Allocations, Common Application, Waivers, and Alternative Requirements for Community Development Block Grant Disaster Recovery Grantees, 40314-40325 [2018-17365]

Download as PDF 40314 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices the use of appropriate automated collection techniques or other forms of information technology, e.g., permitting electronic submission of responses. HUD encourages interested parties to submit comment in response to these questions. Authority: Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35. Dated: August 8, 2018. Inez C. Downs, Department Reports Management Officer, Office of the Chief Information Officer. [FR Doc. 2018–17445 Filed 8–13–18; 8:45 am] BILLING CODE 4210–67–P DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR–6109–N–01] Allocations, Common Application, Waivers, and Alternative Requirements for Community Development Block Grant Disaster Recovery Grantees Office of the Assistant Secretary for Community Planning and Development, HUD. ACTION: Notice. AGENCY: On April 10, 2018, HUD allocated nearly $28 billion in Community Development Block Grant disaster recovery (CDBG–DR) funds appropriated by the Further Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2018. HUD allocated $10.03 billion for the purpose of assisting in addressing unmet needs from disasters that occurred in 2017; $2 billion for improved electrical power systems in areas impacted by Hurricane Maria; and $15.9 billion for mitigation activities. This notice applies only to the $10.03 billion allocated for long-term recovery from disasters that occurred in 2017. A future notice will specify the requirements and process for the electrical power systems funding and the mitigation funds. This $10.03 billion allocation for addressing unmet recovery needs supplements the $7.4 billion in CDBG– DR funds appropriated by the Supplemental Appropriations for Disaster Relief Requirements Act, 2017, which allocated funds to Texas, Florida, Puerto Rico, and the U.S. Virgin Islands in response to qualifying disasters in 2017. In HUD’s Federal Register notice published on February 9, 2018 (the ‘‘Prior Notice’’), HUD described those allocations, applicable waivers and alternative requirements, relevant statutory and regulatory requirements, the grant award process, criteria for amozie on DSK3GDR082PROD with NOTICES1 SUMMARY: VerDate Sep<11>2014 19:13 Aug 13, 2018 Jkt 244001 action plan approval, and eligible disaster recovery activities. DATES: Applicability Date: August 20, 2018. FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Acting Director, Office of Block Grant Assistance, Department of Housing and Urban Development, 451 7th Street SW, Room 10166, Washington, DC 20410, telephone number 202–708–3587. Persons with hearing or speech impairments may access this number via TTY by calling the Federal Relay Service at 800–877–8339. Facsimile inquiries may be sent to Ms. Kome at 202–708–0033. (Except for the ‘‘800’’ number, these telephone numbers are not toll-free.) Email inquiries may be sent to disaster_recovery@hud.gov. SUPPLEMENTARY INFORMATION: Table of Contents I. Allocations II. Use of Funds III. Overview of Grant Process A. Appropriations Act (Pub. L. 115–123) Initial Action Plan Process B. Prior Appropriation (Pub. L. 115–56) Substantial Action Plan Amendment Process IV. Applicable Rules, Statutes, Waivers, and Alternative Requirements A. Grant Administration B. Housing C. Infrastructure D. Economic Revitalization V. Duration of Funding VI. Catalog of Federal Domestic Assistance VII. Finding of No Significant Impact Appendix A: Allocation Methodology I. Allocations The Further Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2018 (Division B, Subdivision 1 of the Bipartisan Budget Act of 2018), approved February 9, 2018 (Pub. L. 115–123) (the ‘‘Appropriations Act’’), appropriated nearly $28 billion in CDBG–DR funds. Of this amount, up to $16 billion is available to address unmet disaster recovery needs through activities authorized under title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.) (HCD Act) related to disaster relief, long-term recovery, restoration of infrastructure and housing, economic revitalization, and mitigation in the ‘‘most impacted and distressed’’ areas (identified by HUD using the best available data) resulting from a major declared disaster that occurred in 2017. Amounts allocated for these purposes supplement $7.4 billion in CDBG–DR funds appropriated on September 8, 2017, by the Supplemental Appropriations for Disaster Relief Requirements, 2017 (Pub. L. 115–56) PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 (the ‘‘Prior Appropriation’’). HUD allocated the first $7.4 billion in the Prior Notice (83 FR 5844, February 9, 2018). This notice amends the Prior Notice to ensure consistency across allocations for the same qualifying disasters, and to give effect to requirements of the Appropriations Act, including that funds allocated under the Prior Notice are subject to the terms and conditions applicable to CDBG–DR funds under the Appropriations Act. Based on the remaining unmet needs allocation methodology outlined in Appendix A, this notice allocates $10,030,484,000 for unmet disaster recovery needs under the Appropriations Act. The allocation amounts for unmet recovery needs included in Table 1 exclude the $2 billion set-aside for Puerto Rico and the Virgin Islands for electrical system improvements. The Appropriations Act further provided that of the nearly $28 billion, HUD must allocate not less than $12 billion for mitigation activities undertaken by grantees receiving an allocation of CDBG–DR funds for recovery from 2015, 2016, or 2017 disasters. On April 10, 2018, HUD announced that after addressing remaining 2017 unmet needs, HUD would allocate an additional $3.9 billion for mitigation, bringing the amount designated for mitigation to $15.9 billion. A subsequent notice will govern the allocations for mitigation and the allocations for electrical power system enhancements and improvements. In accordance with the Appropriations Act, $10,000,000 of the total amounts appropriated under the Act will be transferred to the Department’s Office of Community Planning and Development (CPD), Program Office Salaries and Expenses, for necessary costs of administering and overseeing CDBG–DR funds made available under the Appropriations Act and $15,000,000 is to be transferred to the CPD office to provide necessary capacity building and technical assistance to grantees. The Appropriations Act also provides $10,000,000 to the Department’s Office of the Inspector General for oversight of the appropriated CDBG–DR funds. Although the Prior Notice requires each grantee to primarily consider and address its unmet housing recovery needs, grantees under this notice and the Prior Notice may also propose an allocation of funds that includes unmet economic revitalization and infrastructure needs that are unrelated to unmet housing needs after the grantee demonstrates in its needs assessment that there is no remaining unmet E:\FR\FM\14AUN1.SGM 14AUN1 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices housing need or that the remaining unmet housing need will be addressed by other sources of funds. The law provides that grants shall be awarded directly to a State, local government, or Indian tribe at the discretion of the Secretary. To comply with statutory direction that funds be used for disasterrelated expenses in the most impacted and distressed areas, HUD allocates funds using the best available data that cover all eligible affected areas. Pursuant to the Appropriations Act, HUD has identified the most impacted and distressed areas based on the best available data for all eligible affected areas. A detailed explanation of HUD’s allocation methodology is provided in Appendix A of this notice. For Puerto Rico and the U.S. Virgin Islands, all components of each territory are considered most impacted and distressed as defined in Table 1. For all other grantees, at least 80 percent of all allocations provided to the grantee under the Prior Notice and this notice must address unmet disaster needs within the HUD-identified most impacted and distressed areas, as identified in the last column of Table 1. These grantees may determine where to use the remaining 20 percent of their allocation, but that portion of the allocation may only be used to address unmet disaster needs in those areas that the grantee determines are ‘‘most impacted and distressed’’ and that received a presidential major disaster declaration pursuant to the disaster numbers listed in Table 1. Based on further review of the impacts from the eligible disasters, and estimates of unmet need, Table 1 shows the areas and the minimum amount of 40315 funds from the combined allocations under the Appropriations Act and the Prior Appropriation that must be expended in the HUD-identified most impacted and distressed areas. For some grantees funded under the Prior Appropriation, updated data and methodology led to additional areas being defined as most impacted and distressed. Therefore, the most impacted and distressed areas identified in Table 1 of this notice amend the Prior Notice to replace the most impacted and distressed areas identified in Table 1 of the Prior Notice. The areas are listed alphabetically by county/municipio/ island and numerically by Zip Code and govern all CDBG–DR funds allocated for unmet needs from the 2017 disasters identified in Table 1. TABLE 1—ALLOCATIONS FOR UNMET NEEDS UNDER PUBLIC LAWS 115–56 AND 115–123 Disaster No. Grantee 4344 and 4353 ...... State of California 4337 and 4341 ...... Allocation under Public Law 115–56 (covered by previous Notice 83 FR 5844) Unmet needs allocation under Public Law 115–123 (covered by this Notice) * Combined allocation for unmet needs (Pub. L. 115– 56 and Pub. L. 115–123) * Minimum combined amount from Public Law 115–56 and Public Law 115–123 that must be expended for unmet needs recovery in the HUDidentified ‘‘most impacted and distressed’’ areas listed herein (No less than $99,324,000) Sonoma and Ventura counties; 93108, 94558, 95422, 95470, and 95901 Zip Codes. (No less than $618,878,400) Brevard, Broward, Clay, Collier, Duval, Hillsborough, Lee, MiamiDade, Monroe, Orange, Osceola, Palm Beach, Polk, St. Lucie, and Volusia counties; 32084, 32091, 32136, 32145, 32771, 33440, 33523, 33825, 33870, 33935, and 34266 Zip Codes. (No less than $30,354,400) 31520, 31548, and 31705 Zip Codes. (No less than $46,828,000) 63935, 63965, 64850, 65616, and 65775 Zip Codes. ($9,727,962,000) All components of Puerto Rico.*** (No less than $4,541,112,000) Aransas, Brazoria, Chambers, Fayette, Fort Bend, Galveston, Hardin, Harris, Jasper, Jefferson, Liberty, Montgomery, Newton, Nueces, Orange, Refugio, San Jacinto, San Patricio, Victoria, and Wharton counties; 75979, 77320, 77335, 77351, 77414, 77423, 77482, 77493, 77979, and 78934 Zip Codes. ($1,021,901,000) All components of the U.S. Virgin Islands. $0 $124,155,000 $124,155,000 State of Florida ..... 615,922,000 157,676,000 773,598,000 4294, 4297, and 4338. 4317 ...................... State of Georgia .... 0 37,943,000 37,943,000 State of Missouri ... 0 58,535,000 58,535,000 4336 and 4339 ...... 1,507,179,000 8,220,783,000 9,727,962,000 4332 ...................... Commonwealth of Puerto Rico. State of Texas ** ... 5,024,215,000 652,175,000 5,676,390,000 4335 and 4340 ...... U.S. Virgin Islands 242,684,000 779,217,000 1,021,901,000 amozie on DSK3GDR082PROD with NOTICES1 * The $2 billion required for electric grid enhancements and improvements are considered unmet needs for allocation purposes, but the allocation and use of the funds will be governed by a forthcoming notice and thus are not included in this table. ** State of Texas has also received $57.8 million for disaster recovery in respect to Hurricane Harvey from Public Law 115–31 that is not reflected here. *** The areas defined as most impacted in HUD’s formula calculation include more than 68 of Puerto Rico’s 78 municipios as Most Impacted Counties and all 10 municipios that are non-Most Impacted Counties do each have a Most Impacted Zip Code. This results in nearly 100% coverage of Puerto Rico both in terms of geography and population, so for program implementation purposes, HUD has determined to include all areas of Puerto Rico as Most Impacted. Grantees may use up to 5 percent of the total combined grant award for grant administration. Therefore, for grantees other than Puerto Rico and the U.S. Virgin Islands, HUD will include 80 VerDate Sep<11>2014 20:18 Aug 13, 2018 Jkt 244001 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 PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 identified in Table 1. Additionally, for grantees other than Puerto Rico and U.S. Virgin Islands, expenditures for planning activities may be counted towards a grantee’s 80 percent E:\FR\FM\14AUN1.SGM 14AUN1 40316 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices amozie on DSK3GDR082PROD with NOTICES1 expenditure requirement, provided that the grantee describes in its action plan how those planning activities benefit the HUD-identified most impacted and distressed areas. II. Use of Funds Unless otherwise indicated, funds allocated under this notice and under the Prior Notice are subject to the requirements of this notice and the Prior Notice (as amended). This notice outlines additional requirements imposed by Public Laws 115–141 and 115–123 that apply to funds allocated under this notice and the Prior Notice. These requirements are outlined in section IV.A.1 and 2 of this notice. The Appropriations Act requires that prior to the obligation of CDBG–DR funds by the Secretary, a grantee shall submit a plan to HUD for approval detailing the proposed use of all funds. The plan must include the criteria for eligibility, and how the use of these funds will address long-term recovery and restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas. This notice requires the grantee to submit an action plan that addresses unmet recovery needs related to the applicable disasters. Therefore, the action plan submitted in response to this notice must describe uses and activities that: (1) Are authorized under title I of the Housing and Community Development Act of 1974 (HCD Act) or allowed by a waiver or alternative requirement (see section IV below); and (2) respond to disaster-related impacts to infrastructure, housing, and economic revitalization in the most impacted and distressed areas. Additionally, grantees may include disaster related preparedness and mitigation measures as part of assisted activities as authorized pursuant to paragraph A.2.c.(4) of section VI of the Prior Notice. Grantees must conduct an assessment of community impacts and unmet needs to inform the plan and guide the development and prioritization of planned recovery activities, pursuant to paragraph A.2.a. in section VI of the Prior Notice, as amended in this notice. An alternative requirement established by the Prior Notice authorized the U.S. Virgin Islands to administer a CDBG–DR allocation in accordance with the regulatory and statutory provisions governing the State CDBG program, as modified by applicable waivers and alternative requirements. Therefore, all references to States and State grantees in this notice and the Prior Notice include the U.S. Virgin Islands. VerDate Sep<11>2014 19:13 Aug 13, 2018 Jkt 244001 III. Overview Grant Process A. Appropriations Act (Pub. L. 115–123) Initial Action Plan Process Grantees receiving an initial allocation under this notice for disasters occurring in 2017 (California, Georgia, and Missouri) must submit an action plan per the requirements in section VI.A.2. of the Prior Notice not later than 120 days after the applicability date of this notice. All requirements of the Prior Notice related to the action plan submission apply except the public comment period, which has been extended to no less than 30 calendar days under this notice. Grantees must publish the action plan in a manner that affords citizens, affected local governments, and other interested parties a reasonable opportunity to examine the contents and provide feedback. The manner of publication must include, at a minimum, prominent posting on the grantee’s official website for not less than 30 calendar days for public comment. These grantees must also submit the Financial Management and Grant Compliance submissions and the Pre-Award Implementation Plan per section VI.A.1 of the Prior Notice within 60 days of the applicability date of this notice. B. Prior Appropriation (Pub. L. 115–56) Substantial Amendment Process To Incorporate Additional Funds Each grantee that received an allocation pursuant to the Prior Appropriation (Texas, Florida, Puerto Rico, and U.S. Virgin Islands) is required to submit a substantial amendment amending the initial action plan that was submitted in response to the Prior Notice. The substantial amendment must be submitted not later than 90 days after the initial action plan is approved in whole or in part by HUD or not later than 90 days after the applicability date of this notice, whichever comes later. The substantial amendment must include the additional allocation of funds and address the requirements of this notice. For the Commonwealth of Puerto Rico, the substantial amendment must be reviewed for consistency with the Commonwealth’s 12- and 24-month economic and disaster recovery plan required by Section 21210 of Public Law 115–123, the Commonwealth’s fiscal plan, and CDBG–DR eligibility. The certification of financial controls and procurement processes and the Department’s determination of the adequacy of the grantee’s implementation and capacity assessment pursuant to the Prior Notice, shall remain in effect for this allocation. PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 Provided, however, that grantees shall be required to update the Financial Management and Grant Compliance submissions and the Pre-Award Implementation Plan per section VI.A.1 of the Prior Notice to reflect any material changes in the submissions. Additionally, each grantee that received an allocation under the Prior Notice must meet the following requirements to amend the initial action plan. These steps are only applicable to the substantial amendment process to add the additional allocation under this notice. • Grantee must consult with affected citizens, stakeholders, local governments, and public housing authorities to determine updates to its needs assessment; • Grantee must amend its initial action plan to update its impact and needs assessment, modify or create new activities, or reprogram funds. Each amendment must be highlighted, or otherwise identified within the context of the entire action plan. The beginning of every substantial amendment must include a: (1) Section that identifies exactly what content is being added, deleted, or changed; (2) chart or table that clearly illustrates where funds are coming from and where they are moving to; and (3) a revised budget allocation table that reflects all funds; • Grantee must publish the substantial amendment to its previously approved action plan for disaster recovery in a manner that affords citizens, affected local governments, and other interested parties a reasonable opportunity to examine the amendment’s contents and provide feedback. The manner of publication must include, at a minimum, prominent posting on the grantee’s official website for not less than 30 calendar days for public comment (see section VI.A.4.e of the Prior Notice for details about the website requirements); • Grantee must respond to public comment and submit its substantial amendment to HUD no later than 90 days after the grantee’s initial action plan is approved in whole or in part by HUD or not later than 90 days after the applicability date of this notice, whichever comes later. The substantial amendment submitted to HUD must also be prominently posted on the grantee’s official website; • HUD will review the substantial amendment within 45 days from date of receipt and determine whether to approve the substantial amendment per criteria identified in this notice and the Prior Notice; • HUD will send a substantial amendment approval letter, revised E:\FR\FM\14AUN1.SGM 14AUN1 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices amozie on DSK3GDR082PROD with NOTICES1 grant conditions, and an amended unsigned grant agreement to the grantee. If the substantial amendment is not approved, a letter will be sent identifying its deficiencies; the grantee must then re-submit the substantial amendment within 45 days of the notification letter; • Grantee must ensure that the HUDapproved substantial amendment and initial HUD-approved action plan are posted prominently on its official website. Each grantee’s current version of its entire action plan must be accessible for viewing as a single document at any given point in time, rather than the public or HUD having to view and cross-reference changes among multiple amendments; • Grantee must enter the activities from its published substantial amendment into the Disaster Recovery Grant Reporting (DRGR) system and submit the updated DRGR action plan (revised to reflect the substantial amendment) to HUD within the DRGR system; • Grantee must sign and return the grant agreement to HUD; • HUD will sign the grant agreement and revise the grantee’s CDBG–DR line of credit amount to reflect the total amount of available funds; • Grantee may draw down CDBG–DR funds from its line of credit after the Responsible Entity completes applicable environmental review(s) pursuant to 24 CFR part 58, or adopts another Federal agency’s environmental review as authorized under the Appropriations Act and the Prior Appropriation, and, as applicable, receives from HUD the Authority to Use Grant Funds (AUGF) form and certification; • Grantee must amend and submit its projection of CDBG–DR expenditures and performance outcomes with the substantial amendment. IV. Applicable Rules, Statutes, Waivers, and Alternative Requirements This section of the notice describes rules, statutes, waivers, and alternative requirements that apply to allocations under this notice or the Prior Notice. The Secretary has determined that good cause exists for each waiver and alternative requirement established in this notice, and for the extension of waivers and alternative requirements in the Prior Notice to allocations made under this notice, and that the waivers and alternative requirements are not inconsistent with the overall purpose of the HCD Act. Grantees may request additional waivers and alternative requirements from the Department as needed to address specific needs related to their VerDate Sep<11>2014 19:13 Aug 13, 2018 Jkt 244001 recovery activities. Waivers and alternative requirements are effective five (5) days after they are published in the Federal Register. A. Grant Administration 1. Applicability of waivers, alternative requirements, and other requirements. All funds allocated under the Prior Notice and this notice are subject to the requirements of this notice and the Prior Notice. The waivers, alternative requirements, and other provisions of the Prior Notice, as amended, are also incorporated and made applicable to funds allocated under this notice. The waivers and alternative requirements provide additional flexibility in program design and implementation to support full and swift recovery following the disasters, while also ensuring that statutory requirements under the Appropriations Act, the Prior Appropriation, as well as requirements in Public Laws 115–141 and 115–72, made applicable by the terms of the Appropriations Act and the Prior Appropriation, are met. 2. Additional requirements and modifications of requirements in the Prior Notice. The following clarifications or modifications apply to all grantees in receipt of an allocation under this notice and to funds allocated under the Prior Notice: a. Substantial amendments for grantees receiving an allocation of funds under the Prior Notice. Grantees that received an allocation under the Prior Notice (Texas, Florida, Puerto Rico, and U.S. Virgin Islands) must submit a substantial amendment, including an updated needs assessment, per the requirements outlined in this notice, in addition to meeting the requirements for substantial amendments under the Prior Notice. b. Action plan and other submission requirements for grantees receiving an initial allocation under this notice. Grantees that did not receive an allocation under the Prior Notice (California, Georgia, and Missouri) shall be subject to deadlines for the submission of financial controls and procurement processes, implementation plans, and action plans, as established in the Prior Notice, which shall be based upon the applicability date of this notice. Grantees that did not receive an allocation under the Prior Notice must submit an action plan not later than 120 days after the applicability date of this notice. c. Cost or price analysis. References in the Prior Notice to ‘‘an evaluation of the cost and price of a product or service’’ and to the ‘‘evaluation of the cost or price of a product or service’’ shall be PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 40317 read to require ‘‘an evaluation of the cost or price of a product or service.’’ d. Additional requirements for the comprehensive disaster recovery website. The Prior Notice requires all grantees to maintain a comprehensive disaster recovery website. The Appropriations Act requires that certain content be included on a CDBG–DR grantee’s website. These requirements apply to funds allocated under this notice and the Prior Notice. Each grantee must maintain on its comprehensive disaster recovery website information containing common reporting criteria established by the Department that permits individuals and entities awaiting assistance and the general public to see how all grant funds are used, including copies of all relevant procurement documents, grantee administrative contracts, and details of ongoing procurement processes, as determined by the Secretary. HUD will post guidance related to this requirement on the HUD exchange website. e. Working capital to aid in recovery. The Appropriations Act provides that grantees may establish grant programs to assist small businesses for working capital purposes to aid in recovery with funds allocated under this notice or the Prior Notice. This proviso does not establish a new eligible activity. All funds to assist small businesses for working capital must be expended for eligible CDBG activities that meet a national objective and the other requirements applicable to the use of funds. f. Underwriting. Notwithstanding section 105(e)(1) of the HCD Act, no funds allocated under this notice or the Prior Notice may be provided to a forprofit entity for an economic development project under section 105(a)(17) unless such project has been evaluated and selected in accordance with guidelines developed by HUD pursuant to section 105(e)(2) for evaluating and selecting economic development projects. States and their subrecipients are required to comply with the underwriting guidelines in Appendix A to 24 CFR part 570 if they are using grant funds to provide assistance to a for-profit entity for an economic development project under section 105(a)(17) of the HCDA. The underwriting guidelines are found at Appendix A of Part 570. https://www. ecfr.gov/cgi-bin/text-idx?SID=88dced 3d630ad9fd8ab91268dd829f1e&mc= true&node=ap24.3.570_1913.a&rgn= div9. g. Limitation on use of funds for eminent domain. No funds allocated under this notice or the Prior Notice E:\FR\FM\14AUN1.SGM 14AUN1 amozie on DSK3GDR082PROD with NOTICES1 40318 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices may be used to support any Federal, State, or local projects that seek to use the power of eminent domain, unless eminent domain is employed only for a public use. For purposes of this paragraph, public use shall not be construed to include economic development that primarily benefits private entities. Any use of funds for mass transit, railroad, airport, seaport or highway projects, as well as utility projects which benefit or serve the general public (including energyrelated, communication-related, waterrelated, and wastewater-related infrastructure), other structures designated for use by the general public or which have other common-carrier or public-utility functions that serve the general public and are subject to regulation and oversight by the government, and projects for the removal of an immediate threat to public health and safety or brownfields as defined in the Small Business Liability Relief and Brownfields Revitalization Act (Pub. L. 107–118) shall be considered a public use for purposes of eminent domain. 3. Citizen participation waiver and alternative requirement. Section VI.A.4 of the Prior Notice established citizen participation requirements for input on grantee action plans and substantial amendments. To ensure adequate citizen participation and access to action plans and substantial amendments, the Department is deleting and replacing the first paragraph in section VI.A.4 and the entirety of section VI.A.4.a of the Prior Notice with the following to extend the minimum amount of time grantees are required to publish action plans and substantial amendments for public comment from 14 calendar days to at least 30 calendar days. These paragraphs shall apply to initial action plans and all substantial amendments submitted pursuant to this notice. ‘‘4. Citizen participation waiver and alternative requirement. To permit a more streamlined process and ensure disaster recovery grants are awarded in a timely manner, provisions of 42 U.S.C. 5304(a)(2) and (3), 42 U.S.C. 12707, 24 CFR 570.486, 24 CFR 1003.604, and 24 CFR 91.115(b) and (c), with respect to citizen participation requirements, are waived and replaced by the requirements below. The streamlined requirements do not mandate public hearings but do require the grantee to provide a reasonable opportunity (at least 30 days) for citizen comment and ongoing citizen access to information about the use of grant funds. The streamlined citizen participation VerDate Sep<11>2014 20:18 Aug 13, 2018 Jkt 244001 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 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 reasonable time frame (again, no less than 30 days) and method(s) (including electronic submission) for receiving comments on the plan or substantial amendment. In its action plan, each grantee must specify criteria for determining what changes in the grantee’s plan constitute a substantial amendment to the plan. At a minimum, the following modifications will constitute a substantial amendment: A change in program benefit or eligibility criteria; the addition or deletion of an activity; or the allocation or reallocation of a monetary threshold specified by the grantee in its action plan. The grantee may substantially amend the action plan if it follows the same procedures required in this notice for the preparation and submission of an action plan for disaster recovery.’’ 4. Cost Verification. Section VI.A.2.a of the Prior Notice established the requirements for contents of action plans submitted in response to the Prior Notice and this notice. To further strengthen the ability of grantees to demonstrate that project costs funded with CDBG–DR are necessary and reasonable, section VI.A.2.a of the Prior Notice is amended by adding a new paragraph (14) to read as follows. This requirement shall apply to the substantial amendment submitted by Puerto Rico, Texas, Florida, and the U.S. Virgin Islands pursuant to section IV.A.2.a of this notice: ‘‘14. A description of the grantee’s controls for assuring that construction costs are reasonable and consistent with market costs at the time and place of construction. The method and degree of analysis may vary dependent upon the circumstances surrounding a particular project (e.g., project type, risk, costs), but the description must address controls for housing projects involving eight or more units (whether new construction, rehabilitation, or reconstruction), economic revitalization projects (involving, construction, rehabilitation or reconstruction), and infrastructure projects. HUD may issue guidance to grantees and may require a grantee to verify cost reasonableness from an independent and qualified third-party architect, civil engineer, or construction manager.’’ 5. Additional Specific Criteria and Conditions to Mitigate Risk. HUD is required to design an internal control plan for disaster relief funding based on standard guidance issued by the Director of the Office of Management and Budget on March 30, 2018, to address known internal control risks related to disaster funding provided under the Appropriations Act and the Prior Appropriation. Both the E:\FR\FM\14AUN1.SGM 14AUN1 amozie on DSK3GDR082PROD with NOTICES1 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices Appropriations Act and the Prior Appropriation also require the Secretary to certify in advance of signing a grant agreement, that the grantee has proficient financial controls and procurement processes, and has established adequate procedures to prevent any duplication of benefits as defined by section 312 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5155), ensure timely expenditure of funds, maintain comprehensive websites regarding all disaster recovery activities assisted with these funds, and detect and prevent waste, fraud, and abuse of funds. Additionally, 2 CFR 200.205 requires the Department to assess the risk of each grantee and 2 CFR 200.207(a) provides that specific conditions may be placed on the grant award based upon that assessment of risk. To ensure the effective implementation of the internal controls discussed above, the Department is adding a new paragraph VI.A.32 to the Prior Notice. This paragraph will also apply to funds provided under this notice as well as the Prior Notice: ‘‘32. Additional Criteria and Specific Conditions to Mitigate Risk. To ensure the effective implementation of the internal control plan required under the Appropriations Act and grantee implementation of the financial controls, procurement processes, and other procedures that are the subject of the certification by the Secretary, the Department has and may continue to establish specific criteria and conditions for each grant award as provided for at 2 CFR 200.205 and 200.207(a), respectively, to mitigate the risk of the grant. The Secretary shall specify any such criteria and the resulting conditions in the grant conditions governing the award. These criteria may include, but need not be limited to, a consideration of the internal control framework established by the grantee to ensure compliant implementation of its financial controls, procurement processes and payment of funds to eligible entities, as well as the grantee’s risk management strategy for information technology systems established to implement CDBG–DR funded programs. Additionally, the Secretary may amend the grant conditions to mitigate risk of a grant award at any point at which the Secretary determines a condition to be required to protect the Federal financial interest or to advance recovery.’’ 6. Clarification of Waiver of Section 414 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.). The Prior Notice established a waiver associated VerDate Sep<11>2014 19:13 Aug 13, 2018 Jkt 244001 with Section 414 of the Stafford Act for homeowner occupants and tenants displaced because of the disaster. The waiver is applicable to ‘‘CDBG–DR funded projects commencing more than one year after the date of the Presidentially declared disaster.’’ The Department is amending this provision to clarify the point at which a project is determined to have ‘‘commenced,’’ by amending paragraph VI.A.23.f of the Prior Notice by replacing it in its entirety with the following: ‘‘f. Waiver of Section 414 of the Stafford Act. Section 414 of the Stafford Act (42 U.S.C. 5181) provides that ‘‘Notwithstanding any other provision of law, no person otherwise eligible for any kind of replacement housing payment under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Pub. L. 91–646) [42 U.S.C. 4601 et seq.] [‘‘URA’’] shall be denied such eligibility as a result of his being unable, because of a major disaster as determined by the President, to meet the occupancy requirements set by [the URA].’’ Accordingly, homeowner occupants and tenants displaced from their homes as a result of the identified disasters and who would have otherwise been displaced as a direct result of any acquisition, rehabilitation, or demolition of real property for a federally funded program or project may become eligible for a replacement housing payment notwithstanding their inability to meet occupancy requirements prescribed in the URA. Section 414 of the Stafford Act (including its implementing regulation at 49 CFR 24.403(d)(1)), is waived to the extent that it would apply to real property acquisition, rehabilitation or demolition of real property for a CDBG– DR funded project commencing more than one year after the date of the latest applicable Presidentially declared disaster undertaken by the grantees, or subrecipients, provided that the project was not planned, approved, or otherwise underway prior to the disaster. For purposes of this paragraph, a CDBG–DR funded project shall be determined to have commenced on the earliest of: (1) The date of an approved Request for Release of Funds and certification, or (2) the date of completion of the site-specific review when a program utilizes Tiering, or (3) the date of sign-off by the approving official when a project converts to exempt under 24 CFR 58.34(a)(12). The Department has surveyed other Federal agencies’ interpretation and implementation of Section 414 and found varying views and strategies for PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 40319 long-term, post-disaster projects involving the acquisition, rehabilitation, or demolition of disaster-damaged housing. The Secretary has the authority to waive provisions of the Stafford Act and its implementing regulations that the Secretary administers in connection with the obligation of funds made available by this notice, or the grantees’ use of these funds. The Department has determined that good cause exists for a waiver and that such waiver is not inconsistent with the overall purposes of title I of the HCD Act. (1) The waiver will simplify the administration of the disaster recovery process and reduce the administrative burden associated with the implementation of Stafford Act Section 414 requirements for projects commencing more than one year after the date of the Presidentially declared disaster considering most of such persons displaced by the disaster will have returned to their dwellings or found another place of permanent residence. (2) This waiver does not apply with respect to persons that meet the occupancy requirements to receive a replacement housing payment under the URA nor does it apply to persons displaced or relocated temporarily by other HUD-funded programs or projects. Such persons’ eligibility for relocation assistance and payments under the URA is not impacted by this waiver.’’ 7. Clarification of the Environmental Review requirements. The Prior Notice provided guidance on the adoption of another Federal agency’s environmental review for CDBG–DR projects as permitted by the Prior Appropriation. The Appropriations Act goes beyond the Prior Appropriation and authorizes recipients of CDBG–DR funds under the Appropriations Act that use such funds to supplement Federal assistance provided under section 408(c)(4) of the Stafford Act to adopt, without review or public comment, any environmental review, approval, or permit performed by a Federal agency to satisfy responsibilities with respect to environmental review, approval or permit. Accordingly, the Department is amending paragraph VI.A.24.b of the Prior Notice by replacing it in its entirety with the following: ‘‘b. Adoption of another agency’s environmental review. In accordance with the Appropriations Act, grant recipients of Federal funds that use such funds to supplement Federal assistance provided under section 408(c)(4) as well as sections 402, 403, 404, 406, 407 or 502 of the Stafford Act may adopt, without review or public comment, any environmental review, approval, or E:\FR\FM\14AUN1.SGM 14AUN1 40320 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices permit performed by a Federal agency, and such adoption shall satisfy the responsibilities of the recipient with respect to such environmental review, approval, or permit that is required by the HCD Act. The grant recipient must notify HUD in writing of its decision to adopt another agency’s environmental review. The grant recipient must retain a copy of the review in the grantee’s environmental records.’’ 8. Low- and moderate-income national objective standard (Commonwealth of Puerto Rico only). Section 102(a)(20) of the HCD Act defines ‘‘persons of low and moderate income’’ and ‘‘low- and moderate income persons.’’ Subparagraph (B) of this definition authorizes the Secretary to establish for any area percentages of median income that are higher or lower than the percentages defined as ‘‘lowand moderate-income’’ under 102(a)(20)(A), if the Secretary finds such variations to be necessary because of unusually high or low family incomes in such areas. Due to the unusually low incomes in Puerto Rico, residents that meet the CDBG program definition of ‘‘low- and moderate-income’’ by having incomes of 80 percent AMI or less, also remain below the Federal poverty level. Therefore, the Department is increasing the income limits for low- and moderate-income persons in Puerto Rico, which will be listed in income tables posted on the HUD Exchange website. Under this adjustment, Puerto Rico may use these alternative income limits when determining that activities undertaken with CDBG–DR funds meet the low- and moderate-income benefit CDBG national objective criteria. These income limits apply only to the use of CDBG–DR funds under this notice and the Prior Notice. B. Housing 9. Modification of Affordability Periods. The Prior Notice imposed a twenty-year (20-year) affordability period for all rental properties assisted with CDBG–DR funds under the Prior Appropriation. The Department, however, is amending this requirement to apply the affordability requirements to rental projects as defined below. The Department is amending paragraph VI.B.34 of the Prior Notice by replacing it in its entirety with the following: ‘‘34. Addressing Unmet Affordable Rental Housing Needs. The grantee must identify in its action plan how it will address the rehabilitation, reconstruction, replacement, and new construction of rental housing that is affordable to low- and moderate-income households in the most impacted and distressed areas and ensure that adequate funding from all available sources, including CDBG–DR grant funds, are dedicated to addressing the unmet needs identified in its action plan pursuant to paragraph A.2.a.(3) of section VI of this notice. To meet the low- and moderate-income housing national objective, affordable rental housing funded under this notice must be rented to a low- and moderateincome person at affordable rents. This notice requires grantees to impose the following minimum affordability periods enforced with recorded use restrictions, covenants, deed restrictions, or other mechanisms to ensure that rental housing remains affordable for the required period of time: Minimum period of affordability (years) Rental housing activity amozie on DSK3GDR082PROD with NOTICES1 Rehabilitation or reconstruction of multi-family rental projects with eight or more units .................................................................... New construction multi-family rental projects with five or more units ................................................................................................. The action plan must, at a minimum, provide (1) a definition of ‘‘affordable rents’’; (2) the income limits for tenants of rental housing that is rehabilitated, reconstructed or constructed with CDBG–DR funds; and (3) a minimum affordability period of fifteen (15) years for the rehabilitation or reconstruction of multi-family rental projects with eight or more units, and a minimum affordability period of twenty (20) years for the new construction of multi-family rental units with five or more units. If a rental project that requires rehabilitation or reconstruction is subject to existing affordability requirements associated with other funding sources, grantees may provide in their action plan that the 15-year affordability period required under this notice may run concurrently (or overlap) with the affordability requirements associated with such other funding. 10. Affordability Period for New Construction of Single-Family LMI Homeowner Housing. Grantees receiving funds under this notice are required to implement a minimum five-year VerDate Sep<11>2014 19:13 Aug 13, 2018 Jkt 244001 affordability period on all newly constructed single-family housing that is to be made available for low- and moderate-income homeownership. This requirement for an affordability period does not apply to the rehabilitation or reconstruction of single-family housing. This notice requires grantees to develop and impose affordability (i.e., resale and recapture) restrictions for single-family housing newly constructed with CDBG– DR funds and made available for affordable homeownership to low- and moderate-income persons, and to enforce those restrictions through recorded deed restrictions, covenants, or other similar mechanisms, for a period not less than five years. Grantees shall establish resale or recapture requirements for housing funded pursuant to this paragraph and shall outline those requirements in the action plan or substantial amendment in which the activity is proposed. The resale and recapture provisions must clearly describe the terms of the resale and recapture provisions, the specific circumstances under which these PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 15 20 provisions will be used, and how the provisions will be enforced. 11. CDBG–DR Housing Assistance and FEMA’s Permanent and SemiPermanent Housing Programs. The Prior Appropriation and the Appropriations Act prohibit the use of CDBG–DR funds for activities that are reimbursable by FEMA and the U.S. Army Corps of Engineers. In addition, paragraph VI.A.25 of the Prior Notice requires grantees to ensure that CDBG–DR funds are not used to duplicate funding provided by these agencies or any other potential sources of assistance. As with all sources of FEMA assistance, grantees are reminded that in jurisdictions in which FEMA has implemented its Permanent or Semi-Permanent Housing program, grantees must ensure that CDBG–DR funds are not used in violation of the above two prohibitions. Grantees must also establish policies and procedures to provide for the repayment of a CDBG–DR award when assistance is subsequently provided for that same purpose from FEMA or other sources. E:\FR\FM\14AUN1.SGM 14AUN1 amozie on DSK3GDR082PROD with NOTICES1 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices 12. Rehabilitation and Reconstruction Cost-Effectiveness. In its Federal Register notice allocating additional CDBG–DR funds for Louisiana floods and 2016 disasters (82 FR 5591), the Department required grantees receiving funds under that notice to consider costeffectiveness of residential rehabilitation or reconstruction projects relative to other alternatives. In this notice, the Department is similarly requiring each grantee to establish policies and procedures to assess the cost-effectiveness of each proposed project undertaken to assist a household under any residential rehabilitation or reconstruction program funded under this notice or the Prior Notice. The policies and procedures must address criteria for determining when the cost of the rehabilitation or reconstruction of the unit will not be cost-effective relative to other means of assisting the property-owner, such as buyout or acquisition of the property, or the construction of area-wide protective infrastructure, rather than individual building mitigation solutions designed to protect individual structures (such as elevating an existing structure). For example, as the grantee in designing its program, it might choose as comparison criteria the rehabilitation costs derived from the RS Means Residential Cost Data and costs to buyout or acquire the property as a means of determining whether to fund a rehabilitation project. A grantee may also consider offering different housing alternatives, as appropriate, such as manufactured housing options. A grantee may find it necessary to provide exceptions on a case-by-case basis to the maximum amount of assistance or cost effectiveness criteria and must describe the process it will use to make such exceptions in its policies and procedures. Each grantee must adopt policies and procedures that communicate how it will analyze the circumstances under which an exception is needed, how it will demonstrate that the amount of assistance is necessary and reasonable, and how the grantee will make reasonable accommodations to provide accessibility features necessary to accommodate an occupant with a disability. All CDBG–DR expenditures remain subject to the cost principles in 2 CFR part 200, subpart E—Cost Principles, including the requirement that costs be necessary and reasonable for the performance of the grantee’s CDBG–DR grant. C. Infrastructure 13. Infrastructure planning and design. CDBG–DR allocations provided VerDate Sep<11>2014 19:13 Aug 13, 2018 Jkt 244001 for under this notice are informed in part by the Department’s assessment of unmet infrastructure needs and accordingly, the Department is establishing infrastructure planning and design requirements for grantees subject to the provisions of this notice and the Prior Notice. For funds allocated pursuant to the Prior Notice and this notice, the Department is requiring grantees to address long-term recovery and hazard mitigation planning in the action plan or substantial amendment, whichever is applicable under this notice. Each grantee must include a description of how the grantee plans to: a. Promote sound, sustainable longterm recovery planning informed by a post-disaster evaluation of hazard risk, especially land-use decisions that reflect responsible flood plain management and take into account future possible extreme weather events and other natural hazards and long-term risks; b. Adhere to the elevation requirements established in paragraph B.32.e of section VI of the Prior Notice; c. Coordinate with local and regional planning efforts to ensure consistency, including how the grantee will promote community-level and/or regional (e.g., multiple local jurisdictions) postdisaster recovery and mitigation planning; d. For infrastructure allocations, the grantee must also describe: i. How mitigation measures will be integrated into rebuilding activities and the extent to which infrastructure activities funded through this grant will achieve objectives outlined in regionally or locally established plans and policies that are designed to reduce future risk to the jurisdiction; ii. How infrastructure activities will be informed by a consideration of the costs and benefits of the project; iii. How the grantee will seek to ensure that infrastructure activities will avoid disproportionate impact on vulnerable populations as referenced in paragraph A.2.a(4) of section VI in the Prior Notice and create opportunities to address economic inequities facing local communities; iv. How the grantee will align investments with other planned state or local capital improvements and infrastructure development efforts, and will work to foster the potential for additional infrastructure funding from multiple sources, including existing state and local capital improvement projects in planning, and the potential for private investment; and v. The extent to which the grantee will employ adaptable and reliable technologies to guard against premature obsolescence of infrastructure. PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 40321 Grantees are encouraged to review the additional guidance on predevelopment principles are described in the Federal Resource Guide for Infrastructure Planning and Design: (http://portal.hud. gov/hudportal/documents/huddoc?id= BAInfraResGuideMay2015.pdf) 14. Discipline and Accountability in the Environmental Review and Permitting of Infrastructure Projects. Executive Order 13807, signed by the President on August 15, 2017, establishes a coordinated, predictable, and transparent process for the review and permitting of infrastructure projects. In addition, the Federal Permitting Improvement Steering Council has issued a standard operating procedure to coordinate Federal agency reporting on the environmental review and permitting of covered projects pursuant to the Fixing America’s Surface Transportation Act (FAST–41) (Pub. L. 114–94). Under FAST–41, a covered project is defined as any activity in the United States that requires authorization or environmental review by a Federal agency involving construction of infrastructure for renewable or conventional energy production, electricity transmission, surface transportation, aviation, ports and waterways, water resource projects, broadband, pipelines, manufacturing, or any other sector as determined by a majority vote of the Council that (1) is subject to National Environmental Policy Act of 1969 (NEPA); is likely to require a total investment of more than $200,000,000; and does not qualify for abbreviated authorization or environmental review processes under any applicable law; or (2) is subject to NEPA and the size and complexity of which, in the opinion of the Council, make the project likely to benefit from enhanced oversight and coordination, including a project likely to require authorization from or environmental review involving more than two Federal agencies; or the preparation of an environmental impact statement under NEPA. CDBG–DR grantees may choose to participate in reporting on their environmental review and permitting of covered projects under FAST–41. 15. CDBG–DR Funds as Match for FEMA 428 Public Assistance Projects. In response to a disaster, FEMA may implement, and grantees may elect to follow alternative procedures for FEMA’s Public Assistance Program, as authorized pursuant to Section 428 of the Stafford Act. Grantees may use CDBG–DR funds as a matching requirement, share, or contribution for Public Assistance Projects financed pursuant to Section 428, but as in other instances in which grantee use CDBG– E:\FR\FM\14AUN1.SGM 14AUN1 40322 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices amozie on DSK3GDR082PROD with NOTICES1 DR funds to meet local matching requirements, grantees must document that CDBG–DR funds have been used for the actual costs incurred for the assisted project and for costs that are eligible, meet a national objective, and meet other applicable CDBG requirements. D. Economic Revitalization 16. Waiver to permit tourism marketing (U.S. Virgin Islands only). The U.S. Virgin Islands has requested a waiver to allow the Territory to use up to $5,000,000 in CDBG–DR funds to promote travel to disaster-impacted areas. Tourism is the primary economic contributor to the U.S. Virgin Island’s economy, estimated to account for between 30 and 80 percent of the Territory’s economy. The U.S. Virgin Islands indicated that for several weeks following the disasters, airports and seaports remained closed and due to damage to hotels and a perception that the islands have been completely decimated, tourism has remained low. The Territory indicates that many of its largest hotels will not reopen until late 2019 or 2020, with weekly accommodation capacity dropping from 23,000 in February 2017 to 13,000 in February 2018. The Territory’s request also notes that the decline in tourism has had a particularly adverse impact on low- and moderate-income residents that depend on the industry for employment. The Territory has documented a sharp decline in visitors to the islands, with a corresponding decline in visitor spending and Territory revenues. Prior to the disasters, the Territory reported total monthly visitor expenditures of $84.8 million in October 2016, contrasted to total tourist spending of $49.8 million and lost excursionist spending of $71.1 million in October 2017, after the storms. The Territory estimates that total tourism-related losses caused by the 2017 disasters are expected to approach $1 billion in the 12 months following the storms, amounting to almost 70% of the total revenue generated by tourism in 2016. Tourism industry support, such as a national and international consumer awareness advertising campaign for an area in general, is ineligible for CDBG assistance. However, HUD recognizes that such support can be a useful recovery tool in a damaged regional economy that depends on tourism for most of its jobs and tax revenues. In the past, HUD has granted tourism waivers for several CDBG–DR disaster recovery efforts. As the U.S. Virgin Islands is proposing advertising and marketing activities rather than direct assistance to tourism-dependent businesses, and VerDate Sep<11>2014 19:13 Aug 13, 2018 Jkt 244001 because the measures of long-term benefit from the proposed activities must be derived using indirect means, 42 U.S.C. 5305(a) is waived only to the extent necessary to make eligible use of no more than $5,000,000 for assistance to promote the Territory in general or specific components of the islands. Additionally, no elected officials shall appear in tourism marketing materials financed with CDBG–DR funds. Given the importance of tourism to the overall economy, HUD is authorizing this use of funds without regard to unmet housing need. This waiver will expire two years after the Territory first draws CDBG–DR funds under the allocation provided in the Prior Notice. In providing similar waivers for other CDBG–DR grantees, the Department has often identified issues in the procurement of tourism marketing services, with grantees adding CDBG–DR funds to existing tourism marketing contracts procured with other sources of funds. In providing this waiver, HUD advises the Territory to ensure that contracts funded pursuant to this waiver with CDBG–DR funds comply with applicable procurement requirements. The grantee must also develop metrics to demonstrate the impact of CDBG–DR expenditures on the tourism sector of the economy and shall identify those metrics in the initial substantial amendment submitted pursuant to this notice. 17. Waiver to permit tourism and business marketing (Commonwealth of Puerto Rico only). The Commonwealth of Puerto Rico has requested a waiver to allow the Commonwealth to use up to $15,000,000 in CDBG–DR funds to promote travel and to attract new businesses to disaster-impacted areas. Puerto Rico’s request indicated that prior to the storms, tourism accounted for 8 percent of the economy. One month after the disasters, however, one third of the island’s hotels remained shuttered and beaches remained closed for swimming due to possible water contamination. The Commonwealth’s request notes that insular areas of the island have been particularly slow to recover to historic levels of tourism activity. Puerto Rico anticipates the addition of over 2,000 tourist accommodations this year and accordingly, seeks to use CDBG–DR funds to target outreach efforts through a marketing campaign to reach potential visitors that may not be aware of the pace of recovery in the island’s tourist areas. The Commonwealth’s waiver request includes the proposed use of CDBG–DR funds to also market the island to new businesses. Puerto Rico notes that its PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 declining economic conditions prior to the storms, as reflected through the largest-ever federal bankruptcy by a local government, were exacerbated by the disasters. The top five economic sectors with reported losses to the U.S. Small Business Administration as result of the storms include real estate, accommodations and food services, health care, retail trade, and manufacturing. Unemployment in February 2016 was reported at 10.6%, with a decline in jobs in non-farm industries from 871,200 jobs in September 2017 to 848,300 jobs in February 2018. The Commonwealth’s request notes that the unprecedented federal investment in the island’s damaged housing stock and infrastructure also presents an opportunity to introduce and reintroduce businesses across the nation and around the world to Puerto Rico as an attractive location for new business investment. Tourism and business advertising campaigns for an area in general, are ineligible for CDBG–DR assistance. However, HUD recognizes that such support can be a useful recovery tool in a damaged regional economy that depends on tourism and seeks to attract new business investment to generate new jobs and tax revenues. HUD has previously granted similar waivers for several CDBG–DR disaster recovery efforts. As the Commonwealth of Puerto Rico is proposing advertising and marketing activities rather than direct assistance to tourism-dependent and other businesses, and because the measures of long-term benefit from the proposed activities must be derived using indirect means, 42 U.S.C. 5305(a) is waived only to the extent necessary to make eligible use of no more than $15,000,000 for assistance to promote the Commonwealth in general or specific communities. No elected officials shall appear in tourism or business marketing materials financed with CDBG–DR funds. Given the importance of tourism to the overall economy, HUD is authorizing this use of funds without regard to unmet housing need. This waiver will expire two years after the Commonwealth first draws CDBG–DR funds under the allocation provided in the Prior Notice. In providing similar waivers for other CDBG–DR grantees, the Department has often identified issues in the procurement of tourism and business marketing services, with grantees adding CDBG–DR funds to existing tourism and business marketing contracts procured with other sources of funds. In providing this waiver, HUD E:\FR\FM\14AUN1.SGM 14AUN1 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices advises the Commonwealth to ensure that contracts funded pursuant to this waiver with CDBG–DR funds comply with applicable procurement requirements. The grantee must also develop metrics to demonstrate the impact of CDBG–DR expenditures on the tourism and other sectors of the economy and shall identify those metrics in the initial substantial amendment submitted pursuant to this notice. amozie on DSK3GDR082PROD with NOTICES1 V. Duration of Funding The law, as amended, requires that funds provided under the Appropriations Act and Prior Appropriation be expended within two years of the date that HUD obligates funds to a grantee, but also authorizes the Office of Management and Budget (OMB) to provide a waiver of this requirement. OMB has waived this requirement for a combined total of $35,390,000,000 of CDBG–DR funds appropriated under the Prior Appropriation and the Appropriations Act. Notwithstanding the OMB waiver, however, the provision of the Prior Notice that requires each grantee to expend 100 percent of its total allocation of CDBG–DR funds on eligible activities within six years of HUD’s initial obligation of funds remains in effect. For grantees receiving an allocation of funds under the Prior Notice, the six-year expenditure deadline commences with initial obligation of funds provided under the Prior Notice. For grantees receiving an initial allocation of funds under this Notice, the six-year expenditure deadline commences with the initial obligation of funds provided under this notice. Further, consistent with 31 U.S.C. 1555 and OMB Circular No. A– 11, if the Secretary or the President determines that the purposes for which the appropriation has been made have been carried out and no disbursements have been made against the appropriation for two consecutive fiscal years, any remaining unobligated balance will be made unavailable for obligation or expenditure. VI. Catalog of Federal Domestic Assistance The Catalog of Federal Domestic Assistance numbers for the disaster recovery grants under this notice are as follows: 14.228 for State CDBG grantees. VII. Finding of No Significant Impact A Finding of No Significant Impact (FONSI) with respect to the environment has been made in accordance with HUD regulations at 24 CFR part 50, which implement section VerDate Sep<11>2014 19:13 Aug 13, 2018 Jkt 244001 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). 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: August 8, 2018. Neal J. Rackleff, Assistant Secretary. Appendix A—Detailed Methodology (for Federal Notice Appendix) Allocation of CDBG–DR Funds to Most Impacted and Distressed Areas Due to 2017 Federally Declared Disasters and Allocation of Mitigation Funds for 2015, 2016, and 2017 Federally Declared Disasters Background The Bipartisan Budget Act of 2018, Public Law 115–123, enacted on February 9, 2018, appropriated $28,000,000,000 through the Community Development Block Grant disaster recovery (CDBG–DR) program. The statutory text related to the allocation is as follows: For an additional amount for ‘‘Community Development Fund’’, $28,000,000,000, to remain available until expended, for necessary expenses for activities authorized under title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.) related to disaster relief, long-term recovery, restoration of infrastructure and housing, economic revitalization, and mitigation in the most impacted and distressed areas resulting from a major declared disaster that occurred in 2017 (except as otherwise provided under this heading) pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.): Provided, That funds shall be awarded directly to the State, unit of general local government, or Indian tribe (as such term is defined in section 102 of the Housing and Community Development Act of 1974) at the discretion of the Secretary: Provided further, That of the amounts made available under this heading, up to $16,000,000,000 shall be allocated to meet unmet needs for grantees that have received or will receive allocations under this heading for major declared disasters that occurred in 2017 or under the same heading of Division B of Public Law 115–56, except that, of the amounts made available under this proviso, no less than $11,000,000,000 shall be allocated to the States and units of local government affected by Hurricane Maria, and of such amounts allocated to such grantees PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 40323 affected by Hurricane Maria, $2,000,000,000 shall be used to provide enhanced or improved electrical power systems: Provided further, That to the extent amounts under the previous proviso are insufficient to meet all unmet needs, the allocation amounts related to infrastructure shall be reduced proportionally based on the total infrastructure needs of all grantees: Provided further, That of the amounts made available under this heading, no less than $12,000,000,000 shall be allocated for mitigation activities to all grantees of funding provided under this heading, section 420 of division L of Public Law 114–113, section 145 of division C of Public Law 114–223, section 192 of division C of Public Law 114– 223 (as added by section 101(3) of division A of Public Law 114–254), section 421 of division K of Public Law 115–31, and the same heading in division B of Public Law 115–56, and that such mitigation activities shall be subject to the same terms and conditions under this subdivision, as determined by the Secretary: Provided further, That all such grantees shall receive an allocation of funds under the preceding proviso in the same proportion that the amount of funds each grantee received or will receive under the second proviso of this heading or the headings and sections specified in the previous proviso bears to the amount of all funds provided to all grantees specified in the previous proviso: Provided further, That of the amounts made available under the second and fourth provisos of this heading, the Secretary shall allocate to all such grantees an aggregate amount not less than 33 percent of each such amounts of funds provided under this heading within 60 days after the enactment of this subdivision based on the best available data (especially with respect to data for all such grantees affected by Hurricanes Harvey, Irma, and Maria), and shall allocate no less than 100 percent of the funds provided under this heading by no later than December 1, 2018: . . . Provided further, That of the amounts made available under this heading, up to $15,000,000 shall be made available for capacity building and technical assistance, including assistance on contracting and procurement processes, to support States, units of general local government, or Indian tribes (and their subrecipients) that receive allocations pursuant to this heading, received disaster recovery allocations under the same heading in Public Law 115–56, or may receive similar allocations for disaster recovery in future appropriations Acts: Provided further, That of the amounts made available under this heading, up to $10,000,000 shall be transferred, in aggregate, to ‘‘Department of Housing and Urban Development—Program Office Salaries and Expenses—Community Planning and Development’’ for necessary costs, including information technology costs, of administering and overseeing the obligation and expenditure of amounts under this heading: Further, under the General Provisions of the Act in Section 21102: Any funds made available under the heading ‘‘Community Development Fund’’ E:\FR\FM\14AUN1.SGM 14AUN1 40324 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices under this subdivision that remain available, after the other funds under such heading have been allocated for necessary expenses for activities authorized under such heading, shall be used for additional mitigation activities in the most impacted and distressed areas resulting from a major declared disaster that occurred in 2014, 2015, 2016 or 2017: Provided, That such remaining funds shall be awarded to grantees of funding provided for disaster relief under the heading ‘‘Community Development Fund’’ in this subdivision, section 420 of division L of Public Law 114–113, section 145 of division C of Public Law 114–223, section 192 of division C of Public Law 114–223 (as added by section 101(3) of division A of Public Law 114–254), section 421 of division K of Public Law 115–31, and the same heading in division B of Public Law 115–56 subject to the same terms and conditions under this subdivision and such Acts respectively: Provided further, That each such grantee shall receive an allocation from such remaining funds in the same proportion that the amount of funds such grantee received under this subdivision and under the Acts specified in the previous proviso bears to the amount of all funds provided to all grantees specified in the previous proviso. The methodology for allocating these funds has two core parts: • Unmet Needs: Up to $16 billion for the remaining unmet needs of communities most impacted by a disaster in 2017. After factoring in the $35 million setaside for HUD expenses, up to $15.965 billion is available for unmet needs, of which no less than $11 billion is provided to communities impacted by Hurricane Maria, specifically the Commonwealth of Puerto Rico and United States Virgin Islands. These funds are allocated based on a calculation of unmet needs as described below after taking into account the $7.458 billion of CDBG–DR previously allocated for 2017 disasters. • Mitigation: No less than $12 billion for mitigation activities for grantees who have received CDBG–DR funding under this appropriation or earlier appropriations covering disasters in 2015, 2016, and 2017. This allocation is based on each grantee’s proportional share of total funds allocated for all of the eligible disasters. amozie on DSK3GDR082PROD with NOTICES1 Allocating for remaining unmet needs of 2017 Most impacted and distressed areas As with prior CDBG–DR appropriations, HUD is not obligated to allocate funds for all major disasters declared in 2017. HUD is directed to use the funds ‘‘in the most impacted and distressed areas.’’ HUD has implemented this directive by limiting CDBG–DR formula allocations to jurisdictions with major disasters that meet three standards: (1) Individual Assistance/IHP designation. HUD has limited allocations to those disasters where FEMA had determined the damage was sufficient to declare the VerDate Sep<11>2014 19:13 Aug 13, 2018 Jkt 244001 disaster as eligible to receive Individual and Households Program (IHP) funding. (2) Concentrated damage. HUD has limited its estimate of serious unmet housing need to counties and Zip Codes with high levels of damage, collectively referred to as ‘‘most impacted areas’’. For this allocation, HUD is defining most impacted areas as either most impacted counties—counties exceeding $10 million in serious unmet housing needs—and most impacted Zip Codes— Zip Codes with $2 million or more of serious unmet housing needs. The calculation of serious unmet housing needs is described below. (3) Disasters meeting the most impacted threshold. Only 2017 disasters that meet this requirement for most impacted damage are funded: a. One or more most impacted county b. An aggregate of most impacted Zip Codes of $10 million or greater For disasters that meet the most impacted threshold described above, the unmet need allocations are based on the following factors summed together less previous CDBG–DR allocations for the 2017 disasters unmet needs: (1) Repair estimates for seriously damaged owner-occupied units without insurance (with some exceptions) in most impacted areas after FEMA and SBA repair grants or loans; (2) Repair estimates for seriously damaged rental units occupied by renters with income less than 50 percent of Area Median Income in most impacted areas; (3) Repair and content loss estimates for small businesses with serious damage denied by SBA; (4) The estimated local cost share for Public Assistance Category C to G projects; (5) $2 billion for Maria-impacted disasters for improvements to the electric grid; and (6) An amount to ensure that Maria impacted disasters do not receive less than $11 billion from Public Law 115–123, with the split between the eligible disasters in Puerto Rico and the Virgin Islands based on their relative share of needs as calculated under number 1 to 5 above. Methods for estimating unmet needs for housing The data HUD staff have identified as being available to calculate unmet needs for qualifying disasters come from the FEMA Individual Assistance program data on housing-unit damage as of February 22, 2018. The core data on housing damage for both the unmet housing needs calculation and the concentrated damage are based on home inspection data for FEMA’s Individual Assistance program. HUD calculates ‘‘unmet housing needs’’ as the number of housing units with unmet needs times the estimated cost to repair those units less repair funds already provided by FEMA and SBA. Puerto Rico and the Virgin Island owner damage is calculated based on both real property and personal property inspections based on findings by HUD that this likely is a more accurate estimate of serious homeowner damage in those areas. For the continental PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 U.S., HUD finds its traditional approach of just using real property damage assessments for owner-occupied units continues to be effective. Each of the FEMA inspected owner units are categorized by HUD into one of five categories: • Minor-Low: Less than $3,000 of FEMA inspected real property damage. • Minor-High: $3,000 to $7,999 of FEMA inspected real property damage. • Major-Low: $8,000 to $14,999 of FEMA inspected real property damage and/or 1 to 4 feet of flooding on the first floor. • Major-High: $15,000 to $28,800 of FEMA inspected real property damage and/or 4 to 6 feet of flooding on the first floor. • Severe: Greater than $28,800 of FEMA inspected real property damage or determined destroyed and/or 6 or more feet of flooding on the first floor. For the Virgin Islands and Puerto Rico, the damage grouping would be the higher damage categorization based on the calculation above or: • Minor-Low: Less than $2,500 of FEMA inspected personal property damage. • Minor-High: $2,500 to $3,499 of FEMA inspected personal property damage. • Major-Low: $3,500 to $4,999 of FEMA inspected personal property damage or 1 to 4 feet of flooding on the first floor. • Major-High: $5,000 to $8,999 of FEMA inspected personal property damage or 4 to 6 feet of flooding on the first floor. • Severe: Greater than $9,000 of FEMA inspected personal property damage or determined destroyed and/or 6 or more feet of flooding on the first floor. To meet the statutory requirement of ‘‘most impacted’’ in this legislative language, homes are determined to have a high level of damage if they have damage of ‘‘major-low’’ or higher. That is, they have a real property FEMA inspected damage of $8,000 or flooding over 1 foot. Furthermore, a homeowner is determined to have unmet needs if they reported damage and no insurance to cover that damage and was outside the 1% risk flood hazard area; for homeowners inside the flood hazard area, only homeowners without insurance below 120% of Area Median Income are determined to have unmet needs. Homeowners without hazard insurance with non-flood damage with incomes below the greater of national median or 120% of Area Median Income are included as having unmet needs. FEMA does not inspect rental units for real property damage so personal property damage is used as a proxy for unit damage. Each of the FEMA inspected renter units are categorized by HUD into one of five categories: • Minor-Low: Less than $1,000 of FEMA inspected personal property damage. • Minor-High: $1,000 to $1,999 of FEMA inspected personal property damage. • Major-Low: $2,000 to $3,499 of FEMA inspected personal property damage or 1 to 4 feet of flooding on the first floor. • Major-High: $3,500 to $7,499 of FEMA inspected personal property damage or 4 to 6 feet of flooding on the first floor. E:\FR\FM\14AUN1.SGM 14AUN1 40325 Federal Register / Vol. 83, No. 157 / Tuesday, August 14, 2018 / Notices • Severe: Greater than $7,500 of FEMA inspected personal property damage or determined destroyed and/or 6 or more feet of flooding on the first floor. For rental properties, to meet the statutory requirement of ‘‘most impacted’’ in this legislative language, homes are determined to have a high level of damage if they have damage of ‘‘major-low’’ or higher. That is, they have a FEMA personal property damage assessment of $2,000 or greater or flooding over 1 foot. Furthermore, landlords are presumed to have adequate insurance coverage unless the unit is occupied by a renter with income less than the greater of the Federal poverty level or 50 percent of Area Median Income. Units occupied by a tenant with income less than the greater of the Federal poverty level or 50 percent of Area Median Income are used to calculate likely unmet needs for affordable rental housing. The average cost to fully repair a home for a specific disaster to code within each of the damage categories noted above is calculated using the median real property damage repair costs determined by the Small Business Administration for its disaster loan program for the subset of homes inspected by both SBA and FEMA for each eligible disaster. Because SBA is inspecting for full repair costs, it is presumed to reflect the full cost to repair the home, which is generally more than the FEMA estimates on the cost to make the home habitable. For each household determined to have unmet housing needs (as described above), their estimated average unmet housing need less assistance from FEMA and SBA provided for repair to homes with serious unmet needs. No unmet housing need cost multiplier can be less than the 25th percentile estimate across all disasters of 2017. Those minimum cost multipliers are: $40,323 for major damage (low); $55,812 for major damage (high); and $77,252 for severe damage. The multipliers used for each disaster is shown below. Serious Unmet Housing Need Multipliers Major-Low California ...................................................................................................................................... Florida .......................................................................................................................................... Georgia ........................................................................................................................................ Missouri ........................................................................................................................................ Puerto Rico .................................................................................................................................. Texas ........................................................................................................................................... Virgin Islands ............................................................................................................................... Methods for estimating unmet economic revitalization needs Based on SBA disaster loans to businesses as of 3–22–2018, HUD calculates the median real estate and content loss by the following damage categories for each state: 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: • 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. amozie on DSK3GDR082PROD with NOTICES1 Virgin Islands) for ‘‘enhanced or improved electrical power systems.’’ This is allocated between Puerto Rico and the Virgin Islands based on their relative share of total estimated Category F Public Assistance cost to repair public utilities. • Serious unmet housing needs in most impacted counties less amounts of CDBG– DR previously allocated for serious unmet housing needs • Serious unmet business needs less amounts of CDBG–DR previously allocated for serious business needs • FEMA Public Assistance Category C to G local cost share and the $2 billion additional amount for enhanced or improved electrical power systems in Puerto Rico and the Virgin Islands Methods for estimating unmet infrastructure needs To calculate unmet needs for infrastructure projects, HUD is using data obtained from FEMA as of March 30, 2018, showing the amount FEMA estimates will be needed to repair the permanent public infrastructure (Categories C to G) to their pre-storm condition. HUD uses these data to calculate two infrastructure unmet needs: Prior allocations for 2017 disasters are subtracted from this amount. Because this results in less than $11 billion being allocated to Maria affected disasters (Puerto Rico and the Virgin Islands) from Public Law 115–123, an additional amount is added to those two grantees to reach $11 billion based on their relative share of needs as calculated under the three bullets above. This results in an estimate of unmet needs to be allocated from Public Law 115–123 of $12.031 billion, allowing $3.935 billion to be allocated to mitigation. • The estimated local cost share for Public Assistance Category C to G projects. • An allocation of $2 billion for Maria affected disasters (Puerto Rico and the Allocating for mitigation The allocation of $15.935 billion in mitigation funds (the $12 billion appropriated for mitigation plus the $3.935 VerDate Sep<11>2014 19:13 Aug 13, 2018 Jkt 244001 PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 $40,323 $42,837 $40,323 $40,323 $40,323 $56,342 $80,142 Major-High $55,812 $56,113 $55,812 $66,545 $55,812 $75,414 $97,672 Severe $124,481 $79,096 $77,252 $100,947 $77,252 $101,390 $116,351 billion remaining after allocation of 100% of unmet needs) is allocated proportionally based on each grantee’s relative share of the $22.425 billion of CDBG–DR funds allocated for unmet needs to disasters occurring in 2015, 2016, and 2017. For example, the combination of all grants to Puerto Rico for unmet needs represents 52 percent of the $22.425 billion allocated for unmet needs. As a result, Puerto Rico receives 52 percent of the $15.935 billion made available for mitigation funding. [FR Doc. 2018–17365 Filed 8–13–18; 8:45 am] BILLING CODE 4210–67–P DEPARTMENT OF THE INTERIOR Fish and Wildlife Service [FWS–R3–ES–2018–N044; FXES11130300000–189–FF03E00000] Draft Environmental Assessment and Draft Habitat Conservation Plan; Receipt of an Application for an Incidental Take Permit, Headwaters Wind Farm, Randolph County, Indiana Fish and Wildlife Service, Interior. ACTION: Notice of availability; request for comments. AGENCY: We, the U.S. Fish and Wildlife Service (Service), have received an application from Headwaters Wind Farm LLC (applicant), for an incidental take permit (ITP) under the Endangered Species Act of 1973, as amended (ESA), for its Headwaters Wind Farm (Headwaters) (project). If approved, the ITP would be for a 27-year period and SUMMARY: E:\FR\FM\14AUN1.SGM 14AUN1

Agencies

[Federal Register Volume 83, Number 157 (Tuesday, August 14, 2018)]
[Notices]
[Pages 40314-40325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17365]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6109-N-01]


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

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

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: On April 10, 2018, HUD allocated nearly $28 billion in 
Community Development Block Grant disaster recovery (CDBG-DR) funds 
appropriated by the Further Additional Supplemental Appropriations for 
Disaster Relief Requirements Act, 2018. HUD allocated $10.03 billion 
for the purpose of assisting in addressing unmet needs from disasters 
that occurred in 2017; $2 billion for improved electrical power systems 
in areas impacted by Hurricane Maria; and $15.9 billion for mitigation 
activities. This notice applies only to the $10.03 billion allocated 
for long-term recovery from disasters that occurred in 2017. A future 
notice will specify the requirements and process for the electrical 
power systems funding and the mitigation funds.
    This $10.03 billion allocation for addressing unmet recovery needs 
supplements the $7.4 billion in CDBG-DR funds appropriated by the 
Supplemental Appropriations for Disaster Relief Requirements Act, 2017, 
which allocated funds to Texas, Florida, Puerto Rico, and the U.S. 
Virgin Islands in response to qualifying disasters in 2017. In HUD's 
Federal Register notice published on February 9, 2018 (the ``Prior 
Notice''), HUD described those allocations, applicable waivers and 
alternative requirements, relevant statutory and regulatory 
requirements, the grant award process, criteria for action plan 
approval, and eligible disaster recovery activities.

DATES: Applicability Date: August 20, 2018.

FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Acting 
Director, Office of Block Grant Assistance, Department of Housing and 
Urban Development, 451 7th Street SW, Room 10166, Washington, DC 20410, 
telephone number 202-708-3587. Persons with hearing or speech 
impairments may access this number via TTY by calling the Federal Relay 
Service at 800-877-8339. Facsimile inquiries may be sent to Ms. Kome at 
202-708-0033. (Except for the ``800'' number, these telephone numbers 
are not toll-free.) Email inquiries may be sent to 
[email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Allocations
II. Use of Funds
III. Overview of Grant Process
    A. Appropriations Act (Pub. L. 115-123) Initial Action Plan 
Process
    B. Prior Appropriation (Pub. L. 115-56) Substantial Action Plan 
Amendment Process
IV. Applicable Rules, Statutes, Waivers, and Alternative 
Requirements
    A. Grant Administration
    B. Housing
    C. Infrastructure
    D. Economic Revitalization
V. Duration of Funding
VI. Catalog of Federal Domestic Assistance
VII. Finding of No Significant Impact
Appendix A: Allocation Methodology

I. Allocations

    The Further Additional Supplemental Appropriations for Disaster 
Relief Requirements Act, 2018 (Division B, Subdivision 1 of the 
Bipartisan Budget Act of 2018), approved February 9, 2018 (Pub. L. 115-
123) (the ``Appropriations Act''), appropriated nearly $28 billion in 
CDBG-DR funds. Of this amount, up to $16 billion is available to 
address unmet disaster recovery needs through activities authorized 
under title I of the Housing and Community Development Act of 1974 (42 
U.S.C. 5301 et seq.) (HCD Act) related to disaster relief, long-term 
recovery, restoration of infrastructure and housing, economic 
revitalization, and mitigation in the ``most impacted and distressed'' 
areas (identified by HUD using the best available data) resulting from 
a major declared disaster that occurred in 2017. Amounts allocated for 
these purposes supplement $7.4 billion in CDBG-DR funds appropriated on 
September 8, 2017, by the Supplemental Appropriations for Disaster 
Relief Requirements, 2017 (Pub. L. 115-56) (the ``Prior 
Appropriation''). HUD allocated the first $7.4 billion in the Prior 
Notice (83 FR 5844, February 9, 2018). This notice amends the Prior 
Notice to ensure consistency across allocations for the same qualifying 
disasters, and to give effect to requirements of the Appropriations 
Act, including that funds allocated under the Prior Notice are subject 
to the terms and conditions applicable to CDBG-DR funds under the 
Appropriations Act.
    Based on the remaining unmet needs allocation methodology outlined 
in Appendix A, this notice allocates $10,030,484,000 for unmet disaster 
recovery needs under the Appropriations Act. The allocation amounts for 
unmet recovery needs included in Table 1 exclude the $2 billion set-
aside for Puerto Rico and the Virgin Islands for electrical system 
improvements. The Appropriations Act further provided that of the 
nearly $28 billion, HUD must allocate not less than $12 billion for 
mitigation activities undertaken by grantees receiving an allocation of 
CDBG-DR funds for recovery from 2015, 2016, or 2017 disasters. On April 
10, 2018, HUD announced that after addressing remaining 2017 unmet 
needs, HUD would allocate an additional $3.9 billion for mitigation, 
bringing the amount designated for mitigation to $15.9 billion. A 
subsequent notice will govern the allocations for mitigation and the 
allocations for electrical power system enhancements and improvements.
    In accordance with the Appropriations Act, $10,000,000 of the total 
amounts appropriated under the Act will be transferred to the 
Department's Office of Community Planning and Development (CPD), 
Program Office Salaries and Expenses, for necessary costs of 
administering and overseeing CDBG-DR funds made available under the 
Appropriations Act and $15,000,000 is to be transferred to the CPD 
office to provide necessary capacity building and technical assistance 
to grantees. The Appropriations Act also provides $10,000,000 to the 
Department's Office of the Inspector General for oversight of the 
appropriated CDBG-DR funds.
    Although the Prior Notice requires each grantee to primarily 
consider and address its unmet housing recovery needs, grantees under 
this notice and the Prior Notice may also propose an allocation of 
funds that includes unmet economic revitalization and infrastructure 
needs that are unrelated to unmet housing needs after the grantee 
demonstrates in its needs assessment that there is no remaining unmet

[[Page 40315]]

housing need or that the remaining unmet housing need will be addressed 
by other sources of funds. The law provides that grants shall be 
awarded directly to a State, local government, or Indian tribe at the 
discretion of the Secretary. To comply with statutory direction that 
funds be used for disaster-related expenses in the most impacted and 
distressed areas, HUD allocates funds using the best available data 
that cover all eligible affected areas.
    Pursuant to the Appropriations Act, HUD has identified the most 
impacted and distressed areas based on the best available data for all 
eligible affected areas. A detailed explanation of HUD's allocation 
methodology is provided in Appendix A of this notice. For Puerto Rico 
and the U.S. Virgin Islands, all components of each territory are 
considered most impacted and distressed as defined in Table 1. For all 
other grantees, at least 80 percent of all allocations provided to the 
grantee under the Prior Notice and this notice must address unmet 
disaster needs within the HUD-identified most impacted and distressed 
areas, as identified in the last column of Table 1. These grantees may 
determine where to use the remaining 20 percent of their allocation, 
but that portion of the allocation may only be used to address unmet 
disaster needs in those areas that the grantee determines are ``most 
impacted and distressed'' and that received a presidential major 
disaster declaration pursuant to the disaster numbers listed in Table 
1.
    Based on further review of the impacts from the eligible disasters, 
and estimates of unmet need, Table 1 shows the areas and the minimum 
amount of funds from the combined allocations under the Appropriations 
Act and the Prior Appropriation that must be expended in the HUD-
identified most impacted and distressed areas. For some grantees funded 
under the Prior Appropriation, updated data and methodology led to 
additional areas being defined as most impacted and distressed. 
Therefore, the most impacted and distressed areas identified in Table 1 
of this notice amend the Prior Notice to replace the most impacted and 
distressed areas identified in Table 1 of the Prior Notice. The areas 
are listed alphabetically by county/municipio/island and numerically by 
Zip Code and govern all CDBG-DR funds allocated for unmet needs from 
the 2017 disasters identified in Table 1.

                                        Table 1--Allocations for Unmet Needs Under Public Laws 115-56 and 115-123
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Allocation
                                                                         under Public     Unmet needs      Combined       Minimum combined amount from
                                                                          Law 115-56      allocation    allocation for  Public Law 115-56 and Public Law
               Disaster No.                          Grantee              (covered by    under Public     unmet needs     115-123 that must be expended
                                                                           previous       Law 115-123    (Pub. L. 115-   for unmet needs recovery in the
                                                                         Notice 83 FR     (covered by   56 and Pub. L.   HUD-identified ``most impacted
                                                                             5844)      this Notice) *    115-123) *      and distressed'' areas listed
-------------------------------------------------------------------------------------------------------------------------------------herein-------------
4344 and 4353............................  State of California........              $0    $124,155,000    $124,155,000  (No less than $99,324,000)
                                                                                                                         Sonoma and Ventura counties;
                                                                                                                         93108, 94558, 95422, 95470, and
                                                                                                                         95901 Zip Codes.
4337 and 4341............................  State of Florida...........     615,922,000     157,676,000     773,598,000  (No less than $618,878,400)
                                                                                                                         Brevard, Broward, Clay,
                                                                                                                         Collier, Duval, Hillsborough,
                                                                                                                         Lee, Miami-Dade, Monroe,
                                                                                                                         Orange, Osceola, Palm Beach,
                                                                                                                         Polk, St. Lucie, and Volusia
                                                                                                                         counties; 32084, 32091, 32136,
                                                                                                                         32145, 32771, 33440, 33523,
                                                                                                                         33825, 33870, 33935, and 34266
                                                                                                                         Zip Codes.
4294, 4297, and 4338.....................  State of Georgia...........               0      37,943,000      37,943,000  (No less than $30,354,400)
                                                                                                                         31520, 31548, and 31705 Zip
                                                                                                                         Codes.
4317.....................................  State of Missouri..........               0      58,535,000      58,535,000  (No less than $46,828,000)
                                                                                                                         63935, 63965, 64850, 65616, and
                                                                                                                         65775 Zip Codes.
4336 and 4339............................  Commonwealth of Puerto Rico   1,507,179,000   8,220,783,000   9,727,962,000  ($9,727,962,000) All components
                                                                                                                         of Puerto Rico.***
4332.....................................  State of Texas **..........   5,024,215,000     652,175,000   5,676,390,000  (No less than $4,541,112,000)
                                                                                                                         Aransas, Brazoria, Chambers,
                                                                                                                         Fayette, Fort Bend, Galveston,
                                                                                                                         Hardin, Harris, Jasper,
                                                                                                                         Jefferson, Liberty, Montgomery,
                                                                                                                         Newton, Nueces, Orange,
                                                                                                                         Refugio, San Jacinto, San
                                                                                                                         Patricio, Victoria, and Wharton
                                                                                                                         counties; 75979, 77320, 77335,
                                                                                                                         77351, 77414, 77423, 77482,
                                                                                                                         77493, 77979, and 78934 Zip
                                                                                                                         Codes.
4335 and 4340............................  U.S. Virgin Islands........     242,684,000     779,217,000   1,021,901,000  ($1,021,901,000) All components
                                                                                                                         of the U.S. Virgin Islands.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The $2 billion required for electric grid enhancements and improvements are considered unmet needs for allocation purposes, but the allocation and use
  of the funds will be governed by a forthcoming notice and thus are not included in this table.
** State of Texas has also received $57.8 million for disaster recovery in respect to Hurricane Harvey from Public Law 115-31 that is not reflected
  here.
*** The areas defined as most impacted in HUD's formula calculation include more than 68 of Puerto Rico's 78 municipios as Most Impacted Counties and
  all 10 municipios that are non-Most Impacted Counties do each have a Most Impacted Zip Code. This results in nearly 100% coverage of Puerto Rico both
  in terms of geography and population, so for program implementation purposes, HUD has determined to include all areas of Puerto Rico as Most Impacted.

    Grantees may use up to 5 percent of the total combined grant award 
for grant administration. Therefore, for grantees other than Puerto 
Rico and the U.S. Virgin Islands, HUD will include 80 percent of a 
grantee's expenditures for grant administration in its determination 
that 80 percent of the total award has been expended in the most 
impacted and distressed areas identified in Table 1. Additionally, for 
grantees other than Puerto Rico and U.S. Virgin Islands, expenditures 
for planning activities may be counted towards a grantee's 80 percent

[[Page 40316]]

expenditure requirement, provided that the grantee describes in its 
action plan how those planning activities benefit the HUD-identified 
most impacted and distressed areas.

II. Use of Funds

    Unless otherwise indicated, funds allocated under this notice and 
under the Prior Notice are subject to the requirements of this notice 
and the Prior Notice (as amended). This notice outlines additional 
requirements imposed by Public Laws 115-141 and 115-123 that apply to 
funds allocated under this notice and the Prior Notice. These 
requirements are outlined in section IV.A.1 and 2 of this notice.
    The Appropriations Act requires that prior to the obligation of 
CDBG-DR funds by the Secretary, a grantee shall submit a plan to HUD 
for approval detailing the proposed use of all funds. The plan must 
include the criteria for eligibility, and how the use of these funds 
will address long-term recovery and restoration of infrastructure and 
housing, and economic revitalization in the most impacted and 
distressed areas. This notice requires the grantee to submit an action 
plan that addresses unmet recovery needs related to the applicable 
disasters. Therefore, the action plan submitted in response to this 
notice must describe uses and activities that: (1) Are authorized under 
title I of the Housing and Community Development Act of 1974 (HCD Act) 
or allowed by a waiver or alternative requirement (see section IV 
below); and (2) respond to disaster-related impacts to infrastructure, 
housing, and economic revitalization in the most impacted and 
distressed areas. Additionally, grantees may include disaster related 
preparedness and mitigation measures as part of assisted activities as 
authorized pursuant to paragraph A.2.c.(4) of section VI of the Prior 
Notice. Grantees must conduct an assessment of community impacts and 
unmet needs to inform the plan and guide the development and 
prioritization of planned recovery activities, pursuant to paragraph 
A.2.a. in section VI of the Prior Notice, as amended in this notice.
    An alternative requirement established by the Prior Notice 
authorized the U.S. Virgin Islands to administer a CDBG-DR allocation 
in accordance with the regulatory and statutory provisions governing 
the State CDBG program, as modified by applicable waivers and 
alternative requirements. Therefore, all references to States and State 
grantees in this notice and the Prior Notice include the U.S. Virgin 
Islands.

III. Overview Grant Process

A. Appropriations Act (Pub. L. 115-123) Initial Action Plan Process

    Grantees receiving an initial allocation under this notice for 
disasters occurring in 2017 (California, Georgia, and Missouri) must 
submit an action plan per the requirements in section VI.A.2. of the 
Prior Notice not later than 120 days after the applicability date of 
this notice. All requirements of the Prior Notice related to the action 
plan submission apply except the public comment period, which has been 
extended to no less than 30 calendar days under this notice. Grantees 
must publish the action plan in a manner that affords citizens, 
affected local governments, and other interested parties a reasonable 
opportunity to examine the contents and provide feedback. The manner of 
publication must include, at a minimum, prominent posting on the 
grantee's official website for not less than 30 calendar days for 
public comment. These grantees must also submit the Financial 
Management and Grant Compliance submissions and the Pre-Award 
Implementation Plan per section VI.A.1 of the Prior Notice within 60 
days of the applicability date of this notice.

B. Prior Appropriation (Pub. L. 115-56) Substantial Amendment Process 
To Incorporate Additional Funds

    Each grantee that received an allocation pursuant to the Prior 
Appropriation (Texas, Florida, Puerto Rico, and U.S. Virgin Islands) is 
required to submit a substantial amendment amending the initial action 
plan that was submitted in response to the Prior Notice. The 
substantial amendment must be submitted not later than 90 days after 
the initial action plan is approved in whole or in part by HUD or not 
later than 90 days after the applicability date of this notice, 
whichever comes later. The substantial amendment must include the 
additional allocation of funds and address the requirements of this 
notice. For the Commonwealth of Puerto Rico, the substantial amendment 
must be reviewed for consistency with the Commonwealth's 12- and 24-
month economic and disaster recovery plan required by Section 21210 of 
Public Law 115-123, the Commonwealth's fiscal plan, and CDBG-DR 
eligibility. The certification of financial controls and procurement 
processes and the Department's determination of the adequacy of the 
grantee's implementation and capacity assessment pursuant to the Prior 
Notice, shall remain in effect for this allocation. Provided, however, 
that grantees shall be required to update the Financial Management and 
Grant Compliance submissions and the Pre-Award Implementation Plan per 
section VI.A.1 of the Prior Notice to reflect any material changes in 
the submissions.
    Additionally, each grantee that received an allocation under the 
Prior Notice must meet the following requirements to amend the initial 
action plan. These steps are only applicable to the substantial 
amendment process to add the additional allocation under this notice.
     Grantee must consult with affected citizens, stakeholders, 
local governments, and public housing authorities to determine updates 
to its needs assessment;
     Grantee must amend its initial action plan to update its 
impact and needs assessment, modify or create new activities, or 
reprogram funds. Each amendment must be highlighted, or otherwise 
identified within the context of the entire action plan. The beginning 
of every substantial amendment must include a: (1) Section that 
identifies exactly what content is being added, deleted, or changed; 
(2) chart or table that clearly illustrates where funds are coming from 
and where they are moving to; and (3) a revised budget allocation table 
that reflects all funds;
     Grantee must publish the substantial amendment to its 
previously approved action plan for disaster recovery in a manner that 
affords citizens, affected local governments, and other interested 
parties a reasonable opportunity to examine the amendment's contents 
and provide feedback. The manner of publication must include, at a 
minimum, prominent posting on the grantee's official website for not 
less than 30 calendar days for public comment (see section VI.A.4.e of 
the Prior Notice for details about the website requirements);
     Grantee must respond to public comment and submit its 
substantial amendment to HUD no later than 90 days after the grantee's 
initial action plan is approved in whole or in part by HUD or not later 
than 90 days after the applicability date of this notice, whichever 
comes later. The substantial amendment submitted to HUD must also be 
prominently posted on the grantee's official website;
     HUD will review the substantial amendment within 45 days 
from date of receipt and determine whether to approve the substantial 
amendment per criteria identified in this notice and the Prior Notice;
     HUD will send a substantial amendment approval letter, 
revised

[[Page 40317]]

grant conditions, and an amended unsigned grant agreement to the 
grantee. If the substantial amendment is not approved, a letter will be 
sent identifying its deficiencies; the grantee must then re-submit the 
substantial amendment within 45 days of the notification letter;
     Grantee must ensure that the HUD-approved substantial 
amendment and initial HUD-approved action plan are posted prominently 
on its official website. Each grantee's current version of its entire 
action plan must be accessible for viewing as a single document at any 
given point in time, rather than the public or HUD having to view and 
cross-reference changes among multiple amendments;
     Grantee must enter the activities from its published 
substantial amendment into the Disaster Recovery Grant Reporting (DRGR) 
system and submit the updated DRGR action plan (revised to reflect the 
substantial amendment) to HUD within the DRGR system;
     Grantee must sign and return the grant agreement to HUD;
     HUD will sign the grant agreement and revise the grantee's 
CDBG-DR line of credit amount to reflect the total amount of available 
funds;
     Grantee may draw down CDBG-DR funds from its line of 
credit after the Responsible Entity completes applicable environmental 
review(s) pursuant to 24 CFR part 58, or adopts another Federal 
agency's environmental review as authorized under the Appropriations 
Act and the Prior Appropriation, and, as applicable, receives from HUD 
the Authority to Use Grant Funds (AUGF) form and certification;
     Grantee must amend and submit its projection of CDBG-DR 
expenditures and performance outcomes with the substantial amendment.

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

    This section of the notice describes rules, statutes, waivers, and 
alternative requirements that apply to allocations under this notice or 
the Prior Notice. The Secretary has determined that good cause exists 
for each waiver and alternative requirement established in this notice, 
and for the extension of waivers and alternative requirements in the 
Prior Notice to allocations made under this notice, and that the 
waivers and alternative requirements are not inconsistent with the 
overall purpose of the HCD Act.
    Grantees may request additional waivers and alternative 
requirements from the Department as needed to address specific needs 
related to their recovery activities. Waivers and alternative 
requirements are effective five (5) days after they are published in 
the Federal Register.

A. Grant Administration

    1. Applicability of waivers, alternative requirements, and other 
requirements. All funds allocated under the Prior Notice and this 
notice are subject to the requirements of this notice and the Prior 
Notice. The waivers, alternative requirements, and other provisions of 
the Prior Notice, as amended, are also incorporated and made applicable 
to funds allocated under this notice. The waivers and alternative 
requirements provide additional flexibility in program design and 
implementation to support full and swift recovery following the 
disasters, while also ensuring that statutory requirements under the 
Appropriations Act, the Prior Appropriation, as well as requirements in 
Public Laws 115-141 and 115-72, made applicable by the terms of the 
Appropriations Act and the Prior Appropriation, are met.
    2. Additional requirements and modifications of requirements in the 
Prior Notice. The following clarifications or modifications apply to 
all grantees in receipt of an allocation under this notice and to funds 
allocated under the Prior Notice:
    a. Substantial amendments for grantees receiving an allocation of 
funds under the Prior Notice. Grantees that received an allocation 
under the Prior Notice (Texas, Florida, Puerto Rico, and U.S. Virgin 
Islands) must submit a substantial amendment, including an updated 
needs assessment, per the requirements outlined in this notice, in 
addition to meeting the requirements for substantial amendments under 
the Prior Notice.
    b. Action plan and other submission requirements for grantees 
receiving an initial allocation under this notice. Grantees that did 
not receive an allocation under the Prior Notice (California, Georgia, 
and Missouri) shall be subject to deadlines for the submission of 
financial controls and procurement processes, implementation plans, and 
action plans, as established in the Prior Notice, which shall be based 
upon the applicability date of this notice. Grantees that did not 
receive an allocation under the Prior Notice must submit an action plan 
not later than 120 days after the applicability date of this notice.
    c. Cost or price analysis. References in the Prior Notice to ``an 
evaluation of the cost and price of a product or service'' and to the 
``evaluation of the cost or price of a product or service'' shall be 
read to require ``an evaluation of the cost or price of a product or 
service.''
    d. Additional requirements for the comprehensive disaster recovery 
website. The Prior Notice requires all grantees to maintain a 
comprehensive disaster recovery website. The Appropriations Act 
requires that certain content be included on a CDBG-DR grantee's 
website. These requirements apply to funds allocated under this notice 
and the Prior Notice. Each grantee must maintain on its comprehensive 
disaster recovery website information containing common reporting 
criteria established by the Department that permits individuals and 
entities awaiting assistance and the general public to see how all 
grant funds are used, including copies of all relevant procurement 
documents, grantee administrative contracts, and details of ongoing 
procurement processes, as determined by the Secretary. HUD will post 
guidance related to this requirement on the HUD exchange website.
    e. Working capital to aid in recovery. The Appropriations Act 
provides that grantees may establish grant programs to assist small 
businesses for working capital purposes to aid in recovery with funds 
allocated under this notice or the Prior Notice. This proviso does not 
establish a new eligible activity. All funds to assist small businesses 
for working capital must be expended for eligible CDBG activities that 
meet a national objective and the other requirements applicable to the 
use of funds.
    f. Underwriting. Notwithstanding section 105(e)(1) of the HCD Act, 
no funds allocated under this notice or the Prior Notice may be 
provided to a for-profit entity for an economic development project 
under section 105(a)(17) unless such project has been evaluated and 
selected in accordance with guidelines developed by HUD pursuant to 
section 105(e)(2) for evaluating and selecting economic development 
projects. States and their subrecipients are required to comply with 
the underwriting guidelines in Appendix A to 24 CFR part 570 if they 
are using grant funds to provide assistance to a for-profit entity for 
an economic development project under section 105(a)(17) of the HCDA. 
The underwriting guidelines are found at Appendix A of Part 570. 
https://www.ecfr.gov/cgi-bin/text-idx?SID=88dced3d630ad9fd8ab91268dd829f1e&mc=true&node=ap24.3.570_1913.a&rgn=div9.
    g. Limitation on use of funds for eminent domain. No funds 
allocated under this notice or the Prior Notice

[[Page 40318]]

may be used to support any Federal, State, or local projects that seek 
to use the power of eminent domain, unless eminent domain is employed 
only for a public use. For purposes of this paragraph, public use shall 
not be construed to include economic development that primarily 
benefits private entities. Any use of funds for mass transit, railroad, 
airport, seaport or highway projects, as well as utility projects which 
benefit or serve the general public (including energy-related, 
communication-related, water-related, and wastewater-related 
infrastructure), other structures designated for use by the general 
public or which have other common-carrier or public-utility functions 
that serve the general public and are subject to regulation and 
oversight by the government, and projects for the removal of an 
immediate threat to public health and safety or brownfields as defined 
in the Small Business Liability Relief and Brownfields Revitalization 
Act (Pub. L. 107-118) shall be considered a public use for purposes of 
eminent domain.
    3. Citizen participation waiver and alternative requirement. 
Section VI.A.4 of the Prior Notice established citizen participation 
requirements for input on grantee action plans and substantial 
amendments. To ensure adequate citizen participation and access to 
action plans and substantial amendments, the Department is deleting and 
replacing the first paragraph in section VI.A.4 and the entirety of 
section VI.A.4.a of the Prior Notice with the following to extend the 
minimum amount of time grantees are required to publish action plans 
and substantial amendments for public comment from 14 calendar days to 
at least 30 calendar days. These paragraphs shall apply to initial 
action plans and all substantial amendments submitted pursuant to this 
notice.
    ``4. Citizen participation waiver and alternative requirement. To 
permit a more streamlined process and ensure disaster recovery grants 
are awarded in a timely manner, provisions of 42 U.S.C. 5304(a)(2) and 
(3), 42 U.S.C. 12707, 24 CFR 570.486, 24 CFR 1003.604, and 24 CFR 
91.115(b) and (c), with respect to citizen participation requirements, 
are waived and replaced by the requirements below. The streamlined 
requirements do not mandate public hearings but do require the grantee 
to provide a reasonable opportunity (at least 30 days) for citizen 
comment and ongoing citizen access to information about the use of 
grant funds. The streamlined citizen participation requirements for a 
grant under this notice are:
    a. Publication of the action plan, opportunity for public comment, 
and substantial amendment criteria. Before the grantee adopts the 
action plan for this grant or any substantial amendment to the action 
plan, the grantee will publish the proposed plan or amendment. The 
manner of publication must include prominent posting on the grantee's 
official website and must afford citizens, affected local governments, 
and other interested parties a reasonable opportunity to examine the 
plan or amendment's contents. The topic of disaster recovery should be 
navigable by citizens from the grantee's (or relevant agency's) 
homepage. Grantees are also encouraged to notify affected citizens 
through electronic mailings, press releases, statements by public 
officials, media advertisements, public service announcements, and/or 
contacts with neighborhood organizations. Plan publication efforts must 
meet the effective communications requirements of 24 CFR 8.6 and other 
fair housing and civil rights requirements, such as the effective 
communication requirements under the Americans with Disabilities Act.
    Grantees are responsible for ensuring that all citizens have equal 
access to information about the programs, including persons with 
disabilities and limited English proficiency (LEP). Each grantee must 
ensure that program information is available in the appropriate 
languages for the geographic areas to be served and take appropriate 
steps to ensure effective communications with persons with disabilities 
pursuant to 24 CFR 8.6 and other fair housing and civil rights 
requirements, such as the effective communication requirements under 
the Americans with Disabilities Act. Since State grantees under this 
notice may make grants throughout the State, including to entitlement 
communities, States should carefully evaluate the needs of persons with 
disabilities and those with limited English proficiency. For assistance 
in ensuring that this information is available to LEP populations, 
recipients should consult the Final Guidance to Federal Financial 
Assistance Recipients Regarding Title VI, Prohibition Against National 
Origin Discrimination Affecting Limited English Proficient Persons, 
published on January 22, 2007, in the Federal Register (72 FR 2732) and 
at: https://www.lep.gov/guidance/HUD_guidance_Jan07.pdf
    Subsequent to publication of the action plan, the grantee must 
provide a reasonable time frame (again, no less than 30 days) and 
method(s) (including electronic submission) for receiving comments on 
the plan or substantial amendment. In its action plan, each grantee 
must specify criteria for determining what changes in the grantee's 
plan constitute a substantial amendment to the plan. At a minimum, the 
following modifications will constitute a substantial amendment: A 
change in program benefit or eligibility criteria; the addition or 
deletion of an activity; or the allocation or reallocation of a 
monetary threshold specified by the grantee in its action plan. The 
grantee may substantially amend the action plan if it follows the same 
procedures required in this notice for the preparation and submission 
of an action plan for disaster recovery.''
    4. Cost Verification. Section VI.A.2.a of the Prior Notice 
established the requirements for contents of action plans submitted in 
response to the Prior Notice and this notice. To further strengthen the 
ability of grantees to demonstrate that project costs funded with CDBG-
DR are necessary and reasonable, section VI.A.2.a of the Prior Notice 
is amended by adding a new paragraph (14) to read as follows. This 
requirement shall apply to the substantial amendment submitted by 
Puerto Rico, Texas, Florida, and the U.S. Virgin Islands pursuant to 
section IV.A.2.a of this notice:
    ``14. A description of the grantee's controls for assuring that 
construction costs are reasonable and consistent with market costs at 
the time and place of construction. The method and degree of analysis 
may vary dependent upon the circumstances surrounding a particular 
project (e.g., project type, risk, costs), but the description must 
address controls for housing projects involving eight or more units 
(whether new construction, rehabilitation, or reconstruction), economic 
revitalization projects (involving, construction, rehabilitation or 
reconstruction), and infrastructure projects. HUD may issue guidance to 
grantees and may require a grantee to verify cost reasonableness from 
an independent and qualified third-party architect, civil engineer, or 
construction manager.''
    5. Additional Specific Criteria and Conditions to Mitigate Risk. 
HUD is required to design an internal control plan for disaster relief 
funding based on standard guidance issued by the Director of the Office 
of Management and Budget on March 30, 2018, to address known internal 
control risks related to disaster funding provided under the 
Appropriations Act and the Prior Appropriation. Both the

[[Page 40319]]

Appropriations Act and the Prior Appropriation also require the 
Secretary to certify in advance of signing a grant agreement, that the 
grantee has proficient financial controls and procurement processes, 
and has established adequate procedures to prevent any duplication of 
benefits as defined by section 312 of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 5155), ensure timely 
expenditure of funds, maintain comprehensive websites regarding all 
disaster recovery activities assisted with these funds, and detect and 
prevent waste, fraud, and abuse of funds. Additionally, 2 CFR 200.205 
requires the Department to assess the risk of each grantee and 2 CFR 
200.207(a) provides that specific conditions may be placed on the grant 
award based upon that assessment of risk. To ensure the effective 
implementation of the internal controls discussed above, the Department 
is adding a new paragraph VI.A.32 to the Prior Notice. This paragraph 
will also apply to funds provided under this notice as well as the 
Prior Notice:
    ``32. Additional Criteria and Specific Conditions to Mitigate Risk. 
To ensure the effective implementation of the internal control plan 
required under the Appropriations Act and grantee implementation of the 
financial controls, procurement processes, and other procedures that 
are the subject of the certification by the Secretary, the Department 
has and may continue to establish specific criteria and conditions for 
each grant award as provided for at 2 CFR 200.205 and 200.207(a), 
respectively, to mitigate the risk of the grant. The Secretary shall 
specify any such criteria and the resulting conditions in the grant 
conditions governing the award. These criteria may include, but need 
not be limited to, a consideration of the internal control framework 
established by the grantee to ensure compliant implementation of its 
financial controls, procurement processes and payment of funds to 
eligible entities, as well as the grantee's risk management strategy 
for information technology systems established to implement CDBG-DR 
funded programs. Additionally, the Secretary may amend the grant 
conditions to mitigate risk of a grant award at any point at which the 
Secretary determines a condition to be required to protect the Federal 
financial interest or to advance recovery.''
    6. Clarification of Waiver of Section 414 of the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.). 
The Prior Notice established a waiver associated with Section 414 of 
the Stafford Act for homeowner occupants and tenants displaced because 
of the disaster. The waiver is applicable to ``CDBG-DR funded projects 
commencing more than one year after the date of the Presidentially 
declared disaster.'' The Department is amending this provision to 
clarify the point at which a project is determined to have 
``commenced,'' by amending paragraph VI.A.23.f of the Prior Notice by 
replacing it in its entirety with the following:
    ``f. Waiver of Section 414 of the Stafford Act. Section 414 of the 
Stafford Act (42 U.S.C. 5181) provides that ``Notwithstanding any other 
provision of law, no person otherwise eligible for any kind of 
replacement housing payment under the Uniform Relocation Assistance and 
Real Property Acquisition Policies Act of 1970 (Pub. L. 91-646) [42 
U.S.C. 4601 et seq.] [``URA''] shall be denied such eligibility as a 
result of his being unable, because of a major disaster as determined 
by the President, to meet the occupancy requirements set by [the 
URA].'' Accordingly, homeowner occupants and tenants displaced from 
their homes as a result of the identified disasters and who would have 
otherwise been displaced as a direct result of any acquisition, 
rehabilitation, or demolition of real property for a federally funded 
program or project may become eligible for a replacement housing 
payment notwithstanding their inability to meet occupancy requirements 
prescribed in the URA. Section 414 of the Stafford Act (including its 
implementing regulation at 49 CFR 24.403(d)(1)), is waived to the 
extent that it would apply to real property acquisition, rehabilitation 
or demolition of real property for a CDBG- DR funded project commencing 
more than one year after the date of the latest applicable 
Presidentially declared disaster undertaken by the grantees, or 
subrecipients, provided that the project was not planned, approved, or 
otherwise underway prior to the disaster. For purposes of this 
paragraph, a CDBG-DR funded project shall be determined to have 
commenced on the earliest of: (1) The date of an approved Request for 
Release of Funds and certification, or (2) the date of completion of 
the site-specific review when a program utilizes Tiering, or (3) the 
date of sign-off by the approving official when a project converts to 
exempt under 24 CFR 58.34(a)(12). The Department has surveyed other 
Federal agencies' interpretation and implementation of Section 414 and 
found varying views and strategies for long-term, post-disaster 
projects involving the acquisition, rehabilitation, or demolition of 
disaster-damaged housing. The Secretary has the authority to waive 
provisions of the Stafford Act and its implementing regulations that 
the Secretary administers in connection with the obligation of funds 
made available by this notice, or the grantees' use of these funds. The 
Department has determined that good cause exists for a waiver and that 
such waiver is not inconsistent with the overall purposes of title I of 
the HCD Act.
    (1) The waiver will simplify the administration of the disaster 
recovery process and reduce the administrative burden associated with 
the implementation of Stafford Act Section 414 requirements for 
projects commencing more than one year after the date of the 
Presidentially declared disaster considering most of such persons 
displaced by the disaster will have returned to their dwellings or 
found another place of permanent residence.
    (2) This waiver does not apply with respect to persons that meet 
the occupancy requirements to receive a replacement housing payment 
under the URA nor does it apply to persons displaced or relocated 
temporarily by other HUD-funded programs or projects. Such persons' 
eligibility for relocation assistance and payments under the URA is not 
impacted by this waiver.''
    7. Clarification of the Environmental Review requirements. The 
Prior Notice provided guidance on the adoption of another Federal 
agency's environmental review for CDBG-DR projects as permitted by the 
Prior Appropriation. The Appropriations Act goes beyond the Prior 
Appropriation and authorizes recipients of CDBG-DR funds under the 
Appropriations Act that use such funds to supplement Federal assistance 
provided under section 408(c)(4) of the Stafford Act to adopt, without 
review or public comment, any environmental review, approval, or permit 
performed by a Federal agency to satisfy responsibilities with respect 
to environmental review, approval or permit. Accordingly, the 
Department is amending paragraph VI.A.24.b of the Prior Notice by 
replacing it in its entirety with the following:
    ``b. Adoption of another agency's environmental review. In 
accordance with the Appropriations Act, grant recipients of Federal 
funds that use such funds to supplement Federal assistance provided 
under section 408(c)(4) as well as sections 402, 403, 404, 406, 407 or 
502 of the Stafford Act may adopt, without review or public comment, 
any environmental review, approval, or

[[Page 40320]]

permit performed by a Federal agency, and such adoption shall satisfy 
the responsibilities of the recipient with respect to such 
environmental review, approval, or permit that is required by the HCD 
Act. The grant recipient must notify HUD in writing of its decision to 
adopt another agency's environmental review. The grant recipient must 
retain a copy of the review in the grantee's environmental records.''
    8. Low- and moderate-income national objective standard 
(Commonwealth of Puerto Rico only). Section 102(a)(20) of the HCD Act 
defines ``persons of low and moderate income'' and ``low- and moderate 
income persons.'' Subparagraph (B) of this definition authorizes the 
Secretary to establish for any area percentages of median income that 
are higher or lower than the percentages defined as ``low- and 
moderate-income'' under 102(a)(20)(A), if the Secretary finds such 
variations to be necessary because of unusually high or low family 
incomes in such areas. Due to the unusually low incomes in Puerto Rico, 
residents that meet the CDBG program definition of ``low- and moderate-
income'' by having incomes of 80 percent AMI or less, also remain below 
the Federal poverty level. Therefore, the Department is increasing the 
income limits for low- and moderate-income persons in Puerto Rico, 
which will be listed in income tables posted on the HUD Exchange 
website. Under this adjustment, Puerto Rico may use these alternative 
income limits when determining that activities undertaken with CDBG-DR 
funds meet the low- and moderate-income benefit CDBG national objective 
criteria. These income limits apply only to the use of CDBG-DR funds 
under this notice and the Prior Notice.

B. Housing

    9. Modification of Affordability Periods. The Prior Notice imposed 
a twenty-year (20-year) affordability period for all rental properties 
assisted with CDBG-DR funds under the Prior Appropriation. The 
Department, however, is amending this requirement to apply the 
affordability requirements to rental projects as defined below. The 
Department is amending paragraph VI.B.34 of the Prior Notice by 
replacing it in its entirety with the following:
    ``34. Addressing Unmet Affordable Rental Housing Needs. The grantee 
must identify in its action plan how it will address the 
rehabilitation, reconstruction, replacement, and new construction of 
rental housing that is affordable to low- and moderate-income 
households in the most impacted and distressed areas and ensure that 
adequate funding from all available sources, including CDBG-DR grant 
funds, are dedicated to addressing the unmet needs identified in its 
action plan pursuant to paragraph A.2.a.(3) of section VI of this 
notice. To meet the low- and moderate-income housing national 
objective, affordable rental housing funded under this notice must be 
rented to a low- and moderate-income person at affordable rents. This 
notice requires grantees to impose the following minimum affordability 
periods enforced with recorded use restrictions, covenants, deed 
restrictions, or other mechanisms to ensure that rental housing remains 
affordable for the required period of time:

------------------------------------------------------------------------
                                                              Minimum
                                                             period of
                 Rental housing activity                   affordability
                                                              (years)
------------------------------------------------------------------------
Rehabilitation or reconstruction of multi-family rental               15
 projects with eight or more units......................
New construction multi-family rental projects with five               20
 or more units..........................................
------------------------------------------------------------------------

    The action plan must, at a minimum, provide (1) a definition of 
``affordable rents''; (2) the income limits for tenants of rental 
housing that is rehabilitated, reconstructed or constructed with CDBG-
DR funds; and (3) a minimum affordability period of fifteen (15) years 
for the rehabilitation or reconstruction of multi-family rental 
projects with eight or more units, and a minimum affordability period 
of twenty (20) years for the new construction of multi-family rental 
units with five or more units. If a rental project that requires 
rehabilitation or reconstruction is subject to existing affordability 
requirements associated with other funding sources, grantees may 
provide in their action plan that the 15-year affordability period 
required under this notice may run concurrently (or overlap) with the 
affordability requirements associated with such other funding.
    10. Affordability Period for New Construction of Single-Family LMI 
Homeowner Housing. Grantees receiving funds under this notice are 
required to implement a minimum five-year affordability period on all 
newly constructed single-family housing that is to be made available 
for low- and moderate-income homeownership. This requirement for an 
affordability period does not apply to the rehabilitation or 
reconstruction of single-family housing. This notice requires grantees 
to develop and impose affordability (i.e., resale and recapture) 
restrictions for single-family housing newly constructed with CDBG-DR 
funds and made available for affordable homeownership to low- and 
moderate-income persons, and to enforce those restrictions through 
recorded deed restrictions, covenants, or other similar mechanisms, for 
a period not less than five years. Grantees shall establish resale or 
recapture requirements for housing funded pursuant to this paragraph 
and shall outline those requirements in the action plan or substantial 
amendment in which the activity is proposed. The resale and recapture 
provisions must clearly describe the terms of the resale and recapture 
provisions, the specific circumstances under which these provisions 
will be used, and how the provisions will be enforced.
    11. CDBG-DR Housing Assistance and FEMA's Permanent and Semi-
Permanent Housing Programs. The Prior Appropriation and the 
Appropriations Act prohibit the use of CDBG-DR funds for activities 
that are reimbursable by FEMA and the U.S. Army Corps of Engineers. In 
addition, paragraph VI.A.25 of the Prior Notice requires grantees to 
ensure that CDBG-DR funds are not used to duplicate funding provided by 
these agencies or any other potential sources of assistance. As with 
all sources of FEMA assistance, grantees are reminded that in 
jurisdictions in which FEMA has implemented its Permanent or Semi-
Permanent Housing program, grantees must ensure that CDBG-DR funds are 
not used in violation of the above two prohibitions. Grantees must also 
establish policies and procedures to provide for the repayment of a 
CDBG-DR award when assistance is subsequently provided for that same 
purpose from FEMA or other sources.

[[Page 40321]]

    12. Rehabilitation and Reconstruction Cost-Effectiveness. In its 
Federal Register notice allocating additional CDBG-DR funds for 
Louisiana floods and 2016 disasters (82 FR 5591), the Department 
required grantees receiving funds under that notice to consider cost-
effectiveness of residential rehabilitation or reconstruction projects 
relative to other alternatives. In this notice, the Department is 
similarly requiring each grantee to establish policies and procedures 
to assess the cost-effectiveness of each proposed project undertaken to 
assist a household under any residential rehabilitation or 
reconstruction program funded under this notice or the Prior Notice. 
The policies and procedures must address criteria for determining when 
the cost of the rehabilitation or reconstruction of the unit will not 
be cost-effective relative to other means of assisting the property-
owner, such as buyout or acquisition of the property, or the 
construction of area-wide protective infrastructure, rather than 
individual building mitigation solutions designed to protect individual 
structures (such as elevating an existing structure). For example, as 
the grantee in designing its program, it might choose as comparison 
criteria the rehabilitation costs derived from the RS Means Residential 
Cost Data and costs to buyout or acquire the property as a means of 
determining whether to fund a rehabilitation project. A grantee may 
also consider offering different housing alternatives, as appropriate, 
such as manufactured housing options. A grantee may find it necessary 
to provide exceptions on a case-by-case basis to the maximum amount of 
assistance or cost effectiveness criteria and must describe the process 
it will use to make such exceptions in its policies and procedures. 
Each grantee must adopt policies and procedures that communicate how it 
will analyze the circumstances under which an exception is needed, how 
it will demonstrate that the amount of assistance is necessary and 
reasonable, and how the grantee will make reasonable accommodations to 
provide accessibility features necessary to accommodate an occupant 
with a disability. All CDBG-DR expenditures remain subject to the cost 
principles in 2 CFR part 200, subpart E--Cost Principles, including the 
requirement that costs be necessary and reasonable for the performance 
of the grantee's CDBG-DR grant.

C. Infrastructure

    13. Infrastructure planning and design. CDBG-DR allocations 
provided for under this notice are informed in part by the Department's 
assessment of unmet infrastructure needs and accordingly, the 
Department is establishing infrastructure planning and design 
requirements for grantees subject to the provisions of this notice and 
the Prior Notice. For funds allocated pursuant to the Prior Notice and 
this notice, the Department is requiring grantees to address long-term 
recovery and hazard mitigation planning in the action plan or 
substantial amendment, whichever is applicable under this notice. Each 
grantee must include a description of how the grantee plans to:
    a. Promote sound, sustainable long-term recovery planning informed 
by a post-disaster evaluation of hazard risk, especially land-use 
decisions that reflect responsible flood plain management and take into 
account future possible extreme weather events and other natural 
hazards and long-term risks;
    b. Adhere to the elevation requirements established in paragraph 
B.32.e of section VI of the Prior Notice;
    c. Coordinate with local and regional planning efforts to ensure 
consistency, including how the grantee will promote community-level 
and/or regional (e.g., multiple local jurisdictions) post-disaster 
recovery and mitigation planning;
    d. For infrastructure allocations, the grantee must also describe:
    i. How mitigation measures will be integrated into rebuilding 
activities and the extent to which infrastructure activities funded 
through this grant will achieve objectives outlined in regionally or 
locally established plans and policies that are designed to reduce 
future risk to the jurisdiction;
    ii. How infrastructure activities will be informed by a 
consideration of the costs and benefits of the project;
    iii. How the grantee will seek to ensure that infrastructure 
activities will avoid disproportionate impact on vulnerable populations 
as referenced in paragraph A.2.a(4) of section VI in the Prior Notice 
and create opportunities to address economic inequities facing local 
communities;
    iv. How the grantee will align investments with other planned state 
or local capital improvements and infrastructure development efforts, 
and will work to foster the potential for additional infrastructure 
funding from multiple sources, including existing state and local 
capital improvement projects in planning, and the potential for private 
investment; and
    v. The extent to which the grantee will employ adaptable and 
reliable technologies to guard against premature obsolescence of 
infrastructure.

Grantees are encouraged to review the additional guidance on 
predevelopment principles are described in the Federal Resource Guide 
for Infrastructure Planning and Design: (http://portal.hud.gov/hudportal/documents/huddoc?id=BAInfraResGuideMay2015.pdf)
    14. Discipline and Accountability in the Environmental Review and 
Permitting of Infrastructure Projects. Executive Order 13807, signed by 
the President on August 15, 2017, establishes a coordinated, 
predictable, and transparent process for the review and permitting of 
infrastructure projects. In addition, the Federal Permitting 
Improvement Steering Council has issued a standard operating procedure 
to coordinate Federal agency reporting on the environmental review and 
permitting of covered projects pursuant to the Fixing America's Surface 
Transportation Act (FAST-41) (Pub. L. 114-94). Under FAST-41, a covered 
project is defined as any activity in the United States that requires 
authorization or environmental review by a Federal agency involving 
construction of infrastructure for renewable or conventional energy 
production, electricity transmission, surface transportation, aviation, 
ports and waterways, water resource projects, broadband, pipelines, 
manufacturing, or any other sector as determined by a majority vote of 
the Council that (1) is subject to National Environmental Policy Act of 
1969 (NEPA); is likely to require a total investment of more than 
$200,000,000; and does not qualify for abbreviated authorization or 
environmental review processes under any applicable law; or (2) is 
subject to NEPA and the size and complexity of which, in the opinion of 
the Council, make the project likely to benefit from enhanced oversight 
and coordination, including a project likely to require authorization 
from or environmental review involving more than two Federal agencies; 
or the preparation of an environmental impact statement under NEPA. 
CDBG-DR grantees may choose to participate in reporting on their 
environmental review and permitting of covered projects under FAST-41.
    15. CDBG-DR Funds as Match for FEMA 428 Public Assistance Projects. 
In response to a disaster, FEMA may implement, and grantees may elect 
to follow alternative procedures for FEMA's Public Assistance Program, 
as authorized pursuant to Section 428 of the Stafford Act. Grantees may 
use CDBG-DR funds as a matching requirement, share, or contribution for 
Public Assistance Projects financed pursuant to Section 428, but as in 
other instances in which grantee use CDBG-

[[Page 40322]]

DR funds to meet local matching requirements, grantees must document 
that CDBG-DR funds have been used for the actual costs incurred for the 
assisted project and for costs that are eligible, meet a national 
objective, and meet other applicable CDBG requirements.

D. Economic Revitalization

    16. Waiver to permit tourism marketing (U.S. Virgin Islands only). 
The U.S. Virgin Islands has requested a waiver to allow the Territory 
to use up to $5,000,000 in CDBG-DR funds to promote travel to disaster-
impacted areas. Tourism is the primary economic contributor to the U.S. 
Virgin Island's economy, estimated to account for between 30 and 80 
percent of the Territory's economy. The U.S. Virgin Islands indicated 
that for several weeks following the disasters, airports and seaports 
remained closed and due to damage to hotels and a perception that the 
islands have been completely decimated, tourism has remained low. The 
Territory indicates that many of its largest hotels will not reopen 
until late 2019 or 2020, with weekly accommodation capacity dropping 
from 23,000 in February 2017 to 13,000 in February 2018. The 
Territory's request also notes that the decline in tourism has had a 
particularly adverse impact on low- and moderate-income residents that 
depend on the industry for employment.
    The Territory has documented a sharp decline in visitors to the 
islands, with a corresponding decline in visitor spending and Territory 
revenues. Prior to the disasters, the Territory reported total monthly 
visitor expenditures of $84.8 million in October 2016, contrasted to 
total tourist spending of $49.8 million and lost excursionist spending 
of $71.1 million in October 2017, after the storms. The Territory 
estimates that total tourism-related losses caused by the 2017 
disasters are expected to approach $1 billion in the 12 months 
following the storms, amounting to almost 70% of the total revenue 
generated by tourism in 2016.
    Tourism industry support, such as a national and international 
consumer awareness advertising campaign for an area in general, is 
ineligible for CDBG assistance. However, HUD recognizes that such 
support can be a useful recovery tool in a damaged regional economy 
that depends on tourism for most of its jobs and tax revenues. In the 
past, HUD has granted tourism waivers for several CDBG-DR disaster 
recovery efforts. As the U.S. Virgin Islands is proposing advertising 
and marketing activities rather than direct assistance to tourism-
dependent businesses, and because the measures of long-term benefit 
from the proposed activities must be derived using indirect means, 42 
U.S.C. 5305(a) is waived only to the extent necessary to make eligible 
use of no more than $5,000,000 for assistance to promote the Territory 
in general or specific components of the islands. Additionally, no 
elected officials shall appear in tourism marketing materials financed 
with CDBG-DR funds. Given the importance of tourism to the overall 
economy, HUD is authorizing this use of funds without regard to unmet 
housing need. This waiver will expire two years after the Territory 
first draws CDBG-DR funds under the allocation provided in the Prior 
Notice. In providing similar waivers for other CDBG-DR grantees, the 
Department has often identified issues in the procurement of tourism 
marketing services, with grantees adding CDBG-DR funds to existing 
tourism marketing contracts procured with other sources of funds. In 
providing this waiver, HUD advises the Territory to ensure that 
contracts funded pursuant to this waiver with CDBG-DR funds comply with 
applicable procurement requirements. The grantee must also develop 
metrics to demonstrate the impact of CDBG-DR expenditures on the 
tourism sector of the economy and shall identify those metrics in the 
initial substantial amendment submitted pursuant to this notice.
    17. Waiver to permit tourism and business marketing (Commonwealth 
of Puerto Rico only). The Commonwealth of Puerto Rico has requested a 
waiver to allow the Commonwealth to use up to $15,000,000 in CDBG-DR 
funds to promote travel and to attract new businesses to disaster-
impacted areas. Puerto Rico's request indicated that prior to the 
storms, tourism accounted for 8 percent of the economy. One month after 
the disasters, however, one third of the island's hotels remained 
shuttered and beaches remained closed for swimming due to possible 
water contamination. The Commonwealth's request notes that insular 
areas of the island have been particularly slow to recover to historic 
levels of tourism activity. Puerto Rico anticipates the addition of 
over 2,000 tourist accommodations this year and accordingly, seeks to 
use CDBG-DR funds to target outreach efforts through a marketing 
campaign to reach potential visitors that may not be aware of the pace 
of recovery in the island's tourist areas.
    The Commonwealth's waiver request includes the proposed use of 
CDBG-DR funds to also market the island to new businesses. Puerto Rico 
notes that its declining economic conditions prior to the storms, as 
reflected through the largest-ever federal bankruptcy by a local 
government, were exacerbated by the disasters. The top five economic 
sectors with reported losses to the U.S. Small Business Administration 
as result of the storms include real estate, accommodations and food 
services, health care, retail trade, and manufacturing. Unemployment in 
February 2016 was reported at 10.6%, with a decline in jobs in non-farm 
industries from 871,200 jobs in September 2017 to 848,300 jobs in 
February 2018. The Commonwealth's request notes that the unprecedented 
federal investment in the island's damaged housing stock and 
infrastructure also presents an opportunity to introduce and re-
introduce businesses across the nation and around the world to Puerto 
Rico as an attractive location for new business investment.
    Tourism and business advertising campaigns for an area in general, 
are ineligible for CDBG-DR assistance. However, HUD recognizes that 
such support can be a useful recovery tool in a damaged regional 
economy that depends on tourism and seeks to attract new business 
investment to generate new jobs and tax revenues. HUD has previously 
granted similar waivers for several CDBG-DR disaster recovery efforts. 
As the Commonwealth of Puerto Rico is proposing advertising and 
marketing activities rather than direct assistance to tourism-dependent 
and other businesses, and because the measures of long-term benefit 
from the proposed activities must be derived using indirect means, 42 
U.S.C. 5305(a) is waived only to the extent necessary to make eligible 
use of no more than $15,000,000 for assistance to promote the 
Commonwealth in general or specific communities. No elected officials 
shall appear in tourism or business marketing materials financed with 
CDBG-DR funds. Given the importance of tourism to the overall economy, 
HUD is authorizing this use of funds without regard to unmet housing 
need. This waiver will expire two years after the Commonwealth first 
draws CDBG-DR funds under the allocation provided in the Prior Notice. 
In providing similar waivers for other CDBG-DR grantees, the Department 
has often identified issues in the procurement of tourism and business 
marketing services, with grantees adding CDBG-DR funds to existing 
tourism and business marketing contracts procured with other sources of 
funds. In providing this waiver, HUD

[[Page 40323]]

advises the Commonwealth to ensure that contracts funded pursuant to 
this waiver with CDBG-DR funds comply with applicable procurement 
requirements. The grantee must also develop metrics to demonstrate the 
impact of CDBG-DR expenditures on the tourism and other sectors of the 
economy and shall identify those metrics in the initial substantial 
amendment submitted pursuant to this notice.

V. Duration of Funding

    The law, as amended, requires that funds provided under the 
Appropriations Act and Prior Appropriation be expended within two years 
of the date that HUD obligates funds to a grantee, but also authorizes 
the Office of Management and Budget (OMB) to provide a waiver of this 
requirement. OMB has waived this requirement for a combined total of 
$35,390,000,000 of CDBG-DR funds appropriated under the Prior 
Appropriation and the Appropriations Act. Notwithstanding the OMB 
waiver, however, the provision of the Prior Notice that requires each 
grantee to expend 100 percent of its total allocation of CDBG-DR funds 
on eligible activities within six years of HUD's initial obligation of 
funds remains in effect. For grantees receiving an allocation of funds 
under the Prior Notice, the six-year expenditure deadline commences 
with initial obligation of funds provided under the Prior Notice. For 
grantees receiving an initial allocation of funds under this Notice, 
the six-year expenditure deadline commences with the initial obligation 
of funds provided under this notice. Further, consistent with 31 U.S.C. 
1555 and OMB Circular No. A-11, if the Secretary or the President 
determines that the purposes for which the appropriation has been made 
have been carried out and no disbursements have been made against the 
appropriation for two consecutive fiscal years, any remaining 
unobligated balance will be made unavailable for obligation or 
expenditure.

VI. Catalog of Federal Domestic Assistance

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

VII. Finding of No Significant Impact

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

    Dated: August 8, 2018.
Neal J. Rackleff,
Assistant Secretary.

Appendix A--Detailed Methodology (for Federal Notice Appendix)

Allocation of CDBG-DR Funds to Most Impacted and Distressed Areas Due 
to 2017 Federally Declared Disasters and Allocation of Mitigation Funds 
for 2015, 2016, and 2017 Federally Declared Disasters

Background

    The Bipartisan Budget Act of 2018, Public Law 115-123, enacted 
on February 9, 2018, appropriated $28,000,000,000 through the 
Community Development Block Grant disaster recovery (CDBG-DR) 
program. The statutory text related to the allocation is as follows:

    For an additional amount for ``Community Development Fund'', 
$28,000,000,000, to remain available until expended, for necessary 
expenses for activities authorized under title I of the Housing and 
Community Development Act of 1974 (42 U.S.C. 5301 et seq.) related 
to disaster relief, long-term recovery, restoration of 
infrastructure and housing, economic revitalization, and mitigation 
in the most impacted and distressed areas resulting from a major 
declared disaster that occurred in 2017 (except as otherwise 
provided under this heading) pursuant to the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et 
seq.): Provided, That funds shall be awarded directly to the State, 
unit of general local government, or Indian tribe (as such term is 
defined in section 102 of the Housing and Community Development Act 
of 1974) at the discretion of the Secretary: Provided further, That 
of the amounts made available under this heading, up to 
$16,000,000,000 shall be allocated to meet unmet needs for grantees 
that have received or will receive allocations under this heading 
for major declared disasters that occurred in 2017 or under the same 
heading of Division B of Public Law 115-56, except that, of the 
amounts made available under this proviso, no less than 
$11,000,000,000 shall be allocated to the States and units of local 
government affected by Hurricane Maria, and of such amounts 
allocated to such grantees affected by Hurricane Maria, 
$2,000,000,000 shall be used to provide enhanced or improved 
electrical power systems: Provided further, That to the extent 
amounts under the previous proviso are insufficient to meet all 
unmet needs, the allocation amounts related to infrastructure shall 
be reduced proportionally based on the total infrastructure needs of 
all grantees: Provided further, That of the amounts made available 
under this heading, no less than $12,000,000,000 shall be allocated 
for mitigation activities to all grantees of funding provided under 
this heading, section 420 of division L of Public Law 114-113, 
section 145 of division C of Public Law 114-223, section 192 of 
division C of Public Law 114-223 (as added by section 101(3) of 
division A of Public Law 114-254), section 421 of division K of 
Public Law 115-31, and the same heading in division B of Public Law 
115-56, and that such mitigation activities shall be subject to the 
same terms and conditions under this subdivision, as determined by 
the Secretary: Provided further, That all such grantees shall 
receive an allocation of funds under the preceding proviso in the 
same proportion that the amount of funds each grantee received or 
will receive under the second proviso of this heading or the 
headings and sections specified in the previous proviso bears to the 
amount of all funds provided to all grantees specified in the 
previous proviso: Provided further, That of the amounts made 
available under the second and fourth provisos of this heading, the 
Secretary shall allocate to all such grantees an aggregate amount 
not less than 33 percent of each such amounts of funds provided 
under this heading within 60 days after the enactment of this 
subdivision based on the best available data (especially with 
respect to data for all such grantees affected by Hurricanes Harvey, 
Irma, and Maria), and shall allocate no less than 100 percent of the 
funds provided under this heading by no later than December 1, 2018:
    . . . Provided further, That of the amounts made available under 
this heading, up to $15,000,000 shall be made available for capacity 
building and technical assistance, including assistance on 
contracting and procurement processes, to support States, units of 
general local government, or Indian tribes (and their subrecipients) 
that receive allocations pursuant to this heading, received disaster 
recovery allocations under the same heading in Public Law 115-56, or 
may receive similar allocations for disaster recovery in future 
appropriations Acts: Provided further, That of the amounts made 
available under this heading, up to $10,000,000 shall be 
transferred, in aggregate, to ``Department of Housing and Urban 
Development--Program Office Salaries and Expenses--Community 
Planning and Development'' for necessary costs, including 
information technology costs, of administering and overseeing the 
obligation and expenditure of amounts under this heading:

    Further, under the General Provisions of the Act in Section 
21102:

    Any funds made available under the heading ``Community 
Development Fund''

[[Page 40324]]

under this subdivision that remain available, after the other funds 
under such heading have been allocated for necessary expenses for 
activities authorized under such heading, shall be used for 
additional mitigation activities in the most impacted and distressed 
areas resulting from a major declared disaster that occurred in 
2014, 2015, 2016 or 2017: Provided, That such remaining funds shall 
be awarded to grantees of funding provided for disaster relief under 
the heading ``Community Development Fund'' in this subdivision, 
section 420 of division L of Public Law 114-113, section 145 of 
division C of Public Law 114-223, section 192 of division C of 
Public Law 114-223 (as added by section 101(3) of division A of 
Public Law 114-254), section 421 of division K of Public Law 115-31, 
and the same heading in division B of Public Law 115-56 subject to 
the same terms and conditions under this subdivision and such Acts 
respectively: Provided further, That each such grantee shall receive 
an allocation from such remaining funds in the same proportion that 
the amount of funds such grantee received under this subdivision and 
under the Acts specified in the previous proviso bears to the amount 
of all funds provided to all grantees specified in the previous 
proviso.

    The methodology for allocating these funds has two core parts:

 Unmet Needs: Up to $16 billion for the remaining unmet 
needs of communities most impacted by a disaster in 2017. After 
factoring in the $35 million set-aside for HUD expenses, up to 
$15.965 billion is available for unmet needs, of which no less than 
$11 billion is provided to communities impacted by Hurricane Maria, 
specifically the Commonwealth of Puerto Rico and United States 
Virgin Islands. These funds are allocated based on a calculation of 
unmet needs as described below after taking into account the $7.458 
billion of CDBG-DR previously allocated for 2017 disasters.
 Mitigation: No less than $12 billion for mitigation 
activities for grantees who have received CDBG-DR funding under this 
appropriation or earlier appropriations covering disasters in 2015, 
2016, and 2017. This allocation is based on each grantee's 
proportional share of total funds allocated for all of the eligible 
disasters.

Allocating for remaining unmet needs of 2017

Most impacted and distressed areas

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

(1) Individual Assistance/IHP designation. HUD has limited 
allocations to those disasters where FEMA had determined the damage 
was sufficient to declare the disaster as eligible to receive 
Individual and Households Program (IHP) funding.
(2) Concentrated damage. HUD has limited its estimate of serious 
unmet housing need to counties and Zip Codes with high levels of 
damage, collectively referred to as ``most impacted areas''. For 
this allocation, HUD is defining most impacted areas as either most 
impacted counties--counties exceeding $10 million in serious unmet 
housing needs--and most impacted Zip Codes--Zip Codes with $2 
million or more of serious unmet housing needs. The calculation of 
serious unmet housing needs is described below.
(3) Disasters meeting the most impacted threshold. Only 2017 
disasters that meet this requirement for most impacted damage are 
funded:
    a. One or more most impacted county
    b. An aggregate of most impacted Zip Codes of $10 million or 
greater

    For disasters that meet the most impacted threshold described 
above, the unmet need allocations are based on the following factors 
summed together less previous CDBG-DR allocations for the 2017 
disasters unmet needs:

(1) Repair estimates for seriously damaged owner-occupied units 
without insurance (with some exceptions) in most impacted areas 
after FEMA and SBA repair grants or loans;
(2) Repair estimates for seriously damaged rental units occupied by 
renters with income less than 50 percent of Area Median Income in 
most impacted areas;
(3) Repair and content loss estimates for small businesses with 
serious damage denied by SBA;
(4) The estimated local cost share for Public Assistance Category C 
to G projects;
(5) $2 billion for Maria-impacted disasters for improvements to the 
electric grid; and
(6) An amount to ensure that Maria impacted disasters do not receive 
less than $11 billion from Public Law 115-123, with the split 
between the eligible disasters in Puerto Rico and the Virgin Islands 
based on their relative share of needs as calculated under number 1 
to 5 above.

Methods for estimating unmet needs for housing

    The data HUD staff have identified as being available to 
calculate unmet needs for qualifying disasters come from the FEMA 
Individual Assistance program data on housing-unit damage as of 
February 22, 2018.
    The core data on housing damage for both the unmet housing needs 
calculation and the concentrated damage are based on home inspection 
data for FEMA's Individual Assistance program. HUD calculates 
``unmet housing needs'' as the number of housing units with unmet 
needs times the estimated cost to repair those units less repair 
funds already provided by FEMA and SBA. Puerto Rico and the Virgin 
Island owner damage is calculated based on both real property and 
personal property inspections based on findings by HUD that this 
likely is a more accurate estimate of serious homeowner damage in 
those areas. For the continental U.S., HUD finds its traditional 
approach of just using real property damage assessments for owner-
occupied units continues to be effective.
    Each of the FEMA inspected owner units are categorized by HUD 
into one of five categories:

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

    For the Virgin Islands and Puerto Rico, the damage grouping 
would be the higher damage categorization based on the calculation 
above or:

 Minor-Low: Less than $2,500 of FEMA inspected personal 
property damage.
 Minor-High: $2,500 to $3,499 of FEMA inspected personal 
property damage.
 Major-Low: $3,500 to $4,999 of FEMA inspected personal 
property damage or 1 to 4 feet of flooding on the first floor.
 Major-High: $5,000 to $8,999 of FEMA inspected personal 
property damage or 4 to 6 feet of flooding on the first floor.
 Severe: Greater than $9,000 of FEMA inspected personal 
property damage or determined destroyed and/or 6 or more feet of 
flooding on the first floor.

    To meet the statutory requirement of ``most impacted'' in this 
legislative language, homes are determined to have a high level of 
damage if they have damage of ``major-low'' or higher. That is, they 
have a real property FEMA inspected damage of $8,000 or flooding 
over 1 foot.
    Furthermore, a homeowner is determined to have unmet needs if 
they reported damage and no insurance to cover that damage and was 
outside the 1% risk flood hazard area; for homeowners inside the 
flood hazard area, only homeowners without insurance below 120% of 
Area Median Income are determined to have unmet needs. Homeowners 
without hazard insurance with non-flood damage with incomes below 
the greater of national median or 120% of Area Median Income are 
included as having unmet needs.
    FEMA does not inspect rental units for real property damage so 
personal property damage is used as a proxy for unit damage. Each of 
the FEMA inspected renter units are categorized by HUD into one of 
five categories:

 Minor-Low: Less than $1,000 of FEMA inspected personal 
property damage.
 Minor-High: $1,000 to $1,999 of FEMA inspected personal 
property damage.
 Major-Low: $2,000 to $3,499 of FEMA inspected personal 
property damage or 1 to 4 feet of flooding on the first floor.
 Major-High: $3,500 to $7,499 of FEMA inspected personal 
property damage or 4 to 6 feet of flooding on the first floor.

[[Page 40325]]

 Severe: Greater than $7,500 of FEMA inspected personal 
property damage or determined destroyed and/or 6 or more feet of 
flooding on the first floor.

    For rental properties, to meet the statutory requirement of 
``most impacted'' in this legislative language, homes are determined 
to have a high level of damage if they have damage of ``major-low'' 
or higher. That is, they have a FEMA personal property damage 
assessment of $2,000 or greater or flooding over 1 foot.
    Furthermore, landlords are presumed to have adequate insurance 
coverage unless the unit is occupied by a renter with income less 
than the greater of the Federal poverty level or 50 percent of Area 
Median Income. Units occupied by a tenant with income less than the 
greater of the Federal poverty level or 50 percent of Area Median 
Income are used to calculate likely unmet needs for affordable 
rental housing.
    The average cost to fully repair a home for a specific disaster 
to code within each of the damage categories noted above is 
calculated using the median real property damage repair costs 
determined by the Small Business Administration for its disaster 
loan program for the subset of homes inspected by both SBA and FEMA 
for each eligible disaster. Because SBA is inspecting for full 
repair costs, it is presumed to reflect the full cost to repair the 
home, which is generally more than the FEMA estimates on the cost to 
make the home habitable.
    For each household determined to have unmet housing needs (as 
described above), their estimated average unmet housing need less 
assistance from FEMA and SBA provided for repair to homes with 
serious unmet needs. No unmet housing need cost multiplier can be 
less than the 25th percentile estimate across all disasters of 2017. 
Those minimum cost multipliers are: $40,323 for major damage (low); 
$55,812 for major damage (high); and $77,252 for severe damage. The 
multipliers used for each disaster is shown below.

----------------------------------------------------------------------------------------------------------------
                                                                      Serious Unmet Housing Need Multipliers
                                                                 -----------------------------------------------
                                                                     Major-Low      Major-High        Severe
----------------------------------------------------------------------------------------------------------------
California......................................................         $40,323         $55,812        $124,481
Florida.........................................................         $42,837         $56,113         $79,096
Georgia.........................................................         $40,323         $55,812         $77,252
Missouri........................................................         $40,323         $66,545        $100,947
Puerto Rico.....................................................         $40,323         $55,812         $77,252
Texas...........................................................         $56,342         $75,414        $101,390
Virgin Islands..................................................         $80,142         $97,672        $116,351
----------------------------------------------------------------------------------------------------------------

Methods for estimating unmet economic revitalization needs

    Based on SBA disaster loans to businesses as of 3-22-2018, HUD 
calculates the median real estate and content loss by the following 
damage categories for each state:

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

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

Methods for estimating unmet infrastructure needs

    To calculate unmet needs for infrastructure projects, HUD is 
using data obtained from FEMA as of March 30, 2018, showing the 
amount FEMA estimates will be needed to repair the permanent public 
infrastructure (Categories C to G) to their pre-storm condition. HUD 
uses these data to calculate two infrastructure unmet needs:

 The estimated local cost share for Public Assistance 
Category C to G projects.
 An allocation of $2 billion for Maria affected disasters 
(Puerto Rico and the Virgin Islands) for ``enhanced or improved 
electrical power systems.'' This is allocated between Puerto Rico 
and the Virgin Islands based on their relative share of total 
estimated Category F Public Assistance cost to repair public 
utilities.

Allocation Calculation

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

 Serious unmet housing needs in most impacted counties less 
amounts of CDBG-DR previously allocated for serious unmet housing 
needs
 Serious unmet business needs less amounts of CDBG-DR 
previously allocated for serious business needs
 FEMA Public Assistance Category C to G local cost share and 
the $2 billion additional amount for enhanced or improved electrical 
power systems in Puerto Rico and the Virgin Islands

    Prior allocations for 2017 disasters are subtracted from this 
amount. Because this results in less than $11 billion being 
allocated to Maria affected disasters (Puerto Rico and the Virgin 
Islands) from Public Law 115-123, an additional amount is added to 
those two grantees to reach $11 billion based on their relative 
share of needs as calculated under the three bullets above.
    This results in an estimate of unmet needs to be allocated from 
Public Law 115-123 of $12.031 billion, allowing $3.935 billion to be 
allocated to mitigation.

Allocating for mitigation

    The allocation of $15.935 billion in mitigation funds (the $12 
billion appropriated for mitigation plus the $3.935 billion 
remaining after allocation of 100% of unmet needs) is allocated 
proportionally based on each grantee's relative share of the $22.425 
billion of CDBG-DR funds allocated for unmet needs to disasters 
occurring in 2015, 2016, and 2017. For example, the combination of 
all grants to Puerto Rico for unmet needs represents 52 percent of 
the $22.425 billion allocated for unmet needs. As a result, Puerto 
Rico receives 52 percent of the $15.935 billion made available for 
mitigation funding.

[FR Doc. 2018-17365 Filed 8-13-18; 8:45 am]
BILLING CODE 4210-67-P