Allocations, Common Application, Waivers, and Alternative Requirements for Community Development Block Grant Mitigation Grantees; Commonwealth of Puerto Rico Allocation, 4676-4681 [2020-01334]
Download as PDF
<![CDATA[
4676
Federal Register / Vol. 85, No. 17 / Monday, January 27, 2020 / Notices
(5) An estimate of the total number of
respondents and the amount of time
estimated for an average respondent to
respond: ICE estimates a total of 100
responses at 90 minutes (1.5 hours) per
response.
(6) An estimate of the total public
burden (in hours) associated with the
collection: 150 annual burden hours.
Dated: January 21, 2020.
Scott Elmore,
PRA Clearance Officer.
[FR Doc. 2020–01303 Filed 1–24–20; 8:45 am]
BILLING CODE 9111–28–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
[Docket No. FR–6109–N–04]
Allocations, Common Application,
Waivers, and Alternative Requirements
for Community Development Block
Grant Mitigation Grantees;
Commonwealth of Puerto Rico
Allocation
Office of the Assistant
Secretary for Community Planning and
Development, HUD.
ACTION: Notice.
AGENCY:
This notice allocates $8.285
billion of Community Development
Block Grant mitigation (CDBG–MIT)
funds to the Commonwealth of Puerto
Rico pursuant to the requirements of the
Further Additional Supplemental
Appropriations for Disaster Relief
Requirements Act, 2018 (Division B,
Subdivision 1 of the Bipartisan Budget
Act of 2018 (Pub. L. 115–123).
DATES: Applicability Date: February 3,
2020.
SUMMARY:
khammond on DSKJM1Z7X2PROD with NOTICES
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
7282, Washington, DC 20410, telephone
number 202–708–3587. Persons with
hearing or speech impairments may
access this number via TTY by calling
the Federal Relay Service at 800–877–
8339. Facsimile inquiries may be sent to
Ms. Kome at 202–401–2044. (Except for
the ‘‘800’’ number, these telephone
numbers are not toll-free.) Email
inquiries may be sent to disaster_
recovery@hud.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Allocations
A. Background
B. Use of Funds
C. Grant Process
VerDate Sep<11>2014
16:54 Jan 24, 2020
Jkt 250001
II. Applicable Rules, Statutes, Waivers,
Alternative Requirements, and Grant
Conditions
III. Catalog of Federal Domestic Assistance
IV. Finding of No Significant Impact
I. CDBG–MIT Allocations
I.A. Background
The Further Additional Supplemental
Appropriations for Disaster Relief
Requirements Act, 2018 (Division B,
Subdivision 1 of the Bipartisan Budget
Act of 2018, Pub. L. 115–123, approved
February 9, 2018) (the ‘‘Appropriations
Act’’), made available $28 billion in
Community Development Block Grant
disaster recovery (CDBG–DR) funds, and
directed HUD to allocate not less than
$12 billion for mitigation activities
proportional to the amounts that CDBG–
DR grantees received for qualifying
disasters in 2015, 2016, and 2017. A
Federal Register Notice published by
the Department on August 30, 2019 (84
FR 45838), allocated $6.875 billion of
CDBG–MIT funds to 14 state and local
governments and described the grant
requirements and procedures, including
waivers and alternative requirements
applicable to CDBG–MIT funds (‘‘the
CDBG–MIT Notice’’).
The CDBG–MIT Notice recognizes
that CDBG–MIT funds are to be used for
distinctly different purposes than
CDBG–DR funds and that the level of
funding and nature of programs and
projects that are likely to be funded
requires all CDBG–MIT grantees and
their subrecipients to strengthen their
program management capacity, financial
management, and internal controls.
Under the CDBG–MIT Notice, each
grantee is required to strengthen its
internal audit function, specify the
criteria for subrecipient selection,
increase subrecipient monitoring, and
establish a process for promptly
identifying and addressing conflicts
under the grantee’s conflict of interest
policy. The CDBG–MIT Notice also
states the Department’s intent to
establish special grant conditions for
individual CDBG–MIT grants based
upon the risks posed by the grantee,
including risks related to the grantee’s
capacity to carry out the specific
programs and projects proposed in its
action plan. These conditions are
designed to provide additional
assurances that mitigation programs are
implemented in a manner to prevent
waste, fraud, and abuse and that
mitigation projects are effectively
operated and maintained.
The CDBG–MIT Notice acknowledges
the governance and financial
management challenges of the
Commonwealth of Puerto Rico. For all
CDBG–MIT grantees, the CDBG–MIT
PO 00000
Frm 00055
Fmt 4703
Sfmt 4703
Notice references the Department’s
expectation that grantees will take steps
to set in place substantial governmental
policies and organizational structure to
enhance the impact of HUD-funded
investments. For the Commonwealth of
Puerto Rico, this goal may be achieved
through reforms in land ownership
records and addressing the occurrence
of informal housing, while enhancing
the safety of the Commonwealth’s
residents. The CDBG–MIT Notice also
notes that it is imperative that all
CDBG–MIT grantees collect and supply
sufficient revenues for future operation
and maintenance costs of programs and
projects funded with this CDBG–MIT
grant. Additionally, prior to 2017, the
Department of Housing of Puerto Rico
(PRDOH), who has been designated as
the entity responsible for administering
the CDBG–DR allocations in response to
Hurricanes Irma and Maria, had not
previously administered CDBG–DR
funds. Because PRDOH does not have
previous experience managing CDBG–
DR funds, HUD has reviewed the
Commonwealth’s Staffing Analysis
Worksheet and determined that PRDOH
must continue to secure staff and
contractors to build its capacity and
knowledge of federal requirements,
including civil rights related program
requirements. These considerations
emerge as particular unmitigated risks
for the Commonwealth of Puerto Rico,
in light of the substantial amount of
CDBG–MIT funding allocated under this
notice and the general fiscal condition
of the Commonwealth.
Accordingly, to further reduce the
specific potential risks associated with
the above challenges, this notice builds
upon the requirements of the CDBG–
MIT Notice and establishes additional
grant conditions to reduce risk and
support the successful implementation
of this CDBG–MIT allocation by the
Commonwealth of Puerto Rico. These
measures are designed to augment and
support HUD’s continual technical
assistance and monitoring efforts,
undertaken in partnership with the
grantee.
This notice allocates $8.285 billion in
CDBG–MIT funds to the Commonwealth
of Puerto Rico for mitigation activities
in accordance with the Appropriations
Act and the CDBG–MIT Notice. The
grantee receiving an allocation of funds
under this notice is subject to the
requirements of the CDBG–MIT Notice,
including waivers and alternative
requirements, and any additional
requirements imposed by this or future
Federal Register notices.
E:\FR\FM\27JAN1.SGM
27JAN1
Federal Register / Vol. 85, No. 17 / Monday, January 27, 2020 / Notices
4677
TABLE 1—ALLOCATION FOR MITIGATION ACTIVITIES
Disaster No.
Grantee
CDBG–MIT
allocation
Minimum amount to
be expended in the
HUD-identified ‘‘most
impacted and
distressed’’ areas
listed herein
4336, 4339 ........
Commonwealth of Puerto Rico .........
$8,285,284,000
$8,285,284,000
In accordance with the
Appropriations Act, the CDBG–MIT
allocation is based on the grantee’s
proportional share of total CDBG–DR
funds allocated for all eligible disasters
in 2015, 2016, and 2017.
I.B. Use of Funds
The Appropriations Act requires that
prior to the obligation of CDBG–MIT
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 risks identified
through a mitigation needs assessment
of the most impacted and distressed
areas. The definition of mitigation
activities and the requirements for the
submission of an action plan are
identified in section II of the CDBG–MIT
Notice.
khammond on DSKJM1Z7X2PROD with NOTICES
I.C. Grant Process
The Commonwealth of Puerto Rico
must submit the financial certification
documentation required by section
V.A.1.a of the CDBG–MIT Notice, as
amended herein, and the
implementation plan and capacity
assessment required by section V.A.1.b.
of the CDBG–MIT Notice. All deadlines
for the submissions necessary for the
Secretary’s certification of financial
controls, procurement processes and
adequate procedures, and the
implementation plan and capacity
assessment referenced in the CDBG–
MIT Notice, are determined by the
applicability date of this notice.
The grantee must submit an action
plan per the requirements of section
V.A.2 of the CDBG–MIT Notice no later
than September 4, 2020, unless the
grantee requests, and HUD approves, an
extension of the submission deadline as
provided for in the CDBG–MIT Notice.
To begin expending CDBG–MIT
funds, the grantee must follow the grant
process in the CDBG–MIT Notice in
section IV, with all timelines for grantee
submissions to commence on the
applicability date of this notice.
VerDate Sep<11>2014
16:54 Jan 24, 2020
Jkt 250001
II. Applicable Rules, Statutes, Waivers,
Alternative Requirements, and Grant
Conditions
CDBG–MIT grants are subject to the
requirements of the CDBG–MIT Notice,
which include requirements of the
Appropriations Act and waivers and
alternative requirements. The waivers
and alternative requirements provide
additional flexibility in program design
and implementation to eligible
mitigation activities to lessen the impact
of future disasters, while also ensuring
that statutory requirements are met. All
references to states and State grantees in
the CDBG–MIT Notice and this notice
shall include the Commonwealth of
Puerto Rico. The Commonwealth may
request additional waivers and
alternative requirements from the
Department as needed to address
specific needs related to its mitigation
activities. Waivers and alternative
requirements are effective five days after
they are published in the Federal
Register.
This section of the notice establishes
additional rules, waivers and alternative
requirements, and grant conditions
specific to the allocation of CDBG–MIT
funds for the Commonwealth of Puerto
Rico.
II.A. Limitation on Use of CDBG–MIT
Funds for Electrical Power System
Enhancements
In addition to the appropriation of
CDBG–MIT funds, the Appropriations
Act requires HUD to allocate $2 billion
of CDBG–DR funds to provide enhanced
or improved electrical power systems in
response to Hurricane Maria. HUD
announced the allocation of these funds
to the U.S. Virgin Islands and the
Commonwealth of Puerto Rico and
provided that the electrical power
system allocation shall be governed by
a subsequent notice. To enhance the use
of the $2 billion allocated to enhance or
improve electrical power systems, the
grantee may wish to use CDBG–MIT
funds to lessen the risks of disasterrelated damage to electric power
systems. However, successful efforts to
restore, enhance, and improve electrical
power systems, and guard this
PO 00000
Frm 00056
Fmt 4703
Sfmt 4703
HUD-identified ‘‘most impacted and
distressed’’ areas
All components of the Commonwealth of
Puerto Rico.
infrastructure against future disasters,
will require coordination across
multiple sources of Federal financial
assistance provided for this purpose.
Therefore, the grantee is prohibited
from using CDBG–MIT funds for
mitigation activities to reduce the risk of
disaster related damage to electric
power systems until after HUD
publishes the Federal Register notice
governing the use of the $2 billion for
enhanced or improved electrical power
systems. This limitation includes a
prohibition on the use of CDBG–MIT
funds for mitigation activities carried
out to meet the matching requirement,
share, or contribution for any Federallyfunded project that is providing funds
for electrical power systems
improvements until HUD publishes the
Federal Register notice governing the
use of CDBG–DR funds to provide
enhanced or improved electrical power
systems. After publication of HUD’s
electrical power systems notice, use of
CDBG–MIT funds to mitigate risks to
electric power systems, including the
provision of non-Federal cost share for
any Federally-funded activity related to
electrical power systems, shall be
limited to activities that meet the
requirements for CDBG–MIT funds and
that are not inconsistent with the
requirements of HUD’s electrical power
systems notice and any additional
requirements on the use of CDBG–MIT
funds published in that notice.
II.B. Grant Conditions
The Uniform Administrative
Requirements, Cost Principles, and
Audit Requirements for Federal Awards
(2 CFR part 200) direct HUD to assess
risks posed by the grantee and authorize
HUD to impose special grant conditions
that correspond to the assessed degree
of risk. As described in the CDBG–MIT
Notice, HUD will establish special grant
conditions for individual CDBG–MIT
grants based upon assessed risks,
including risks related to the grantee’s
capacity to carry out the specific
programs and projects proposed in its
action plan. These conditions are
designed to provide additional
assurances that actions are carried out to
address grantee-specific risks, such as
E:\FR\FM\27JAN1.SGM
27JAN1
khammond on DSKJM1Z7X2PROD with NOTICES
4678
Federal Register / Vol. 85, No. 17 / Monday, January 27, 2020 / Notices
the potential for waste, fraud, and
abuse, or the potential that failure to
effectively operate and maintain
infrastructure will interfere with
anticipated risk mitigation value of
CDBG–MIT activities. At any time, if
HUD determines that an identified risk
has been mitigated and the grantee has
met the required grant terms and
conditions, HUD can modify or remove
those terms and conditions. To address
identified risks, the Department will
establish grant conditions for the
Commonwealth of Puerto Rico which
shall include, but not be limited to, the
following requirements:
II.B.1. Special Condition related to
program risk.
In response to the scale and
complexity of the Grantee’s mitigation
activities and implementation, as a
condition to HUD’s obligation of CDBG–
MIT funds the grantee shall request and
submit to HUD any certification,
observations, and recommendations by
the Financial Oversight and
Management Board (FOMB) established
by the Puerto Rico Oversight,
Management, and Economic Stability
Act (PROMESA), that the action plan
and any related program budgets are
consistent with any reasonably related
provisions of the applicable FOMBcertified budgets and fiscal plans. This
condition shall not be interpreted to
require a review and certification that is
outside of the FOMB’s authority.
The Secretary of HUD retains
authority to permit the Grantee to access
funds notwithstanding the certification
requirement upon making a finding that
doing so is necessary to effectuate the
efficient administration of this grant
award at his discretion. In exercising
this authority, the Secretary of HUD
may require conditions to address
FOMB recommendations. The following
conditions are imposed on each
obligation of grant funds:
• HUD’s Federal Financial Monitor
shall review any obligation. HUD shall
approve the obligation if the grantee
satisfactorily resolves all findings of
substantial noncompliance related to
the use of grant funds and complies
with all grant conditions in its grant
agreement.
• The Grantee may not draw down
funds for an activity in its action plan
for mitigation until the Grantee submits
to disaster_recovery@hud.gov final
policies and procedures for
implementation of the activity.
• The Grantee shall enter into a
Memorandum of Agreement with HUD
for technical assistance to support
compliant program launch within 90
days.
VerDate Sep<11>2014
16:54 Jan 24, 2020
Jkt 250001
II.B.2. Additional requirements for
financial management.
II.B.2.a. Enhanced DRGR voucher
review. Based on the risk posed by the
Grantee’s limited financial management
staff capacity and to ensure compliant
implementation of the Grantee’s internal
control framework, the Grantee must
maintain and adhere to the policies and
procedures for its established Financial
Management System and internal
control framework, or submit to HUD a
new plan with a schedule for otherwise
obtaining and maintaining the necessary
financial management capacity. In order
for HUD to monitor the grantee’s
financial management capacity, the
Commonwealth of Puerto Rico shall
provide, via upload in DRGR, support
documentation for each voucher
drawdown request made in DRGR for its
CDBG–MIT grant. The Commonwealth
shall continue to upload support
documentation for its voucher
drawdown requests in DRGR until
completion of HUD’s first two on-site
monitoring reviews and the grantee’s
resolution of any significant findings
that result from those reviews.
II.B.2.b. Drawdown milestones. To
reduce risk, HUD will establish a grant
condition that will require the grantee to
take certain steps prior to drawing over
a certain percentage of available funds,
such as:
i. Update its DRGR administration
module to include a list of all grantrelated internal audit issues (i.e.,
findings or concerns) and
recommendations along with the
resolution or planned resolution of
these issues;
ii. Update its DRGR administration
module to include a summary of each
open Single Audit recommendation for
(1) the Grantee and/or (2) subrecipient
along with the resolution or planned
resolution of the audit recommendation;
iii. Update its DRGR administration
module to include a summary of each
open HUD OIG recommendation related
to this grant together with its resolution
or planned resolution;
iv. Update DRGR administration
module to include a summary of each
HUD monitoring recommendation
related to this grant along with the
resolution or planned resolution of the
OIG recommendation; and,
v. Review its management and
capacity plan and inform HUD of all
updates, including an explanation for
each missed milestone, if any.
HUD will review the information
submitted by the grantee to determine
whether the Grantee demonstrates
capacity to make timely and effective
corrective actions on identified
deficiencies and compliance issues. If
PO 00000
Frm 00057
Fmt 4703
Sfmt 4703
HUD determines the Grantee does not
demonstrate such capacity, HUD may
take additional corrective actions, such
as restricting access to grant funds
pending resolution of identified issues.
If the Grantee fails to comply with this
condition, HUD will block access to all
or a portion of the grant funds, pending
HUD on-site review of the Grantee’s
management controls.
II.B.3. Special condition related to
detection and prevention of fraud,
waste, and abuse.
Section V.A.1.a of the CDBG–MIT
Notice establishes the submission
requirements that are required for
HUD’s certification of the proficiency of
a CDBG–MIT grantees’ financial
controls and procurement processes,
and adequate procedures for grants
management. Among the required
submissions are grantee procedures to
detect and prevent fraud, waste, and
abuse, including a requirement that
each grantee indicate how it will ‘‘verify
the accuracy of information provided by
(CDBG–MIT) applicants.’’ To address
the risk of fraudulent application
information and reflect a connection to
on-going efforts of the Commonwealth
to update its 911 database, property tax
records, and GIS maps to include all
housing units and to help housing
rehabilitation applicants clear title
issues that have arisen in the course of
federal disaster assistance efforts
following Hurricane Maria, the
Department is adding to the requirement
in section V.A.1.a.(6)(v) of the CDBG–
MIT Notice. Accordingly, the grantee’s
procedures to detect and prevent fraud,
waste, and abuse must include how the
grantee will verify the accuracy of
information provided by applicants. The
polices must address how the
Commonwealth’s CDBG–DR-funded
planning activity to develop a uniform
parcel registry and GIS database that
contains ownership and parcel registry
data is to be used to assist HUD, other
third parties, and the public to verify
the legal and physical address
associated with CDBG–MIT activities.
Additionally, so that the uniform
parcel registry and GIS database are
available to support the detection and
prevention of waste, fraud, and abuse in
its CDBG–MIT grant, the grantee must
adhere to its quarterly performance
projections for the use of CDBG–DR
funds related to the uniform parcel
registry and GIS database activity,
beginning with the quarter funds are
available to the grantee and continuing
each quarter until all funds are
expended, unless HUD approves an
amendment to the projections via the
Quarterly Performance Report (QPR). If
the grantee does not complete the
E:\FR\FM\27JAN1.SGM
27JAN1
khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 85, No. 17 / Monday, January 27, 2020 / Notices
uniform parcel registry project, HUD
may impose an additional condition to
mitigate the risk of fraud within the
Grantee’s programs.
II.B.4. Special conditions related to
operation and maintenance of
mitigation projects. Section V.A.2.a of
the CDBG–MIT Notice establishes the
requirements for a grantee’s CDBG–MIT
action plan and section V.A.2.a (10) of
that notice requires the grantee to
describe how it will fund long-term
operation and maintenance of certain
CDBG–MIT projects. In addition to the
requirement of the CDBG–MIT Notice,
this notice requires the grantee to
include additional information in its
action plan in recognition of the fiscal
and financial management challenges of
the Commonwealth of Puerto Rico, and
the impact of these challenges on the
ability of the Commonwealth to ensure
continued operation and maintenance of
CDBG–MIT projects to achieve the
intended risk reduction.
In its action plan, the grantee must
describe all resources, including user
fees or Commonwealth or local
resources, that have been identified for
the operation and maintenance costs of
projects assisted with CDBG–MIT funds.
The action plan shall indicate that,
within one year of approval of the
action plan and annually thereafter, the
Commonwealth shall submit an
operation and maintenance plan to HUD
which shall identify the source(s) and
amount(s) of revenue that will be
sufficient to operate and maintain
infrastructure and public facility
projects funded with CDBG–MIT funds
and which shall identify the entity or
entities responsible for the operation
and maintenance of those projects.
II.B.5. Special Condition Related to
Covered Projects. As described in the
CDBG–MIT Notice, for grantees that are
considered by HUD to have
‘‘unmitigated high risks’’ that impact
their ability to implement large scale
projects, HUD may impose special grant
conditions, including but not limited to
a lower dollar threshold for the largescale infrastructure projects that meet
the definition of a Covered Project.
Covered Projects are subject to the
additional action plan requirements
described in section V.A.2.h. of the
CDBG–MIT notice. As the
Commonwealth of Puerto Rico has been
determined by HUD to have unmitigated
high risks with regard to its capacity, a
Covered Project for the grantee will
alternatively be defined as an
infrastructure project having a total
project cost of $50 million or more, with
at least $25 million of CDBG funds
(regardless of source (e.g., CDBG–DR,
CDBG–MIT, or CDBG)).
VerDate Sep<11>2014
16:54 Jan 24, 2020
Jkt 250001
II.B.6. Additional implementation
plan capacity assessment requirements.
In addition to the submission
requirements established for the
implementation plan and capacity
assessment provided in section V.A.1.b.
of the CDBG–MIT Notice, the
Commonwealth of Puerto Rico shall
submit evidence that it has secured or
is in the process of securing staff and
contractors necessary to effectively
implement CDBG–MIT funded programs
and projects. Staff and contractors must
be identified by the grantee in a Staff
Analysis Worksheet. The Staff Analysis
Worksheet must be submitted within 90
days of the CDBG–MIT grant agreement
as a supplement to the Grantee’s pregrant implementation and capacity
assessment submission. The Worksheet
must show the staff that are in place and
all of their responsibilities, including
the staff that have responsibilities for
program-related civil rights compliance
and staff and contracted support for
implementation of the funds and
programs associated with the obligation.
The Grantee also shall identify staff
responsible for fraud prevention and
their specific responsibilities. After
receiving the Staff Analysis Worksheet,
HUD may establish a special condition
requiring the Grantee to hire specific
staff positions that HUD determines are
critical to the Grantee’s implementation
of CDBG–MIT funded programs and
projects. Any specific position required
by HUD must be advertised within 90
days of HUD’s inclusion of a specific
position in a grant condition and filled
within 90 days following advertisement.
To reduce the risk of noncompliance
within a particular program or project
due to lack of staff capacity, when HUD
requires the Grantee to hire a specific
position, a portion of CDBG–MIT funds
the Grantee designated at risk of
noncompliance shall remain in a
restricted balance in the Disaster
Recovery and Grants Reporting (DRGR)
system until HUD receives evidence that
the Grantee has advertised and filled the
required staff positions. The amount of
the restricted balance will be identified
in the grant condition, and will be based
on HUD’s determination of the amount
that will allow the Grantee to undertake
initial work to support the launch of the
at-risk activity, but will reduce the risk
by adding staff capacity before incurring
significant activity implementation
costs.
II.B.7. Enhanced subrecipient
monitoring and oversight. Sections
V.A.1.a.(6)(i) and (ii) of the CDBG–MIT
Notice require grantees, as part of the
implementation plan and capacity
assessment, to submit criteria to be used
PO 00000
Frm 00058
Fmt 4703
Sfmt 4703
4679
to evaluate the capacity of potential
subrecipients and certain details about
subrecipient monitoring. In addition to
these requirements, the Commonwealth
of Puerto Rico shall submit a monitoring
plan for its subrecipients to HUD within
90 days of the approval of the CDBG–
MIT action plan.
II.B.8. Financial Management Related
to Indirect Cost Risk. Based on
applicable requirements and risks
related to charges to grants for indirect
costs, the Grantee must: (1) Prepare an
indirect cost proposal prior to charging
indirect costs to the Grant. The indirect
cost proposal and related
documentation to support the costs
must be submitted to its cognizant
agency for indirect costs if required
pursuant to Appendix VII to Part 200—
States and Local Government and
Indian Tribe Indirect Cost. (2) Require
each subrecipient receiving a subaward
under the Grant to prepare an indirect
cost proposal prior to charging indirect
costs to the subaward. The indirect cost
proposal and related documentation to
support the costs must be submitted to
its cognizant agency for indirect costs if
required pursuant to Appendix IV to
Part 200—Indirect (F&A) Costs
Identification and Assignment, and Rate
Determination for Nonprofit
Organizations or Appendix VII to Part
200—States and Local Government and
Indian Tribe Indirect Cost Proposals, or
if the subrecipient is an Institution of
Higher Education (IHE), pursuant to
Appendix III to Part 200—Indirect
(F&A) Costs Identification and
Assignment, and Rate Determination for
IHEs. If a subrecipient does not have a
cognizant agency, the Grantee is
responsible for reviewing the indirect
cost proposal if submission to a
cognizant agency would otherwise be
required.
All costs charged to the Grant or a
subaward must comply with the cost
principles specified at 2 CFR part 200,
subpart E—Cost Principles. Neither the
Grantee nor any subrecipient may
charge a fee to the Grant or a subaward
for the purpose of defraying costs of
work performed by the Grantee or
subrecipient that would otherwise be
subject to such cost principles or would
include an increment above allowable
costs.
II.B.9. Staff and subrecipient fraud
prevention and other federal
requirements training. Section V.A.18 of
the CDBG–MIT Notice requires each
CDBG–MIT grantee and its
subrecipients to attend fraud related
training provided by HUD OIG to assist
in the proper management of CDBG–
MIT grant funds. Additionally, in order
to prevent discriminatory practices in
E:\FR\FM\27JAN1.SGM
27JAN1
khammond on DSKJM1Z7X2PROD with NOTICES
4680
Federal Register / Vol. 85, No. 17 / Monday, January 27, 2020 / Notices
the administration of CDBG–MIT funds
and to reduce the risk of having new
staff who are not familiar with federal
requirements, the Commonwealth’s
CDBG–MIT staff and CDBG–MIT
subrecipients must attend programrelated civil rights and fair housing
requirements training. Within 90 days of
execution of the CDBG–MIT grant
agreement, the Commonwealth shall
submit documentation to HUD that
CDBG–MIT staff and CDBG–MIT
subrecipients have completed such
training. The Grantee shall maintain
documentation that staff hired and
subrecipients selected after the CDBG–
MIT grant agreement attended required
training. The grantee shall also identify
staff responsible for fraud prevention
and their specific responsibilities.
II.B.10. Citizen engagement. In
response to the limited experience of
the grantee in administering a CDBG–
MIT grant, particularly experience in
engaging the community after a major
disaster, the Commonwealth shall
indicate in its implementation plan for
CDBG–MIT that it has in place public
affairs staff with community
engagement experience and that it has
updated its citizen participation plan to
include specific outreach actions
designed to mitigate risks arising from
public pressure and a lack of broad
community input in the identification of
mitigation needs.
II.B.11. Submission of internal audit
reports and posting of reports. Section
V.A.1.a. (6)(iii) of the CDBG–MIT Notice
provides that HUD may establish a grant
condition to require grantees to submit
copies of the reports of its internal
auditor directly to HUD. Accordingly,
the Commonwealth of Puerto Rico shall
submit to HUD and HUD’s Office of
Inspector General (OIG) a copy of all
reports issued by its internal auditor,
and if the internal auditor does not issue
formal reports then the grantee will
instead submit a regular summary of
findings and assessments made by the
auditor. Additionally, while all CDBG–
MIT grantees are required to post certain
information on the grantee’s website
pursuant to section V.A.3.d of the
CDBG–MIT Notice, the Commonwealth
shall also post final audit reports issued
by HUD’s OIG on the grantee’s website,
(including any translations of such
reports, as available), along with any
other relevant reports that HUD requests
that the grantee posts on its website.
II.B.12. Additional requirements for
policies and procedures. The
Commonwealth of Puerto Rico shall
develop and maintain policies and
procedures and shall describe for each
program (or project, as applicable): The
eligible activities; the required records
VerDate Sep<11>2014
16:54 Jan 24, 2020
Jkt 250001
management practices; procurement
requirements; subrecipient oversight;
providing technical assistance;
monitoring practices; policies for
assigning direct costs to the correct
program or project; and timely
expenditure of funds. The policies and
procedures shall include a plan for
training all subrecipients on all federal
and state CDBG–MIT requirements (e.g.
program-related civil rights
requirements training). The grantee’s
policies and procedures shall provide
that the grantee shall comply with
federal accessibility requirements to the
extent that they apply to activities
funded with CDBG–MIT funds. The
grantee shall submit the policies and
procedures to HUD within 30 days of
HUD’s execution of the grant agreement
or before the grantee awards funds to
subrecipients, whichever is later.
II.B.13. Additional requirements for
Cost Allowability. The Federal
government can only share in a cost to
the extent it is necessary and
reasonable. To reduce risks related to a
lack of financial management capacity,
the following condition applies:
II.B.13.a. Based upon applicable
regulations and guidance related to the
construction labor costs resulting from
the minimum wage established by
Commonwealth of Puerto Rico
Executive Order 2018–033, the grantee
shall not take into account the
minimum wage rate established by
Executive Order 2018–033 for
construction contracts entered by the
Commonwealth when determining
whether a wage cost is reasonable under
the factors at 2 CFR 200.404. Before
charging wage costs to this grant, the
Grantee must make an independent
determination that wages to be paid
with grant funds are reasonable, using
factors such as the prevailing wage
established by the Department of Labor
or other indicators of market wage rates
for comparable labor in the geographic
area, and the restraints or requirements
imposed by such factors as sound
business practices and arm’s-length
bargaining.
II.B.14. Additional requirements for
Grant Method of Distribution Risk.
Based on the risk of using another
partner agency/agencies or
subrecipients without CDBG–DR or
CDBG–MIT grant experience that are
budgeted for activities equal to or
exceeding $500 million, within 90 days
of the execution of the grant agreement:
(1) The Grantee must provide a
monitoring plan for overseeing the
performance of other agencies, existing
subrecipients, and subrecipients that
will receive subawards (used here to
mean grant funds provided to another
PO 00000
Frm 00059
Fmt 4703
Sfmt 4703
agency of the Grantee or to a
subrecipient) under the approved action
plan for mitigation with dates and areas
of review. The monitoring plan shall
include:
(a) An evaluation of each agency or
subrecipient’s risk of noncompliance
with Federal statutes, regulations, and
the terms and conditions of the
subaward for purposes of determining
the appropriate agency or subrecipient
monitoring. The evaluation must
include consideration of the following
factors:
i. The agency or subrecipient’s prior
experience with the same or similar
grant;
ii. The results of previous audits
including whether the agency or
subrecipient receives a Single Audit in
accordance with 2 CFR part 200, subpart
F—Audit Requirements, and the extent
to which the same or similar grant has
been audited as a major program;
iii. Whether the agency or
subrecipient has new personnel or new
or substantially changed systems; and,
iv. The extent and results of HUD
monitoring, if the agency or
subrecipient also receives Federal
awards directly from HUD.
(b) A plan to monitor the activities of
the agency or subrecipient as necessary
to ensure that the subaward is used for
authorized purposes, in compliance
with Federal statutes, regulations, and
the terms and conditions of the
subaward; and that subaward
performance goals are achieved,
including:
i. Review of financial and
performance reports required by the
Grantee;
ii. Review of expenditures to
determine that charges to the subaward
by another agency or subrecipient
conform to the cost principles at 2 CFR
part 200, subpart E—Cost Principles,
and are net of all applicable credits.
iii. Follow-up and ensuring that the
agency or subrecipient takes timely and
appropriate action on all deficiencies
pertaining to the subaward as detected
through audits, on-site reviews, and
other means;
iv. Issuance of a management decision
for audit findings pertaining to the
subaward as required by § 200.521
Management decision; and,
v. A schedule of follow-up actions to
be taken to resolve a finding of noncompliance and identify the official
responsible for such actions.
(2) The Grantee must provide copies
of agency memoranda of agreement and
subrecipient agreements for subawards
above $200 million or those evaluated
by HUD to be the highest risk as well
as a certification by the parties to each
E:\FR\FM\27JAN1.SGM
27JAN1
khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 85, No. 17 / Monday, January 27, 2020 / Notices
agreement that the agreement for CDBG–
MIT funds is legally-binding.
(3) The Grantee must impose specific
subaward conditions upon an agency or
subrecipient as described in § 200.207
Specific conditions.
(4) The Grantee, based on the
evaluation of risk posed by the agency
or subrecipient, must ensure proper
accountability and compliance with
program requirements and achievement
of performance goals by:
(a) Providing agencies or
subrecipients with training and
technical assistance on program-related
matters;
(b) Performing on-site reviews of the
agency’s or subrecipient’s program
operations; and,
(c) Arranging for agreed-uponprocedures engagements as described in
§ 200.425 Audit services.
(5) The Grantee must verify that every
agency (where not included in the audit
of the grantee) or subrecipient is audited
as required by Subpart F—Audit
Requirements of 2 CFR part 200 when
it is expected that the agency or
subrecipient’s subaward expended
during the respective fiscal year equaled
or exceeded the threshold set forth in
§ 200.501 Audit requirements.
(6) The Grantee must consider
whether the results of the agency or
subrecipient’s audits, on-site reviews, or
other monitoring indicate conditions
that necessitate adjustments to the
Grantee’s own records.
(7) The Grantee must take
enforcement action against
noncompliant agencies or subrecipients
as described in § 200.338 Remedies for
noncompliance of this part and in
program regulations.
II.B.15. Additional requirements for
Fiscal Distress Risk. Based on the
financial risk posed by the Grantee’s
fiscal distress (as evidenced by ongoing
debt restructuring pursuant to the
Puerto Rico Oversight, Management,
and Economic Stability Act
(PROMESA), 48 U.S.C. 2101–2241) the
Grantee must comply with the
requirements of the October 26, 2017
‘‘ORDER GRANTING URGENT JOINT
MOTION OF THE COMMONWEALTH
OF PUERTO RICO, PUERTO RICO
HIGHWAYS AND TRANSPORTATION
AUTHORITY, PUERTO RICO ELECTRIC
POWER AUTHORITY, AND THE
PUERTO RICO FISCAL AGENCY AND
FINANCIAL ADVISORY AUTHORITY
FOR ORDER CONCERNING RECEIPT
AND USE OF ANTICIPATED FEDERAL
DISASTER RELIEF FUNDS AND
PRESERVING RIGHTS OF PARTIES,’’ as
may be amended from time to time by
the United States District Court for the
District of Puerto Rico or other court
VerDate Sep<11>2014
16:54 Jan 24, 2020
Jkt 250001
with jurisdiction (the Order). As
required by the Order, grant funds
received by the Commonwealth or other
Non-Federal entity (as defined by 2 CFR
200.69) shall be deposited solely into a
Disaster Relief Account, meaning a new,
segregated, non-co-mingled,
unencumbered account held in the
name of the Commonwealth or of the
Non-Federal entity to whom the funds
have been provided, and shall be used
solely for eligible activities. Evidence of
the Disaster Relief Account held by the
Commonwealth must be provided to
HUD within 60 days of the date of the
CDBG–MIT grant agreement with the
submission of a completed SF–1199
(direct deposit form) or other similar
form specified by HUD. The Grantee
must maintain documentation of the
Disaster Relief Accounts held by other
Non-Federal entities that receive grant
funds from the Grantee.
III. Catalog of Federal Domestic
Assistance
The Catalog of Federal Domestic
Assistance numbers for the disaster
recovery grants under this notice are as
follows: 14.218 and 14.228.
IV. 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
inspection at HUD’s Funding
Opportunities web page at: https://
www.hud.gov/program_offices/spm/
gmomgmt/grantsinfo/fundingopps. 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: January 16, 2020.
Benjamin Carson, Sr.,
Secretary.
[FR Doc. 2020–01334 Filed 1–24–20; 8:45 am]
BILLING CODE 4210–67–P
PO 00000
Frm 00060
Fmt 4703
Sfmt 4703
4681
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
[Docket No. FR–6182–N–01]
Allocations, Common Application,
Waivers, and Alternative Requirements
for Disaster Community Development
Block Grant Disaster Recovery
Grantees
Office of the Assistant
Secretary for Community Planning and
Development, HUD.
ACTION: Notice.
AGENCY:
This notice allocates a total of
$3,831,428,000 in Community
Development Block Grant disaster
recovery (CDBG–DR) funds
appropriated by the Supplemental
Appropriations for Disaster Relief Act,
2018, and the Additional Supplemental
Appropriations for Disaster Relief Act,
2019. The combined amount of
$3,831,428,000 in CDBG–DR funds is
allocated by this notice for the purpose
of assisting in long-term recovery from
major disasters that occurred in 2017,
2018, and 2019. This notice also
contains clarifications on waivers and
alternative requirements that were
included in the Prior Notices. Unless
expressly limited to certain grantees, the
amended waivers and alternative
requirements apply to all CDBG–DR
grants that are subject to the Prior
Notices (previous grants for 2017
disasters and grants under this Notice).
DATES: Applicability Date: February 3,
2020.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
Jessie Handforth Kome, Acting Director,
Office of Block Grant Assistance, U.S.
Department of Housing and Urban
Development, 451 7th Street SW, Room
7282, 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
IV. Applicable Rules, Statutes, Waivers, and
Alternative Requirements
V. Duration of Funding
VI. Catalog of Federal Domestic Assistance
VII. Finding of No Significant Impact
Appendix A: Allocation Methodology
E:\FR\FM\27JAN1.SGM
27JAN1
]]>Agencies
[Federal Register Volume 85, Number 17 (Monday, January 27, 2020)]
[Notices]
[Pages 4676-4681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01334]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6109-N-04]
Allocations, Common Application, Waivers, and Alternative
Requirements for Community Development Block Grant Mitigation Grantees;
Commonwealth of Puerto Rico Allocation
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This notice allocates $8.285 billion of Community Development
Block Grant mitigation (CDBG-MIT) funds to the Commonwealth of Puerto
Rico pursuant to the requirements of the Further Additional
Supplemental Appropriations for Disaster Relief Requirements Act, 2018
(Division B, Subdivision 1 of the Bipartisan Budget Act of 2018 (Pub.
L. 115-123).
DATES: Applicability Date: February 3, 2020.
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 7282, Washington, DC 20410,
telephone number 202-708-3587. Persons with hearing or speech
impairments may access this number via TTY by calling the Federal Relay
Service at 800-877-8339. Facsimile inquiries may be sent to Ms. Kome at
202-401-2044. (Except for the ``800'' number, these telephone numbers
are not toll-free.) Email inquiries may be sent to
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Allocations
A. Background
B. Use of Funds
C. Grant Process
II. Applicable Rules, Statutes, Waivers, Alternative Requirements,
and Grant Conditions
III. Catalog of Federal Domestic Assistance
IV. Finding of No Significant Impact
I. CDBG-MIT Allocations
I.A. Background
The Further Additional Supplemental Appropriations for Disaster
Relief Requirements Act, 2018 (Division B, Subdivision 1 of the
Bipartisan Budget Act of 2018, Pub. L. 115-123, approved February 9,
2018) (the ``Appropriations Act''), made available $28 billion in
Community Development Block Grant disaster recovery (CDBG-DR) funds,
and directed HUD to allocate not less than $12 billion for mitigation
activities proportional to the amounts that CDBG-DR grantees received
for qualifying disasters in 2015, 2016, and 2017. A Federal Register
Notice published by the Department on August 30, 2019 (84 FR 45838),
allocated $6.875 billion of CDBG-MIT funds to 14 state and local
governments and described the grant requirements and procedures,
including waivers and alternative requirements applicable to CDBG-MIT
funds (``the CDBG-MIT Notice'').
The CDBG-MIT Notice recognizes that CDBG-MIT funds are to be used
for distinctly different purposes than CDBG-DR funds and that the level
of funding and nature of programs and projects that are likely to be
funded requires all CDBG-MIT grantees and their subrecipients to
strengthen their program management capacity, financial management, and
internal controls. Under the CDBG-MIT Notice, each grantee is required
to strengthen its internal audit function, specify the criteria for
subrecipient selection, increase subrecipient monitoring, and establish
a process for promptly identifying and addressing conflicts under the
grantee's conflict of interest policy. The CDBG-MIT Notice also states
the Department's intent to establish special grant conditions for
individual CDBG-MIT grants based upon the risks posed by the grantee,
including risks related to the grantee's capacity to carry out the
specific programs and projects proposed in its action plan. These
conditions are designed to provide additional assurances that
mitigation programs are implemented in a manner to prevent waste,
fraud, and abuse and that mitigation projects are effectively operated
and maintained.
The CDBG-MIT Notice acknowledges the governance and financial
management challenges of the Commonwealth of Puerto Rico. For all CDBG-
MIT grantees, the CDBG-MIT Notice references the Department's
expectation that grantees will take steps to set in place substantial
governmental policies and organizational structure to enhance the
impact of HUD-funded investments. For the Commonwealth of Puerto Rico,
this goal may be achieved through reforms in land ownership records and
addressing the occurrence of informal housing, while enhancing the
safety of the Commonwealth's residents. The CDBG-MIT Notice also notes
that it is imperative that all CDBG-MIT grantees collect and supply
sufficient revenues for future operation and maintenance costs of
programs and projects funded with this CDBG-MIT grant. Additionally,
prior to 2017, the Department of Housing of Puerto Rico (PRDOH), who
has been designated as the entity responsible for administering the
CDBG-DR allocations in response to Hurricanes Irma and Maria, had not
previously administered CDBG-DR funds. Because PRDOH does not have
previous experience managing CDBG-DR funds, HUD has reviewed the
Commonwealth's Staffing Analysis Worksheet and determined that PRDOH
must continue to secure staff and contractors to build its capacity and
knowledge of federal requirements, including civil rights related
program requirements. These considerations emerge as particular
unmitigated risks for the Commonwealth of Puerto Rico, in light of the
substantial amount of CDBG-MIT funding allocated under this notice and
the general fiscal condition of the Commonwealth.
Accordingly, to further reduce the specific potential risks
associated with the above challenges, this notice builds upon the
requirements of the CDBG-MIT Notice and establishes additional grant
conditions to reduce risk and support the successful implementation of
this CDBG-MIT allocation by the Commonwealth of Puerto Rico. These
measures are designed to augment and support HUD's continual technical
assistance and monitoring efforts, undertaken in partnership with the
grantee.
This notice allocates $8.285 billion in CDBG-MIT funds to the
Commonwealth of Puerto Rico for mitigation activities in accordance
with the Appropriations Act and the CDBG-MIT Notice. The grantee
receiving an allocation of funds under this notice is subject to the
requirements of the CDBG-MIT Notice, including waivers and alternative
requirements, and any additional requirements imposed by this or future
Federal Register notices.
[[Page 4677]]
Table 1--Allocation for Mitigation Activities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minimum amount to be
expended in the HUD-
CDBG-MIT identified ``most
Disaster No. Grantee allocation impacted and HUD-identified ``most impacted and distressed'' areas
distressed'' areas
listed herein
--------------------------------------------------------------------------------------------------------------------------------------------------------
4336, 4339................. Commonwealth of Puerto $8,285,284,000 $8,285,284,000 All components of the Commonwealth of Puerto Rico.
Rico.
--------------------------------------------------------------------------------------------------------------------------------------------------------
In accordance with the Appropriations Act, the CDBG-MIT allocation
is based on the grantee's proportional share of total CDBG-DR funds
allocated for all eligible disasters in 2015, 2016, and 2017.
I.B. Use of Funds
The Appropriations Act requires that prior to the obligation of
CDBG-MIT 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 risks identified through a mitigation needs assessment of
the most impacted and distressed areas. The definition of mitigation
activities and the requirements for the submission of an action plan
are identified in section II of the CDBG-MIT Notice.
I.C. Grant Process
The Commonwealth of Puerto Rico must submit the financial
certification documentation required by section V.A.1.a of the CDBG-MIT
Notice, as amended herein, and the implementation plan and capacity
assessment required by section V.A.1.b. of the CDBG-MIT Notice. All
deadlines for the submissions necessary for the Secretary's
certification of financial controls, procurement processes and adequate
procedures, and the implementation plan and capacity assessment
referenced in the CDBG-MIT Notice, are determined by the applicability
date of this notice.
The grantee must submit an action plan per the requirements of
section V.A.2 of the CDBG-MIT Notice no later than September 4, 2020,
unless the grantee requests, and HUD approves, an extension of the
submission deadline as provided for in the CDBG-MIT Notice.
To begin expending CDBG-MIT funds, the grantee must follow the
grant process in the CDBG-MIT Notice in section IV, with all timelines
for grantee submissions to commence on the applicability date of this
notice.
II. Applicable Rules, Statutes, Waivers, Alternative Requirements, and
Grant Conditions
CDBG-MIT grants are subject to the requirements of the CDBG-MIT
Notice, which include requirements of the Appropriations Act and
waivers and alternative requirements. The waivers and alternative
requirements provide additional flexibility in program design and
implementation to eligible mitigation activities to lessen the impact
of future disasters, while also ensuring that statutory requirements
are met. All references to states and State grantees in the CDBG-MIT
Notice and this notice shall include the Commonwealth of Puerto Rico.
The Commonwealth may request additional waivers and alternative
requirements from the Department as needed to address specific needs
related to its mitigation activities. Waivers and alternative
requirements are effective five days after they are published in the
Federal Register.
This section of the notice establishes additional rules, waivers
and alternative requirements, and grant conditions specific to the
allocation of CDBG-MIT funds for the Commonwealth of Puerto Rico.
II.A. Limitation on Use of CDBG-MIT Funds for Electrical Power System
Enhancements
In addition to the appropriation of CDBG-MIT funds, the
Appropriations Act requires HUD to allocate $2 billion of CDBG-DR funds
to provide enhanced or improved electrical power systems in response to
Hurricane Maria. HUD announced the allocation of these funds to the
U.S. Virgin Islands and the Commonwealth of Puerto Rico and provided
that the electrical power system allocation shall be governed by a
subsequent notice. To enhance the use of the $2 billion allocated to
enhance or improve electrical power systems, the grantee may wish to
use CDBG-MIT funds to lessen the risks of disaster-related damage to
electric power systems. However, successful efforts to restore,
enhance, and improve electrical power systems, and guard this
infrastructure against future disasters, will require coordination
across multiple sources of Federal financial assistance provided for
this purpose.
Therefore, the grantee is prohibited from using CDBG-MIT funds for
mitigation activities to reduce the risk of disaster related damage to
electric power systems until after HUD publishes the Federal Register
notice governing the use of the $2 billion for enhanced or improved
electrical power systems. This limitation includes a prohibition on the
use of CDBG-MIT funds for mitigation activities carried out to meet the
matching requirement, share, or contribution for any Federally-funded
project that is providing funds for electrical power systems
improvements until HUD publishes the Federal Register notice governing
the use of CDBG-DR funds to provide enhanced or improved electrical
power systems. After publication of HUD's electrical power systems
notice, use of CDBG-MIT funds to mitigate risks to electric power
systems, including the provision of non-Federal cost share for any
Federally-funded activity related to electrical power systems, shall be
limited to activities that meet the requirements for CDBG-MIT funds and
that are not inconsistent with the requirements of HUD's electrical
power systems notice and any additional requirements on the use of
CDBG-MIT funds published in that notice.
II.B. Grant Conditions
The Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (2 CFR part 200) direct HUD to assess
risks posed by the grantee and authorize HUD to impose special grant
conditions that correspond to the assessed degree of risk. As described
in the CDBG-MIT Notice, HUD will establish special grant conditions for
individual CDBG-MIT grants based upon assessed risks, including risks
related to the grantee's capacity to carry out the specific programs
and projects proposed in its action plan. These conditions are designed
to provide additional assurances that actions are carried out to
address grantee-specific risks, such as
[[Page 4678]]
the potential for waste, fraud, and abuse, or the potential that
failure to effectively operate and maintain infrastructure will
interfere with anticipated risk mitigation value of CDBG-MIT
activities. At any time, if HUD determines that an identified risk has
been mitigated and the grantee has met the required grant terms and
conditions, HUD can modify or remove those terms and conditions. To
address identified risks, the Department will establish grant
conditions for the Commonwealth of Puerto Rico which shall include, but
not be limited to, the following requirements:
II.B.1. Special Condition related to program risk.
In response to the scale and complexity of the Grantee's mitigation
activities and implementation, as a condition to HUD's obligation of
CDBG-MIT funds the grantee shall request and submit to HUD any
certification, observations, and recommendations by the Financial
Oversight and Management Board (FOMB) established by the Puerto Rico
Oversight, Management, and Economic Stability Act (PROMESA), that the
action plan and any related program budgets are consistent with any
reasonably related provisions of the applicable FOMB-certified budgets
and fiscal plans. This condition shall not be interpreted to require a
review and certification that is outside of the FOMB's authority.
The Secretary of HUD retains authority to permit the Grantee to
access funds notwithstanding the certification requirement upon making
a finding that doing so is necessary to effectuate the efficient
administration of this grant award at his discretion. In exercising
this authority, the Secretary of HUD may require conditions to address
FOMB recommendations. The following conditions are imposed on each
obligation of grant funds:
HUD's Federal Financial Monitor shall review any
obligation. HUD shall approve the obligation if the grantee
satisfactorily resolves all findings of substantial noncompliance
related to the use of grant funds and complies with all grant
conditions in its grant agreement.
The Grantee may not draw down funds for an activity in its
action plan for mitigation until the Grantee submits to
[email protected] final policies and procedures for
implementation of the activity.
The Grantee shall enter into a Memorandum of Agreement
with HUD for technical assistance to support compliant program launch
within 90 days.
II.B.2. Additional requirements for financial management.
II.B.2.a. Enhanced DRGR voucher review. Based on the risk posed by
the Grantee's limited financial management staff capacity and to ensure
compliant implementation of the Grantee's internal control framework,
the Grantee must maintain and adhere to the policies and procedures for
its established Financial Management System and internal control
framework, or submit to HUD a new plan with a schedule for otherwise
obtaining and maintaining the necessary financial management capacity.
In order for HUD to monitor the grantee's financial management
capacity, the Commonwealth of Puerto Rico shall provide, via upload in
DRGR, support documentation for each voucher drawdown request made in
DRGR for its CDBG-MIT grant. The Commonwealth shall continue to upload
support documentation for its voucher drawdown requests in DRGR until
completion of HUD's first two on-site monitoring reviews and the
grantee's resolution of any significant findings that result from those
reviews.
II.B.2.b. Drawdown milestones. To reduce risk, HUD will establish a
grant condition that will require the grantee to take certain steps
prior to drawing over a certain percentage of available funds, such as:
i. Update its DRGR administration module to include a list of all
grant-related internal audit issues (i.e., findings or concerns) and
recommendations along with the resolution or planned resolution of
these issues;
ii. Update its DRGR administration module to include a summary of
each open Single Audit recommendation for (1) the Grantee and/or (2)
subrecipient along with the resolution or planned resolution of the
audit recommendation;
iii. Update its DRGR administration module to include a summary of
each open HUD OIG recommendation related to this grant together with
its resolution or planned resolution;
iv. Update DRGR administration module to include a summary of each
HUD monitoring recommendation related to this grant along with the
resolution or planned resolution of the OIG recommendation; and,
v. Review its management and capacity plan and inform HUD of all
updates, including an explanation for each missed milestone, if any.
HUD will review the information submitted by the grantee to
determine whether the Grantee demonstrates capacity to make timely and
effective corrective actions on identified deficiencies and compliance
issues. If HUD determines the Grantee does not demonstrate such
capacity, HUD may take additional corrective actions, such as
restricting access to grant funds pending resolution of identified
issues. If the Grantee fails to comply with this condition, HUD will
block access to all or a portion of the grant funds, pending HUD on-
site review of the Grantee's management controls.
II.B.3. Special condition related to detection and prevention of
fraud, waste, and abuse.
Section V.A.1.a of the CDBG-MIT Notice establishes the submission
requirements that are required for HUD's certification of the
proficiency of a CDBG-MIT grantees' financial controls and procurement
processes, and adequate procedures for grants management. Among the
required submissions are grantee procedures to detect and prevent
fraud, waste, and abuse, including a requirement that each grantee
indicate how it will ``verify the accuracy of information provided by
(CDBG-MIT) applicants.'' To address the risk of fraudulent application
information and reflect a connection to on-going efforts of the
Commonwealth to update its 911 database, property tax records, and GIS
maps to include all housing units and to help housing rehabilitation
applicants clear title issues that have arisen in the course of federal
disaster assistance efforts following Hurricane Maria, the Department
is adding to the requirement in section V.A.1.a.(6)(v) of the CDBG-MIT
Notice. Accordingly, the grantee's procedures to detect and prevent
fraud, waste, and abuse must include how the grantee will verify the
accuracy of information provided by applicants. The polices must
address how the Commonwealth's CDBG-DR-funded planning activity to
develop a uniform parcel registry and GIS database that contains
ownership and parcel registry data is to be used to assist HUD, other
third parties, and the public to verify the legal and physical address
associated with CDBG-MIT activities.
Additionally, so that the uniform parcel registry and GIS database
are available to support the detection and prevention of waste, fraud,
and abuse in its CDBG-MIT grant, the grantee must adhere to its
quarterly performance projections for the use of CDBG-DR funds related
to the uniform parcel registry and GIS database activity, beginning
with the quarter funds are available to the grantee and continuing each
quarter until all funds are expended, unless HUD approves an amendment
to the projections via the Quarterly Performance Report (QPR). If the
grantee does not complete the
[[Page 4679]]
uniform parcel registry project, HUD may impose an additional condition
to mitigate the risk of fraud within the Grantee's programs.
II.B.4. Special conditions related to operation and maintenance of
mitigation projects. Section V.A.2.a of the CDBG-MIT Notice establishes
the requirements for a grantee's CDBG-MIT action plan and section
V.A.2.a (10) of that notice requires the grantee to describe how it
will fund long-term operation and maintenance of certain CDBG-MIT
projects. In addition to the requirement of the CDBG-MIT Notice, this
notice requires the grantee to include additional information in its
action plan in recognition of the fiscal and financial management
challenges of the Commonwealth of Puerto Rico, and the impact of these
challenges on the ability of the Commonwealth to ensure continued
operation and maintenance of CDBG-MIT projects to achieve the intended
risk reduction.
In its action plan, the grantee must describe all resources,
including user fees or Commonwealth or local resources, that have been
identified for the operation and maintenance costs of projects assisted
with CDBG-MIT funds. The action plan shall indicate that, within one
year of approval of the action plan and annually thereafter, the
Commonwealth shall submit an operation and maintenance plan to HUD
which shall identify the source(s) and amount(s) of revenue that will
be sufficient to operate and maintain infrastructure and public
facility projects funded with CDBG-MIT funds and which shall identify
the entity or entities responsible for the operation and maintenance of
those projects.
II.B.5. Special Condition Related to Covered Projects. As described
in the CDBG-MIT Notice, for grantees that are considered by HUD to have
``unmitigated high risks'' that impact their ability to implement large
scale projects, HUD may impose special grant conditions, including but
not limited to a lower dollar threshold for the large-scale
infrastructure projects that meet the definition of a Covered Project.
Covered Projects are subject to the additional action plan requirements
described in section V.A.2.h. of the CDBG-MIT notice. As the
Commonwealth of Puerto Rico has been determined by HUD to have
unmitigated high risks with regard to its capacity, a Covered Project
for the grantee will alternatively be defined as an infrastructure
project having a total project cost of $50 million or more, with at
least $25 million of CDBG funds (regardless of source (e.g., CDBG-DR,
CDBG-MIT, or CDBG)).
II.B.6. Additional implementation plan capacity assessment
requirements. In addition to the submission requirements established
for the implementation plan and capacity assessment provided in section
V.A.1.b. of the CDBG-MIT Notice, the Commonwealth of Puerto Rico shall
submit evidence that it has secured or is in the process of securing
staff and contractors necessary to effectively implement CDBG-MIT
funded programs and projects. Staff and contractors must be identified
by the grantee in a Staff Analysis Worksheet. The Staff Analysis
Worksheet must be submitted within 90 days of the CDBG-MIT grant
agreement as a supplement to the Grantee's pre-grant implementation and
capacity assessment submission. The Worksheet must show the staff that
are in place and all of their responsibilities, including the staff
that have responsibilities for program-related civil rights compliance
and staff and contracted support for implementation of the funds and
programs associated with the obligation. The Grantee also shall
identify staff responsible for fraud prevention and their specific
responsibilities. After receiving the Staff Analysis Worksheet, HUD may
establish a special condition requiring the Grantee to hire specific
staff positions that HUD determines are critical to the Grantee's
implementation of CDBG-MIT funded programs and projects. Any specific
position required by HUD must be advertised within 90 days of HUD's
inclusion of a specific position in a grant condition and filled within
90 days following advertisement. To reduce the risk of noncompliance
within a particular program or project due to lack of staff capacity,
when HUD requires the Grantee to hire a specific position, a portion of
CDBG-MIT funds the Grantee designated at risk of noncompliance shall
remain in a restricted balance in the Disaster Recovery and Grants
Reporting (DRGR) system until HUD receives evidence that the Grantee
has advertised and filled the required staff positions. The amount of
the restricted balance will be identified in the grant condition, and
will be based on HUD's determination of the amount that will allow the
Grantee to undertake initial work to support the launch of the at-risk
activity, but will reduce the risk by adding staff capacity before
incurring significant activity implementation costs.
II.B.7. Enhanced subrecipient monitoring and oversight. Sections
V.A.1.a.(6)(i) and (ii) of the CDBG-MIT Notice require grantees, as
part of the implementation plan and capacity assessment, to submit
criteria to be used to evaluate the capacity of potential subrecipients
and certain details about subrecipient monitoring. In addition to these
requirements, the Commonwealth of Puerto Rico shall submit a monitoring
plan for its subrecipients to HUD within 90 days of the approval of the
CDBG-MIT action plan.
II.B.8. Financial Management Related to Indirect Cost Risk. Based
on applicable requirements and risks related to charges to grants for
indirect costs, the Grantee must: (1) Prepare an indirect cost proposal
prior to charging indirect costs to the Grant. The indirect cost
proposal and related documentation to support the costs must be
submitted to its cognizant agency for indirect costs if required
pursuant to Appendix VII to Part 200--States and Local Government and
Indian Tribe Indirect Cost. (2) Require each subrecipient receiving a
subaward under the Grant to prepare an indirect cost proposal prior to
charging indirect costs to the subaward. The indirect cost proposal and
related documentation to support the costs must be submitted to its
cognizant agency for indirect costs if required pursuant to Appendix IV
to Part 200--Indirect (F&A) Costs Identification and Assignment, and
Rate Determination for Nonprofit Organizations or Appendix VII to Part
200--States and Local Government and Indian Tribe Indirect Cost
Proposals, or if the subrecipient is an Institution of Higher Education
(IHE), pursuant to Appendix III to Part 200--Indirect (F&A) Costs
Identification and Assignment, and Rate Determination for IHEs. If a
subrecipient does not have a cognizant agency, the Grantee is
responsible for reviewing the indirect cost proposal if submission to a
cognizant agency would otherwise be required.
All costs charged to the Grant or a subaward must comply with the
cost principles specified at 2 CFR part 200, subpart E--Cost
Principles. Neither the Grantee nor any subrecipient may charge a fee
to the Grant or a subaward for the purpose of defraying costs of work
performed by the Grantee or subrecipient that would otherwise be
subject to such cost principles or would include an increment above
allowable costs.
II.B.9. Staff and subrecipient fraud prevention and other federal
requirements training. Section V.A.18 of the CDBG-MIT Notice requires
each CDBG-MIT grantee and its subrecipients to attend fraud related
training provided by HUD OIG to assist in the proper management of
CDBG-MIT grant funds. Additionally, in order to prevent discriminatory
practices in
[[Page 4680]]
the administration of CDBG-MIT funds and to reduce the risk of having
new staff who are not familiar with federal requirements, the
Commonwealth's CDBG-MIT staff and CDBG-MIT subrecipients must attend
program-related civil rights and fair housing requirements training.
Within 90 days of execution of the CDBG-MIT grant agreement, the
Commonwealth shall submit documentation to HUD that CDBG-MIT staff and
CDBG-MIT subrecipients have completed such training. The Grantee shall
maintain documentation that staff hired and subrecipients selected
after the CDBG-MIT grant agreement attended required training. The
grantee shall also identify staff responsible for fraud prevention and
their specific responsibilities.
II.B.10. Citizen engagement. In response to the limited experience
of the grantee in administering a CDBG-MIT grant, particularly
experience in engaging the community after a major disaster, the
Commonwealth shall indicate in its implementation plan for CDBG-MIT
that it has in place public affairs staff with community engagement
experience and that it has updated its citizen participation plan to
include specific outreach actions designed to mitigate risks arising
from public pressure and a lack of broad community input in the
identification of mitigation needs.
II.B.11. Submission of internal audit reports and posting of
reports. Section V.A.1.a. (6)(iii) of the CDBG-MIT Notice provides that
HUD may establish a grant condition to require grantees to submit
copies of the reports of its internal auditor directly to HUD.
Accordingly, the Commonwealth of Puerto Rico shall submit to HUD and
HUD's Office of Inspector General (OIG) a copy of all reports issued by
its internal auditor, and if the internal auditor does not issue formal
reports then the grantee will instead submit a regular summary of
findings and assessments made by the auditor. Additionally, while all
CDBG-MIT grantees are required to post certain information on the
grantee's website pursuant to section V.A.3.d of the CDBG-MIT Notice,
the Commonwealth shall also post final audit reports issued by HUD's
OIG on the grantee's website, (including any translations of such
reports, as available), along with any other relevant reports that HUD
requests that the grantee posts on its website.
II.B.12. Additional requirements for policies and procedures. The
Commonwealth of Puerto Rico shall develop and maintain policies and
procedures and shall describe for each program (or project, as
applicable): The eligible activities; the required records management
practices; procurement requirements; subrecipient oversight; providing
technical assistance; monitoring practices; policies for assigning
direct costs to the correct program or project; and timely expenditure
of funds. The policies and procedures shall include a plan for training
all subrecipients on all federal and state CDBG-MIT requirements (e.g.
program-related civil rights requirements training). The grantee's
policies and procedures shall provide that the grantee shall comply
with federal accessibility requirements to the extent that they apply
to activities funded with CDBG-MIT funds. The grantee shall submit the
policies and procedures to HUD within 30 days of HUD's execution of the
grant agreement or before the grantee awards funds to subrecipients,
whichever is later.
II.B.13. Additional requirements for Cost Allowability. The Federal
government can only share in a cost to the extent it is necessary and
reasonable. To reduce risks related to a lack of financial management
capacity, the following condition applies:
II.B.13.a. Based upon applicable regulations and guidance related
to the construction labor costs resulting from the minimum wage
established by Commonwealth of Puerto Rico Executive Order 2018-033,
the grantee shall not take into account the minimum wage rate
established by Executive Order 2018-033 for construction contracts
entered by the Commonwealth when determining whether a wage cost is
reasonable under the factors at 2 CFR 200.404. Before charging wage
costs to this grant, the Grantee must make an independent determination
that wages to be paid with grant funds are reasonable, using factors
such as the prevailing wage established by the Department of Labor or
other indicators of market wage rates for comparable labor in the
geographic area, and the restraints or requirements imposed by such
factors as sound business practices and arm's-length bargaining.
II.B.14. Additional requirements for Grant Method of Distribution
Risk. Based on the risk of using another partner agency/agencies or
subrecipients without CDBG-DR or CDBG-MIT grant experience that are
budgeted for activities equal to or exceeding $500 million, within 90
days of the execution of the grant agreement:
(1) The Grantee must provide a monitoring plan for overseeing the
performance of other agencies, existing subrecipients, and
subrecipients that will receive subawards (used here to mean grant
funds provided to another agency of the Grantee or to a subrecipient)
under the approved action plan for mitigation with dates and areas of
review. The monitoring plan shall include:
(a) An evaluation of each agency or subrecipient's risk of
noncompliance with Federal statutes, regulations, and the terms and
conditions of the subaward for purposes of determining the appropriate
agency or subrecipient monitoring. The evaluation must include
consideration of the following factors:
i. The agency or subrecipient's prior experience with the same or
similar grant;
ii. The results of previous audits including whether the agency or
subrecipient receives a Single Audit in accordance with 2 CFR part 200,
subpart F--Audit Requirements, and the extent to which the same or
similar grant has been audited as a major program;
iii. Whether the agency or subrecipient has new personnel or new or
substantially changed systems; and,
iv. The extent and results of HUD monitoring, if the agency or
subrecipient also receives Federal awards directly from HUD.
(b) A plan to monitor the activities of the agency or subrecipient
as necessary to ensure that the subaward is used for authorized
purposes, in compliance with Federal statutes, regulations, and the
terms and conditions of the subaward; and that subaward performance
goals are achieved, including:
i. Review of financial and performance reports required by the
Grantee;
ii. Review of expenditures to determine that charges to the
subaward by another agency or subrecipient conform to the cost
principles at 2 CFR part 200, subpart E--Cost Principles, and are net
of all applicable credits.
iii. Follow-up and ensuring that the agency or subrecipient takes
timely and appropriate action on all deficiencies pertaining to the
subaward as detected through audits, on-site reviews, and other means;
iv. Issuance of a management decision for audit findings pertaining
to the subaward as required by Sec. 200.521 Management decision; and,
v. A schedule of follow-up actions to be taken to resolve a finding
of non-compliance and identify the official responsible for such
actions.
(2) The Grantee must provide copies of agency memoranda of
agreement and subrecipient agreements for subawards above $200 million
or those evaluated by HUD to be the highest risk as well as a
certification by the parties to each
[[Page 4681]]
agreement that the agreement for CDBG-MIT funds is legally-binding.
(3) The Grantee must impose specific subaward conditions upon an
agency or subrecipient as described in Sec. 200.207 Specific
conditions.
(4) The Grantee, based on the evaluation of risk posed by the
agency or subrecipient, must ensure proper accountability and
compliance with program requirements and achievement of performance
goals by:
(a) Providing agencies or subrecipients with training and technical
assistance on program-related matters;
(b) Performing on-site reviews of the agency's or subrecipient's
program operations; and,
(c) Arranging for agreed-upon-procedures engagements as described
in Sec. 200.425 Audit services.
(5) The Grantee must verify that every agency (where not included
in the audit of the grantee) or subrecipient is audited as required by
Subpart F--Audit Requirements of 2 CFR part 200 when it is expected
that the agency or subrecipient's subaward expended during the
respective fiscal year equaled or exceeded the threshold set forth in
Sec. 200.501 Audit requirements.
(6) The Grantee must consider whether the results of the agency or
subrecipient's audits, on-site reviews, or other monitoring indicate
conditions that necessitate adjustments to the Grantee's own records.
(7) The Grantee must take enforcement action against noncompliant
agencies or subrecipients as described in Sec. 200.338 Remedies for
noncompliance of this part and in program regulations.
II.B.15. Additional requirements for Fiscal Distress Risk. Based on
the financial risk posed by the Grantee's fiscal distress (as evidenced
by ongoing debt restructuring pursuant to the Puerto Rico Oversight,
Management, and Economic Stability Act (PROMESA), 48 U.S.C. 2101-2241)
the Grantee must comply with the requirements of the October 26, 2017
``ORDER GRANTING URGENT JOINT MOTION OF THE COMMONWEALTH OF PUERTO
RICO, PUERTO RICO HIGHWAYS AND TRANSPORTATION AUTHORITY, PUERTO RICO
ELECTRIC POWER AUTHORITY, AND THE PUERTO RICO FISCAL AGENCY AND
FINANCIAL ADVISORY AUTHORITY FOR ORDER CONCERNING RECEIPT AND USE OF
ANTICIPATED FEDERAL DISASTER RELIEF FUNDS AND PRESERVING RIGHTS OF
PARTIES,'' as may be amended from time to time by the United States
District Court for the District of Puerto Rico or other court with
jurisdiction (the Order). As required by the Order, grant funds
received by the Commonwealth or other Non-Federal entity (as defined by
2 CFR 200.69) shall be deposited solely into a Disaster Relief Account,
meaning a new, segregated, non-co-mingled, unencumbered account held in
the name of the Commonwealth or of the Non-Federal entity to whom the
funds have been provided, and shall be used solely for eligible
activities. Evidence of the Disaster Relief Account held by the
Commonwealth must be provided to HUD within 60 days of the date of the
CDBG-MIT grant agreement with the submission of a completed SF-1199
(direct deposit form) or other similar form specified by HUD. The
Grantee must maintain documentation of the Disaster Relief Accounts
held by other Non-Federal entities that receive grant funds from the
Grantee.
III. Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers for the disaster
recovery grants under this notice are as follows: 14.218 and 14.228.
IV. 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 inspection at HUD's Funding Opportunities web page at:
https://www.hud.gov/program_offices/spm/gmomgmt/grantsinfo/fundingopps.
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: January 16, 2020.
Benjamin Carson, Sr.,
Secretary.
[FR Doc. 2020-01334 Filed 1-24-20; 8:45 am]
BILLING CODE 4210-67-P
