucoa, Barranquitas, Rio Grande, Dorado, Cayey, Guaynabo, Vega Alta, Comerio, Loiza, Manati, Ciales, Aibonito, Aguadilla, Santa Isabel, Orocovis, Coamo, Cidra, Juncos, Utuado, Naguabo, Trujillo Alto, Barceloneta, Las Piedras, Hatillo, Patillas, Gurabo, Catano, San Sebastian, San Lorenzo, Aguas Buenas, Moca, Villalba, Isabela, Arroyo, Adjuntas, Camuy, Fajardo, Maunabo, Yauco, Lares Municipios; 00650, 00624, 00765, 00656, 00664, 00678, 00773, 00677, 00735, 00623, 00670, 00660, 00667, 00683, 00606, 00653 Zip Codes. ($242,684,000) St. Thomas, St. Croix, and St. John Islands. 7,390,000,000 sradovich on DSK3GMQ082PROD with NOTICES2 * Of the $7,400,000,000 appropriated, $10 million is provided for HUD administrative costs. Pursuant to the Appropriations Act, HUD has identified the most impacted and distressed areas based on the best available data for all eligible affected areas. A detailed explanation of HUD’s allocation methodology is provided in Appendix A of this notice. Other than the United States Virgin Islands, at least 80 percent of the total funds provided to the grantees under this notice must address unmet disaster needs within the HUD-identified most impacted and distressed areas, as identified in the last column in Table 1. The United States Virgin Islands must use 100 percent of the total funds provided under this notice to address unmet disaster needs within the HUD-identified most impacted and distressed areas identified in the last column in Table 1. Grantees, other than the United States Virgin Islands, may determine where to use the remaining 20 percent of the allocation, but that portion of the allocation may only be used to address unmet disaster needs in those areas that the State determines are ‘‘most impacted and distressed’’ and received a presidential major disaster declaration pursuant to the disaster numbers listed in Table 1. Grantees may use up to 5 percent of the total grant award for grant administration. Therefore, other than for the United States Virgin Islands, HUD will include 80 percent of a grantee’s expenditures for grant administration in its determination that 80 percent of the total award has been expended in the most impacted and distressed areas identified in Table 1. Additionally, other than the United States Virgin Islands, expenditures for planning activities may be counted towards a grantee’s 80 percent expenditure requirement, provided that the grantee describes in its action plan how those planning activities benefit the HUD- VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 identified most impacted and distressed areas. Grantees that received an allocation pursuant to Public Law 114–113, 114– 223, 114–254, or 115–31 (‘‘Prior Appropriations’’) must submit an action plan for disaster recovery not later than 90 days after the effective date of this notice. All other grantees receiving an allocation under this notice must submit an action plan not later than 120 days after the effective date of this notice. HUD will only approve action plans that meet the specific requirements identified in this notice under section VI, ‘‘Applicable Rules, Statutes, Waivers, and Alternative Requirements. II. Use of Funds Grants under the Appropriations Act are only available for activities authorized under title I of the HCD Act related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from an eligible disaster. The Appropriations Act requires that prior to the obligation of CDBG–DR funds a grantee shall submit a plan detailing the proposed use of all funds, including criteria for eligibility, and how the use of these funds will address long-term recovery and restoration of infrastructure and housing and economic revitalization in the most impacted and distressed areas. Therefore, grantees may only use funds for activities included in the action plan that are approved by the Secretary for disaster recovery that: (1) Are authorized under title I of the HCD Act or allowed by a waiver or alternative requirement published in this notice; and (2) respond to a disaster-related impact to infrastructure, housing, or economic revitalization in the most PO 00000 Frm 00003 Fmt 4701 Sfmt 4703 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 below. Grantees are advised that pursuant to this notice, CDBG–DR funds may not be used for activities reimbursable by or for which funds are made available by the Federal Emergency Management Agency (FEMA) or the US Army Corps of Engineers (USACE). As such, the grantee must verify whether FEMA or USACE funds are available prior to awarding CDBG–DR funds to specific activities or beneficiaries. Consistent with the policy framework of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), HUD is underscoring that disaster recovery is a partnership between Federal, state and local government, and reminding CDBG–DR grantees they should invest in their own recovery. In developing this Notice, HUD evaluated options to promote policies that require state and local financial participation to ensure their shared commitment and responsibility for long-term recovery and future disaster risk reduction. This Notice does not limit, except as required by Public Law 105–276, the use of CDBG–DR funds toward the state or local contribution for other Federal programs (e.g., FEMA Public Assistance). However, HUD expects grantees to financially contribute to their recovery through the use of reserve or ‘‘rainy day’’ funds, borrowing authority, or retargeting of existing financial resources. The Administration aims to rebalance Federal, state, and local government roles and responsibilities not only for long-term recovery but across the broader E:\FR\FM\09FEN2.SGM 09FEN2 5846 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices landscape of Federal programs that provide financial assistance to state and local governments. sradovich on DSK3GMQ082PROD with NOTICES2 III. Management and Oversight of Funds The Appropriations Act requires the Secretary to certify, in advance of signing a grant agreement, that the grantee has in place proficient financial controls and procurement processes, and adequate procedures for proper grant management as detailed in paragraph A.1.a of section VI. If HUD recently certified for a grantee that received a CDBG–DR grant pursuant to Prior Appropriations, the grantee may request that HUD rely on its previous certification and supporting documentation for purposes of this allocation, as modified by any updates provided by the grantee. To submit such a request, the grantee should follow the instructions under paragraph A.1.a of section VI of this notice. Until grant closeout, all grantees shall adhere to the controls, processes, and procedures described in the grantee’s financial controls and procurement processes documentation submitted in response to paragraph A.1.a. of section VI (including any previous documentation the grantee requests HUD to rely on), unless amended with HUD’s approval. Additionally, in advance of signing a grant agreement and consistent with 2 CFR 200.205 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Requirements), HUD will evaluate each grantee’s capacity to effectively manage the funds through a review of the grantee’s implementation plan and capacity assessment detailed in paragraph A.1.b of section VI. The grant terms and specific conditions of the award will reflect HUD’s risk assessment of the grantee based upon its submission and the grantee shall adhere to the description of its implementation plan and capacity assessment documentation until grant closeout, unless amended with HUD’s approval. For all grantees receiving an allocation of funds pursuant to this notice, HUD will undertake an annual risk analysis as well as on-site monitoring of grantee management to further guide oversight of these funds. IV. Authority To Grant Waivers The Appropriations Act authorizes the Secretary to waive or specify alternative requirements for any provision of any statute or regulation that the Secretary administers in connection with the obligation by the Secretary, or use by the recipient, of VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 these funds, except for requirements related to fair housing, nondiscrimination, labor standards, and the environment. Waivers and alternative requirements are based upon a determination by the Secretary that good cause exists and that the waiver or alternative requirement is not inconsistent with the overall purposes of title I of the HCD Act. HUD also has regulatory waiver authority under 24 CFR 5.110, 91.600, and 570.5. Grantees may request waivers as described in section VI of this notice. The Appropriations Act provides that the Secretary ‘‘may 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 (except for requirements related to fair housing, nondiscrimination, labor standards, and the environment).’’ Accordingly, grantees are reminded that all fair housing and nondiscrimination requirements continue to apply in administering the funds described in this notice. V. Overview of Grant Process To begin expending of CDBG–DR funds, the following expedited steps are necessary: • Grantee follows citizen participation plan for disaster recovery in accordance with the requirements in paragraph A.4 of section VI of this notice. • Grantee consults with stakeholders, including required consultation with affected local governments, Indian Tribes, and public housing authorities (as identified in paragraph A.7 of section VI of this notice). • Within 60 days of the effective date of this notice (or when the grantee submits its action plan, whichever is earlier), the grantee submits documentation for the certification of financial controls and procurement processes, and adequate procedures for grant management in accordance with the requirements in paragraph A.1.a of section VI. A grantee that previously received a certification of its financial controls and procurement processes pursuant to a Prior Appropriation may request that HUD rely on that certification for purposes of this allocation, with updates provided by the grantee as appropriate. • Within 60 days of the effective date of this notice (or when the grantee submits its action plan, whichever is earlier) the grantee submits its implementation plan and capacity assessment submissions, in accordance PO 00000 Frm 00004 Fmt 4701 Sfmt 4703 with the requirements in paragraph A.1.b of section VI.A grantee that previously received a certification of its financial controls and procurement processes pursuant to a Prior Appropriation may request that HUD rely on that certification for purposes of this allocation, with updates provided by the grantee as appropriate. • Grantee publishes its action plan for disaster recovery on the grantee’s required disaster recovery website for no less than 14 calendar days to solicit public comment. • Grantee responds to public comment and submits its action plan and projection of expenditures and outcomes (which includes Standard Form 424 (SF–424) and certifications) to HUD. • Grantee requests and receives Disaster Recovery Grant Reporting (DRGR) system access (if the grantee does not already have DRGR access) and may enter activities into the DRGR system before or after submission of the action plan to HUD. • HUD expedites review (allotted 45 days from date of receipt) and approves the action plan according to criteria identified in this notice. • HUD sends an action plan approval letter and grant agreement to the grantee. If the action plan is not approved, HUD will notify the grantee of the deficiencies. The grantee must then resubmit the action plan within 45 days of the notification. • Grantee signs and returns the grant agreement to HUD. • Grantee ensures that the final HUDapproved action plan is posted on its official website. • HUD establishes the grantee’s line of credit. • Grantee enters the activities from its approved action plan into the DRGR system if it has not previously done so and submits its DRGR action plan to HUD (funds can be drawn from the line of credit only for activities that are established in the DRGR system). • Grantee must draft and publish (on their website) policies and procedures for programs and key recovery operations implemented by the grantee with CDBG–DR funds. • The grantee may draw down funds from the line of credit after the Responsible Entity completes applicable environmental review(s) pursuant to 24 CFR part 58 or as authorized by the Appropriations Act and, as applicable, receives from HUD the Authority to Use Grant Funds (AUGF) form and certification. • The grantee should begin to draw down funds from DRGR no later than 180 days after the effective date of this E:\FR\FM\09FEN2.SGM 09FEN2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices sradovich on DSK3GMQ082PROD with NOTICES2 notice. Additionally, the Appropriations Act requires all funds to be expended within two years of the date of obligation as described in paragraph A.28 of section VI of this notice. VI. Applicable Rules, Statutes, Waivers, and Alternative Requirements This section of the notice describes requirements imposed by the Appropriations Act, as well as applicable waivers and alternative requirements. For each waiver and alternative requirement, the Secretary has determined that good cause exists and the waiver or alternative requirement is not inconsistent with the overall purpose of the HCD Act. The waivers and alternative requirements provide flexibility in program design and implementation to support full and swift recovery following eligible disasters, while ensuring that statutory requirements are met. The following requirements apply only to the CDBG– DR funds appropriated in the Appropriations Act, and not to funds provided under the annual formula State or Entitlement CDBG programs, the Indian Community Development Block Grant program, or those provided under any other component of the CDBG program, such as the Section 108 Loan Guarantee Program, or any prior CDBG–DR appropriation. Grantees may request additional waivers and alternative requirements from the Department as needed to address specific needs related to their recovery activities, accompanied by data to support the request. Grantees should work with the assigned CPD representative to request any additional waivers or alternative requirements from HUD headquarters. Except where noted, waivers and alternative requirements described below apply to all grantees under this notice. Under the requirements of the Appropriations Act, waivers and alternative requirements are effective five days after they are published in the Federal Register. Except as described in this notice, statutory and regulatory provisions governing the State CDBG program shall apply to State grantees receiving an allocation under this notice. Pursuant to an alternative requirement established by this notice, all references to states and State grantees shall include the Commonwealth of Puerto Rico and the U.S. Virgin Islands. Applicable statutory provisions (title I of the HCD Act) can be found at 42 U.S.C. 5301 et seq. Applicable State and Entitlement CDBG regulations can be found at 24 CFR part 570. References to the action plan in these regulations shall refer to the action plan required by this notice. All VerDate Sep<11>2014 18:06 Feb 08, 2018 Jkt 244001 references in this notice pertaining to timelines and/or deadlines are in terms of calendar days unless otherwise noted. The date of this notice shall mean the effective date of this notice unless otherwise noted. A. Grant Administration 1. Preaward Evaluation of Management and Oversight of Funds a. Certification of financial controls and procurement processes, and adequate procedures for proper grant management. The Appropriations Act requires that the Secretary certify, in advance of signing a grant agreement, that the grantee has in place proficient financial controls and procurement processes and has established adequate procedures to prevent any duplication of benefits as defined by section 312 of the Stafford Act, 42 U.S.C. 5155, to ensure timely expenditure of funds, maintain a comprehensive website regarding all disaster recovery activities assisted with these funds, and detect and prevent waste, fraud, and abuse of funds. To enable the Secretary to make this certification, each grantee must submit to HUD the certification documentation listed below. This information must be submitted within 60 days of the effective date of this notice, or with the grantee’s submission of its action plan, whichever date is earlier. Grant agreements will not be executed until HUD has approved the grantee’s certifications. For each of the items (1) through (6) below, the grantee must also provide a table that clearly indicates which unit and personnel are responsible for each task along with contact information. In the alternative, if HUD recently certified the controls, processes, and procedures for a grantee that received an allocation of CDBG–DR funds pursuant to Prior Appropriations, the grantee may request that HUD rely on its previous certification(s) and supporting documentation required by (1) through (6) below for purposes of allocations under this notice, as modified by any updates provided by the grantee. To submit the request, a grantee must indicate in the P.L. 115–56 Financial Management and Grant Compliance Certification that the past submissions pursuant to Prior Appropriations remain unchanged (except where updates are specified and supported with revised submissions), and that the submissions on which HUD based its previous certification, or new submissions as appropriate, will apply to the grantee’s CDBG–DR grant under this notice. In either case, the grantee must certify to the accuracy of its documentation as required by paragraph E.51 of section VI PO 00000 Frm 00005 Fmt 4701 Sfmt 4703 5847 of this notice. Additionally, the grantee must submit with its action plan the certifications in paragraph E.51 of section VI of this notice. (1) Proficient Financial Management Controls. A grantee has proficient financial management controls if each of the following criteria is satisfied: (a) The grantee submits its most recent single audit and consolidated annual financial report (CAFR), which in HUD’s determination indicates that the grantee has no material weaknesses, deficiencies, or concerns that HUD considers to be relevant to the financial management of the CDBG program. If the single audit or CAFR identified weaknesses or deficiencies, the grantee must provide documentation satisfactory to HUD showing how those weaknesses have been removed or are being addressed; and (b) The grantee has assessed its financial standards and has submitted the completed Public Law 115–56 Financial Management and Grant Compliance Certification (Compliance Certification) available on the HUD Exchange website at https:// www.hudexchange.info/cdbg-dr/cdbgdr-laws-regulations-and-federal-registernotices/, together with all documentation required in the Compliance Certification. The grantee’s standards must comply with the requirements and standards of the Compliance Certification to be proficient, and the grantee must continue to maintain these standards until grant closeout. The grantee must identify which sections of its financial standards address applicable questions in the document. (2) Procurement. Each grantee must provide HUD its procurement process/ standards for review, so HUD may evaluate the overall effect of the grantee’s procurement process/ standards to determine that they uphold the principles of full and open competition and include an evaluation of the cost or price of the product or service. The grantee must also provide a legal opinion that it has proficient procurement policies and procedures. A State grantee (including the Commonwealth of Puerto Rico and the U.S. Virgin Islands) has proficient procurement policies and processes if HUD determines that its procurement processes uphold the principles of full and open competition and include an evaluation of the cost and price of the product or service, and if its procurement processes reflect that it: (a) Adopted 2 CFR 200.318 through 200.326; or (b) follows its own E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 5848 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices procurement policies and procedures and establishes requirements for procurement policies and procedures for local governments and subrecipients based on full and open competition pursuant to 24 CFR 570.489(g), and the requirements applicable to the state, its local governments, and subrecipients include evaluation of the cost or price of the product or service; or (c) adopted 2 CFR 200.317, meaning that it will follow its own State procurement policies and procedures and evaluate the cost or price of the product or service, but impose 2 CFR 200.318 through 200.326 on its subgrantees and subrecipients. A grantee must demonstrate that its procurement policies and procedures will allow the grantee to comply with the procurement requirements at paragraph A.26 of Section VI of this notice. (3) Duplication of benefits. A grantee has adequate procedures to prevent the duplication of benefits if the grantee submits uniform processes that reflect the requirements of paragraph A.25 in section VI of this notice, including: (a) Verifying all sources of disaster assistance received by the grantee or applicant prior to the award of CDBG– DR funds to the applicant, as applicable; (b) determining a grantee’s or an applicant’s unmet need(s) before committing funds or awarding assistance; and (c) ensuring beneficiaries agree to repay any duplicative assistance if they later receive other disaster assistance for the same purpose. Grantee procedures shall provide that prior to the award of assistance, the grantee will use the best, most recent available data from FEMA, the Small Business Administration (SBA), insurers, and any other sources of funding to prevent the duplication of benefits. (4) Timely expenditures. A grantee has adequate procedures to determine timely expenditures if it submits procedures that indicate to HUD how the grantee will track expenditures each month; how it will monitor expenditures of its subrecipients; how it will account for and manage program income; how it will reprogram funds in a timely manner for activities that are stalled; and how it will project expenditures to provide for the expenditure of all CDBG–DR funds within the period provided for in paragraph A.28 of section VI of this notice. (5) Comprehensive disaster recovery website. A grantee has adequate procedures to maintain a comprehensive website regarding all disaster recovery activities if it submits procedures that indicate that the grantee VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 will have a separate page dedicated to its disaster recovery activities assisted with CDBG–DR funds provided under this notice that includes the information described at paragraph A.27 of section VI of this notice. The procedures should also indicate the frequency of website updates. At minimum, grantees must update their website monthly. (6) Procedures to detect and prevent fraud, waste and abuse. A grantee has adequate procedures to detect and prevent fraud, waste, and abuse if it submits procedures that indicate how the grantee will verify the accuracy of information provided by applicants; if it provides a monitoring policy indicating how and why monitoring is conducted, the frequency of monitoring, and which items are monitored; if it demonstrates that it has an internal auditor that provides both programmatic and financial oversight of grantee activities; and includes a document signed by the internal auditor that describes his or her role in detecting fraud, waste, and abuse. Instances of fraud, waste, and abuse should be referred to the HUD OIG Fraud Hotline (phone: 1–800–347– 3735 or email: hotline@hudoig.gov). To address any potential duplication, beneficiaries must enter a signed agreement to repay any assistance later received for the same purpose as the CDBG–DR funds. The grantee must identify a method to monitor compliance with the agreement for a reasonable period, and should articulate this method in its written administrative procedures. This agreement must also include the following language: ‘‘Warning: Any person who knowingly makes a false claim or statement to HUD may be subject to civil or criminal penalties under 18 U.S.C. 287, 1001 and 31 U.S.C. 3729.’’ b. Implementation Plan and Capacity Assessment. Before signing a grant agreement, HUD is requiring each grantee to demonstrate that it has sufficient capacity to manage these funds and the associated risks. Evidence of grantee management capacity will be provided through the grantee’s implementation plan and capacity assessment submissions. These submissions must meet the criteria in (1) and (2) below, and must be submitted within 60 days of the effective date of this notice or with the grantee’s submission of its action plan, whichever date is earlier. A grantee has sufficient management capacity if it submits documentation showing that each of the following criteria is satisfied: (1) Timely information on application status. A grantee has adequate procedures to enable applicants to PO 00000 Frm 00006 Fmt 4701 Sfmt 4703 determine the status of their applications for recovery assistance, at all phases, if its procedures indicate methods for communication (i.e., website, telephone, case managers, letters, etc.), ensure the accessibility and privacy of individualized information for all applicants, indicate the frequency of applicant status updates, and identify which personnel or unit is responsible for informing applicants of the status of recovery applications. (2) Implementation Plan. To enable HUD to assess risk as described in 2 CFR 200.205(c), the grantee will submit an implementation plan to the Department. The plan must describe the grantee’s capacity to carry out the recovery and how it will address any capacity gaps. HUD will determine a plan is adequate to reduce risk if, at a minimum it addresses (a) through (e) below: (a) Capacity Assessment. The grantee has conducted an assessment of its capacity to carry out CDBG–DR recovery efforts and has developed a timeline with milestones describing when and how the grantee will address all capacity gaps that are identified. The assessment must include a list of any open CDBG–DR findings and an update on the corrective actions undertaken to address each finding. HUD may include additional requirements in the grantee’s grant terms and conditions in order to prevent similar findings for this grant. (b) Staffing. The plan shows that the grantee has assessed staff capacity and identified personnel for the purpose of case management in proportion to the applicant population; program managers who will be assigned responsibility for each primary recovery area (housing, economic revitalization, and infrastructure); staff who have demonstrated experience in housing, economic revitalization, and infrastructure (as applicable); and staff responsible for procurement/contract management, compliance with the regulations implementing Section 3 of the Housing and Urban Development Act of 1968 (24 CFR part 135) (Section 3), fair housing compliance, and environmental compliance; as well as staff responsible for monitoring and quality assurance, and financial management. An adequate plan will also provide for an internal audit function with responsible audit staff reporting independently to the chief elected official or executive officer or board of the governing body of any designated administering entity. (c) Internal and Interagency Coordination. The grantee’s plan describes how it will ensure effective communication between different E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices departments and divisions within the grantee’s organizational structure that are involved in CDBG–DR–funded recovery efforts; between its lead agency and subrecipients responsible for implementing the grantee’s action plan; and with other local and regional planning efforts to ensure consistency. (d) Technical Assistance. The grantee’s implementation plan describes how it will procure and provide technical assistance for any personnel that the grantee does not employ at the time of action plan submission, and to fill gaps in knowledge or technical expertise required for successful and timely recovery implementation where identified in the capacity assessment. (e) Accountability. The grantee’s plan identifies the lead agency responsible for implementation of the CDBG–DR award and indicates that the head of that agency will report directly to the chief executive officer of the jurisdiction. 2. Action Plan for Disaster Recovery waiver and alternative requirement. Requirements for CDBG actions plans, located at 42 U.S.C. 5304(a)(1), 42 U.S.C. 5304(m), 42 U.S.C. 5306(d)(2)(C)(iii), 42 U.S.C. 5306(a)(1), 42 U.S.C. 12705(a)(2), and 24 CFR 91.320, are waived for these disaster recovery grants. Instead, grantees must submit to HUD an action plan for disaster recovery which will describe disaster recovery programs that conform to applicable requirements as specified in this notice. The Secretary may disapprove an action plan as substantially incomplete if it is determined that the plan does not satisfy all the required elements identified in this notice. During the course of the grant, HUD will monitor the grantee’s actions and use of funds for consistency with the plan, as well as meeting the performance and timeliness objectives therein. a. Action Plan. The action plan must identify the proposed use of all funds, including criteria for eligibility, and how the uses address necessary expenses related to disaster relief, longterm recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from a major disaster declared in 2017. Funds dedicated for uses not described in accordance with paragraphs b. or c. under this section will not be obligated until the grantee submits, and HUD approves, an action plan amendment programming the use of those funds, at the necessary level of detail. The action plan must contain: (1) An impact and unmet needs assessment. Each grantee must develop VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 a needs assessment to understand the type and location of community needs and to target limited resources to those areas with the greatest need. Grantees receiving an allocation under this notice must conduct a needs assessment to inform the use of CDBG–DR funds. Grantees must cite data sources. Grantees may use HUD’s AFFH mapping tool (https://egis.hud.gov/ affht/) or the CPD Mapping tool (https:// egis.hud.gov/cpdmaps/) to inform their analysis. At a minimum, the needs assessment must: • Evaluate all aspects of recovery including housing (interim and permanent, owner and rental, singlefamily and multifamily, affordable and market rate, and housing to meet the needs of persons who were homeless pre-disaster), infrastructure, and economic revitalization; • Estimate unmet needs to ensure CDBG–DR funds meet needs that are not likely to be addressed by other sources of funds by accounting for the various forms of assistance available to, or likely to be available to, affected communities (e.g., projected FEMA funds) and individuals (e.g., estimated insurance) and use the most recent available data to estimate the portion of need unlikely to be addressed by insurance proceeds, other Federal assistance, or any other funding sources (thus producing an estimate of unmet need); • Assess whether public services (e.g., housing counseling, legal counseling, job training, mental health, and general health services) are necessary to complement activities intended to address housing, infrastructure, and economic revitalization and how those services are to be made accessible to individuals having wide-ranging disabilities including mobility, sensory, developmental, emotional, and other impairments; • Describe the extent to which expenditures for planning activities will benefit the HUD-identified most impacted and distressed areas; • Describe impacts geographically by type at the lowest level practicable (e.g., county level, zip code, neighborhood, or census tract); and • Take into account the costs of incorporating mitigation and resilience measures to protect against the anticipated effects of future extreme weather events and other natural hazards and long-term risks. CDBG–DR funds may be used to reimburse planning and administration costs for developing the action plan, including the needs assessment, environmental review, and citizen participation requirements. HUD has PO 00000 Frm 00007 Fmt 4701 Sfmt 4703 5849 developed a Disaster Impact and Unmet Needs Assessment Kit to guide CDBG– DR grantees through a process for identifying and prioritizing critical unmet needs for long-term community recovery. The Kit is available on the HUD Exchange website at: https:// www.hudexchange.info/resources/ documents/Disaster_Recovery_Disaster_ Impact_Needs_Assessment_Kit.pdf. Disaster recovery needs evolve over time and therefore grantees are expected to amend the needs assessment and action plan as conditions change, additional needs are identified, and additional resources become available. (2) A description of the connection between identified unmet needs and the allocation of CDBG–DR resources. Grantees must propose an allocation of CDBG–DR funds that primarily considers and addresses unmet housing needs. Grantees may also allocate funds for economic revitalization and infrastructure activities, but in doing so, must identify how any remaining unmet housing needs will be addressed or how its economic revitalization and infrastructure activities will contribute to the long-term recovery and restoration of housing in the most impacted and distressed areas. Grantee action plans may provide for the allocation of funds for administration and planning activities and for public service activities, subject to the caps on such activities as described below. (3) Each grantee must include a description of how it will identify and address the rehabilitation, reconstruction, replacement, and new construction of housing and shelters in the areas affected by the disaster. This includes any rental housing that is affordable to low- or moderate-income households as provided for in B.34 of section VI of this notice; public housing as provided for in B.33 of Section VI of this notice; emergency shelters and housing for the homeless; private market units receiving project-based assistance or with tenants that participate in the Section 8 Housing Choice Voucher Program; and any other housing that is assisted under a HUD program. (4) A description of how the grantee’s programs will promote housing for vulnerable populations, including a description of activities it plans to address: (a) The transitional housing, permanent supportive housing, and permanent housing needs of individuals and families (including subpopulations) that are homeless and at-risk of homelessness; (b) the prevention of lowincome individuals and families with children (especially those with incomes below 30 percent of the area median) E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 5850 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices from becoming homeless; and (c) the special needs of persons who are not homeless but require supportive housing (e.g., elderly, persons with disabilities, persons with alcohol or other drug addiction, persons with HIV/ AIDS and their families, and public housing residents. Grantees must also assess how planning decisions may affect members of protected classes, racially and ethnically concentrated areas, as well as concentrated areas of poverty; will promote the availability of affordable housing in low-poverty, nonminority areas where appropriate; and will respond to natural hazardrelated impacts. Grantees are reminded that the use of recovery funds must meet accessibility standards, provide reasonable accommodations to persons with disabilities, and take into consideration the functional needs of persons with disabilities in the relocation process. Guidance on relocation considerations for persons with disabilities may be found in Chapter 3 of HUD’s Relocation Handbook 1378.0 (available on the HUD Exchange website at: https:// www.hud.gov/program_offices/ administration/hudclips/handbooks/ cpd/13780). A checklist of accessibility requirements under the Uniform Federal Accessibility Standards (UFAS) is available at: https:// www.hudexchange.info/resources/796/ ufas-accessibility-checklist/. The HUD Deeming Notice.79 FR 29671 (May 23, 2014) explains when HUD recipients can use 2010 ADA Standards with exceptions, as an alternative to UFAS to comply with Section 504. (5) A description of how the grantee plans to minimize displacement of persons or entities, and assist any persons or entities displaced. (6) A description of the maximum amount of assistance available to a beneficiary under each of the grantee’s disaster recovery programs. A grantee may find it necessary to provide exceptions on a case-by-case basis to the maximum amount of assistance and must describe the process it will use to make such exceptions in its action plan. At minimum, each grantee must adopt policies and procedures that communicate how it will analyze the circumstances under which an exception is needed and how it will demonstrate that the amount of assistance is necessary and reasonable. (7) A description of how the grantee plans to: Promote sound, sustainable long-term recovery planning informed by a post-disaster evaluation of hazard risk, especially construction standards and land-use decisions that reflect responsible floodplain and wetland VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 management and take into account continued sea level rise, if applicable; and coordinate with other local and regional planning efforts to ensure consistency. This information should be based on the history of FEMA flood mitigation efforts and take into account projected increase in sea level (if applicable) and the frequency and intensity of precipitation events. (8) A description of how the grantee plans to adhere to the advanced elevation requirements established in paragraph B.32.e of section VI of this notice. Grantee decisions to elevate structures in a particular neighborhood or local government must be cost reasonable relative to other alternatives strategies, such as demolition of substantially-damaged structures with reconstruction of an elevated structure on the same site, property buyouts, or infrastructure improvements to prevent loss of life and mitigate future property damage. The action plan should include an estimate of the average costs associated with elevating structures (updated as additional information becomes available through subsequent action plan amendments) and provide a description of how it will document on a neighborhood or local government level that elevation, as opposed to alternative strategies, is cost reasonable to promote a community’s long-term recovery. (9) A description of how the grantee will: (a) Design and implement programs or activities with the goal of protecting people and property from harm; (b) emphasize high quality, durability, energy efficiency, sustainability, and mold resistance; (c) support adoption and enforcement of modern and/or resilient building codes and mitigation of hazard risk, including possible sea level rise, high winds, storm surge, and flooding, where appropriate; and (d) implement and ensure compliance with the Green Building standards required in paragraph B.32.a of section VI of this notice. All rehabilitation, reconstruction, and new construction should be designed to incorporate principles of sustainability, including water and energy efficiency, resilience, and mitigating the impact of future disasters. Whenever feasible, grantees should follow best practices such as those provided by the U.S. Department of Energy’s Guidelines for Home Energy Professionals—Professional Certifications and Standard Work Specifications found at https:// energy.gov/eere/wipo/guidelines-homeenergy-professionals-standards-workspecifications. HUD also encourages PO 00000 Frm 00008 Fmt 4701 Sfmt 4703 grantees to implement green infrastructure policies to the extent practicable. (10) Additionally, a grantee using grant funds for infrastructure must include a description of how the proposed infrastructure activities will advance long-term resilience to natural hazards and how the grantee intends to align these investments with other planned State or local capital improvements. Grantees should describe how preparedness and mitigation measures will be integrated into rebuilding activities and how the grantee will promote community-level and/or regional (e.g. multiple local jurisdictions) post-disaster recovery and mitigation planning. Grantees must also describe how they will address the construction or rehabilitation of storm water management systems in flood impacted areas. State grantees must work with local governments in the most impacted and distressed areas to identify the unmet needs and associated costs of needed storm water infrastructure improvements. (11) A description of the grantee’s proposed use of CDBG–DR funds to develop a disaster recovery and response plan that addresses long-term recovery and pre- and post-disaster hazard mitigation, if one does not currently exist. (12) A description of how the grantee will leverage CDBG–DR funds with funding provided by other Federal, State, local, private, and nonprofit sources to generate a more effective and comprehensive recovery. Examples of other Federal sources are those provided by HUD, FEMA (specifically the Public Assistance Program, Individual Assistance Program, Permanent Housing Construction Repair, where applicable, and Hazard Mitigation Grant Program), SBA (specifically the Disaster Loans program), Economic Development Administration, USACE, and the U.S. Department of Agriculture. The grantee should seek to maximize the outcomes of investments and the degree to which CDBG funds are leveraged. Grantees shall identify leveraged funds for each activity, as applicable, in the DRGR system. (13) A description of the standards to be established for construction contractors performing work in the jurisdiction and a mechanism for homeowners and small business owners to challenge construction work that does not meet these standards. HUD strongly encourages the grantee to require a warranty period post-construction, which includes a formal notification that is provided to homeowners on a E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices periodic basis (e.g., 6 months and one month prior to expiration date of the warranty). b. Funds Awarded Directly to a State. For State grantees, the action plan shall describe the method of distribution of funds to local governments and Indian tribes and/or descriptions of specific programs or activities the grantee will carry out directly. The description must include: (1) How the needs assessment informed grantee funding determinations, including the rationale behind the decision(s) to provide funds to areas that were identified by the grantee as being most impacted and distressed, if applicable (i.e., how the grantee determined that these areas are most impacted and distressed). All grant funds shall be expended in areas that received a presidential disaster declaration pursuant to the disaster numbers specified in Table 1 of this notice. (2) The threshold factors and recipient or beneficiary grant size limits that are to be applied. (3) The projected uses for the CDBG– DR funds, by responsible organization, activity, and geographic area, when the grantee carries out an activity directly. (4) For each proposed program and/or activity carried out directly, its respective CDBG activity eligibility category (or categories), national objective(s), and specific aspects of disaster recovery as described in subparagraph d. of this paragraph. (5) How the method of distribution to local governments and Indian tribes or programs/activities carried out directly will result in long-term recovery from specific impacts of the disaster. (6) When funds are subgranted to local governments or Indian tribes, all criteria used to distribute funds to local governments or Indian tribes including the relative importance of each criterion. (7) When applications are solicited for programs carried out directly, all criteria used to select applications for funding, including the relative importance of each criterion. c. Clarification of disaster-related activities. All CDBG–DR funded activities must clearly address an impact of the disaster for which funding was allocated. Given standard CDBG requirements, this means each activity must: (1) Be a CDBG-eligible activity (or be eligible under a waiver or alternative requirement in this notice); (2) meet a national objective; and (3) address a direct or indirect impact from the major disaster in a Presidentially-declared county. A disaster-related impact can be addressed through any eligible CDBG– VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 DR activity. Additional details on disaster-related activities are provided under section VI, parts B through D. Additionally, HUD has developed a series of CDBG–DR toolkits that guide grantees through specific grant implementation activities. These can be found on the HUD Exchange website at https://www.hudexchange.info/ programs/cdbg-dr/toolkits/. (1) Housing. Typical housing activities include new construction and rehabilitation of single-family or multifamily units. Most often, grantees use CDBG–DR funds to rehabilitate damaged homes and rental units. However, grantees may also fund new construction (see paragraph B.32 of section VI of this notice) or rehabilitate units not damaged by the disaster if the activity clearly addresses a disasterrelated impact and is located in a disaster-affected area. This impact can be demonstrated by the disaster’s overall effect on the quality, quantity, and affordability of the housing stock and the resulting inability of that stock to meet post-disaster needs and population demands. Grantees are also required to coordinate with HUD-certified housing counseling organizations to ensure that information and services are made available to both renters and homeowners. Additional information for each grantee is available here: https://apps.hud.gov/offices/hsg/sfh/ hcc/hcs.cfm?weblistaction=summary. (2) Economic Revitalization. The attraction, retention and return of businesses and jobs to a disasterimpacted area is critical to long term recovery. Accordingly, for CDBG–DR purposes, economic revitalization may include any CDBG–DR eligible activity that demonstrably restores and improves some aspect of the local economy through the attraction, retention and return of businesses and jobs. The activity may address job losses, or negative impacts to tax revenues or businesses. Examples of eligible activities include providing loans and grants to businesses to carry out eligible economic development activities, funding job training, making improvements to commercial/retail districts, and financing other efforts that attract/retain workers in devastated communities. All economic revitalization activities must address an economic impact(s) caused by the disaster (e.g., loss of jobs, loss of public revenue). Through its needs assessment and action plan, the grantee must clearly identify the economic loss or need resulting from the disaster, and how the proposed activities will address that loss or need. PO 00000 Frm 00009 Fmt 4701 Sfmt 4703 5851 In proposing the use of CDBG–DR funds for economic revitalization under this notice, a grantee must identify how any remaining unmet housing needs will be addressed or how its economic development activities will contribute to the long-term recovery and restoration of housing in the most impacted and distressed areas. (3) Infrastructure. Typical infrastructure activities include the rehabilitation, replacement, or relocation of damaged public facilities and improvements including, but not limited to, bridges, water treatment facilities, roads, sewer and water lines, and storm water management systems. In proposing an allocation of CDBG–DR funds under this notice for infrastructure, a grantee must identify how any remaining unmet housing needs will be addressed or how its infrastructure activities will contribute to the long-term recovery and restoration of housing in the most impacted and distressed areas. (4) Preparedness and Mitigation. To ensure that CDBG–DR funds are used for authorized disaster recovery purposes, all assisted activities must respond to the impacts of the declared disaster identified in Table 1. HUD encourages grantees to incorporate preparedness and mitigation measures into CDBG–DR assisted activities to rebuild communities that are more resilient to future disasters. Mitigation measures that are not incorporated into those rebuilding activities must be a necessary expense related to disaster relief or longterm recovery that responds to the eligible disaster. (5) Connection to the Disaster. Grantees must maintain records about each activity funded, as described in paragraph A.16 of section VI of this notice. In regard to physical losses, damage or rebuilding estimates are often the most effective tools for demonstrating the connection to the disaster. For housing market, economic, and/or nonphysical losses, post-disaster analyses or assessments may best document the relationship between the loss and the disaster. d. Clarity of Action Plan. All grantees must include sufficient information so that all interested parties will be able to understand and comment on the action plan and, if applicable, be able to prepare responsive applications to the grantee. The action plan (and subsequent amendments) must include a single chart or table that illustrates, at the most practical level, how all funds are budgeted (e.g., by program, subrecipient, grantee-administered activity, or other category). E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 5852 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices e. Review and Approval of Action Plan. The action plan (including SF–424 and certifications) must be submitted to HUD for review and approval. Grantees that received an allocation pursuant to a Prior Appropriation must submit an action plan within 90 days of the effective date of this notice. All other grantees receiving an allocation under this notice must submit an action plan within 120 days of the effective date of this notice. HUD will review each action plan within 45 days from the date of receipt. The Secretary may disapprove an action plan as substantially incomplete if it is determined that the action plan does not meet the requirements of this notice. f. Obligation and expenditure of funds. Once HUD makes the required certifications and approves the action plan, it will then sign a grant agreement obligating allocated funds to the grantee. In addition, HUD will establish the line of credit and the grantee will receive DRGR system access (if it does not already have DRGR system access). The grantee must also enter its action plan activities into the DRGR system in order to draw funds for those activities. Each activity must meet the applicable environmental requirements prior to the use of funds. After the Responsible Entity (usually the grantee) completes environmental review(s) pursuant to 24 CFR part 58 (as applicable) or adopts the environmental review performed by another federal agency, as authorized by the Appropriations Act, and receives from HUD or the State an approved Request for Release of Funds and certification (as applicable), the grantee may draw down funds from the line of credit for an activity. The disbursement of grant funds should begin no later than 180 days after the effective date of this notice. Failure to draw funds within 180 days of the effective date of this notice will result in the Department’s review of the grantee’s certification of its financial controls, procurement processes and capacity, and may result in a recommended corrective actions deemed appropriate by the Department pursuant to 24 CFR 570.495, 24 CFR 570.910, or 24 CFR 1003.701. g. Amending the Action Plan. The grantee must amend its action plan to update its needs assessment, modify or create new activities, or reprogram funds, as necessary. 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 VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 coming from and where they are moving to; and (3) revised budget allocation table that reflects the entirety of all funds, as amended. A grantee’s current version of its entire action plan must be accessible for viewing as a single document at any given point in time, rather than the public or HUD having to view and cross-reference changes among multiple amendments. h. Projection of expenditures and outcomes. Each grantee must submit projected expenditures and outcomes with the action plan. The projections must be based on each quarter’s expected performance—beginning with the quarter funds are available to the grantee and continuing each quarter until all funds are expended. The projections will enable HUD, the public, and the grantee to track proposed versus actual performance. The published action plan must be amended for any subsequent changes, updates or revision of the projections. Guidance on the preparation of projections is available on the HUD website. 3. HUD performance review authorities and grantee reporting requirements in the Disaster Recovery Grant Reporting (DRGR) System. a. Performance review authorities. 42 U.S.C. 5304(e) requires that the Secretary shall, at least on an annual basis, make such reviews and audits as may be necessary or appropriate to determine whether the grantee has carried out its activities in a timely manner, whether the grantee’s activities and certifications are carried out in accordance with the requirements and the primary objectives of the HCD Act and other applicable laws, and whether the grantee has the continuing capacity to carry out those activities in a timely manner. This notice waives the requirements for submission of a performance report pursuant to 42 U.S.C. 12708(a), 24 CFR 91.520, and 24 CFR 1003.506. Alternatively, HUD is requiring that grantees enter information in the DRGR system in sufficient detail to permit the Department’s review of grantee performance on a quarterly basis through the Quarterly Performance Report (QPR) and to enable remote review of grantee data to allow HUD to assess compliance and risk. HUD-issued general and appropriation-specific guidance for DRGR reporting requirements can be found on the HUD exchange at: https://www.hudexchange. info/programs/drgr/. b. DRGR Action Plan. Each grantee must enter its action plan for disaster recovery, including performance measures, into HUD’s DRGR system. As more detailed information about uses of PO 00000 Frm 00010 Fmt 4701 Sfmt 4703 funds is identified by the grantee, it must be entered into the DRGR system at a level of detail that is sufficient to serve as the basis for acceptable performance reports and permits HUD review of compliance requirements. The action plan must also be entered into the DRGR system so that the grantee is able to draw its CDBG–DR funds. The grantee may enter activities into the DRGR system before or after submission of the written action plan to HUD, but will not be able to budget grant funds to these activities until after the grant agreement has been executed. To enter an activity into the DRGR system, the grantee must know the activity type, national objective, and the organization that will be responsible for the activity. Grantees will gain access to its line of credit upon review and approval of the initial DRGR action plan. Each activity entered into the DRGR system must also be categorized under a ‘‘project.’’ Typically, projects are based on groups of activities that accomplish a similar, broad purpose (e.g., housing, infrastructure, or economic revitalization) or are based on an area of service (e.g., Community A). If a grantee describes just one program within a broader category (e.g., single family rehabilitation), that program is entered as a project in the DRGR system. Further, the budget of the program would be identified as the project’s budget. If a grantee has only identified the Method of Distribution (MOD) upon HUD’s approval of the published action plan, the MOD categories typically serve as the projects in the DRGR system, rather than activity groupings. Activities are added to MOD projects as specific CDBG–DR programs and projects are identified for funding. c. Tracking oversight activities in the DRGR system; use of DRGR data for HUD review and dissemination. Each grantee must also enter into the DRGR system summary information on monitoring visits and reports, audits, and technical assistance it conducts as part of its oversight of its disaster recovery programs. The grantee’s Quarterly Performance Report (QPR) will include a summary indicating the number of grantee oversight visits and reports (see subparagraph e. for more information on the QPR). HUD will use data entered into the DRGR action plan and the QPR, transactional data from the DRGR system, and other information provided by the grantee, to provide reports to Congress and the public, as well as to: (1) Monitor for anomalies or performance problems that suggest fraud, abuse of funds, and duplication of benefits; (2) reconcile budgets, E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices obligations, funding draws, and expenditures; (3) calculate expenditures to determine compliance with administrative and public service caps and the overall percentage of funds that benefit low- and moderate-income persons; and (4) analyze the risk of grantee programs to determine priorities for the Department’s monitoring. Any instances of fraud, waste, or abuse identified should be referred to the HUD OIG Fraud Hotline (phone: 1–800–347– 3735 or email: hotline@hudoig.gov). No personally identifiable information shall be reported in DRGR. d. Tracking program income in the DRGR system. Grantees must use the DRGR system to draw grant funds for each activity. Grantees must also use the DRGR system to track program income receipts, disbursements, revolving loan funds, and leveraged funds (if applicable). If a State permits local governments to retain program income, or a State permits subrecipients to retain program income prior to grant closeout, the grantee must establish program income accounts in the DRGR system. The DRGR system requires grantees to use program income before drawing additional grant funds, and ensures that program income retained by one organization will not affect grant draw requests for other organizations. e. DRGR system Quarterly Performance Report (QPR). Each grantee must submit a QPR through the DRGR system no later than 30 days following the end of each calendar quarter. Within 3 days of submission to HUD, each QPR must be posted on the grantee’s official website. In the event the QPR is rejected by HUD, the grantee must post the revised version, as approved by HUD, within 3 days of HUD approval. The grantee’s first QPR is due after the first full calendar year quarter after HUD signs the grant agreement. For example, a grant agreement signed in April requires a QPR to be submitted by October 30. QPRs must be submitted on a quarterly basis until all funds have been expended and all expenditures and accomplishments have been reported. If a satisfactory report is not submitted in a timely manner, HUD may suspend access to CDBG–DR funds until a satisfactory report is submitted, or may withdraw and reallocate funding if HUD determines, after notice and opportunity for a hearing, that the jurisdiction did not submit a satisfactory report. Each QPR will include information about the uses of funds in activities identified in the DRGR action plan during the applicable quarter. This includes, but is not limited to, the project name, activity, location, and national objective; funds budgeted, VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 obligated, drawn down, and expended; the funding source and total amount of any non–CDBG–DR funds to be expended on each activity; beginning and actual completion dates of completed activities; achieved performance outcomes, such as number of housing units completed or number of low- and moderate-income persons served; and the race and ethnicity of persons assisted under direct-benefit activities. For all housing and economic development activities, the address of each CDBG–DR assisted property must be recorded in the QPR. Grantees must not include such addresses in its public QPR; when entering addresses in the QPR, grantees must select ‘‘Not Visible on PDF’’ to exclude them from the report required to be posted on its website. The DRGR system will automatically display the amount of program income receipted, the amount of program income reported as disbursed, and the amount of grant funds disbursed in the QPR. Grantees must include a description of actions taken in that quarter to affirmatively further fair housing, within the section titled ‘‘Overall Progress Narrative’’ in the DRGR system. 4. Citizen participation waiver and alternative requirement. To permit a more streamlined process, and ensure disaster recovery grants are awarded in a timely manner, provisions of 42 U.S.C. 5304(a)(2) and (3), 42 U.S.C. 12707, 24 CFR 570.486, 24 CFR 1003.604, and 24 CFR 91.115(b) and (c), with respect to citizen participation requirements, are waived and replaced by the requirements below. The streamlined requirements do not mandate public hearings but do require the grantee to provide a reasonable opportunity (at least 14 days) for citizen comment and ongoing citizen access to information about the use of grant funds. The streamlined citizen participation requirements for a grant under this notice are: a. Publication of the action plan, opportunity for public comment, and substantial amendment criteria. Before the grantee adopts the action plan for this grant or any substantial amendment to the action plan, the grantee will publish the proposed plan or amendment. The manner of publication must include prominent posting on the grantee’s official website and must afford citizens, affected local governments, and other interested parties a reasonable opportunity to examine the plan or amendment’s contents. The topic of disaster recovery should be navigable by citizens from the grantee’s (or relevant agency’s) homepage. Grantees are also encouraged PO 00000 Frm 00011 Fmt 4701 Sfmt 4703 5853 to notify affected citizens through electronic mailings, press releases, statements by public officials, media advertisements, public service announcements, and/or contacts with neighborhood organizations. Plan publication efforts must meet the effective communications requirements of 24 CFR 8.6 and other fair housing and civil rights requirements, such as the effective communication requirements under the Americans with Disabilities Act. Grantees are responsible for ensuring that all citizens have equal access to information about the programs, including persons with disabilities and limited English proficiency (LEP). Each grantee must ensure that program information is available in the appropriate languages for the geographic areas to be served and take appropriate steps to ensure effective communications with persons with disabilities pursuant to 24 CFR 8.6 and other fair housing and civil rights requirements, such as the effective communication requirements under the Americans with Disabilities Act. Since State grantees under this notice may make grants throughout the State, including to entitlement communities, States should carefully evaluate the needs of persons with disabilities and those with limited English proficiency. For assistance in ensuring that this information is available to LEP populations, recipients should consult the Final Guidance to Federal Financial Assistance Recipients Regarding Title VI, Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons, published on January 22, 2007, in the Federal Register (72 FR 2732) and at: https:// www.lep.gov/guidance/HUD_guidance_ Jan07.pdf. Subsequent to publication of the action plan, the grantee must provide a reasonable time frame (again, no less than 14 days) and method(s) (including electronic submission) for receiving comments on the plan or substantial amendment. In its action plan, each grantee must specify criteria for determining what changes in the grantee’s plan constitute a substantial amendment to the plan. At a minimum, the following modifications will constitute a substantial amendment: A change in program benefit or eligibility criteria; the addition or deletion of an activity; or the allocation or reallocation of a monetary threshold specified by the grantee in its action plan. The grantee may substantially amend the action plan if it follows the same procedures required in this notice for the E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 5854 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices preparation and submission of an action plan for disaster recovery. b. Nonsubstantial amendment. The grantee must notify HUD, but is not required to seek public comment, when it makes any plan amendment that is not substantial. HUD must be notified at least 5 business days before the amendment becomes effective. However, 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 the notification of nonsubstantial amendments via email within 5 business days. c. Consideration of public comments. The grantee must consider all comments, received orally or in writing, on the action plan or any substantial amendment. A summary of these comments or views, and the grantee’s response to each must be submitted to HUD with the action plan or substantial amendment. d. Availability and accessibility of the Action Plan. The grantee must make the action plan, any substantial amendments, and all performance reports available to the public on its website and on request. In addition, the grantee must make these documents available in a form accessible to persons with disabilities and those with limited English proficiency. During the term of the grant, the grantee will provide citizens, affected local governments, and other interested parties with reasonable and timely access to information and records relating to the action plan and to the grantee’s use of grant funds. e. Public website. The grantee must maintain a public website that provides information accounting for how all grant funds are used and managed/ administered, including links to all action plans, action plan amendments, CDBG–DR program policies and procedures, performance reports, citizen participation requirements, and activity/ program information for activities described in its action plan, including details of all contracts and ongoing procurement policies. To meet this requirement, each grantee must have a separate page dedicated to disaster recovery that includes the information described at paragraph A.27 of section VI of this notice. f. Application status. The grantee must provide multiple methods of communication, such as websites, tollfree numbers, or other means that provide applicants for recovery assistance with timely information to determine the status of their application, as provided for in VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 paragraph A.1.b in section VI of this notice. g. Citizen complaints. The grantee will provide a timely written response to every citizen complaint. The response must be provided within 15 working days of the receipt of the complaint. Complaints regarding fraud, waste, or abuse of government funds should be forwarded to the HUD OIG Fraud Hotline (phone: 1–800–347–3735 or email: hotline@hudoig.gov). 5. Direct grant administration and means of carrying out eligible activities—applicable to State grantees only. Requirements at 42 U.S.C. 5306(d) are waived to the extent necessary to allow a State to use its disaster recovery grant allocation directly to carry out State-administered activities eligible under this notice, rather than distribute all funds to local governments. Pursuant to this waiver, the standard at 24 CFR 570.480(c) and the provisions at 42 U.S.C. 5304(e)(2) will also include activities that the State carries out directly. Activities eligible under this notice may be carried out by the State, subject to State law and consistent with the requirement of 24 CFR 570.200(f), through its employees, through procurement contracts, or through assistance provided under agreements with subrecipients. State grantees continue to be responsible for civil rights, labor standards, and environmental protection requirements, for compliance with 24 CFR 570.489(g) and (h) relating to conflicts of interest and for compliance with 24 CFR 570.489(m) relating to monitoring and management of subrecipients. A State grantee may also carry out activities in tribal areas. The State should coordinate with the Indian tribe with jurisdiction over the tribal area when providing CDBG–DR assistance to beneficiaries in tribal areas. State grantees carrying out projects in tribal areas, either directly or through its employees, through procurement contracts, or through assistance provided under agreements with subrecipients, must obtain the consent of the Indian tribe with jurisdiction over the tribal area to allow the State to carry out or to fund CDBG–DR projects in the area. Indian tribes that receive CDBG– DR funding from a State grantee must comply with the Title II of the Civil Rights Act of 1968 (25 U.S.C. 1301 et seq.) (Indian Civil Rights Act). For activities carried out by entities eligible under section 105(a)(15) of the HCD Act, such entities will be subject to the description of a nonprofit under that section rather than the description located in 24 CFR 570.204, even in a case in which the entity is receiving PO 00000 Frm 00012 Fmt 4701 Sfmt 4703 assistance through a local government that is an entitlement grantee. 6. Consolidated Plan waiver. HUD is temporarily waiving the requirement for consistency with the consolidated plan (requirements at 42 U.S.C. 12706, 24 CFR 91.325(a)(5) and 91.225(a)(5)), because the effects of a major disaster alter a grantee’s priorities for meeting housing, employment, and infrastructure needs. In conjunction, 42 U.S.C. 5304(e), to the extent that it would require HUD to annually review grantee performance under the consistency criteria, is also waived. However, this waiver applies only until the grantee submits its next full (3–5 year) consolidated plan, or for 24 months after the effective date of this notice, whichever is sooner. If the grantee is not scheduled to submit a new 3–5 year consolidated plan within the next 2 years, HUD expects each grantee to update its existing 3–5 year consolidated plan to reflect disasterrelated needs no later than 24 months after the effective date of this notice. Additionally, grantees are encouraged to incorporate disaster-recovery needs into their consolidated plan updates as soon as practicable, but any unmet disasterrelated needs and associated priorities must be incorporated into the grantee’s next consolidated plan update no later than its Fiscal Year 2020 update. HUD has issued guidance for incorporating CDBG–DR funds into consolidated plans via HUD’s eCon Planning Suite. This guidance is on the HUD Exchange at: https://www.hudexchange.info/ resource/4400/updating-theconsolidated-plan-to-reflect-disasterrecovery-needs-and-associatedpriorities/. This waiver does not affect the current applicability of HUD’s July 16, 2015, final rule on Affirmatively Furthering Fair Housing (80 FR 42272) to grantees. 7. Requirement for consultation during plan preparation. Currently, the HCD Act and regulations require State grantees to consult with affected local governments in nonentitlement areas of the State in determining the State’s proposed method of distribution. HUD is waiving 42 U.S.C. 5306(d)(2)(C)(iv), 42 U.S.C. 5306(d)(2)(D), 24 CFR 91.325(b)(2), and 24 CFR 91.110, and instituting the alternative requirement that States receiving an allocation under this notice consult with all disasteraffected local governments (including any CDBG entitlement grantees), Indian tribes, and any local public housing authorities in determining the use of funds. This ensures that State grantees sufficiently assess the recovery needs of all areas affected by the disaster. Additional guidance on consultation E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices with local stakeholders can be found in the National Disaster Recovery Framework and its discussion of preand post-disaster planning, at: https:// www.fema.gov/national-disasterrecovery-framework. Grantees must consult with States, Indian tribes, local governments, Federal partners, nongovernmental organizations, the private sector, and other stakeholders and affected parties in the surrounding geographic area to ensure consistency of the action plan with applicable regional redevelopment plans. Grantees are encouraged to establish a recovery task force with representative members of each sector to advise on how recovery activities can best contribute towards the goals of regional redevelopment plans. 8. Overall benefit requirement. The primary objective of the HCD Act 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 not less than 70 percent of the aggregate of CDBG program funds be used to support activities benefitting low- and moderateincome persons. The 70 percent overall benefit requirement shall remain in effect for this allocation, unless waived pursuant to a request by an individual grantee to authorize a lower overall benefit for its CDBG–DR grant based on a determination by HUD of compelling need for the reduction. A grantee may seek to reduce the overall benefit requirement below 70 percent of the total grant, but must submit a justification that, at a minimum: (a) Identifies the planned activities that meet the needs of its lowand 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 70 percent requirement; and (d) demonstrates that low- and moderate-income persons’ disaster-related needs have been sufficiently met and 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. 9. Use of the ‘‘upper quartile’’ or ‘‘exception criteria’’ for low- and moderate-income area benefit activities. Section 101(c) of the HCD Act requires each funded activity to meet a national VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 objective of the CDBG program, including the national objective of benefiting low- and moderate-income persons. Grantees may meet this national objective on an area basis, through an activity which is available to benefit all the residents of an area where at least 51 percent of the residents are low- and moderate income. In some cases, HUD permits an exception to the low- and moderate-income area benefit requirement that an area contain at least 51 percent low- and moderate-income residents. This exception applies to entitlement communities that have few, if any, areas within their jurisdiction that have 51 percent or more low- and moderate-income residents. These communities are allowed to use a percentage less than 51 percent to qualify activities under the low- and moderate-income area benefit category. This exception is referred to as the ‘‘exception criteria’’ or the ‘‘upper quartile.’’ A grantee qualifies for this exception when fewer than one quarter of the populated-block groups in its jurisdictions contain 51 percent or more low- and moderate-income persons. In such a community, activities must serve an area that contains a percentage of low- and moderate-income residents that is within the upper quartile of all census-block groups within its jurisdiction in terms of the degree of concentration of low- and moderateincome residents. HUD assesses each grantee’s census-block groups to determine whether a grantee qualifies to use this exception and identifies the alternative percentage the grantee may use instead of 51 percent for the purpose of qualifying activities under the low- and moderate-income area benefit. HUD determines the lowest proportion a grantee may use to qualify an area for this purpose and advises the grantee, accordingly. Disaster recovery grantees are required to use the most recent data available in implementing the exception criteria (https:// www.hudexchange.info/programs/acslow-mod-summary-data/acs-low-modsummary-data-exception-grantees/). The ‘‘exception criteria’’ apply to disaster recovery activities funded pursuant to this notice in jurisdictions covered by such criteria, including jurisdictions that receive disaster recovery funds from a State. 10. Grant administration responsibilities and general administration cap. a. Grantee responsibilities. Each grantee shall administer its award in compliance with all applicable laws and regulations and shall be financially accountable for the use of all funds provided in this notice. PO 00000 Frm 00013 Fmt 4701 Sfmt 4703 5855 b. General administration cap. For all grantees under this notice, the CDBG program administration requirements must be modified to be consistent with the Appropriations Act. Accordingly, 5 percent of the grant (plus program income) may be used for administrative costs by the grantee, units of general local government, or by subrecipients. Thus, the total of all costs classified as administrative for any grantee under this notice must be less than or equal to the 5 percent cap. (1) Combined technical assistance and administrative expenditures cap for States only. The provisions of 42 U.S.C. 5306(d) and 24 CFR 570.489(a)(1)(i) and (iii) will not apply to the extent that they cap administration and technical assistance expenditures, limit a State’s ability to charge a nominal application fee for grant applications for activities the State carries out directly, and require a dollar-for-dollar match of State funds for administrative costs exceeding $100,000. 42 U.S.C. 5306(d)(5) and (6) are waived and replaced with the alternative requirement that the aggregate total for administrative and technical assistance expenditures must not exceed 5 percent of the grant plus program income. Under this alternative requirement, a State is limited to spending a maximum of 15 percent of its total grant amount on planning costs. Planning costs subject to the 15 percent cap are those defined in 42 U.S.C. 5305(a)(12). 11. Planning-only activitiesapplicable to State grantees only. The State CDBG program requires that local government grant subrecipients for planning-only grants must document that the use of funds meets a national objective. In the State CDBG program, these planning grants are typically used for individual project plans. By contrast, planning activities carried out by entitlement communities are more likely to include non-project-specific plans such as functional land-use plans, master plans, historic preservation plans, comprehensive plans, community recovery plans, development of housing codes, zoning ordinances, and neighborhood plans. These plans may guide long-term community development efforts comprising multiple activities funded by multiple sources. In the CDBG Entitlement program, these more general planning activities are presumed to meet a national objective under the requirements at 24 CFR 570.208(d)(4). The Department notes that almost all effective recoveries in the past have relied on some form of area-wide or comprehensive planning activity to guide overall redevelopment E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 5856 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices independent of the ultimate source of implementation funds. To assist State grantees, the Department is waiving the requirements at 24 CFR 570.483(b)(5) or (c)(3), which limit the circumstances under which the planning activity can meet a low- and moderate-income or slum-and-blight national objective. Instead, States must comply with 24 CFR 570.208(d)(4) when funding disaster recovery-assisted, planningonly grants, or directly administering planning activities that guide recovery in accordance with the Appropriations Act. In addition, the types of planning activities that States may fund or undertake are expanded to be consistent with those of entitlement communities identified at 24 CFR 570.205. Plans should include an assessment of natural hazard risks, including anticipated effects of future extreme weather events and other hazards. Additional resources to assist in this process are available on the HUD exchange website: https:// www.hudexchange.info/programs/cdbgdr/resources/#natural-hazard-risk-andresilience-tools. 12. Use of the urgent need national objective. The CDBG certification requirements for documentation of urgent need, located at 24 CFR 570.483(d), are waived for the grants under this notice and replaced with the following alternative requirement. In the context of disaster recovery, the standard urgent need certification requirements may impede recovery. Since the Department only provides CDBG–DR awards to grantees with documented disaster-related impacts and each grantee is limited to spending funds only for the benefit of areas that received a presidential disaster declaration as identified in Table 1 of this notice, the following streamlined alternative requirement recognizes the urgency in addressing serious threats to community welfare following a major disaster. A grantee need not issue formal certification statements to qualify an activity as meeting the urgent need national objective. Instead, it must document how each program and/or activity funded under the urgent need national objective responds to a disaster-related impact. For each activity that will meet an urgent need national objective, the grantee must reference in its action plan needs assessment the type, scale, and location of the disaster-related impacts that each program and/or activity is addressing over the course of the applicable deadline for the expenditure of obligated grant funds. Grantees are advised to use the low- and moderateincome benefit national objective for all VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 activities that qualify under the criteria for that national objective. At least 70 percent of the entire CDBG–DR grant must be used for activities that benefit low- and moderate-income persons. 13. Waiver and alternative requirement for distribution to CDBG metropolitan cities and urban countiesapplicable to State grantees only. 42 U.S.C. 5302(a)(7) (definition of ‘‘nonentitlement area’’) and provisions of 24 CFR part 570, including 24 CFR 570.480, are waived to permit a State to distribute CDBG–DR funds to units of local government and Indian tribes. 14. Use of subrecipients—applicable to State grantees only. The State CDBG program rule does not make specific provision for the treatment of entities that the CDBG Entitlement program calls ‘‘subrecipients.’’ The waiver allowing the State to directly carry out activities creates a situation in which the State may use subrecipients to carry out activities in a manner similar to an entitlement community. Therefore, for States taking advantage of the waiver to carry out activities directly, the requirements at 24 CFR 570.502, 570.503, and 570.500(c) apply. 15. Waiver and alternative requirement for the U.S. Virgin Islands to administer CDBG–DR funds pursuant to the regulatory and statutory requirements of the State CDBG program. The provisions of 24 CFR part 570 subpart F are waived to authorize the U.S. Virgin Islands to administer a CDBG–DR allocation in accordance with the regulatory and statutory provisions governing the State CDBG program, as modified by this notice. This includes the requirement that the aggregate total for administrative and technical assistance expenditures by the U.S. Virgin Islands must not exceed 5 percent of any CDBG–DR grant made pursuant to the Appropriations Act, plus program income. 16. Recordkeeping. When a State carries out activities directly, 24 CFR 570.490(b) is waived and the following alternative provision shall apply: the State shall establish and maintain such records as may be necessary to facilitate review and audit by HUD of the State’s administration of CDBG–DR funds, under 24 CFR 570.493. Consistent with applicable statutes, regulations, waivers and alternative requirements, and other Federal requirements, the content of records maintained by the State shall be sufficient to: (1) Enable HUD to make the applicable determinations described at 24 CFR 570.493; (2) make compliance determinations for activities carried out directly by the State; and (3) show how activities funded are consistent with the descriptions of activities proposed for PO 00000 Frm 00014 Fmt 4701 Sfmt 4703 funding in the action plan and/or DRGR system. For fair housing and equal opportunity (FHEO) purposes, as applicable, such records shall include data on the racial, ethnic, and gender characteristics of persons who are applicants for, participants in, or beneficiaries of the program. All grantees must report FHEO data in the DRGR system at the activity level. 17. Change of use of real propertyapplicable to State grantees only. This alternative requirement conforms the change of use of real property rule to the waiver allowing a State to carry out activities directly. For purposes of this program, all references to ‘‘unit of general local government’’ in 24 CFR 570.489(j), shall be read as ‘‘State, unit of general local government (UGLG) or State subrecipient.’’ 18. Responsibility for review and handling of noncompliance-applicable to State grantees only. This change is in conformance with the waiver allowing the State to carry out activities directly. 24 CFR 570.492 is waived and the following alternative requirement applies for any State receiving a direct award under this notice: The State shall make reviews and audits, including onsite reviews of any subrecipients, designated public agencies, and local governments, as may be necessary or appropriate to meet the requirements of section 104(e)(2) of the HCD Act, as amended, as modified by this notice. In the case of noncompliance with these requirements, the State shall take such actions as may be appropriate to prevent a continuance of the deficiency, mitigate any adverse effects or consequences, and prevent a recurrence. The State shall establish remedies for noncompliance by any designated subrecipients, public agencies, or local governments. The State shall attend and require subrecipients to attend fraud related training provided by HUD OIG to assist in the proper management of CDBG–DR grant funds. Additional information about this training will be posted on the HUD website. 19. Program income alternative requirement. The Department is waiving applicable program income rules at 42 U.S.C. 5304(j) and 24 CFR 570.489(e), 570.500 and 570.504 only to the extent necessary to provide additional flexibility to State and local government as described below. The alternative requirements provide guidance regarding the use of program income received before and after grant close out and address revolving loan funds. a. Definition of program income. (1) For purposes of this notice, ‘‘program income’’ is defined as gross income generated from the use of E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices CDBG–DR funds, except as provided in subparagraph (d) of this paragraph, and received by a State or a subrecipient of a State. When income is generated by an activity that is only partially assisted with CDBG–DR funds, the income shall be prorated to reflect the percentage of CDBG–DR funds used (e.g., a single loan supported by CDBG–DR funds and other funds; a single parcel of land purchased with CDBG funds and other funds). Program income includes, but is not limited to, the following: (a) Proceeds from the disposition by sale or long-term lease of real property purchased or improved with CDBG–DR funds. (b) Proceeds from the disposition of equipment purchased with CDBG–DR funds. (c) Gross income from the use or rental of real or personal property acquired by a State, local government, or subrecipient thereof with CDBG–DR funds, less costs incidental to generation of the income (i.e., net income). (d) Net income from the use or rental of real property owned by a State, local government, or subrecipient thereof, that was constructed or improved with CDBG–DR funds. (e) Payments of principal and interest on loans made using CDBG–DR funds. (f) Proceeds from the sale of loans made with CDBG–DR funds. (g) Proceeds from the sale of obligations secured by loans made with CDBG–DR funds. (h) Interest earned on program income pending disposition of the income, including interest earned on funds held in a revolving fund account. (i) Funds collected through special assessments made against nonresidential properties and properties owned and occupied by households not low- and moderate-income, where the special assessments are used to recover all or part of the CDBG–DR portion of a public improvement. (j) Gross income paid to a State, local government, or a subrecipient thereof, from the ownership interest in a forprofit entity in which the income is in return for the provision of CDBG–DR assistance. (2) ‘‘Program income’’ does not include the following: (a) The total amount of funds that is less than $35,000 received in a single year and retained by a State, local government, or a subrecipient thereof. (b) Amounts generated by activities eligible under section 105(a)(15) of the HCD Act and carried out by an entity under the authority of section 105(a)(15) of the HCD Act. b. Retention of program income. State grantees may permit a local government VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 or Indian tribe that receives or will receive program income to retain the program income, but are not required to do so. c. Program income—use, close out, and transfer. (1) Program income received (and retained, if applicable) before or after close out of the grant that generated the program income, and used to continue disaster recovery activities, is treated as additional CDBG–DR funds subject to the requirements of this notice and must be used in accordance with the grantee’s action plan for disaster recovery. To the maximum extent feasible, program income shall be used or distributed before additional withdrawals from the U.S. Treasury are made, except as provided in subparagraph d. of this paragraph. (2) In addition to the regulations addressing program income found at 24 CFR 570.489(e) and 570.504, the following rules apply: A State grantee may transfer program income to its annual CDBG program before close out of the grant that generated the program income. In addition, a State grantee may transfer program income before close out to any annual CDBG-funded activities carried out by a local government within the State. Program income received by a grantee after close out of the grant that generated the program income, may also be transferred to a grantee’s annual CDBG award. In all cases, any program income received that is not used to continue the disaster recovery activity will not be subject to the waivers and alternative requirements of this notice. Rather, those funds will be subject to the State grantee’s regular CDBG program rules. d. Revolving loan funds. State grantees and local governments may establish revolving funds to carry out specific, identified activities. A revolving fund, for this purpose, is a separate fund (with a set of accounts that are independent of other program accounts) established to carry out specific activities. These activities generate payments used to support similar activities going forward. These payments to the revolving fund are program income and must be substantially disbursed from the revolving fund before additional grant funds are drawn from the U.S. Treasury for payments that could be funded from the revolving fund. Such program income is not required to be disbursed for nonrevolving fund activities. State grantees may also establish a revolving fund to distribute funds to local governments to carry out specific, identified activities. The same requirements, outlined above, apply to PO 00000 Frm 00015 Fmt 4701 Sfmt 4703 5857 this type of revolving loan fund. Note that no revolving fund established per this notice shall be directly funded or capitalized with CDBG–DR grant funds, pursuant to 24 CFR 570.489(f)(3). 20. Reimbursement of disaster recovery expenses. The provisions of 24 CFR 570.489(b) are applied to permit a State grantee to charge to the grant otherwise allowable costs incurred by itself, its recipients or subrecipients (including public housing authorities (PHAs)) on or after the incident date of the covered disaster. A local government grantee is subject to the provisions of 24 CFR 570.200(h) but may reimburse itself or its subrecipients for otherwise allowable costs incurred on or after the incident date of the covered disaster. Section 570.200(h)(1)(i) will not apply to the extent that it requires pre-agreement activities to be included in a consolidated plan. The Department expects a grantee to include all preagreement activities in its action plans. 21. Reimbursement of pre-application costs of homeowners, businesses, and other qualifying entities. A grantee is permitted to charge to grants the preaward and preapplication costs of homeowners, businesses, and other qualifying entities for eligible costs it has incurred in response to an eligible disaster covered under this notice. However, a grantee may not charge such preaward or preapplication costs to grants if the preaward or preapplication action results in an adverse impact to the environment. Grantees receiving an allocation under this notice are also subject to HUD’s guidance on preaward expenses published in CPD Notice 2015–07, ‘‘Guidance for Charging PreApplication Costs of Homeowners, Businesses, and Other Qualifying Entities to CDBG Disaster Recovery Grants,’’ as amended (https:// www.hud.gov/sites/documents/1507CPDN.PDF). Grantees are required to consult with the State Historic Preservation Officer, Fish and Wildlife Service, and National Marine Fisheries Service, to obtain formal agreements for compliance with section 106 of the National Historic Preservation Act (54 U.S.C. 306108) and section 7 of the Endangered Species Act of 1973 (16 U.S.C. 1536) when designing a reimbursement program. Grantees may not use CDBG–DR funds to provide compensation to beneficiaries meaning that funds may not be provided to a beneficiary based on the estimated or actual amount of loss from the declared disaster. Grantees may, however, reimburse beneficiaries for preapplication costs incurred by the beneficiary for completing an eligible E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 5858 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices activity, not for the amount of loss incurred by the beneficiary. 22. Prohibition on forced mortgage payoff. In some instances, a homeowner with an outstanding mortgage balance is required, under the terms of their loan agreement, to repay the balance of the mortgage loan prior to using assistance to rehabilitate or reconstruct their home. CDBG–DR funds, however, may not be used for a forced mortgage payoff. The ineligibility of a forced mortgage payoff with CDBG–DR funds does not affect HUD’s longstanding guidance that when other non-CDBG disaster assistance is taken by lenders for a forced mortgage payoff, those funds are not considered to be available to the homeowner and do not constitute a duplication of benefits for the purpose of housing rehabilitation or reconstruction. 23. One-for-One Replacement Housing, Relocation, and Real Property Acquisition Requirements. Activities and projects undertaken with CDBG–DR funds are subject to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, (42 U.S.C. 4601 et seq.) (‘‘URA’’) and section 104(d) of the HCD Act (42 U.S.C. 5304(d))(Section 104(d)). The implementing regulations for the URA are at 49 CFR part 24. The regulations for section 104(d) are at 24 CFR part 42, subpart C. For the purpose of promoting the availability of decent, safe, and sanitary housing, HUD is waiving the following URA and section 104(d) requirements with respect to the use of CDBG–DR funds allocated under this notice: a. Section 104(d) one for one replacement. One-for-one replacement requirements at section 104(d)(2)(A)(i) and (ii) and (d)(3) of the HCD Act and 24 CFR 42.375 are waived in connection with funds allocated under this notice for lower-income dwelling units that are damaged by the disaster and not suitable for rehabilitation. The section 104(d) one-for-one replacement requirements generally apply to demolished or converted occupied and vacant occupiable lower-income dwelling units. This waiver exempts disaster-damaged units that meet the grantee’s definition of ‘‘not suitable for rehabilitation’’ from the one-for-one replacement requirements. Before carrying out activities that may be subject to the one-for-one replacement requirements, the grantee must define ‘‘not suitable for rehabilitation’’ in its action plan or in policies/procedures governing these activities. A grantee with questions about the one-for-one replacement requirements is encouraged to contact the HUD regional relocation VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 specialist responsible for its jurisdiction. HUD is waiving the section 104(d) one-for-one replacement requirement for lower-income dwelling units that are damaged by the disaster and not suitable for rehabilitation because it does not account for the large, sudden changes that a major disaster may cause to the local housing stock, population, or economy. Further, the requirement may discourage grantees from converting or demolishing disasterdamaged housing when excessive costs would result from replacing all such units. Disaster-damaged housing structures that are not suitable for rehabilitation can pose a threat to public health and safety and to economic revitalization. Grantees should reassess post-disaster population and housing needs to determine the appropriate type and amount of lower-income dwelling units to rehabilitate and/or rebuild. Grantees should note that the demolition and/or disposition of PHAowned public housing units is covered by section 18 of the United States Housing Act of 1937, as amended, and 24 CFR part 970. b. Relocation assistance. The relocation assistance requirements at section 104(d)(2)(A) of the HCD Act and 24 CFR 42.350 are waived to the extent that they differ from the requirements of the URA and implementing regulations at 49 CFR part 24, as modified by this notice, for activities related to disaster recovery. Without this waiver, disparities exist in relocation assistance associated with activities typically funded by HUD and FEMA (e.g., buyouts and relocation). Both FEMA and CDBG funds are subject to the requirements of the URA; however, CDBG funds are subject to section 104(d), while FEMA funds are not. The URA provides at 49 CFR 24.402(b) that a displaced person is eligible to receive a rental assistance payment that is calculated to cover a period of 42 months. By contrast, section 104(d) allows a lower-income displaced person to choose between the URA rental assistance payment and a rental assistance payment calculated over a period of 60 months. This waiver of the section 104(d) relocation assistance requirements assures uniform and equitable treatment by setting the URA and its implementing regulations as the sole standard for relocation assistance under this notice. c. Tenant-based rental assistance. The requirements of sections 204 and 205 of the URA, and 49 CFR 24.2(a)(6)(vii), 24.2(a)(6)(ix), and 24.402(b) are waived to the extent necessary to permit a grantee to meet all or a portion of a PO 00000 Frm 00016 Fmt 4701 Sfmt 4703 grantee’s replacement housing payment obligation to a displaced tenant by offering rental housing through a tenantbased rental assistance (TBRA) housing program subsidy (e.g., Section 8 rental voucher or certificate), provided that comparable replacement dwellings are made available to the tenant in accordance with 49 CFR 24.204(a) where the owner is willing to participate in the TBRA program, and the period of authorized assistance is at least 42 months. Failure to grant this waiver would impede disaster recovery whenever TBRA program subsidies are available but funds for cash replacement housing payments are limited and such payments are required by the URA to be based on a 42-month term. d. Arm’s length voluntary purchase. The requirements at 49 CFR 24.101(b)(2)(i) and (ii) are waived to the extent that they apply to an arm’s length voluntary purchase carried out by a person who uses funds allocated under this notice and does not have the power of eminent domain, in connection with the purchase and occupancy of a principal residence by that person. Given the often large-scale acquisition needs of grantees, this waiver is necessary to reduce burdensome administrative requirements following a disaster. Grantees are reminded that tenants occupying real property acquired through voluntary purchase may be eligible for relocation assistance. e. Optional relocation policies. The regulation at 24 CFR 570.606(d) is waived to the extent that it requires optional relocation policies to be established at the grantee level. Unlike the regular CDBG program, States may carry out disaster recovery activities directly or through subrecipients, but 24 CFR 570.606(d) does not account for this distinction. This waiver makes clear that grantees receiving CDBG–DR funds under this notice may establish optional relocation policies or permit their subrecipients to establish separate optional relocation policies. This waiver is intended to provide States with maximum flexibility in developing optional relocation policies with CDBG– DR funds. f. Waiver of Section 414 of the Stafford Act. Section 414 of the Stafford Act (42 U.S.C. 5181) provides that ‘‘Notwithstanding any other provision of law, no person otherwise eligible for any kind of replacement housing payment under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Pub. L. 91–646) [42 U.S.C. 4601 et seq.] [‘‘URA’’] shall be denied such eligibility as a result of his being unable, because of a major disaster as determined by the E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices President, to meet the occupancy requirements set by [the URA]’’. Accordingly, homeowner occupants and tenants displaced from their homes as a result of the identified disaster and who would have otherwise been displaced as a direct result of any acquisition, rehabilitation, or demolition of real property for a federally funded program or project may become eligible for a replacement housing payment notwithstanding their inability to meet occupancy requirements prescribed in the URA. Section 414 of the Stafford Act (including its implementing regulation at 49 CFR 24.403(d)(1)), is waived to the extent that it would apply to real property acquisition, rehabilitation or demolition of real property for a CDBG– DR funded project commencing more than one year after the Presidentially declared disaster undertaken by the grantees, or subrecipients, provided that the project was 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. The Secretary has the authority to waive provisions of the Stafford Act and its implementing regulations that the Secretary administers in connection with the obligation of funds made available by this notice, or the grantees’ use of these funds. The Department has determined that good cause exists for a waiver and that such waiver is not inconsistent with the overall purposes of title I of the HCD Act. (1) The waiver will simplify the administration of the disaster recovery process and reduce the administrative burden associated with the implementation of Stafford Act Section 414 requirements for projects commencing more than one year after the date of the Presidentially declared disaster considering the majority of such persons displaced by the disaster will have returned to their dwellings or found another place of permanent residence. (2) This waiver does not apply with respect to persons that meet the occupancy requirements to receive a replacement housing payment under the URA nor does it apply to persons displaced or relocated temporarily by other HUD-funded programs or projects. Such persons’ eligibility for relocation assistance and payments under the URA is not impacted by this waiver. 24. Environmental requirements. a. Clarifying note on the process for environmental release of funds when a VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 State carries out activities directly. Usually, a State distributes CDBG funds to local governments and takes on HUD’s role in receiving environmental certifications from the grant recipients and approving releases of funds. For this grant, HUD will allow a State grantee to also carry out activities directly, in addition to distributing funds to subrecipients. Thus, per 24 CFR 58.4, when a State carries out activities directly, the State must submit the Certification and Request for Release of Funds to HUD for approval. b. Adoption of another agency’s environmental review. In accordance with the Appropriations Act, grant recipients of Federal funds that use such funds to supplement Federal assistance provided under sections 402, 403, 404, 406, 407, or 502 of the Stafford Act may adopt, without review or public comment, any environmental review, approval, or permit performed by a Federal agency, and such adoption shall satisfy the responsibilities of the recipient with respect to such environmental review, approval, or permit that is required by the HCD Act. The grant recipient must notify HUD in writing of its decision to adopt another agency’s environmental review. The grant recipient must retain a copy of the review in the grantee’s environmental records. c. Unified Federal Review. Section 1106 or the Sandy Recovery Improvement Act (Div. B of Pub. L. 113– 2, enacted January 29, 3013) directed the Administration to ‘‘establish an expedited and unified interagency review process to ensure compliance with environmental and historic requirements under Federal law relating to disaster recovery projects, in order to expedite the recovery process, consistent with applicable law.’’ The process aims to coordinate environmental and historic preservation reviews to expedite planning and decision-making for disaster recovery projects. This can improve the Federal Government’s assistance to States, local, and tribal governments; communities; families; and individual citizens as they recover from future Presidentially declared disasters. Grantees receiving an allocation of funds under this notice are encouraged to participate in this process as one means of expediting recovery. Tools for the unified interagency review process (UFR) process can be found here: https://www.fema.gov/unifiedfederal-environmental-and-historicpreservation-review-presidentiallydeclared-disasters. d. Release of funds. In accordance with the Appropriations Act, and notwithstanding 42 U.S.C. 5304(g)(2), PO 00000 Frm 00017 Fmt 4701 Sfmt 4703 5859 the Secretary may, upon receipt of a Request for Release of Funds and Certification, immediately approve the release of funds for an activity or project assisted with allocations under this notice if the recipient has adopted an environmental review, approval, or permit under subparagraph b. above, or the activity or project is categorically excluded from review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). e. Historic preservation reviews. To facilitate expedited historic preservation reviews under section 106 of the National Historic Preservation Act of 1966 (54 U.S.C. Section 306108), HUD strongly encourages grantees to allocate general administration funds to retain a qualified historic preservation professional, and support the capacity of the State Historic Preservation Officer/Tribal Historic Preservation Officer to review CDBG–DR projects. For more information on qualified historic preservation professional qualifications standards see https:// www.nps.gov/history/local-law/arch_ stnds_9.htm. f. Tiered environmental reviews. HUD strongly encourages grantees as Responsible Entities to develop a Tiered approach to streamline the environmental review process for single family housing programs. Tiering, as defined in 40 CFR 1508.28, is a means of making the environmental review process more efficient by allowing parties to ‘‘eliminate repetitive discussions of the same issues and to focus on the actual issues ripe for decision at each level of environmental review’’ (40 CFR 1502.20). Tiering is appropriate when a Responsible Entity is evaluating a single-family housing program with similar activities within a defined local geographic area and timeframe (e.g., rehabilitating singlefamily homes within a city district or county over the course of 1 to 5 years) but where the specific sites and activities are not yet known. A tiered review consists of two stages: A broad-level review and subsequent site-specific reviews. The broad-level review should identify and evaluate the issues that can be fully addressed and resolved, notwithstanding possible limited knowledge of the project. In addition, it must establish the standards, constraints, and processes to be followed in the site-specific reviews. An 8-Step Decision Making Process for Floodplains and Wetlands, including early and final public notices can be completed on a county-wide basis for single-family housing programs funded through CDBG–DR. As individual sites are selected for review, the site-specific E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 5860 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices reviews evaluate the remaining issues based on the policies established in the broad-level review. Together, the broadlevel review and all site-specific reviews will collectively comprise a complete environmental review addressing all required elements. Public notice and the Request for Release of Funds (HUDForm 7015.15) are processed at the broad-level, eliminating the need for publication at the site-specific level. However, funds cannot be spent or committed on a specific site or activity until the site-specific review have been completed for the site. 25. Duplication of benefits. Section 312 of the Stafford Act, as amended, generally prohibits any person, business concern, or other entity from receiving financial assistance with respect to any part of a loss resulting from a major disaster for which such person, business concern, or other entity has received financial assistance under any other program or from insurance or any other source. To comply with Section 312, each grantee must ensure that each activity provides assistance to a person or entity only to the extent that the person or entity has a disaster recovery need that has not been fully met. Grantees are subject to the requirements of a separate notice explaining the duplication of benefit requirements, entitled ‘‘Clarification of Duplication of Benefits Requirements Under the Stafford Act for Community Development Block Grant (CDBG) Disaster Recovery Grantees’’ (76 FR 71060, published November 16, 2011). 26. Procurement. State grantees must comply with the procurement requirements at 24 CFR 570.489(g) and evaluate the cost or price of the product or service. State grantees shall establish requirements for procurement policies and procedures for local governments and subrecipients based on full and open competition consistent with the requirements of 24 CFR 570.489(g), and shall require an evaluation of the cost or price of the product or service. Additionally, if the State agency designated as the administering agency chooses to provide funding to another State agency, the administering agency may specify in its procurement policies and procedures whether the agency implementing the program must follow the procurement policies and procedures that the administering agency is subject to, or whether the agency must follow the same policies and procedures to which other local governments and subrecipients are subject. HUD may request periodic updates from any grantee that uses contractors. A contractor is a third-party person or VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 organization from which the grantee acquires good or services through a procurement process, consistent with the procurement requirements in the CDBG program regulations. HUD is establishing an additional alternative requirement for all contracts with contractors used to provide discrete services or deliverables only, as follows: a. The grantee (or procuring entity) is required to clearly state the period of performance or date of completion in all contracts; b. The grantee (or procuring entity) must incorporate performance requirements and liquidated damages into each procured contract. Contracts that describe work performed by general management consulting services need not adhere to this requirement; and c. The grantee (or procuring entity) may contract for administrative support but may not delegate or contract to any other party any inherently governmental responsibilities related to management of the grant, such as oversight, policy development, monitoring, internal auditing, and financial management. Technical assistance resources for procurement are available to grantees either through HUD staff or through technical assistance providers engaged by HUD or a grantee. 27. Public website. HUD is requiring each grantee to maintain a public website that provides information accounting for how all grant funds are used and managed/administered. The creation and maintenance of the public website is one component of the Department’s certification of a grantee’s proficient financial controls and procurement processes and adequate procedures for proper grants management as provided in paragraph A.1.a of section VI. of this notice. To meet this requirement, each grantee must make the following items available on its website: The action plan (including all amendments); the current approved DRGR action plan; each QPR (as created using the DRGR system); citizen participation requirements; procurement policies and procedures; description of services or goods currently being procured by the grantee; a copy of contracts the grantee has procured directly; and a summary of all procured contracts, including those procured by the grantee, recipients, or subrecipients (e.g., a summary list of procurements, the phase of the procurement, requirements for proposals, and any liquidation of damages associated with a contractor’s failure or inability to implement the contract, etc.). The grantee should post only contracts as defined in 2 CFR 200.22. To assist grantees in preparing PO 00000 Frm 00018 Fmt 4701 Sfmt 4703 the procurement summary, HUD has developed a template (the Contract Reporting Template). The template can be accessed at: https:// www.hudexchange.info/cdbg-dr/cdbgdr-laws-regulations-and-federal-registernotices/. Each grantee is required to use this template and attach an updated version to the DRGR system each quarter as part of its QPR submissions. Updated summaries must also be posted monthly on each grantee’s website. 28. Timely distribution of funds. The Appropriations Act, as amended, requires that funds provided under the Act be expended within two years of the date that HUD obligates funds to a grantee and authorizes the Office of Management and Budget (OMB) to provide a waiver of this requirement. In the absence of a waiver for this requirement, each grantee is required to expend all obligated funds within two years of HUD’s execution of the grant agreement or amended grant agreement that obligates those funds. In addition, the provisions at 24 CFR 570.494 and 24 CFR 570.902 regarding timely distribution and expenditure of funds are waived and an alternative requirement established, providing that each grantee must also expend 100 percent of its allocation of CDBG–DR funds on eligible activities within 6 years of HUD’s execution of the initial grant agreement. 29. Review of continuing capacity to carry out CDBG-funded activities in a timely manner. If HUD determines that the grantee has not carried out its CDBG–DR activities and certifications in accordance with the requirements in this notice, HUD will undertake a further review to determine whether or not the grantee has the continuing capacity to carry out its activities in a timely manner. In making the determination, the Department will consider the nature and extent of the recipient’s performance deficiencies, types of corrective actions the recipient has undertaken, and the success or likely success of such actions, and apply the corrective and remedial actions specified in paragraph A.30 (below) of section VI of this notice. 30. Corrective and remedial actions. To ensure compliance with the requirements of the Appropriations Act and to effectively administer the CDBG– DR program in a manner that facilitates recovery, particularly the alternative requirements permitting States to act directly to carry out eligible activities, HUD is waiving 42 U.S.C. 5304(e) to the extent necessary to establish the following alternative requirement: HUD may undertake corrective and remedial actions for States in accordance with the E:\FR\FM\09FEN2.SGM 09FEN2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices authorities applicable to entitlement grantees in subpart O (including corrective and remedial actions in 24 CFR 570.910, 570.911, and 570.913) or under subpart I of the CDBG regulations at 24 CFR part 570. In response to a deficiency, HUD may issue a warning letter followed by a corrective action plan that may include a management plan which assigns responsibility for further administration of the grant to specific entities or persons. Failure to comply with a corrective action may result in the termination, reduction or limitation of payments to grantees receiving funds under this notice. 31. Reduction, withdrawal, or adjustment of a grant, or other appropriate action. Prior to a reduction, withdrawal, or adjustment of a CDBG– DR grant, or other actions taken pursuant to this section, the recipient shall be notified of the proposed action and be given an opportunity for an informal consultation. Consistent with the procedures described in this notice, the Department may adjust, reduce, or withdraw the CDBG–DR grant or take other actions as appropriate, except for funds that have been expended for eligible, approved activities. sradovich on DSK3GMQ082PROD with NOTICES2 B. Housing and Related Floodplain Issues 32. Housing-related eligibility waivers. The broadening of eligible activities under the HCD Act is necessary following major disasters in which large numbers of affordable housing units have been damaged or destroyed, as is the case of the disasters eligible under this notice. Therefore, 42 U.S.C. 5305(a)(24)(A) and (D) is waived to the extent necessary to allow: (1) Homeownership assistance for households earning up to 120 percent of the area median income; and (2) down payment assistance for up to 100 percent of the down payment. While homeownership assistance may be provided to households earning up to 120 percent of the area median income, only those funds used for households with up to 80 percent of the area median income may qualify as meeting the lowand moderate-income person benefit national objective. In addition, 42 U.S.C. 5305(a) and 24 CFR 570.207(b)(3) is waived and alternative requirements adopted to the extent necessary to permit new housing construction, and to require the following construction standards on structures constructed or rehabilitated with CDBG–DR funds as part of activities eligible under 42 U.S.C. 5305(a). All references to ‘‘substantial damage’’ and ‘‘substantial VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 improvement’’ shall be as defined in 44 CFR 59.1 unless otherwise noted. a. Green Building Standard for Replacement and New Construction of Residential Housing. Grantees must meet the Green Building Standard in this subparagraph for: (i) All new construction of residential buildings and (ii) all replacement of substantially damaged residential buildings. Replacement of residential buildings may include reconstruction (i.e., demolishing and rebuilding a housing unit on the same lot in substantially the same manner) and may include changes to structural elements such as flooring systems, columns, or load bearing interior or exterior walls. b. Meaning of Green Building Standard. For purposes of this notice, the Green Building Standard means the grantee will require that all construction covered by subparagraph a, above, meet an industry-recognized standard that has achieved certification under at least one of the following programs: (i) ENERGY STAR (Certified Homes or Multifamily High-Rise), (ii) Enterprise Green Communities, (iii) LEED (New Construction, Homes, Midrise, Existing Buildings Operations and Maintenance, or Neighborhood Development), (iv) ICC–700 National Green Building Standard, (v) EPA Indoor AirPlus (ENERGY STAR a prerequisite), or (vi) any other equivalent comprehensive green building program acceptable to HUD. Grantees must identify which Green Building Standard will be used in the program policies and procedures. c. Standards for rehabilitation of nonsubstantially damaged residential buildings. For rehabilitation other than that described in subparagraph a, above, grantees must follow the guidelines specified in the HUD CPD Green Building Retrofit Checklist, available at https://www.hudexchange.info/ resource/3684/guidance-on-the-cpdgreen-building-checklist/. Grantees must apply these guidelines to the extent applicable to the rehabilitation work undertaken, including the use of mold resistant products when replacing surfaces such as drywall. When older or obsolete products are replaced as part of the rehabilitation work, rehabilitation is required to use ENERGY STAR-labeled, WaterSense-labeled, or Federal Energy Management Program (FEMP)designated products and appliances. For example, if the furnace, air conditioner, windows, and appliances are replaced, the replacements must be ENERGY STAR-labeled or FEMP-designated products; WaterSense-labeled products (e.g., faucets, toilets, showerheads) must be used when water products are replaced. Rehabilitated housing may PO 00000 Frm 00019 Fmt 4701 Sfmt 4703 5861 also implement measures recommended in a Physical Condition Assessment (PCA) or Green Physical Needs Assessment (GPNA). d. Implementation of green building standards. (i) For construction projects completed, underway, or under contract prior to the date that assistance is approved for the project, the grantee is encouraged to apply the applicable standards to the extent feasible, but the Green Building Standard is not required. (ii) For specific required equipment or materials for which an ENERGY STAR- or WaterSense-labeled or FEMP-designated product does not exist, the requirement to use such products does not apply. e. Elevation standards for new construction, repair of substantial damage, or substantial improvement. The following elevation standards apply to new construction, repair of substantial damage, or substantial improvement of structures located in an area delineated as a flood hazard area or equivalent in FEMA’s data source identified in 24 CFR 55.2(b)(1). All structures, defined at 44 CFR 59.1, designed principally for residential use and located in the 100-year (or 1 percent annual chance) floodplain that receive assistance for new construction, repair of substantial damage, or substantial improvement, as defined at 24 CFR 55.2(b)(10), must be elevated with the lowest floor, including the basement, at least two feet above the base flood elevation. Mixed-use structures with no dwelling units and no residents below two feet above base flood elevation, must be elevated or floodproofed, in accordance with FEMA floodproofing standards at 44 CFR 60.3(c)(3)(ii) or successor standard, up to at least two feet above base flood elevation. Please note that grantees should review the UFAS accessibility checklist available at https://www.hudexchange.info/ resource/796/ufas-accessibilitychecklist/ and the HUD Deeming Notice, 79 FR 29671 (May 23, 2014) to ensure that these structures comply with accessibility requirements. All Critical Actions, as defined at 24 CFR 55.2(b)(3), within the 500-year (or 0.2 percent annual chance) floodplain must be elevated or floodproofed (in accordance with the FEMA standards) to the higher of the 500-year floodplain elevation or three feet above the 100year floodplain elevation. If the 500-year floodplain is unavailable, and the Critical Action is in the 100-year floodplain, then the structure must be elevated or floodproofed at least three feet above the 100-year floodplain elevation. Critical Actions are defined as an ‘‘activity for which even a slight E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 5862 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices chance of flooding would be too great, because such flooding might result in loss of life, injury to persons or damage to property.’’ For example, Critical Actions include hospitals, nursing homes, police stations, fire stations and principal utility lines. Applicable State, local, and tribal codes and standards for floodplain management that exceed these requirements, including elevation, setbacks, and cumulative substantial damage requirements, must be followed. f. Broadband infrastructure in housing. Any substantial rehabilitation, as defined by 24 CFR 5.100, or new construction of a building with more than four rental units must include installation of broadband infrastructure, except where the grantee documents that: (a) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible; (b) the cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or (c) the structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible. g. Resilient Home Construction Standard. Grantees are strongly encouraged to incorporate a Resilient Home Construction Standard, meaning that all construction covered by subparagraph (a) meet an industryrecognized standard such as those set by the FORTIFIED HomeTM Gold level for new construction of single-family, detached homes; and FORTIFIED HomeTM Silver level for reconstruction of the roof, windows and doors; or FORTIFIED HomeTM Bronze level for repair or reconstruction of the roof; or any other equivalent comprehensive resilient or disaster resistant building program. Further, grantees are strongly encouraged to meet the FORTIFIED HomeTM Bronze level standard for roof repair or reconstruction, for all construction covered under subparagraph B.32.c. FORTIFIED HomeTM is a risk-reduction program providing construction standards for new homes and retrofit standards for existing homes, which will increase a home’s resilience to natural hazards, including high wind, hail, and tropical storms. Insurers can provide discounts for homeowner’s insurance for properties certified as FORTIFIED. Grantees should advise property owners to contact their insurance agent for current information on what discounts may be available. More information is also available at: https:// VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 disastersafety.org/fortified/fortifiedhome/. 33. Addressing Unmet Public Housing Needs. The grantee must identify in its action plan how it will address the rehabilitation, mitigation, and new construction needs of each disasterimpacted PHA within its jurisdiction, if applicable. The grantee must work directly with impacted PHAs in identifying necessary and reasonable costs and ensure that adequate funding from all available sources, including CDBG–DR grant funds, are dedicated to addressing the unmet needs of damaged public housing (e.g., FEMA, insurance, and funds available from programs administered by HUD’s Office of Public and Indian Housing). In the rehabilitation, reconstruction and replacement of public housing provided for in the action plan pursuant to paragraph A.2.a.3 of section VI of this notice, each grantee must identify funding to specifically address the unmet needs described in this subparagraph. 34. Addressing Unmet Affordable Rental Housing Needs. The grantee must identify in its action plan how it will address the rehabilitation, reconstruction, replacement, and new construction rental housing that is affordable to low- and moderate-income households in the most impacted and distressed areas and ensure that adequate funding from all available sources, including CDBG–DR grant funds, are dedicated to addressing the unmet needs identified in its action plan pursuant to paragraph A.2.a.3 of section VI of this notice. To meet the low-moderate housing national objective, affordable rental housing funded under this notice must be rented to a low- and moderate-income person at affordable rents. The grantee must impose a minimum affordability period of twenty (20) years enforced with recorded use restrictions or other mechanisms to ensure that rental housing remains affordable for the required period of time. The action plan must, at a minimum, provide (1) a definition of ‘‘affordable rents’’; (2) the income limits for tenants of rental housing; (3) and minimum affordability period of twenty (20) years. 35. Housing incentives in disasteraffected communities. Incentive payments are generally offered in addition to other programs or funding (such as insurance), to encourage households to relocate in a suitable housing development or an area promoted by the community’s comprehensive recovery plan. For example, a grantee may offer an incentive payment (possibly in addition PO 00000 Frm 00020 Fmt 4701 Sfmt 4703 to a buyout payment) for households that volunteer to relocate outside of floodplain or to a lower-risk area. Therefore, 42 U.S.C. 5305(a) and associated regulations are waived to the extent necessary to allow the provision of housing incentives. These grantees must maintain documentation, at least at a programmatic level, describing how the amount of assistance was determined to be necessary and reasonable, and the incentives must be in accordance with the grantee’s approved action plan and published program design(s). This waiver does not permit a compensation program. Additionally, a grantee may require the housing incentive to be used for a particular purpose by the household receiving the assistance. In undertaking a larger scale migration or relocation recovery effort that is intended to move households out of high-risk areas, the grantee should consider how it can protect and sustain the impacted community and its assets. Grantees must also weigh the benefits and costs, including anticipated insurance costs, of redeveloping highrisk areas that were impacted by a disaster. Accordingly, grantees are prohibited from offering incentives to return households to disaster-impacted floodplains, unless the grantee can demonstrate to HUD how it will resettle such areas in a way that mitigates the risks of future disasters and increasing insurance costs resulting from continued occupation of high-risk areas, through mechanisms that can reduce risks and insurance costs, such as new land use development plans, building codes or construction requirements, protective infrastructure development, or through restrictions on future disaster assistance to such properties. When undertaking housing incentive activities, to demonstrate that an incentive meets the low- and moderateincome housing national objective, grantees must meet all requirements of the HCD Act and the criteria for the Low/Mod Housing Incentive (LMHI) national objectives for the use of housing incentives as described in paragraph B.38 of section VI. 36. Limitation on emergency grant payments—interim mortgage assistance. 42 U.S.C. 5305(a)(8), 24 CFR 570.207(b)(4), and 24 CFR 1003.207(b)(4) are modified to the extent necessary to extend interim mortgage assistance to qualified individuals from 3 months to up to 20 months. Interim mortgage assistance is typically used in conjunction with a buyout program, or when the rehabilitation or reconstruction of single-family housing extends beyond 3 E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices months, during which mortgage payments may be due but the home is uninhabitable. Thus, this interim assistance will be critical for many households facing financial hardship during this period. Grantees may use interim housing mortgage assistance payments along with rehabilitation/ reconstruction assistance to expedite recovery assistance to homeowners, but must establish performance milestones for the rehabilitation/reconstruction that are to be met by the homeowner in order to receive the interim mortgage assistance payments. A grantee using this alternative requirement must document, in its policies and procedures, how it will determine the amount of assistance to be provided is necessary and reasonable. 37. Acquisition of real property; flood and other buyouts. Grantees under this notice are able to carry out property acquisition for a variety of purposes. However, the term ‘‘buyouts’’ as referenced in this notice refers to acquisition of properties located in a floodway or floodplain that is intended to reduce risk from future flooding or the acquisition of properties in Disaster Risk Reduction Areas as designated by the grantee and defined below. HUD is providing alternative requirements for consistency with the application of other Federal resources commonly used for this type of activity. Grantees are encouraged to use buyouts strategically, as a means of acquiring contiguous parcels of land for uses compatible with open space, recreational, natural floodplain functions, other ecosystem restoration, or wetlands management practices. To the maximum extent practicable, grantees should avoid circumstances in which parcels that could not be acquired through a buyout remain alongside parcels that have been acquired through the grantee’s buyout program. Grantees are reminded that real property acquisition with CDBG– DR funding, including buyout, is subject to the URA, including the real property acquisitions requirements at 49 CFR part 24, subpart B, as modified at paragraph A.23 of section VI of this notice. a. Clarification of ‘‘Buyout’’ and ‘‘Real Property Acquisition’’ activities. Grantees that choose to undertake a buyout program have the discretion to determine the appropriate valuation method, including paying either predisaster or post-disaster fair market value (FMV). In most cases, a program that provides pre-disaster FMV to buyout applicants provides compensation at an amount greater than the post-disaster FMV. When the VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 purchase price exceeds the current FMV, any CDBG–DR funds in excess of the FMV are considered assistance to the seller, thus making the seller a beneficiary of CDBG–DR assistance. If the seller receives assistance as part of the purchase price, this may have implications for duplication of benefits calculations or for demonstrating national objective criteria, as discussed below. However, a program that provides post-disaster FMV to buyout applicants merely provides the actual value of the property; thus, the seller is not considered a beneficiary of CDBG– DR assistance. Regardless of purchase price, all buyout activities are a type of acquisition of real property (as permitted by 42 U.S.C. 5305(a)(1)). However, only acquisitions that meet the definition of a ‘‘buyout’’ are subject to the post-acquisition land use restrictions imposed by this notice (subparagraph b. below). The key factor in determining whether the acquisition is a buyout is whether the intent of the purchase is to reduce risk of property damage in a floodplain or a Disaster Risk Reduction Area. To conduct a buyout in a Disaster Risk Reduction Area, the grantee must establish criteria in its policies and procedures to designate the area subject to the buyout, pursuant to the following requirements: (1) The hazard must have been caused or exacerbated by the Presidentially declared disaster for which the grantee received its CDBG–DR allocation; (2) the hazard must be a predictable environmental threat to the safety and well-being of program beneficiaries, as evidenced by the best available data (e.g. FEMA Repetitive Loss Data) and science; and (3) the Disaster Risk Reduction Area must be clearly delineated so that HUD and the public may easily determine which properties are located within the designated area. The distinction between buyouts and other types of acquisitions is important, because grantees may only redevelop an acquired property if the property is not acquired through a buyout program (i.e., the purpose of acquisition was something other than risk reduction). When acquisitions are not acquired through a buyout program, the purchase price must be consistent with applicable uniform cost principles (and the predisaster FMV may not be used). b. Buyout requirements: (1) Any property acquired, accepted, or from which a structure will be removed pursuant to the project will be dedicated and maintained in perpetuity for a use that is compatible with open space, recreational, or floodplain and wetlands management practices. PO 00000 Frm 00021 Fmt 4701 Sfmt 4703 5863 (2) No new structure will be erected on property acquired, accepted, or from which a structure was removed under the acquisition or relocation program other than: (a) A public facility that is open on all sides and functionally related to a designated open space (e.g., a park, campground, or outdoor recreation area); (b) a rest room; or (c) a flood control structure, provided that structure does not reduce valley storage, increase erosive velocities, or increase flood heights on the opposite bank, upstream, or downstream and that the local floodplain manager approves, in writing, before the commencement of the construction of the structure. (3) After receipt of the assistance, with respect to any property acquired, accepted, or from which a structure was removed under the acquisition or relocation program, no subsequent application for additional disaster assistance for any purpose or to repair damage or make improvements of any sort will be made by the owner of the buyout property (including subsequent owners) to any Federal entity in perpetuity. The entity acquiring the property may lease it to adjacent property owners or other parties for compatible uses in return for a maintenance agreement. Although Federal policy encourages leasing rather than selling such property, the property may also be sold. In all cases, a deed restriction or covenant running with the property must require that the buyout property be dedicated and maintained for compatible uses in perpetuity. (4) Grantees have the discretion to determine an appropriate valuation method (including the use of pre-flood value or post-flood value as a basis for property value). However, in using CDBG–DR funds for buyouts, the grantee must uniformly apply whichever valuation method it chooses. (5) All buyout activities must be classified using the ‘‘buyout’’ activity type in the DRGR system. (6) Any State grantee implementing a buyout program or activity must consult with affected local governments. (7) When undertaking buyout activities, to demonstrate that a buyout meets the low- and moderate-income housing national objective, grantees must meet all requirements of the HCD Act and applicable regulatory criteria described below. Grantees are encouraged to consult with HUD prior to undertaking a buyout program with the intent of using the low- and moderate-income housing (LMH) national objective. 42 U.S.C. 5305(c)(3) provides that any assisted activity that involves the acquisition or E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 5864 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices rehabilitation of property to provide housing shall be considered to benefit persons of low- and moderate-income only to the extent such housing will, upon completion, be occupied by such persons. In addition, the State CDBG regulations at 24 CFR 570.483(b)(3), entitlement CDBG regulations at 24 CFR 570.208(a)(3), and Indian CDBG regulations at 24 CFR 1003.208(c) apply the LMH national objective to an eligible activity carried out for the purpose of providing or improving permanent residential structures that, upon completion, will be occupied by low- and moderate-income households. Therefore, a buyout program that merely pays homeowners to leave their existing homes does not result in a low- and moderate-income household occupying a residential structure and, thus, cannot meet the requirements of the LMH national objective. Buyout programs that assist low- and moderate-income persons can be structured in one of the following ways: (a) The buyout program combines the acquisition of properties with another direct benefit—Low- and ModerateIncome housing activity, such as down payment assistance—that results in occupancy and otherwise meets the applicable LMH national objective criteria; (b) The program meets the low- and moderate-income area benefit criteria as defined in this notice, to demonstrate national objective compliance, provided that the grantee can document that the properties acquired through buyouts will be used in a way that benefits all of the residents in a particular area where at least 51 percent of the residents are low- and moderate-income persons. When using the area benefit approach, grantees must define the service area based on the end use of the buyout properties; or (c) The program meets the criteria for the low- and moderate-income limited clientele national objective, including the prohibition on the use of the limited clientele national objective when an activity’s benefits are available to all residents of the area. A buyout program could meet the national objective criteria for the limited clientele national objective if it restricts buyout program eligibility to exclusively low- and moderate-income persons, and the buyout provides an actual benefit to the low- and moderate-income sellers by providing pre-disaster valuation uniformly to those who participate in the program. (d) The program meets the criteria for the Low/Mod Buyout (LMB) or Low/ Mod Housing Incentive (LMHI) national objectives for buyouts and the use of VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 housing incentives as authorized in the Department’s August 7, 2017 Federal Register notice at 82 FR 36825 and described in paragraph B.38 of section VI in this notice. c. Redevelopment of acquired properties. (1) Grantees may redevelop an acquired property if the property is not acquired through a buyout program and the purchase price is based on the property’s post-disaster value, consistent with applicable cost principles (the pre-disaster value may not be used). In addition to the purchase price, grantees may opt to provide relocation assistance or housing incentives to the owner of a property that will be redeveloped if the property is purchased by the grantee or subrecipient through voluntary acquisition, and the owner’s need for additional assistance is documented. (2) In carrying out acquisition activities, grantees must ensure they are in compliance with their long-term redevelopment plans. 38. Additional LMI National Objective Criteria for Buyouts and Housing Incentives. 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 in this notice must follow guidelines outlined in paragraph 35 of section VI of this notice. 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 HCD Act 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 PO 00000 Frm 00022 Fmt 4701 Sfmt 4703 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 the two new LMI national objective criteria for buyouts (LMB) and housing incentives (LMHI) that benefit LMI households that use CDBG–DR funding provided pursuant to this notice. 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 activity that benefits LMI households 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 (including optional relocation assistance) is greater than the post-disaster (current) 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. 39. Alternative requirement for housing rehabilitation—assistance for second homes. The Department is instituting an alternative requirement to the rehabilitation provisions at 42 U.S.C. 5305(a)(4) as follows: Properties that served as second homes at the time of the disaster, or following the disaster, are not eligible for rehabilitation assistance or housing incentives. A second home is defined under this notice as a home that is not the primary E:\FR\FM\09FEN2.SGM 09FEN2 sradovich on DSK3GMQ082PROD with NOTICES2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices residence of the owner, a tenant, or any occupant at the time of the storm or at the time of application for assistance. Grantees may adopt policies and procedures that provide for limited exceptions to providing assistance to a second home in order to meet specific disaster recovery needs (e.g., adding affordable housing capacity); provided however that such exceptions are developed in consultation with and approved by HUD prior to implementation. Grantees can verify a primary residence using a variety of documentation including, but not limited to, voter registration cards, tax returns, homestead exemptions, driver’s licenses and rental agreements. 40. Flood insurance. Grantees, recipients, and subrecipients must implement procedures and mechanisms to ensure that assisted property owners comply with all flood insurance requirements, including the purchase and notification requirements described below, prior to providing assistance. For additional information, please consult with the field environmental officer in the local HUD field office or review the guidance on flood insurance requirements on HUD’s website. a. Flood insurance purchase requirements. HUD does not prohibit the use of CDBG–DR funds for existing residential buildings in a Special Flood Hazard Area (or 100-year floodplain). However, Federal, State, local, and tribal laws and regulations related to both flood insurance and floodplain management must be followed, as applicable. With respect to flood insurance, a HUD-assisted homeowner of a property located in a Special Flood Hazard Area must obtain and maintain flood insurance in the amount and duration prescribed by FEMA’s National Flood Insurance Program. Section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a) mandates the purchase of flood insurance protection for any HUD-assisted property within a Special Flood Hazard Area. HUD strongly recommends the purchase of flood insurance outside of a Special Flood Hazard Area for properties that have been damaged by a flood, to better protect property owners from the economic risks of future floods and reduce dependence on Federal disaster assistance in the future, but this is not a requirement. b. Federal assistance to owners remaining in a floodplain. (1) Section 582 of the National Flood Insurance Reform Act of 1994, as amended, (42 U.S.C. 5154a) prohibits flood disaster assistance in certain circumstances. In general, it provides that no Federal disaster relief assistance VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 made available in a flood disaster area may be used to make a payment (including any loan assistance payment) to a person for ‘‘repair, replacement, or restoration’’ for damage to any personal, residential, or commercial property if that person at any time has received Federal flood disaster assistance that was conditioned on the person first having obtained flood insurance under applicable Federal law and the person has subsequently failed to obtain and maintain flood insurance as required under applicable Federal law on such property. This means that a grantee may not provide disaster assistance for the repair, replacement, or restoration of a property to a person who has failed to meet this requirement and must implement a process to check and monitor for compliance. (2) The Department is instituting an alternative requirement to 42 U.S.C. 5305(a)(4) as follows: Grantees receiving funds under this notice are prohibited from providing CDBG–DR assistance for the rehabilitation/reconstruction of a house, if (a) the combined household income is greater than 120% AMI or the national median, (b) the property was located in a floodplain at the time of the disaster, and (c) the property owner did not maintain flood insurance on the damaged property, even when the property owner was not required to obtain and maintain such insurance. When a homeowner located in the floodplain allows their flood insurance policy to lapse, it is assumed that the homeowner is unable to afford insurance and/or is accepting responsibility for future flood damage to the home. HUD is establishing this alternative requirement to ensure that adequate recovery resources are available to assist lower income homeowners who reside in a floodplain but who are unlikely to be able to afford flood insurance. Higher income homeowners who reside in a floodplain, but who failed to secure or decided to not maintain their flood insurance, should not be assisted at the expense of those lower income households. Therefore, a grantee may only provide assistance for the rehabilitation/ reconstruction of a house located in a floodplain if: (a) The homeowner had flood insurance at the time of the qualifying disaster and still has unmet recovery needs; or (b) the household earns less than the greater of 120% AMI or the national median and has unmet recovery needs. (3) Section 582 also imposes a responsibility on a grantee that receives CDBG–DR funds or that designates annually appropriated CDBG funds for disaster recovery. That responsibility is PO 00000 Frm 00023 Fmt 4701 Sfmt 4703 5865 to inform property owners receiving disaster assistance that triggers the flood insurance purchase requirement that they have a statutory responsibility to notify any transferee of the requirement to obtain and maintain flood insurance in writing and to maintain such written notification in the documents evidencing the transfer of the property, and that the transferring owner may be liable if he or she fails to do so. These requirements are enumerated at https:// uscode.house.gov/view.xhtml?req= granuleid:USC-prelim-title42section5154a&num=0&edition=prelim. C. Infrastructure (Public Facilities, Public Improvements) 41. Elevation of Nonresidential Structures. Nonresidential structures must be elevated to the standards described in this paragraph or floodproofed, in accordance with FEMA floodproofing standards at 44 CFR 60.3(c)(3)(ii) or successor standard, up to at least two feet above the 100-year (or 1 percent annual chance) floodplain. All Critical Actions, as defined at 24 CFR 55.2(b)(3), within the 500-year (or 0.2 percent annual chance) floodplain must be elevated or floodproofed (in accordance with the FEMA standards) to the higher of the 500-year floodplain elevation or three feet above the 100year floodplain elevation. If the 500-year floodplain or elevation is unavailable, and the Critical Action is in the 100year floodplain, then the structure must be elevated or floodproofed at least three feet above the 100-year floodplain elevation. Critical Actions are defined as an ‘‘activity for which even a slight chance of flooding would be too great, because such flooding might result in loss of life, injury to persons or damage to property.’’ For example, Critical Actions include hospitals, nursing homes, police stations, fire stations and principal utility lines. Applicable State, local, and tribal codes and standards for floodplain management that exceed these requirements, including elevation, setbacks, and cumulative substantial damage requirements, will be followed. 42. Use of CDBG–DR as Match. As provided by the HCD Act, funds may be used as a matching requirement, share, or contribution for any other Federal program when used to carry out an eligible CDBG–DR activity. This includes programs or activities administered by the FEMA or USACE. By law, (codified in the HCD Act as a note to 105(a)), the amount of CDBG–DR funds that may be contributed to a USACE project is $250,000 or less. Note that the Appropriations Act prohibits the use of CDBG–DR funds for any E:\FR\FM\09FEN2.SGM 09FEN2 5866 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices sradovich on DSK3GMQ082PROD with NOTICES2 activity reimbursable by, or for which funds are also made available by FEMA or USACE. 43. Requirements for flood control structures. Grantees that use CDBG–DR funds to assist flood control structures (i.e., dams and levees) are prohibited from using CDBG–DR funds to enlarge a dam or levee beyond the original footprint of the structure that existed prior to the disaster event. Grantees that use CDBG–DR funds for levees and dams are required to: (1) Register and maintain entries regarding such structures with the U.S. Army Corps of Engineers National Levee Database or National Inventory of Dams; (2) ensure that the structure is admitted in the U.S. Army Corps of Engineers PL 84–99 Rehabilitation Program (Rehabilitation Assistance for Non-Federal Flood Control Projects); (3) ensure the structure is accredited under the FEMA National Flood Insurance Program; (4) enter into DRGR system the exact location of the structure and the area served and protected by the structure; and (5) maintain file documentation demonstrating that the grantee has conducted a risk assessment prior to funding the flood control structure and documentation that the investment includes risk reduction measures. D. Economic Revitalization 44. National Objective Documentation for Economic Development Activities. 24 CFR 570.483(b)(4)(i), 24 CFR 570.506(b)(5), and 24 CFR 1003.208(d) are waived to allow the grantees under this notice to identify the low- and moderate-income jobs benefit by documenting, for each person employed, the name of the business, type of job, and the annual wages or salary of the job. HUD will consider the person income-qualified if the annual wages or salary of the job is at or under the HUD-established income limit for a one-person family. This method replaces the standard CDBG requirement—in which grantees must review the annual wages or salary of a job in comparison to the person’s total household income and size (i.e., the number of persons). Thus, it streamlines the documentation process because it allows the collection of wage data for each position created or retained from the assisted businesses, rather than from each individual household. 45. Public benefit for certain Economic Development activities. The public benefit provisions set standards for individual economic development activities (such as a single loan to a business) and for economic development activities in the aggregate. Currently, public benefit standards limit VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 the amount of CDBG assistance per job retained or created, or the amount of CDBG assistance per low- and moderateincome person to which goods or services are provided by the activity. These dollar thresholds were set two decades ago and can impede recovery by limiting the amount of assistance the grantee may provide to a critical activity. This notice waives the public benefit standards at 42 U.S.C. 5305(e)(3), 24 CFR 570.482(f), 24 CFR 570.209(b) and (d), and 24 CFR 1003.302(c) for only those economic development activities designed to create or retain jobs or businesses (including, but not limited to, long-term, short-term, and infrastructure projects). However, grantees shall collect and maintain documentation in the project file on the creation and retention of total jobs; the number of jobs within certain salary ranges; the average amount of assistance provided per job, by activity or program; and the types of jobs. Additionally, grantees shall report the total number of jobs created and retained and the applicable national objective in the DRGR system. Paragraph (g) of 24 CFR 570.482 is also waived to the extent these provisions are related to public benefit. 46. Clarifying note on Section 3 resident eligibility and documentation requirements. The definition of ‘‘lowincome persons’’ in 12 U.S.C. 1701u and 24 CFR 135.5 is the basis for eligibility as a section 3 resident. A section 3 resident means: (1) A public housing resident; or (2) an individual who resides in the metropolitan area or nonmetropolitan county in which the section 3 covered assistance is expended, and who is: (i) A low-income person or (ii) a very-low-income person. This notice authorizes grantees to determine that an individual is eligible to be considered a section 3 resident if the annual wages or salary of the person are at, or under, the HUD-established income limit for a one-person family for the jurisdiction. This authority does not impact other section 3 resident eligibility requirements in 24 CFR 135.5. All direct recipients of CDBG–DR funding must submit form HUD–60002 annually through the Section 3 Performance Evaluation and Registry System (SPEARS) which can be found on HUD’s website: https:// www.hud.gov/program_offices/fair_ housing_equal_opp/section3/section3/ spears. 47. Waiver and modification of the job relocation clause to permit assistance to help a business return. CDBG requirements prevent program participants from providing assistance PO 00000 Frm 00024 Fmt 4701 Sfmt 4703 to a business to relocate from one labor market area to another if the relocation is likely to result in a significant loss of jobs in the labor market from which the business moved. This prohibition can be a critical barrier to reestablishing and rebuilding a displaced employment base after a major disaster. Therefore, 42 U.S.C. 5305(h), 24 CFR 570.210, 24 CFR 570.482, and 24 CFR 1003.209 are waived to allow a grantee to provide assistance to any business that was operating in the disaster-declared labor market area before the incident date of the applicable disaster and has since moved, in whole or in part, from the affected area to another State or to a labor market area within the same State to continue business. 48. Prioritizing small businesses. To target assistance to small businesses, the Department is instituting an alternative requirement to the provisions at 42 U.S.C. 5305(a) to require grantees to prioritize assisting businesses that meet the definition of a small business as defined by SBA at 13 CFR part 121 or, for businesses engaged in ‘‘farming operations’’ as defined at 7 CFR 1400.3, and that meet the United States Department of Agriculture Farm Service Agency (FSA), criteria that are described at 7 CFR 1400.500, which are used by the FSA to determine eligibility for certain assistance programs. With regard to assistance to businesses engaged in ‘‘farming operations,’’ grantees are advised that in its allocation methodology HUD does not account for crop loss and other agricultural losses in its determination of unmet economic need. Accordingly, HUD advises grantees to pursue sources of assistance other than CDBG–DR funds in order to address needs arising from crop loss or other agricultural losses attributable to the disaster. 49. Clarifying note on the provision of ‘‘working capital’’ grants and loans to businesses. Grantees may provide many forms of assistance to businesses under the provisions of 105(a)(17) of the HCD Act, including ‘‘working capital.’’ In past recovery efforts, grantees have inquired as to how a business’s working capital needs should be calculated. Working capital is one facet of a business’s need after a disaster; it is not, however, the vehicle by which to fund all of a business’s unmet needs. In its simplest form, working capital is defined as ‘‘Current Assets minus Current Liabilities’’ on the business’s balance sheet. In other words, working capital is the amount of cash needed to fund one year’s worth of liabilities (i.e., one year’s worth of mortgage payments and other debt, tax and utilities, yearly wages, and accounts payable) after E:\FR\FM\09FEN2.SGM 09FEN2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices subtracting other current assets such as inventory and accounts receivable. Working capital does not include any expense for any form of construction or expansion of existing facilities, whether ‘‘hard’’ or ‘‘soft’’ costs. Therefore, grantees should not include expenses for construction or expansion of existing facilities in any calculation involving working capital, unless the grantee intends to provide a comprehensive assistance package that is subject to the environmental review requirements of 24 CFR part 58. The provision of working capital constitutes an economic development activity under 24 CFR 58.35(b)(4) and may provide operating costs under 24 CFR 58.35(b)(3) and therefore, per 24 CFR 55.12(c)(1), are not subject to Part 55 unless it includes expenses for construction or expansion of existing facilities. A grantee’s environmental review record must document the determination of this exclusion from environmental review. 50. Prohibiting assistance to private utilities. Funds made available under this notice may not be used to assist a privately-owned utility for any purpose. sradovich on DSK3GMQ082PROD with NOTICES2 E. Certifications and Collection of Information 51. Certifications waiver and alternative requirement. 24 CFR 91.225 and 91.325 are waived. Each grantee receiving a direct allocation under this notice must make the following certifications with its action plan: a. The grantee certifies that it has in effect and is following a residential antidisplacement and relocation assistance plan in connection with any activity assisted with funding under the CDBG program. b. The grantee certifies its compliance with restrictions on lobbying required by 24 CFR part 87, together with disclosure forms, if required by part 87. c. The grantee certifies that the action plan for disaster recovery is authorized under State and local law (as applicable) and that the grantee, and any entity or entities designated by the grantee, and any contractor, subrecipient, or designated public agency carrying out an activity with CDBG–DR funds, possess(es) the legal authority to carry out the program for which it is seeking funding, in accordance with applicable HUD regulations and this notice. The grantee certifies that activities to be undertaken with funds under this notice are consistent with its action plan. d. The grantee certifies that it will comply with the acquisition and relocation requirements of the URA, as amended, and implementing regulations at 49 CFR part 24, except where waivers VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 or alternative requirements are provided for in this notice. e. The grantee certifies that it will comply with section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and implementing regulations at 24 CFR part 135. f. The grantee certifies that it is following a detailed citizen participation plan that satisfies the requirements of 24 CFR 91.115 or 91.105 (except as provided for in notices providing waivers and alternative requirements for this grant). Also, each local government receiving assistance from a State grantee must follow a detailed citizen participation plan that satisfies the requirements of 24 CFR 570.486 (except as provided for in notices providing waivers and alternative requirements for this grant). g. State grantee certifies that it has consulted with affected local governments in counties designated in covered major disaster declarations in the non-entitlement, entitlement, and tribal areas of the State in determining the uses of funds, including the method of distribution of funding, or activities carried out directly by the State. h. The grantee certifies that it is complying with each of the following criteria: (1) Funds will be used solely for necessary expenses related to disaster relief, long-term recovery, restoration of infrastructure and housing and economic revitalization in the most impacted and distressed areas for which the President declared a major disaster in 2016 pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1974 (42 U.S.C. 5121 et seq.). (2) With respect to activities expected to be assisted with CDBG–DR funds, the action plan has been developed so as to give the maximum feasible priority to activities that will benefit low- and moderate-income families. (3) The aggregate use of CDBG–DR funds shall principally benefit low- and moderate-income families in a manner that ensures that at least 70 percent (or another percentage permitted by HUD in a waiver published in an applicable Federal Register notice) of the grant amount is expended for activities that benefit such persons. (4) The grantee will not attempt to recover any capital costs of public improvements assisted with CDBG–DR grant funds, by assessing any amount against properties owned and occupied by persons of low- and moderateincome, including any fee charged or assessment made as a condition of obtaining access to such public improvements, unless: (a) Disaster PO 00000 Frm 00025 Fmt 4701 Sfmt 4703 5867 recovery grant funds are used to pay the proportion of such fee or assessment that relates to the capital costs of such public improvements that are financed from revenue sources other than under this title; or (b) for purposes of assessing any amount against properties owned and occupied by persons of moderate income, the grantee certifies to the Secretary that it lacks sufficient CDBG funds (in any form) to comply with the requirements of clause (a). i. The grantee certifies that the grant will be conducted and administered in conformity with title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d), the Fair Housing Act (42 U.S.C. 3601– 3619), and implementing regulations, and that it will affirmatively further fair housing. j. The grantee certifies that it has adopted and is enforcing the following policies, and, in addition, must certify that they will require local governments that receive grant funds to certify that they have adopted and are enforcing: (1) A policy prohibiting the use of excessive force by law enforcement agencies within its jurisdiction against any individuals engaged in nonviolent civil rights demonstrations; and (2) A policy of enforcing applicable State and local laws against physically barring entrance to or exit from a facility or location that is the subject of such nonviolent civil rights demonstrations within its jurisdiction. k. The grantee certifies that it (and any subrecipient or administering entity) currently has or will develop and maintain the capacity to carry out disaster recovery activities in a timely manner and that the grantee has reviewed the requirements of this notice. The grantee certifies to the accuracy of its Public Law 115–56 Financial Management and Grant Compliance certification checklist, or other recent certification submission, if approved by HUD, and related supporting documentation referenced at A.1.a. under section VI and its Implementation Plan and Capacity Assessment and related submissions to HUD referenced at A.1.b. under section VI. l. The grantee certifies that it will not use CDBG–DR funds for any activity in an area identified as flood prone for land use or hazard mitigation planning purposes by the State, local, or tribal government or delineated as a Special Flood Hazard Area (or 100-year floodplain) in FEMA’s most current flood advisory maps, unless it also ensures that the action is designed or modified to minimize harm to or within the floodplain, in accordance with Executive Order 11988 and 24 CFR part E:\FR\FM\09FEN2.SGM 09FEN2 5868 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices 55. The relevant data source for this provision is the State, local, and tribal government land use regulations and hazard mitigation plans and the latestissued FEMA data or guidance, which includes advisory data (such as Advisory Base Flood Elevations) or preliminary and final Flood Insurance Rate Maps. m. The grantee certifies that its activities concerning lead-based paint will comply with the requirements of 24 CFR part 35, subparts A, B, J, K, and R. n. The grantee certifies that it will comply with environmental requirements at 24 CFR part 58. o. The grantee certifies that it will comply with applicable laws. Warning: Any person who knowingly makes a false claim or statement to HUD may be subject to civil or criminal penalties under 18 U.S.C. 287, 1001 and 31 U.S.C. 3729. VII. Duration of Funding The Appropriations Act, as amended, requires that funds provided under the Act be expended within two years of the date that HUD obligates funds to a grantee. The Act as amended further authorizes the Office of Management and Budget (OMB) to provide a waiver of this requirement. This notice also requires each grantee to expend 100 percent of its allocation of CDBG–DR funds on eligible activities within 6 years of HUD’s initial obligation of funds pursuant to an executed grant agreement. However, in accordance with 31 U.S.C. 1555, HUD shall close the appropriation account and cancel any remaining obligated or unobligated balance 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. In such case, the funds shall not be available for obligation or expenditure for any purpose after the account is closed. 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). Hearingor 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: February 2, 2018. Neal J. Rackleff, Assistant Secretary. Appendix A—Allocation of CDBG–DR Funds to Most Impacted and Distressed Areas Due to 2017 Federally Declared Disasters sradovich on DSK3GMQ082PROD with NOTICES2 VIII. Catalog of Federal Domestic Assistance The Catalog of Federal Domestic Assistance numbers for the disaster recovery grants under this notice are as follows: 14.228 for State CDBG grantees. Background The Supplemental Appropriations for Disaster Relief Requirements, 2017 (Pub. L. 115–56) appropriated $7,400,000,000 through the Community Development Block Grant disaster recovery (CDBG–DR) program for necessary expenses for authorized activities related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from a major disaster declared in 2017, specifically: For an additional amount for ‘‘Community Development Fund’’, $7,400,000,000, . . ., for necessary expenses . . . related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from a major disaster declared in 2017 pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.): Provided, That funds shall be awarded directly to the State or unit of general local government at the discretion of the Secretary: . . . Provided further, That such funds may not be used for activities reimbursable by, or for which funds are made available by, the Federal Emergency Management Agency or the Army Corps of Engineers: . . . It should be noted that the language of Public Law 115–56 permits HUD to deduct up to $10 million from the $7.4 billion for purposes of administration and oversight of the appropriation. HUD has opted to deduct the full $10 million, resulting in a total of $7.39 billion available for allocation. IX. 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 Most Impacted and Distressed Areas As with prior CDBG–DR appropriations, HUD is not obligated to allocate funds for all major disasters declared in 2017. HUD is directed to use the funds ‘‘in the most impacted and distressed areas.’’ HUD has implemented this directive by limiting CDBG–DR formula allocations to jurisdictions with major disasters that meet two standards: VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4703 (1) Individual Assistance/IHP designation. HUD has limited allocations to those disasters where FEMA had determined the damage was sufficient to declare the disaster as eligible to receive Individual and Households Program (IHP) funding. (2) Concentrated damage. HUD has limited the allocations to counties and zip codes with high levels of damage, collectively referred to as ‘‘most impacted areas’’. For this allocation, HUD is using the amount of serious unmet housing need as its measure of concentrated damage and limits the data used for the allocation only to counties exceeding a ‘‘natural break’’ in the data for their total amount of serious unmet housing needs. For purposes of this allocation, the serious unmet housing needs break occurs at $16 million at the county level and $3.5 million for Zip Codes for Texas and Florida and $10 million for counties and $2 million for Zip Codes for the Commonwealth of Puerto Rico (Puerto Rico) and the United States Virgin Islands (Virgin Islands). The calculation for serious unmet housing needs are described below. These allocations are thus based on the unmet costs to repair seriously damaged properties in most impacted areas. These do not capture expected resiliency costs, although grantees may choose to use the CDBG funds for resiliency expenses. The estimated damage is based on the following factors: (1) Repair estimates for seriously damaged owner-occupied units without insurance (with some exceptions) in most impacted areas after FEMA and SBA repair grants or loans; (2) Repair estimates for seriously damaged rental units occupied by renters with income less than 50% of Area Median Income in most impacted areas; and (3) Repair and content loss estimates for small businesses with serious damage denied by SBA. Methods for Estimating Unmet Needs for Housing The data HUD staff have identified as being available to calculate unmet needs for qualifying disasters come from the FEMA Individual Assistance program data on housing-unit damage as of November 8, 2017 for Texas and Florida and as of December 22, 2017 for Puerto Rico and the Virgin Islands. The core data on housing damage for both the unmet housing needs calculation and the concentrated damage are based on home inspection data for FEMA’s Individual Assistance program, and supplemented by SBA data from its Disaster Loan Program. HUD calculates ‘‘unmet housing needs’’ as the number of housing units with unmet needs times the estimated cost to repair those units less repair funds already provided by FEMA and SBA. For the continental U.S., HUD finds its traditional approach of just using real property damage assessments for owneroccupied units continues to be effective. Each of the FEMA inspected owner units are categorized by HUD into one of five categories: • Minor-Low: Less than $3,000 of FEMA inspected real property damage E:\FR\FM\09FEN2.SGM 09FEN2 Federal Register / Vol. 83, No. 28 / Friday, February 9, 2018 / Notices sradovich on DSK3GMQ082PROD with NOTICES2 • Minor-High: $3,000 to $7,999 of FEMA inspected real property damage • Major-Low: $8,000 to $14,999 of FEMA inspected real property damage and/or 1 to 4 feet of flooding on the first floor • Major-High: $15,000 to $28,800 of FEMA inspected real property damage and/or 4 to 6 feet of flooding on the first floor • Severe: Greater than $28,800 of FEMA inspected real property damage or determined destroyed and/or 6 or more feet of flooding on the first floor For Puerto Rico and the Virgin Islands, owner damage is calculated based on both real property and personal property on findings by HUD that this likely is a more accurate estimate of serious homeowner damage in those areas. For these owneroccupied units, the damage grouping would be the higher damage categorization based on the calculation above or: • Minor-Low: Less than $2,500 of FEMA inspected personal property damage • Minor-High: $2,500 to $3,499 of FEMA inspected personal property damage • Major-Low: $3,500 to $4,999 of FEMA inspected personal property damage or 1 to 4 feet of flooding on the first floor • Major-High: $5,000 to $8,999 of FEMA inspected personal property damage or 4 to 6 feet of flooding on the first floor • Severe: Greater than $9,000 of FEMA inspected personal property damage or determined destroyed and/or 6 or more feet of flooding on the first floor To meet the statutory requirement of ‘‘most impacted’’ in this legislative language, homes are determined to have a most impacted or serious level of damage if they have damage of ‘‘major-low’’ or higher. Furthermore, a homeowner is determined to have unmet needs if they reported damage and no insurance to cover that damage and was outside the 1% risk flood hazard area. For all disasters, for homeowners inside the flood hazard area, only homeowners without insurance below 120% of Area Median Income are included in the estimated unmet needs. FEMA does not inspect rental units for real property damage so personal property damage is used as a proxy for unit damage. Each of the FEMA inspected renter units are categorized by HUD into one of five categories: • Minor-Low: Less than $1,000 of FEMA inspected personal property damage • Minor-High: $1,000 to $1,999 of FEMA inspected personal property damage VerDate Sep<11>2014 17:35 Feb 08, 2018 Jkt 244001 • Major-Low: $2,000 to $3,499 of FEMA inspected personal property damage or 1 to 4 feet of flooding on the first floor • Major-High: $3,500 to $7,499 of FEMA inspected personal property damage or 4 to 6 feet of flooding on the first floor • Severe: Greater than $7,500 of FEMA inspected personal property damage or determined destroyed and/or 6 or more feet of flooding on the first floor For rental properties, to meet the statutory requirement of ‘‘most impacted’’ in this legislative language, homes are determined to have a high level of damage if they have damage of ‘‘major-low’’ or higher. That is, they have a FEMA personal property damage assessment of $2,000 or greater or flooding over 1 foot. Furthermore, landlords are presumed to have adequate insurance coverage unless the unit is occupied by a renter with income less than 50% of Area Median Income. Units are occupied by a tenant with income less than 50% of Area Median Income are used to calculate likely unmet needs for affordable rental housing. In Puerto Rico and the Virgin Islands, units are occupied by a tenant with income less than the greater of the Federal poverty level or 50% of Area Median Income are used to calculate likely unmet needs for affordable rental housing. The average cost to fully repair a home for a specific disaster to code within each of the damage categories noted above is calculated using the average real property damage repair costs determined by the Small Business Administration for its disaster loan program for the subset of homes inspected by both SBA and FEMA for each eligible disaster. Because SBA is inspecting for full repair costs, it is presumed to reflect the full cost to repair the home, which is generally more than the FEMA estimates on the cost to make the home habitable. For each household determined to have unmet housing needs (as described above), their estimated average unmet housing need less assumed assistance from FEMA and SBA was calculated for Texas as $58,956 for major damage (low); $72,961 for major damage (high); and $102,046 for severe damage. For Florida: $44,810 for major damage (low); $45,997 for major damage (high); and $67,799 for severe damage. For Puerto Rico and the Virgin Islands: $38,249 for major damage (low); $41,595 for major damage (high); and $66,066 for severe damage. Methods for Estimating Unmet Economic Revitalization Needs Based on SBA disaster loans to businesses, HUD calculates the median real estate and PO 00000 Frm 00027 Fmt 4701 Sfmt 9990 5869 content loss by the following damage categories for each state: • Category 1: real estate + content loss = below 12,000 • Category 2: real estate + content loss = 12,000–30,000 • Category 3: real estate + content loss = 30,000–65,000 • Category 4: real estate + content loss = 65,000–150,000 • Category 5: real estate + content loss = above 150,000 For properties with real estate and content loss of $30,000 or more, HUD calculates the estimated amount of unmet needs for small businesses by multiplying the median damage estimates for the categories above by the number of small businesses denied an SBA loan, including those denied a loan prior to inspection due to inadequate credit or income (or a decision had not been made), under the assumption that damage among those denied at pre-inspection have the same distribution of damage as those denied after inspection. Allocation Calculation Once eligible entities are identified using the above criteria, the allocation to individual grantees represents their proportional share of the estimated unmet needs. For the formula allocation, HUD calculates total serious unmet recovery needs as the aggregate of: • Serious unmet housing needs in most impacted counties or county-equivalents • Serious unmet business needs For Texas, HUD announced an allocation on November 17, 2017, that reflected the 100% calculation of serious unmet housing and business needs as calculated using the methods above less $57.8 million allocated from an earlier appropriation. For Florida, HUD announced an allocation on November 28, 2017, that reflected a 100% calculation of serious unmet housing and business needs. Data were not available for Puerto Rico and the Virgin Islands until late December 2017. The remaining funds ($1.7 billion of $7.4 billion appropriated) are significantly less than the calculated serious unmet housing and business needs, and thus the allocations are only 57% of the estimated serious unmet housing and business needs for Puerto Rico and the Virgin Islands. [FR Doc. 2018–02693 Filed 2–7–18; 11:15 am] BILLING CODE 4210–67–P E:\FR\FM\09FEN2.SGM 09FEN2

Agencies

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 83, Number 28 (Friday, February 9, 2018)]
[Notices]
[Pages 5844-5869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-02693]



[[Page 5843]]

Vol. 83

Friday,

No. 28

February 9, 2018

Part II





Department of Housing and Urban Development





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Allocations, Common Application, Waivers, and Alternative Requirements 
for 2017 Disaster Community Development Block Grant Disaster Recovery 
Grantees; Notice

Federal Register / Vol. 83 , No. 28 / Friday, February 9, 2018 / 
Notices

[[Page 5844]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6066-N-01]


Allocations, Common Application, Waivers, and Alternative 
Requirements for 2017 Disaster 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 allocates $7.39 billion in Community Development 
Block Grant disaster recovery (CDBG-DR) funds appropriated by the 
Supplemental Appropriations for Disaster Relief Requirements, 2017, for 
the purpose of assisting in long-term recovery from 2017 disasters. 
This notice describes applicable waivers and alternative requirements, 
relevant statutory provisions for grants provided under this notice, 
the grant award process, criteria for action plan approval, and 
eligible disaster recovery activities. Given the extent of damage to 
housing in the eligible disaster areas and the very limited data at 
present regarding unmet infrastructure and economic revitalization 
needs, this notice requires each grantee to primarily consider and 
address its unmet housing recovery needs.

DATES: Applicability Date: February 14, 2018.

FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Acting 
Director, Office of Block Grant Assistance, Department of Housing and 
Urban Development, 451 7th Street SW, Room 10166, Washington, DC 20410, 
telephone number 202-708-3587. Persons with hearing or speech 
impairments may access this number via TTY by calling the Federal Relay 
Service at 800-877-8339. Facsimile inquiries may be sent to Ms. Kome at 
202-401-2044. (Except for the ``800'' number, these telephone numbers 
are not toll-free.) Email inquiries may be sent to 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Allocations
II. Use of Funds
III. Management and Oversight of Funds
IV. Authority To Grant Waivers
V. Overview of Grant Process
VI. Applicable Rules, Statutes, Waivers, and Alternative 
Requirements
    A. Grant Administration
    B. Housing and Related Floodplain Issues
    C. Infrastructure
    D. Economic Revitalization
    E. Certifications and Collection of Information
VII. Duration of Funding
VIII. Catalog of Federal Domestic Assistance
IX. Finding of No Significant Impact
Appendix A--Allocation of CDBG-DR Funds to Most Impacted and 
Distressed Areas Due to 2017 Federally Declared Disasters

I. Allocations

    The Supplemental Appropriations for Disaster Relief Requirements, 
2017 (Pub. L. 115-56), approved September 8, 2017 (Appropriations Act) 
makes available $7.4 billion in Community Development Block Grant 
disaster recovery (CDBG-DR) funds for necessary expenses for activities 
authorized under title I of the Housing and Community Development Act 
of 1974 (42 U.S.C. 5301 et seq.) (HCD Act) related to disaster relief, 
long-term recovery, restoration of infrastructure and housing, and 
economic revitalization in the ``most impacted and distressed'' areas 
(identified by HUD using the best available data) resulting from a 
major disaster declared in 2017. This notice allocates $7,390,000,000 
in CDBG-DR funds to assist in long-term recovery from 2017 disasters. 
In addition to the funds allocated in this notice, and in accordance 
with the Appropriations Act, $10,000,000 will be transferred to the 
Department's Office of Community Planning and Development (CPD), 
Program Office Salaries and Expenses, for necessary costs of 
administering and overseeing CDBG-DR funds made available under the 
Appropriations Act. This notice requires each grantee to primarily 
consider and address its unmet housing recovery needs. A grantee may 
also allocate funds to address unmet economic revitalization and 
infrastructure needs, but in doing so, the grantee must identify how 
unmet housing needs will be addressed or how its economic 
revitalization or infrastructure activities will contribute to the 
long-term recovery and restoration of housing in the most impacted and 
distressed areas. The law provides that grants shall be awarded 
directly to a State, local government, or Indian tribe at the 
discretion of the Secretary.\1\ Any award of funds provided pursuant to 
the Appropriations Act to Indian tribes will be provided pursuant to 
the requirements of the Indian Community Development Block Grant 
program. To comply with statutory direction that funds be used for 
disaster-related expenses in the most impacted and distressed areas, 
HUD allocates funds using the best available data that cover all of the 
eligible affected areas.
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    \1\ Section 306(a) of division A, title III of the Additional 
Supplemental Appropriations for Disaster Relief Requirements Act, 
2017 (Pub. L. 115-72, approved October 26, 2017) amended the 
Appropriations Act to permit the Secretary to award grants directly 
to a State, unit of general local government, or Indian tribe.
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    Based on further review of the impacts from the eligible disasters, 
and estimates of unmet need, HUD is making the following allocations:

              Table 1--Allocations Under Public Law 115-56
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                                                          Minimum amount
                                                           that must be
                                                           expended for
                                                         recovery in the
     Disaster No.          Grantee         Allocation     HUD-identified
                                                         ``most impacted
                                                               and
                                                           distressed''
                                                              areas
------------------------------------------------------------------------
4332.................  State of Texas.   $5,024,215,000  ($4,019,372,000
                                                          ) Harris,
                                                          Jefferson,
                                                          Orange,
                                                          Galveston,
                                                          Fort Bend,
                                                          Brazoria,
                                                          Montgomery,
                                                          Liberty,
                                                          Hardin,
                                                          Chambers,
                                                          Aransas,
                                                          Wharton, San
                                                          Patricio, San
                                                          Jacinto,
                                                          Nueces, and
                                                          Victoria
                                                          Counties;
                                                          78945, 77423,
                                                          77612, 78934,
                                                          75956, 77632,
                                                          75979, 77414,
                                                          77335, 78377,
                                                          and 77979 Zip
                                                          Codes.
4337.................  State of             615,922,000  ($492,737,600)
                        Florida.                          Monroe, Miami-
                                                          Dade, Duval,
                                                          Lee, Polk,
                                                          Collier,
                                                          Brevard,
                                                          Broward,
                                                          Orange, and
                                                          Volusia
                                                          counties;
                                                          32068, 34266,
                                                          32136, and
                                                          32091 Zip
                                                          Codes.

[[Page 5845]]

 
4336, 4339...........  Commonwealth of    1,507,179,000  ($1,205,743,200
                        Puerto Rico.                      ) Toa Baja,
                                                          Canovanas, San
                                                          Juan, Arecibo,
                                                          Ponce,
                                                          Bayamon,
                                                          Caguas,
                                                          Humacao, Vega
                                                          Baja,
                                                          Mayaguez,
                                                          Corozal,
                                                          Anasco, Toa
                                                          Alta, Guayama,
                                                          Naranjito,
                                                          Juana Diaz,
                                                          Salinas,
                                                          Morovis,
                                                          Carolina,
                                                          Aguada,
                                                          Yabucoa,
                                                          Barranquitas,
                                                          Rio Grande,
                                                          Dorado, Cayey,
                                                          Guaynabo, Vega
                                                          Alta, Comerio,
                                                          Loiza, Manati,
                                                          Ciales,
                                                          Aibonito,
                                                          Aguadilla,
                                                          Santa Isabel,
                                                          Orocovis,
                                                          Coamo, Cidra,
                                                          Juncos,
                                                          Utuado,
                                                          Naguabo,
                                                          Trujillo Alto,
                                                          Barceloneta,
                                                          Las Piedras,
                                                          Hatillo,
                                                          Patillas,
                                                          Gurabo,
                                                          Catano, San
                                                          Sebastian, San
                                                          Lorenzo, Aguas
                                                          Buenas, Moca,
                                                          Villalba,
                                                          Isabela,
                                                          Arroyo,
                                                          Adjuntas,
                                                          Camuy,
                                                          Fajardo,
                                                          Maunabo,
                                                          Yauco, Lares
                                                          Municipios;
                                                          00650, 00624,
                                                          00765, 00656,
                                                          00664, 00678,
                                                          00773, 00677,
                                                          00735, 00623,
                                                          00670, 00660,
                                                          00667, 00683,
                                                          00606, 00653
                                                          Zip Codes.
4335, 4340...........  United States        242,684,000  ($242,684,000)
                        Virgin Islands.                   St. Thomas,
                                                          St. Croix, and
                                                          St. John
                                                          Islands.
                                       -----------------
    Total *..........  ...............    7,390,000,000  ...............
------------------------------------------------------------------------
* Of the $7,400,000,000 appropriated, $10 million is provided for HUD
  administrative costs.

    Pursuant to the Appropriations Act, HUD has identified the most 
impacted and distressed areas based on the best available data for all 
eligible affected areas. A detailed explanation of HUD's allocation 
methodology is provided in Appendix A of this notice. Other than the 
United States Virgin Islands, at least 80 percent of the total funds 
provided to the grantees under this notice must address unmet disaster 
needs within the HUD-identified most impacted and distressed areas, as 
identified in the last column in Table 1. The United States Virgin 
Islands must use 100 percent of the total funds provided under this 
notice to address unmet disaster needs within the HUD-identified most 
impacted and distressed areas identified in the last column in Table 1. 
Grantees, other than the United States Virgin Islands, may determine 
where to use the remaining 20 percent of the allocation, but that 
portion of the allocation may only be used to address unmet disaster 
needs in those areas that the State determines are ``most impacted and 
distressed'' and received a presidential major disaster declaration 
pursuant to the disaster numbers listed in Table 1.
    Grantees may use up to 5 percent of the total grant award for grant 
administration. Therefore, other than for the United States Virgin 
Islands, HUD will include 80 percent of a grantee's expenditures for 
grant administration in its determination that 80 percent of the total 
award has been expended in the most impacted and distressed areas 
identified in Table 1. Additionally, other than the United States 
Virgin Islands, expenditures for planning activities may be counted 
towards a grantee's 80 percent expenditure requirement, provided that 
the grantee describes in its action plan how those planning activities 
benefit the HUD-identified most impacted and distressed areas.
    Grantees that received an allocation pursuant to Public Law 114-
113, 114-223, 114-254, or 115-31 (``Prior Appropriations'') must submit 
an action plan for disaster recovery not later than 90 days after the 
effective date of this notice. All other grantees receiving an 
allocation under this notice must submit an action plan not later than 
120 days after the effective date of this notice. HUD will only approve 
action plans that meet the specific requirements identified in this 
notice under section VI, ``Applicable Rules, Statutes, Waivers, and 
Alternative Requirements.

II. Use of Funds

    Grants under the Appropriations Act are only available for 
activities authorized under title I of the HCD Act related to disaster 
relief, long-term recovery, restoration of infrastructure and housing, 
and economic revitalization in the most impacted and distressed areas 
resulting from an eligible disaster. The Appropriations Act requires 
that prior to the obligation of CDBG-DR funds a grantee shall submit a 
plan detailing the proposed use of all funds, including criteria for 
eligibility, and how the use of these funds will address long-term 
recovery and restoration of infrastructure and housing and economic 
revitalization in the most impacted and distressed areas. Therefore, 
grantees may only use funds for activities included in the action plan 
that are approved by the Secretary for disaster recovery that: (1) Are 
authorized under title I of the HCD Act or allowed by a waiver or 
alternative requirement published in this notice; and (2) respond to a 
disaster-related impact to infrastructure, housing, or 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 below.
    Grantees are advised that pursuant to this notice, CDBG-DR funds 
may not be used for activities reimbursable by or for which funds are 
made available by the Federal Emergency Management Agency (FEMA) or the 
US Army Corps of Engineers (USACE). As such, the grantee must verify 
whether FEMA or USACE funds are available prior to awarding CDBG-DR 
funds to specific activities or beneficiaries.
    Consistent with the policy framework of the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act (Stafford Act), HUD is 
underscoring that disaster recovery is a partnership between Federal, 
state and local government, and reminding CDBG-DR grantees they should 
invest in their own recovery. In developing this Notice, HUD evaluated 
options to promote policies that require state and local financial 
participation to ensure their shared commitment and responsibility for 
long-term recovery and future disaster risk reduction. This Notice does 
not limit, except as required by Public Law 105-276, the use of CDBG-DR 
funds toward the state or local contribution for other Federal programs 
(e.g., FEMA Public Assistance). However, HUD expects grantees to 
financially contribute to their recovery through the use of reserve or 
``rainy day'' funds, borrowing authority, or retargeting of existing 
financial resources. The Administration aims to rebalance Federal, 
state, and local government roles and responsibilities not only for 
long-term recovery but across the broader

[[Page 5846]]

landscape of Federal programs that provide financial assistance to 
state and local governments.

III. Management and Oversight of Funds

    The Appropriations Act requires the Secretary to certify, in 
advance of signing a grant agreement, that the grantee has in place 
proficient financial controls and procurement processes, and adequate 
procedures for proper grant management as detailed in paragraph A.1.a 
of section VI. If HUD recently certified for a grantee that received a 
CDBG-DR grant pursuant to Prior Appropriations, the grantee may request 
that HUD rely on its previous certification and supporting 
documentation for purposes of this allocation, as modified by any 
updates provided by the grantee. To submit such a request, the grantee 
should follow the instructions under paragraph A.1.a of section VI of 
this notice. Until grant closeout, all grantees shall adhere to the 
controls, processes, and procedures described in the grantee's 
financial controls and procurement processes documentation submitted in 
response to paragraph A.1.a. of section VI (including any previous 
documentation the grantee requests HUD to rely on), unless amended with 
HUD's approval.
    Additionally, in advance of signing a grant agreement and 
consistent with 2 CFR 200.205 of the Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards (Uniform Requirements), HUD will evaluate each grantee's 
capacity to effectively manage the funds through a review of the 
grantee's implementation plan and capacity assessment detailed in 
paragraph A.1.b of section VI. The grant terms and specific conditions 
of the award will reflect HUD's risk assessment of the grantee based 
upon its submission and the grantee shall adhere to the description of 
its implementation plan and capacity assessment documentation until 
grant closeout, unless amended with HUD's approval. For all grantees 
receiving an allocation of funds pursuant to this notice, HUD will 
undertake an annual risk analysis as well as on-site monitoring of 
grantee management to further guide oversight of these funds.

IV. Authority To Grant Waivers

    The Appropriations Act authorizes the Secretary to waive or specify 
alternative requirements for any provision of any statute or regulation 
that the Secretary administers in connection with the obligation by the 
Secretary, or use by the recipient, of these funds, except for 
requirements related to fair housing, nondiscrimination, labor 
standards, and the environment. Waivers and alternative requirements 
are based upon a determination by the Secretary that good cause exists 
and that the waiver or alternative requirement is not inconsistent with 
the overall purposes of title I of the HCD Act. HUD also has regulatory 
waiver authority under 24 CFR 5.110, 91.600, and 570.5. Grantees may 
request waivers as described in section VI of this notice.
    The Appropriations Act provides that the Secretary ``may 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 
(except for requirements related to fair housing, nondiscrimination, 
labor standards, and the environment).'' Accordingly, grantees are 
reminded that all fair housing and nondiscrimination requirements 
continue to apply in administering the funds described in this notice.

V. Overview of Grant Process

    To begin expending of CDBG-DR funds, the following expedited steps 
are necessary:
     Grantee follows citizen participation plan for disaster 
recovery in accordance with the requirements in paragraph A.4 of 
section VI of this notice.
     Grantee consults with stakeholders, including required 
consultation with affected local governments, Indian Tribes, and public 
housing authorities (as identified in paragraph A.7 of section VI of 
this notice).
     Within 60 days of the effective date of this notice (or 
when the grantee submits its action plan, whichever is earlier), the 
grantee submits documentation for the certification of financial 
controls and procurement processes, and adequate procedures for grant 
management in accordance with the requirements in paragraph A.1.a of 
section VI. A grantee that previously received a certification of its 
financial controls and procurement processes pursuant to a Prior 
Appropriation may request that HUD rely on that certification for 
purposes of this allocation, with updates provided by the grantee as 
appropriate.
     Within 60 days of the effective date of this notice (or 
when the grantee submits its action plan, whichever is earlier) the 
grantee submits its implementation plan and capacity assessment 
submissions, in accordance with the requirements in paragraph A.1.b of 
section VI.A grantee that previously received a certification of its 
financial controls and procurement processes pursuant to a Prior 
Appropriation may request that HUD rely on that certification for 
purposes of this allocation, with updates provided by the grantee as 
appropriate.
     Grantee publishes its action plan for disaster recovery on 
the grantee's required disaster recovery website for no less than 14 
calendar days to solicit public comment.
     Grantee responds to public comment and submits its action 
plan and projection of expenditures and outcomes (which includes 
Standard Form 424 (SF-424) and certifications) to HUD.
     Grantee requests and receives Disaster Recovery Grant 
Reporting (DRGR) system access (if the grantee does not already have 
DRGR access) and may enter activities into the DRGR system before or 
after submission of the action plan to HUD.
     HUD expedites review (allotted 45 days from date of 
receipt) and approves the action plan according to criteria identified 
in this notice.
     HUD sends an action plan approval letter and grant 
agreement to the grantee. If the action plan is not approved, HUD will 
notify the grantee of the deficiencies. The grantee must then resubmit 
the action plan within 45 days of the notification.
     Grantee signs and returns the grant agreement to HUD.
     Grantee ensures that the final HUD-approved action plan is 
posted on its official website.
     HUD establishes the grantee's line of credit.
     Grantee enters the activities from its approved action 
plan into the DRGR system if it has not previously done so and submits 
its DRGR action plan to HUD (funds can be drawn from the line of credit 
only for activities that are established in the DRGR system).
     Grantee must draft and publish (on their website) policies 
and procedures for programs and key recovery operations implemented by 
the grantee with CDBG-DR funds.
     The grantee may draw down funds from the line of credit 
after the Responsible Entity completes applicable environmental 
review(s) pursuant to 24 CFR part 58 or as authorized by the 
Appropriations Act and, as applicable, receives from HUD the Authority 
to Use Grant Funds (AUGF) form and certification.
     The grantee should begin to draw down funds from DRGR no 
later than 180 days after the effective date of this

[[Page 5847]]

notice. Additionally, the Appropriations Act requires all funds to be 
expended within two years of the date of obligation as described in 
paragraph A.28 of section VI of this notice.

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

    This section of the notice describes requirements imposed by the 
Appropriations Act, as well as applicable waivers and alternative 
requirements. For each waiver and alternative requirement, the 
Secretary has determined that good cause exists and the waiver or 
alternative requirement is not inconsistent with the overall purpose of 
the HCD Act. The waivers and alternative requirements provide 
flexibility in program design and implementation to support full and 
swift recovery following eligible disasters, while ensuring that 
statutory requirements are met. The following requirements apply only 
to the CDBG-DR funds appropriated in the Appropriations Act, and not to 
funds provided under the annual formula State or Entitlement CDBG 
programs, the Indian Community Development Block Grant program, or 
those provided under any other component of the CDBG program, such as 
the Section 108 Loan Guarantee Program, or any prior CDBG-DR 
appropriation.
    Grantees may request additional waivers and alternative 
requirements from the Department as needed to address specific needs 
related to their recovery activities, accompanied by data to support 
the request. Grantees should work with the assigned CPD representative 
to request any additional waivers or alternative requirements from HUD 
headquarters. Except where noted, waivers and alternative requirements 
described below apply to all grantees under this notice. Under the 
requirements of the Appropriations Act, waivers and alternative 
requirements are effective five days after they are published in the 
Federal Register.
    Except as described in this notice, statutory and regulatory 
provisions governing the State CDBG program shall apply to State 
grantees receiving an allocation under this notice. Pursuant to an 
alternative requirement established by this notice, all references to 
states and State grantees shall include the Commonwealth of Puerto Rico 
and the U.S. Virgin Islands. Applicable statutory provisions (title I 
of the HCD Act) can be found at 42 U.S.C. 5301 et seq. Applicable State 
and Entitlement CDBG regulations can be found at 24 CFR part 570. 
References to the action plan in these regulations shall refer to the 
action plan required by this notice. All references in this notice 
pertaining to timelines and/or deadlines are in terms of calendar days 
unless otherwise noted. The date of this notice shall mean the 
effective date of this notice unless otherwise noted.

A. Grant Administration

    1. Preaward Evaluation of Management and Oversight of Funds
    a. Certification of financial controls and procurement processes, 
and adequate procedures for proper grant management. The Appropriations 
Act requires that the Secretary certify, in advance of signing a grant 
agreement, that the grantee has in place proficient financial controls 
and procurement processes and has established adequate procedures to 
prevent any duplication of benefits as defined by section 312 of the 
Stafford Act, 42 U.S.C. 5155, to ensure timely expenditure of funds, 
maintain a comprehensive website regarding all disaster recovery 
activities assisted with these funds, and detect and prevent waste, 
fraud, and abuse of funds. To enable the Secretary to make this 
certification, each grantee must submit to HUD the certification 
documentation listed below. This information must be submitted within 
60 days of the effective date of this notice, or with the grantee's 
submission of its action plan, whichever date is earlier. Grant 
agreements will not be executed until HUD has approved the grantee's 
certifications. For each of the items (1) through (6) below, the 
grantee must also provide a table that clearly indicates which unit and 
personnel are responsible for each task along with contact information.
    In the alternative, if HUD recently certified the controls, 
processes, and procedures for a grantee that received an allocation of 
CDBG-DR funds pursuant to Prior Appropriations, the grantee may request 
that HUD rely on its previous certification(s) and supporting 
documentation required by (1) through (6) below for purposes of 
allocations under this notice, as modified by any updates provided by 
the grantee. To submit the request, a grantee must indicate in the P.L. 
115-56 Financial Management and Grant Compliance Certification that the 
past submissions pursuant to Prior Appropriations remain unchanged 
(except where updates are specified and supported with revised 
submissions), and that the submissions on which HUD based its previous 
certification, or new submissions as appropriate, will apply to the 
grantee's CDBG-DR grant under this notice. In either case, the grantee 
must certify to the accuracy of its documentation as required by 
paragraph E.51 of section VI of this notice. Additionally, the grantee 
must submit with its action plan the certifications in paragraph E.51 
of section VI of this notice.
    (1) Proficient Financial Management Controls. A grantee has 
proficient financial management controls if each of the following 
criteria is satisfied:
    (a) The grantee submits its most recent single audit and 
consolidated annual financial report (CAFR), which in HUD's 
determination indicates that the grantee has no material weaknesses, 
deficiencies, or concerns that HUD considers to be relevant to the 
financial management of the CDBG program. If the single audit or CAFR 
identified weaknesses or deficiencies, the grantee must provide 
documentation satisfactory to HUD showing how those weaknesses have 
been removed or are being addressed; and
    (b) The grantee has assessed its financial standards and has 
submitted the completed Public Law 115-56 Financial Management and 
Grant Compliance Certification (Compliance Certification) available on 
the HUD Exchange website at https://www.hudexchange.info/cdbg-dr/cdbg-dr-laws-regulations-and-federal-register-notices/, together with all 
documentation required in the Compliance Certification. The grantee's 
standards must comply with the requirements and standards of the 
Compliance Certification to be proficient, and the grantee must 
continue to maintain these standards until grant closeout. The grantee 
must identify which sections of its financial standards address 
applicable questions in the document.
    (2) Procurement. Each grantee must provide HUD its procurement 
process/standards for review, so HUD may evaluate the overall effect of 
the grantee's procurement process/standards to determine that they 
uphold the principles of full and open competition and include an 
evaluation of the cost or price of the product or service. The grantee 
must also provide a legal opinion that it has proficient procurement 
policies and procedures.
    A State grantee (including the Commonwealth of Puerto Rico and the 
U.S. Virgin Islands) has proficient procurement policies and processes 
if HUD determines that its procurement processes uphold the principles 
of full and open competition and include an evaluation of the cost and 
price of the product or service, and if its procurement processes 
reflect that it: (a) Adopted 2 CFR 200.318 through 200.326; or (b) 
follows its own

[[Page 5848]]

procurement policies and procedures and establishes requirements for 
procurement policies and procedures for local governments and 
subrecipients based on full and open competition pursuant to 24 CFR 
570.489(g), and the requirements applicable to the state, its local 
governments, and subrecipients include evaluation of the cost or price 
of the product or service; or (c) adopted 2 CFR 200.317, meaning that 
it will follow its own State procurement policies and procedures and 
evaluate the cost or price of the product or service, but impose 2 CFR 
200.318 through 200.326 on its subgrantees and subrecipients. A grantee 
must demonstrate that its procurement policies and procedures will 
allow the grantee to comply with the procurement requirements at 
paragraph A.26 of Section VI of this notice.
    (3) Duplication of benefits. A grantee has adequate procedures to 
prevent the duplication of benefits if the grantee submits uniform 
processes that reflect the requirements of paragraph A.25 in section VI 
of this notice, including: (a) Verifying all sources of disaster 
assistance received by the grantee or applicant prior to the award of 
CDBG-DR funds to the applicant, as applicable; (b) determining a 
grantee's or an applicant's unmet need(s) before committing funds or 
awarding assistance; and (c) ensuring beneficiaries agree to repay any 
duplicative assistance if they later receive other disaster assistance 
for the same purpose. Grantee procedures shall provide that prior to 
the award of assistance, the grantee will use the best, most recent 
available data from FEMA, the Small Business Administration (SBA), 
insurers, and any other sources of funding to prevent the duplication 
of benefits.
    (4) Timely expenditures. A grantee has adequate procedures to 
determine timely expenditures if it submits procedures that indicate to 
HUD how the grantee will track expenditures each month; how it will 
monitor expenditures of its subrecipients; how it will account for and 
manage program income; how it will reprogram funds in a timely manner 
for activities that are stalled; and how it will project expenditures 
to provide for the expenditure of all CDBG-DR funds within the period 
provided for in paragraph A.28 of section VI of this notice.
    (5) Comprehensive disaster recovery website. A grantee has adequate 
procedures to maintain a comprehensive website regarding all disaster 
recovery activities if it submits procedures that indicate that the 
grantee will have a separate page dedicated to its disaster recovery 
activities assisted with CDBG-DR funds provided under this notice that 
includes the information described at paragraph A.27 of section VI of 
this notice. The procedures should also indicate the frequency of 
website updates. At minimum, grantees must update their website 
monthly.
    (6) Procedures to detect and prevent fraud, waste and abuse. A 
grantee has adequate procedures to detect and prevent fraud, waste, and 
abuse if it submits procedures that indicate how the grantee will 
verify the accuracy of information provided by applicants; if it 
provides a monitoring policy indicating how and why monitoring is 
conducted, the frequency of monitoring, and which items are monitored; 
if it demonstrates that it has an internal auditor that provides both 
programmatic and financial oversight of grantee activities; and 
includes a document signed by the internal auditor that describes his 
or her role in detecting fraud, waste, and abuse. Instances of fraud, 
waste, and abuse should be referred to the HUD OIG Fraud Hotline 
(phone: 1-800-347-3735 or email: [email protected]).
    To address any potential duplication, beneficiaries must enter a 
signed agreement to repay any assistance later received for the same 
purpose as the CDBG-DR funds. The grantee must identify a method to 
monitor compliance with the agreement for a reasonable period, and 
should articulate this method in its written administrative procedures. 
This agreement must also include the following language: ``Warning: Any 
person who knowingly makes a false claim or statement to HUD may be 
subject to civil or criminal penalties under 18 U.S.C. 287, 1001 and 31 
U.S.C. 3729.''
    b. Implementation Plan and Capacity Assessment. Before signing a 
grant agreement, HUD is requiring each grantee to demonstrate that it 
has sufficient capacity to manage these funds and the associated risks.
    Evidence of grantee management capacity will be provided through 
the grantee's implementation plan and capacity assessment submissions. 
These submissions must meet the criteria in (1) and (2) below, and must 
be submitted within 60 days of the effective date of this notice or 
with the grantee's submission of its action plan, whichever date is 
earlier.
    A grantee has sufficient management capacity if it submits 
documentation showing that each of the following criteria is satisfied:
    (1) Timely information on application status. A grantee has 
adequate procedures to enable applicants to determine the status of 
their applications for recovery assistance, at all phases, if its 
procedures indicate methods for communication (i.e., website, 
telephone, case managers, letters, etc.), ensure the accessibility and 
privacy of individualized information for all applicants, indicate the 
frequency of applicant status updates, and identify which personnel or 
unit is responsible for informing applicants of the status of recovery 
applications.
    (2) Implementation Plan. To enable HUD to assess risk as described 
in 2 CFR 200.205(c), the grantee will submit an implementation plan to 
the Department. The plan must describe the grantee's capacity to carry 
out the recovery and how it will address any capacity gaps. HUD will 
determine a plan is adequate to reduce risk if, at a minimum it 
addresses (a) through (e) below:
    (a) Capacity Assessment. The grantee has conducted an assessment of 
its capacity to carry out CDBG-DR recovery efforts and has developed a 
timeline with milestones describing when and how the grantee will 
address all capacity gaps that are identified. The assessment must 
include a list of any open CDBG-DR findings and an update on the 
corrective actions undertaken to address each finding. HUD may include 
additional requirements in the grantee's grant terms and conditions in 
order to prevent similar findings for this grant.
    (b) Staffing. The plan shows that the grantee has assessed staff 
capacity and identified personnel for the purpose of case management in 
proportion to the applicant population; program managers who will be 
assigned responsibility for each primary recovery area (housing, 
economic revitalization, and infrastructure); staff who have 
demonstrated experience in housing, economic revitalization, and 
infrastructure (as applicable); and staff responsible for procurement/
contract management, compliance with the regulations implementing 
Section 3 of the Housing and Urban Development Act of 1968 (24 CFR part 
135) (Section 3), fair housing compliance, and environmental 
compliance; as well as staff responsible for monitoring and quality 
assurance, and financial management. An adequate plan will also provide 
for an internal audit function with responsible audit staff reporting 
independently to the chief elected official or executive officer or 
board of the governing body of any designated administering entity.
    (c) Internal and Interagency Coordination. The grantee's plan 
describes how it will ensure effective communication between different

[[Page 5849]]

departments and divisions within the grantee's organizational structure 
that are involved in CDBG-DR-funded recovery efforts; between its lead 
agency and subrecipients responsible for implementing the grantee's 
action plan; and with other local and regional planning efforts to 
ensure consistency.
    (d) Technical Assistance. The grantee's implementation plan 
describes how it will procure and provide technical assistance for any 
personnel that the grantee does not employ at the time of action plan 
submission, and to fill gaps in knowledge or technical expertise 
required for successful and timely recovery implementation where 
identified in the capacity assessment.
    (e) Accountability. The grantee's plan identifies the lead agency 
responsible for implementation of the CDBG-DR award and indicates that 
the head of that agency will report directly to the chief executive 
officer of the jurisdiction.
    2. Action Plan for Disaster Recovery waiver and alternative 
requirement. Requirements for CDBG actions plans, located at 42 U.S.C. 
5304(a)(1), 42 U.S.C. 5304(m), 42 U.S.C. 5306(d)(2)(C)(iii), 42 U.S.C. 
5306(a)(1), 42 U.S.C. 12705(a)(2), and 24 CFR 91.320, are waived for 
these disaster recovery grants. Instead, grantees must submit to HUD an 
action plan for disaster recovery which will describe disaster recovery 
programs that conform to applicable requirements as specified in this 
notice. The Secretary may disapprove an action plan as substantially 
incomplete if it is determined that the plan does not satisfy all the 
required elements identified in this notice. During the course of the 
grant, HUD will monitor the grantee's actions and use of funds for 
consistency with the plan, as well as meeting the performance and 
timeliness objectives therein.
    a. Action Plan. The action plan must identify the proposed use of 
all funds, including criteria for eligibility, and how the uses address 
necessary expenses related to disaster relief, long-term recovery, 
restoration of infrastructure and housing, and economic revitalization 
in the most impacted and distressed areas resulting from a major 
disaster declared in 2017. Funds dedicated for uses not described in 
accordance with paragraphs b. or c. under this section will not be 
obligated until the grantee submits, and HUD approves, an action plan 
amendment programming the use of those funds, at the necessary level of 
detail.
    The action plan must contain:
    (1) An impact and unmet needs assessment. Each grantee must develop 
a needs assessment to understand the type and location of community 
needs and to target limited resources to those areas with the greatest 
need. Grantees receiving an allocation under this notice must conduct a 
needs assessment to inform the use of CDBG-DR funds. Grantees must cite 
data sources. Grantees may use HUD's AFFH mapping tool (https://egis.hud.gov/affht/) or the CPD Mapping tool (https://egis.hud.gov/cpdmaps/) to inform their analysis. At a minimum, the needs assessment 
must:
     Evaluate all aspects of recovery including housing 
(interim and permanent, owner and rental, single-family and 
multifamily, affordable and market rate, and housing to meet the needs 
of persons who were homeless pre-disaster), infrastructure, and 
economic revitalization;
     Estimate unmet needs to ensure CDBG-DR funds meet needs 
that are not likely to be addressed by other sources of funds by 
accounting for the various forms of assistance available to, or likely 
to be available to, affected communities (e.g., projected FEMA funds) 
and individuals (e.g., estimated insurance) and use the most recent 
available data to estimate the portion of need unlikely to be addressed 
by insurance proceeds, other Federal assistance, or any other funding 
sources (thus producing an estimate of unmet need);
     Assess whether public services (e.g., housing counseling, 
legal counseling, job training, mental health, and general health 
services) are necessary to complement activities intended to address 
housing, infrastructure, and economic revitalization and how those 
services are to be made accessible to individuals having wide-ranging 
disabilities including mobility, sensory, developmental, emotional, and 
other impairments;
     Describe the extent to which expenditures for planning 
activities will benefit the HUD-identified most impacted and distressed 
areas;
     Describe impacts geographically by type at the lowest 
level practicable (e.g., county level, zip code, neighborhood, or 
census tract); and
     Take into account the costs of incorporating mitigation 
and resilience measures to protect against the anticipated effects of 
future extreme weather events and other natural hazards and long-term 
risks.
    CDBG-DR funds may be used to reimburse planning and administration 
costs for developing the action plan, including the needs assessment, 
environmental review, and citizen participation requirements. HUD has 
developed a Disaster Impact and Unmet Needs Assessment Kit to guide 
CDBG-DR grantees through a process for identifying and prioritizing 
critical unmet needs for long-term community recovery. The Kit is 
available on the HUD Exchange website at: https://www.hudexchange.info/resources/documents/Disaster_Recovery_Disaster_Impact_Needs_Assessment_Kit.pdf.
    Disaster recovery needs evolve over time and therefore grantees are 
expected to amend the needs assessment and action plan as conditions 
change, additional needs are identified, and additional resources 
become available.
    (2) A description of the connection between identified unmet needs 
and the allocation of CDBG-DR resources. Grantees must propose an 
allocation of CDBG-DR funds that primarily considers and addresses 
unmet housing needs. Grantees may also allocate funds for economic 
revitalization and infrastructure activities, but in doing so, must 
identify how any remaining unmet housing needs will be addressed or how 
its economic revitalization and infrastructure activities will 
contribute to the long-term recovery and restoration of housing in the 
most impacted and distressed areas. Grantee action plans may provide 
for the allocation of funds for administration and planning activities 
and for public service activities, subject to the caps on such 
activities as described below.
    (3) Each grantee must include a description of how it will identify 
and address the rehabilitation, reconstruction, replacement, and new 
construction of housing and shelters in the areas affected by the 
disaster. This includes any rental housing that is affordable to low- 
or moderate-income households as provided for in B.34 of section VI of 
this notice; public housing as provided for in B.33 of Section VI of 
this notice; emergency shelters and housing for the homeless; private 
market units receiving project-based assistance or with tenants that 
participate in the Section 8 Housing Choice Voucher Program; and any 
other housing that is assisted under a HUD program.
    (4) A description of how the grantee's programs will promote 
housing for vulnerable populations, including a description of 
activities it plans to address: (a) The transitional housing, permanent 
supportive housing, and permanent housing needs of individuals and 
families (including subpopulations) that are homeless and at-risk of 
homelessness; (b) the prevention of low-income individuals and families 
with children (especially those with incomes below 30 percent of the 
area median)

[[Page 5850]]

from becoming homeless; and (c) the special needs of persons who are 
not homeless but require supportive housing (e.g., elderly, persons 
with disabilities, persons with alcohol or other drug addiction, 
persons with HIV/AIDS and their families, and public housing residents. 
Grantees must also assess how planning decisions may affect members of 
protected classes, racially and ethnically concentrated areas, as well 
as concentrated areas of poverty; will promote the availability of 
affordable housing in low-poverty, nonminority areas where appropriate; 
and will respond to natural hazard-related impacts. Grantees are 
reminded that the use of recovery funds must meet accessibility 
standards, provide reasonable accommodations to persons with 
disabilities, and take into consideration the functional needs of 
persons with disabilities in the relocation process. Guidance on 
relocation considerations for persons with disabilities may be found in 
Chapter 3 of HUD's Relocation Handbook 1378.0 (available on the HUD 
Exchange website at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/cpd/13780). A checklist of 
accessibility requirements under the Uniform Federal Accessibility 
Standards (UFAS) is available at: https://www.hudexchange.info/resources/796/ufas-accessibility-checklist/. The HUD Deeming Notice.79 
FR 29671 (May 23, 2014) explains when HUD recipients can use 2010 ADA 
Standards with exceptions, as an alternative to UFAS to comply with 
Section 504.
    (5) A description of how the grantee plans to minimize displacement 
of persons or entities, and assist any persons or entities displaced.
    (6) A description of the maximum amount of assistance available to 
a beneficiary under each of the grantee's disaster recovery programs. A 
grantee may find it necessary to provide exceptions on a case-by-case 
basis to the maximum amount of assistance and must describe the process 
it will use to make such exceptions in its action plan. At minimum, 
each grantee must adopt policies and procedures that communicate how it 
will analyze the circumstances under which an exception is needed and 
how it will demonstrate that the amount of assistance is necessary and 
reasonable.
    (7) A description of how the grantee plans to: Promote sound, 
sustainable long-term recovery planning informed by a post-disaster 
evaluation of hazard risk, especially construction standards and land-
use decisions that reflect responsible floodplain and wetland 
management and take into account continued sea level rise, if 
applicable; and coordinate with other local and regional planning 
efforts to ensure consistency. This information should be based on the 
history of FEMA flood mitigation efforts and take into account 
projected increase in sea level (if applicable) and the frequency and 
intensity of precipitation events.
    (8) A description of how the grantee plans to adhere to the 
advanced elevation requirements established in paragraph B.32.e of 
section VI of this notice. Grantee decisions to elevate structures in a 
particular neighborhood or local government must be cost reasonable 
relative to other alternatives strategies, such as demolition of 
substantially-damaged structures with reconstruction of an elevated 
structure on the same site, property buyouts, or infrastructure 
improvements to prevent loss of life and mitigate future property 
damage.
    The action plan should include an estimate of the average costs 
associated with elevating structures (updated as additional information 
becomes available through subsequent action plan amendments) and 
provide a description of how it will document on a neighborhood or 
local government level that elevation, as opposed to alternative 
strategies, is cost reasonable to promote a community's long-term 
recovery.
    (9) A description of how the grantee will: (a) Design and implement 
programs or activities with the goal of protecting people and property 
from harm; (b) emphasize high quality, durability, energy efficiency, 
sustainability, and mold resistance; (c) support adoption and 
enforcement of modern and/or resilient building codes and mitigation of 
hazard risk, including possible sea level rise, high winds, storm 
surge, and flooding, where appropriate; and (d) implement and ensure 
compliance with the Green Building standards required in paragraph 
B.32.a of section VI of this notice. All rehabilitation, 
reconstruction, and new construction should be designed to incorporate 
principles of sustainability, including water and energy efficiency, 
resilience, and mitigating the impact of future disasters. Whenever 
feasible, grantees should follow best practices such as those provided 
by the U.S. Department of Energy's Guidelines for Home Energy 
Professionals--Professional Certifications and Standard Work 
Specifications found at https://energy.gov/eere/wipo/guidelines-home-energy-professionals-standards-work-specifications. HUD also encourages 
grantees to implement green infrastructure policies to the extent 
practicable.
    (10) Additionally, a grantee using grant funds for infrastructure 
must include a description of how the proposed infrastructure 
activities will advance long-term resilience to natural hazards and how 
the grantee intends to align these investments with other planned State 
or local capital improvements. Grantees should describe how 
preparedness and mitigation measures will be integrated into rebuilding 
activities and how the grantee will promote community-level and/or 
regional (e.g. multiple local jurisdictions) post-disaster recovery and 
mitigation planning.
    Grantees must also describe how they will address the construction 
or rehabilitation of storm water management systems in flood impacted 
areas. State grantees must work with local governments in the most 
impacted and distressed areas to identify the unmet needs and 
associated costs of needed storm water infrastructure improvements.
    (11) A description of the grantee's proposed use of CDBG-DR funds 
to develop a disaster recovery and response plan that addresses long-
term recovery and pre- and post-disaster hazard mitigation, if one does 
not currently exist.
    (12) A description of how the grantee will leverage CDBG-DR funds 
with funding provided by other Federal, State, local, private, and 
nonprofit sources to generate a more effective and comprehensive 
recovery. Examples of other Federal sources are those provided by HUD, 
FEMA (specifically the Public Assistance Program, Individual Assistance 
Program, Permanent Housing Construction Repair, where applicable, and 
Hazard Mitigation Grant Program), SBA (specifically the Disaster Loans 
program), Economic Development Administration, USACE, and the U.S. 
Department of Agriculture. The grantee should seek to maximize the 
outcomes of investments and the degree to which CDBG funds are 
leveraged. Grantees shall identify leveraged funds for each activity, 
as applicable, in the DRGR system.
    (13) A description of the standards to be established for 
construction contractors performing work in the jurisdiction and a 
mechanism for homeowners and small business owners to challenge 
construction work that does not meet these standards. HUD strongly 
encourages the grantee to require a warranty period post-construction, 
which includes a formal notification that is provided to homeowners on 
a

[[Page 5851]]

periodic basis (e.g., 6 months and one month prior to expiration date 
of the warranty).
    b. Funds Awarded Directly to a State. For State grantees, the 
action plan shall describe the method of distribution of funds to local 
governments and Indian tribes and/or descriptions of specific programs 
or activities the grantee will carry out directly. The description must 
include:
    (1) How the needs assessment informed grantee funding 
determinations, including the rationale behind the decision(s) to 
provide funds to areas that were identified by the grantee as being 
most impacted and distressed, if applicable (i.e., how the grantee 
determined that these areas are most impacted and distressed). All 
grant funds shall be expended in areas that received a presidential 
disaster declaration pursuant to the disaster numbers specified in 
Table 1 of this notice.
    (2) The threshold factors and recipient or beneficiary grant size 
limits that are to be applied.
    (3) The projected uses for the CDBG-DR funds, by responsible 
organization, activity, and geographic area, when the grantee carries 
out an activity directly.
    (4) For each proposed program and/or activity carried out directly, 
its respective CDBG activity eligibility category (or categories), 
national objective(s), and specific aspects of disaster recovery as 
described in subparagraph d. of this paragraph.
    (5) How the method of distribution to local governments and Indian 
tribes or programs/activities carried out directly will result in long-
term recovery from specific impacts of the disaster.
    (6) When funds are subgranted to local governments or Indian 
tribes, all criteria used to distribute funds to local governments or 
Indian tribes including the relative importance of each criterion.
    (7) When applications are solicited for programs carried out 
directly, all criteria used to select applications for funding, 
including the relative importance of each criterion.
    c. Clarification of disaster-related activities. All CDBG-DR funded 
activities must clearly address an impact of the disaster for which 
funding was allocated. Given standard CDBG requirements, this means 
each activity must: (1) Be a CDBG-eligible activity (or be eligible 
under a waiver or alternative requirement in this notice); (2) meet a 
national objective; and (3) address a direct or indirect impact from 
the major disaster in a Presidentially-declared county. A disaster-
related impact can be addressed through any eligible CDBG-DR activity. 
Additional details on disaster-related activities are provided under 
section VI, parts B through D. Additionally, HUD has developed a series 
of CDBG-DR toolkits that guide grantees through specific grant 
implementation activities. These can be found on the HUD Exchange 
website at https://www.hudexchange.info/programs/cdbg-dr/toolkits/.
    (1) Housing. Typical housing activities include new construction 
and rehabilitation of single-family or multifamily units. Most often, 
grantees use CDBG-DR funds to rehabilitate damaged homes and rental 
units. However, grantees may also fund new construction (see paragraph 
B.32 of section VI of this notice) or rehabilitate units not damaged by 
the disaster if the activity clearly addresses a disaster-related 
impact and is located in a disaster-affected area. This impact can be 
demonstrated by the disaster's overall effect on the quality, quantity, 
and affordability of the housing stock and the resulting inability of 
that stock to meet post-disaster needs and population demands.
    Grantees are also required to coordinate with HUD-certified housing 
counseling organizations to ensure that information and services are 
made available to both renters and homeowners. Additional information 
for each grantee is available here: https://apps.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?weblistaction=summary.
    (2) Economic Revitalization. The attraction, retention and return 
of businesses and jobs to a disaster-impacted area is critical to long 
term recovery. Accordingly, for CDBG-DR purposes, economic 
revitalization may include any CDBG-DR eligible activity that 
demonstrably restores and improves some aspect of the local economy 
through the attraction, retention and return of businesses and jobs. 
The activity may address job losses, or negative impacts to tax 
revenues or businesses. Examples of eligible activities include 
providing loans and grants to businesses to carry out eligible economic 
development activities, funding job training, making improvements to 
commercial/retail districts, and financing other efforts that attract/
retain workers in devastated communities.
    All economic revitalization activities must address an economic 
impact(s) caused by the disaster (e.g., loss of jobs, loss of public 
revenue). Through its needs assessment and action plan, the grantee 
must clearly identify the economic loss or need resulting from the 
disaster, and how the proposed activities will address that loss or 
need. In proposing the use of CDBG-DR funds for economic revitalization 
under this notice, a grantee must identify how any remaining unmet 
housing needs will be addressed or how its economic development 
activities will contribute to the long-term recovery and restoration of 
housing in the most impacted and distressed areas.
    (3) Infrastructure. Typical infrastructure activities include the 
rehabilitation, replacement, or relocation of damaged public facilities 
and improvements including, but not limited to, bridges, water 
treatment facilities, roads, sewer and water lines, and storm water 
management systems. In proposing an allocation of CDBG-DR funds under 
this notice for infrastructure, a grantee must identify how any 
remaining unmet housing needs will be addressed or how its 
infrastructure activities will contribute to the long-term recovery and 
restoration of housing in the most impacted and distressed areas.
    (4) Preparedness and Mitigation. To ensure that CDBG-DR funds are 
used for authorized disaster recovery purposes, all assisted activities 
must respond to the impacts of the declared disaster identified in 
Table 1. HUD encourages grantees to incorporate preparedness and 
mitigation measures into CDBG-DR assisted activities to rebuild 
communities that are more resilient to future disasters. Mitigation 
measures that are not incorporated into those rebuilding activities 
must be a necessary expense related to disaster relief or long-term 
recovery that responds to the eligible disaster.
    (5) Connection to the Disaster. Grantees must maintain records 
about each activity funded, as described in paragraph A.16 of section 
VI of this notice. In regard to physical losses, damage or rebuilding 
estimates are often the most effective tools for demonstrating the 
connection to the disaster. For housing market, economic, and/or 
nonphysical losses, post-disaster analyses or assessments may best 
document the relationship between the loss and the disaster.
    d. Clarity of Action Plan. All grantees must include sufficient 
information so that all interested parties will be able to understand 
and comment on the action plan and, if applicable, be able to prepare 
responsive applications to the grantee. The action plan (and subsequent 
amendments) must include a single chart or table that illustrates, at 
the most practical level, how all funds are budgeted (e.g., by program, 
subrecipient, grantee-administered activity, or other category).

[[Page 5852]]

    e. Review and Approval of Action Plan. The action plan (including 
SF-424 and certifications) must be submitted to HUD for review and 
approval. Grantees that received an allocation pursuant to a Prior 
Appropriation must submit an action plan within 90 days of the 
effective date of this notice. All other grantees receiving an 
allocation under this notice must submit an action plan within 120 days 
of the effective date of this notice. HUD will review each action plan 
within 45 days from the date of receipt. The Secretary may disapprove 
an action plan as substantially incomplete if it is determined that the 
action plan does not meet the requirements of this notice.
    f. Obligation and expenditure of funds. Once HUD makes the required 
certifications and approves the action plan, it will then sign a grant 
agreement obligating allocated funds to the grantee. In addition, HUD 
will establish the line of credit and the grantee will receive DRGR 
system access (if it does not already have DRGR system access). The 
grantee must also enter its action plan activities into the DRGR system 
in order to draw funds for those activities. Each activity must meet 
the applicable environmental requirements prior to the use of funds. 
After the Responsible Entity (usually the grantee) completes 
environmental review(s) pursuant to 24 CFR part 58 (as applicable) or 
adopts the environmental review performed by another federal agency, as 
authorized by the Appropriations Act, and receives from HUD or the 
State an approved Request for Release of Funds and certification (as 
applicable), the grantee may draw down funds from the line of credit 
for an activity. The disbursement of grant funds should begin no later 
than 180 days after the effective date of this notice. Failure to draw 
funds within 180 days of the effective date of this notice will result 
in the Department's review of the grantee's certification of its 
financial controls, procurement processes and capacity, and may result 
in a recommended corrective actions deemed appropriate by the 
Department pursuant to 24 CFR 570.495, 24 CFR 570.910, or 24 CFR 
1003.701.
    g. Amending the Action Plan. The grantee must amend its action plan 
to update its needs assessment, modify or create new activities, or 
reprogram funds, as necessary. 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) revised budget 
allocation table that reflects the entirety of all funds, as amended. A 
grantee's current version of its entire action plan must be accessible 
for viewing as a single document at any given point in time, rather 
than the public or HUD having to view and cross-reference changes among 
multiple amendments.
    h. Projection of expenditures and outcomes. Each grantee must 
submit projected expenditures and outcomes with the action plan. The 
projections must be based on each quarter's expected performance--
beginning with the quarter funds are available to the grantee and 
continuing each quarter until all funds are expended. The projections 
will enable HUD, the public, and the grantee to track proposed versus 
actual performance. The published action plan must be amended for any 
subsequent changes, updates or revision of the projections. Guidance on 
the preparation of projections is available on the HUD website.
    3. HUD performance review authorities and grantee reporting 
requirements in the Disaster Recovery Grant Reporting (DRGR) System.
    a. Performance review authorities. 42 U.S.C. 5304(e) requires that 
the Secretary shall, at least on an annual basis, make such reviews and 
audits as may be necessary or appropriate to determine whether the 
grantee has carried out its activities in a timely manner, whether the 
grantee's activities and certifications are carried out in accordance 
with the requirements and the primary objectives of the HCD Act and 
other applicable laws, and whether the grantee has the continuing 
capacity to carry out those activities in a timely manner.
    This notice waives the requirements for submission of a performance 
report pursuant to 42 U.S.C. 12708(a), 24 CFR 91.520, and 24 CFR 
1003.506. Alternatively, HUD is requiring that grantees enter 
information in the DRGR system in sufficient detail to permit the 
Department's review of grantee performance on a quarterly basis through 
the Quarterly Performance Report (QPR) and to enable remote review of 
grantee data to allow HUD to assess compliance and risk. HUD-issued 
general and appropriation-specific guidance for DRGR reporting 
requirements can be found on the HUD exchange at: https://www.hudexchange.info/programs/drgr/.
    b. DRGR Action Plan. Each grantee must enter its action plan for 
disaster recovery, including performance measures, into HUD's DRGR 
system. As more detailed information about uses of funds is identified 
by the grantee, it must be entered into the DRGR system at a level of 
detail that is sufficient to serve as the basis for acceptable 
performance reports and permits HUD review of compliance requirements.
    The action plan must also be entered into the DRGR system so that 
the grantee is able to draw its CDBG-DR funds. The grantee may enter 
activities into the DRGR system before or after submission of the 
written action plan to HUD, but will not be able to budget grant funds 
to these activities until after the grant agreement has been executed. 
To enter an activity into the DRGR system, the grantee must know the 
activity type, national objective, and the organization that will be 
responsible for the activity.
    Grantees will gain access to its line of credit upon review and 
approval of the initial DRGR action plan. Each activity entered into 
the DRGR system must also be categorized under a ``project.'' 
Typically, projects are based on groups of activities that accomplish a 
similar, broad purpose (e.g., housing, infrastructure, or economic 
revitalization) or are based on an area of service (e.g., Community A). 
If a grantee describes just one program within a broader category 
(e.g., single family rehabilitation), that program is entered as a 
project in the DRGR system. Further, the budget of the program would be 
identified as the project's budget. If a grantee has only identified 
the Method of Distribution (MOD) upon HUD's approval of the published 
action plan, the MOD categories typically serve as the projects in the 
DRGR system, rather than activity groupings. Activities are added to 
MOD projects as specific CDBG-DR programs and projects are identified 
for funding.
    c. Tracking oversight activities in the DRGR system; use of DRGR 
data for HUD review and dissemination. Each grantee must also enter 
into the DRGR system summary information on monitoring visits and 
reports, audits, and technical assistance it conducts as part of its 
oversight of its disaster recovery programs. The grantee's Quarterly 
Performance Report (QPR) will include a summary indicating the number 
of grantee oversight visits and reports (see subparagraph e. for more 
information on the QPR). HUD will use data entered into the DRGR action 
plan and the QPR, transactional data from the DRGR system, and other 
information provided by the grantee, to provide reports to Congress and 
the public, as well as to: (1) Monitor for anomalies or performance 
problems that suggest fraud, abuse of funds, and duplication of 
benefits; (2) reconcile budgets,

[[Page 5853]]

obligations, funding draws, and expenditures; (3) calculate 
expenditures to determine compliance with administrative and public 
service caps and the overall percentage of funds that benefit low- and 
moderate-income persons; and (4) analyze the risk of grantee programs 
to determine priorities for the Department's monitoring. Any instances 
of fraud, waste, or abuse identified should be referred to the HUD OIG 
Fraud Hotline (phone: 1-800-347-3735 or email: [email protected]). No 
personally identifiable information shall be reported in DRGR.
    d. Tracking program income in the DRGR system. Grantees must use 
the DRGR system to draw grant funds for each activity. Grantees must 
also use the DRGR system to track program income receipts, 
disbursements, revolving loan funds, and leveraged funds (if 
applicable). If a State permits local governments to retain program 
income, or a State permits subrecipients to retain program income prior 
to grant closeout, the grantee must establish program income accounts 
in the DRGR system. The DRGR system requires grantees to use program 
income before drawing additional grant funds, and ensures that program 
income retained by one organization will not affect grant draw requests 
for other organizations.
    e. DRGR system Quarterly Performance Report (QPR). Each grantee 
must submit a QPR through the DRGR system no later than 30 days 
following the end of each calendar quarter. Within 3 days of submission 
to HUD, each QPR must be posted on the grantee's official website. In 
the event the QPR is rejected by HUD, the grantee must post the revised 
version, as approved by HUD, within 3 days of HUD approval. The 
grantee's first QPR is due after the first full calendar year quarter 
after HUD signs the grant agreement. For example, a grant agreement 
signed in April requires a QPR to be submitted by October 30. QPRs must 
be submitted on a quarterly basis until all funds have been expended 
and all expenditures and accomplishments have been reported. If a 
satisfactory report is not submitted in a timely manner, HUD may 
suspend access to CDBG-DR funds until a satisfactory report is 
submitted, or may withdraw and reallocate funding if HUD determines, 
after notice and opportunity for a hearing, that the jurisdiction did 
not submit a satisfactory report.
    Each QPR will include information about the uses of funds in 
activities identified in the DRGR action plan during the applicable 
quarter. This includes, but is not limited to, the project name, 
activity, location, and national objective; funds budgeted, obligated, 
drawn down, and expended; the funding source and total amount of any 
non-CDBG-DR funds to be expended on each activity; beginning and actual 
completion dates of completed activities; achieved performance 
outcomes, such as number of housing units completed or number of low- 
and moderate-income persons served; and the race and ethnicity of 
persons assisted under direct-benefit activities. For all housing and 
economic development activities, the address of each CDBG-DR assisted 
property must be recorded in the QPR. Grantees must not include such 
addresses in its public QPR; when entering addresses in the QPR, 
grantees must select ``Not Visible on PDF'' to exclude them from the 
report required to be posted on its website. The DRGR system will 
automatically display the amount of program income receipted, the 
amount of program income reported as disbursed, and the amount of grant 
funds disbursed in the QPR. Grantees must include a description of 
actions taken in that quarter to affirmatively further fair housing, 
within the section titled ``Overall Progress Narrative'' in the DRGR 
system.
    4. Citizen participation waiver and alternative requirement. To 
permit a more streamlined process, and ensure disaster recovery grants 
are awarded in a timely manner, provisions of 42 U.S.C. 5304(a)(2) and 
(3), 42 U.S.C. 12707, 24 CFR 570.486, 24 CFR 1003.604, and 24 CFR 
91.115(b) and (c), with respect to citizen participation requirements, 
are waived and replaced by the requirements below. The streamlined 
requirements do not mandate public hearings but do require the grantee 
to provide a reasonable opportunity (at least 14 days) for citizen 
comment and ongoing citizen access to information about the use of 
grant funds. The streamlined citizen participation requirements for a 
grant under this notice are:
    a. Publication of the action plan, opportunity for public comment, 
and substantial amendment criteria. Before the grantee adopts the 
action plan for this grant or any substantial amendment to the action 
plan, the grantee will publish the proposed plan or amendment. The 
manner of publication must include prominent posting on the grantee's 
official website and must afford citizens, affected local governments, 
and other interested parties a reasonable opportunity to examine the 
plan or amendment's contents. The topic of disaster recovery should be 
navigable by citizens from the grantee's (or relevant agency's) 
homepage. Grantees are also encouraged to notify affected citizens 
through electronic mailings, press releases, statements by public 
officials, media advertisements, public service announcements, and/or 
contacts with neighborhood organizations. Plan publication efforts must 
meet the effective communications requirements of 24 CFR 8.6 and other 
fair housing and civil rights requirements, such as the effective 
communication requirements under the Americans with Disabilities Act.
    Grantees are responsible for ensuring that all citizens have equal 
access to information about the programs, including persons with 
disabilities and limited English proficiency (LEP). Each grantee must 
ensure that program information is available in the appropriate 
languages for the geographic areas to be served and take appropriate 
steps to ensure effective communications with persons with disabilities 
pursuant to 24 CFR 8.6 and other fair housing and civil rights 
requirements, such as the effective communication requirements under 
the Americans with Disabilities Act. Since State grantees under this 
notice may make grants throughout the State, including to entitlement 
communities, States should carefully evaluate the needs of persons with 
disabilities and those with limited English proficiency. For assistance 
in ensuring that this information is available to LEP populations, 
recipients should consult the Final Guidance to Federal Financial 
Assistance Recipients Regarding Title VI, Prohibition Against National 
Origin Discrimination Affecting Limited English Proficient Persons, 
published on January 22, 2007, in the Federal Register (72 FR 2732) and 
at: https://www.lep.gov/guidance/HUD_guidance_Jan07.pdf.
    Subsequent to publication of the action plan, the grantee must 
provide a reasonable time frame (again, no less than 14 days) and 
method(s) (including electronic submission) for receiving comments on 
the plan or substantial amendment. In its action plan, each grantee 
must specify criteria for determining what changes in the grantee's 
plan constitute a substantial amendment to the plan. At a minimum, the 
following modifications will constitute a substantial amendment: A 
change in program benefit or eligibility criteria; the addition or 
deletion of an activity; or the allocation or reallocation of a 
monetary threshold specified by the grantee in its action plan. The 
grantee may substantially amend the action plan if it follows the same 
procedures required in this notice for the

[[Page 5854]]

preparation and submission of an action plan for disaster recovery.
    b. Nonsubstantial amendment. The grantee must notify HUD, but is 
not required to seek public comment, when it makes any plan amendment 
that is not substantial. HUD must be notified at least 5 business days 
before the amendment becomes effective. However, 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 the notification of nonsubstantial amendments 
via email within 5 business days.
    c. Consideration of public comments. The grantee must consider all 
comments, received orally or in writing, on the action plan or any 
substantial amendment. A summary of these comments or views, and the 
grantee's response to each must be submitted to HUD with the action 
plan or substantial amendment.
    d. Availability and accessibility of the Action Plan. The grantee 
must make the action plan, any substantial amendments, and all 
performance reports available to the public on its website and on 
request. In addition, the grantee must make these documents available 
in a form accessible to persons with disabilities and those with 
limited English proficiency. During the term of the grant, the grantee 
will provide citizens, affected local governments, and other interested 
parties with reasonable and timely access to information and records 
relating to the action plan and to the grantee's use of grant funds.
    e. Public website. The grantee must maintain a public website that 
provides information accounting for how all grant funds are used and 
managed/administered, including links to all action plans, action plan 
amendments, CDBG-DR program policies and procedures, performance 
reports, citizen participation requirements, and activity/program 
information for activities described in its action plan, including 
details of all contracts and ongoing procurement policies. To meet this 
requirement, each grantee must have a separate page dedicated to 
disaster recovery that includes the information described at paragraph 
A.27 of section VI of this notice.
    f. Application status. The grantee must provide multiple methods of 
communication, such as websites, toll-free numbers, or other means that 
provide applicants for recovery assistance with timely information to 
determine the status of their application, as provided for in paragraph 
A.1.b in section VI of this notice.
    g. Citizen complaints. The grantee will provide a timely written 
response to every citizen complaint. The response must be provided 
within 15 working days of the receipt of the complaint. Complaints 
regarding fraud, waste, or abuse of government funds should be 
forwarded to the HUD OIG Fraud Hotline (phone: 1-800-347-3735 or email: 
[email protected]).
    5. Direct grant administration and means of carrying out eligible 
activities--applicable to State grantees only. Requirements at 42 
U.S.C. 5306(d) are waived to the extent necessary to allow a State to 
use its disaster recovery grant allocation directly to carry out State-
administered activities eligible under this notice, rather than 
distribute all funds to local governments. Pursuant to this waiver, the 
standard at 24 CFR 570.480(c) and the provisions at 42 U.S.C. 
5304(e)(2) will also include activities that the State carries out 
directly. Activities eligible under this notice may be carried out by 
the State, subject to State law and consistent with the requirement of 
24 CFR 570.200(f), through its employees, through procurement 
contracts, or through assistance provided under agreements with 
subrecipients. State grantees continue to be responsible for civil 
rights, labor standards, and environmental protection requirements, for 
compliance with 24 CFR 570.489(g) and (h) relating to conflicts of 
interest and for compliance with 24 CFR 570.489(m) relating to 
monitoring and management of subrecipients.
    A State grantee may also carry out activities in tribal areas. The 
State should coordinate with the Indian tribe with jurisdiction over 
the tribal area when providing CDBG-DR assistance to beneficiaries in 
tribal areas. State grantees carrying out projects in tribal areas, 
either directly or through its employees, through procurement 
contracts, or through assistance provided under agreements with 
subrecipients, must obtain the consent of the Indian tribe with 
jurisdiction over the tribal area to allow the State to carry out or to 
fund CDBG-DR projects in the area. Indian tribes that receive CDBG-DR 
funding from a State grantee must comply with the Title II of the Civil 
Rights Act of 1968 (25 U.S.C. 1301 et seq.) (Indian Civil Rights Act).
    For activities carried out by entities eligible under section 
105(a)(15) of the HCD Act, such entities will be subject to the 
description of a nonprofit under that section rather than the 
description located in 24 CFR 570.204, even in a case in which the 
entity is receiving assistance through a local government that is an 
entitlement grantee.
    6. Consolidated Plan waiver. HUD is temporarily waiving the 
requirement for consistency with the consolidated plan (requirements at 
42 U.S.C. 12706, 24 CFR 91.325(a)(5) and 91.225(a)(5)), because the 
effects of a major disaster alter a grantee's priorities for meeting 
housing, employment, and infrastructure needs. In conjunction, 42 
U.S.C. 5304(e), to the extent that it would require HUD to annually 
review grantee performance under the consistency criteria, is also 
waived. However, this waiver applies only until the grantee submits its 
next full (3-5 year) consolidated plan, or for 24 months after the 
effective date of this notice, whichever is sooner. If the grantee is 
not scheduled to submit a new 3-5 year consolidated plan within the 
next 2 years, HUD expects each grantee to update its existing 3-5 year 
consolidated plan to reflect disaster-related needs no later than 24 
months after the effective date of this notice. Additionally, grantees 
are encouraged to incorporate disaster-recovery needs into their 
consolidated plan updates as soon as practicable, but any unmet 
disaster-related needs and associated priorities must be incorporated 
into the grantee's next consolidated plan update no later than its 
Fiscal Year 2020 update. HUD has issued guidance for incorporating 
CDBG-DR funds into consolidated plans via HUD's eCon Planning Suite. 
This guidance is on the HUD Exchange at: https://www.hudexchange.info/resource/4400/updating-the-consolidated-plan-to-reflect-disaster-recovery-needs-and-associated-priorities/. This waiver does not affect 
the current applicability of HUD's July 16, 2015, final rule on 
Affirmatively Furthering Fair Housing (80 FR 42272) to grantees.
    7. Requirement for consultation during plan preparation. Currently, 
the HCD Act and regulations require State grantees to consult with 
affected local governments in nonentitlement areas of the State in 
determining the State's proposed method of distribution. HUD is waiving 
42 U.S.C. 5306(d)(2)(C)(iv), 42 U.S.C. 5306(d)(2)(D), 24 CFR 
91.325(b)(2), and 24 CFR 91.110, and instituting the alternative 
requirement that States receiving an allocation under this notice 
consult with all disaster-affected local governments (including any 
CDBG entitlement grantees), Indian tribes, and any local public housing 
authorities in determining the use of funds. This ensures that State 
grantees sufficiently assess the recovery needs of all areas affected 
by the disaster. Additional guidance on consultation

[[Page 5855]]

with local stakeholders can be found in the National Disaster Recovery 
Framework and its discussion of pre- and post-disaster planning, at: 
https://www.fema.gov/national-disaster-recovery-framework.
    Grantees must consult with States, Indian tribes, local 
governments, Federal partners, nongovernmental organizations, the 
private sector, and other stakeholders and affected parties in the 
surrounding geographic area to ensure consistency of the action plan 
with applicable regional redevelopment plans. Grantees are encouraged 
to establish a recovery task force with representative members of each 
sector to advise on how recovery activities can best contribute towards 
the goals of regional redevelopment plans.
    8. Overall benefit requirement. The primary objective of the HCD 
Act 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 
not less than 70 percent of the aggregate of CDBG program funds be used 
to support activities benefitting low- and moderate-income persons. The 
70 percent overall benefit requirement shall remain in effect for this 
allocation, unless waived pursuant to a request by an individual 
grantee to authorize a lower overall benefit for its CDBG-DR grant 
based on a determination by HUD of compelling need for the reduction.
    A grantee may seek to reduce the overall benefit requirement below 
70 percent of the total grant, but must submit 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 70 percent requirement; and (d) demonstrates 
that low- and moderate-income persons' disaster-related needs have been 
sufficiently met and 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.
    9. Use of the ``upper quartile'' or ``exception criteria'' for low- 
and moderate-income area benefit activities. Section 101(c) of the HCD 
Act requires each funded activity to meet a national objective of the 
CDBG program, including the national objective of benefiting low- and 
moderate-income persons. Grantees may meet this national objective on 
an area basis, through an activity which is available to benefit all 
the residents of an area where at least 51 percent of the residents are 
low- and moderate income. In some cases, HUD permits an exception to 
the low- and moderate-income area benefit requirement that an area 
contain at least 51 percent low- and moderate-income residents. This 
exception applies to entitlement communities that have few, if any, 
areas within their jurisdiction that have 51 percent or more low- and 
moderate-income residents. These communities are allowed to use a 
percentage less than 51 percent to qualify activities under the low- 
and moderate-income area benefit category. This exception is referred 
to as the ``exception criteria'' or the ``upper quartile.'' A grantee 
qualifies for this exception when fewer than one quarter of the 
populated-block groups in its jurisdictions contain 51 percent or more 
low- and moderate-income persons. In such a community, activities must 
serve an area that contains a percentage of low- and moderate-income 
residents that is within the upper quartile of all census-block groups 
within its jurisdiction in terms of the degree of concentration of low- 
and moderate-income residents. HUD assesses each grantee's census-block 
groups to determine whether a grantee qualifies to use this exception 
and identifies the alternative percentage the grantee may use instead 
of 51 percent for the purpose of qualifying activities under the low- 
and moderate-income area benefit. HUD determines the lowest proportion 
a grantee may use to qualify an area for this purpose and advises the 
grantee, accordingly. Disaster recovery grantees are required to use 
the most recent data available in implementing the exception criteria 
(https://www.hudexchange.info/programs/acs-low-mod-summary-data/acs-low-mod-summary-data-exception-grantees/). The ``exception criteria'' 
apply to disaster recovery activities funded pursuant to this notice in 
jurisdictions covered by such criteria, including jurisdictions that 
receive disaster recovery funds from a State.
    10. Grant administration responsibilities and general 
administration cap.
    a. Grantee responsibilities. Each grantee shall administer its 
award in compliance with all applicable laws and regulations and shall 
be financially accountable for the use of all funds provided in this 
notice.
    b. General administration cap. For all grantees under this notice, 
the CDBG program administration requirements must be modified to be 
consistent with the Appropriations Act. Accordingly, 5 percent of the 
grant (plus program income) may be used for administrative costs by the 
grantee, units of general local government, or by subrecipients. Thus, 
the total of all costs classified as administrative for any grantee 
under this notice must be less than or equal to the 5 percent cap.
    (1) Combined technical assistance and administrative expenditures 
cap for States only. The provisions of 42 U.S.C. 5306(d) and 24 CFR 
570.489(a)(1)(i) and (iii) will not apply to the extent that they cap 
administration and technical assistance expenditures, limit a State's 
ability to charge a nominal application fee for grant applications for 
activities the State carries out directly, and require a dollar-for-
dollar match of State funds for administrative costs exceeding 
$100,000. 42 U.S.C. 5306(d)(5) and (6) are waived and replaced with the 
alternative requirement that the aggregate total for administrative and 
technical assistance expenditures must not exceed 5 percent of the 
grant plus program income. Under this alternative requirement, a State 
is limited to spending a maximum of 15 percent of its total grant 
amount on planning costs. Planning costs subject to the 15 percent cap 
are those defined in 42 U.S.C. 5305(a)(12).
    11. Planning-only activities-applicable to State grantees only. The 
State CDBG program requires that local government grant subrecipients 
for planning-only grants must document that the use of funds meets a 
national objective. In the State CDBG program, these planning grants 
are typically used for individual project plans. By contrast, planning 
activities carried out by entitlement communities are more likely to 
include non-project-specific plans such as functional land-use plans, 
master plans, historic preservation plans, comprehensive plans, 
community recovery plans, development of housing codes, zoning 
ordinances, and neighborhood plans. These plans may guide long-term 
community development efforts comprising multiple activities funded by 
multiple sources. In the CDBG Entitlement program, these more general 
planning activities are presumed to meet a national objective under the 
requirements at 24 CFR 570.208(d)(4).
    The Department notes that almost all effective recoveries in the 
past have relied on some form of area-wide or comprehensive planning 
activity to guide overall redevelopment

[[Page 5856]]

independent of the ultimate source of implementation funds. To assist 
State grantees, the Department is waiving the requirements at 24 CFR 
570.483(b)(5) or (c)(3), which limit the circumstances under which the 
planning activity can meet a low- and moderate-income or slum-and-
blight national objective. Instead, States must comply with 24 CFR 
570.208(d)(4) when funding disaster recovery-assisted, planning-only 
grants, or directly administering planning activities that guide 
recovery in accordance with the Appropriations Act. In addition, the 
types of planning activities that States may fund or undertake are 
expanded to be consistent with those of entitlement communities 
identified at 24 CFR 570.205. Plans should include an assessment of 
natural hazard risks, including anticipated effects of future extreme 
weather events and other hazards. Additional resources to assist in 
this process are available on the HUD exchange website: https://www.hudexchange.info/programs/cdbg-dr/resources/#natural-hazard-risk-and-resilience-tools.
    12. Use of the urgent need national objective. The CDBG 
certification requirements for documentation of urgent need, located at 
24 CFR 570.483(d), are waived for the grants under this notice and 
replaced with the following alternative requirement. In the context of 
disaster recovery, the standard urgent need certification requirements 
may impede recovery. Since the Department only provides CDBG-DR awards 
to grantees with documented disaster-related impacts and each grantee 
is limited to spending funds only for the benefit of areas that 
received a presidential disaster declaration as identified in Table 1 
of this notice, the following streamlined alternative requirement 
recognizes the urgency in addressing serious threats to community 
welfare following a major disaster.
    A grantee need not issue formal certification statements to qualify 
an activity as meeting the urgent need national objective. Instead, it 
must document how each program and/or activity funded under the urgent 
need national objective responds to a disaster-related impact. For each 
activity that will meet an urgent need national objective, the grantee 
must reference in its action plan needs assessment the type, scale, and 
location of the disaster-related impacts that each program and/or 
activity is addressing over the course of the applicable deadline for 
the expenditure of obligated grant funds. Grantees are advised to use 
the low- and moderate-income benefit national objective for all 
activities that qualify under the criteria for that national objective. 
At least 70 percent of the entire CDBG-DR grant must be used for 
activities that benefit low- and moderate-income persons.
    13. Waiver and alternative requirement for distribution to CDBG 
metropolitan cities and urban counties- applicable to State grantees 
only. 42 U.S.C. 5302(a)(7) (definition of ``nonentitlement area'') and 
provisions of 24 CFR part 570, including 24 CFR 570.480, are waived to 
permit a State to distribute CDBG-DR funds to units of local government 
and Indian tribes.
    14. Use of subrecipients--applicable to State grantees only. The 
State CDBG program rule does not make specific provision for the 
treatment of entities that the CDBG Entitlement program calls 
``subrecipients.'' The waiver allowing the State to directly carry out 
activities creates a situation in which the State may use subrecipients 
to carry out activities in a manner similar to an entitlement 
community. Therefore, for States taking advantage of the waiver to 
carry out activities directly, the requirements at 24 CFR 570.502, 
570.503, and 570.500(c) apply.
    15. Waiver and alternative requirement for the U.S. Virgin Islands 
to administer CDBG-DR funds pursuant to the regulatory and statutory 
requirements of the State CDBG program. The provisions of 24 CFR part 
570 subpart F are waived to authorize the U.S. Virgin Islands to 
administer a CDBG-DR allocation in accordance with the regulatory and 
statutory provisions governing the State CDBG program, as modified by 
this notice. This includes the requirement that the aggregate total for 
administrative and technical assistance expenditures by the U.S. Virgin 
Islands must not exceed 5 percent of any CDBG-DR grant made pursuant to 
the Appropriations Act, plus program income.
    16. Recordkeeping. When a State carries out activities directly, 24 
CFR 570.490(b) is waived and the following alternative provision shall 
apply: the State shall establish and maintain such records as may be 
necessary to facilitate review and audit by HUD of the State's 
administration of CDBG-DR funds, under 24 CFR 570.493. Consistent with 
applicable statutes, regulations, waivers and alternative requirements, 
and other Federal requirements, the content of records maintained by 
the State shall be sufficient to: (1) Enable HUD to make the applicable 
determinations described at 24 CFR 570.493; (2) make compliance 
determinations for activities carried out directly by the State; and 
(3) show how activities funded are consistent with the descriptions of 
activities proposed for funding in the action plan and/or DRGR system. 
For fair housing and equal opportunity (FHEO) purposes, as applicable, 
such records shall include data on the racial, ethnic, and gender 
characteristics of persons who are applicants for, participants in, or 
beneficiaries of the program. All grantees must report FHEO data in the 
DRGR system at the activity level.
    17. Change of use of real property-applicable to State grantees 
only. This alternative requirement conforms the change of use of real 
property rule to the waiver allowing a State to carry out activities 
directly. For purposes of this program, all references to ``unit of 
general local government'' in 24 CFR 570.489(j), shall be read as 
``State, unit of general local government (UGLG) or State 
subrecipient.''
    18. Responsibility for review and handling of noncompliance-
applicable to State grantees only. This change is in conformance with 
the waiver allowing the State to carry out activities directly. 24 CFR 
570.492 is waived and the following alternative requirement applies for 
any State receiving a direct award under this notice: The State shall 
make reviews and audits, including on-site reviews of any 
subrecipients, designated public agencies, and local governments, as 
may be necessary or appropriate to meet the requirements of section 
104(e)(2) of the HCD Act, as amended, as modified by this notice. In 
the case of noncompliance with these requirements, the State shall take 
such actions as may be appropriate to prevent a continuance of the 
deficiency, mitigate any adverse effects or consequences, and prevent a 
recurrence. The State shall establish remedies for noncompliance by any 
designated subrecipients, public agencies, or local governments. The 
State shall attend and require subrecipients to attend fraud related 
training provided by HUD OIG to assist in the proper management of 
CDBG-DR grant funds. Additional information about this training will be 
posted on the HUD website.
    19. Program income alternative requirement. The Department is 
waiving applicable program income rules at 42 U.S.C. 5304(j) and 24 CFR 
570.489(e), 570.500 and 570.504 only to the extent necessary to provide 
additional flexibility to State and local government as described 
below. The alternative requirements provide guidance regarding the use 
of program income received before and after grant close out and address 
revolving loan funds.
    a. Definition of program income.
    (1) For purposes of this notice, ``program income'' is defined as 
gross income generated from the use of

[[Page 5857]]

CDBG-DR funds, except as provided in subparagraph (d) of this 
paragraph, and received by a State or a subrecipient of a State. When 
income is generated by an activity that is only partially assisted with 
CDBG-DR funds, the income shall be prorated to reflect the percentage 
of CDBG-DR funds used (e.g., a single loan supported by CDBG-DR funds 
and other funds; a single parcel of land purchased with CDBG funds and 
other funds). Program income includes, but is not limited to, the 
following:
    (a) Proceeds from the disposition by sale or long-term lease of 
real property purchased or improved with CDBG-DR funds.
    (b) Proceeds from the disposition of equipment purchased with CDBG-
DR funds.
    (c) Gross income from the use or rental of real or personal 
property acquired by a State, local government, or subrecipient thereof 
with CDBG-DR funds, less costs incidental to generation of the income 
(i.e., net income).
    (d) Net income from the use or rental of real property owned by a 
State, local government, or subrecipient thereof, that was constructed 
or improved with CDBG-DR funds.
    (e) Payments of principal and interest on loans made using CDBG-DR 
funds.
    (f) Proceeds from the sale of loans made with CDBG-DR funds.
    (g) Proceeds from the sale of obligations secured by loans made 
with CDBG-DR funds.
    (h) Interest earned on program income pending disposition of the 
income, including interest earned on funds held in a revolving fund 
account.
    (i) Funds collected through special assessments made against 
nonresidential properties and properties owned and occupied by 
households not low- and moderate-income, where the special assessments 
are used to recover all or part of the CDBG-DR portion of a public 
improvement.
    (j) Gross income paid to a State, local government, or a 
subrecipient thereof, from the ownership interest in a for-profit 
entity in which the income is in return for the provision of CDBG-DR 
assistance.
    (2) ``Program income'' does not include the following:
    (a) The total amount of funds that is less than $35,000 received in 
a single year and retained by a State, local government, or a 
subrecipient thereof.
    (b) Amounts generated by activities eligible under section 
105(a)(15) of the HCD Act and carried out by an entity under the 
authority of section 105(a)(15) of the HCD Act.
    b. Retention of program income. State grantees may permit a local 
government or Indian tribe that receives or will receive program income 
to retain the program income, but are not required to do so.
    c. Program income--use, close out, and transfer.
    (1) Program income received (and retained, if applicable) before or 
after close out of the grant that generated the program income, and 
used to continue disaster recovery activities, is treated as additional 
CDBG-DR funds subject to the requirements of this notice and must be 
used in accordance with the grantee's action plan for disaster 
recovery. To the maximum extent feasible, program income shall be used 
or distributed before additional withdrawals from the U.S. Treasury are 
made, except as provided in subparagraph d. of this paragraph.
    (2) In addition to the regulations addressing program income found 
at 24 CFR 570.489(e) and 570.504, the following rules apply: A State 
grantee may transfer program income to its annual CDBG program before 
close out of the grant that generated the program income. In addition, 
a State grantee may transfer program income before close out to any 
annual CDBG-funded activities carried out by a local government within 
the State. Program income received by a grantee after close out of the 
grant that generated the program income, may also be transferred to a 
grantee's annual CDBG award. In all cases, any program income received 
that is not used to continue the disaster recovery activity will not be 
subject to the waivers and alternative requirements of this notice. 
Rather, those funds will be subject to the State grantee's regular CDBG 
program rules.
    d. Revolving loan funds. State grantees and local governments may 
establish revolving funds to carry out specific, identified activities. 
A revolving fund, for this purpose, is a separate fund (with a set of 
accounts that are independent of other program accounts) established to 
carry out specific activities. These activities generate payments used 
to support similar activities going forward. These payments to the 
revolving fund are program income and must be substantially disbursed 
from the revolving fund before additional grant funds are drawn from 
the U.S. Treasury for payments that could be funded from the revolving 
fund. Such program income is not required to be disbursed for 
nonrevolving fund activities.
    State grantees may also establish a revolving fund to distribute 
funds to local governments to carry out specific, identified 
activities. The same requirements, outlined above, apply to this type 
of revolving loan fund. Note that no revolving fund established per 
this notice shall be directly funded or capitalized with CDBG-DR grant 
funds, pursuant to 24 CFR 570.489(f)(3).
    20. Reimbursement of disaster recovery expenses. The provisions of 
24 CFR 570.489(b) are applied to permit a State grantee to charge to 
the grant otherwise allowable costs incurred by itself, its recipients 
or subrecipients (including public housing authorities (PHAs)) on or 
after the incident date of the covered disaster. A local government 
grantee is subject to the provisions of 24 CFR 570.200(h) but may 
reimburse itself or its subrecipients for otherwise allowable costs 
incurred on or after the incident date of the covered disaster. Section 
570.200(h)(1)(i) will not apply to the extent that it requires pre-
agreement activities to be included in a consolidated plan. The 
Department expects a grantee to include all pre-agreement activities in 
its action plans.
    21. Reimbursement of pre-application costs of homeowners, 
businesses, and other qualifying entities. A grantee is permitted to 
charge to grants the preaward and preapplication costs of homeowners, 
businesses, and other qualifying entities for eligible costs it has 
incurred in response to an eligible disaster covered under this notice. 
However, a grantee may not charge such preaward or preapplication costs 
to grants if the preaward or preapplication action results in an 
adverse impact to the environment. Grantees receiving an allocation 
under this notice are also subject to HUD's guidance on preaward 
expenses published in CPD Notice 2015-07, ``Guidance for Charging Pre-
Application Costs of Homeowners, Businesses, and Other Qualifying 
Entities to CDBG Disaster Recovery Grants,'' as amended (https://www.hud.gov/sites/documents/15-07CPDN.PDF). Grantees are required to 
consult with the State Historic Preservation Officer, Fish and Wildlife 
Service, and National Marine Fisheries Service, to obtain formal 
agreements for compliance with section 106 of the National Historic 
Preservation Act (54 U.S.C. 306108) and section 7 of the Endangered 
Species Act of 1973 (16 U.S.C. 1536) when designing a reimbursement 
program. Grantees may not use CDBG-DR funds to provide compensation to 
beneficiaries meaning that funds may not be provided to a beneficiary 
based on the estimated or actual amount of loss from the declared 
disaster. Grantees may, however, reimburse beneficiaries for pre-
application costs incurred by the beneficiary for completing an 
eligible

[[Page 5858]]

activity, not for the amount of loss incurred by the beneficiary.
    22. Prohibition on forced mortgage payoff. In some instances, a 
homeowner with an outstanding mortgage balance is required, under the 
terms of their loan agreement, to repay the balance of the mortgage 
loan prior to using assistance to rehabilitate or reconstruct their 
home. CDBG-DR funds, however, may not be used for a forced mortgage 
payoff. The ineligibility of a forced mortgage payoff with CDBG-DR 
funds does not affect HUD's longstanding guidance that when other non-
CDBG disaster assistance is taken by lenders for a forced mortgage 
payoff, those funds are not considered to be available to the homeowner 
and do not constitute a duplication of benefits for the purpose of 
housing rehabilitation or reconstruction.
    23. One-for-One Replacement Housing, Relocation, and Real Property 
Acquisition Requirements. Activities and projects undertaken with CDBG-
DR funds are subject to the Uniform Relocation Assistance and Real 
Property Acquisition Policies Act of 1970, as amended, (42 U.S.C. 4601 
et seq.) (``URA'') and section 104(d) of the HCD Act (42 U.S.C. 
5304(d))(Section 104(d)). The implementing regulations for the URA are 
at 49 CFR part 24. The regulations for section 104(d) are at 24 CFR 
part 42, subpart C. For the purpose of promoting the availability of 
decent, safe, and sanitary housing, HUD is waiving the following URA 
and section 104(d) requirements with respect to the use of CDBG-DR 
funds allocated under this notice:
    a. Section 104(d) one for one replacement. One-for-one replacement 
requirements at section 104(d)(2)(A)(i) and (ii) and (d)(3) of the HCD 
Act and 24 CFR 42.375 are waived in connection with funds allocated 
under this notice for lower-income dwelling units that are damaged by 
the disaster and not suitable for rehabilitation. The section 104(d) 
one-for-one replacement requirements generally apply to demolished or 
converted occupied and vacant occupiable lower-income dwelling units. 
This waiver exempts disaster-damaged units that meet the grantee's 
definition of ``not suitable for rehabilitation'' from the one-for-one 
replacement requirements. Before carrying out activities that may be 
subject to the one-for-one replacement requirements, the grantee must 
define ``not suitable for rehabilitation'' in its action plan or in 
policies/procedures governing these activities. A grantee with 
questions about the one-for-one replacement requirements is encouraged 
to contact the HUD regional relocation specialist responsible for its 
jurisdiction.
    HUD is waiving the section 104(d) one-for-one replacement 
requirement for lower-income dwelling units that are damaged by the 
disaster and not suitable for rehabilitation because it does not 
account for the large, sudden changes that a major disaster may cause 
to the local housing stock, population, or economy. Further, the 
requirement may discourage grantees from converting or demolishing 
disaster-damaged housing when excessive costs would result from 
replacing all such units. Disaster-damaged housing structures that are 
not suitable for rehabilitation can pose a threat to public health and 
safety and to economic revitalization. Grantees should reassess post-
disaster population and housing needs to determine the appropriate type 
and amount of lower-income dwelling units to rehabilitate and/or 
rebuild. Grantees should note that the demolition and/or disposition of 
PHA-owned public housing units is covered by section 18 of the United 
States Housing Act of 1937, as amended, and 24 CFR part 970.
    b. Relocation assistance. The relocation assistance requirements at 
section 104(d)(2)(A) of the HCD Act and 24 CFR 42.350 are waived to the 
extent that they differ from the requirements of the URA and 
implementing regulations at 49 CFR part 24, as modified by this notice, 
for activities related to disaster recovery. Without this waiver, 
disparities exist in relocation assistance associated with activities 
typically funded by HUD and FEMA (e.g., buyouts and relocation). Both 
FEMA and CDBG funds are subject to the requirements of the URA; 
however, CDBG funds are subject to section 104(d), while FEMA funds are 
not. The URA provides at 49 CFR 24.402(b) that a displaced person is 
eligible to receive a rental assistance payment that is calculated to 
cover a period of 42 months. By contrast, section 104(d) allows a 
lower-income displaced person to choose between the URA rental 
assistance payment and a rental assistance payment calculated over a 
period of 60 months. This waiver of the section 104(d) relocation 
assistance requirements assures uniform and equitable treatment by 
setting the URA and its implementing regulations as the sole standard 
for relocation assistance under this notice.
    c. Tenant-based rental assistance. The requirements of sections 204 
and 205 of the URA, and 49 CFR 24.2(a)(6)(vii), 24.2(a)(6)(ix), and 
24.402(b) are waived to the extent necessary to permit a grantee to 
meet all or a portion of a grantee's replacement housing payment 
obligation to a displaced tenant by offering rental housing through a 
tenant-based rental assistance (TBRA) housing program subsidy (e.g., 
Section 8 rental voucher or certificate), provided that comparable 
replacement dwellings are made available to the tenant in accordance 
with 49 CFR 24.204(a) where the owner is willing to participate in the 
TBRA program, and the period of authorized assistance is at least 42 
months. Failure to grant this waiver would impede disaster recovery 
whenever TBRA program subsidies are available but funds for cash 
replacement housing payments are limited and such payments are required 
by the URA to be based on a 42-month term.
    d. Arm's length voluntary purchase. The requirements at 49 CFR 
24.101(b)(2)(i) and (ii) are waived to the extent that they apply to an 
arm's length voluntary purchase carried out by a person who uses funds 
allocated under this notice and does not have the power of eminent 
domain, in connection with the purchase and occupancy of a principal 
residence by that person. Given the often large-scale acquisition needs 
of grantees, this waiver is necessary to reduce burdensome 
administrative requirements following a disaster. Grantees are reminded 
that tenants occupying real property acquired through voluntary 
purchase may be eligible for relocation assistance.
    e. Optional relocation policies. The regulation at 24 CFR 
570.606(d) is waived to the extent that it requires optional relocation 
policies to be established at the grantee level. Unlike the regular 
CDBG program, States may carry out disaster recovery activities 
directly or through subrecipients, but 24 CFR 570.606(d) does not 
account for this distinction. This waiver makes clear that grantees 
receiving CDBG-DR funds under this notice may establish optional 
relocation policies or permit their subrecipients to establish separate 
optional relocation policies. This waiver is intended to provide States 
with maximum flexibility in developing optional relocation policies 
with CDBG-DR funds.
    f. Waiver of Section 414 of the Stafford Act. Section 414 of the 
Stafford Act (42 U.S.C. 5181) provides that ``Notwithstanding any other 
provision of law, no person otherwise eligible for any kind of 
replacement housing payment under the Uniform Relocation Assistance and 
Real Property Acquisition Policies Act of 1970 (Pub. L. 91-646) [42 
U.S.C. 4601 et seq.] [``URA''] shall be denied such eligibility as a 
result of his being unable, because of a major disaster as determined 
by the

[[Page 5859]]

President, to meet the occupancy requirements set by [the URA]''. 
Accordingly, homeowner occupants and tenants displaced from their homes 
as a result of the identified disaster and who would have otherwise 
been displaced as a direct result of any acquisition, rehabilitation, 
or demolition of real property for a federally funded program or 
project may become eligible for a replacement housing payment 
notwithstanding their inability to meet occupancy requirements 
prescribed in the URA. Section 414 of the Stafford Act (including its 
implementing regulation at 49 CFR 24.403(d)(1)), is waived to the 
extent that it would apply to real property acquisition, rehabilitation 
or demolition of real property for a CDBG- DR funded project commencing 
more than one year after the Presidentially declared disaster 
undertaken by the grantees, or subrecipients, provided that the project 
was 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. The 
Secretary has the authority to waive provisions of the Stafford Act and 
its implementing regulations that the Secretary administers in 
connection with the obligation of funds made available by this notice, 
or the grantees' use of these funds. The Department has determined that 
good cause exists for a waiver and that such waiver is not inconsistent 
with the overall purposes of title I of the HCD Act.
    (1) The waiver will simplify the administration of the disaster 
recovery process and reduce the administrative burden associated with 
the implementation of Stafford Act Section 414 requirements for 
projects commencing more than one year after the date of the 
Presidentially declared disaster considering the majority of such 
persons displaced by the disaster will have returned to their dwellings 
or found another place of permanent residence.
    (2) This waiver does not apply with respect to persons that meet 
the occupancy requirements to receive a replacement housing payment 
under the URA nor does it apply to persons displaced or relocated 
temporarily by other HUD-funded programs or projects. Such persons' 
eligibility for relocation assistance and payments under the URA is not 
impacted by this waiver.
    24. Environmental requirements.
    a. Clarifying note on the process for environmental release of 
funds when a State carries out activities directly. Usually, a State 
distributes CDBG funds to local governments and takes on HUD's role in 
receiving environmental certifications from the grant recipients and 
approving releases of funds. For this grant, HUD will allow a State 
grantee to also carry out activities directly, in addition to 
distributing funds to subrecipients. Thus, per 24 CFR 58.4, when a 
State carries out activities directly, the State must submit the 
Certification and Request for Release of Funds to HUD for approval.
    b. Adoption of another agency's environmental review. In accordance 
with the Appropriations Act, grant recipients of Federal funds that use 
such funds to supplement Federal assistance provided under sections 
402, 403, 404, 406, 407, or 502 of the Stafford Act may adopt, without 
review or public comment, any environmental review, approval, or permit 
performed by a Federal agency, and such adoption shall satisfy the 
responsibilities of the recipient with respect to such environmental 
review, approval, or permit that is required by the HCD Act. The grant 
recipient must notify HUD in writing of its decision to adopt another 
agency's environmental review. The grant recipient must retain a copy 
of the review in the grantee's environmental records.
    c. Unified Federal Review. Section 1106 or the Sandy Recovery 
Improvement Act (Div. B of Pub. L. 113-2, enacted January 29, 3013) 
directed the Administration to ``establish an expedited and unified 
interagency review process to ensure compliance with environmental and 
historic requirements under Federal law relating to disaster recovery 
projects, in order to expedite the recovery process, consistent with 
applicable law.'' The process aims to coordinate environmental and 
historic preservation reviews to expedite planning and decision-making 
for disaster recovery projects. This can improve the Federal 
Government's assistance to States, local, and tribal governments; 
communities; families; and individual citizens as they recover from 
future Presidentially declared disasters. Grantees receiving an 
allocation of funds under this notice are encouraged to participate in 
this process as one means of expediting recovery. Tools for the unified 
interagency review process (UFR) process can be found here: https://www.fema.gov/unified-federal-environmental-and-historic-preservation-review-presidentially-declared-disasters.
    d. Release of funds. In accordance with the Appropriations Act, and 
notwithstanding 42 U.S.C. 5304(g)(2), the Secretary may, upon receipt 
of a Request for Release of Funds and Certification, immediately 
approve the release of funds for an activity or project assisted with 
allocations under this notice if the recipient has adopted an 
environmental review, approval, or permit under subparagraph b. above, 
or the activity or project is categorically excluded from review under 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
    e. Historic preservation reviews. To facilitate expedited historic 
preservation reviews under section 106 of the National Historic 
Preservation Act of 1966 (54 U.S.C. Section 306108), HUD strongly 
encourages grantees to allocate general administration funds to retain 
a qualified historic preservation professional, and support the 
capacity of the State Historic Preservation Officer/Tribal Historic 
Preservation Officer to review CDBG-DR projects. For more information 
on qualified historic preservation professional qualifications 
standards see https://www.nps.gov/history/local-law/arch_stnds_9.htm.
    f. Tiered environmental reviews. HUD strongly encourages grantees 
as Responsible Entities to develop a Tiered approach to streamline the 
environmental review process for single family housing programs. 
Tiering, as defined in 40 CFR 1508.28, is a means of making the 
environmental review process more efficient by allowing parties to 
``eliminate repetitive discussions of the same issues and to focus on 
the actual issues ripe for decision at each level of environmental 
review'' (40 CFR 1502.20). Tiering is appropriate when a Responsible 
Entity is evaluating a single-family housing program with similar 
activities within a defined local geographic area and timeframe (e.g., 
rehabilitating single-family homes within a city district or county 
over the course of 1 to 5 years) but where the specific sites and 
activities are not yet known.
    A tiered review consists of two stages: A broad-level review and 
subsequent site-specific reviews. The broad-level review should 
identify and evaluate the issues that can be fully addressed and 
resolved, notwithstanding possible limited knowledge of the project. In 
addition, it must establish the standards, constraints, and processes 
to be followed in the site-specific reviews. An 8-Step Decision Making 
Process for Floodplains and Wetlands, including early and final public 
notices can be completed on a county-wide basis for single-family 
housing programs funded through CDBG-DR. As individual sites are 
selected for review, the site-specific

[[Page 5860]]

reviews evaluate the remaining issues based on the policies established 
in the broad-level review. Together, the broad-level review and all 
site-specific reviews will collectively comprise a complete 
environmental review addressing all required elements. Public notice 
and the Request for Release of Funds (HUD-Form 7015.15) are processed 
at the broad-level, eliminating the need for publication at the site-
specific level. However, funds cannot be spent or committed on a 
specific site or activity until the site-specific review have been 
completed for the site.
    25. Duplication of benefits. Section 312 of the Stafford Act, as 
amended, generally prohibits any person, business concern, or other 
entity from receiving financial assistance with respect to any part of 
a loss resulting from a major disaster for which such person, business 
concern, or other entity has received financial assistance under any 
other program or from insurance or any other source. To comply with 
Section 312, each grantee must ensure that each activity provides 
assistance to a person or entity only to the extent that the person or 
entity has a disaster recovery need that has not been fully met. 
Grantees are subject to the requirements of a separate notice 
explaining the duplication of benefit requirements, entitled 
``Clarification of Duplication of Benefits Requirements Under the 
Stafford Act for Community Development Block Grant (CDBG) Disaster 
Recovery Grantees'' (76 FR 71060, published November 16, 2011).
    26. Procurement. State grantees must comply with the procurement 
requirements at 24 CFR 570.489(g) and evaluate the cost or price of the 
product or service. State grantees shall establish requirements for 
procurement policies and procedures for local governments and 
subrecipients based on full and open competition consistent with the 
requirements of 24 CFR 570.489(g), and shall require an evaluation of 
the cost or price of the product or service. Additionally, if the State 
agency designated as the administering agency chooses to provide 
funding to another State agency, the administering agency may specify 
in its procurement policies and procedures whether the agency 
implementing the program must follow the procurement policies and 
procedures that the administering agency is subject to, or whether the 
agency must follow the same policies and procedures to which other 
local governments and subrecipients are subject.
    HUD may request periodic updates from any grantee that uses 
contractors. A contractor is a third-party person or organization from 
which the grantee acquires good or services through a procurement 
process, consistent with the procurement requirements in the CDBG 
program regulations. HUD is establishing an additional alternative 
requirement for all contracts with contractors used to provide discrete 
services or deliverables only, as follows:
    a. The grantee (or procuring entity) is required to clearly state 
the period of performance or date of completion in all contracts;
    b. The grantee (or procuring entity) must incorporate performance 
requirements and liquidated damages into each procured contract. 
Contracts that describe work performed by general management consulting 
services need not adhere to this requirement; and
    c. The grantee (or procuring entity) may contract for 
administrative support but may not delegate or contract to any other 
party any inherently governmental responsibilities related to 
management of the grant, such as oversight, policy development, 
monitoring, internal auditing, and financial management. Technical 
assistance resources for procurement are available to grantees either 
through HUD staff or through technical assistance providers engaged by 
HUD or a grantee.
    27. Public website. HUD is requiring each grantee to maintain a 
public website that provides information accounting for how all grant 
funds are used and managed/administered. The creation and maintenance 
of the public website is one component of the Department's 
certification of a grantee's proficient financial controls and 
procurement processes and adequate procedures for proper grants 
management as provided in paragraph A.1.a of section VI. of this 
notice. To meet this requirement, each grantee must make the following 
items available on its website: The action plan (including all 
amendments); the current approved DRGR action plan; each QPR (as 
created using the DRGR system); citizen participation requirements; 
procurement policies and procedures; description of services or goods 
currently being procured by the grantee; a copy of contracts the 
grantee has procured directly; and a summary of all procured contracts, 
including those procured by the grantee, recipients, or subrecipients 
(e.g., a summary list of procurements, the phase of the procurement, 
requirements for proposals, and any liquidation of damages associated 
with a contractor's failure or inability to implement the contract, 
etc.). The grantee should post only contracts as defined in 2 CFR 
200.22. To assist grantees in preparing the procurement summary, HUD 
has developed a template (the Contract Reporting Template). The 
template can be accessed at: https://www.hudexchange.info/cdbg-dr/cdbg-dr-laws-regulations-and-federal-register-notices/. Each grantee is 
required to use this template and attach an updated version to the DRGR 
system each quarter as part of its QPR submissions. Updated summaries 
must also be posted monthly on each grantee's website.
    28. Timely distribution of funds. The Appropriations Act, as 
amended, requires that funds provided under the Act be expended within 
two years of the date that HUD obligates funds to a grantee and 
authorizes the Office of Management and Budget (OMB) to provide a 
waiver of this requirement. In the absence of a waiver for this 
requirement, each grantee is required to expend all obligated funds 
within two years of HUD's execution of the grant agreement or amended 
grant agreement that obligates those funds. In addition, the provisions 
at 24 CFR 570.494 and 24 CFR 570.902 regarding timely distribution and 
expenditure of funds are waived and an alternative requirement 
established, providing that each grantee must also expend 100 percent 
of its allocation of CDBG-DR funds on eligible activities within 6 
years of HUD's execution of the initial grant agreement.
    29. Review of continuing capacity to carry out CDBG-funded 
activities in a timely manner. If HUD determines that the grantee has 
not carried out its CDBG-DR activities and certifications in accordance 
with the requirements in this notice, HUD will undertake a further 
review to determine whether or not the grantee has the continuing 
capacity to carry out its activities in a timely manner. In making the 
determination, the Department will consider the nature and extent of 
the recipient's performance deficiencies, types of corrective actions 
the recipient has undertaken, and the success or likely success of such 
actions, and apply the corrective and remedial actions specified in 
paragraph A.30 (below) of section VI of this notice.
    30. Corrective and remedial actions. To ensure compliance with the 
requirements of the Appropriations Act and to effectively administer 
the CDBG-DR program in a manner that facilitates recovery, particularly 
the alternative requirements permitting States to act directly to carry 
out eligible activities, HUD is waiving 42 U.S.C. 5304(e) to the extent 
necessary to establish the following alternative requirement: HUD may 
undertake corrective and remedial actions for States in accordance with 
the

[[Page 5861]]

authorities applicable to entitlement grantees in subpart O (including 
corrective and remedial actions in 24 CFR 570.910, 570.911, and 
570.913) or under subpart I of the CDBG regulations at 24 CFR part 570. 
In response to a deficiency, HUD may issue a warning letter followed by 
a corrective action plan that may include a management plan which 
assigns responsibility for further administration of the grant to 
specific entities or persons. Failure to comply with a corrective 
action may result in the termination, reduction or limitation of 
payments to grantees receiving funds under this notice.
    31. Reduction, withdrawal, or adjustment of a grant, or other 
appropriate action. Prior to a reduction, withdrawal, or adjustment of 
a CDBG-DR grant, or other actions taken pursuant to this section, the 
recipient shall be notified of the proposed action and be given an 
opportunity for an informal consultation. Consistent with the 
procedures described in this notice, the Department may adjust, reduce, 
or withdraw the CDBG-DR grant or take other actions as appropriate, 
except for funds that have been expended for eligible, approved 
activities.

B. Housing and Related Floodplain Issues

    32. Housing-related eligibility waivers. The broadening of eligible 
activities under the HCD Act is necessary following major disasters in 
which large numbers of affordable housing units have been damaged or 
destroyed, as is the case of the disasters eligible under this notice.
    Therefore, 42 U.S.C. 5305(a)(24)(A) and (D) is waived to the extent 
necessary to allow: (1) Homeownership assistance for households earning 
up to 120 percent of the area median income; and (2) down payment 
assistance for up to 100 percent of the down payment. While 
homeownership assistance may be provided to households earning up to 
120 percent of the area median income, only those funds used for 
households with up to 80 percent of the area median income may qualify 
as meeting the low- and moderate-income person benefit national 
objective.
    In addition, 42 U.S.C. 5305(a) and 24 CFR 570.207(b)(3) is waived 
and alternative requirements adopted to the extent necessary to permit 
new housing construction, and to require the following construction 
standards on structures constructed or rehabilitated with CDBG-DR funds 
as part of activities eligible under 42 U.S.C. 5305(a). All references 
to ``substantial damage'' and ``substantial improvement'' shall be as 
defined in 44 CFR 59.1 unless otherwise noted.
    a. Green Building Standard for Replacement and New Construction of 
Residential Housing. Grantees must meet the Green Building Standard in 
this subparagraph for: (i) All new construction of residential 
buildings and (ii) all replacement of substantially damaged residential 
buildings. Replacement of residential buildings may include 
reconstruction (i.e., demolishing and rebuilding a housing unit on the 
same lot in substantially the same manner) and may include changes to 
structural elements such as flooring systems, columns, or load bearing 
interior or exterior walls.
    b. Meaning of Green Building Standard. For purposes of this notice, 
the Green Building Standard means the grantee will require that all 
construction covered by subparagraph a, above, meet an industry-
recognized standard that has achieved certification under at least one 
of the following programs: (i) ENERGY STAR (Certified Homes or 
Multifamily High-Rise), (ii) Enterprise Green Communities, (iii) LEED 
(New Construction, Homes, Midrise, Existing Buildings Operations and 
Maintenance, or Neighborhood Development), (iv) ICC-700 National Green 
Building Standard, (v) EPA Indoor AirPlus (ENERGY STAR a prerequisite), 
or (vi) any other equivalent comprehensive green building program 
acceptable to HUD. Grantees must identify which Green Building Standard 
will be used in the program policies and procedures.
    c. Standards for rehabilitation of nonsubstantially damaged 
residential buildings. For rehabilitation other than that described in 
subparagraph a, above, grantees must follow the guidelines specified in 
the HUD CPD Green Building Retrofit Checklist, available at https://www.hudexchange.info/resource/3684/guidance-on-the-cpd-green-building-checklist/. Grantees must apply these guidelines to the extent 
applicable to the rehabilitation work undertaken, including the use of 
mold resistant products when replacing surfaces such as drywall. When 
older or obsolete products are replaced as part of the rehabilitation 
work, rehabilitation is required to use ENERGY STAR-labeled, 
WaterSense-labeled, or Federal Energy Management Program (FEMP)-
designated products and appliances. For example, if the furnace, air 
conditioner, windows, and appliances are replaced, the replacements 
must be ENERGY STAR-labeled or FEMP-designated products; WaterSense-
labeled products (e.g., faucets, toilets, showerheads) must be used 
when water products are replaced. Rehabilitated housing may also 
implement measures recommended in a Physical Condition Assessment (PCA) 
or Green Physical Needs Assessment (GPNA).
    d. Implementation of green building standards. (i) For construction 
projects completed, underway, or under contract prior to the date that 
assistance is approved for the project, the grantee is encouraged to 
apply the applicable standards to the extent feasible, but the Green 
Building Standard is not required. (ii) For specific required equipment 
or materials for which an ENERGY STAR- or WaterSense-labeled or FEMP-
designated product does not exist, the requirement to use such products 
does not apply.
    e. Elevation standards for new construction, repair of substantial 
damage, or substantial improvement. The following elevation standards 
apply to new construction, repair of substantial damage, or substantial 
improvement of structures located in an area delineated as a flood 
hazard area or equivalent in FEMA's data source identified in 24 CFR 
55.2(b)(1). All structures, defined at 44 CFR 59.1, designed 
principally for residential use and located in the 100-year (or 1 
percent annual chance) floodplain that receive assistance for new 
construction, repair of substantial damage, or substantial improvement, 
as defined at 24 CFR 55.2(b)(10), must be elevated with the lowest 
floor, including the basement, at least two feet above the base flood 
elevation. Mixed-use structures with no dwelling units and no residents 
below two feet above base flood elevation, must be elevated or 
floodproofed, in accordance with FEMA floodproofing standards at 44 CFR 
60.3(c)(3)(ii) or successor standard, up to at least two feet above 
base flood elevation. Please note that grantees should review the UFAS 
accessibility checklist available at https://www.hudexchange.info/resource/796/ufas-accessibility-checklist/ and the HUD Deeming Notice, 
79 FR 29671 (May 23, 2014) to ensure that these structures comply with 
accessibility requirements.
    All Critical Actions, as defined at 24 CFR 55.2(b)(3), within the 
500-year (or 0.2 percent annual chance) floodplain must be elevated or 
floodproofed (in accordance with the FEMA standards) to the higher of 
the 500-year floodplain elevation or three feet above the 100-year 
floodplain elevation. If the 500-year floodplain is unavailable, and 
the Critical Action is in the 100-year floodplain, then the structure 
must be elevated or floodproofed at least three feet above the 100-year 
floodplain elevation. Critical Actions are defined as an ``activity for 
which even a slight

[[Page 5862]]

chance of flooding would be too great, because such flooding might 
result in loss of life, injury to persons or damage to property.'' For 
example, Critical Actions include hospitals, nursing homes, police 
stations, fire stations and principal utility lines.
    Applicable State, local, and tribal codes and standards for 
floodplain management that exceed these requirements, including 
elevation, setbacks, and cumulative substantial damage requirements, 
must be followed.
    f. Broadband infrastructure in housing. Any substantial 
rehabilitation, as defined by 24 CFR 5.100, or new construction of a 
building with more than four rental units must include installation of 
broadband infrastructure, except where the grantee documents that: (a) 
The location of the new construction or substantial rehabilitation 
makes installation of broadband infrastructure infeasible; (b) the cost 
of installing broadband infrastructure would result in a fundamental 
alteration in the nature of its program or activity or in an undue 
financial burden; or (c) the structure of the housing to be 
substantially rehabilitated makes installation of broadband 
infrastructure infeasible.
    g. Resilient Home Construction Standard. Grantees are strongly 
encouraged to incorporate a Resilient Home Construction Standard, 
meaning that all construction covered by subparagraph (a) meet an 
industry-recognized standard such as those set by the FORTIFIED 
Home^TM Gold level for new construction of single-family, 
detached homes; and FORTIFIED Home^TM Silver level for 
reconstruction of the roof, windows and doors; or FORTIFIED 
Home^TM Bronze level for repair or reconstruction of the 
roof; or any other equivalent comprehensive resilient or disaster 
resistant building program. Further, grantees are strongly encouraged 
to meet the FORTIFIED Home^TM Bronze level standard for roof 
repair or reconstruction, for all construction covered under 
subparagraph B.32.c. FORTIFIED Home^TM is a risk-reduction 
program providing construction standards for new homes and retrofit 
standards for existing homes, which will increase a home's resilience 
to natural hazards, including high wind, hail, and tropical storms. 
Insurers can provide discounts for homeowner's insurance for properties 
certified as FORTIFIED. Grantees should advise property owners to 
contact their insurance agent for current information on what discounts 
may be available. More information is also available at: https://disastersafety.org/fortified/fortified-home/.
    33. Addressing Unmet Public Housing Needs. The grantee must 
identify in its action plan how it will address the rehabilitation, 
mitigation, and new construction needs of each disaster-impacted PHA 
within its jurisdiction, if applicable. The grantee must work directly 
with impacted PHAs in identifying necessary and reasonable costs and 
ensure that adequate funding from all available sources, including 
CDBG-DR grant funds, are dedicated to addressing the unmet needs of 
damaged public housing (e.g., FEMA, insurance, and funds available from 
programs administered by HUD's Office of Public and Indian Housing). In 
the rehabilitation, reconstruction and replacement of public housing 
provided for in the action plan pursuant to paragraph A.2.a.3 of 
section VI of this notice, each grantee must identify funding to 
specifically address the unmet needs described in this subparagraph.
    34. Addressing Unmet Affordable Rental Housing Needs. The grantee 
must identify in its action plan how it will address the 
rehabilitation, reconstruction, replacement, and new construction 
rental housing that is affordable to low- and moderate-income 
households in the most impacted and distressed areas and ensure that 
adequate funding from all available sources, including CDBG-DR grant 
funds, are dedicated to addressing the unmet needs identified in its 
action plan pursuant to paragraph A.2.a.3 of section VI of this notice. 
To meet the low-moderate housing national objective, affordable rental 
housing funded under this notice must be rented to a low- and moderate-
income person at affordable rents. The grantee must impose a minimum 
affordability period of twenty (20) years enforced with recorded use 
restrictions or other mechanisms to ensure that rental housing remains 
affordable for the required period of time. The action plan must, at a 
minimum, provide (1) a definition of ``affordable rents''; (2) the 
income limits for tenants of rental housing; (3) and minimum 
affordability period of twenty (20) years.
    35. Housing incentives in disaster-affected communities. Incentive 
payments are generally offered in addition to other programs or funding 
(such as insurance), to encourage households to relocate in a suitable 
housing development or an area promoted by the community's 
comprehensive recovery plan. For example, a grantee may offer an 
incentive payment (possibly in addition to a buyout payment) for 
households that volunteer to relocate outside of floodplain or to a 
lower-risk area.
    Therefore, 42 U.S.C. 5305(a) and associated regulations are waived 
to the extent necessary to allow the provision of housing incentives. 
These grantees must maintain documentation, at least at a programmatic 
level, describing how the amount of assistance was determined to be 
necessary and reasonable, and the incentives must be in accordance with 
the grantee's approved action plan and published program design(s). 
This waiver does not permit a compensation program. Additionally, a 
grantee may require the housing incentive to be used for a particular 
purpose by the household receiving the assistance.
    In undertaking a larger scale migration or relocation recovery 
effort that is intended to move households out of high-risk areas, the 
grantee should consider how it can protect and sustain the impacted 
community and its assets. Grantees must also weigh the benefits and 
costs, including anticipated insurance costs, of redeveloping high-risk 
areas that were impacted by a disaster. Accordingly, grantees are 
prohibited from offering incentives to return households to disaster-
impacted floodplains, unless the grantee can demonstrate to HUD how it 
will resettle such areas in a way that mitigates the risks of future 
disasters and increasing insurance costs resulting from continued 
occupation of high-risk areas, through mechanisms that can reduce risks 
and insurance costs, such as new land use development plans, building 
codes or construction requirements, protective infrastructure 
development, or through restrictions on future disaster assistance to 
such properties.
    When undertaking housing incentive activities, to demonstrate that 
an incentive meets the low- and moderate-income housing national 
objective, grantees must meet all requirements of the HCD Act and the 
criteria for the Low/Mod Housing Incentive (LMHI) national objectives 
for the use of housing incentives as described in paragraph B.38 of 
section VI.
    36. Limitation on emergency grant payments--interim mortgage 
assistance. 42 U.S.C. 5305(a)(8), 24 CFR 570.207(b)(4), and 24 CFR 
1003.207(b)(4) are modified to the extent necessary to extend interim 
mortgage assistance to qualified individuals from 3 months to up to 20 
months. Interim mortgage assistance is typically used in conjunction 
with a buyout program, or when the rehabilitation or reconstruction of 
single-family housing extends beyond 3

[[Page 5863]]

months, during which mortgage payments may be due but the home is 
uninhabitable. Thus, this interim assistance will be critical for many 
households facing financial hardship during this period. Grantees may 
use interim housing mortgage assistance payments along with 
rehabilitation/reconstruction assistance to expedite recovery 
assistance to homeowners, but must establish performance milestones for 
the rehabilitation/reconstruction that are to be met by the homeowner 
in order to receive the interim mortgage assistance payments. A grantee 
using this alternative requirement must document, in its policies and 
procedures, how it will determine the amount of assistance to be 
provided is necessary and reasonable.
    37. Acquisition of real property; flood and other buyouts. Grantees 
under this notice are able to carry out property acquisition for a 
variety of purposes. However, the term ``buyouts'' as referenced in 
this notice refers to acquisition of properties located in a floodway 
or floodplain that is intended to reduce risk from future flooding or 
the acquisition of properties in Disaster Risk Reduction Areas as 
designated by the grantee and defined below. HUD is providing 
alternative requirements for consistency with the application of other 
Federal resources commonly used for this type of activity.
    Grantees are encouraged to use buyouts strategically, as a means of 
acquiring contiguous parcels of land for uses compatible with open 
space, recreational, natural floodplain functions, other ecosystem 
restoration, or wetlands management practices. To the maximum extent 
practicable, grantees should avoid circumstances in which parcels that 
could not be acquired through a buyout remain alongside parcels that 
have been acquired through the grantee's buyout program. Grantees are 
reminded that real property acquisition with CDBG-DR funding, including 
buyout, is subject to the URA, including the real property acquisitions 
requirements at 49 CFR part 24, subpart B, as modified at paragraph 
A.23 of section VI of this notice.
    a. Clarification of ``Buyout'' and ``Real Property Acquisition'' 
activities. Grantees that choose to undertake a buyout program have the 
discretion to determine the appropriate valuation method, including 
paying either pre-disaster or post-disaster fair market value (FMV). In 
most cases, a program that provides pre-disaster FMV to buyout 
applicants provides compensation at an amount greater than the post-
disaster FMV. When the purchase price exceeds the current FMV, any 
CDBG-DR funds in excess of the FMV are considered assistance to the 
seller, thus making the seller a beneficiary of CDBG-DR assistance. If 
the seller receives assistance as part of the purchase price, this may 
have implications for duplication of benefits calculations or for 
demonstrating national objective criteria, as discussed below. However, 
a program that provides post-disaster FMV to buyout applicants merely 
provides the actual value of the property; thus, the seller is not 
considered a beneficiary of CDBG-DR assistance.
    Regardless of purchase price, all buyout activities are a type of 
acquisition of real property (as permitted by 42 U.S.C. 5305(a)(1)). 
However, only acquisitions that meet the definition of a ``buyout'' are 
subject to the post-acquisition land use restrictions imposed by this 
notice (subparagraph b. below). The key factor in determining whether 
the acquisition is a buyout is whether the intent of the purchase is to 
reduce risk of property damage in a floodplain or a Disaster Risk 
Reduction Area. To conduct a buyout in a Disaster Risk Reduction Area, 
the grantee must establish criteria in its policies and procedures to 
designate the area subject to the buyout, pursuant to the following 
requirements: (1) The hazard must have been caused or exacerbated by 
the Presidentially declared disaster for which the grantee received its 
CDBG-DR allocation; (2) the hazard must be a predictable environmental 
threat to the safety and well-being of program beneficiaries, as 
evidenced by the best available data (e.g. FEMA Repetitive Loss Data) 
and science; and (3) the Disaster Risk Reduction Area must be clearly 
delineated so that HUD and the public may easily determine which 
properties are located within the designated area.
    The distinction between buyouts and other types of acquisitions is 
important, because grantees may only redevelop an acquired property if 
the property is not acquired through a buyout program (i.e., the 
purpose of acquisition was something other than risk reduction). When 
acquisitions are not acquired through a buyout program, the purchase 
price must be consistent with applicable uniform cost principles (and 
the pre-disaster FMV may not be used).
    b. Buyout requirements:
    (1) Any property acquired, accepted, or from which a structure will 
be removed pursuant to the project will be dedicated and maintained in 
perpetuity for a use that is compatible with open space, recreational, 
or floodplain and wetlands management practices.
    (2) No new structure will be erected on property acquired, 
accepted, or from which a structure was removed under the acquisition 
or relocation program other than: (a) A public facility that is open on 
all sides and functionally related to a designated open space (e.g., a 
park, campground, or outdoor recreation area); (b) a rest room; or (c) 
a flood control structure, provided that structure does not reduce 
valley storage, increase erosive velocities, or increase flood heights 
on the opposite bank, upstream, or downstream and that the local 
floodplain manager approves, in writing, before the commencement of the 
construction of the structure.
    (3) After receipt of the assistance, with respect to any property 
acquired, accepted, or from which a structure was removed under the 
acquisition or relocation program, no subsequent application for 
additional disaster assistance for any purpose or to repair damage or 
make improvements of any sort will be made by the owner of the buyout 
property (including subsequent owners) to any Federal entity in 
perpetuity.
    The entity acquiring the property may lease it to adjacent property 
owners or other parties for compatible uses in return for a maintenance 
agreement. Although Federal policy encourages leasing rather than 
selling such property, the property may also be sold.
    In all cases, a deed restriction or covenant running with the 
property must require that the buyout property be dedicated and 
maintained for compatible uses in perpetuity.
    (4) Grantees have the discretion to determine an appropriate 
valuation method (including the use of pre-flood value or post-flood 
value as a basis for property value). However, in using CDBG-DR funds 
for buyouts, the grantee must uniformly apply whichever valuation 
method it chooses.
    (5) All buyout activities must be classified using the ``buyout'' 
activity type in the DRGR system.
    (6) Any State grantee implementing a buyout program or activity 
must consult with affected local governments.
    (7) When undertaking buyout activities, to demonstrate that a 
buyout meets the low- and moderate-income housing national objective, 
grantees must meet all requirements of the HCD Act and applicable 
regulatory criteria described below. Grantees are encouraged to consult 
with HUD prior to undertaking a buyout program with the intent of using 
the low- and moderate-income housing (LMH) national objective. 42 
U.S.C. 5305(c)(3) provides that any assisted activity that involves the 
acquisition or

[[Page 5864]]

rehabilitation of property to provide housing shall be considered to 
benefit persons of low- and moderate-income only to the extent such 
housing will, upon completion, be occupied by such persons. In 
addition, the State CDBG regulations at 24 CFR 570.483(b)(3), 
entitlement CDBG regulations at 24 CFR 570.208(a)(3), and Indian CDBG 
regulations at 24 CFR 1003.208(c) apply the LMH national objective to 
an eligible activity carried out for the purpose of providing or 
improving permanent residential structures that, upon completion, will 
be occupied by low- and moderate-income households. Therefore, a buyout 
program that merely pays homeowners to leave their existing homes does 
not result in a low- and moderate-income household occupying a 
residential structure and, thus, cannot meet the requirements of the 
LMH national objective. Buyout programs that assist low- and moderate-
income persons can be structured in one of the following ways:
    (a) The buyout program combines the acquisition of properties with 
another direct benefit--Low- and Moderate-Income housing activity, such 
as down payment assistance--that results in occupancy and otherwise 
meets the applicable LMH national objective criteria;
    (b) The program meets the low- and moderate-income area benefit 
criteria as defined in this notice, to demonstrate national objective 
compliance, provided that the grantee can document that the properties 
acquired through buyouts will be used in a way that benefits all of the 
residents in a particular area where at least 51 percent of the 
residents are low- and moderate-income persons. When using the area 
benefit approach, grantees must define the service area based on the 
end use of the buyout properties; or
    (c) The program meets the criteria for the low- and moderate-income 
limited clientele national objective, including the prohibition on the 
use of the limited clientele national objective when an activity's 
benefits are available to all residents of the area. A buyout program 
could meet the national objective criteria for the limited clientele 
national objective if it restricts buyout program eligibility to 
exclusively low- and moderate-income persons, and the buyout provides 
an actual benefit to the low- and moderate-income sellers by providing 
pre-disaster valuation uniformly to those who participate in the 
program.
    (d) The program meets the criteria for the Low/Mod Buyout (LMB) or 
Low/Mod Housing Incentive (LMHI) national objectives for buyouts and 
the use of housing incentives as authorized in the Department's August 
7, 2017 Federal Register notice at 82 FR 36825 and described in 
paragraph B.38 of section VI in this notice.
    c. Redevelopment of acquired properties.
    (1) Grantees may redevelop an acquired property if the property is 
not acquired through a buyout program and the purchase price is based 
on the property's post-disaster value, consistent with applicable cost 
principles (the pre-disaster value may not be used). In addition to the 
purchase price, grantees may opt to provide relocation assistance or 
housing incentives to the owner of a property that will be redeveloped 
if the property is purchased by the grantee or subrecipient through 
voluntary acquisition, and the owner's need for additional assistance 
is documented.
    (2) In carrying out acquisition activities, grantees must ensure 
they are in compliance with their long-term redevelopment plans.
    38. Additional LMI National Objective Criteria for Buyouts and 
Housing Incentives. 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 in this notice must follow 
guidelines outlined in paragraph 35 of section VI of this notice. 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 HCD Act 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 the two new LMI national objective criteria for buyouts 
(LMB) and housing incentives (LMHI) that benefit LMI households that 
use CDBG-DR funding provided pursuant to this notice.
    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 activity 
that benefits LMI households 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 (including optional relocation assistance) is greater than 
the post-disaster (current) 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.
    39. Alternative requirement for housing rehabilitation--assistance 
for second homes. The Department is instituting an alternative 
requirement to the rehabilitation provisions at 42 U.S.C. 5305(a)(4) as 
follows: Properties that served as second homes at the time of the 
disaster, or following the disaster, are not eligible for 
rehabilitation assistance or housing incentives. A second home is 
defined under this notice as a home that is not the primary

[[Page 5865]]

residence of the owner, a tenant, or any occupant at the time of the 
storm or at the time of application for assistance. Grantees may adopt 
policies and procedures that provide for limited exceptions to 
providing assistance to a second home in order to meet specific 
disaster recovery needs (e.g., adding affordable housing capacity); 
provided however that such exceptions are developed in consultation 
with and approved by HUD prior to implementation. Grantees can verify a 
primary residence using a variety of documentation including, but not 
limited to, voter registration cards, tax returns, homestead 
exemptions, driver's licenses and rental agreements.
    40. Flood insurance. Grantees, recipients, and subrecipients must 
implement procedures and mechanisms to ensure that assisted property 
owners comply with all flood insurance requirements, including the 
purchase and notification requirements described below, prior to 
providing assistance. For additional information, please consult with 
the field environmental officer in the local HUD field office or review 
the guidance on flood insurance requirements on HUD's website.
    a. Flood insurance purchase requirements. HUD does not prohibit the 
use of CDBG-DR funds for existing residential buildings in a Special 
Flood Hazard Area (or 100-year floodplain). However, Federal, State, 
local, and tribal laws and regulations related to both flood insurance 
and floodplain management must be followed, as applicable. With respect 
to flood insurance, a HUD-assisted homeowner of a property located in a 
Special Flood Hazard Area must obtain and maintain flood insurance in 
the amount and duration prescribed by FEMA's National Flood Insurance 
Program. Section 102(a) of the Flood Disaster Protection Act of 1973 
(42 U.S.C. 4012a) mandates the purchase of flood insurance protection 
for any HUD-assisted property within a Special Flood Hazard Area. HUD 
strongly recommends the purchase of flood insurance outside of a 
Special Flood Hazard Area for properties that have been damaged by a 
flood, to better protect property owners from the economic risks of 
future floods and reduce dependence on Federal disaster assistance in 
the future, but this is not a requirement.
    b. Federal assistance to owners remaining in a floodplain.
    (1) Section 582 of the National Flood Insurance Reform Act of 1994, 
as amended, (42 U.S.C. 5154a) prohibits flood disaster assistance in 
certain circumstances. In general, it provides that no Federal disaster 
relief assistance made available in a flood disaster area may be used 
to make a payment (including any loan assistance payment) to a person 
for ``repair, replacement, or restoration'' for damage to any personal, 
residential, or commercial property if that person at any time has 
received Federal flood disaster assistance that was conditioned on the 
person first having obtained flood insurance under applicable Federal 
law and the person has subsequently failed to obtain and maintain flood 
insurance as required under applicable Federal law on such property. 
This means that a grantee may not provide disaster assistance for the 
repair, replacement, or restoration of a property to a person who has 
failed to meet this requirement and must implement a process to check 
and monitor for compliance.
    (2) The Department is instituting an alternative requirement to 42 
U.S.C. 5305(a)(4) as follows: Grantees receiving funds under this 
notice are prohibited from providing CDBG-DR assistance for the 
rehabilitation/reconstruction of a house, if (a) the combined household 
income is greater than 120% AMI or the national median, (b) the 
property was located in a floodplain at the time of the disaster, and 
(c) the property owner did not maintain flood insurance on the damaged 
property, even when the property owner was not required to obtain and 
maintain such insurance. When a homeowner located in the floodplain 
allows their flood insurance policy to lapse, it is assumed that the 
homeowner is unable to afford insurance and/or is accepting 
responsibility for future flood damage to the home. HUD is establishing 
this alternative requirement to ensure that adequate recovery resources 
are available to assist lower income homeowners who reside in a 
floodplain but who are unlikely to be able to afford flood insurance. 
Higher income homeowners who reside in a floodplain, but who failed to 
secure or decided to not maintain their flood insurance, should not be 
assisted at the expense of those lower income households. Therefore, a 
grantee may only provide assistance for the rehabilitation/
reconstruction of a house located in a floodplain if: (a) The homeowner 
had flood insurance at the time of the qualifying disaster and still 
has unmet recovery needs; or (b) the household earns less than the 
greater of 120% AMI or the national median and has unmet recovery 
needs.
    (3) Section 582 also imposes a responsibility on a grantee that 
receives CDBG-DR funds or that designates annually appropriated CDBG 
funds for disaster recovery. That responsibility is to inform property 
owners receiving disaster assistance that triggers the flood insurance 
purchase requirement that they have a statutory responsibility to 
notify any transferee of the requirement to obtain and maintain flood 
insurance in writing and to maintain such written notification in the 
documents evidencing the transfer of the property, and that the 
transferring owner may be liable if he or she fails to do so. These 
requirements are enumerated at https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section5154a&num=0&edition=prelim.

C. Infrastructure (Public Facilities, Public Improvements)

    41. Elevation of Nonresidential Structures. Nonresidential 
structures must be elevated to the standards described in this 
paragraph or floodproofed, in accordance with FEMA floodproofing 
standards at 44 CFR 60.3(c)(3)(ii) or successor standard, up to at 
least two feet above the 100-year (or 1 percent annual chance) 
floodplain. All Critical Actions, as defined at 24 CFR 55.2(b)(3), 
within the 500-year (or 0.2 percent annual chance) floodplain must be 
elevated or floodproofed (in accordance with the FEMA standards) to the 
higher of the 500-year floodplain elevation or three feet above the 
100-year floodplain elevation. If the 500-year floodplain or elevation 
is unavailable, and the Critical Action is in the 100-year floodplain, 
then the structure must be elevated or floodproofed at least three feet 
above the 100-year floodplain elevation. Critical Actions are defined 
as an ``activity for which even a slight chance of flooding would be 
too great, because such flooding might result in loss of life, injury 
to persons or damage to property.'' For example, Critical Actions 
include hospitals, nursing homes, police stations, fire stations and 
principal utility lines.
    Applicable State, local, and tribal codes and standards for 
floodplain management that exceed these requirements, including 
elevation, setbacks, and cumulative substantial damage requirements, 
will be followed.
    42. Use of CDBG-DR as Match. As provided by the HCD Act, funds may 
be used as a matching requirement, share, or contribution for any other 
Federal program when used to carry out an eligible CDBG-DR activity. 
This includes programs or activities administered by the FEMA or USACE. 
By law, (codified in the HCD Act as a note to 105(a)), the amount of 
CDBG-DR funds that may be contributed to a USACE project is $250,000 or 
less. Note that the Appropriations Act prohibits the use of CDBG-DR 
funds for any

[[Page 5866]]

activity reimbursable by, or for which funds are also made available by 
FEMA or USACE.
    43. Requirements for flood control structures. Grantees that use 
CDBG-DR funds to assist flood control structures (i.e., dams and 
levees) are prohibited from using CDBG-DR funds to enlarge a dam or 
levee beyond the original footprint of the structure that existed prior 
to the disaster event. Grantees that use CDBG-DR funds for levees and 
dams are required to: (1) Register and maintain entries regarding such 
structures with the U.S. Army Corps of Engineers National Levee 
Database or National Inventory of Dams; (2) ensure that the structure 
is admitted in the U.S. Army Corps of Engineers PL 84-99 Rehabilitation 
Program (Rehabilitation Assistance for Non-Federal Flood Control 
Projects); (3) ensure the structure is accredited under the FEMA 
National Flood Insurance Program; (4) enter into DRGR system the exact 
location of the structure and the area served and protected by the 
structure; and (5) maintain file documentation demonstrating that the 
grantee has conducted a risk assessment prior to funding the flood 
control structure and documentation that the investment includes risk 
reduction measures.

D. Economic Revitalization

    44. National Objective Documentation for Economic Development 
Activities. 24 CFR 570.483(b)(4)(i), 24 CFR 570.506(b)(5), and 24 CFR 
1003.208(d) are waived to allow the grantees under this notice to 
identify the low- and moderate-income jobs benefit by documenting, for 
each person employed, the name of the business, type of job, and the 
annual wages or salary of the job. HUD will consider the person income-
qualified if the annual wages or salary of the job is at or under the 
HUD-established income limit for a one-person family. This method 
replaces the standard CDBG requirement--in which grantees must review 
the annual wages or salary of a job in comparison to the person's total 
household income and size (i.e., the number of persons). Thus, it 
streamlines the documentation process because it allows the collection 
of wage data for each position created or retained from the assisted 
businesses, rather than from each individual household.
    45. Public benefit for certain Economic Development activities. The 
public benefit provisions set standards for individual economic 
development activities (such as a single loan to a business) and for 
economic development activities in the aggregate. Currently, public 
benefit standards limit the amount of CDBG assistance per job retained 
or created, or the amount of CDBG assistance per low- and moderate-
income person to which goods or services are provided by the activity. 
These dollar thresholds were set two decades ago and can impede 
recovery by limiting the amount of assistance the grantee may provide 
to a critical activity.
    This notice waives the public benefit standards at 42 U.S.C. 
5305(e)(3), 24 CFR 570.482(f), 24 CFR 570.209(b) and (d), and 24 CFR 
1003.302(c) for only those economic development activities designed to 
create or retain jobs or businesses (including, but not limited to, 
long-term, short-term, and infrastructure projects). However, grantees 
shall collect and maintain documentation in the project file on the 
creation and retention of total jobs; the number of jobs within certain 
salary ranges; the average amount of assistance provided per job, by 
activity or program; and the types of jobs. Additionally, grantees 
shall report the total number of jobs created and retained and the 
applicable national objective in the DRGR system. Paragraph (g) of 24 
CFR 570.482 is also waived to the extent these provisions are related 
to public benefit.
    46. Clarifying note on Section 3 resident eligibility and 
documentation requirements. The definition of ``low-income persons'' in 
12 U.S.C. 1701u and 24 CFR 135.5 is the basis for eligibility as a 
section 3 resident. A section 3 resident means: (1) A public housing 
resident; or (2) an individual who resides in the metropolitan area or 
nonmetropolitan county in which the section 3 covered assistance is 
expended, and who is: (i) A low-income person or (ii) a very-low-income 
person. This notice authorizes grantees to determine that an individual 
is eligible to be considered a section 3 resident if the annual wages 
or salary of the person are at, or under, the HUD-established income 
limit for a one-person family for the jurisdiction. This authority does 
not impact other section 3 resident eligibility requirements in 24 CFR 
135.5. All direct recipients of CDBG-DR funding must submit form HUD-
60002 annually through the Section 3 Performance Evaluation and 
Registry System (SPEARS) which can be found on HUD's website: https://www.hud.gov/program_offices/fair_housing_equal_opp/section3/section3/spears.
    47. Waiver and modification of the job relocation clause to permit 
assistance to help a business return. CDBG requirements prevent program 
participants from providing assistance to a business to relocate from 
one labor market area to another if the relocation is likely to result 
in a significant loss of jobs in the labor market from which the 
business moved. This prohibition can be a critical barrier to 
reestablishing and rebuilding a displaced employment base after a major 
disaster. Therefore, 42 U.S.C. 5305(h), 24 CFR 570.210, 24 CFR 570.482, 
and 24 CFR 1003.209 are waived to allow a grantee to provide assistance 
to any business that was operating in the disaster-declared labor 
market area before the incident date of the applicable disaster and has 
since moved, in whole or in part, from the affected area to another 
State or to a labor market area within the same State to continue 
business.
    48. Prioritizing small businesses. To target assistance to small 
businesses, the Department is instituting an alternative requirement to 
the provisions at 42 U.S.C. 5305(a) to require grantees to prioritize 
assisting businesses that meet the definition of a small business as 
defined by SBA at 13 CFR part 121 or, for businesses engaged in 
``farming operations'' as defined at 7 CFR 1400.3, and that meet the 
United States Department of Agriculture Farm Service Agency (FSA), 
criteria that are described at 7 CFR 1400.500, which are used by the 
FSA to determine eligibility for certain assistance programs. With 
regard to assistance to businesses engaged in ``farming operations,'' 
grantees are advised that in its allocation methodology HUD does not 
account for crop loss and other agricultural losses in its 
determination of unmet economic need. Accordingly, HUD advises grantees 
to pursue sources of assistance other than CDBG-DR funds in order to 
address needs arising from crop loss or other agricultural losses 
attributable to the disaster.
    49. Clarifying note on the provision of ``working capital'' grants 
and loans to businesses. Grantees may provide many forms of assistance 
to businesses under the provisions of 105(a)(17) of the HCD Act, 
including ``working capital.'' In past recovery efforts, grantees have 
inquired as to how a business's working capital needs should be 
calculated. Working capital is one facet of a business's need after a 
disaster; it is not, however, the vehicle by which to fund all of a 
business's unmet needs. In its simplest form, working capital is 
defined as ``Current Assets minus Current Liabilities'' on the 
business's balance sheet. In other words, working capital is the amount 
of cash needed to fund one year's worth of liabilities (i.e., one 
year's worth of mortgage payments and other debt, tax and utilities, 
yearly wages, and accounts payable) after

[[Page 5867]]

subtracting other current assets such as inventory and accounts 
receivable. Working capital does not include any expense for any form 
of construction or expansion of existing facilities, whether ``hard'' 
or ``soft'' costs. Therefore, grantees should not include expenses for 
construction or expansion of existing facilities in any calculation 
involving working capital, unless the grantee intends to provide a 
comprehensive assistance package that is subject to the environmental 
review requirements of 24 CFR part 58. The provision of working capital 
constitutes an economic development activity under 24 CFR 58.35(b)(4) 
and may provide operating costs under 24 CFR 58.35(b)(3) and therefore, 
per 24 CFR 55.12(c)(1), are not subject to Part 55 unless it includes 
expenses for construction or expansion of existing facilities. A 
grantee's environmental review record must document the determination 
of this exclusion from environmental review.
    50. Prohibiting assistance to private utilities. Funds made 
available under this notice may not be used to assist a privately-owned 
utility for any purpose.

E. Certifications and Collection of Information

    51. Certifications waiver and alternative requirement. 24 CFR 
91.225 and 91.325 are waived. Each grantee receiving a direct 
allocation under this notice must make the following certifications 
with its action plan:
    a. The grantee certifies that it has in effect and is following a 
residential anti-displacement and relocation assistance plan in 
connection with any activity assisted with funding under the CDBG 
program.
    b. The grantee certifies its compliance with restrictions on 
lobbying required by 24 CFR part 87, together with disclosure forms, if 
required by part 87.
    c. The grantee certifies that the action plan for disaster recovery 
is authorized under State and local law (as applicable) and that the 
grantee, and any entity or entities designated by the grantee, and any 
contractor, subrecipient, or designated public agency carrying out an 
activity with CDBG-DR funds, possess(es) the legal authority to carry 
out the program for which it is seeking funding, in accordance with 
applicable HUD regulations and this notice. The grantee certifies that 
activities to be undertaken with funds under this notice are consistent 
with its action plan.
    d. The grantee certifies that it will comply with the acquisition 
and relocation requirements of the URA, as amended, and implementing 
regulations at 49 CFR part 24, except where waivers or alternative 
requirements are provided for in this notice.
    e. The grantee certifies that it will comply with section 3 of the 
Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and 
implementing regulations at 24 CFR part 135.
    f. The grantee certifies that it is following a detailed citizen 
participation plan that satisfies the requirements of 24 CFR 91.115 or 
91.105 (except as provided for in notices providing waivers and 
alternative requirements for this grant). Also, each local government 
receiving assistance from a State grantee must follow a detailed 
citizen participation plan that satisfies the requirements of 24 CFR 
570.486 (except as provided for in notices providing waivers and 
alternative requirements for this grant).
    g. State grantee certifies that it has consulted with affected 
local governments in counties designated in covered major disaster 
declarations in the non-entitlement, entitlement, and tribal areas of 
the State in determining the uses of funds, including the method of 
distribution of funding, or activities carried out directly by the 
State.
    h. The grantee certifies that it is complying with each of the 
following criteria:
    (1) Funds will be used solely for necessary expenses related to 
disaster relief, long-term recovery, restoration of infrastructure and 
housing and economic revitalization in the most impacted and distressed 
areas for which the President declared a major disaster in 2016 
pursuant to the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act of 1974 (42 U.S.C. 5121 et seq.).
    (2) With respect to activities expected to be assisted with CDBG-DR 
funds, the action plan has been developed so as to give the maximum 
feasible priority to activities that will benefit low- and moderate-
income families.
    (3) The aggregate use of CDBG-DR funds shall principally benefit 
low- and moderate-income families in a manner that ensures that at 
least 70 percent (or another percentage permitted by HUD in a waiver 
published in an applicable Federal Register notice) of the grant amount 
is expended for activities that benefit such persons.
    (4) The grantee will not attempt to recover any capital costs of 
public improvements assisted with CDBG-DR grant funds, by assessing any 
amount against properties owned and occupied by persons of low- and 
moderate-income, including any fee charged or assessment made as a 
condition of obtaining access to such public improvements, unless: (a) 
Disaster recovery grant funds are used to pay the proportion of such 
fee or assessment that relates to the capital costs of such public 
improvements that are financed from revenue sources other than under 
this title; or (b) for purposes of assessing any amount against 
properties owned and occupied by persons of moderate income, the 
grantee certifies to the Secretary that it lacks sufficient CDBG funds 
(in any form) to comply with the requirements of clause (a).
    i. The grantee certifies that the grant will be conducted and 
administered in conformity with title VI of the Civil Rights Act of 
1964 (42 U.S.C. 2000d), the Fair Housing Act (42 U.S.C. 3601-3619), and 
implementing regulations, and that it will affirmatively further fair 
housing.
    j. The grantee certifies that it has adopted and is enforcing the 
following policies, and, in addition, must certify that they will 
require local governments that receive grant funds to certify that they 
have adopted and are enforcing:
    (1) A policy prohibiting the use of excessive force by law 
enforcement agencies within its jurisdiction against any individuals 
engaged in nonviolent civil rights demonstrations; and
    (2) A policy of enforcing applicable State and local laws against 
physically barring entrance to or exit from a facility or location that 
is the subject of such nonviolent civil rights demonstrations within 
its jurisdiction.
    k. The grantee certifies that it (and any subrecipient or 
administering entity) currently has or will develop and maintain the 
capacity to carry out disaster recovery activities in a timely manner 
and that the grantee has reviewed the requirements of this notice. The 
grantee certifies to the accuracy of its Public Law 115-56 Financial 
Management and Grant Compliance certification checklist, or other 
recent certification submission, if approved by HUD, and related 
supporting documentation referenced at A.1.a. under section VI and its 
Implementation Plan and Capacity Assessment and related submissions to 
HUD referenced at A.1.b. under section VI.
    l. The grantee certifies that it will not use CDBG-DR funds for any 
activity in an area identified as flood prone for land use or hazard 
mitigation planning purposes by the State, local, or tribal government 
or delineated as a Special Flood Hazard Area (or 100-year floodplain) 
in FEMA's most current flood advisory maps, unless it also ensures that 
the action is designed or modified to minimize harm to or within the 
floodplain, in accordance with Executive Order 11988 and 24 CFR part

[[Page 5868]]

55. The relevant data source for this provision is the State, local, 
and tribal government land use regulations and hazard mitigation plans 
and the latest-issued FEMA data or guidance, which includes advisory 
data (such as Advisory Base Flood Elevations) or preliminary and final 
Flood Insurance Rate Maps.
    m. The grantee certifies that its activities concerning lead-based 
paint will comply with the requirements of 24 CFR part 35, subparts A, 
B, J, K, and R.
    n. The grantee certifies that it will comply with environmental 
requirements at 24 CFR part 58.
    o. The grantee certifies that it will comply with applicable laws.
    Warning: Any person who knowingly makes a false claim or statement 
to HUD may be subject to civil or criminal penalties under 18 U.S.C. 
287, 1001 and 31 U.S.C. 3729.

VII. Duration of Funding

    The Appropriations Act, as amended, requires that funds provided 
under the Act be expended within two years of the date that HUD 
obligates funds to a grantee. The Act as amended further authorizes the 
Office of Management and Budget (OMB) to provide a waiver of this 
requirement. This notice also requires each grantee to expend 100 
percent of its allocation of CDBG-DR funds on eligible activities 
within 6 years of HUD's initial obligation of funds pursuant to an 
executed grant agreement. However, in accordance with 31 U.S.C. 1555, 
HUD shall close the appropriation account and cancel any remaining 
obligated or unobligated balance 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. In such case, the funds 
shall not be available for obligation or expenditure for any purpose 
after the account is closed.

VIII. Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers for the disaster 
recovery grants under this notice are as follows: 14.228 for State CDBG 
grantees.

IX. 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: February 2, 2018.
Neal J. Rackleff,
Assistant Secretary.

Appendix A--Allocation of CDBG-DR Funds to Most Impacted and Distressed 
Areas Due to 2017 Federally Declared Disasters

Background

    The Supplemental Appropriations for Disaster Relief 
Requirements, 2017 (Pub. L. 115-56) appropriated $7,400,000,000 
through the Community Development Block Grant disaster recovery 
(CDBG-DR) program for necessary expenses for authorized activities 
related to disaster relief, long-term recovery, restoration of 
infrastructure and housing, and economic revitalization in the most 
impacted and distressed areas resulting from a major disaster 
declared in 2017, specifically:

    For an additional amount for ``Community Development Fund'', 
$7,400,000,000, . . ., for necessary expenses . . . related to 
disaster relief, long-term recovery, restoration of infrastructure 
and housing, and economic revitalization in the most impacted and 
distressed areas resulting from a major disaster declared in 2017 
pursuant to the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5121 et seq.): Provided, That funds shall 
be awarded directly to the State or unit of general local government 
at the discretion of the Secretary: . . . Provided further, That 
such funds may not be used for activities reimbursable by, or for 
which funds are made available by, the Federal Emergency Management 
Agency or the Army Corps of Engineers: . . .

    It should be noted that the language of Public Law 115-56 
permits HUD to deduct up to $10 million from the $7.4 billion for 
purposes of administration and oversight of the appropriation. HUD 
has opted to deduct the full $10 million, resulting in a total of 
$7.39 billion available for allocation.

Most Impacted and Distressed Areas

    As with prior CDBG-DR appropriations, HUD is not obligated to 
allocate funds for all major disasters declared in 2017. HUD is 
directed to use the funds ``in the most impacted and distressed 
areas.'' HUD has implemented this directive by limiting CDBG-DR 
formula allocations to jurisdictions with major disasters that meet 
two standards:

    (1) Individual Assistance/IHP designation. HUD has limited 
allocations to those disasters where FEMA had determined the damage 
was sufficient to declare the disaster as eligible to receive 
Individual and Households Program (IHP) funding.
    (2) Concentrated damage. HUD has limited the allocations to 
counties and zip codes with high levels of damage, collectively 
referred to as ``most impacted areas''. For this allocation, HUD is 
using the amount of serious unmet housing need as its measure of 
concentrated damage and limits the data used for the allocation only 
to counties exceeding a ``natural break'' in the data for their 
total amount of serious unmet housing needs. For purposes of this 
allocation, the serious unmet housing needs break occurs at $16 
million at the county level and $3.5 million for Zip Codes for Texas 
and Florida and $10 million for counties and $2 million for Zip 
Codes for the Commonwealth of Puerto Rico (Puerto Rico) and the 
United States Virgin Islands (Virgin Islands). The calculation for 
serious unmet housing needs are described below.

    These allocations are thus based on the unmet costs to repair 
seriously damaged properties in most impacted areas. These do not 
capture expected resiliency costs, although grantees may choose to 
use the CDBG funds for resiliency expenses. The estimated damage is 
based on the following factors:

    (1) Repair estimates for seriously damaged owner-occupied units 
without insurance (with some exceptions) in most impacted areas 
after FEMA and SBA repair grants or loans;
    (2) Repair estimates for seriously damaged rental units occupied 
by renters with income less than 50% of Area Median Income in most 
impacted areas; and
    (3) Repair and content loss estimates for small businesses with 
serious damage denied by SBA.

Methods for Estimating Unmet Needs for Housing

    The data HUD staff have identified as being available to 
calculate unmet needs for qualifying disasters come from the FEMA 
Individual Assistance program data on housing-unit damage as of 
November 8, 2017 for Texas and Florida and as of December 22, 2017 
for Puerto Rico and the Virgin Islands.
    The core data on housing damage for both the unmet housing needs 
calculation and the concentrated damage are based on home inspection 
data for FEMA's Individual Assistance program, and supplemented by 
SBA data from its Disaster Loan Program. HUD calculates ``unmet 
housing needs'' as the number of housing units with unmet needs 
times the estimated cost to repair those units less repair funds 
already provided by FEMA and SBA.
    For the continental U.S., HUD finds its traditional approach of 
just using real property damage assessments for owner-occupied units 
continues to be effective. Each of the FEMA inspected owner units 
are categorized by HUD into one of five categories:

 Minor-Low: Less than $3,000 of FEMA inspected real property 
damage

[[Page 5869]]

 Minor-High: $3,000 to $7,999 of FEMA inspected real 
property damage
 Major-Low: $8,000 to $14,999 of FEMA inspected real 
property damage and/or 1 to 4 feet of flooding on the first floor
 Major-High: $15,000 to $28,800 of FEMA inspected real 
property damage and/or 4 to 6 feet of flooding on the first floor
 Severe: Greater than $28,800 of FEMA inspected real 
property damage or determined destroyed and/or 6 or more feet of 
flooding on the first floor

    For Puerto Rico and the Virgin Islands, owner damage is 
calculated based on both real property and personal property on 
findings by HUD that this likely is a more accurate estimate of 
serious homeowner damage in those areas. For these owner-occupied 
units, the damage grouping would be the higher damage categorization 
based on the calculation above or:

 Minor-Low: Less than $2,500 of FEMA inspected personal 
property damage
 Minor-High: $2,500 to $3,499 of FEMA inspected personal 
property damage
 Major-Low: $3,500 to $4,999 of FEMA inspected personal 
property damage or 1 to 4 feet of flooding on the first floor
 Major-High: $5,000 to $8,999 of FEMA inspected personal 
property damage or 4 to 6 feet of flooding on the first floor
 Severe: Greater than $9,000 of FEMA inspected personal 
property damage or determined destroyed and/or 6 or more feet of 
flooding on the first floor
    To meet the statutory requirement of ``most impacted'' in this 
legislative language, homes are determined to have a most impacted 
or serious level of damage if they have damage of ``major-low'' or 
higher.
    Furthermore, a homeowner is determined to have unmet needs if 
they reported damage and no insurance to cover that damage and was 
outside the 1% risk flood hazard area. For all disasters, for 
homeowners inside the flood hazard area, only homeowners without 
insurance below 120% of Area Median Income are included in the 
estimated unmet needs.
    FEMA does not inspect rental units for real property damage so 
personal property damage is used as a proxy for unit damage. Each of 
the FEMA inspected renter units are categorized by HUD into one of 
five categories:

 Minor-Low: Less than $1,000 of FEMA inspected personal 
property damage
 Minor-High: $1,000 to $1,999 of FEMA inspected personal 
property damage
 Major-Low: $2,000 to $3,499 of FEMA inspected personal 
property damage or 1 to 4 feet of flooding on the first floor
 Major-High: $3,500 to $7,499 of FEMA inspected personal 
property damage or 4 to 6 feet of flooding on the first floor
 Severe: Greater than $7,500 of FEMA inspected personal 
property damage or determined destroyed and/or 6 or more feet of 
flooding on the first floor
    For rental properties, to meet the statutory requirement of 
``most impacted'' in this legislative language, homes are determined 
to have a high level of damage if they have damage of ``major-low'' 
or higher. That is, they have a FEMA personal property damage 
assessment of $2,000 or greater or flooding over 1 foot.
    Furthermore, landlords are presumed to have adequate insurance 
coverage unless the unit is occupied by a renter with income less 
than 50% of Area Median Income. Units are occupied by a tenant with 
income less than 50% of Area Median Income are used to calculate 
likely unmet needs for affordable rental housing. In Puerto Rico and 
the Virgin Islands, units are occupied by a tenant with income less 
than the greater of the Federal poverty level or 50% of Area Median 
Income are used to calculate likely unmet needs for affordable 
rental housing.
    The average cost to fully repair a home for a specific disaster 
to code within each of the damage categories noted above is 
calculated using the average real property damage repair costs 
determined by the Small Business Administration for its disaster 
loan program for the subset of homes inspected by both SBA and FEMA 
for each eligible disaster. Because SBA is inspecting for full 
repair costs, it is presumed to reflect the full cost to repair the 
home, which is generally more than the FEMA estimates on the cost to 
make the home habitable.
    For each household determined to have unmet housing needs (as 
described above), their estimated average unmet housing need less 
assumed assistance from FEMA and SBA was calculated for Texas as 
$58,956 for major damage (low); $72,961 for major damage (high); and 
$102,046 for severe damage. For Florida: $44,810 for major damage 
(low); $45,997 for major damage (high); and $67,799 for severe 
damage. For Puerto Rico and the Virgin Islands: $38,249 for major 
damage (low); $41,595 for major damage (high); and $66,066 for 
severe damage.

Methods for Estimating Unmet Economic Revitalization Needs

    Based on SBA disaster loans to businesses, HUD calculates the 
median real estate and content loss by the following damage 
categories for each state:

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

    For properties with real estate and content loss of $30,000 or 
more, HUD calculates the estimated amount of unmet needs for small 
businesses by multiplying the median damage estimates for the 
categories above by the number of small businesses denied an SBA 
loan, including those denied a loan prior to inspection due to 
inadequate credit or income (or a decision had not been made), under 
the assumption that damage among those denied at pre-inspection have 
the same distribution of damage as those denied after inspection.

Allocation Calculation

    Once eligible entities are identified using the above criteria, 
the allocation to individual grantees represents their proportional 
share of the estimated unmet needs. For the formula allocation, HUD 
calculates total serious unmet recovery needs as the aggregate of:

 Serious unmet housing needs in most impacted counties or 
county-equivalents
 Serious unmet business needs

    For Texas, HUD announced an allocation on November 17, 2017, 
that reflected the 100% calculation of serious unmet housing and 
business needs as calculated using the methods above less $57.8 
million allocated from an earlier appropriation. For Florida, HUD 
announced an allocation on November 28, 2017, that reflected a 100% 
calculation of serious unmet housing and business needs. Data were 
not available for Puerto Rico and the Virgin Islands until late 
December 2017. The remaining funds ($1.7 billion of $7.4 billion 
appropriated) are significantly less than the calculated serious 
unmet housing and business needs, and thus the allocations are only 
57% of the estimated serious unmet housing and business needs for 
Puerto Rico and the Virgin Islands.

[FR Doc. 2018-02693 Filed 2-7-18; 11:15 am]
 BILLING CODE 4210-67-P

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