Waivers and Alternative Requirements for Community Development Block Grant Disaster Recovery Grantees, 60821-60828 [2020-21359]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 85, Number 188 (Monday, September 28, 2020)]
[Notices]
[Pages 60821-60828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21359]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6219-N-01]


Waivers and Alternative Requirements for Community Development 
Block Grant Disaster Recovery Grantees

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

ACTION: Notice.

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SUMMARY: This notice governs Community Development Block Grant disaster 
recovery (CDBG-DR) funds awarded under several appropriations. 
Specifically, this notice provides waivers and establishes alternative 
requirements for certain grantees that have submitted waiver requests 
for grants provided pursuant to Public Laws. This notice also provides 
further clarification on the waiver and alternative requirement for use 
of a FEMA-approved alternative to the CDBG-DR elevation requirement for 
nonresidential structures. Additionally, this notice revises action 
plan substantial amendment requirements for CDBG-Mitigation (CDBG-MIT) 
grants.

DATES: Applicability Date: October 5, 2020.

FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, 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 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Public Law 113-2 Waivers and Alternative Requirements
II. Public Law 114-113, 114-223, 114-254, 115-31, 115-56, 115-123, 
115-254, and 116-20 Waivers and Alternative Requirements
III. Public Law 115-31, 115-56, 115-123, 115-254, and 116-20 Waivers 
and Alternative Requirements
IV. Public Law 115-56 and 115-123 Waivers and Alternative 
Requirements
V. Public Law 115-123 Waivers and Alternative Requirements
VI. Public Law 115-56, 115-123, and 116-20 Waivers and Alternative 
Requirements
VII. Public Law 115-254 and 116-20 Waivers and Alternative 
Requirements
VIII. Finding of No Significant Impact

I. Public Law 113-2 Waivers and Alternative Requirements

Authorizing Specific Housing Activities for the ``Reshaping the Urban 
Delta'' Initiative (City of New Orleans Only)

    The Department awarded $141,260,569 in Community Development Block 
Grant National Disaster Resilience (CDBG-NDR) funds made available 
under Public Law 113-2 to the City of New Orleans to implement 
activities described in the city's application, which the city 
collectively refers to as the ``Reshaping the Urban Delta'' initiative. 
This section of the notice specifies waivers and

[[Page 60822]]

alternative requirements and modifies requirements for CDBG-NDR funds 
awarded to the City of New Orleans under Public Law 113-2, for 
necessary expenses related to disaster relief, long-term recovery, 
restoration of infrastructure and housing, and economic revitalization.
    Public Law 113-2 authorizes the Secretary to waive or specify 
alternative requirements for any provision of any statute or regulation 
that the Secretary administers in connection with HUD's obligation or 
use by the recipient of these funds (except for requirements related to 
fair housing, nondiscrimination, labor standards, and the environment). 
Regulatory waiver authority is also provided by 24 CFR 5.110, 91.600, 
and 570.5. The waiver and alternative requirement provided in this 
section is in response to a request by the City of New Orleans 
explaining why there is good cause for the waiver and is based upon a 
determination by the Secretary that good cause exists and that the 
waiver or alternative requirement is not inconsistent with the overall 
purposes of title I of the Housing and Community Development Act of 
1974 (HCDA).
    The City of New Orleans will use its CDBG-NDR funds to create the 
city's first Resilience District in the Gentilly neighborhood, a low- 
and moderate-income community with a particularly high risk of 
flooding. The city is requesting a waiver to establish an alternative 
requirement to create a CDBG-eligible activity that comprises all of 
the activities proposed in the community adaptation component of the 
Resilience District initiative.
    The city's initiative is comprised of four components: (1) Urban 
water: consisting of public improvements to improve storm water 
management; (2) reliable energy and smart systems: to enhance the 
reliability of the electrical grid and energy asset monitoring; (3) 
coastal restoration: A series of coastal protection and restoration 
projects to mitigate flooding impacts; and (4) community adaptation: to 
support improvements to private residential properties in the 
neighborhood as a means of improving storm water management.
    Certain activities under the community adaptation component, as 
proposed by the City, are not CDBG-eligible as housing rehabilitation 
activities as they do not involve the rehabilitation of the housing 
structure itself. Accordingly, the Department is granting a waiver and 
establishing an alternative requirement to create a CDBG-eligible 
activity that comprises all of the activities proposed for improvements 
to residential properties under the community adaptation component of 
the initiative. In its approved CDBG-NDR action plan, the city 
describes activities that will be eligible for funding and that entail 
improvements to private residential properties. These improvements may 
include the installation of permeable driveways, rain cisterns, 
bioswales and other site and exterior adaptations and resilience 
retrofits which are on the property of homeowners, but generally do not 
involve physical improvements to the housing unit.
    To clarify the eligibility of these activities as outlined in the 
city's approved CDBG-NDR application and action plan, the Department is 
approving a waiver and alternative requirement to expand section 
105(a)(4) of the HCDA only to the extent necessary to create a new 
eligible activity for the city's CDBG-NDR grant. This new eligible 
activity shall be comprised of activities described in its CDBG-NDR 
application and approved action plan for residential improvements under 
the community adaptation portion of the initiative, through 
installation of improvements and implementation of stormwater 
management practices on residential properties for the purpose of 
enhancing the resilience of the residential building and preventing 
neighborhood flooding.

II. Public Law 114-113, 114-223, 114-254, 115-31, 115-56, 115-123, 115-
254, and 116-20 Waivers and Alternative Requirements

    This section of the notice specifies waivers and alternative 
requirements and modifies requirements for CDBG-DR funds awarded to 
grantees that received an allocation for a 2015, 2016, 2017, 2018, or 
2019 major disaster under Public Laws 114-113, 114-223, 114-254, 115-
31, 115-56, 115-123, 115-254, and 116-20 for necessary expenses related 
to disaster relief, long-term recovery, restoration of infrastructure 
and housing, economic revitalization, and mitigation. Public Laws 114-
113, 114-223, 114-254, 115-31, 115-56, 115-123, 115-254, and 116-20 
authorize the Secretary to waive or specify alternative requirements 
for any provision of any statute or regulation that the Secretary 
administers in connection with HUD's obligation or use by the recipient 
of these funds (except for requirements related to fair housing, 
nondiscrimination, labor standards, and the environment). Regulatory 
waiver authority is also provided by 24 CFR 5.110, 91.600, and 570.5. 
As required by Public Laws 114-113, 114-223, 114-254, 115-31, 115-56, 
115-123, 115-254, and 116-20 the waivers and alternative requirements 
provided in this paragraph are based upon a determination by the 
Secretary that good cause exists and that the waivers or alternative 
requirements are not inconsistent with the overall purposes of title I 
of the HCDA.

II.A. Waiver and Alternative Requirement for Use of FEMA-Approved 
Elevation Standards for Nonresidential Structures

    Grantees that received an allocation for a 2015, 2016, 2017, 2018, 
or 2019 major disaster under Public Laws 114-113, 114-223, 114-254, 
115-31, 115-56, 115-123, 115-254, and 116-20 are subject to different 
federal requirements established by the Federal Emergency Management 
Agency (FEMA) and HUD, with respect to the elevation of nonresidential 
structures in a floodplain. Grantees that have received an allocation 
of CDBG-MIT funds pursuant to Public Law 115-123 are also subject to 
these different federal requirements.
    Specifically, CDBG-DR and CDBG-MIT grantees under these 
appropriations and corresponding Federal Register notices are required 
to elevate, or floodproof in accordance with FEMA floodproofing 
standards at 44 CFR 60.3(c)(3)(ii) or a successor standard, 
nonresidential structures up to at least two feet above the 100-year 
(or 1 percent annual chance floodplain), i.e. two feet above the base 
flood elevation. Critical Actions, as defined at 24 CFR 55.2(b)(3), 
within the 0.2 percent annual chance floodplain (i.e., 500-year 
floodplain), must be elevated or floodproofed (in accordance with FEMA 
standards) to the higher of 0.2 percent annual floodplain flood 
elevation or three feet above the 1 percent annual chance floodplain 
(i.e., 100-year floodplain). Under current CDBG-DR and CDBG-MIT 
requirements for these grantees, if the 500-year floodplain or 
elevation standard is unavailable, and the Critical Action is in the 
100-year floodplain, then the structure must be elevated or 
floodproofed to at least three feet above the 100-year floodplain 
elevation.
    CDBG-DR funds may be used to meet the non-federal match 
requirements for programs funded by FEMA. CDBG-DR grantees using FEMA 
and CDBG-DR funds to fund the same activity, however, have encountered 
challenges in certain circumstances in reconciling CDBG-DR elevation 
requirements with those established by FEMA. CDBG-MIT grantees will 
encounter similar challenges in the implementation of projects when 
using FEMA funds

[[Page 60823]]

together with CDBG-MIT funds. FEMA regulations at 44 CFR 9.11(d)(3)(i) 
and (ii) prohibit new construction or substantial improvements to a 
structure unless the lowest floor of the structure is at or above the 
level of the base flood and for critical actions, at or above the level 
of the 500-year flood, while 44 CFR 9.11(d)(3)(iii) allows for an 
alternative to elevation to the 100- or 500-year flood level, subject 
to FEMA approval, which would provide for improvements that would 
ensure the substantial impermeability of the structure below flood 
level.
    As programs funded by FEMA are pursuant to an annual appropriation, 
FEMA funded projects generally commence soon after a disaster and well 
in advance of the availability of CDBG-DR funds. When CDBG-DR funds are 
used as match for a FEMA project that is underway, the alignment of 
HUD's elevation standards with any alternative standard allowed by FEMA 
may not be feasible and may not be cost reasonable.
    Accordingly, the Department is waiving the elevation requirements 
applicable under the Federal Register notices for the referenced 
appropriations, and establishing an alternative requirement for the use 
of an alternative, FEMA-approved flood standard when each of the 
following conditions is in place: (i) CDBG-DR or CDBG-MIT funds are 
used as the non-federal match for FEMA assistance; (ii) the FEMA-
assisted activity, for which CDBG-DR or CDBG-MIT funds will be used as 
match, commenced prior to HUD's obligation of CDBG-MIT or CDBG-DR funds 
to the grantee; and (iii) the grantee has determined and demonstrated 
with records in the activity file that implementation costs of the 
required CDBG-DR elevation or flood proofing up to two feet is not 
reasonable as that term is defined in the applicable cost principles at 
2 CFR 200.404. HUD and FEMA will issue joint guidance to assist 
grantees in the compliant implementation of this provision and with 
other requirements that apply when CDBG-DR or CDBG-MIT funds are used 
to meet the non-federal match requirements of certain FEMA programs.

II.B. Changes to the DOB Implementation Notice for Grantees That 
Received a CDBG-DR Allocation for a 2015, 2016, or 2017 Disaster Event

    On June 20, 2019, the Department published a Federal Register 
notice, ``Updates to Duplication of Benefits Requirements Under the 
Stafford Act for Community Development Block Grant (CDBG) Disaster 
Recovery Grantees,'' (84 FR 28836) (``2019 DOB Notice''). This notice 
reflects the requirements of recent CDBG-DR supplemental appropriations 
acts and amendments to the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act. HUD's corresponding DOB implementation 
notice, ``Applicability of Updates to Duplication of Benefits 
Requirements Under the Stafford Act for Community Development Block 
Grant (CDBG) Disaster Recovery Grantees,'' (84 FR 28848) (``DOB 
Implementation Notice'') makes conforming amendments to other notices 
governing CDBG-DR grants received in response to a disaster declared 
between January 1, 2015 and December 31, 2017. The DOB Implementation 
Notice advises these grantees of the applicability of the 2019 DOB 
Notice to their existing CDBG-DR activities. In the DOB Implementation 
Notice, the Department imposed the requirements of the 2019 DOB Notice 
for: (a) New programs and activities added to the action plan after the 
date of the implementation notice; and (b) existing programs and 
activities, to the extent that the grantee amends its action plan to 
change its treatment of loans in accordance with the 2019 DOB Notice.
    The Department recognizes that not all grantees include this level 
of specificity in their action plan and is broadening the applicability 
of the 2019 DOB Notice to include existing programs and activities, to 
the extent that the grantee amends its action plan or its policies and 
procedures to change the treatment of loans in accordance with the 2019 
DOB Notice. Therefore, this notice deletes and replaces the first 
bullet of the third paragraph of section III of the DOB Implementation 
Notice, which follows the sentence: ``This notice makes the following 
changes to the Prior Notices.'' The first bullet in the third paragraph 
of section III is revised to read:
     ``The 2019 DOB Notice shall supersede the 2011 DOB notice 
for any new activities submitted to HUD in an action plan or action 
plan amendment on or after the effective date of this notice, and for 
existing programs and activities, to the extent that the grantee amends 
its action plan or its policies and procedures to change the treatment 
of loans in accordance with the 2019 DOB Notice. If a grantee opts to 
revise its policies and procedures for one or more existing programs 
that were included in an action plan for disaster recovery before the 
effective date of this notice, the grantee must amend its action plan 
to reflect any resulting changes in benefits to program participants or 
to correct any resulting inconsistencies with duplication of benefits 
policies described in the action plan.''

II.C. Use of the ``Upper Quartile'' or ``Exception Criteria'' for Low- 
and Moderate-Income Area Benefit Activities (State of Texas only)

    The State of Texas was awarded a total of $74,568,000 from Public 
Laws 114-113 and 115-31 for recovery from 2015 disasters; a total of 
$238,895,000 from Public Laws 114-223, 114-254, and 115-31 for recovery 
from 2016 disasters; a total of $5,734,190,000 from Public Laws 115-56, 
115-123, and 115-31 for recovery from Hurricane Harvey disaster; a 
total of $72,913,000 from Public Laws 115-254 and 116-20 for recovery 
from 2018 disasters; and a total of $212,741,000 from Public Law 116-20 
for recovery from 2019 disasters. HUD has also awarded $4,297,189,000 
of CDBG-MIT funds to the State under Public Law 115-123 for mitigation 
activities. This section of the notice specifies waivers and 
alternative requirements and modifies requirements for CDBG-DR and 
CDBG-MIT funds awarded to the State of Texas under Public Laws 114-113, 
114-223, 114-254, 115-31, 115-56, 115-123, 115-254, and 116-20 for 
necessary expenses related to disaster relief, long-term recovery, 
restoration of infrastructure and housing, economic revitalization, and 
mitigation.
    The State is seeking a waiver and alternative requirement to apply 
exception criteria in determining that an activity qualifies as meeting 
the low- and moderate-income (LMI) area benefit national objective when 
the area contains fewer than 51 percent of LMI persons. This waiver and 
alternative requirement will allow the State to use the ``upper 
quartile'' or ``exception criteria'' for LMI area benefit activities 
for non-entitlement counties impacted by the 2015 and 2016 floods, as 
well as areas impacted by Hurricane Harvey.
    Section 105(c)(2)(A) of the HCDA generally provides that assisted 
activities designed to serve an area generally and clearly designed to 
meet identified needs of LMI persons in the area, shall be considered 
to principally benefit persons of low- and moderate-income if the area 
served in a metropolitan city or urban county is within the highest 
quartile of all areas within the jurisdiction of such city or county in 
terms of the degree of concentration of persons of low- and moderate-
income. In some cases, HUD permits an exception to the requirement that 
at least 51 percent of the residents of the area qualify as LMI, when 
certain requirements are met.

[[Page 60824]]

    The exception provided by HUD under this waiver and alternative 
requirement is typically applied to those entitlement communities that 
have few, if any, areas within their jurisdiction that have 51 percent 
or more of LMI residents. Under the exception, communities are allowed 
to use a percentage that is less than 51 percent to qualify activities 
under the LMI area benefit national objective criteria. In these 
communities, activities must serve an area that contains a percentage 
of LMI residents that is within the upper quartile of all census-block 
groups within its jurisdiction in terms of the degree of concentration 
of LMI residents. HUD assesses each grantee's census-block groups to 
determine whether a grantee qualifies to use this exception and 
identifies the alternative percentage the grantee may use instead of 51 
percent for the purpose of qualifying activities under the LMI area 
benefit national objective criteria. HUD determines the lowest 
proportion a grantee may use to qualify an area for this purpose and 
advises the grantee accordingly. CDBG-DR grantees are required to use 
the most recent data available in implementing the exception criteria. 
The ``exception criteria'' applies to disaster recovery activities 
funded by a State grantee pursuant to the applicable Federal Register 
notices in jurisdictions covered by such criteria, including 
jurisdictions that receive CDBG-DR funds from a State.
    The State of Texas is requesting this waiver and alternative 
requirement for only those non-entitlement counties in which fewer than 
one quarter of the block groups within each jurisdiction have 51 
percent or more of LMI residents. When the ``upper quartile'' or 
``exception criteria'' methodology is applied to block groups within 
those counties that do not fall within an entitlement community, fewer 
than one quarter of the populated-block groups in those counties 
contain 51 percent or more of LMI persons.
    To enable the State to undertake the activities it has determined 
to be most critical for its recovery, and to ensure that LMI persons 
are sufficiently served and assisted, HUD is waiving section 
105(c)(2)(A) of the HCDA and establishing an alternative requirement to 
authorize the State to use the ``upper quartile'' or ``exception 
criteria'' for LMI area benefit activities for non-entitlement counties 
for any current or future grants made under Public Laws 114-113, 114-
223, 114-254, 115-31, 115-56, 115-123, 115-254, and 116-20.
    The non-entitlement counties that qualify under this alternative 
requirement, and the calculated ``exception percentages'' for each, 
will be posted in tables on the HUD website. These tables will be 
updated annually by HUD. The ``exception percentage'' for each of the 
counties that qualify will represent the new threshold for qualifying 
block groups in those counties under the LMI area benefit national 
objective criteria. In granting this flexibility to the State of Texas, 
the Department will not consider any request to lower the State's 
requirements in regard to the overall percentage of funds that must be 
used for activities that benefit low- and moderate-income persons for 
its CDBG-DR funds for 2015 to 2019 disasters, or its CDBG-MIT funds.

III. Public Law 115-31, 115-56, 115-123, 115-254, and 116-20 Waivers 
and Alternative Requirements

Use of Standardized Area Median Income (State of Texas Only)

    The Department has awarded $5,734,190,000 in CDBG-DR funds to the 
State of Texas for recovery from Hurricane Harvey from Public Laws 115-
56, 115-123, and 115-31. HUD has also awarded $4,297,189,000 of CDBG-
MIT funds to the State under Public Law 115-123 for mitigation 
activities. Additionally, the State was awarded a total of $72,913,000 
from Public Laws 115-254 and 116-20 for recovery from 2018 disasters, 
and a total of $212,741,000 from Public Law 116-20 for recovery from 
2019 disasters. This section of the notice specifies waivers and 
alternative requirements and modifies requirements for CDBG-DR and 
CDBG-MIT funds awarded to the State of Texas under Public Laws 115-31, 
115-56, 115-123, 115-254, and 116-20 for necessary expenses related to 
disaster relief, long-term recovery, restoration of infrastructure and 
housing, economic revitalization, and mitigation.
    Public Laws 115-31, 115-56, 115-123, 115-254, and 116-20 authorize 
the Secretary to waive or specify alternative requirements for any 
provision of any statute or regulation that the Secretary administers 
in connection with HUD's obligation or use by the recipient of these 
funds (except for requirements related to fair housing, 
nondiscrimination, labor standards, and the environment). Regulatory 
waiver authority is also provided by 24 CFR 5.110, 91.600, and 570.5. 
The waiver and alternative requirement provided in this paragraph is in 
response to a request by the State of Texas explaining why there is 
good cause for the waiver and based upon a determination by the 
Secretary that good cause exists and that the waiver or alternative 
requirement is not inconsistent with the overall purposes of title I of 
the HCDA.
    The State is asking to modify requirements and coordinate recovery 
efforts across multiple CDBG-DR and CDBG-MIT allocations under Public 
Laws 115-31, 115-56, 115-123, 115-254, and 116-20 through use of a 
standardized area median income for purposes of meeting the low- and 
moderate-income national objective criteria.
    42 U.S.C. 5302(a)(20)(A) defines the terms ``persons of low and 
moderate income'' and ``low- and moderate-income persons'' to mean 
families and individuals whose incomes do not exceed 80 percent of the 
median income of the area involved, as determined by the Secretary with 
adjustments for smaller and larger families.
    The State has presented data indicating a large range in area 
median income (AMI) in the Harvey-impacted areas of the State, ranging 
from $40,200 to $91,100 for a family of four. This statewide variation 
can have unintended consequences for participation in CDBG-DR funded 
activities, for example, the State affirms that ``while the cost of 
living varies between communities throughout the state, the cost to 
rebuild or reconstruct a new home does not vary on the order of 
magnitude evidenced by the disparity in AMI across Texas counties.'' As 
the State seeks to primarily serve LMI individuals and areas in the 
disaster-impacted counties, the variation between county-level AMI 
limits the participation of families and individuals in the State's 
recovery programs in those counties with very low AMI, because these 
families and individuals have incomes that are at or above the 80 
percent of AMI in the respective county even though their incomes are 
less than 80 percent of the statewide median income.
    Based on the above circumstance, the State of Texas has requested a 
waiver and alternative requirement to allow the State to make LMI 
determinations across the most impacted and distressed (MID) areas for 
2017, 2018, and 2019 disasters based on a determination that the 
incomes of families and individuals are below 80 percent of statewide 
median income. In its request, the State emphasizes the importance of 
providing assistance to the households most in need through a housing 
rehabilitation and reconstruction program, through buyouts and 
acquisitions that remove homes from harms' way, and through other flood 
drainage infrastructure activities.

[[Page 60825]]

    In the circumstances outlined in the State's request, the 
broadening of 42 U.S.C. 5302(a)(20)(A) is warranted given the variance 
in AMIs across the affected counties. Thus, the Department finds that 
good causes exists and waives 42 U.S.C. 5302(a)(20)(A) to the extent 
necessary to allow the Secretary to enable the State of Texas to make 
LMI determinations based on statewide median income instead of 
otherwise applicable AMI when local AMI is below statewide median 
income data (as published by HUD annually with adjustments for smaller 
and larger families). In areas where this waiver and alternative 
requirement permits the State to use statewide median income for LMI 
determinations, the State may also use statewide median income data (as 
published by HUD annually with adjustments for smaller and larger 
families) to calculate 120 percent of statewide median income, and to 
use 120 percent of statewide median income as a substitute for 120 
percent of AMI. This will allow the State of Texas to standardize the 
median income for the counties impacted by Hurricane Harvey, and 2018 
and 2019 disasters that have an AMI below the statewide median income. 
This alternative requirement also includes the MID areas identified by 
the State and HUD for its CDBG-MIT funds. However, if those counties 
have an AMI above the statewide median income, LMI eligibility will 
continue to be defined by the county's higher AMI standard.
    This waiver and alternative requirement is provided for the 
purposes of assisting the most at-risk populations who are in need of 
recovery assistance in each of the MID areas identified by HUD and the 
State for 2017, 2018, 2019 disasters, and its CDBG-MIT funds. In 
granting this flexibility to the State of Texas, the Department will 
not consider any request to lower the State's requirement in regard to 
the overall percentage of funds that must be used for activities that 
benefit low- and moderate-income persons for its CDBG-DR funds for 
2017, 2018, or 2019 disasters or its CDBG-MIT funds.

IV. Public Law 115-56 and 115-123 Waivers and Alternative Requirements

Base Flood Elevation Requirement and Reimbursement in the ``Homeowner 
Reimbursement Program'' (State of Texas Only)

    The Department awarded $5,024,215,000 under Public Law 115-56 and 
$652,175,000 under Public Law 115-123 to the State of Texas for 
recovery from Hurricane Harvey for necessary expenses related to 
disaster relief, long term recovery, restoration of infrastructure and 
housing, economic revitalization, and mitigation due to a qualified 
disaster. This section of the notice specifies waivers and alternative 
requirements and modifies requirements for CDBG-DR funds awarded to the 
State of Texas under Public Laws 115-56 and 115-123.
    Public Law 115-56 and 115-123 authorize the Secretary to waive or 
specify alternative requirements for any provision of any statute or 
regulation that the Secretary administers in connection with HUD's 
obligation or use by the recipient of these funds (except for 
requirements related to fair housing, nondiscrimination, labor 
standards, and the environment). Regulatory waiver authority is also 
provided by 24 CFR 5.110, 91.600, and 570.5. The State of Texas has 
submitted a request for the waiver in this section with an explanation 
of why the waiver is required to facilitate the use of the funds. The 
waiver and alternative requirement provided in this section is based 
upon a determination by the Secretary that good cause exists, and that 
the waiver and alternative requirement is not inconsistent with the 
overall purposes of title I of the HCDA.
    The State is implementing a Homeowner Reimbursement Program 
designed to assist homeowners in recovering up to $50,000 in out-of-
pocket expenses paid by the homeowner for residential rehabilitation 
due to Hurricane Harvey. To be eligible for this program, the State's 
rules require that the home must be the owner's primary residence and 
the eligible repairs must have been completed prior to the program's 
application launch date of February 28, 2019. Because the State's 
Hurricane Harvey response and recovery efforts commenced on the date of 
the disaster and before CDBG-DR assistance was available, some 
homeowners participating in the State's Homeowner Reimbursement Program 
may have repaired their homes to meet program requirements of the 
Federal Emergency Management Agency (FEMA) and local permitting 
requirements, rather than the CDBG-DR program requirements.
    Some homeowners seeking assistance from the State's program 
elevated homes to meet the requirements of their municipalities but did 
not elevate their homes to meet HUD's requirement that residential 
structures be elevated to at least 2 feet above base flood elevation as 
required by the Federal Register notice governing the use of these 
funds. Because the homeowners did not anticipate receiving federal 
assistance, the State is requesting a waiver to reimburse homeowners 
that are otherwise eligible for assistance but elevated their homes to 
comply with the local jurisdiction's freeboard requirements, which may 
be lower than the HUD-mandated standard to elevate to base flood 
elevation plus 2 feet.
    HUD's February 9, 2018 notice provides that: ``All structures, 
defined at 44 CFR 59.1, designed principally for residential use and 
located in the 100-year (or 1 percent annual chance) floodplain that 
receive assistance for new construction, repair of substantial damage, 
or substantial improvement, as defined at 24 CFR 55.2(b)(10), must be 
elevated with the lowest floor, including the basement, at least two 
feet above the base flood elevation (83 FR 5861).''
    HUD finds that good cause exists to waive the language in the 
Federal Register notice requiring the 2 feet above base flood elevation 
for homeowners seeking reimbursement in the State's Homeowner 
Reimbursement Program and to establish an alternative requirement to 
permit the State to reimburse those homeowners for costs of 
rehabilitation completed before the program's application launch date 
of February 28, 2019, subject to the following requirements:
     The homeowner's reimbursed rehabilitation costs complied 
with the elevation requirement of the local jurisdiction.
     The activity is eligible under title I of the HCDA or by 
waiver and is consistent with CPD-15-07: Guidance for Charging Pre-
Application Costs of Homeowners, Businesses, and Other Qualifying 
Entities to CDBG Disaster Recovery Grants.
     The activity meets a CDBG-DR national objective and 
otherwise complies with CDBG-DR requirements not waived by this 
section.
     The State uses not less than 70 percent of the aggregate 
CDBG-DR grant for activities that benefit low- and moderate-income 
persons.
    The State must ensure that all costs charged to this program and to 
the CDBG-DR grant are necessary and reasonable expenses related to 
disaster recovery.

V. Public Law 115-123 Waivers and Alternative Requirements

Substantial Action Plan Amendment Requirements for CDBG-MIT Grants

    Public Law 115-123 authorizes the Secretary to waive or specify 
alternative requirements for any provision of any statute or regulation 
that the Secretary administers in connection with HUD's obligation or 
use by the recipient of

[[Page 60826]]

these funds (except for requirements related to fair housing, 
nondiscrimination, labor standards, and the environment). Regulatory 
waiver authority is also provided by 24 CFR 5.110, 91.600, and 570.5. 
As required by Public Laws 115-123, the waiver and alternative 
requirement provided in this paragraph is based upon a determination by 
the Secretary that good cause exists, and that the waiver or 
alternative requirement is not inconsistent with the overall purposes 
of title I of the HCDA.
    The Department's August 30, 2019 Federal Register notice (84 FR 
45838) included requirements for CDBG-MIT grantees that must be 
followed for substantial amendments to a CDBG-MIT action plan. Section 
V.A.2.g.(1) of the August 30, 2019 notice requires grantees to follow 
the same procedures for a substantial action plan amendment as are 
required for the preparation and submission of the initial CDBG-MIT 
action plan, including multiple public hearings in various geographic 
locations, except that that a substantial action plan amendment shall 
require a 30-day public comment period. HUD, however, has generally not 
established a public hearing requirement for substantial amendments to 
a grantee's action plan for CDBG-DR grants. This alternative 
requirement will better align CDBG-MIT substantial amendment 
requirements with those established for CDBG-DR substantial amendments, 
with the addition of continued engagement of the public through a 30-
day public comment period and through the citizen advisory committees 
required by the CDBG-MIT notice. For these reasons, HUD is replacing 
V.A.2.g. subparagraph (1) of the August 30, 2019 notice with the 
following:

    (1) Substantial amendment. The grantee must provide a 30-day 
public comment period and reasonable method(s) (including electronic 
submission) for receiving comments on substantial amendments. 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: The addition of a CDBG-MIT Covered Project; 
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 for CDBG- MIT funds for the preparation and 
submission of an action plan, provided, however, that a substantial 
action plan amendment shall require a 30-day public comment period 
and is not subject to the public hearing requirements in section 
V.A.3.a. of this notice.

VI. Public Law 115-56, 115-123, and 116-20 Waivers and Alternative 
Requirements

Use of Standardized Area Medium Income (U.S. Virgin Islands Only)

    Public Laws 115-56, 115-123, and 116-20 authorize the Secretary to 
waive or specify alternative requirements for any provision of any 
statute or regulation that the Secretary administers in connection with 
HUD's obligation or use by the recipient of these funds (except for 
requirements related to fair housing, nondiscrimination, labor 
standards, and the environment).
    Waivers and alternative requirements are based upon a determination 
by the Secretary that good cause exists, and that the waiver or 
alternative requirement is not inconsistent with the overall purposes 
of title I of the HCDA. Regulatory waiver authority is also provided by 
24 CFR 5.110, 91.600, and 570.5. For the waiver and alternative 
requirement described in this section of the notice, the Secretary has 
determined that good cause exists and that the waiver and alternative 
requirement is not inconsistent with the overall purposes of title I of 
the HCDA.
    Grantees under Public Laws 115-56, 115-123, and 116-20 may request 
waivers and alternative requirements from the Department as needed to 
address specific needs related to their recovery activities. Public 
Laws 115-56, 115-123, and 116-20 also authorize the Department to 
provide waivers and establish alternative requirements absent a request 
from a CDBG-DR grantee.
    The Department awarded the U.S. Virgin Islands (USVI) $242,684,000 
of CDBG-DR funds under Public Law 115-56, $779,221,000 of CDBG-DR funds 
under Public Law 115-123, and $53,588,884 of CDBG-DR funds under Public 
Law 116-20. The Department has also awarded the USVI $774,188,000 of 
CDBG-MIT funds under Public Law 115-123 for mitigation activities.
    The USVI has requested that HUD provide a waiver to establish 
higher income limits for the purposes of determining low- and moderate-
income benefit, due to the USVI's extremely high cost of living. The 
USVI contends that ``the data used to set HUD area medium incomes (AMI) 
and the associated income limits for the U.S. Virgin Islands is 
uniquely outdated compared to other grantees due to the lack of recent 
American Community Survey (ACS) data from the Census Bureau. This 
results in compounding inaccuracies as estimates are based on data 
collected over eight years ago.'' The USVI contends that granting this 
waiver and alternative requirement will allow it to more accurately 
reflect the number of residents that are financially burdened and who 
are in greatest need of CDBG-DR assistance.
    In order to establish consistent LMI income limits across all three 
islands of the USVI and recognizing the high cost and other unique 
characteristics of the USVI identified above, the Department finds that 
good causes exists and waives 42 U.S.C. 5302(a)(20)(A) to the extent 
necessary to standardize the AMI across the entire territory of the 
USVI by allowing the USVI to use the area median income (as published 
by HUD annually with adjustments for smaller and larger families) of 
the Island of St. John for all islands in the territory, since those 
LMI income limits are the highest of the three islands within the 
Territory. This waiver also permits the use of AMI of the Island of St. 
John (as published by HUD annually with adjustments for smaller and 
larger families) for all islands in the territory whenever grant 
requirements necessitate the application of AMI, including when it may 
be necessary to calculate 120 percent of AMI. In granting this 
flexibility, the Department will not consider any request to lower the 
USVI's requirement in regard to the overall percentage of funds that 
must be used for activities that benefit low- and moderate-income 
persons.

VII. Public Law 115-254 and 116-20 Waivers and Alternative Requirements

    This section of the notice applies to certain grantees that 
received an allocation of funds appropriated under Public Laws 115-254 
and 116-20 for major disasters and events that occurred in 2017, 2018, 
and 2019. Public Laws 115-254 and 116-20 authorize the Secretary to 
waive or specify alternative requirements for any provision of any 
statute or regulation that the Secretary administers in connection with 
HUD's obligation or use by the recipient of these funds (except for 
requirements related to fair housing, nondiscrimination, labor 
standards, and the environment).
    Waivers and alternative requirements are based upon a determination 
by the Secretary that good cause exists, and that the waiver or 
alternative requirement is not inconsistent with the overall purposes 
of title I of the HCDA. Regulatory waiver authority is also provided by 
24 CFR 5.110, 91.600, and 570.5. For the waivers and alternative 
requirements described in this section of notice, the Secretary has 
determined

[[Page 60827]]

that good cause exists and that the waivers and alternative 
requirements are not inconsistent with the overall purposes of title I 
of the HCDA.
    Grantees under Public Laws 115-254 and 116-20 may request waivers 
and alternative requirements from the Department as needed to address 
specific needs related to their recovery activities. Public Laws 115-
254 and 116-20 also authorize the Department to provide waivers and 
establish alternative requirements absent a request from a CDBG-DR 
grantee.

VIII.A. Authorizing Tourism and Business Marketing Assistance 
Activities (The Northern Mariana Islands Only)

    The Department has awarded $188,652,000 of CDBG-DR funds under 
Public Law 115-254 and $55,294,000 under Public Law 116-20, for a 
combined allocation of $243,946,000 to the Commonwealth of Northern 
Mariana Islands (CNMI). CNMI has requested that HUD authorize the use 
of up to $10,000,000 of CDBG-DR funds for tourism and business 
marketing as activities necessary for recovery from Super Typhoon Yutu. 
Tourism is the primary economic contributor to CNMI's economy. The 
Marianas Visitors Authority (MVA), the CNMI's tourism office, is 
mandated to promote Saipan, Tinian, Rota, and the Northern Islands as 
an ideal destination to travelers from countries in Asia, Oceania and 
throughout the world. CNMI's current main tourism markets are Korea, 
China, and Japan.
    The total value of tourism within the CNMI economy amounts to $1.1 
billion (or 72 percent) of overall Gross Domestic Product (GDP) and the 
accommodations and amusement sector provides for an average of 21.5 
percent of total employee compensation within the Commonwealth. Due to 
the influence of the tourism industry in the CNMI and the scale of 
Super Typhoon Yutu, the impacts of the disaster on the economy were 
wide-ranging and pronounced. In total, arrivals for November (after the 
typhoon in October) fell by 88.35 percent or 42,444, marking the 
sharpest year-over-year downturn in recent history. The closure of the 
Saipan International Airport also led to a decrease in arrivals by 30 
percent (over 400,000 visitors).
    Tourism and business advertising campaigns are in general 
ineligible for CDBG-DR assistance. HUD, however, recognizes that such 
support can be an important means of economic recovery in a damaged 
regional economy that depends on tourism and seeks to attract new 
business investments to generate jobs and create tax revenues.
    HUD has previously granted similar waivers for other CDBG-DR 
grantees with tourism-dependent economies. As CNMI 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 $10,000,000 for 
assistance for tourism and business marketing activities to promote 
travel and to attract new businesses to disaster-impacted areas. 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 these 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 January 27, 2020 Federal Register notice (85 FR 4681).
    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 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 its action plan.

VIII.B. Financial Certification Requirements Under Public Laws 115-254 
and 116-20

    The Department's January 27, 2020 Federal Register notice (84 FR 
4681) included requirements for the certification of financial controls 
and procurement processes and adequate procedures for grant management 
for Public Law 115-254 and 116-20 grantees, allowing them to use their 
prior 2016 or 2017 certifications for the purposes of the allocations 
provided by that notice. The notice, however, did not include or 
reference the financial certifications provided for a grantee's CDBG-
MIT funds as also being a valid form of certification for the 
allocation. Since the Department's August 30, 2019 CDBG-MIT Federal 
Register notice (84 FR 45838) requires grantees to provide evidence of 
proficient financial controls and procurement processes as well as the 
establishment of adequate procedures to prevent any duplication of 
benefits as defined by section 312 of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (Stafford Act), 42 U.S.C. 5155, the 
Department is adding the CDBG-MIT certification as an acceptable 
certification that may be used for grants allocated by Public Laws 115-
254 and 116-20 for 2018 and 2019 disasters. HUD is deleting and 
replacing the second paragraph of section IV.B.1. of the January 27, 
2020 notice with the following:

    A grantee that received a certification of its financial 
controls and procurement processes pursuant to a 2016 or 2017 
disaster or for its CDBG-MIT allocation may request that HUD rely on 
its previous certification for purposes of this grant, provided, 
however, that grantees shall be required to provide updates to 
reflect any material changes in the submissions. This information 
must be submitted within 60 days of the applicability date of this 
notice. The grant agreement will not be executed until HUD has 
approved the grantee's certifications. The grantee must implement 
the CDBG-DR grant consistent with the controls, processes, and 
procedures as certified by HUD. HUD is requiring each grantee to 
submit (or update and resubmit, as applicable) all policies and 
procedures pertaining to its duplication of benefits procedures as 
outlined below:

    HUD is also deleting and replacing the first bullet in section III 
of the January 27, 2020 notice with the following:

     Within 60 days of the applicability date of this notice 
(or when the grantee submits its action plan, whichever is earlier), 
submit documentation for the certification of financial controls and 
procurement processes and adequate procedures for grant management, 
as amended in section IV.B.1 of this notice. A grantee that received 
a certification of its financial controls and procurement processes 
pursuant to a 2016 or 2017 disaster or for its CDBG-MIT allocation, 
may request that HUD rely on its previous certification for purposes 
of this allocation, provided, however, that grantees shall be 
required to provide updates to reflect any material changes in the 
submissions.

VIII. 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,

[[Page 60828]]

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: September 23, 2020.
John Gibbs,
Acting Assistant Secretary for Community Planning and Development.
[FR Doc. 2020-21359 Filed 9-25-20; 8:45 am]
BILLING CODE 4210-67-P