Allocations for Community Development Block Grant Disaster Recovery and Implementation of the CDBG-DR Consolidated Waivers and Alternative Requirements Notice, 32046-32081 [2023-10598]
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32046
Federal Register / Vol. 88, No. 96 / Thursday, May 18, 2023 / Notices
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
[Docket No. FR–6393–N–01]
Allocations for Community
Development Block Grant Disaster
Recovery and Implementation of the
CDBG–DR Consolidated Waivers and
Alternative Requirements Notice
Office of the Assistant
Secretary for Community Planning and
Development, HUD.
ACTION: Notice.
AGENCY:
In March 2023, HUD allocated
more than $3 billion in Community
Development Block Grant Disaster
Recovery (CDBG–DR) funds
appropriated by the Continuing
Appropriations Act, 2023 and the
Department of Housing and Urban
Development Appropriations Act, 2023
for major disasters occurring in 2022.
This Allocation Announcement Notice
identifies grant requirements for these
funds, including requirements in HUD’s
CDBG–DR Consolidated Notice
(‘‘Consolidated Notice’’) found in
Appendix B, and a limited number of
amendments to the Consolidated Notice
that apply to CDBG–DR grants for
disasters occurring in 2020, 2021, and
2022. The Consolidated Notice, as
amended by this Allocation
Announcement Notice, includes
waivers and alternative requirements,
relevant regulatory requirements, the
grant award process, criteria for action
plan approval, and eligible disaster
recovery activities.
DATES: Applicability Date: May 23,
2023.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
Tennille Smith Parker, Director, Office
of Disaster Recovery, Department of
Housing and Urban Development, 451
7th Street SW, Room 7282, Washington,
DC 20410, telephone number 202–708–
3587 (this is not a toll-free number).
HUD welcomes and is prepared to
receive calls from individuals who are
deaf or hard of hearing, as well as
individuals with speech or
communication disabilities. To learn
more about how to make an accessible
telephone call, please visit: https://
www.fcc.gov/consumers/guides/
telecommunications-relay-service-trs.
Facsimile inquiries may be sent to Ms.
Parker at 202–708–0033 (this is not a
toll-free number). Email inquiries may
be sent to disaster_recovery@hud.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Allocations
II. Use of Funds
A. Allocations of CDBG–DR Funds for
Smaller Grants
III. Overview of Grant Process
A. Requirements Related to Administrative
Funds
IV. Applicable Rules, Statutes, Waivers, and
Alternative Requirements
A. Grant Administration
B. Clarifications to the Consolidated Notice
V. Duration of Funding
VI. Assistance Listing Numbers (formerly
known as the CFDA Number)
VII. Finding of No Significant Impact
Appendix A: Allocation Methodology
Appendix B: CDBG–DR Consolidated Notice
I. Allocations
The Continuing Appropriations Act,
2023 (Pub. L. 117–180, Division A)
approved September 30, 2022, makes
available $2,000,000,000 in CDBG–DR
funds. These CDBG–DR funds are for
necessary expenses for activities
authorized under title I of the Housing
and Community Development Act of
1974 (42 U.S.C. 5301 et seq.) (HCDA)
related to disaster relief, long-term
recovery, restoration of infrastructure
and housing, economic revitalization,
and mitigation in the ‘‘most impacted
and distressed’’ (MID) areas resulting
from a qualifying major disaster in 2021
or 2022. Additionally, the Department
of Housing and Urban Development
Appropriations Act, 2023 (Pub. L. 117–
328, Division L, Title II) approved
December 29, 2022, makes available
$3,000,000,000 in CDBG–DR funds for
major disasters that occurred in 2022 or
later until such funds are fully
allocated. This notice announces
allocations of $3,391,220,000 from
Public Laws 117–180 and 117–328
(collectively, the ‘‘Appropriations
Acts’’) for disasters occurring in 2022.
The Appropriations Acts require HUD
to include with any final allocation for
the total estimate of unmet need an
additional amount of 15 percent of that
estimate for mitigation activities that
reduce risk in the MID areas (see Table
1).
The Appropriations Acts provide that
grants shall be awarded directly to a
state, local government, or Indian tribe
at the discretion of the Secretary.
Pursuant to the Appropriations Acts,
HUD has identified MID areas based on
the best available data for all eligible
affected areas. A detailed explanation of
HUD’s allocation methodology is
provided in Appendix A of this notice.
To comply with requirements that all
funds are expended in MID areas, Lee
County, Florida; Volusia County,
Florida; Orange County, Florida;
Sarasota County, Florida; St. Clair
County, Illinois; St. Louis County,
Missouri; and St. Louis City, Missouri
must use 100 percent of the total funds
allocated to address unmet disaster
needs or mitigation activities within the
HUD-identified MID areas identified in
the last column in Table 2.
All other grantees must use at least 80
percent of their allocations to address
unmet disaster needs or mitigation
activities in the HUD-identified MID
areas, as identified in the last column of
Table 2. These grantees may use the
remaining 20 percent of their allocation
to address unmet disaster needs or
mitigation activities in those areas that
the grantee determines are ‘‘most
impacted and distressed’’ within an area
that received a Presidential major
disaster declaration identified by the
Federal Emergency Management Agency
(FEMA) disaster numbers listed in
column two of Table 1. However, these
grantees are not precluded from
spending 100 percent of their allocation
in the HUD-identified MID areas if they
choose to do so. Detailed requirements
related to MID areas are provided in
section II.A.3. of the Consolidated
Notice.
Based on a review of the impacts from
the eligible disasters, and estimates of
unmet need, HUD made the following
allocations for disasters occurring in
2022:
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TABLE 1—ALLOCATIONS FOR UNMET NEEDS AND MITIGATION ACTIVITIES UNDER PUBLIC LAW 117–180 AND 117–328
FOR DISASTERS OCCURING IN 2022
Year
2022 .................
2022 .................
2022 .................
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FEMA disaster
No.
4672
4673
4673
21:24 May 17, 2023
Allocation for
unmet needs
from
Public Law
117–180
State
Grantee
Alaska ....................
Florida ...................
Florida ...................
State of Alaska ......
Lee County ............
Volusia County ......
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$0
0
0
Sfmt 4703
CDBG–DR
mitigation
set-aside
amounts
from
Public Law
117–180
$0
0
0
Allocation for
unmet needs
from
Public Law
117–328
$33,472,000
963,375,000
286,009,000
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18MYN2
CDBG–DR
mitigation
set-aside
amounts from
Public Law
117–328
$5,021,000
144,506,000
42,901,000
Total allocated
under this
notice from
Public Law
117–180
and 117–328
$38,493,000
1,107,881,000
328,910,000
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TABLE 1—ALLOCATIONS FOR UNMET NEEDS AND MITIGATION ACTIVITIES UNDER PUBLIC LAW 117–180 AND 117–328
FOR DISASTERS OCCURING IN 2022—Continued
FEMA disaster
No.
Year
2022
2022
2022
2022
2022
2022
2022
2022
2022
State
Grantee
Allocation for
unmet needs
from
Public Law
117–180
CDBG–DR
mitigation
set-aside
amounts
from
Public Law
117–180
Allocation for
unmet needs
from
Public Law
117–328
CDBG–DR
mitigation
set-aside
amounts from
Public Law
117–328
Total allocated
under this
notice from
Public Law
117–180
and 117–328
.................
.................
.................
.................
.................
.................
.................
.................
.................
4673
4673
4673
4676
4663
4665
4665
4657 & 4670
4649 & 4671
Florida ...................
Florida ...................
Florida ...................
Illinois ....................
Kentucky ................
Missouri .................
Missouri .................
Oklahoma ..............
Commonwealth of
Puerto Rico.
Orange County ......
Sarasota County ...
State of Florida ......
St. Clair County .....
State of Kentucky ..
St. Louis County ....
St. Louis City .........
State of Oklahoma
Commonwealth of
Puerto Rico.
0
0
0
0
259,125,000
49,065,000
22,464,000
6,498,000
144,039,000
0
0
0
0
38,869,000
7,360,000
3,370,000
975,000
21,606,000
191,054,000
175,248,000
791,847,000
26,110,000
0
0
0
0
580,000
28,658,000
26,287,000
118,777,000
3,917,000
0
0
0
0
87,000
219,712,000
201,535,000
910,624,000
30,027,000
297,994,000
56,425,000
25,834,000
7,473,000
166,312,000
Totals ........
........................
...............................
...............................
481,191,000
72,180,000
2,467,695,000
370,154,000
3,391,220,000
Note: Grantees in Kentucky, Missouri, and Oklahoma are funded under PL 117–180; the grant for Puerto Rico is split $165,645,000 under PL 117–180 and
$667,000 under PL 117–328; Grantees in Alaska, Florida, and Illinois are funded completely under PL 117–328. The Oklahoma allocation is based on both a county
and tribal geography because declarations include both a tribal area and counties.
TABLE 2—MOST IMPACTED AND DISTRESSED AREAS FOR DISASTERS OCCURING IN 2022
Minimum
amount from
Public Law
117–180
that must be
expended in the
HUD-identified
‘‘most impacted
and distressed’’
areas in column 4
Minimum
amount from
Public Law
117–328
that must be
expended in the
HUD-identified
‘‘most impacted
and distressed’’
areas in column 4
State of Alaska .....................
$0
$30,794,400
Lee County ...........................
Volusia County .....................
Orange County .....................
Sarasota County ..................
State of Florida ....................
0
0
0
0
0
1,107,881,000
328,910,000
219,712,000
201,535,000
728,499,200
St. Clair County ....................
State of Kentucky .................
St. Louis County ..................
St. Louis City ........................
State of Oklahoma ...............
Commonwealth of Puerto
Rico.
0
238,395,200
56,425,000
25,834,000
5,978,400
132,516,000
30,027,000
0
0
0
0
533,600
Grantee
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II. Use of Funds
Funds for disasters occurring in 2022
announced in this notice are subject to
the requirements of this Allocation
Announcement Notice and the
Consolidated Notice, included as
Appendix B, as amended. HUD makes
amendments to the Consolidated Notice
in this Allocation Announcement
Notice to reflect the terms of the
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‘‘Most impacted and distressed’’
areas
Bering Strait Regional Education, Lower Yukon Regional Education;
99563 (Kashunamiut Regional Education).
Lee County.
Volusia County.
Orange County.
Sarasota County.
Brevard, Charlotte, Collier, DeSoto, Hardee, Highlands, Hillsborough,
Manatee, Monroe, Osceola, Pinellas, Polk, Seminole Counties;
32177 (Putnam County).
St. Clair County.
Breathitt, Knott, Letcher, Perry Counties; 41572 (Pike County).
St. Louis County.
St. Louis City.
Muscogee (Creek) OTSA/74447 (Okmulgee County).
Salinas Municipio; 00610 (Anasco Municipio), 00612 (Arecibo
Municipio), 00794 (Barranquitas Municipio), 00623 (Cabo Rojo
Municipio), 00725 (Caguas Municipio), 00729 (Canovanas Municipio),
00646 (Dorado Municipio), 00784 (Guayama Municipio), 00660
(Hormigueros Municipio), 00791 (Humacao Municipio), 00795 (Juana
Diaz Municipio), 00667 (Lajas Municipio), 00771 (Las Piedras
Municipio), 00719 (Naranjito Municipio), 00720 (Orocovis Municipio),
00728 (Ponce Municipio), 00754 (San Lorenzo Municipio), 00757
(Santa Isabel Municipio), 00949 (Toa Baja Municipio), 00693 (Vega
Baja Municipio), 00767 (Yabucoa Municipio), 00698 (Yauco
Municipio).
Appropriations Acts. However, the
Consolidated Notice in Appendix B is
the same Consolidated Notice included
as Appendix B in previous Allocation
Announcements Notices published in
the Federal Register (87 FR 6364, 87 FR
31636, and 88 FR 3198). Sections
III.A.1, III.A.1.a, and III.A.1.b of this
Allocation Announcement Notice
include instructions for a grantee
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submitting an early action plan for
program administrative costs and will
replace the alternative requirement in
the Consolidated Notice at III.C.1 for
purposes of accessing funds for program
administrative costs prior to the
Secretary’s certification.
To comply with the statutory
requirement in the Appropriations Acts,
grantees shall not use CDBG–DR funds
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for activities reimbursable by or for
which funds are made available by
FEMA or the U.S. USACE of Engineers
(USACE). Grantees must verify whether
FEMA or USACE funds are available
prior to awarding CDBG–DR funds to
specific activities or beneficiaries.
Grantees may use CDBG–DR funds as
the non-Federal match as described in
section II.C.3 of the Consolidated
Notice.
II.A. Allocations of CDBG–DR Funds for
Smaller Grants
Paragraph III.C.1.b of the
Consolidated Notice requires that
CDBG–DR action plans ‘‘demonstrate a
reasonably proportionate allocation of
resources relative to areas and categories
(i.e., housing, economic revitalization,
and infrastructure) of greatest needs
identified in the grantee’s impact and
unmet needs assessment or provide an
acceptable justification for a
disproportional allocation.’’
Additionally, paragraph III.C.1.g of the
Consolidated Notice requires grantees to
‘‘provide a budget for the full amount of
the allocation that is reasonably
proportionate to its unmet needs (or
provide an acceptable justification for
disproportional allocation) and is
consistent with the requirements to
integrate hazard mitigation measures
into all its programs and projects.’’
HUD recognizes that grantees
receiving a relatively small allocation of
funds for 2022 disasters in this notice
may most effectively advance recovery
by more narrowly targeting these
limited recovery and mitigation
resources. Accordingly, for grantees
receiving an allocation of less than $20
million for 2022 disaster(s) announced
in this notice, HUD will consider the
small size of the grant and HUD’s
allocation methodology as acceptable
justification for a grantee to propose a
disproportional allocation when the
grantee is allocating funds to address
unmet affordable rental housing needs
caused by or exacerbated by the
disaster(s). Grantees exercising this
option must continue to comply with
the applicable requirements of this
notice and the Consolidated Notice,
including the CDBG–DR mitigation setaside requirement in section IV.A.2 of
this notice.
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III. Overview of Grant Process
III.A. Requirements Related to
Administrative Funds
III.A.1. Action plan submittal for
program administrative costs. The
Appropriations Acts allow grantees
receiving an award under this notice to
access funding for program
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administrative costs prior to the
Secretary’s certification of financial
controls and procurement processes,
and adequate procedures for proper
grant management. To implement this
authority, the following alternative
requirement will replace the alternative
requirement in the Consolidated Notice
at III.C.1.
If a grantee chooses to access funds
for program administrative costs prior to
the Secretary’s certification, it must first
prepare an action plan describing its use
of funds for program administrative
costs, subject to the five percent cap on
the use of grant funds for such costs.
Instead of following requirements in
section III.C.1 of the Consolidated
Notice, which require grantees to use
the Public Action Plan in HUD’s DRGR
system to submit their action plans,
grantees will follow a different process
to access funds for program
administrative costs prior to the
Secretary’s certification.
As part of the process of accessing
funds for these costs, grantees must
submit to HUD an action plan
describing their use of funds for
program administrative costs. The
action plan will be developed outside of
DRGR and must include all proposed
uses of funds for program administrative
costs incurred prior to a final action
plan being submitted and approved. The
action plan for program administrative
costs must also include the criteria for
eligibility and the amount to be
budgeted for that activity. If a grantee
chooses to submit the action plan for
program administrative costs, the
grantee should calculate its need to
cover program administrative costs over
the life of the grant and consider how
much of its available program
administrative funds may be reasonably
budgeted at this very early stage of its
grant lifecycle.
III.A.1.a. Publication of the action
plan for program administrative costs
and opportunity for public comment.
The grantee must publish the proposed
action plan for program administrative
costs, and substantial amendments to
the plan, for public comment. To permit
a more streamlined process and ensure
that grants for program administrative
costs are awarded in a timely manner in
order to allow grantees to more rapidly
design and launch recovery activities,
provisions of 42 U.S.C. 5304(a)(2) and
(3), 42 U.S.C. 12707, 24 CFR 570.486, 24
CFR 1003.604, 24 CFR 91.105(b)
through (d), and 24 CFR 91.115(b)
through (d), with respect to citizen
participation requirements, are waived
and replaced by the alternative
requirements in section III.A.1 that
apply only to action plans for program
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administrative costs and substantial
amendments to these plans.
Additionally, for these action plans
only, grantees are not subject to the
Consolidated Notice action plan
requirements in sections III.B.2.i, III.C.2,
III.C.3, III.C.6, and III.D.1.a–c.
The manner of publication of the
action plan for program administrative
costs must include prominent posting
on the grantee’s official disaster
recovery website and must afford
residents, affected local governments,
and other interested parties a reasonable
opportunity to review the contents of
the plan or substantial amendment.
Subsequent to publication of the action
plan or substantial amendment to that
plan, the grantee must provide a
reasonable time frame (no less than
seven days) and multiple methods
(including electronic submission) for
receiving comments on the action plan
or substantial amendment for program
administrative costs. At a minimum, the
topic of disaster recovery on the
grantee’s website, including the posted
action plan or substantial amendment,
must be navigable by interested parties
from the grantee homepage and must
link to the disaster recovery website as
required by section III.D.1.e of the
Consolidated Notice. The grantee’s
records must demonstrate that it has
notified affected parties through
electronic mailings, press releases,
statements by public officials, media
advertisements, public service
announcements, and/or contacts with
neighborhood organizations. Grantees
are not required to hold any public
hearings on the proposed action plan or
substantial amendment for program
administrative costs.
The grantee must consider all oral and
written comments on the action plan or
any substantial amendment. Any
updates or changes made to the action
plan in response to public comments
should be clearly identified in the
action plan. A summary of comments on
the plan or amendment, and the
grantee’s response to each, must be
included with the action plan or
substantial amendment. Grantee
responses shall address the substance of
the comment rather than merely
acknowledge that the comment was
received.
After the grantee responds to public
comments, it will then submit its action
plan or substantial amendment for
program administrative costs (which
includes Standard Form 424 (SF–424))
to HUD for approval. There is no due
date for this plan as it may be submitted
any time prior to the grantee’s Public
Action Plan. HUD will review the action
plan or substantial amendment for
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program administrative costs within 15
days from date of receipt and determine
whether to approve the action plan or
substantial amendment to that plan per
the criteria identified in this notice.
III.A.1.b. Certifications waiver and
alternative requirement. Sections
104(b)(4), (c), and (m) of the HCDA (42
U.S.C. 5304(b)(4), (c), and (m)), sections
106(d)(2)(C) and (D) of the HCDA (42
U.S.C. 5306(d)(2)(C) and (D)), and
section 106 of the Cranston-Gonzalez
National Affordable Housing Act (42
U.S.C. 12706), and regulations at 24 CFR
91.225 and 91.325 are waived and
replaced with the following alternative.
Each grantee choosing to submit an
action plan for program administrative
costs must make the following
certifications listed in section III.F.7 of
the Consolidated Notice and include
them with the submission of this plan:
paragraphs b, c, d, g, i, j, k, l, p, and q.
Additionally, HUD is waiving section
104(a)–(c) and (d)(1) of the HCDA (42
U.S.C. 5304), section 106(c)(1) and (d) of
the HCDA (42 U.S.C. 5306), section 210
of the Uniform Relocation Assistance
and Real Property Acquisition Policies
Act of 1970 (URA) (42 U.S.C. 4630),
section 305 of the URA (42 U.S.C. 4655),
and regulations at 24 CFR 91.225(a)(2),
(6), and (7), 91.225(b)(7), 91.325(a)(2),
(6), and (7), 49 CFR 24.4(a), and 24 CFR
42.325 only to the extent necessary to
allow grantees to receive a portion of
their allocation as a grant for program
administrative costs before submitting
other statutorily required certifications.
Each grantee must make all
certifications included in section III.F.7
of the Consolidated Notice and submit
them to HUD when it submits its Public
Action Plan in DRGR described in
III.C.1.
III.A.1.c. Submission of the action
plan for program administrative costs in
DRGR. After HUD’s approval of the
action plan for program administrative
costs, the grantee enters the activities
from its approved action plan into the
DRGR system if it has not previously
done so and submits its DRGR action
plan to HUD (funds can be drawn from
the line of credit only for activities that
are established in the DRGR system).
HUD has previously provided
additional guidance (‘‘Fact Sheet’’) with
screenshots and step-by-step
instructions describing the submittal
process for this DRGR action plan for
program administrative costs.1 This
process will allow a grantee to access
1 The Fact Sheet describing the process to submit
an action plan for program administrative costs in
DRGR can be viewed at https://
files.hudexchange.info/resources/documents/
DRGR-Fact-Sheet-PL117-43-AppropriationGrantees.pdf.
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funds for program administrative costs
while the grantee begins developing its
Public Action Plan in DRGR as provided
in section III.C.1 of the Consolidated
Notice.
III.A.1.d. Incorporation of the action
plan for program administrative costs
into the Public Action Plan. The grantee
shall describe the use of all grant funds
for administrative costs in the Public
Action Plan required by section III.C.1.
Use of grant funds for administrative
costs before approval of the Public
Action Plan must be consistent with the
action plan for administrative costs.
Once the Public Action Plan is
approved, the use of all grant funds
must be consistent with the Public
Action Plan. Upon HUD’s approval of
the Public Action Plan, the action plan
for administrative costs shall only be
relevant to administrative costs charged
to the grant before the date of approval
of the Public Action Plan.
III.A.2. Use of administrative funds
across multiple grants. The
Appropriations Acts authorize special
treatment of grant administrative funds.
Grantees that are receiving awards
under this notice, and that have
received CDBG–DR or Community
Development Block Grant mitigation
(CDBG–MIT) grants in the past or in any
future acts, may use eligible
administrative funds (up to five percent
of each grant award plus up to five
percent of program income generated by
the grant) appropriated by these acts for
the cost of administering any CDBG–DR
or CDBG–MIT grant without regard to
the particular disaster appropriation
from which such funds originated. If the
grantee chooses to exercise this
authority, the grantee must have
appropriate financial controls to comply
with the requirement that the amount of
grant administration expenditures for
each CDBG–DR or CDBG–MIT grant will
not exceed five percent of the total grant
award for each grant (plus five percent
of program income generated by the
grant), review and modify its financial
management policies and procedures
regarding the tracking and accounting of
administration costs, as necessary, and
address the adoption of this treatment of
administrative costs in the applicable
portions of its Financial Management
and Grant Compliance submissions as
referenced in section III.A.1 of the
Consolidated Notice. Grantees are
reminded that all uses of funds for
program administrative activities must
qualify as an eligible administration
cost.
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IV. Applicable Rules, Statutes, Waivers,
and Alternative Requirements
The Appropriations Acts authorize
the Secretary to waive or specify
alternative requirements for any
provision of any statute or regulation
that the Secretary administers in
connection with the obligation by the
Secretary, or use by the recipient, of
these funds, except for requirements
related to fair housing,
nondiscrimination, labor standards, and
the environment. This section of the
notice and the Consolidated Notice
describe rules, statutes, waivers, and
alternative requirements that apply to
allocations under this notice. For each
waiver and alternative requirement in
this notice and incorporated through the
Consolidated Notice, the Secretary has
determined that good cause exists, and
the waiver or alternative requirement is
not inconsistent with the overall
purpose of title I of the HCDA. The
waivers and alternative requirements
provide flexibility in program design
and implementation to support full and
swift recovery following eligible
disasters, while ensuring that statutory
requirements are met.
Grantees may request additional
waivers and alternative requirements
from the Department as needed to
address specific needs related to their
recovery and mitigation activities.
Grantees should work with the assigned
CPD representative to request any
additional waivers or alternative
requirements from HUD headquarters.
The waivers and alternative
requirements described below apply to
all grantees under this notice. Under the
requirements of the Appropriations
Acts, waivers and alternative
requirements are effective five days after
they are published in the Federal
Register or on the website of the
Department.
IV.A. Grant Administration
IV.A.1. Duplication of Benefits (DOB).
Grantees that received funds for
disasters occurring in 2022 must follow
the requirements located in section
IV.A. of the Consolidated Notice and the
DOB requirements described in this
section. The Federal Register notice
published on June 2019, titled ‘‘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’’), revised
the DOB requirements that apply to
CDBG–DR grants for disasters declared
between January 1, 2016, and December
31, 2021. For these disasters, the 2019
DOB Notice also implemented
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temporary changes to the treatment of
loans made by the Disaster Recovery
Reform Act of 2018 (DRRA) (division D
of Pub. L. 115–254), which sunsets on
October 5, 2023.
This DRRA loan exception does not
apply to disasters occurring in 2022,
therefore, subsidized loans may be a
duplication of benefits for CDBG–DR
grants announced in this notice
(depending on a grantee’s DOB
analysis). Without the DRRA loan
exception, most subsidized loans
duplicate CDBG–DR funds for the same
purpose (there are limited exceptions
for declined, cancelled, or subsidized
short-term loans to pay for eligible costs
before CDBG–DR funds became
available, as described in section IV.A.1.
of the Consolidated Notice). Therefore,
HUD’s time-limited policy in the 2019
DOB Notice to permit reimbursement of
costs paid with the proceeds of
subsidized loans does not apply after
the DRRA loan exception sunsets.
Additionally, because the DRRA loan
exception never applied to disasters
occurring in 2022 or later, grantees
receiving CDBG–DR funds for those
disasters are not able to reimburse the
costs paid by subsidized loans,
including SBA loans, unless the
exceptions in section IV.A.1.a. of the
Consolidated Notice applies. These
grantees must follow the duplication of
benefits requirements described below
and in section IV.A. of the Consolidated
Notice.
This section of the notice describes
the applicable laws and requirements
related to DOB, including the general
framework to calculate DOB. Section
IV.A. of the Consolidated Notice
describes the exceptions for when a
subsidized loan that is cancelled or
declined is not considered a duplication
of benefits.
IV.A.1.(a). The Stafford Act. The
Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C.
5121–5207) (Stafford Act) is the primary
legal authority establishing the
framework for the Federal government
to provide disaster and emergency
assistance.
Section 312 of the Stafford Act directs
Federal agencies that provide disaster
assistance to assure that people,
businesses, or other entities do not
receive financial assistance that
duplicates any part of their disaster loss
covered by insurance or another source
(42 U.S.C. 5155(a)). Section 312 also
makes recipients of Federal disaster
assistance liable for repayment of the
amount of Federal disaster assistance
that duplicates benefits available for the
same purpose from another source (42
U.S.C. 5155(c)).
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The Stafford Act also provides that
when assistance covers only a part of
the recipient’s disaster needs, additional
assistance to cover needs not met by
other sources will not cause a DOB (42
U.S.C. 5155(b)(3)). CDBG–DR assistance
may only pay for eligible activities to
address unmet needs. This section
advises grantees on the calculation of
unmet needs through a duplication of
benefits analysis.
IV.A.1.(b). CDBG–DR Appropriations
Acts and Federal Register Notices.
CDBG–DR funds are made available for
‘‘necessary expenses’’ by the
Appropriations Acts that contain
statutory requirements on the use of the
grant funds. Grantees are subject to the
requirements of the Appropriations
Acts, this notice, and the Consolidated
Notice.
Since 2013, as a condition of making
any CDBG–DR grant, the Secretary must
certify that the grantee has established
adequate procedures to prevent DOB. To
meet this requirement, grantees must
submit DOB policies to HUD for review
before HUD will award nonadministrative funds. ‘‘Adequate’’
procedures are those that meet the
requirements that HUD established in
this notice, in the Consolidated Notice,
and as reflected in the related checklists
that are available online. HUD requires
grantees to establish DOB policies that
incorporate certain steps before
committing or awarding assistance.
Typically, the steps include determining
the total need for assistance, verifying
the total assistance available from all
sources of disaster assistance (using
recent data available from FEMA, SBA,
and other sources), excluding nonduplicative assistance from total
assistance to calculate DOB, reducing
the total award by the amount of the
DOB, and obtaining an agreement from
applicants to repay duplicative
assistance.
This notice and the Consolidated
Notice also require CDBG–DR grantees
to consider projected sources of disaster
assistance in the needs assessment that
is part of an action plan for disaster
recovery. Consideration of other
potential sources of assistance when
planning for the use of grant funds helps
to limit the possibility of duplication
between CDBG–DR and other assistance.
IV.A.1.(c). Necessary and Reasonable
Requirements. The Uniform
Administrative Requirements, Cost
Principles, and Audit Requirements for
Federal Awards in subpart E of 2 CFR
part 200 (the Cost Principles) applicable
to all CDBG–DR grantees and their
subrecipients require that costs are
necessary and reasonable. The Cost
Principles are made applicable to states
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by 24 CFR 570.489(p) and to local
governments through 24 CFR 570.502.
State grantees are also subject to 24 CFR
570.489(d), which requires that states
shall have fiscal and administrative
requirements to ensure that grant funds
are used ‘‘for reasonable and necessary
costs of operating programs.’’
Under the Cost Principles, a cost
assigned to a grant ‘‘is reasonable if, in
its nature and amount, it does not
exceed that which would be incurred by
a prudent person under the
circumstances prevailing at the time the
decision was made to incur the cost’’ (2
CFR 200.404).
Grantees must consider factors
described at 2 CFR 200.404(a) through
(e) when determining which types and
amounts of cost items are necessary and
reasonable. Based on these factors, HUD
generally presumes that if a cost has
been paid by another source, charging it
to the Federal award violates the
necessary and reasonable standard
unless grant requirements permit
reimbursement.
IV.A.1.(d). Basic Duplication of
Benefits Calculation Framework. The
Stafford Act requires a fact specific
inquiry into assistance received by each
applicant. This notice refers to the
subject of a DOB review as an
‘‘applicant’’ or ‘‘CDBG–DR applicant’’
and uses the term ‘‘applicant’’ to
include individuals, businesses,
households, or other entities that apply
to the grantee or a subrecipient for
CDBG–DR assistance, as well as entities
that use CDBG–DR assistance for an
activity without submitting an
application (e.g., the department or
agency of the grantee administering the
grant, other state or local departments or
agencies, or local governments).
A grantee is prohibited from making
a blanket determination that CDBG–DR
assistance under one of its programs or
activities does not duplicate another
category or source of assistance. The
grantee must conduct an individualized
review of each applicant to determine
that the amount of assistance will not
cause a DOB by exceeding the unmet
needs of that applicant. A review
specific to each applicant is necessary
because assistance available to each
applicant varies widely based on
individual insurance coverage,
eligibility for various sources of
assistance, and other factors.
This section establishes the primary
considerations that must be part of a
DOB analysis when providing CDBG–
DR assistance, and a framework for
analyzing need and avoiding DOB when
calculating awards. CDBG–DR grantees
have discretion to develop policies and
procedures that tailor their DOB
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analyses to their own programs and
activities so long as the grantee’s
policies and procedures are consistent
with the requirements of this notice. If
the grantee modifies its DOB procedures
after the Secretary certifies that the
grantee’s DOB procedures are adequate,
the grantee’s modified procedures must
meet standards HUD adopts to
determine adequacy.
IV.A.1.(d)(i). Assess Applicant Need.
A grantee must determine an applicant’s
total need. Total need is calculated
based on need estimates at a point in
time; total need is the current need.
However, if the grantee’s action plan
permits CDBG–DR assistance to
reimburse costs of CDBG–DR eligible
activities undertaken by the applicant
before submitting an application the
total need also includes these costs.
Generally, total need is calculated
without regard to the grantee’s programspecific caps on the amount of
assistance.
For rehabilitation, reconstruction, or
new construction activities, the need
can be reasonably documented using
construction cost estimates.
For recovery programs of the grantee
that do not entail physical rebuilding,
such as special economic development
activities to provide an affected business
with working capital, the total need will
be determined by the requirements or
parameters of the program or activity.
For special economic development
activities, total need should be guided
by standard underwriting guidelines
(when required by section II.D.6. of the
Consolidated Notice, CDBG–DR grantees
and subrecipients must comply with the
underwriting guidelines in Appendix A
to 24 CFR part 570 when assisting a forprofit entity as part of a special
economic development project).
The grantee’s assessment of total need
must consider in-kind donations of
materials or services that are known to
the grantee at the time it calculates need
and makes the award. In-kind donations
are non-cash contributions, such as
donations of professional services, use
of construction equipment, or
contributions of building materials. Inkind donations are not ‘‘financial
assistance’’ that creates a DOB under the
Stafford Act, but they do reduce the
amount of CDBG–DR assistance for
unmet need because the donated goods
or services reduce activity costs.
IV.A.1.(d)(ii). Identify Total
Assistance. To calculate DOB, grantees
are required to identify ‘‘total
assistance.’’ For this notice, total
assistance includes all reasonably
identifiable financial assistance
available to an applicant.
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Total assistance includes resources
such as cash awards, insurance
proceeds, grants, and loans received by
or available to each CDBG–DR
applicant, including awards under local,
state or Federal programs, and from
private or nonprofit charity
organizations. At a minimum, the
grantee’s efforts to identify total
assistance must include a review to
determine whether the applicant
received FEMA, SBA, insurance, and
any other major forms of assistance (e.g.,
state disaster assistance programs)
generally available to applicants.
Total assistance does not include
personal assets such as money in a
checking or savings account (excluding
insurance proceeds or disaster
assistance deposited into the applicant’s
account); retirement accounts; credit
cards and lines of credit; in-kind
donations (although these non-cash
contributions known to the grantee
reduce total need); and private loans.
For this notice, a private loan is a loan
that is not provided by or guaranteed by
a governmental entity, and that requires
the CDBG–DR applicant (the borrower)
to repay the full amount of the loan
(principal and interest) under typical
commercial lending terms, e.g., the loan
is not forgivable. For DOB calculations,
private loans are not financial assistance
and need not be considered in the DOB
calculation, regardless of whether the
borrower is a person or entity.
By contrast, subsidized loans for the
same purpose are to be included in the
DOB calculation unless an exception
applies (see sections IV.A.1.a. or
IV.A.1.b. of the Consolidated Notice).
Total assistance includes available
assistance. Assistance is available if an
applicant: (1) would have received it by
acting in a reasonable manner, or in
other words, by taking the same
practical steps toward funding recovery
as would disaster survivors faced with
the same situation but not eligible to
receive CDBG–DR assistance; or (2) has
received the assistance and has legal
control over it. Available assistance
includes reasonably anticipated
assistance that has been awarded and
accepted but has not yet been received.
For example, if a local government seeks
CDBG–DR assistance to fund part of a
project that also has been awarded
FEMA Hazard Mitigation Grant Program
(HMGP) assistance, the entire HMGP
award must be included in the
calculation of total assistance even if
FEMA obligates the first award
increment for the project, but
subsequent increments remain
unfunded until certain project
milestones are met.
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Applicants for CDBG–DR assistance
are expected to seek insurance or other
assistance to which they are legally
entitled under existing policies and
contracts, and to behave reasonably
when negotiating payments to which
they may be entitled. For example, it
may be reasonable for an applicant to
elect to receive an immediate lump sum
insurance settlement based on estimated
cost of rehabilitation instead of waiting
for a longer period of time for the
insurance company to calculate
reimbursement based on actual
replacement costs, even if the
reimbursement based on actual costs
would exceed the lump sum insurance
settlement.
HUD generally considers assistance to
be available if it is awarded to the
applicant but is administered by another
party instead of being directly deposited
with the applicant. For example, if an
entity administering homeowner
rehabilitation assistance pays a
contractor directly to complete the
rehabilitation, the assistance is still
considered available to the applicant.
By contrast, funds that are not
available to an applicant must be
excluded from the final CDBG–DR
award calculation. For example,
insurance or rehabilitation assistance
received by a previous owner of a
disaster damaged housing unit is not
available to a current owner that
acquired the unit by sale or transfer
(including a current owner that
inherited the unit as a result of the
death of the previous owner) unless the
current owner is a co-recipient of that
assistance.
Funds are not available to an
applicant if the applicant does not have
legal control of the funds when they are
received. For example, if a homeowner’s
mortgage requires insurance proceeds to
be applied to reduce the unpaid
mortgage principal, then the lender/
mortgage holder (not the homeowner)
has legal control over those funds. The
homeowner is legally obligated to use
insurance proceeds for the purpose of
reducing the unpaid mortgage principal
and does not have a choice in using
them for any other purpose, such as to
rehabilitate the house. Under these
circumstances, insurance proceeds do
not reduce CDBG–DR rehabilitation
assistance eligibility.
Alternatively, if a lender requires use
of insurance for rehabilitation, or a
disaster-affected homeowner chooses to
apply insurance proceeds received for
damage to the building to reduce an
unpaid mortgage principal, these
insurance proceeds are treated as a DOB
and reduce the amount of CDBG–DR
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funds the grantee may provide for
rehabilitation.
IV.A.1.(d)(iii). Exclude NonDuplicative Amounts. Once a grantee
has determined the total need and the
total assistance, it determines which
sources it must exclude as nonduplicative for the DOB calculation.
Grantees must exclude amounts that are:
(1) provided for a different purpose; or
(2) provided for the same purpose
(eligible activity), but for a different,
allowable use (cost). Below, each of
these categories is explained in greater
detail.
IV.A.1.(d)(iii)(1). Funds for a Different
Purpose. Any assistance provided for a
different purpose than the CDBG–DR
eligible activity, or a general, nonspecific purpose (e.g., ‘‘disaster relief/
recovery’’) and not used for the same
purpose must be excluded from total
assistance when calculating the amount
of the DOB.
Insurance proceeds for damage or
destruction of a building are for the
same purpose as CDBG–DR assistance to
rehabilitate or reconstruct that building.
On the other hand, grantees may
exclude, as non-duplicative, insurance
provided for a different purpose (e.g.,
insurance proceeds for loss of contents
and personal property, or insurance
proceeds for loss of buildings (such as
a detached garage) that the grantee has
determined it will not assist with
CDBG–DR funds). However, a grantee
may treat all insurance proceeds as
duplicative if it is impractical to
identify the portion of insurance
proceeds that are non-duplicative
because they are for a different purpose
than the CDBG–DR assistance.
Similarly, CDBG–DR assistance paid
to a homeowner as a housing incentive
for the purpose of inducing the
homeowner to sell the home to the
grantee (e.g., in conjunction with a
buyout) are for a different purpose than
funds provided for interim housing (e.g.,
temporary assistance for rental housing
during a period when a household is
unable to reside in its home). In such a
case, interim housing assistance may be
excluded from the final DOB calculation
as non-duplicative of funds paid for the
housing incentive.
IV.A.1.(d)(iii)(2). Funds for Same
Purpose, Different Allowable Use.
Assistance provided for the same
purpose as the CDBG–DR purpose (the
CDBG–DR eligible activity) must be
excluded when calculating the amount
of the DOB if the applicant can
document that actual specific use of the
assistance was an allowable use of that
assistance and was different than the
use (cost) of the CDBG–DR assistance
(e.g., the purpose is housing
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rehabilitation, the use of the other
assistance was roof replacement and the
use of the CDBG–DR assistance is
rehabilitation of the interior of the
house). Grantees are advised to consult
with HUD to determine what
documentation is appropriate in this
circumstance. As a starting point,
grantees should consider whether the
source of the assistance requires
beneficiaries to maintain documentation
of how the assistance was used.
Whether the use of the non-CDBG–DR
assistance is an allowable use depends
on the rules imposed by the source that
provided the assistance. For example,
assume that a CDBG–DR grantee is
administering a homeowner
rehabilitation program and an applicant
to the program can document that he/
she previously received and used FEMA
funds for interim housing costs (i.e.,
rent). If FEMA permitted the applicant
to use its assistance for the general
purpose of meeting any housing need,
the CDBG–DR grantee can exclude the
FEMA assistance used for interim
housing as non-duplicative of the
CDBG–DR assistance for rehabilitation.
If, on the other hand, FEMA limited
the use of FEMA funds to housing
rehabilitation, then the full amount of
the FEMA assistance must be
considered for the specific purpose of
housing rehabilitation and cannot be
excluded if the applicant used those
funds for interim housing. If interim
housing is not an allowable use, the
amount of the FEMA housing
rehabilitation assistance used for
interim housing is considered a DOB. If
the grantee thinks the actual use of the
FEMA assistance may be allowable, the
CDBG–DR grantee should contact FEMA
for clarification.
Assistance provided for the purpose
of housing rehabilitation, including
assistance provided for temporary or
minor rehabilitation, is for the same
purpose as CDBG–DR rehabilitation
assistance. However, the grantee can
exclude assistance used for different
costs of the rehabilitation, which are a
different allowable use (rehabilitation
costs not assisted with CDBG–DR). For
example, if the other assistance is used
for minor or temporary rehabilitation
which enabled the applicant family to
live in their home instead of moving to
temporary housing until rehabilitation
can be completed, the grantee can
undertake remaining work necessary to
complete rehabilitation. The grantee’s
assessment of total need at the time of
application may include the costs of
replacing temporary materials with
permanent construction and of
completing mold remediation by
removing drywall installed with other
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assistance. These types of costs to
modify partially completed
rehabilitation that the grantee
determines are necessary to comply
with the requirements of CDBG–DR
assistance do not duplicate other
assistance used for the partial
rehabilitation.
Grantees are encouraged to contact
HUD for further guidance in cases when
it is unclear whether non-CDBG–DR
assistance for the same general purpose
can be excluded from the DOB
calculation because it was used for a
different allowable use.
IV.A.1.(d)(iv). Identify DOB Amount
and Calculate the Total CDBG–DR
Award. The total DOB is calculated by
subtracting non-duplicative exclusions
from total assistance. Therefore, to
calculate the total maximum amount of
the CDBG–DR award, the grantee must:
(1) identify total need; (2) identify total
assistance; (3) subtract exclusions from
total assistance to determine the amount
of the DOB; and (4) subtract the amount
of the DOB from the amount of the total
need to determine the maximum
amount of the CDBG–DR award.
Three considerations may change the
maximum amount of the CDBG–DR
award.
First, the grantee may impose a
program cap that limits the amount of
assistance an applicant is eligible to
receive, which may reduce the potential
CDBG–DR assistance available to the
applicant.
Second, the grantee may increase the
amount of an award if the applicant
agrees to repay duplicative assistance it
receives in the future (unless prohibited
by a statutory order of assistance, as in
the requirement to use FEMA or USACE
assistance before CDBG–DR assistance
discussed in sections II. and IV.A.1.(f)).
Section 312(b) of the Stafford Act
permits a grantee to provide CDBG–DR
assistance to an applicant who is or may
be entitled to receive assistance that
would be duplicative if: (1) the
applicant has not received the other
assistance at the time the CDBG–DR
grantee makes its award; and (2) the
applicant agrees to repay the CDBG–DR
grantee for any duplicative assistance
once it is received. The agreement to
repay from future funds may enable a
faster recovery in cases when other
sources of assistance are delayed (e.g.,
due to insurance litigation). HUD
requires all grantees to enter into
agreements with applicants before the
applicant receives CDBG–DR assistance.
Third, the applicant’s CDBG–DR
award may increase if a reassessment
shows that the applicant has additional
unmet need.
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IV.A.1.(d)(v). Reassess Unmet Need
When Necessary. Although long-term
recovery is a process, disaster recovery
needs are calculated at points in time.
As a result, a subsequent change in an
applicant’s circumstances can affect that
applicant’s remaining unmet need,
meaning the need that was not met by
CDBG–DR and other sources of
assistance. Oftentimes, unmet need does
not become apparent until after CDBG–
DR assistance has been provided.
Examples may include: a subsequent
disaster that causes further damage to a
partially rehabilitated home or business;
an increase in the cost of construction
materials; vandalism; contractor fraud;
or theft of materials. Unmet need may
also change if other resources become
available to pay for costs of the activity
(such as FEMA or USACE), and reduce
the need for CDBG–DR.
To the extent that an original disaster
recovery need was not fully met or was
exacerbated by factors beyond the
control of the applicant, the grantee may
provide additional CDBG–DR funds to
meet the increased unmet need.
Grantees must be able to identify and
document additional unmet need, for
example, by completing a professional
inspection to verify the revised estimate
of costs to rehabilitate or reconstruct
damaged property.
IV.A.1.(e). Special Considerations.
The potential for DOB arises most
frequently under homeowner
rehabilitation programs but is not
limited solely to that type of activity.
The following examples do not form an
exhaustive list of all CDBG–DR funded
programs or activities. They are
included to illustrate instances when
duplicative assistance can occur when
assisting other recovery activities:
1. Assistance to businesses. Many
grantees carry out economic
revitalization programs that provide
working capital assistance to businesses.
Generally, working capital assistance is
calculated after assessing a business’s
ability to use its current assets to pay its
current liabilities. The grantee’s DOB
analysis must consider total assistance,
which includes all sources of financial
assistance available to the applicant to
pay a portion of liabilities that will
become due. For example, a downtown
business alliance might award business
recovery grants from its funds to cover
some of the same liabilities. Even if the
downtown business alliance does not
call its assistance ‘‘working capital’’
assistance, the amount the business
received from the downtown business
alliance to pay the same costs as the
CDBG–DR funds is a DOB. Therefore, a
grantee’s basis for calculating CDBG–DR
economic development assistance and
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the purposes for which the applicant
can use the assistance should be clearly
identified so that grantees can prevent a
DOB. As discussed above, assets such as
cash and cash equivalents (excluding
deposits of insurance proceeds or other
disaster assistance), inventories, shortterm investments and securities,
accounts receivable, and other assets of
the business are not financial assistance,
although those assets may be relevant to
underwriting.
2. Assistance for infrastructure. State
grantees may assist state or local
government entities by providing
funding to restore infrastructure (public
facilities and improvements) after a
disaster. CDBG–DR funds used directly
by state and local governments for
public facilities and improvements, or
other purposes are also subject to the
DOB requirements of the Stafford Act.
For example, a wastewater treatment
facility owned by a local government
may need to be rehabilitated. In this
instance, total assistance, for a DOB
analysis, would not only include any
other Federal assistance available to
rehabilitate the facility, but it must also
include any local funds that are
available for this activity. And if local
funds were previously designated or
planned for the activity, but are no
longer available, the grantee should
document that the local government
recipient does not have funds set aside
for the activity in any capital
improvement plan (or similar document
showing planned use of funds).
3. Payments made under the Uniform
Relocation Assistance and Real Property
Acquisition Policies Act (URA).
Grantees may provide a displaced
person (as defined under 24 CFR
570.606) with rental assistance
payments under the URA or provide
temporary relocation assistance (as
described in 49 CFR part 24, Appendix
A, 49 CFR 24.2(a)(9)(ii)(D)) to persons
temporary relocated as a result of a
project. Relocation payments made
under the URA, as well as under
CDBG’s optional relocation assistance
provisions of 24 CFR 570.606(d), are
subject to DOB requirements in this
notice and the Consolidated Notice, as
well as DOB requirements under the
URA that prohibit payments for the
same ‘‘purpose and effect’’ as another
payment to a displaced person (49 CFR
24.3). To comply with CDBG–DR DOB
requirements, before issuance of rental
assistance payments required by the
URA, grantees must complete a DOB
analysis. For example, a CDBG–DR
grantee must check FEMA assistance
data to determine that FEMA did not
provide rental assistance payments
during the same time period (under the
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URA or as part of a FEMA Individual
Assistance Award). Please note that
while you cannot duplicate assistance
for the same purpose, advisory services
and the provision of notices required
under the URA are not subject to this
analysis because they are not financial
assistance to the person, and therefore
must be provided in accordance with
the URA.
Subsidized Loans. For this notice,
subsidized loans (including forgivable
loans) are loans other than private loans.
Subsidized loans are assistance that
must be included in the DOB analysis,
unless an exception applies. Section
IV.A. of the Consolidated Notice
discusses these exceptions and related
requirements for the treatment of
subsidized loans in a duplication of
benefits analysis. The full amount of a
subsidized loan available to the
applicant for the same purpose as
CDBG–DR assistance is assistance that
must be included in the DOB
calculation unless one of the exceptions
in IV.A.1. of the Consolidated Notice
applies. A subsidized loan is available
when it is accepted, meaning that the
borrower has signed a note or other loan
document that allows the lender to
advance loan proceeds. Both SBA and
FEMA provide subsidized loans for
disaster recovery. Note that the statutory
order of assistance provision pertaining
to assistance from FEMA and USACE
applies to grants and subsidized loans
made by these agencies. Subsidized
loans may also be available from other
sources.
IV.A.1.(f). Order of Assistance. CDBG–
DR appropriations acts generally
include a statutory order of assistance
for Federal agencies. Although the
language may vary among
appropriations, the statutory order of
assistance typically provides that
CDBG–DR funds may not be used for
activities reimbursable by or for which
funds are made available by FEMA or
USACE. This means that grantees must
verify whether FEMA or USACE funds
are available for an activity (i.e. the
application period is open) or the costs
are reimbursable by FEMA or USACE
(i.e., the grantee will receive FEMA or
USACE assistance to reimburse the costs
of the activity) before awarding CDBG–
DR assistance for costs of carrying out
the same activity. If FEMA or USACE
are accepting applications for the
activity, the applicant must seek
assistance from those sources before
receiving CDBG–DR assistance. If the
applicant’s costs for the activity will be
reimbursed by FEMA or USACE, the
grantee cannot provide the CDBG–DR
assistance for those costs. In the event
that FEMA or USACE assistance is
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awarded after CDBG–DR to pay the
same costs, it is the CDBG–DR grantee’s
responsibility to recapture CDBG–DR
assistance that duplicates assistance
from FEMA or USACE.
Under the Stafford Act, a Federal
agency that provides duplicative
assistance must collect that assistance.
For CDBG–DR grants, the grantee is
required to collect duplicative
assistance it provides. A grantee that
does not collect duplicative CDBG–DR
assistance that it provides may resolve
this noncompliance by reimbursing its
program account with non-Federal
funds in the amount of the duplication
and reprograming the use of the funds
in accordance with applicable
requirements to avoid other corrective
or remedial actions.
FEMA regulations at 44 CFR 206.191
set forth a delivery sequence that
establishes which source of assistance is
duplicative for certain programs. CDBG–
DR assistance is not listed in FEMA’s
sequence, but as a practical matter,
CDBG–DR assistance duplicates other
sources received before CDBG–DR
assistance for the same purpose and
portion of need. Any amount received
from other sources before the CDBG–DR
assistance that is determined to be
duplicative must be collected by the
grantee. The mandatory agreement to
repay (discussed in section
IV.A.1.(i)below) can be used to prevent
duplication by assistance that is
available, but not yet received. If the
duplicative assistance is received after
CDBG–DR, the grantee must collect the
DOB or contact HUD if it has questions
about whether another Federal agency is
responsible for collecting the
duplication.
IV.A.1.(g). Multiple Disasters. When
multiple disasters occur in the same
location, and the applicant has not
recovered from the first disaster at the
time of a second disaster, the assistance
provided in response to the second
disaster may duplicate assistance for the
same purpose and need as assistance
provided after the first disaster. HUD
recognizes that in this scenario, DOB
calculations can be complicated.
Damage from a second disaster, for
example, may destroy work funded and
completed in response to the first
disaster. The second disaster may also
damage or destroy receipts and other
documentation of how applicants
expended assistance provided after the
first disaster.
Therefore, HUD is adopting the
following policy that is applicable to
circumstances when two disasters occur
in the same area, and the applicant has
not fully recovered from the first
disaster before the second disaster
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occurs: Applicants are not required to
maintain documentation related to the
use of public disaster assistance
(Federal, state, and local) beyond the
period required by the agency that
provided the assistance. If
documentation cannot be provided, the
grantee may accept a self-certification
regarding how the applicant used the
other agency’s assistance, provided that
the applicant is advised of the criminal
and civil penalties that apply in cases of
false claims and fraud, and the grantee
determines that the applicant’s total
need is consistent with data the grantee
has about the nature of damage caused
by the disasters (e.g., flood inundation
levels). For example, a second disaster
strikes three years after an agency
provided assistance in response to the
first disaster, and that agency required
applicants to maintain documentation
for two years, the grantee may accept a
self-certification regarding how the
applicant used the other agency’s
assistance.
IV.A.1.(h). Recordkeeping. The
grantee must document compliance
with DOB requirements. Policies and
procedures for DOB may be specific for
each program funded by the CDBG–DR
grantee and should be commensurate
with risk. Grantees should be especially
careful to sufficiently document the
DOB analysis for activities they are
carrying out directly. Insufficient
documentation on DOB can lead to
findings, which can be difficult to
resolve if records are missing,
inadequate, or inaccurate to
demonstrate compliance with DOB
requirements.
When documenting its DOB analysis,
grantees cannot rely on certification
alone for proof of other sources of funds
for the same purpose (unless authorized
by this notice, see section IV.A.1.(g).
above). Any certification by an
applicant must be based on supporting
evidence that will be kept available for
inspection by HUD. For example, if an
applicant certifies that other sources of
funds were received and expended for
a different purpose than the CDBG–DR
funds, grantees must substantiate this
assertion with an additional source of
information (e.g., physical inspections,
credit card statements, work estimates,
contractor invoices, flood inundation
records, or receipts). For these reasons,
HUD recommends that as soon as
possible after a disaster, grantees advise
the public and potential applicants to
retain all receipts that document
expenditures for recovery needs.
Grantees should consult their CPD
specialist or CPD Representative with
questions about the sufficiency of
documentation.
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IV.A.1.(i). Agreement to Repay. The
Stafford Act requires grantees to ensure
that applicants agree to repay all
duplicative assistance to the agency
providing that Federal assistance. To
address any potential DOB, each
applicant must also enter into an
agreement with the CDBG–DR grantee to
repay any assistance later received for
the same purpose for which the CDBG–
DR funds were provided. This
agreement can be in the form of a
subrogation agreement or similar
document and must be signed by every
applicant before the grantee disburses
any CDBG–DR assistance to the
applicant.
In its policies and procedures, the
grantee must establish a method to
monitor each applicant’s compliance
with the agreement for a reasonable
period after project completion (i.e., a
time period commensurate with risk).
Additionally, section III.A.1. of the
Consolidated Notice requires a grantee’s
agreement to also include the following
language: ‘‘Warning: Any person who
knowingly makes a false claim or
statement to HUD may be subject to
civil or criminal penalties under 18
U.S.C. 287, 1001 and 31 U.S.C. 3729.’’
IV.A.1.(j). Collecting a Duplication. If
a potential DOB is discovered after
CDBG–DR assistance has been provided,
the grantee must reassess the applicant’s
need at that time (see section
IV.A.1.(d)(v) above). If additional need
is not demonstrated, CDBG–DR funds
shall be recaptured to the extent they
are in excess of the remaining need and
duplicate other assistance received by
the applicant for the same purpose.
However, this determination may
depend on what sources of assistance
were last received by the applicant.
If a grantee fails to recapture funds
from an applicant, HUD may impose
corrective actions pursuant to 24 CFR
570.495, 24 CFR 570.910, and Federal
Register notices, as applicable. Also,
HUD reminds grantees that the Stafford
Act states that ‘‘A person receiving
Federal assistance for a major disaster or
emergency shall be liable to the United
States to the extent that such assistance
duplicates benefits available to the
person for the same purpose from
another source.’’ A grantee’s failure to
collect duplication of benefits does not
remove an applicant’s potential liability
to the United States. A grantee that does
not collect duplicative CDBG–DR
assistance that it provides, should
review HUD’s guidance in the second
paragraph of section IV.A.1.(f). above.
The grantee may refer to any relevant
guidance or the debt collection
procedures in place for the state or local
government. HUD is available to
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provide guidance to grantees in
establishing or revising the grantee’s
duplication of benefits policies and
procedures.
CDBG–DR grantees awarded funds for
disasters occurring in 2022 can find the
additional DOB requirements in Section
IV.A. of the Consolidated Notice.
IV.A.2. CDBG–DR mitigation setaside. The Appropriations Acts require
HUD to include in any allocation of
CDBG–DR funds for unmet needs an
additional amount of 15 percent for
mitigation activities (‘‘CDBG–DR
mitigation set-aside’’). Grantees should
consult Table 1 for the amount allocated
specifically for the CDBG–DR mitigation
set-aside. For purposes of grants under
this notice, mitigation activities are
defined as those activities that increase
resilience to disasters and reduce or
eliminate the long-term risk of loss of
life, injury, damage to and loss of
property, and suffering and hardship, by
lessening the impact of future disasters.
In the grantee’s action plan, it must
identify how the proposed use of the
CDBG–DR mitigation set-aside will: (1)
meet the definition of mitigation
activities; (2) address the current and
future risks as identified in the grantee’s
mitigation needs assessment in the MID
areas; (3) be CDBG-eligible activities
under title I of the HCDA or otherwise
eligible pursuant to a waiver or
alternative requirement; and (4) meet a
national objective.
Unlike recovery activities where
grantees must demonstrate that their
activities ‘‘tie-back’’ to the specific
disaster and address a specific unmet
recovery need for which the CDBG–DR
funds were appropriated, activities
funded by the CDBG–DR mitigation setaside do not require such a ‘‘tie-back’’
to the specific qualified disaster that has
served as the basis for the grantee’s
allocation. Instead, grantees must
demonstrate that activities funded by
the CDBG–DR mitigation set-aside meet
the provisions included as (1) through
(4) in the prior paragraph, to be eligible.
Grantees must report activities as a
‘‘MIT’’ activity type in DRGR so that
HUD and the public can determine that
the grantee has fulfilled the requirement
for the CDBG–DR mitigation set-aside.
Grantees may also meet the
requirement of the CDBG–DR mitigation
set-aside by including eligible recovery
activities that both address the impacts
of the disaster (i.e., have ‘‘tie-back’’ to
the specific qualified disaster) and
incorporate mitigation measures into the
recovery activities. In section II.A.2.b of
the Consolidated Notice, grantees are
instructed to incorporate mitigation
measures when carrying out activities to
construct, reconstruct, or rehabilitate
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residential or non-residential structures
with CDBG–DR funds as part of
activities eligible under 42 U.S.C.
5305(a) (including activities authorized
by waiver and alternative requirement).
Additionally, in section II.A.2.c of the
Consolidated Notice, grantees are
required to establish resilience
performance metrics for those activities.
If grantees wish to count those
activities towards the grantee’s CDBG–
DR mitigation set-aside, grantees must:
(1) Document how those activities and
the incorporated mitigation measures
will meet the definition of mitigation, as
provided above; and (2) Report those
activities as a ‘‘MIT’’ activity type in
DRGR so they are easily tracked.
IV.A.2.a. Mitigation needs
assessment. In addition to the
requirements prescribed in section
III.C.1.a of the Consolidated Notice that
grantees must develop an impact and
unmet needs assessment, grantees
receiving an award under this
Allocation Announcement Notice must
also include in their action plan a
mitigation needs assessment to inform
the activities funded by the CDBG–DR
mitigation set-aside. Each grantee must
assess the characteristics and impacts of
current and future hazards identified
through its recovery from the qualified
disaster and any other Presidentially
declared disaster. Mitigation solutions
designed to be resilient only for threats
and hazards related to a prior disaster
can leave a community vulnerable to
negative effects from future extreme
events related to other threats or
hazards. When risks are identified
among other vulnerabilities during the
framing and design of mitigation
projects, implementation of those
projects can enhance protection and
save lives, maximize the utility of scarce
resources, and benefit the community
long after the projects are complete.
Accordingly, each grantee receiving a
CDBG–DR allocation under this notice
must conduct a risk-based assessment to
inform the use of its CDBG–DR
mitigation set-aside considering
identified current and future hazards.
Grantees must assess their mitigation
needs in a manner that effectively
addresses risks to indispensable services
that enable continuous operation of
critical business and government
functions and are critical to human
health and safety or economic security.
In the mitigation needs assessment, each
grantee must cite data sources and must,
at a minimum, use the risks identified
in the current FEMA-approved state or
local Hazard Mitigation Plan (HMP). If
a jurisdiction is currently updating an
expired HMP, the grantee’s agency
administering the CDBG–DR funds must
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consult with the agency administering
the HMP update to identify the risks
that will be included in the assessment.
Mitigation needs evolve over time and
grantees are to amend the mitigation
needs assessment and action plan as
conditions change, additional mitigation
needs are identified, and additional
resources become available.
IV.A.2.b. Connection of programs and
projects to the mitigation needs
assessment. Grantees are required by
section III.C.1.b of the Consolidated
Notice to describe the connection
between identified unmet needs and the
allocation of CDBG–DR resources. In a
similar fashion, the plan must provide
a clear connection between a grantee’s
mitigation needs assessment and its
proposed activities in the MID areas
funded by the CDBG–DR mitigation setaside (or outside in connection to the
MID areas as described in section II.A.3
of the Consolidated Notice). To
maximize the impact of all available
funds, grantees are encouraged to
coordinate and align these funds with
other projects funded with CDBG–DR
and CDBG–MIT funds, as well as other
disaster recovery activities funded by
FEMA, USACE, the U.S. Forest Service,
and other agencies as appropriate.
Grantees are encouraged to fund
planning activities that complement
FEMA’s Building Resilient
Infrastructure and Communities (BRIC)
program and to upgrade mapping, data,
and other capabilities to better
understand evolving disaster risks.
IV.A.3. Interchangeability of disaster
funds. The Appropriations Acts gives
the Secretary authority to authorize
grantees that receive an award in this
Allocation Announcement Notice and
under prior or future appropriations to
use those funds interchangeably and
without limitation for the same
activities related to unmet recovery
needs in the MID areas resulting from a
major disaster in the Appropriations
Acts or in prior or future appropriation
acts, when the MID areas overlap and
when the use of the funds will address
unmet recovery needs of major disasters
in the Appropriations Acts or in any
prior or future appropriation acts.
Based on this authority, the Secretary
authorizes grantees receiving a CDBG–
DR grant under the Appropriations Acts
and prior or future appropriation acts
for activities authorized under title I of
the HCDA for a specific qualifying
disaster(s) to use these funds
interchangeably and without limitation
for the same activities in MID areas
resulting from a major disaster in prior
or future appropriation acts, as long as
the MID areas overlap and the activities
address unmet needs of both disasters.
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Grantees are reminded that expanding
the eligible beneficiaries of activities in
an action plan funded by any prior or
future acts to include those impacted by
the specific qualifying disaster(s) in this
notice requires the submission of a
substantial action plan amendment in
accordance with section III.C.6 of the
Consolidated Notice. Additionally, all
waivers and alternative requirements
associated with a CDBG–DR grant apply
to the use of the funds provided by that
grant, regardless of which disaster the
funded activity will address.
For example, if a grantee is receiving
funds under this notice for a disaster
occurring in 2022 and the MID areas for
the 2022 disaster overlap with the MID
areas for a disaster that occurred in
2017, the grantee may choose to use the
funds allocated under this notice to
address unmet needs of both the 2017
disaster and the 2022 disaster. In doing
so, the grantee must follow the rules and
requirements outlined in this notice.
However, if the grantee chooses to use
its CDBG–DR grant awarded due to a
disaster that occurred in 2017 to address
unmet needs of both that disaster and
the 2022 disaster, the grantee must
follow the rules and requirements
outlined in the Federal Register notices
applicable to its CDBG–DR grant for
2017 disasters.
IV.A.4. Assistance to utilities. The
Appropriations Acts provide that funds
‘‘may be used by a grantee to assist
utilities as part of a disaster-related
eligible activity under section 105(a) of
the Housing and Community
Development Act of 1974 (42 U.S.C.
5305(a)).’’
Accordingly, paragraph III.G.3 of the
Consolidated Notice does not apply to
funds under the Appropriations Acts,
and HUD is adding a modified
alternative requirement that applies in
lieu of paragraph III.G.3.
While it is possible that not every
CDBG–DR assisted utility will serve
predominantly low- and moderateincome (LMI) populations, HUD
recognizes that LMI populations would
benefit especially from the increased
resilience and recovery of private
utilities. HUD also recognizes that
privately-owned, for-profit utilities have
a means of obtaining private investment
or otherwise recapturing costs from
ratepayers. Therefore, HUD’s alternative
requirement below includes basic
safeguards that HUD has determined are
necessary to ensure that costs comply
with the certification to give maximum
feasible priority to activities that benefit
LMI persons and that costs are
necessary and reasonable and do not
duplicate other financial assistance. The
modified alternative requirement also
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makes clear that assistance to utilities is
subject to all other requirements that
apply to the use of funds, consistent
with the requirement in the
Appropriations Acts that funds must be
for an ‘‘eligible activity under section
105(a).’’ If a grantee needs to submit a
substantial amendment to add any
activity based on these new alternative
requirements, they must follow section
III.C.6.a in the Consolidated Notice.
For grants made in response to 2022
disasters under the Appropriations Acts,
the following alternative requirement
applies:
A grantee may assist private for-profit,
non-profit, or publicly owned utilities
as part of disaster-related activities that
are eligible under section 105(a) of the
HCDA, or otherwise made eligible
through a waiver or alternative
requirement, provided that the grantee
complies with the following:
1. The funded activity must comply
with applicable CDBG–DR
requirements, including the
requirements that the assisted activity
will meet a national objective, the
activity will address an unmet recovery
need or a risk identified in the grantee’s
mitigation needs assessment, and if the
assistance is provided to a for-profit
entity for an economic development
project under section 105(a)(17), the
grantee must first comply with the
underwriting requirements in section
II.D.6 of the Consolidated Notice.
2. Each grantee must carry out the
grant consistent with the grantee’s
certification that ‘‘With respect to
activities expected to be assisted with
CDBG–DR funds, the action plan has
been developed so as to give the
maximum feasible priority to activities
that will benefit low- and moderateincome families.’’
To fortify compliance with the
existing certification, if the grantee
carries out activities that assist
privately-owned, for-profit utilities, the
grantee must prioritize assistance to forprofit utilities that will benefit areas
where at least 51 percent of the
residents are LMI persons and
demonstrate how assisting the private,
for-profit utility will benefit those areas.
3. The grantee must determine that
the costs of the activity to assist a utility
are necessary and reasonable and that
they do not duplicate other financial
assistance. To fortify these requirements
and achieve a targeted use of funds and
to safeguard against the potential oversubsidization when assistance is used to
carry out activities that benefit private,
for-profit utilities, the grantee must
document that the level of assistance
provided to a private, for-profit utility
addresses only the actual identified
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needs of the utility. Additionally, the
grantee must establish policies and
procedures to ensure that the CDBG–DR
funds that assist private, for-profit
utilities reflect the actual identified
financing needs of the assisted
businesses by establishing a mix of
financing terms (loan, forgivable loan,
and/or grant) for each assisted private,
for-profit utility, based on the business’s
financial capacity, in order to ensure
that assistance is based on actual
identified need.
IV.B. Clarifications to the Consolidated
Notice
IV.B.1. Reimbursement Requirements
for Grants Under the Appropriations
Acts. This section sets out requirements
for 2022 disasters under the
Appropriations Acts. In paragraph
III.F.5 of the Consolidated Notice, HUD
permits grantees to charge to grants the
pre-award and pre-application costs of
homeowners, renters, businesses, and
other qualifying entities for eligible
costs these applicants have incurred in
response to an eligible disaster covered
under a grantee’s applicable Allocation
Announcement Notice. In addition to
other requirements, paragraph III.F.5
stipulates that grantees may charge the
eligible pre-application costs to the
grant only if (1) the person or private
entity incurred the expenses within one
year after the applicability date of the
grantee’s Allocation Announcement
Notice (or within one year after the date
of the disaster, whichever is later); and
(2) the person or entity pays for the cost
before the date on which the person or
entity applies for CDBG–DR assistance.
Congress may enact multiple
supplemental appropriations of CDBG–
DR funds for disasters occurring in the
same year and HUD may then publish
multiple notices announcing CDBG–DR
grants for the same disaster. For
example, HUD announced CDBG–DR
grants for disasters occurring in 2022 in
this notice. If Congress appropriates
additional funds for 2022 disasters in a
future appropriations act, grantees may
find it difficult to track expenses
incurred within one year after the
applicability date of this notice and
another Allocation Announcement
Notice, given that funds for disasters
occurring in 2022 would be announced
in different notices. To avoid confusion
and to apply a uniform time frame to
reimbursement of all pre-application
costs for 2022 disasters, the requirement
in III.F.5.(1) in the Consolidated Notice
that states, ‘‘The person or private entity
incurred the expenses within one year
after the applicability date of the
grantee’s Allocation Announcement
Notice (or within one year after the date
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of the disaster, whichever is later)’’ shall
not apply, and instead, grantees shall
comply with the following alternative to
that requirement in III.F.5.(1): ‘‘The
person or private entity incurred the
expenses within one year after the
applicability date of the notice that
announced the initial allocation of
CDBG–DR funds (or within one year
after the date of the disaster, whichever
is later).’’ For grantees receiving an
allocation for a 2022 disaster, the notice
that announced the initial allocation of
CDBG–DR funds is this notice.
IV.B.2. Clarification of the green and
resilient building standard. Paragraph
II.B.2.a. of the Consolidated Notice
requires that all covered construction
(new construction, reconstruction, and
rehabilitation) that is assisted with
CDBG–DR funds meet an industryrecognized standard that has achieved
certain certifications described in the
notice. HUD updated its building
standards to support the adoption and
enforcement of modern and resilient
codes for grants subject to the Federal
Register notices published on February
3, 2022, at 87 FR 6364; May 24, 2022 at
87 FR 31636; January 18, 2023, at 88 FR
3198; and this notice (including
requirements identified as the
‘‘Consolidated Notice’’ incorporated by
each of these notices as an Appendix B).
During this update, HUD inadvertently
omitted a standard.
Accordingly, HUD clarifies that
paragraph II.B.2.a. in the ‘‘Consolidated
Notice ’’ (as defined in the previous
sentence) allows a grantee to use either
the ICC–700 National Green Building
Standard (NGBS) Green or NGBS
Green+ Resilience standard, among
other industry-recognized standards.
For grants made in response to disasters
occurring in 2020, 2021, and 2022, this
notice replaces paragraph II.B.2.a. in the
Appendix B Consolidated Notice
attached to this notice and to the
document titled ‘‘Consolidated Notice’’
in Appendix B to each of the Federal
Register notices published on February
3, 2022, at 87 FR 6364; May 24, 2022 at
87 FR 31636; January 18, 2023, at 88 FR
3198; and this notice. In lieu of the text
originally published in paragraph
II.B.2.a. of those appendices (which is
hereby replaced), the following
alternative requirement applies:
II.B.2.a. Green and resilient building
standard for new construction and
reconstruction of housing. Grantees
must meet the Green and Resilient
Building Standard, as defined in this
subparagraph, for: (i) all new
construction and reconstruction (i.e.,
demolishing a housing unit and
rebuilding it on the same lot in
substantially the same manner) of
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residential buildings and (ii) all
rehabilitation activities of substantially
damaged residential buildings,
including changes to structural elements
such as flooring systems, columns, or
load-bearing interior or exterior walls.
The Green and Resilient Building
Standard requires that all construction
covered by the paragraph above and
assisted with CDBG–DR funds meet an
industry-recognized standard that has
achieved certification under (i)
Enterprise Green Communities; (ii)
LEED (New Construction, Homes,
Midrise, Existing Buildings Operations
and Maintenance, or Neighborhood
Development); (iii) ICC–700 National
Green Building Standard (NGBS) Green
or NGBS Green+ Resilience; (iv) Living
Building Challenge; or (v) any other
equivalent comprehensive green
building program acceptable to HUD.
IV.B.3. Clarification of the Use of
‘‘Uncapped’’ Income Limits. The
Quality Housing and Work
Responsibility Act of 1998 (Title V of
Pub. L. 105–276) enacted a provision
that directs the Department to grant
exceptions to at least 10 jurisdictions
that are currently ‘‘capped’ under HUD’s
low and moderate-income limits. Under
this exception, several CDBG
entitlement grantees may use
‘‘uncapped’’ income limits that reflect
80 percent of the actual median income
for the area. Each year, HUD publishes
guidance on its website identifying
which grantees may use uncapped
limits.
Accordingly, HUD clarifies that, the
annual uncapped income limits
published by HUD applies to CDBG–DR
funded activities in jurisdictions
covered by the uncapped limits,
including jurisdictions that receive
disaster recovery funds from a state
CDBG–DR grantee. This alternative
requirement applies to grants made in
response to disasters occurring in 2020,
2021, and 2022 that are subject to
Federal Register notices published on
February 3, 2022, at 87 FR 6364; May
24, 2022 at 87 FR 31636; January 18,
2023, at 88 FR 3198; and this notice
(including requirements identified as a
‘‘Consolidated Notice’’ incorporated by
each of these notices as an Appendix B).
V. Duration of Funding
The Appropriations Acts make the
funds available for obligation by HUD
until expended. HUD waives the
provisions at 24 CFR 570.494 and 24
CFR 570.902 regarding timely
distribution and expenditure of funds
and establishes an alternative
requirement providing that each grantee
must expend 100 percent of its
allocation within six years of the date
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HUD signs the grant agreement. HUD
may extend the time period in this
alternative requirement and associated
grant period of performance
administratively, if good cause for such
an extension exists at that time, as
requested by the grantee, and approved
by HUD. When the period of
performance has ended, HUD will close
out the grant and any remaining funds
not expended by the grantee on
appropriate programmatic purposes will
be recaptured by HUD.
VI. Assistance Listing Numbers
(Formerly Known as the CFDA
Number)
The Assistance Listing Numbers
(formerly known as the Catalog of
Federal Domestic Assistance numbers)
for the disaster recovery grants under
this notice are as follows: 14.218;
14.228.
VII. Finding of No Significant Impact
A Finding of No Significant Impact
(FONSI) with respect to the
environment has been made in
accordance with HUD regulations at 24
CFR part 50, which implement section
102(2)(C) of the National Environmental
Policy Act of 1969 (42 U.S.C.
4332(2)(C)). The FONSI is available
online on HUD’s CDBG–DR website at
https://www.hud.gov/program_offices/
comm_planning/cdbg-dr. 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). HUD
welcomes and is prepared to receive
calls from individuals who are deaf or
hard of hearing, as well as individuals
with speech or communication
disabilities. To learn more about how to
make an accessible telephone call,
please visit https://www.fcc.gov/
consumers/guides/telecommunicationsrelay-service-trs.
Adrianne Todman,
Deputy Secretary.
Appendix A
Allocation of CDBG–DR Funds to Most
Impacted and Distressed Areas Due to
Presidentially Declared Disasters Occurring
in 2022
Background
The Continuing Appropriation Act, 2023
(Pub. L. 117–180, Division A) (approved
September 30, 2022) appropriated $2 billion
in CDBG-Disaster Recovery (CDBG–DR)
funds for ‘‘major disasters that occurred in
2021 or 2022’’ and the Department of
Housing and Urban Development
Appropriations Act, 2023 (Pub. L. 117–328,
Division L, Title II) (approved on December
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29, 2022) appropriated $3 billion of CDBG–
DR for disasters ‘‘that occurred in 2022 or
later until such funds are fully allocated’’.
Both laws instruct HUD that the funds are
‘‘for the same purposes and under the same
terms and conditions as funds appropriated
under such heading in title VIII of the
Disaster Relief Supplemental Appropriations
Act, 2022 (division B of Pub. L. 117–43)’’.
The statutory text related to the allocation
in Public Law 117–43 is as follows:
‘‘. . . for necessary expenses for activities
authorized under title I of the Housing and
Community Development Act of 1974 (42
U.S.C. 5301 et seq.) related to disaster relief,
long-term recovery, restoration of
infrastructure and housing, economic
revitalization, and mitigation, in the most
impacted and distressed areas resulting from
a major disaster. . . . Provided, That amounts
made available under this heading in this Act
shall be awarded directly to the State, unit
of general local government, or Indian tribe
(as such term is defined in section 102 of the
Housing and Community Development Act of
1974 (42 U.S.C. 5302)) at the discretion of the
Secretary: Provided further, That the
Secretary shall allocate, using the best
available data, an amount equal to the total
estimate for unmet needs for qualifying
disasters under this heading in this Act:
Provided further, That any final allocation for
the total estimate for unmet need made
available under the preceding proviso shall
include an additional amount of 15 percent
of such estimate for additional mitigation: ’’
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This methodology applies to allocations for
disasters occurring on or after January 1,
2022 and had been declared major disasters
as of October 30, 2022. It reflects the
$553,371,000 remaining from the $2 billion
appropriated under Public Law 117–180
($1.44 billion had been provided for 2021
disasters in an earlier allocation) and
$2,837,849,000 under Public Law 117–328.
Most Impacted and Distressed Areas
As with prior CDBG–DR appropriations,
HUD is not obligated to allocate funds for all
major disasters occurring in the statutory
timeframes. HUD is directed to use the funds
‘‘in the most impacted and distressed areas.’’
HUD has implemented this directive by
limiting CDBG–DR formula allocations to
grantees with major disasters that meet these
standards:
(1) Individual and Households Program
(IHP) designation. HUD has limited
allocations to those disasters where the
Federal Emergency Management Agency
(FEMA) had determined the damage was
sufficient to declare the disaster as eligible to
receive IHP funding.
(2) Concentrated damage. HUD has limited
its estimate of serious unmet housing need to
counties and/or counties with zip codes with
high levels of damage, collectively referred to
as ‘‘most impacted areas.’’ For this allocation,
HUD is defining most impacted areas as
either most impacted counties—counties
exceeding $10 million in serious unmet
housing needs—and most impacted Zip
Codes—Zip Codes with $2 million or more
of serious unmet housing needs. The
calculation of serious unmet housing needs
is described below.
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For disasters that meet the most impacted
threshold described above, the unmet need
allocations are based on the following factors
summed together:
(1) Repair estimates for seriously damaged
owner-occupied units without insurance
(with some exceptions) in most impacted
areas after FEMA and Small Business
Administration (SBA) repair grants or loans;
(2) Repair estimates for seriously damaged
rental units occupied by very low-income
renters in most impacted areas;
(3) Repair and content loss estimates for
small businesses with serious damage denied
by SBA; and
(4) The estimated local cost share for
Public Assistance Category C to G projects.
Methods for Estimating Serious Unmet
Needs for Housing
The data HUD uses to calculate unmet
needs for 2022 qualifying disasters come
from the FEMA IHP data on housing-unit
damage as of January 10, 2023, and reflect
disasters occurring in 2022 and declared on
or before October 30, 2022.
The core data on housing damage for both
the unmet housing needs calculation and the
concentrated damage are based on home
inspection data for FEMA’s IHP and SBA’s
disaster loan program. HUD calculates
‘‘unmet housing needs’’ as the number of
housing units with unmet needs times the
estimated cost to repair those units less
repair funds estimated to be provided by
FEMA and SBA.
Each of the FEMA IHP inspected owner
units are categorized by HUD into one of five
categories:
• Minor-Low: Less than $3,000 of FEMA
inspected real property damage.
• Minor-High: $3,000 to $7,999 of FEMA
inspected real property damage.
• Major-Low: $8,000 to $14,999 of FEMA
inspected real property damage and/or 1 to
3.9 feet of flooding on the first floor.
• Major-High: $15,000 to $28,800 of FEMA
inspected real property damage and/or 4 to
5.9 feet of flooding on the first floor.
• Severe: Greater than $28,800 of FEMA
inspected real property damage or
determined destroyed and/or six or more feet
of flooding on the first floor.
When owner-occupied properties also have
a personal property inspection or only have
a personal property inspection, HUD reviews
the personal property damage amounts such
that if the personal property damage places
the home into a higher need category over the
real property assessment, the personal
property amount is used. The personal
property-based need categories for owneroccupied units are defined as follows:
• Minor-Low: Less than $2,500 of FEMA
inspected personal property damage.
• Minor-High: $2,500 to $3,499 of FEMA
inspected personal property damage.
• Major-Low: $3,500 to $4,999 of FEMA
inspected personal property damage or 1 to
3.9 feet of flooding on the first floor.
• Major-High: $5,000 to $9,000 of FEMA
inspected personal property damage or 4 to
5.9 feet of flooding on the first floor.
• Severe: Greater than $9,000 of FEMA
inspected personal property damage or
determined destroyed and/or 6 or more feet
of flooding on the first floor.
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To meet the statutory requirement of ‘‘most
impacted’’ in this legislative language, homes
are determined to have a high level of
damage if they have damage of ‘‘major-low’’
or higher. That is, they have a FEMA
inspected real property damage of $8,000 or
above, personal property damage $3,500 or
above, or flooding 1 foot or above on the first
floor.
Furthermore, a homeowner with flooding
outside the one percent risk flood hazard area
is determined to have unmet needs if they
reported damage and no flood insurance to
cover that damage. For homeowners inside
the one percent risk flood hazard area,
homeowners without flood insurance with
flood damage below the greater of national
median or 120 percent of Area Median
Income are determined to have unmet needs.
For non-flood damage, homeowners without
hazard insurance with incomes below the
greater of national median or 120 percent of
Area Median Income are included as having
unmet needs. The unmet need categories for
these types of homeowners are defined as
above for real and personal property damage.
FEMA IHP does not inspect rental units for
real property damage so personal property
damage is used as a proxy for unit damage.
Each of the FEMA-inspected renter units are
categorized by HUD into one of five
categories:
• Minor-Low: Less than $1,000 of FEMA
inspected personal property damage.
• Minor-High: $1,000 to $1,999 of FEMA
inspected personal property damage or
determination of ‘‘Moderate’’ damage by the
FEMA inspector.
• Major-Low: $2,000 to $3,499 of FEMA
inspected personal property damage or 1 to
3.9 feet of flooding on the first floor or
determination of ‘‘Major’’ damage by the
FEMA inspector.
• Major-High: $3,500 to $7,500 of FEMA
inspected personal property damage or 4 to
5.9 feet of flooding on the first floor.
• Severe: Greater than $7,500 of FEMA
inspected personal property damage or
determined destroyed and/or 6 or more feet
of flooding on the first floor or determination
of ‘‘Destroyed’’ by the FEMA inspector.
To meet the statutory requirement of ‘‘most
impacted’’ for rental properties, homes are
determined to have a high level of damage if
they have damage of ‘‘major-low’’ or higher.
That is, they have a FEMA personal property
damage assessment of $2,000 or greater or
flooding 1 foot or above on the first floor.
Furthermore, landlords are presumed to
have adequate insurance coverage unless the
unit is occupied by a renter with income less
than the greater of the Federal poverty level
or 50 percent of the area median income.
Units occupied by a tenant with income less
than the greater of the poverty level or 50
percent of the area median income are used
to calculate likely unmet needs for affordable
rental housing.
The average cost to fully repair a home for
a specific disaster to code within each of the
damage categories noted above is calculated
using the median real property damage repair
costs determined by the SBA for its disaster
loan program based on a match comparing
FEMA and SBA inspections by each of the
FEMA damage categories described above.
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If there is a match of 20 or more SBA
inspections to FEMA inspections for any
damage category, the median damage
estimate for the SBA properties is used less
the estimated average FEMA IHP repair grant
and average SBA disaster loan grant weighted
on take-up rates, which are generally high for
IHP and low and for SBA. Except that no
matched multiplier can be less than the 25th
percentile for all IHP eligible disasters
combined in eligible disaster years at the
time of the allocation calculation or more
than the 75th percentile for all IHP eligible
disasters combined with data available as of
the allocation.
If there is a match of fewer than 20 SBA
inspections to FEMA inspections within
individual damage categories, these
multipliers are used which are based on the
2020 and 2021 disaster years:
Multipliers by disaster type
Disaster type
Major-low
Dam/Levee Break ........................................................................................................................
Earthquake ...................................................................................................................................
Fire ...............................................................................................................................................
Flood ............................................................................................................................................
Hurricane .....................................................................................................................................
Severe Ice Storm .........................................................................................................................
Severe Storm(s) ...........................................................................................................................
Tornado ........................................................................................................................................
A separate multiplier is applied to mobile
homes for all disaster types. Where there are
fewer than 20 mobile homes for a match for
a disaster, the mobile home multipliers are
$49,571 for major-low, $60,189 for majorhigh, and $67,594 for severe. If there are 20
or more matches for a specific disaster’s
mobile homes, that specific disaster
multiplier is used.
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Methods for Estimating Serious Unmet
Economic Revitalization Needs
Based on SBA disaster loans to businesses
using data for 2022 disasters from as of
January 4, 2023, HUD calculates the median
real estate and content loss by the following
damage categories for each disaster:
• Category 1: real estate + content loss =
below $12,000
• Category 2: real estate + content loss =
$12,000–$29,999
• Category 3: real estate + content loss =
$30,000–$64,999
• Category 4: real estate + content loss =
$65,000–$149,999
• Category 5: real estate + content loss =
$150,000 and above
For properties with real estate and content
loss of $30,000 or more, HUD calculates the
estimated amount of unmet needs for small
businesses by multiplying the median
damage estimates for the categories above by
the number of small businesses denied an
SBA loan, including those denied a loan
prior to inspection due to inadequate credit
or income (or a decision had not been made),
under the assumption that damage among
those denied at pre-inspection have the same
distribution of damage as those denied after
inspection.
Methods for Estimating Unmet
Infrastructure Needs
To calculate 2022 unmet needs for
infrastructure projects, HUD received FEMA
cost estimates on January 10, 2023, of the
expected local cost share to repair the
permanent public infrastructure (Categories C
to G) to their pre-storm condition.
Allocation Calculation
Once eligible entities are identified using
the above criteria, the allocation to
individual grantees represents their
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proportional share of the estimated unmet
needs. For the formula allocation, HUD
calculates total unmet recovery needs for
eligible disasters as the aggregate of:
• Serious unmet housing needs in most
impacted and distressed areas;
• Serious unmet business needs; and
• Unmet infrastructure need.
Mitigation is calculated as 15 percent of
the unmet need calculation, and then
rounded to the nearest $1,000.
Sub-Disaster Allocations for Local
Governments
Sub-allocations to local governments are
made from this disaster level allocation. Each
disaster that has allocations to local
governments has a slightly different
methodology reflecting best available data for
that disaster at the local level and program
administration considerations.
• DR4665–MO. This disaster is
concentrated in two entitlement areas. Local
data from this July 2022 disaster allows for
consideration of housing, business, and
infrastructure data for all impacted counties.
St. Louis County has the greatest serious
housing damage for a most impacted and
distressed area designation while St. Louis
City has the greatest concentration of public
assistance category C to G match
requirements in excess of $10 million for a
Most Impacted and Distressed area
designation.
• DR4657 & DR4670–OK. These two
Oklahoma major disaster declarations were
for the same event, DR 4657 received an IHP
designation for several counties in Oklahoma
and DR 4670 a Public Assistance designation
for Muscogee (Creek). This disaster was made
eligible based on a concentration of damage
in a zip code. To ease program
administration the Most Impacted and
Distressed Areas are defined as both
Okmulgee County and Muscogee (Creek)
Oklahoma Tribal Statistical Area (OTSA).
These areas overlap and HUD has identified
both as most impacted and distressed areas
for purposes of this allocation.
• DR 4673–FL. Hurricane Ian has led to the
designation of 18 Most Impacted Counties
and 1 Most Impacted Zip Code. Within those
areas are dozens of affected regular CDBG
entitlement areas. There are four counties,
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$33,007
27,141
22,971
47,074
36,800
33,528
22,971
52,961
Major-high
$47,078
33,714
82,582
57,856
45,952
33,714
37,299
82,582
Severe
$47,078
134,503
134,503
64,513
45,952
36,592
37,299
134,503
however, that are entitlement counties under
the regular CDBG Urban County program
and, when their need is combined with the
6 city entitlement cities within them, each
have more than $100 million in serious
unmet housing needs, which is a natural
break in the distribution from the other
CDBG program entitlement communities.
With administrative costs capped at 5
percent, larger grants offer more program
efficiencies, HUD is allocating directly to the
most seriously impacted counties to serve
their entire county (including all cities
within them) and the state to serve the areas
for the other counties where funds are not
directly allocated.
Appendix B—The Consolidated Notice
CDBG–DR Consolidated Notice Waivers and
Alternative Requirements
Table of Contents
I. Waivers and Alternative Requirements
II. Eligible Activities
A. Clarification of Disaster-Related
Activities
B. Housing and Related Floodplain Issues
C. Infrastructure (Public Facilities, Public
Improvements)
D. Economic Revitalization
III. Grant Administration
A. Pre-Award Evaluation of Management
and Oversight of Funds
B. Administration, Planning, and Financial
Management
C. Action Plan for Disaster Recovery
Waiver and Alternative Requirement
D. Citizen Participation Requirements
E. Program Income
F. Other General Waivers and Alternative
Requirements
G. Ineligible Activities in CDBG–DR
IV. Other Program Requirements
A. Duplication of Benefits
B. Procurement
C. Use of the ‘‘Upper Quartile’’ or
‘‘Exception Criteria’’
D. Environmental Requirements
E. Flood Insurance Requirements
F. URA, Section 104(d) and Related CDBG
Program Requirements
V. Performance Reviews
A. Timely Distribution and Expenditure of
Funds
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B. HUD’s Review of Continuing Capacity
C. Grantee Reporting Requirements in the
DRGR System
I. Waivers and Alternative Requirements
CDBG–DR grantees that are subject to this
Consolidated Notice, as indicated in each
Federal Register notice that announces
allocations of the appropriated CDBG–DR
funds (‘‘Allocation Announcement Notice’’),
must comply with all waivers and alternative
requirements in the Consolidated Notice,
unless expressly made inapplicable (e.g., a
waiver that applies to states only does not
apply to units of general local governments
and Indian tribes). Except as described in
applicable waivers and alternative
requirements, the statutory and regulatory
provisions governing the CDBG program (and
for Indian tribes, the Indian CDBG program)
shall apply to grantees receiving a CDBG–DR
allocation. Statutory provisions (title I of the
HCDA) that apply to all grantees can be
found at 42 U.S.C. 5301 et seq. and regulatory
requirements, which differ for each type of
grantee, are described in each of the three
paragraphs below.
Except as modified, the State CDBG
program rules shall apply to state grantees
receiving a CDBG–DR allocation. Applicable
State CDBG program regulations are found at
24 CFR part 570, subpart I. For insular areas,
HUD waives the provisions of 24 CFR part
570, subpart F and imposes the following
alternative requirement: Insular areas shall
administer their CDBG–DR allocations in
accordance with the regulatory and statutory
provisions governing the State CDBG
program, as modified by the Consolidated
Notice.
Except as modified, statutory and
regulatory provisions governing the
Entitlement CDBG Program shall apply to
unit of general local government grantees
(often referred to as local government
grantees in appropriations acts). Applicable
Entitlement CDBG Program regulations are
found at 24 CFR part 570, as described in
570.1(a).
Except as modified, CDBG–DR grants made
by HUD to Indian tribes shall be subject to
the statutory provisions in title I of the HCDA
that apply to Indian tribes and the
regulations in 24 CFR part 1003 governing
the Indian CDBG program, except those
requirements in part 1003 related to the
funding application and selection process.
References to the action plan in the above
regulations shall refer to the action plan
required by the Consolidated Notice and not
to the consolidated plan action plan required
by 24 CFR part 91. All references pertaining
to timelines and/or deadlines are in terms of
calendar days unless otherwise noted.
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II. Eligible Activities
II.A. Clarification of Disaster-Related
Activities
CDBG–DR funds are provided for necessary
expenses for activities authorized under title
I of the HCDA related to disaster relief, longterm recovery, restoration of infrastructure
and housing, economic revitalization, and
mitigation of risk associated with activities
carried out for these purposes, in the ‘‘most
impacted and distressed’’ areas (identified by
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HUD or the grantee) resulting from a major
disaster. All CDBG–DR funded activities
must address an impact of the disaster for
which funding was allocated. Accordingly,
each activity must: (1) address a direct or
indirect impact from the disaster in a most
impacted and distressed area; (2) be a CDBGeligible activity (or be eligible under a waiver
or alternative requirement); and (3) meet a
national objective. When appropriations acts
provide an additional allocation amount for
mitigation of hazard risks that does not
require a connection to the qualifying major
disaster, requirements for the use of those
funds will be included in the Allocation
Announcement Notice.
II.A.1. Documenting a Connection to the
Disaster. Grantees must maintain records that
document how each funded activity
addresses a direct or indirect impact from the
disaster. Grantees may do this by linking
activities to a disaster recovery need that is
described in the impact and unmet needs
assessment in the action plan (requirements
for the assessment are addressed in section
III.C.1.a.). Sufficient documentation of
physical loss must include damage or
rebuilding estimates, insurance loss reports,
images, or similar information that
documents damage caused by the disaster.
Sufficient documentation for non-physical
disaster-related impacts must clearly show
how the activity addresses the disaster
impact, e.g., for economic development
activities, data about job loss or businesses
closing after the disaster or data showing
how pre-disaster economic stressors were
aggravated by the disaster; or for housing
activities, a post-disaster housing analysis
that describes the activities that are necessary
to address the post-disaster housing needs.
II.A.2. Resilience and hazard mitigation.
The Consolidated Notice will help to
improve long-term community resilience by
requiring grantees to fully incorporate
mitigation measures that will protect the
public, including members of protected
classes, vulnerable populations, and
underserved communities, from the risks
identified by the grantee among other
vulnerabilities. This approach will better
ensure the revitalization of the community
long after the recovery projects are complete.
Accordingly, HUD is adopting the
following alternative requirement to section
105(a): Grantees may carry out the activities
described in section 105(a), as modified by
waivers and alternative requirements, to the
extent that the activities comply with the
following:
II.A.2.a. Alignment with mitigation plans.
Grantees must ensure that the mitigation
measures identified in their action plan will
align with existing hazard mitigation plans
submitted to the Federal Emergency
Management Agency (FEMA) under section
322 of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C.
5165) or other state, local, or tribal hazard
mitigation plans.
II.A.2.b. Mitigation measures. Grantees
must incorporate mitigation measures when
carrying out activities to construct,
reconstruct, or rehabilitate residential or nonresidential structures with CDBG–DR funds
as part of activities eligible under 42 U.S.C.
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5305(a) (including activities authorized by
waiver and alternative requirement). To meet
this alternative requirement, grantees must
demonstrate that they have incorporated
mitigation measures into CDBG–DR activities
as a construction standard to create
communities that are more resilient to the
impacts of recurring natural disasters and the
impacts of climate change. When
determining which mitigation measures to
incorporate, grantees should design and
construct structures to withstand existing
and future climate impacts expected to occur
over the service life of the project.
II.A.2.c. Resilience performance metrics.
Before carrying out CDBG–DR funded
activities to construct, reconstruct, or
rehabilitate residential or non-residential
structures, the grantee must establish
resilience performance metrics for the
activity, including: (1) an estimate of the
projected risk to the completed activity from
natural hazards, including those hazards that
are influenced by climate change (e.g., high
winds destroying newly built homes), (2)
identification of the mitigation measures that
will address the projected risks (e.g., using
building materials that are able to withstand
high winds), and (3) an assessment of the
benefit of the grantee’s measures through
verifiable data (e.g., 10 newly built homes
will withstand high winds up to 100 mph).
II.A.3. Most impacted and distressed (MID)
areas. Funds must be used for costs related
to unmet needs in the MID areas resulting
from qualifying disasters. HUD allocates
funds using the best available data that cover
the eligible affected areas and identifies MID
areas. Grantees are required to use 80 percent
of all CDBG–DR funds to benefit the HUDidentified MID areas. The HUD-identified
MID areas and the minimum dollar amount
that must be spent to benefit those areas will
be identified for each grantee in the
applicable Allocation Announcement Notice.
If a grantee seeks to add other areas to the
HUD-identified MID area, the grantee must
contact its CPD Representative or CPD
Specialist and submit the request with a datadriven analysis that illustrates the basis for
designating the additional area as most
impacted and distressed as a result of the
qualifying disaster.
Grantees may use up to five percent of the
total grant award for grant administration.
Therefore, HUD will include 80 percent of a
grantee’s expenditures for grant
administration in its determination that 80
percent of the total award has benefited the
HUD-identified MID area. Expenditures for
planning activities may also be counted
towards the HUD-identified MID area
requirement, if the grantee describes in its
action plan how those planning activities
benefit those areas.
HUD may identify an entire jurisdiction or
a ZIP code as a MID area. If HUD designates
a ZIP code as a MID area for the purposes of
allocating funds, the grantee may expand
program operations to the whole county or
counties that overlap with the HUD
designated ZIP code. A grantee must indicate
the decision to expand eligibility to the
whole county or counties in its action plan.
Grantees must determine where to use the
remaining amount of the CDBG–DR grant, but
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that portion of the allocation may only be
used to address unmet needs and that benefit
those areas that the grantee determines are
most impacted and distressed (‘‘granteeidentified MID areas’’) within areas that
received a presidential major disaster
declaration identified by the disaster
numbers listed in the applicable Allocation
Announcement Notice. The grantee must use
quantifiable and verifiable data in its
analysis, as referenced in its action plan, to
identify the MID areas where it will use the
remaining amount of CDBG–DR funds.
Grantee expenditures for eligible unmet
needs outside of the HUD-identified or
grantee-identified MID areas are allowable,
provided that the grantee can demonstrate
how the expenditure of CDBG–DR funds
outside of the MID areas will address unmet
needs identified within the HUD-identified
or grantee-identified MID area (e.g., upstream
water retention projects to reduce
downstream flooding in the HUD-identified
MID area).
II.B. Housing Activities and Related
Floodplain Issues
Grantees may use CDBG–DR funds for
activities that may include, but are not
limited to, new construction, reconstruction,
and rehabilitation of single-family or
multifamily housing, homeownership
assistance, buyouts, and rental assistance.
The broadening of eligible CDBG–DR
activities related to housing under the HCDA
is necessary following major disasters in
which housing, including large numbers of
affordable housing units, have been damaged
or destroyed. The following waivers and
alternative requirements will assist grantees
in addressing the full range of unmet housing
needs arising from a disaster.
II.B.1. New housing construction waiver
and alternative requirement. 42 U.S.C.
5305(a) and 24 CFR 570.207(b)(3) are waived
to the extent necessary to permit new
housing construction, subject to the
following alternative requirement. When a
CDBG–DR grantee carries out a new housing
construction activity, 24 CFR 570.202 shall
apply and shall be read to extend to new
construction in addition to rehabilitation
assistance. Private individuals and entities
must remain compliant with federal
accessibility requirements as well as with the
applicable site selection requirements of 24
CFR 1.4(b)(3) and 8.4(b)(5).
II.B.2. Construction standards for new
construction, reconstruction, and
rehabilitation. HUD is adopting an
alternative requirement to require grantees to
adhere to the applicable construction
standards in II.B.2.a. through II.B.2.d. when
carrying out activities to construct,
reconstruct, or rehabilitate residential
structures with CDBG–DR funds as part of
activities eligible under 42 U.S.C. 5305(a)
(including activities authorized by waiver
and alternative requirement). For purposes of
the Consolidated Notice, the terms
‘‘substantial damage’’ and ‘‘substantial
improvement’’ shall be as defined in 44 CFR
59.1 unless otherwise noted.
II.B.2.a. Green and resilient building
standard for new construction and
reconstruction of housing. Grantees must
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meet the Green and Resilient Building
Standard, as defined in this subparagraph,
for: (i) all new construction and
reconstruction (i.e., demolishing a housing
unit and rebuilding it on the same lot in
substantially the same manner) of residential
buildings and (ii) all rehabilitation activities
of substantially damaged residential
buildings, including changes to structural
elements such as flooring systems, columns,
or load-bearing interior or exterior walls.
The Green and Resilient Building Standard
requires that all construction covered by the
paragraph above and assisted with CDBG–DR
funds meet an industry-recognized standard
that has achieved certification under (i)
Enterprise Green Communities; (ii) LEED
(New Construction, Homes, Midrise, Existing
Buildings Operations and Maintenance, or
Neighborhood Development); (iii) ICC–700
National Green Building Standard Green+
Resilience; (iv) Living Building Challenge; or
(v) any other equivalent comprehensive green
building program acceptable to HUD.
Additionally, all such covered construction
must achieve a minimum energy efficiency
standard, such as (i) ENERGY STAR
(Certified Homes or Multifamily High-Rise);
(ii) DOE Zero Energy Ready Home; (iii)
EarthCraft House, EarthCraft Multifamily; (iv)
Passive House Institute Passive Building or
EnerPHit certification from the Passive House
Institute US (PHIUS), International Passive
House Association; (v) Greenpoint Rated
New Home, Greenpoint Rated Existing Home
(Whole House or Whole Building label); (vi)
Earth Advantage New Homes; or (vii) any
other equivalent energy efficiency standard
acceptable to HUD. Grantees must identify,
in each project file, which of these Green and
Resilient Building Standards will be used for
any building subject to this paragraph.
However, grantees are not required to use the
same standards for each project or building.
II.B.2.b. Standards for rehabilitation of
nonsubstantially damaged residential
buildings. For rehabilitation other than the
rehabilitation of substantially damaged
residential buildings described in section
II.B.2.a. above, grantees must follow the
guidelines specified in the HUD CPD Green
Building Retrofit Checklist.
Grantees must apply these guidelines to
the extent applicable for the rehabilitation
work undertaken, for example, the use of
mold resistant products when replacing
surfaces such as drywall. Products and
appliances replaced as part of the
rehabilitation work, must be ENERGY STARlabeled, WaterSense-labeled, or Federal
Energy Management Program (FEMP)designated products or appliances.
II.B.2.c. Elevation standards for new
construction, reconstruction, and
rehabilitation of substantial damage, or
rehabilitation resulting in substantial
improvements. The following elevation
standards apply to new construction,
rehabilitation of substantial damage, or
rehabilitation resulting in substantial
improvement of residential structures located
in an area delineated as a special flood
hazard area or equivalent in FEMA’s data
sources. 24 CFR 55.2(b)(1) provides
additional information on data sources,
which apply to all floodplain designations.
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All structures, defined at 44 CFR 59.1,
designed principally for residential use, and
located in the one percent annual chance (or
100-year) floodplain, that receive assistance
for new construction, reconstruction,
rehabilitation of substantial damage, or
rehabilitation that results in 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 one percent annual chance
floodplain elevation (base flood elevation).
Mixed-use structures with no dwelling units
and no residents below two feet above base
flood elevation, must be elevated or
floodproofed, in accordance with FEMA
floodproofing standards at 44 CFR
60.3(c)(3)(ii) or successor standard, up to at
least two feet above base flood elevation.
All Critical Actions, as defined at 24 CFR
55.2(b)(3), within the 500-year (or 0.2 percent
annual chance) floodplain must be elevated
or floodproofed (in accordance with FEMA
floodproofing standards at 44 CFR 60.3(c)(2)–
(3) or successor standard) to the higher of the
500-year floodplain elevation or three feet
above the 100-year floodplain elevation. If
the 500-year floodplain is unavailable, and
the Critical Action is in the 100-year
floodplain, then the structure must be
elevated or floodproofed (in accordance with
FEMA floodproofing standards at 44 CFR
60.3(c)(2)–(3) or successor standard) at least
three feet above the 100-year floodplain
elevation. Critical Actions are defined as
‘‘any activity for which even a slight chance
of flooding would be too great, because such
flooding might result in loss of life, injury to
persons or damage to property.’’ For
example, Critical Actions include hospitals,
nursing homes, emergency shelters, police
stations, fire stations, and principal utility
lines.
In addition to other requirements in this
section, grantees must comply with
applicable state, local, and tribal codes and
standards for floodplain management,
including elevation, setbacks, and
cumulative substantial damage requirements.
Grantees using CDBG–DR funds as the nonFederal match in a FEMA-funded project
may apply the alternative requirement for the
elevation of structures described in section
III.F.6. Structures that are elevated must meet
federal accessibility standards.
II.B.2.d. Broadband infrastructure in
housing. Any substantial rehabilitation, as
defined by 24 CFR 5.100, reconstruction, or
new construction of a building with more
than four rental units must include
installation of broadband infrastructure,
except where the grantee documents that: (i)
the location of the new construction or
substantial rehabilitation makes installation
of broadband infrastructure infeasible; (ii) the
cost of installing broadband infrastructure
would result in a fundamental alteration in
the nature of its program or activity, or in an
undue financial burden; or (iii) the structure
of the housing to be substantially
rehabilitated makes installation of broadband
infrastructure infeasible.
II.B.3. Applicable affordability periods for
new construction of affordable rental
housing. To meet the low- and moderateincome housing national objective, rental
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housing assisted with CDBG–DR funds must
be rented to low- and moderate-income (LMI)
households at affordable rents, and a grantee
must define ‘‘affordable rents’’ in its action
plan. Because the waiver and alternative
requirement in II.B.1. authorizes the use of
grant funds for new housing construction,
HUD is imposing the following alternative
requirement to modify the low- and
moderate-income housing national objective
criteria in 24 CFR 570.208(a)(3) and
570.483(b)(3) for activities involving the new
construction of affordable rental housing of
five or more units. For activities that will
construct five or more units, in addition to
other applicable criteria in 24 CFR
570.208(a)(3) and 570.483(b)(3), in its action
plan, a grantee must define the affordability
standards, including ‘‘affordable rents,’’ the
enforcement mechanisms, and applicable
timeframes, that will apply to the new
construction of affordable rental housing, i.e.,
when the activity will result in construction
of five or more units, the affordability
requirements described in the action plan
apply to the units that will be occupied by
LMI households. The minimum timeframes
and other related requirements acceptable for
compliance with this alternative requirement
are the HOME Investment Partnerships
Program (HOME) requirements at 24 CFR
92.252(e), including the table listing the
affordability periods at the end of 24 CFR
92.252(e). Therefore, the grantee must adopt
and implement enforceable affordability
standards that comply with or exceed
requirements at 24 CFR 92.252(e)(1) for the
new construction of affordable rental housing
in structures containing five or more units.
II.B.4. Affordability period for new
construction of homes built for LMI
households. In addition to alternative
requirements in II.B.1., the following
alternative requirement applies to activities
to construct new single-family units for
homeownership that will meet the LMI
housing national objective criteria. Grantees
must establish affordability restrictions on all
newly constructed single-family housing (for
purposes of the Consolidated Notice, singlefamily housing is defined as four units or
less), that, upon completion, will be
purchased and occupied by LMI
homeowners. The minimum affordability
period acceptable for compliance are the
HOME requirements at 24 CFR 92.254(a)(4).
If a grantee applies other standards, the
periods of affordability applied by a grantee
must meet or exceed the applicable HOME
requirements in 24 CFR 92.254(a)(4) and the
table of affordability periods directly
following that provision. Grantees shall
establish resale or recapture requirements for
housing funded pursuant to this paragraph
and shall describe those requirements in the
action plan or substantial amendment in
which the activity is proposed. The resale or
recapture requirements must clearly describe
the terms of resale or recapture and the
specific circumstances under which resale or
recapture will be used. Affordability
restrictions must be enforceable and imposed
by recorded deed restrictions, covenants, or
other similar mechanisms. The affordability
restrictions, including the affordability
period requirements in this paragraph do not
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apply to housing units newly constructed or
reconstructed for an owner-occupant to
replace the owner-occupant’s home that was
damaged by the disaster.
II.B.5. Homeownership assistance waiver
and alternative requirement. 42 U.S.C.
5305(a)(24) is waived and replaced with the
following alternative requirement:
‘‘Provision of direct assistance to facilitate
and expand homeownership among persons
at or below 120 percent of area median
income (except that such assistance shall not
be considered a public service for purposes
of 42 U.S.C. 5305(a)(8)) by using such
assistance to—
(A) subsidize interest rates and mortgage
principal amounts for homebuyers with
incomes at or below 120 percent of area
median income;
(B) finance the acquisition of housing by
homebuyers with incomes at or below 120
percent of area median income that is
occupied by the homebuyers;
(C) acquire guarantees for mortgage
financing obtained by homebuyers with
incomes at or below 120 percent of area
median income from private lenders,
meaning that if a private lender selected by
the homebuyer offers a guarantee of the
mortgage financing, the grantee may
purchase the guarantee to ensure repayment
in case of default by the homebuyer. This
subparagraph allows the purchase of
mortgage insurance by the household but not
the direct issuance of mortgage insurance by
the grantee;
(D) provide up to 100 percent of any down
payment required from homebuyers with
incomes at or below 120 percent of area
median income; or
(E) pay reasonable closing costs (normally
associated with the purchase of a home)
incurred by homebuyers with incomes at or
below 120 percent of area median income.’’
While homeownership assistance, as
described above, may be provided to
households with incomes at or below 120
percent of the area median income, HUD will
only consider those funds used for
households with incomes at or below 80
percent of the area median income to qualify
as meeting the LMI person benefit national
objective.
II.B.6. Limitation on emergency grant
payments—interim mortgage assistance. 42
U.S.C. 5305(a)(8), 24 CFR 570.201(e), 24 CFR
570.207(b)(4), and 24 CFR 1003.207(b)(4) are
modified to extend interim mortgage
assistance (IMA) to qualified individuals
from three months to up to twenty months.
IMA must be used in conjunction with a
buyout program, or the rehabilitation or
reconstruction of single-family housing,
during which mortgage payments may be due
but the home is not habitable. A grantee
using this alternative requirement must
document, in its policies and procedures,
how it will determine that the amount of
assistance to be provided is necessary and
reasonable.
II.B.7. Buyout activities. CDBG–DR
grantees may carry out property acquisition
for a variety of purposes, but buyouts are a
type of acquisition for the specific purpose of
reducing the risk of property damage. HUD
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has determined that creating a new activity
and alternative requirement for buyouts is
necessary for consistency with the
application of other Federal resources
commonly used for this type of activity.
Therefore, HUD is waiving 42 U.S.C. 5305(a)
and establishing an alternative requirement
only to the extent necessary to create a new
eligible activity for buyouts. The term
‘‘buyouts’’ means the acquisition of
properties located in a floodway, floodplain,
or other Disaster Risk Reduction Area that is
intended to reduce risk from future hazards.
Grantees can designate a Disaster Risk
Reduction Area, as defined below.
Grantees carrying out buyout activities
must establish an open space management
plan or equivalent, if one has not already
been established, before implementation. The
plan must establish full transparency about
the planned use of acquired properties postbuyout, or the process by which the planned
use will be determined and enforced.
Buyout activities are subject to all
requirements that apply to acquisition
activities generally including but not limited
to, the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of
1970 (URA) (42 U.S.C. 4601, et seq.) and its
implementing regulations at 49 CFR part 24,
subpart B, unless waived or modified by
alternative requirements. Only acquisitions
that meet the definition of a ‘‘buyout’’ are
subject to the post-acquisition land use
restrictions imposed by the alternative
requirement (II.B.7.a. below). The key factor
in determining whether the acquisition is a
buyout is whether the intent of the purchase
is to reduce risk of property damage from
future flooding or other hazards in a
floodway, floodplain, or a Disaster Risk
Reduction Area. A grantee that will buyout
properties in a Disaster Risk Reduction Area
must establish criteria in its policies and
procedures to designate an area as a Disaster
Risk Reduction Area for the buyout, pursuant
to the following requirements:
(1) the area has been impacted by the
hazard that has been caused or exacerbated
by the disaster for which the grantee received
its CDBG–DR allocation;
(2) the hazard identified must be a
predictable environmental threat to the safety
and well-being of program beneficiaries,
including members of protected classes,
vulnerable populations, and underserved
communities, as evidenced by the best
available data (e.g., FEMA Repetitive Loss
Data, EPA’s Environmental Justice Screening
and Mapping Tool, HHS’s climate change
related guidance and data, etc.) and science
(such as engineering and structural solutions
propounded by FEMA, USACE, other federal
agencies, etc.); and
(3) the area must be clearly delineated so
that HUD and the public may easily
determine which properties are located
within the designated area.
Grantees may only redevelop an acquired
property if the property is not acquired
through a buyout program (i.e., the purpose
of acquisition was something other than risk
reduction). When acquisitions are not
acquired through a buyout program, the
purchase price must be consistent with 2
CFR part 200, subpart E—Cost Principles
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(‘‘cost principles’’) and the pre-disaster fair
market value may not be used.
II.B.7.a. Buyout requirements:
(i) Property to be acquired or accepted
must be located within a floodway,
floodplain, or Disaster Risk Reduction Area.
(ii) Any property acquired or accepted
must be dedicated and maintained in
perpetuity for a use that is compatible with
open space, recreational, floodplain and
wetlands management practices, or other
disaster-risk reduction practices.
(iii) No new structure will be erected on
property acquired or accepted under the
buyout program other than:
(a) a public facility that is open on all sides
and functionally related to a designated open
space (e.g., a park, campground, or outdoor
recreation area);
(b) a restroom; or
(c) a flood control structure, provided that:
(1) the structure does not reduce valley
storage, increase erosive velocities, or
increase flood heights on the opposite bank,
upstream, or downstream; and
(2) the local floodplain manager approves
the structure, in writing, before
commencement of construction of the
structure.
(iv) After the purchase of a buyout property
with CDBG–DR funds, the owner of the
buyout property (including subsequent
owners) is prohibited from making any
applications to any Federal entity in
perpetuity for additional disaster assistance
for any purpose related to the property
acquired through the CDBG–DR funded
buyout, unless the assistance is for an
allowed use as described in paragraph (ii)
above. The entity acquiring the property may
lease or sell it to adjacent property owners or
other parties for compatible uses that comply
with buyout requirements in return for a
maintenance agreement.
(v) A deed restriction or covenant running
with the property must require that the
buyout property be dedicated and
maintained for compatible uses that comply
with buyout requirements in perpetuity.
(vi) Grantees must choose from one of two
valuation methods (pre-disaster value or
post-disaster value) for a buyout program (or
a single buyout activity). The grantee must
apply its valuation method for all buyouts
carried out under the program. If the grantee
determines the post-disaster value of a
property is higher than the pre-disaster value,
a grantee may provide exceptions to its
established valuation method on a case-bycase basis. The grantee must describe the
process for such exceptions and how it will
analyze the circumstances to permit an
exception in its buyout policies and
procedures. Each grantee must adopt policies
and procedures on how it will demonstrate
that the amount of assistance for a buyout is
necessary and reasonable.
(vii) All buyout activities must be
classified using the ‘‘buyout’’ activity type in
the Disaster Recovery and Grant Reporting
(DRGR) system.
(viii) Any state grantee implementing a
buyout program or activity must consult with
local or tribal governments within the areas
in which buyouts will occur.
II.B.8. Safe housing incentives in disasteraffected communities.
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The limitation on eligible activities in
section 42 U.S.C. 5305(a) is waived and HUD
is establishing the following alternative
requirement to establish safe housing
incentives as an eligible activity. A safe
housing incentive is any incentive provided
to encourage households to relocate to
suitable housing in a lower risk area or in an
area promoted by the community’s
comprehensive recovery plan. Displaced
persons must receive any relocation
assistance to which they are entitled under
other legal authorities, such as the URA,
section 104(d) of the HCDA, or those
described in the Consolidated Notice. The
grantee may offer safe housing incentives in
addition to the relocation assistance that is
legally required.
Grantees must maintain documentation, at
least at a programmatic level, describing how
the grantee determined the amount of
assistance for the incentive was necessary
and reasonable, how the incentive meets a
national objective, and that the incentives are
in accordance with the grantee’s approved
action plan and published program design(s).
A grantee may require the safe housing
incentive to be used for a particular purpose
by the household receiving the assistance.
However, this waiver does not permit a
compensation program meaning that funds
may not be provided to a beneficiary to
compensate the beneficiary for an estimated
or actual amount of loss from the declared
disaster. Grantees are prohibited from
offering housing incentives to a homeowner
as an incentive to induce the homeowner to
sell a second home, consistent with the
prohibition and definition of second home in
section II.B.12.
II.B.9. National objectives for buyouts and
safe housing incentives.
Activities that assist LMI persons and meet
the criteria for the national objectives
described below, including in II.B.10., will be
considered to benefit LMI persons unless
there is substantial evidence to the contrary
and will count towards the calculation of a
grantee’s overall LMI benefit requirement as
described in section III.F.2. The grantee shall
appropriately ensure that activities that meet
the criteria for any of the national objectives
below do not benefit moderate-income
persons to the exclusion of low-income
persons.
When undertaking buyout activities, to
demonstrate that a buyout meets the low- and
moderate-income housing (LMH) national
objective, grantees must meet all
requirements of the HCDA, and applicable
regulatory criteria described below. 42 U.S.C.
5305(c)(3) provides that any assisted activity
that involves the acquisition of property to
provide housing shall be considered to
benefit LMI persons only to the extent such
housing will, upon completion, be occupied
by such persons. In addition, 24 CFR
570.483(b)(3), 24 CFR 570.208(a)(3), and 24
CFR 1003.208(c) apply the LMH national
objective to an eligible activity carried out for
the purpose of providing or improving
permanent residential structures that, upon
completion, will be occupied by LMI
households.
A buyout program that merely pays
homeowners to leave their existing homes
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does not guarantee that those homeowners
will occupy a new residential structure.
Therefore, acquisition-only buyout programs
cannot satisfy the LMH national objective
criteria.
To meet a national objective that benefits
a LMI person, buyout programs can be
structured in one of the following ways:
(1) The buyout activity combines the
acquisition of properties with another direct
benefit—LMI housing activity, such as down
payment assistance—that results in
occupancy and otherwise meets the
applicable LMH national objective criteria;
(2) The activity meets the low- and
moderate-income area (LMA) benefit criteria
and documents that the acquired properties
will have a use that benefits all the residents
in a particular area that is primarily
residential, where at least 51 percent of the
residents are LMI persons. Grantees covered
by the ‘‘exception criteria’’ as described in
section IV.C. of the Consolidated Notice may
apply it to these activities. To satisfy LMA
criteria, grantees must define the service area
based on the end use of the buyout
properties; or
(3) The program meets the criteria for the
low- and moderate-income limited clientele
(LMC) national objective by restricting
buyout program eligibility to exclusively LMI
persons and benefiting LMI sellers by
acquiring their properties for more than
current fair market value (in accordance with
the valuation requirements in section
II.B.7.a.(vi)).
II.B.10. For LMI Safe Housing Incentive
(LMHI). The following alternative
requirement establishes new LMI national
objective criteria that apply to safe housing
incentive (LMHI) activities that benefit LMI
households. HUD has determined that
providing CDBG–DR grantees with an
additional method to demonstrate how safe
housing incentive activities benefit LMI
households will ensure that grantees and
HUD can account for and assess the benefit
that CDBG–DR assistance for these activities
has on LMI households.
The LMHI national objective may be used
when a grantee uses CDBG–DR funds to carry
out a safe housing incentive activity that
benefits one or more LMI persons. To meet
the LMHI national objective, the incentive
must be (a.) tied to the voluntary acquisition
of housing (including buyouts) owned by a
qualifying LMI household and made to
induce a move outside of the affected
floodplain or disaster risk reduction area to
a lower-risk area or structure; or (b.) for the
purpose of providing or improving
residential structures that, upon completion,
will be occupied by a qualifying LMI
household and will be in a lower risk area.
II.B.11. Redevelopment of acquired
properties. Although properties acquired
through a buyout program may not be
redeveloped, grantees may redevelop other
acquired properties. For non-buyout
acquisitions, HUD has not permitted the
grantee to base acquisition cost on predisaster fair market value. The acquisition
cost must comply with applicable cost
principles and with the acquisition
requirements at 49 CFR 24, Subpart B, as
revised by the Consolidated Notice waivers
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and alternative requirements. In addition to
the purchase price, grantees may opt to
provide optional relocation assistance, as
allowable under section 104 and 105 of the
HCDA (42 U.S.C. 5304 and 42 U.S.C. 5305)
and 24 CFR 570.606(d), and as expanded by
section IV.F.5. of the Consolidated Notice, to
the owner of a property that will be
redeveloped if: (a.) the property is purchased
by the grantee or subrecipient through
voluntary acquisition; and (b.) the owner’s
need for additional assistance is documented.
Any optional relocation assistance must
provide equal relocation assistance within
each class of displaced persons, including
but not limited to providing reasonable
accommodation exceptions to persons with
disabilities. See 24 CFR 570.606(d) for more
information on optional relocation
assistance. In addition, tenants displaced by
these voluntary acquisitions may be eligible
for URA relocation assistance. In carrying out
acquisition activities, grantees must ensure
they are in compliance with the long-term
redevelopment plans of the community in
which the acquisition and redevelopment is
to occur.
II.B.12. Alternative requirement for
housing rehabilitation—assistance for second
homes. HUD is instituting an alternative
requirement to the rehabilitation provisions
at 42 U.S.C. 5305(a)(4) as follows: properties
that served as second homes at the time of
the disaster, or following the disaster, are not
eligible for rehabilitation assistance or safe
housing incentives. This prohibition does not
apply to acquisitions that meet the definition
of a buyout. A second home is defined for
purposes of the Consolidated Notice as a
home that is not the primary residence of the
owner, a tenant, or any occupant at the time
of the disaster or at the time of application
for CDBG–DR assistance. Grantees can verify
a primary residence using a variety of
documentation including, but not limited to,
voter registration cards, tax returns,
homestead exemptions, driver’s licenses, and
rental agreements. Acquisition of second
homes at post-disaster fair market value is
not prohibited.
II.C. Infrastructure (Public Facilities, Public
Improvements), Match, and Elevation of NonResidential Structures
HUD is adopting an alternative
requirement to require grantees to adhere to
the applicable construction standards and
requirements in II.C.1., II.C.2. and II.C.4.,
which apply only to those eligible activities
described in those paragraphs.
II.C.1. Infrastructure planning and design.
All newly constructed infrastructure that is
assisted with CDBG–DR funds must be
designed and constructed to withstand
extreme weather events and the impacts of
climate change. To satisfy this requirement,
the grantee must identify and implement
resilience performance metrics as described
in section II.A.2.
For purposes of this requirement, an
infrastructure activity includes any activity
or group of activities (including acquisition
or site or other improvements), whether
carried out on public or private land, that
assists the development of the physical assets
that are designed to provide or support
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services to the general public in the following
sectors: Surface transportation, including
roadways, bridges, railroads, and transit;
aviation; ports, including navigational
channels; water resources projects; energy
production and generation, including from
renewable, nuclear, and hydro sources;
electricity transmission; broadband;
pipelines; stormwater and sewer
infrastructure; drinking water infrastructure;
schools, hospitals, and housing shelters; and
other sectors as may be determined by the
Federal Permitting Improvement Steering
Council. For purposes of this requirement, an
activity that falls within this definition is an
infrastructure activity regardless of whether
it is carried out under sections 105(a)(2),
105(a)(4), 105(a)(14), another section of the
HCDA, or a waiver or alternative requirement
established by HUD. Action plan
requirements related to infrastructure
activities are found in section III.C.1.e. of the
Consolidated Notice.
II.C.2. Elevation of nonresidential
structure. Nonresidential structures,
including infrastructure, assisted with
CDBG–DR funds must be elevated to the
standards described in this paragraph or
floodproofed, in accordance with FEMA
floodproofing standards at 44 CFR
60.3(c)(3)(ii) or successor standard, up to at
least two feet above the 100-year (or one
percent annual chance) floodplain. All
Critical Actions, as defined at 24 CFR
55.2(b)(3), within the 500-year (or 0.2 percent
annual chance) floodplain must be elevated
or floodproofed (in accordance with FEMA
floodproofing standards at 44 CFR 60.3(c)(2)–
(3) or successor standard) to the higher of the
500-year floodplain elevation or three feet
above the 100-year floodplain elevation. If
the 500-year floodplain or elevation is
unavailable, and the Critical Action is in the
100-year floodplain, then the structure must
be elevated or floodproofed at least three feet
above the 100-year floodplain elevation.
Activities subject to elevation requirements
must comply with applicable federal
accessibility mandates.
In addition to the other requirements in
this section, the grantee must comply with
applicable state, local, and tribal codes and
standards for floodplain management,
including elevation, setbacks, and
cumulative substantial damage requirements.
Grantees using CDBG–DR funds as the nonFederal match in a FEMA-funded project
may apply the alternative requirement for the
elevation of structures described in section
IV.D.5.
II.C.3. CDBG–DR funds as match. As
provided by the HCDA, grant funds may be
used to satisfy a match requirement, share, or
contribution for any other Federal program
when used to carry out an eligible CDBG–DR
activity. This includes programs or activities
administered by the FEMA or the U.S. Army
Corps of Engineers (USACE). By law,
(codified in the HCDA as a note to section
105(a)) only $250,000 or less of CDBG–DR
funds may be used for the non-Federal costshare of any project funded by USACE.
Appropriations acts prohibit the use of
CDBG–DR funds for any activity
reimbursable by, or for which funds are also
made available by FEMA or USACE.
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In response to a disaster, FEMA may
implement, and grantees may elect to follow,
alternative procedures for FEMA’s Public
Assistance Program, as authorized pursuant
to section 428 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act
(‘‘Stafford Act’’). Like other projects, grantees
may use CDBG–DR funds as a matching
requirement, share, or contribution for
section 428 Public Assistance Projects. For
all match activities, grantees must document
that CDBG–DR funds have been used for the
actual costs incurred for the assisted project
and for costs that are eligible, meet a national
objective, and meet other applicable CDBG
requirements.
II.C.4. Requirements for flood control
structures. Grantees that use CDBG–DR funds
to assist flood control structures (i.e., dams
and levees) are prohibited from using CDBG–
DR funds to enlarge a dam or levee beyond
the original footprint of the structure that
existed before the disaster event, without
obtaining pre-approval from HUD and any
Federal agencies that HUD determines are
necessary based on their involvement or
potential involvement with the levee or dam.
Grantees that use CDBG–DR funds for levees
and dams are required to: (1) register and
maintain entries regarding such structures
with the USACE National Levee Database or
National Inventory of Dams; (2) ensure that
the structure is admitted in the USACE PL
84–99 Program (Levee Rehabilitation and
Inspection Program); (3) ensure the structure
is accredited under the FEMA National Flood
Insurance Program; (4) enter the exact
location of the structure and the area served
and protected by the structure into the DRGR
system; and (5) maintain file documentation
demonstrating that the grantee has conducted
a risk assessment before funding the flood
control structure and documentation that the
investment includes risk reduction measures.
II.D. Economic Revitalization and Section 3
Requirements on Economic Opportunities
CDBG–DR funds can be used for CDBG–DR
eligible activities related to economic
revitalization. The attraction, retention, and
return of businesses and jobs to a disasterimpacted area is critical to long-term
recovery. Accordingly, for CDBG–DR
purposes, economic revitalization may
include any CDBG–DR eligible activity that
demonstrably restores and improves the local
economy through job creation and retention
or by expanding access to goods and services.
The most common CDBG–DR eligible
activities to support economic revitalization
are outlined in 24 CFR 570.203 and 570.204
and sections 105(a)(14), (15), and (17) of the
HCDA.
Based on the U.S. Change Research
Program’s Fourth National Climate
Assessment, climate-related natural hazards,
extreme events, and natural disasters
disproportionately affect LMI individuals
who belong to underserved communities
because they are less able to prepare for,
respond to, and recover from the impacts of
extreme events and natural hazards, or are
members of communities that have
experienced significant disinvestment and
historic discrimination. Therefore, HUD is
imposing the following alternative
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requirement: When funding activities under
section 105(a) of the HCDA that support
economic revitalization, grantees must
prioritize those underserved communities
that have been impacted by the disaster and
that were economically distressed before the
disaster, as described further below in II.D.1.
The term ‘‘underserved communities’’
refers to populations sharing a particular
characteristic, as well as geographic
communities, that have been systematically
denied a full opportunity to participate in
aspects of economic, social, and civic life.
Underserved communities that were
economically distressed before the disaster
include, but are not limited to, those areas
that were designated as a Promise Zone,
Opportunity Zone, a Neighborhood
Revitalization Strategy Area, a tribal area, or
those areas that meet at least one of the
distress criteria established for the
designation of an investment area of
Community Development Financial
Institution at 12 CFR 1805.201(b)(3)(ii)(D).
Grantees undertaking an economic
revitalization activity must maintain
supporting documentation to demonstrate
how the grantee has prioritized underserved
communities for purposes of its activities
that support economic revitalization, as
described below in II.D.1.
II.D.1. Prioritizing economic revitalization
assistance—alternative requirement. When
funding activities outlined in 24 CFR 570.203
and 570.204 and sections 105(a)(14), (15),
and (17) of the HCDA, HUD is instituting an
alternative requirement in addition to the
other requirements in these provisions to
require grantees to prioritize assistance to
disaster-impacted businesses that serve
underserved communities and spur
economic opportunity for underserved
communities that were economically
distressed before the disaster.
II.D.2. National objective documentation
for activities that support economic
revitalization. 24 CFR 570.208(a)(4)(i)&(ii), 24
CFR 570.483(b)(4)(i)&(ii), 24 CFR
570.506(b)(5)&(6), and 24 CFR 1003.208(d)
are waived to allow the grantees under the
Consolidated Notice to identify the LMI jobs
benefit by documenting, for each person
employed, the name of the business, type of
job, and the annual wages or salary of the job.
HUD will consider the person incomequalified if the annual wages or salary of the
job is at or under the HUD-established
income limit for a one-person family. This
method replaces the standard CDBG
requirement—in which grantees must review
the annual wages or salary of a job in
comparison to the person’s total household
income and size (i.e., the number of persons).
Thus, this method streamlines the
documentation process by allowing the
collection of wage data for each position
created or retained from the assisted
businesses, rather than from each individual
household.
II.D.3. Public benefit for activities that
support economic revitalization. When
applicable, the public benefit provisions set
standards for individual economic
development activities (such as a single loan
to a business) and for the aggregate of all
economic development activities. Economic
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development activities support economic
revitalization. Currently, public benefit
standards limit the amount of CDBG
assistance per job retained or created, or the
amount of CDBG assistance per LMI person
to whom goods or services are provided by
the activity. These dollar thresholds can
impede recovery by limiting the amount of
assistance the grantee may provide to a
critical activity.
HUD waives the public benefit standards at
42 U.S.C. 5305(e)(3), 24 CFR 570.482(f)(1),
(2), (3), (4)(i), (5), and (6), and 570.209(b)(1),
(2), (3)(i), (4), and 24 CFR 1003.302(c) for all
economic development activities. Paragraph
(g) of 24 CFR 570.482 and paragraph (c) and
(d) under 570.209 are also waived to the
extent these provisions are related to public
benefit. However, grantees that choose to take
advantage of this waiver in lieu of complying
with public benefit standards under the
existing regulatory requirements shall be
subject to the following condition: grantees
shall collect and maintain documentation in
the project file on the creation and retention
of total jobs; the number of jobs within
appropriate salary ranges, as determined by
the grantee; the average amount of assistance
provided per job, by activity or program; and
the types of jobs. Additionally, grantees shall
report the total number of jobs created and
retained and the applicable national objective
in the DRGR system.
II.D.4. Clarifying note on Section 3 worker
eligibility and documentation requirements.
Section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701u)
(section 3) applies to CDBG–DR activities
that are section 3 projects, as defined at 24
CFR 75.3(a)(2). The purpose of section 3 is
to ensure that economic opportunities, most
importantly employment, generated by
certain HUD financial assistance shall be
directed to low- and very low-income
persons, particularly those who are recipients
of government assistance for housing or
residents of the community in which the
Federal assistance is spent. CDBG–DR
grantees are directed to HUD’s guidance
published in CPD Notice 2021–09, ‘‘Section
3 of the Housing and Urban Development Act
of 1968, as amended by the Housing and
Community Development Act of 1992, final
rule requirements for CDBG, CDBG–CV,
CDBG–DR, CDBG-Mitigation (CDBG–MIT),
NSP, section 108, and RHP projects,’’ as
amended (https://www.hud.gov/sites/dfiles/
OCHCO/documents/2021-09cpdn.pdf). All
direct recipients of CDBG–DR funding must
report section 3 information through the
DRGR system.
II.D.5. Waiver and modification of the job
relocation clause to permit assistance to help
a business return. CDBG requirements
prevent program participants from providing
assistance to a business to relocate from one
labor market area to another if the relocation
is likely to result in a significant loss of jobs
in the labor market from which the business
moved. This prohibition can be a critical
barrier to reestablishing and rebuilding a
displaced employment base after a major
disaster. Therefore, 42 U.S.C. 5305(h), 24
CFR 570.210, 24 CFR 570.482(h), and 24 CFR
1003.209, are waived to allow a grantee to
provide assistance to any business that was
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operating in the disaster-declared labor
market area before the incident date of the
applicable disaster and has since moved, in
whole or in part, from the affected area to
another state or to another labor market area
within the same state to continue business.
II.D.6. Underwriting. Notwithstanding
section 105(e)(1) of the HCDA, no CDBG–DR
funds may be provided to a for-profit entity
for an economic development project under
section 105(a)(17) of the HCDA unless such
project has been evaluated and selected in
accordance with guidelines developed by
HUD pursuant to section 105(e)(2) of the
HCDA for evaluating and selecting economic
development projects. Grantees and their
subrecipients are required to comply with the
underwriting guidelines in Appendix A to 24
CFR part 570 if they are using grant funds to
provide assistance to a for-profit entity for an
economic development project under section
105(a)(17) of the HCDA. The underwriting
guidelines are found at Appendix A of 24
CFR part 570.
II.D.7. Limitation on use of funds for
eminent domain. CDBG–DR funds may not
be used to support any Federal, state, or local
projects that seek to use the power of
eminent domain, unless eminent domain is
employed only for a public use. For purposes
of this paragraph, public use shall not be
construed to include economic development
that primarily benefits private entities. The
following shall be considered a public use for
the purposes of eminent domain: any use of
funds for (1) mass transit, railroad, airport,
seaport, or highway projects; (2) utility
projects that benefit or serve the general
public, including energy related,
communication-related, water related, and
wastewater-related infrastructure; (3) other
structures designated for use by the general
public or which have other common-carrier
or public-utility functions that serve the
general public and are subject to regulation
and oversight by the government; and (4)
projects for the removal of an immediate
threat to public health and safety, including
the removal of a brownfield as defined in the
Small Business Liability Relief and
Brownfields Revitalization Act (Pub. L. 107–
118).
III. Grant Administration
III.A. Pre-Award Evaluation of Management
and Oversight of Funds
III.A.1. Certification of financial controls
and procurement processes, and adequate
procedures for proper grant management.
Appropriations acts require that the Secretary
certify that the grantee has in place proficient
financial controls and procurement processes
and has established adequate procedures to
prevent any duplication of benefits as
defined by section 312 of the Stafford Act, 42
U.S.C. 5155, to ensure timely expenditure of
funds, to maintain a comprehensive website
regarding all disaster recovery activities
assisted with these funds, and to detect and
prevent waste, fraud, and abuse of funds.
III.A.1.a. Documentation requirements. To
enable the Secretary to make this
certification, each grantee must submit to
HUD the certification documentation listed
below. This information must be submitted
within 60 days of the applicability date of the
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Allocation Announcement Notice, or with
the grantee’s submission of its action plan in
DRGR as described in section III.C.1,
whichever date is earlier. If required by
appropriations acts, grant agreements will
not be executed until the Secretary has
issued a certification for the grantee. For each
of the items (1) through (6) below
(collectively referred to as the ‘‘Financial
Management and Grant Compliance
Certification Requirements’’) the grantee
must certify to the accuracy of its submission
when submitting the Financial Management
and Grant Compliance Certification Checklist
(the ‘‘Certification Checklist’’). The
Certification Checklist is a document that
incorporates all of the Financial Management
and Grant Compliance Certification
Requirements. Not all of the requirements in
(1) through (6) below are appropriate or
applicable to Indian tribes. Therefore, Indian
tribes that receive an allocation directly from
HUD may request an alternative method to
document support for the Secretary’s
certification.
(1) Proficient financial management
controls. A grantee has proficient financial
management controls if each of the following
criteria is satisfied:
(a) The grantee agency administering this
grant submits its most recent single audit and
consolidated annual financial report (CAFR),
which in HUD’s determination indicates that
the grantee has no material weaknesses,
deficiencies, or concerns that HUD considers
to be relevant to the financial management of
CDBG, CDBG–DR, or CDBG–MIT funds. If the
single audit or CAFR identified weaknesses
or deficiencies, the grantee must provide
documentation satisfactory to HUD showing
how those weaknesses have been removed or
are being addressed.
(b) The grantee has completed and
submitted the certification documentation
required in the applicable Certification
Checklist. The grantee’s documentation must
demonstrate that the standards meet the
requirements in the Consolidated Notice and
the Certification Checklist.
(2) Each grantee must provide HUD its
procurement processes for review, so HUD
may evaluate the grantee’s processes to
determine that they are based on principles
of full and open competition. A grantee’s
procurement processes must comply with the
procurement requirements at section IV.B.
(a) A state grantee has proficient
procurement processes if HUD determines
that its processes uphold the principles of
full and open competition and include an
evaluation of the cost or price of the product
or service, and if its procurement processes
reflect that it:
(i) adopted 2 CFR 200.318 through 200.327;
(ii) follows its own state procurement
policies and procedures and establishes
requirements for procurement processes for
local governments and subrecipients based
on full and open competition pursuant to 24
CFR 570.489(g), and the requirements for the
state, its local governments, and
subrecipients include evaluation of the cost
or price of the product or service; or
(iii) adopted 2 CFR 200.317, meaning that
it will follow its own state procurement
processes and evaluate the cost or price of
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the product or service, but impose 2 CFR
200.318 through 200.327 on its subrecipients.
(b) A local government grantee has
proficient procurement processes if the
processes are consistent with the specific
applicable procurement standards identified
in 2 CFR 200.318 through 200.327. When the
grantee provides a copy of its procurement
processes, it must indicate the sections that
incorporate these provisions.
(c) An Indian tribe grantee has proficient
procurement processes if its procurement
standards are consistent with procurement
requirements in 2 CFR part 200 imposed by
24 CFR 1003.501, and additional
procurement requirements in 1003.509(e)
and 1003.510.
(3) Duplication of benefits. A grantee has
adequate policies and procedures to prevent
the duplication of benefits (DOB) if the
grantee submits and identifies a uniform
process that reflects the requirements in
section IV.A of the Consolidated Notice,
including:
(a) determining all disaster assistance
received by the grantee or applicant and all
reasonably identifiable financial assistance
available to the grantee or applicant, as
applicable, before committing funds or
awarding assistance;
(b) determining a grantee’s or an
applicant’s unmet need(s) for CDBG–DR
assistance before committing funds or
awarding assistance; and
(c) requiring beneficiaries to enter into a
signed agreement to repay any duplicative
assistance if they later receive additional
assistance for the same purpose for which the
CDBG–DR award was provided. The grantee
must identify a method to monitor
compliance with the agreement for a
reasonable period (i.e., a time period
commensurate with risk) and must articulate
this method in its policies and procedures,
including the basis for the period during
which the grantee will monitor compliance.
This agreement must also include the
following language: ‘‘Warning: Any person
who knowingly makes a false claim or
statement to HUD or causes another to do so
may be subject to civil or criminal penalties
under 18 U.S.C. 2, 287, 1001 and 31 U.S.C.
3729.’’
Policies and procedures of the grantee
submitted to support the certification must
provide that before the award of assistance,
the grantee will use the best, most recent
available data from FEMA, the Small
Business Administration (SBA), insurers, and
any other sources of local, state, and Federal
sources of funding to prevent the duplication
of benefits.
(4) Timely expenditures. A grantee has
adequate policies and procedures to
determine timely expenditures if it submits
policies and procedures that indicate the
following to HUD: how it will track and
document expenditures of the grantee and its
subrecipients (both actual and projected
reported in performance reports); how it will
account for and manage program income;
how it will reprogram funds in a timely
manner for activities that are stalled; and
how it will project expenditures of all CDBG–
DR funds within the period provided for in
section V.A.
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(5) Comprehensive disaster recovery
website. A grantee has adequate policies and
procedures to maintain a comprehensive
accessible website if it submits policies and
procedures indicating to HUD that the
grantee will have a separate web page
dedicated to its disaster recovery activities
assisted with CDBG–DR funds that includes
the information described at section
III.D.1.d.—e. The procedures must also
indicate the frequency of website updates. At
minimum, grantees must update their
website quarterly.
(6) Procedures to detect and prevent fraud,
waste, and abuse. A grantee has adequate
procedures to detect and prevent fraud,
waste, and abuse if it submits procedures that
indicate:
(a) how the grantee will verify the accuracy
of information provided by applicants;
(b) the criteria to be used to evaluate the
capacity of potential subrecipients;
(c) the frequency with which the grantee
will monitor other agencies of the grantee
that will administer CDBG–DR funds, and
how it will monitor subrecipients,
contractors, and other program participants,
and why monitoring is to be conducted and
which items are to be monitored;
(d) it has or will hire an internal auditor
that provides both programmatic and
financial oversight of grantee activities, and
has adopted policies that describes the
auditor’s role in detecting fraud, waste, and
abuse, which policies must be submitted to
HUD;
(e) (i) for states or grantees subject to the
same requirements as states, a written
standard of conduct and conflicts of interest
policy that complies with the requirements of
24 CFR 570.489(g) and (h) and subparagraph
III.A.1.a(2)(a) of the Consolidated Notice,
which policy includes the process for
promptly identifying and addressing such
conflicts;
(ii) for units of general local government or
grantees subject to the same requirements as
units of general local government, a written
standard of conduct and conflicts of interest
policy that complies with 24 CFR 570.611
and 2 CFR 200.318, as applicable, which
includes the process for promptly identifying
and addressing such conflicts;
(iii) for Indian tribes, a written standard of
conduct and conflicts of interest policy that
complies with 24 CFR 1003.606, as
applicable; and
(f) it assists in investigating and taking
action when fraud occurs within the
grantee’s CDBG–DR activities and/or
programs. All grantees receiving CDBG–DR
funds for the first time shall attend and
require subrecipients to attend fraud related
training provided by HUD OIG, when offered,
to assist in the proper management of CDBG–
DR grant funds. Instances of fraud, waste,
and abuse should be referred to the HUD OIG
Fraud Hotline (phone: 1–800–347–3735 or
email: hotline@hudoig.gov).
Following a disaster, property owners and
renters are frequently the targets of persons
fraudulently posing as government
employees, creditors, mortgage servicers,
insurance adjusters, and contractors. The
grantee’s procedures must address how the
grantee will make CDBG–DR beneficiaries
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aware of the risks of contractor fraud and
other potentially fraudulent activity that can
occur in communities recovering from a
disaster. Grantees must provide CDBG–DR
beneficiaries with information that raises
awareness of possible fraudulent activity,
how the fraud can be avoided, and what local
or state agencies to contact to take action and
protect the grantee and beneficiary
investment. The grantee’s procedures must
address the steps it will take to assist a
CDBG–DR beneficiary if the beneficiary
experiences contractor or other fraud. If the
beneficiary is eligible for additional
assistance as a result of the fraudulent
activity and the creation of remaining unmet
need, the procedures must also address what
steps the grantee will follow to provide the
additional assistance.
III.A.1.b. Relying on prior submissions—
financial management and grant compliance
certification requirements. This section only
applies once a grantee has received a CDBG–
DR grant through an Allocation
Announcement Notice that makes the
Consolidated Notice applicable. After that
original grant, if a CDBG–DR grantee is
awarded a subsequent CDBG–DR grant, HUD
will rely on the grantee’s prior submissions
provided in response to the Financial
Management and Grant Compliance
Certification Requirements in the
Consolidated Notice. HUD will continue to
monitor the grantee’s submissions and
updates made to policies and procedures
during the normal course of business. The
grantee must notify HUD of any substantial
changes made to these submissions.
If a CDBG–DR grantee is awarded a
subsequent CDBG–DR grant, and it has been
more than three years since the executed
grant agreement for the original CDBG–DR
grant or a subsequent grant is equal to or
greater than ten times the amount of the
original CDBG–DR grant, grantees must
update and resubmit the documentation
required by paragraph III.A.1.a. with the
completed Certification Checklist to enable
the Secretary to certify that the grantee has
in place proficient financial controls and
procurement processes, and adequate
procedures for proper grant management.
However, the Secretary may require any
CDBG–DR grantee to update and resubmit the
documentation required by paragraph
III.A.1.a., if there is good cause to require it.
III.A.2. Implementation plan. HUD requires
each grantee to demonstrate that it has
sufficient capacity to manage the CDBG–DR
funds and the associated risks. Grantees must
evidence their management capacity through
their implementation plan submissions.
These submissions must meet the criteria
below and must be submitted within 120
days of the applicability date of the
governing Allocation Announcement Notice
or with the grantee’s submission of its action
plan, whichever is earlier, unless the grantee
has requested, and HUD has approved an
extension of the submission deadline.
III.A.2.a. To enable HUD to assess risk as
described in 2 CFR 200.206, the grantee will
submit an implementation plan to HUD. The
implementation plan must describe the
grantee’s capacity to carry out the recovery
and how it will address any capacity gaps.
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HUD will determine that the grantee has
sufficient management capacity to adequately
reduce risk if the grantee submits
implementation plan documentation that
addresses (1) through (3) below:
(1) Capacity assessment. The grantee
identifies the lead agency responsible for
implementation of the CDBG–DR award and
indicates that the head of that agency will
report directly to the chief executive officer
of the jurisdiction. The grantee has
conducted an assessment of its capacity to
carry out CDBG–DR recovery efforts and has
developed a timeline with milestones
describing when and how the grantee will
address all capacity gaps that are identified.
The assessment must include a list of any
open CDBG–DR findings and an update on
the corrective actions undertaken to address
each finding.
(2) Staffing. The grantee must submit an
organizational chart of its department or
division and must also provide a table that
clearly indicates which personnel or
organizational unit will be responsible for
each of the Financial Management and Grant
Compliance Certification Requirements
identified in section III.A.1.a. along with staff
contact information, if available (i.e.,
personnel responsible for conducting DOB
analysis, timely expenditure, website
management, monitoring and compliance,
and financial management). The grantee must
also submit documentation demonstrating
that it has assessed staff capacity and
identified positions for the purpose of: case
management in proportion to the applicant
population; program managers who will be
assigned responsibility for each primary
recovery area; staff who have demonstrated
experience in housing, infrastructure (as
applicable), and economic revitalization (as
applicable); staff responsible for
procurement/contract management,
regulations implementing section 3 of the
Housing and Urban Development Act of
1968, as amended (24 CFR part 75) (section
3), fair housing compliance, and
environmental compliance. An adequate plan
must also demonstrate that the internal
auditor and responsible audit staff report
independently to the chief elected or
executive officer or board of the governing
body of any designated administering entity.
The grantee’s implementation plan must
describe how it will provide technical
assistance for any personnel that are not
employed by the grantee at the time of action
plan submission, and to fill gaps in
knowledge or technical expertise required for
successful and timely recovery. State
grantees must also include how it plans to
provide technical assistance to subgrantees
and subrecipients, including units of general
local government.
(3) Internal and interagency coordination.
The grantee’s plan must describe how it will
ensure effective communication between
different departments and divisions within
the grantee’s organizational structure that are
involved in CDBG–DR-funded recovery
efforts, mitigation efforts, and environmental
review requirements, as appropriate; between
its lead agency and subrecipients responsible
for implementing the grantee’s action plan;
and with other local and regional planning
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efforts to ensure consistency. The grantee’s
submissions must demonstrate how it will
consult with other relevant government
agencies, including the State Hazard
Mitigation Officer (SHMO), State or local
Disaster Recovery Coordinator, floodplain
administrator, and any other state and local
emergency management agencies, such as
public health and environmental protection
agencies, that have primary responsibility for
the administration of FEMA or USACE funds.
III.A.2.b. Relying on prior submissions—
Implementation plan. This section only
applies once a grantee has received a CDBG–
DR grant through an Allocation
Announcement Notice that makes the
Consolidated Notice applicable. After that
original grant, if a CDBG–DR grantee is
awarded a subsequent CDBG–DR grant, HUD
will rely on the grantee’s implementation
plan submitted for its original CDBG–DR
grant unless it has been more than three years
since the executed grant agreement for the
original CDBG–DR grant or the subsequent
grant is equal to or greater than ten times the
amount of its original CDBG–DR grant.
If a CDBG–DR grantee is awarded a
subsequent CDBG–DR grant, and it has been
more than three years since the executed
grant agreement for its original CDBG–DR
grant or a subsequent grant is equal to or
greater than ten times the amount of the
original CDBG–DR grant, the grantee is to
update and resubmit its implementation plan
to reflect any changes to its capacity, staffing,
and coordination.
III.B. Administration, Planning, and
Financial Management
III.B.1. Grant administration and planning.
III.B.1.a. Grantee responsibilities. Each
grantee shall administer its award in
compliance with all applicable laws and
regulations and shall be financially
accountable for the use of all awarded funds.
CDBG–DR grantees must comply with the
recordkeeping requirements of 24 CFR
570.506 and 24 CFR 570.490, as amended by
the Consolidated Notice waivers and
alternative requirements. All grantees must
maintain records of performance in DRGR, as
described elsewhere in the Consolidated
Notice.
III.B.1.b. Grant administration cap. Up to
five percent of the grant (plus five percent of
program income generated by the grant) can
be used for administrative costs by the
grantee, units of general local government, or
subrecipients. Thus, the total of all costs
classified as administrative for a CDBG–DR
grant must be less than or equal to the five
percent cap (plus five percent of program
income generated by the grant). The cap for
administrative costs is subject to the
combined technical assistance and
administrative cap for state grantees as
discussed in section III.B.2.a.
III.B.1.c. Use of funds for administrative
costs across multiple grants. The Additional
Supplemental Appropriations for Disaster
Relief Act, 2019 (Pub. L. 116–20) authorized
special treatment for eligible administrative
costs for grantees that received awards under
Public Laws 114–113, 114–223, 114–254,
115–31, 115–56, 115–123, 115–254, 116–20,
or any future act. The Consolidated Notice
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permits grantees to use eligible
administrative funds (up to five percent of
each grant award plus up to five percent of
program income generated by the grant) for
the cost of administering any of these grants
awarded under the identified Public Laws
(including future Acts) without regard to the
particular disaster appropriation from which
such funds originated. To exercise this
authority, the grantee must ensure that it has
appropriate financial controls to guarantee
that the amount of grant administration
expenditures for each of the aforementioned
grants will not exceed five percent of the
total grant award for each grant (plus five
percent of program income generated by the
grant). The grantee must review and modify
any financial management policies and
procedures regarding the tracking and
accounting of administration costs as
necessary.
III.B.1.d. Planning expenditures cap. Both
state and local government grantees are
limited to spending a maximum of fifteen
percent of their total grant amount on
planning costs. Planning costs subject to the
15 percent cap are those defined in 42 U.S.C.
5305(a)(12) and more broadly in 24 CFR
570.205.
III.B.2. State grantees only.
III.B.2.a. Combined technical assistance
and administrative cap (state grantees only).
The provisions of 42 U.S.C. 5306(d) and 24
CFR 570.489(a)(1)(i) and (iii), and 24 CFR
570.489(a)(2) shall not apply to the extent
that they cap administration and technical
assistance expenditures, limit a state’s ability
to charge a nominal application fee for grant
applications for activities the state carries out
directly, and require a dollar-for-dollar match
of state funds for administrative costs
exceeding $100,000. 42 U.S.C. 5306(d)(5) and
(6) are waived and replaced with the
alternative requirement that the aggregate
total for administrative and technical
assistance expenditures must not exceed five
percent of the grant, plus five percent of
program income generated by the grant.
III.B.2.b. Planning-only activities (state
grantees only). The State CDBG Program
requires that, for planning-only grants, local
government grant recipients must document
that the use of funds meets a national
objective. In the CDBG Entitlement Program,
these more general planning activities are
presumed to meet a national objective under
the requirements at 24 CFR 570.208(d)(4).
HUD notes that almost all effective recoveries
in the past have relied on some form of areawide or comprehensive planning activity to
guide overall redevelopment independent of
the ultimate source of implementation funds.
To assist state grantees, HUD is waiving the
requirements at 24 CFR 570.483(b)(5) and
(c)(3), which limit the circumstances under
which the planning activity can meet a lowand moderate-income or slum-and-blight
national objective. Instead, as an alternative
requirement, 24 CFR 570.208(d)(4) applies to
states when funding disaster recoveryassisted, planning-only grants, or when
directly administering planning activities
that guide disaster recovery. In addition, 42
U.S.C. 5305(a)(12) is waived to the extent
necessary so the types of planning activities
that states may fund or undertake are
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expanded to be consistent with those of
CDBG Entitlement grantees identified at 24
CFR 570.205.
III.B.2.c. Direct grant administration and
means of carrying out eligible activities (state
grantees only). Requirements at 42 U.S.C.
5306(d) are waived to allow a state to use its
disaster recovery grant allocation directly to
carry out state-administered activities eligible
under the Consolidated Notice, rather than
distribute all funds to local governments.
Pursuant to this waiver and alternative
requirement, the standard at 24 CFR
570.480(c) and the provisions at 42 U.S.C.
5304(e)(2) will also include activities that the
state carries out directly. Activities eligible
under the Consolidated Notice may be
carried out by a state, subject to state law and
consistent with the requirement of 24 CFR
570.200(f), through its employees, through
procurement contracts, or through assistance
provided under agreements with
subrecipients. State grantees continue to be
responsible for civil rights, labor standards,
and environmental protection requirements,
for compliance with 24 CFR 570.489(g) and
(h), and subparagraph III.A.1.a.(2)(a) of the
Consolidated Notice relating to conflicts of
interest, and for compliance with 24 CFR
570.489(m) relating to monitoring and
management of subrecipients.
A state grantee may also carry out activities
in tribal areas. A state must coordinate with
the Indian tribe with jurisdiction over the
tribal area when providing CDBG–DR
assistance to beneficiaries in tribal areas.
State grantees carrying out projects in tribal
areas, either directly or through its
employees, through procurement contracts,
or through assistance provided under
agreements with subrecipients, must obtain
the consent of the Indian tribe with
jurisdiction over the tribal area to allow the
state grantee to carry out or to fund CDBG–
DR projects in the area.
III.B.2.d. Waiver and alternative
requirement for distribution to CDBG
metropolitan cities and urban counties (state
grantees only). 42 U.S.C. 5302(a)(7)
(definition of ‘‘nonentitlement area’’) and
related provisions of 24 CFR part 570,
including 24 CFR 570.480, are waived to
permit state grantees to distribute CDBG–DR
funds to units of local government and
Indian tribes.
III.B.2.e. Use of subrecipients (state
grantees only). Paragraph III.B.2.c. provides a
waiver and alternative requirement that a
state may carry out activities directly,
including through assistance provided under
agreements with subrecipients. Therefore,
when states carry out activities directly
through subrecipients, the following
alternative requirements apply: the state is
subject to the definition of subrecipients at
24 CFR 570.500(c) and must adhere to the
requirements for agreements with
subrecipients at 24 CFR 570.503.
Additionally, 24 CFR 570.503(b)(4) is
modified to require the subrecipient to
comply with applicable uniform
requirements, as described in 24 CFR
570.502, except that the subrecipient shall
follow procurement requirements imposed
by the state in accordance with subparagraph
III.A.1.a.(2) of the Consolidated Notice. When
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24 CFR 570.503 applies, notwithstanding 24
CFR 570.503(b)(5)(i), units of general local
government that are subrecipients are
defined as recipients under 24 CFR part 58
and are therefore responsible entities that
assume environmental review
responsibilities, as described in III.F.5.
Grantees are reminded that they are
responsible for providing on-going oversight
and monitoring of subrecipients and are
ultimately responsible for subrecipient
compliance with all CDBG–DR requirements.
III.B.2.f. Recordkeeping (state grantees
only). When a state carries out activities
directly, 24 CFR 570.490(b) is waived and the
following alternative provision shall apply: a
state grantee shall establish and maintain
such records as may be necessary to facilitate
review and audit by HUD of the state’s
administration of CDBG–DR funds, under 24
CFR 570.493 and reviews and audits by the
state under III.B.2.h. Consistent with
applicable statutes, regulations, waivers and
alternative requirements, and other Federal
requirements, the content of records
maintained by the state shall be sufficient to:
(a) enable HUD to make the applicable
determinations described at 24 CFR 570.493;
(b) make compliance determinations for
activities carried out directly by the state;
and (c) show how activities funded are
consistent with the descriptions of activities
proposed for funding in the action plan and/
or DRGR system. For fair housing and equal
opportunity purposes, and as applicable,
such records shall include data on the racial,
ethnic, and gender characteristics of persons
who are applicants for, participants in, or
beneficiaries of the program.
III.B.2.g. Change of use of real property
(state grantees only). This alternative
requirement conforms the change of use of
real property rule to the waiver allowing a
state to carry out activities directly. For
purposes of these grants, all references to
‘‘unit of general local government’’ in 24 CFR
570.489(j), shall be read as ‘‘state, local
governments, or Indian tribes (either as
subrecipients or through a method of
distribution), or other state subrecipient.’’
III.B.2.h. Responsibility for review and
handling of noncompliance (state grantees
only). This change is in conformance with
the waiver allowing a state to carry out
activities directly. 24 CFR 570.492 is waived,
and the following alternative requirement
applies for any state receiving a direct award:
the state shall make reviews and audits,
including on-site reviews of any local
governments or Indian tribes (either as
subrecipients or through a method of
distribution) designated public agencies, and
other subrecipients, as may be necessary or
appropriate to meet the requirements of
section 104(e)(2) of the HCDA, as amended,
and as modified by the Consolidated Notice.
In the case of noncompliance with these
requirements, the state shall take such
actions as may be appropriate to prevent a
continuance of the deficiency, mitigate any
adverse effects or consequences, and prevent
a recurrence. The state shall establish
remedies for noncompliance by any
subrecipients, designated public agencies, or
local governments.
III.B.2.i. Consultation (state grantees only).
Currently, the HCDA and regulations require
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a state grantee to consult with affected local
governments in nonentitlement areas of the
state in determining the state’s proposed
method of distribution. HUD is waiving 42
U.S.C. 5306(d)(2)(C)(iv), 42 U.S.C.
5306(d)(2)(D), 24 CFR 91.325(b)(2), and 24
CFR 91.110, and imposing an alternative
requirement that states receiving an
allocation of CDBG–DR funds consult with
all disaster-affected local governments
(including any CDBG-entitlement grantees),
Indian tribes, and any public housing
authorities in determining the use of funds.
This approach ensures that a state grantee
sufficiently assesses the recovery needs of all
areas affected by the disaster.
III.C. Action Plan for Disaster Recovery
Waiver and Alternative Requirement
Requirements for CDBG actions plans,
located at 42 U.S.C. 5304(a)(1), 42 U.S.C.
5304(m), 42 U.S.C. 5306(a)(1), 42 U.S.C.
5306(d)(2)(C)(iii), 42 U.S.C. 12705(a)(2), and
24 CFR 91.220 and 91.320, are waived for
CDBG–DR grants. Instead, grantees must
submit to HUD an action plan for disaster
recovery which will describe programs and
activities that conform to applicable
requirements as specified in the Consolidated
Notice and the applicable Allocation
Announcement Notice. HUD will monitor the
grantee’s actions and use of funds for
consistency with the plan, as well as meeting
the performance and timeliness objectives
therein. The Secretary will disapprove all
action plans that are substantially incomplete
if it is determined that the plan does not
satisfy all of the required elements identified
in the Consolidated Notice and the
applicable Allocation Announcement Notice.
III.C.1. Action plan. The grantee’s action
plan must identify the use of all funds—
including criteria for eligibility and how the
uses address long-term recovery needs,
restoration of infrastructure and housing,
economic revitalization, and the
incorporation of mitigation measures in the
MID areas. HUD created the Public Action
Plan in DRGR which is a function that allows
grantees to develop and submit their action
plans for disaster recovery directly into
DRGR. Grantees must use HUD’s Public
Action Plan in DRGR to develop all CDBG–
DR action plans and substantial amendments
submitted to HUD for approval. The Public
Action Plan is different from the DRGR
Action Plan, which is a comprehensive
description of projects and activities in
DRGR.
The grantee must describe the steps it will
follow to make the action plan, substantial
amendments, performance reports, and other
relevant program materials available in a
form accessible to persons with disabilities
and those with limited English proficiency
(LEP). All grantees must include sufficient
information in its action plan so that all
interested parties will be able to understand
and comment on the action plan. The action
plan (and subsequent amendments) must
include a single chart or table that illustrates,
at the most practical level, how all funds are
budgeted (e.g., by program, subrecipient,
grantee-administered activity, or other
category). The grantee must certify, as
required by section III.F.7., that activities to
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be undertaken with CDBG–DR funds are
consistent with its action plan.
The action plan must contain:
III.C.1.a. An impact and unmet needs
assessment. Each grantee must develop an
impact and unmet needs assessment to
understand the type and location of
community needs and to target limited
resources to those areas with the greatest
need. CDBG–DR grantees must conduct an
impact and unmet needs assessment to
inform the use of the grant. Grantees must
cite data sources in the impact and unmet
needs assessment. At a minimum, the impact
and unmet needs assessment must:
• Evaluate all aspects of recovery
including housing (interim and permanent,
owner and rental, single family and
multifamily, affordable and market rate, and
housing to meet the needs of persons who
were experiencing homelessness predisaster), infrastructure, and economic
revitalization needs, while also incorporating
mitigation needs into activities that support
recovery as required in section II.A.2.;
• Estimate unmet needs to ensure CDBG–
DR funds meet needs that are not likely to
be addressed by other sources of funds by
accounting for the various forms of assistance
available to, or likely to be available to,
affected communities (e.g., projected FEMA
funds) and individuals (e.g., estimated
insurance) and, using the most recent
available data, estimating the portion of need
unlikely to be addressed by insurance
proceeds, other Federal assistance, or any
other funding sources;
• Assess whether public services (e.g.,
housing counseling, legal advice and
representation, job training, mental health,
and general health services) are necessary to
complement activities intended to address
housing, infrastructure, and economic
revitalization and how those services would
need to be made accessible to individuals
with disabilities including, but not limited
to, mobility, sensory, developmental,
emotional, cognitive, and other impairments;
• Describe the extent to which
expenditures for planning activities,
including the determination of land use goals
and policies, will benefit the HUD-identified
MID areas, as described in section II.A.3.;
• Describe disaster impacts geographically
by type at the lowest level practicable (e.g.,
county/parish level or lower if available for
states, and neighborhood or census tract level
for cities); and
• Take into account the costs and benefits
of incorporating hazard mitigation measures
to protect against the specific identified
impacts of future extreme weather events and
other natural hazards. This analysis should
factor in historical and projected data on risk
that incorporates best available science (e.g.,
the most recent National Climate
Assessment).
Disaster recovery needs evolve over time
and grantees must amend the impact and
unmet needs assessment and action plan as
additional needs are identified and
additional resources become available. At a
minimum, grantees must revisit and update
the impact and unmet needs assessment
when moving funds from one program to
another through a substantial amendment.
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III.C.1.b. Connection of programs and
projects to unmet needs. The grantee must
describe the connection between identified
unmet needs and the allocation of CDBG–DR
resources. The plan must provide a clear
connection between a grantee’s impact and
unmet needs assessment and its proposed
programs and projects in the MID areas (or
outside in connection to the MID areas as
described in section II.A.3). Such description
must demonstrate a reasonably proportionate
allocation of resources relative to areas and
categories (i.e., housing, economic
revitalization, and infrastructure) of greatest
needs identified in the grantee’s impact and
unmet needs assessment or provide an
acceptable justification for a disproportional
allocation, while also incorporating hazard
mitigation measures to reduce the impacts of
recurring natural disasters and the long-term
impacts of climate change. Grantee action
plans may provide for the allocation of funds
for administration and planning activities
and for public service activities, subject to
the caps on such activities as described in the
Consolidated Notice.
III.C.1.c. Public housing, affordable rental
housing, and housing for vulnerable
populations. Each grantee must include a
description of how it has analyzed,
identified, and will address (with CDBG–DR
or other sources) the disaster-related
rehabilitation, reconstruction, and new
construction needs in the MID-area of the
types of housing described below.
Specifically, a grantee must assess and
describe how it will address unmet needs in
the following types of housing, subject to the
applicable HUD program requirements:
public housing, affordable rental housing
(including both subsidized and market rate
affordable housing), and housing for
vulnerable populations (See section
III.C.1.c.iii below), including emergency
shelters and permanent housing for persons
experiencing homelessness, in the areas
affected by the disaster. Grantees must
coordinate with local public housing
authorities (PHA) in the MID areas to ensure
that the grantee’s representation in the action
plan reflects the input of those entities as
well as coordinating with State Housing
Finance agencies to make sure that all
funding sources that are available and
opportunities for leverage are noted in the
action plan.
(i) Public housing: Describe unmet public
housing needs of each disaster-impacted
PHA within its jurisdiction, if applicable.
The grantee must work directly with
impacted PHAs in identifying necessary and
reasonable costs and ensuring that adequate
funding from all available sources is
dedicated to addressing the unmet needs of
damaged public housing (e.g., FEMA,
insurance, and funds available from
programs administered by HUD’s Office of
Public and Indian Housing).
(ii) Affordable rental housing: Describe
unmet affordable rental housing needs for
LMI households as a result of the disaster or
exacerbated by the disaster, including private
market units receiving project-based rental
assistance or with tenants that participate in
the section 8 Housing Choice Voucher
Program, and any other housing that is
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assisted under a HUD program in the MID
areas. Identify funding to specifically address
these unmet needs for affordable rental
housing to LMI households. If a grantee is
proposing an allocation of CDBG–DR funds
for affordable rental housing needs, the
action plan must, at a minimum, meet the
requirements described in II.B.3.
(iii) Housing for vulnerable populations:
Describe how CDBG–DR or other funding
sources available will promote housing for
vulnerable populations, as defined in section
III.C.1.d., in the MID area, including how it
plans to address: (1) transitional housing,
including emergency shelters and housing for
persons experiencing homelessness,
permanent supportive housing, and
permanent housing needs of individuals and
families (including subpopulations) that are
experiencing or at risk of experiencing
homelessness; (2) the prevention of lowincome individuals and families with
children (especially those with incomes
below thirty percent of the area median) from
becoming homeless; (3) the special needs of
persons who are not experiencing
homelessness but require supportive housing
(i.e., elderly, frail elderly, persons with
disabilities (mental, physical, developmental,
etc.), victims of domestic violence, persons
with alcohol or other substance-use disorder,
persons with HIV/AIDS and their families,
and public housing residents, as identified in
24 CFR 91.315(e)).
III.C.1.d. Fair housing, civil rights data,
and advancing equity.
The grantee must use its CDBG–DR funds
in a manner that complies with its fair
housing and nondiscrimination obligations,
including title VI of the Civil Rights Act of
1964, 42 U.S.C. 2000d et seq., the Fair
Housing Act, 42 U.S.C. 3601—19, section 504
of the Rehabilitation Act of 1973, 29 U.S.C.
794, the Americans with Disabilities Act of
1990, 42 U.S.C. 12131 et seq., and section
109 of the HCDA, 42 U.S.C. 5309. To ensure
that the activities performed in connection
with the action plan will comply with these
requirements, the grantee must provide an
assessment of whether its planned use of
CDBG–DR funds will have an unjustified
discriminatory effect on or failure to benefit
racial and ethnic minorities in proportion to
their communities’ needs, particularly in
racially and ethnically concentrated areas of
poverty, and how it will address the recovery
needs of impacted individuals with
disabilities.
Grantees should also consider the impact
of their planned use of CDBG–DR funds on
other protected class groups under fair
housing and civil rights laws, vulnerable
populations, and other historically
underserved communities. For purposes of
the Consolidated Notice, HUD defines
vulnerable populations as a group or
community whose circumstances present
barriers to obtaining or understanding
information or accessing resources. In the
action plan, grantees should identify those
populations (i.e., which protected class,
vulnerable population, and historically
underserved groups were considered) and
how those groups can be expected to benefit
from the activities set forth in the plan
consistent with the civil rights requirements
set forth above.
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To perform such an assessment, grantees
must include data for the HUD-identified and
grantee-identified MID areas that identifies
the following information, as it is available:
• Racial and ethnic make-up of the
population, including relevant subpopulations depending on activities and
programs outlined in the plan (this would
include renters and homeowners if eligibility
is dependent on housing tenure) and the
specific sub- geographies in the MID areas in
which those programs and activities will be
carried out;
• LEP populations, including number and
percentage of each identified group;
• Number and percentage of persons with
disabilities;
• Number and percentage of persons
belonging to Federally protected classes
under the Fair Housing Act (race, color,
national origin, religion, sex—which
includes sexual orientation and gender
identity—familial status, and disability) and
other vulnerable populations as determined
by the grantee;
• Indigenous populations and tribal
communities, including number and
percentage of each identified group;
• Racially and ethnically concentrated
areas and concentrated areas of poverty; and
• Historically distressed and underserved
communities;
Grantees must explain how the use of
funds will reduce barriers that individuals
may face when enrolling in and accessing
CDBG–DR assistance, for example, barriers
imposed by a lack of outreach to their
community or by the lack of information in
non-English languages or accessible formats
for individuals with different types of
disabilities.
Grantees are strongly encouraged to
include examples of how their proposed
allocations, selection criteria, and other
actions can be expected to advance equity for
protected class groups. Grantees are strongly
encouraged to explain and provide examples
of how their actions can be expected to
advance the following objectives:
• Equitably benefit protected class groups
in the MID areas, including racial and ethnic
minorities, and sub geographies in the MID
areas in which residents belonging to such
groups are concentrated;
• To the extent consistent with purposes
and uses of CDBG–DR funds, overcome prior
disinvestment in infrastructure and public
services for protected class groups, and areas
in which residents belonging to such groups
are concentrated, when addressing unmet
needs;
• Enhance for individuals with disabilities
in the MID areas (a) the accessibility of
disaster preparedness, resilience, or recovery
services, including the accessibility of
evacuation services and shelters; (b) the
provision of critical disaster-related
information in accessible formats; and/or (c)
the availability of integrated, accessible
housing and supportive services.
Grantees must identify the proximity of
natural and environmental hazards (e.g.,
industrial corridors, sewage treatment
facilities, waterways, EPA superfund sites,
brownfields, etc.) to affected populations in
the MID area, including members of
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protected classes, vulnerable populations,
and underserved communities and explore
how CDBG–DR activities may mitigate
environmental concerns and increase
resilience among these populations to protect
against the effects of extreme weather events
and other natural hazards.
Grantees must also describe how their use
of CDBG–DR funds is consistent with their
obligation to affirmatively further fair
housing. HUD regulations at 24 CFR 5.151
provide that affirmatively furthering fair
housing means taking meaningful actions, in
addition to combating discrimination, that
overcome patterns of segregation and foster
inclusive communities free from barriers that
restrict access to opportunity based on
protected characteristics. Specifically,
affirmatively furthering fair housing means
taking meaningful actions that, taken
together, address significant disparities in
housing needs and in access to opportunity,
replacing segregated living patterns with
truly integrated and balanced living patterns,
transforming racially or ethnically
concentrated areas of poverty into areas of
opportunity, and fostering and maintaining
compliance with civil rights and fair housing
laws.
State and local government grantees must
submit a certification to AFFH in accordance
with 24 CFR 5.150, et. seq. CDBG–DR
grantees must also comply with the
recordkeeping requirements of 24 CFR
570.506 and 24 CFR 570.490(b), as amended
by the Consolidated Notice.
III.C.1.e. Infrastructure. In its action plan,
each grantee must include a description of
how it plans to meet the requirements of the
Consolidated Notice, including how it will:
promote sound, sustainable long-term
recovery planning as described in this
section; adhere to the elevation requirements
established in section II.C.2.; and coordinate
with local and regional planning efforts as
described in section III.B.2.i and III.D.1.a. All
infrastructure investments must be designed
and constructed to withstand chronic stresses
and extreme events by identifying and
implementing resilience performance metrics
as described in section II.A.2.c.
If a grantee is allocating funds for
infrastructure, its description must include:
(1) How it will address the construction or
rehabilitation of disaster-related systems
(e.g., storm water management systems) or
other disaster-related community-based
mitigation systems (e.g., using FEMA’s
community lifelines). State grantees carrying
out infrastructure activities must work with
units of general local government and Indian
tribes in the MID areas to identify the unmet
needs and associated costs of needed
disaster-related infrastructure improvements;
(2) How mitigation measures and strategies
to reduce natural hazard risks, including
climate-related risks, will be integrated into
rebuilding activities;
(3) The extent to which CDBG–DR funded
infrastructure activities will achieve
objectives outlined in regionally or locally
established plans and policies that are
designed to reduce future risk to the
jurisdiction;
(4) How the grantee will evaluate the costs
and benefits in selecting infrastructure
projects to assist with CDBG–DR funds;
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(5) How the grantee will align
infrastructure investments with other
planned federal, state, or local capital
improvements and infrastructure
development efforts, and will work to foster
the potential for additional infrastructure
funding from multiple sources, including
state and local capital improvement projects
in planning, and the potential for private
investment;
(6) How the grantee will employ adaptable
and reliable technologies to prevent
premature obsolescence of infrastructure; and
(7) How the grantee will invest in
restoration of infrastructure and related longterm recovery needs within historically
underserved communities that lacked
adequate investments in housing,
transportation, water, and wastewater
infrastructure prior to the disaster.
III.C.1.f. Minimize Displacement. A
description of how the grantee plans to
minimize displacement of persons or entities,
and assist any persons or entities displaced,
and ensure accessibility needs of displaced
persons with disabilities. Specifically,
grantees must detail how they will meet the
Residential Anti-displacement and
Relocation Assistance Plan (RARAP)
requirements in section IV.F.7. Grantees must
indicate to HUD whether they will be
amending an existing RARAP or creating a
new RARAP specific to CDBG–DR. Grantees
must meet the requirements related to the
RARAP prior to implementing any activity
with CDBG–DR grant funds, such as buyouts
and other disaster recovery activities.
Grantees must seek to minimize
displacement or adverse impacts from
displacement, consistent with the
requirements of Section IV.F of the
Consolidated Notice, section 104(d) of the
HCDA (42 U.S.C. 5304(d)) and implementing
regulations at 24 CFR part 42, and 24 CFR
570.488 or 24 CFR 570.606, as applicable.
Grantees must describe how they will plan
and budget for relocation activities in the
action plan.
III.C.1.g. Allocation and award caps. The
grantee must provide a budget for the full
amount of the allocation that is reasonably
proportionate to its unmet needs (or provide
an acceptable justification for disproportional
allocation) and is consistent with the
requirements to integrate hazard mitigation
measures into all its programs and projects.
The grantee shall provide a description of
each disaster recovery program or activity to
be funded, including the CDBG–DR eligible
activities and national objectives associated
with each program and the eligibility criteria
for assistance. The grantee shall also describe
the maximum amount of assistance (i.e.,
award cap) available to a beneficiary under
each of the grantee’s disaster recovery
programs. A grantee may find it necessary to
provide exceptions on a case-by-case basis to
the maximum amount of assistance and must
describe the process it will use to make such
exceptions in its action plan. At a minimum,
each grantee must adopt policies and
procedures that communicate how it will
analyze the circumstances under which an
exception is needed and how it will
demonstrate that the amount of assistance is
necessary and reasonable. Each grantee must
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also indicate in its action plan that it will
make exceptions to the maximum award
amounts when necessary, to comply with
federal accessibility standards or to
reasonably accommodate a person with
disabilities.
III.C.1.h. Cost controls and warranties. The
grantee must provide a description of the
standards to be established for construction
contractors performing work in the
jurisdiction and the mechanisms to be used
by the grantee to assist beneficiaries in
responding to contractor fraud, poor quality
work, and associated issues. Grantees must
require a warranty period post-construction
with a formal notification to beneficiaries on
a periodic basis (e.g., 6 months and one
month before expiration date of the
warranty). Each grantee must also describe its
controls for assuring that construction costs
are reasonable and consistent with market
costs at the time and place of construction.
III.C.1.i. Resilience planning. Resilience is
defined as a community’s ability to minimize
damage and recover quickly from extreme
events and changing conditions, including
natural hazard risks. At a minimum, the
grantee’s action plan must contain a
description of how the grantee will: (a)
emphasize high quality design, durability,
energy efficiency, sustainability, and mold
resistance; (b) support adoption and
enforcement of modern and/or resilient
building codes that mitigate against natural
hazard risks, including climate-related risks
(e.g., sea level rise, high winds, storm surge,
flooding, volcanic eruption, and wildfire risk,
where appropriate and as may be identified
in the jurisdiction’s rating and identified
weaknesses (if any) in building code
adoption using FEMA’s Nationwide Building
Code Adoption Tracking (BCAT) portal), and
provide for accessible building codes and
standards, as applicable; (c) establish and
support recovery efforts by funding feasible,
cost-effective measures that will make
communities more resilient against a future
disaster; (d) make land-use decisions that
reflect responsible and safe standards to
reduce future natural hazard risks, e.g., by
adopting or amending an open space
management plan that reflects responsible
floodplain and wetland management and
takes into account continued sea level rise,
if applicable, and (e) increase awareness of
the hazards in their communities (including
for members of protected classes, vulnerable
populations, and underserved communities)
through outreach to the MID areas.
While the purpose of CDBG–DR funds is to
recover from a Presidentially declared
disaster, integrating hazard mitigation and
resilience planning with recovery efforts will
promote a more resilient and sustainable
long-term recovery. The action plan must
include a description of how the grantee will
promote sound, sustainable long-term
recovery planning informed by a postdisaster evaluation of hazard risk, including
climate-related natural hazards and the
creation of resilience performance metrics as
described in paragraph II.A.2.c. of the
Consolidated Notice. This information
should be based on the history of FEMA and
other federally-funded disaster mitigation
efforts and, as appropriate, take into account
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projected increases in sea level, the
frequency and intensity of extreme weather
events, and worsening wildfires. Grantees
must use the FEMA-approved Hazard
Mitigation Plan (HMP), Community Wildfire
Protection Plan (CWPP), or other resilience
plans to inform the evaluation, and it should
be referenced in the action plan.
III.C.2. Additional action plan
requirements for states. For state grantees,
the action plan must describe how the
grantee will distribute grant funds, either
through specific programs and projects the
grantee will carry out directly (through
employees, contractors, or through
subrecipients), or through a method of
distribution of funds to local governments
and Indian tribes (as permitted by III.B.2.d.).
The grantee shall describe how the method
of distribution to local governments or Indian
tribes, or programs/projects carried out
directly, will result in long-term recovery
from specific impacts of the disaster.
All states must include in their action plan
the information outlined in (1) through (7)
below (in addition to other information
required by section III.C.). For states using a
method of distribution, if some required
information is unknown when the grantee is
submitting its action plan to HUD (e.g., the
list of programs or activities required by
III.C.1.g. or the projected use of CDBG–DR
funds by responsible entity as required by
subparagraph (5) below), the grantee must
update the action plan through a substantial
amendment once the information is known.
If necessary to comply with a statutory
requirement that a grantee shall submit a
plan detailing the proposed use of all funds
prior to HUD’s obligation of grant funds,
HUD may obligate only a portion of grant
funds until the substantial amendment
providing the required information is
submitted and approved by HUD.
(1) How the impact and unmet needs
assessment informs funding determinations,
including the rationale behind the decision(s)
to provide funds to most impacted and
distressed areas.
(2) When funds are subgranted to local
governments or Indian tribes (either as
subrecipients or through a method of
distribution), all criteria used to allocate and
award the funds including the relative
importance of each criterion (including any
priorities). If the criteria are unknown when
the grantee is submitting the initial action
plan to HUD, the grantee must update the
action plan through a substantial amendment
once the information is known. The
substantial amendment must be submitted
and approved before distributing the funds to
a local government or Indian tribe.
(3) How the distribution and selection
criteria will address disaster-related unmet
needs in a manner that does not have an
unjustified discriminatory effect based on
race or other protected class and ensure the
participation of minority residents and those
belonging to other protected class groups in
the MID areas. Such description should
include an assessment of who may be
expected to benefit, the timing of who will
be prioritized, and the amount or proportion
of benefits expected to be received by
different communities or groups (e.g., the
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proportion of benefits going to different
locations within the MID or to homeowners
versus renters).
(4) The threshold factors and recipient or
beneficiary grant size limits that are to be
applied.
(5) The projected uses for the CDBG–DR
funds, by responsible entity, activity, and
geographic area.
(6) For each proposed program and/or
activity, its respective CDBG activity
eligibility category (or categories), national
objective(s), and what disaster-related impact
is addressed, as described in section II.A.1.
(7) When applications are solicited for
programs carried out directly, all criteria
used to select applications for funding,
including the relative importance of each
criterion, and any eligibility requirements. If
the criteria are unknown when the grantee is
submitting the initial action plan to HUD, the
grantee must update the action plan through
a substantial amendment once the
information is known. The substantial
amendment must be submitted and approved
before selecting applications.
III.C.3. Additional action plan
requirements for local governments. For local
governments grantees, the action plan shall
describe specific programs and/or activities
they will carry out. The action plan must also
describe:
(1) How the impact and unmet needs
assessment informs funding determinations,
including the rationale behind the decision(s)
to provide funds to most impacted and
distressed areas.
(2) All criteria used to select applications
(including any priorities), including the
relative importance of each criterion, and any
eligibility requirements. If the criteria are
unknown when the grantee is submitting the
initial action plan to HUD, the grantee must
update the action plan through a substantial
amendment once the information is known.
The substantial amendment must be
submitted and approved before selecting
applications.
(3) How the distribution and selection
criteria will address disaster-related unmet
needs in a manner that does not have an
unjustified discriminatory effect and ensures
the participation of minority residents and
those belonging to other protected class
groups in the MID areas, including with
regards to who may benefit, the timing of
who will be prioritized, and the amount or
proportion of benefits expected to be
received by different communities or groups
(e.g., the proportion of benefits going to
different locations within the MID or to
homeowners versus renters).
(4) The threshold factors and grant size
limits that are to be applied.
(5) The projected uses for the CDBG–DR
funds, by responsible entity, activity, and
geographic area.
(6) For each proposed program and/or
activity, its respective CDBG activity
eligibility category (or categories), national
objective(s), and what disaster-related impact
is addressed, as described in section II.A.1.
of the Consolidated Notice.
III.C.4. Waiver of 45-day review period for
CDBG–DR action plans to 60 days. HUD may
disapprove an action plan or substantial
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action plan amendment if it is incomplete.
HUD works with grantees to resolve or
provide additional information during the
review period to avoid the need to
disapprove an action plan or substantial
action plan amendments. There are several
issues related to the action plan as submitted
that can be fully resolved via further
discussion and revision during an extended
review period, rather than through HUD
disapproval of the plan, which in turn would
require grantees to take additional time to
revise and resubmit their respective plan.
Therefore, the Secretary has determined that
good cause exists and waives 24 CFR
91.500(a) to extend HUD’s action plan review
period from 45 days to 60 days.
The action plan (including SF–424 and
certifications) must be submitted to HUD for
review and approval using DRGR. By
submitting required standard forms (that
must be submitted with the action plan), the
grantee is providing assurances that it will
comply with statutory requirements,
including, but not limited to civil rights
requirements. Applicants and recipients are
required to submit assurances of compliance
with federal civil rights requirements. A
grantee will use DRGR’s upload function to
include the SF 424 (including SF 424B and
SF 424D, as applicable) and certifications
with its action plan. Grantees receiving an
allocation are required to submit an action
plan within 120 days of the applicability date
of the Allocation Announcement Notice,
unless the grantee has requested, and HUD
has approved an extension of the submission
deadline. HUD will then review each action
plan within 60 days from the date of receipt.
During its review, HUD typically provides
grantees with comments on the submitted
plan to avoid the need to disapprove an
action plan and offers a grantee the
opportunity to make updates to the action
plan during the first forty-five days of HUD’s
initial sixty-day review period. If a grantee
wants to make updates to the action plan,
HUD will reject the Public Action Plan in
DRGR to return the plan to the grantee. Then,
once the grantee resubmits the plan, HUD
reviews the revised plan within the initial
sixty-day period. HUD is establishing an
alternative process that offers a grantee the
option to voluntarily provide a revised action
plan, updated to respond to HUD’s
comments, no later than day forty-five in
HUD’s sixty-day review. A grantee is not
required to participate in the revisions of the
action plan during this time, but with the
understanding that an action plan may be
determined to be substantially incomplete.
The Secretary may disapprove an action plan
as substantially incomplete if HUD
determines that the action plan does not meet
the requirements of the Consolidated Notice
and the applicable Allocation Announcement
Notice.
III.C.5. Obligation and expenditure of
funds. Once HUD approves the action plan
and approves certifications if required by
appropriations acts, it will then sign a grant
agreement obligating allocated funds to the
grantee. The grantee will continue the action
plan process in DRGR to draw funds (see
section V.C.1.).
The grantee must meet the applicable
environmental requirements before the use or
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commitment of funds for each activity. After
the Responsible Entity (1) completes
environmental review(s) pursuant to 24 CFR
part 58 and receives from HUD an approved
Request for Release of Funds and
certification (as applicable), or (2) adopts
another Federal agency’s environmental
review, approval, or permit and receives from
HUD (or the state) an approved Request for
Release of Funds and certification (as
applicable), the grantee may draw down
funds from the line of credit for an activity.
The disbursement of grant funds must begin
no later than 180 calendar days after HUD
executes a grant agreement with the grantee.
Failure to draw funds within this timeframe
may result in HUD’s review of the grantee’s
certification of its financial controls,
procurement processes, and capacity, and
may result in the imposition of any corrective
actions deemed appropriate by HUD
pursuant to 24 CFR 570.495, 24 CFR 570.910,
or 24 CFR 1003.701.
III.C.6. Amending the action plan. The
grantee must amend its action plan to update
its needs assessment, modify or create new
activities, or reprogram funds, as necessary,
in the DRGR system. Each amendment must
be published on the grantee’s official website
and describe the changes within the context
of the entire action plan. A grantee’s current
version of its entire action plan must be
accessible for viewing as a single document
at any given point in time, rather than require
the public or HUD to view and crossreference changes among multiple
amendments. HUD’s DRGR system will
include the capabilities necessary for a
grantee to sufficiently identify the changes
for each amendment. When a grantee has
finished amending the content in the Public
Action Plan, the grantee will click ‘‘Submit
Plan’’ in the DRGR system. The DRGR system
will prompt the grantee to select the ‘‘Public
Action Plan’’ and identify the amendment
type (substantial or nonsubstantial). The
grantee will complete this cover page to
describe each amendment. At a minimum,
the grantee must: (1) identify exactly what
content is being added, deleted, or changed;
(2) clearly illustrate where funds are coming
from and where they are moving to; and (3)
include a revised budget allocation table that
reflects the entirety of all funds, as amended.
III.C.6.a. Substantial amendment. In its
action plan, each grantee must specify
criteria for determining what changes in the
grantee’s plan constitute a substantial
amendment to the plan. At a minimum, the
following modifications will constitute a
substantial amendment: a change in program
benefit or eligibility criteria; the addition or
deletion of an activity; a proposed reduction
in the overall benefit requirement, as
outlined in III.F.2.; or the allocation or
reallocation of a monetary threshold
specified by the grantee in their action plan.
For all substantial amendments, the grantee
must follow the same procedures required for
the preparation and submission of an action
plan for disaster recovery, with the exception
of the public hearing requirements described
in section III.D.1.b. and the consultation
requirements described in section III.D.1.a.,
which are not required for substantial
amendments. A substantial action plan
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amendment shall require a 30-day public
comment period.
III.C.6.b Nonsubstantial amendment. The
grantee must notify HUD, but is not required
to seek public comment, when it makes any
plan amendment that is not substantial.
Although nonsubstantial amendments do not
require HUD’s approval to become effective,
the DRGR system must approve the
amendment to change the status of the Public
Action Plan to ‘‘reviewed and approved.’’
The DRGR system will automatically approve
the amendment by the fifth day, if not
completed by HUD sooner.
III.C.7. Projection of expenditures and
outcomes. Each grantee must submit
projected expenditures and outcomes with
the action plan. The projections must be
based on each quarter’s expected
performance—beginning with the first
quarter funds are available to the grantee and
continuing each quarter until all funds are
expended. The grantee will use DRGR’s
upload feature to include projections and
accomplishments for each program created.
III.D. Citizen Participation Requirements
III.D.1. Citizen participation waiver and
alternative requirement. To permit a more
streamlined process and ensure disaster
recovery grants are awarded in a timely
manner, provisions of 42 U.S.C. 5304(a)(2)
and (3), 42 U.S.C. 12707, 24 CFR 570.486, 24
CFR 1003.604, 24 CFR 91.105(b) through (d),
and 24 CFR 91.115(b) through (d), with
respect to citizen participation requirements,
are waived and replaced by the alternative
requirements in this section. The streamlined
requirements require the grantee to include
public hearings on the proposed action plan
and provide a reasonable opportunity (at
least 30 days) for citizen comment.
The grantee must follow a detailed citizen
participation plan that satisfies the
requirements of 24 CFR 91.115 or 91.105
(except as provided for in notices providing
waivers and alternative requirements). Each
local government receiving assistance from a
state grantee must follow a detailed citizen
participation plan that satisfies the
requirements of 24 CFR 570.486 (except as
provided for in notices providing waivers
and alternative requirements).
In addition to the requirements above, the
streamlined citizen participation alternative
requirements for CDBG–DR grants are as
follows:
III.D.1.a. Requirement for consultation
during plan preparation. All grantees must
consult with states, Indian tribes, local
governments, Federal partners,
nongovernmental organizations, the private
sector, and other stakeholders and affected
parties in the surrounding geographic area,
including organizations that advocate on
behalf of members of protected classes,
vulnerable populations, and underserved
communities impacted by the disaster, to
ensure consistency of the action plan with
applicable regional redevelopment plans. A
grantee must consult with other relevant
government agencies, including state and
local emergency management agencies that
have primary responsibility for the
administration of FEMA funds, if applicable.
III.D.1.b. Publication of the action plan and
opportunity for public comment. Following
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the creation of the action plan or substantial
amendment in DRGR and before the grantee
submits the action plan or substantial
amendment to HUD, the grantee must
publish the proposed plan or amendment for
public comment. The manner of publication
must include prominent posting on the
grantee’s official disaster recovery website
and must afford citizens, affected local
governments, and other interested parties a
reasonable opportunity to review the plan or
substantial amendment. Grantees shall
consider if there are potential barriers that
may limit or prohibit vulnerable populations
or underserved communities and individuals
affected by the disaster from providing public
comment on the grantee’s action plan or
substantial amendment. If the grantee
identifies barriers that may limit or prohibit
equitable participation, the grantee must take
reasonable measures to increase
coordination, communication, affirmative
marketing, targeted outreach, and
engagement with underserved communities
and individuals, including persons with
disabilities and persons with LEP.
At a minimum, the topic of disaster
recovery on the grantee’s website must be
navigable by all interested parties from the
grantee homepage and must link to the
disaster recovery website required by section
III.D.1.e. The grantee’s records must
demonstrate that it has notified affected
citizens through electronic mailings, press
releases, statements by public officials, media
advertisements, public service
announcements, and/or contacts with
neighborhood organizations.
Additionally, the CDBG–DR grantee must
convene at least one public hearing on the
proposed action plan after it has published
on its website to solicit public comment and
before submittal of the action plan to HUD.
If the grantee holds more than one public
hearing, it must hold each hearing in a
different location within the MID area in
locations that the grantee determines will
promote geographic balance and maximum
accessibility. The minimum number of
public hearings a grantee must convene on
the action plan to obtain interested parties’
views and to respond to comments and
questions shall be determined by the amount
of the grantee’s CDBG–DR allocation: (1)
CDBG–DR grantees with allocations under
$500 million are required to hold at least one
public hearing in a HUD-identified MID area;
and (2) CDBG–DR grantees with allocations
over $500 million or more shall convene at
least two public hearings in HUD-identified
MID areas.
Grantees may convene public hearings
virtually (alone, or in concert with an inperson hearing). All in-person hearings must
be held in facilities that are physically
accessible to persons with disabilities. HUD’s
implementing regulations for section 504 of
the Rehabilitation Act (24 CFR part 8, subpart
C) provide that where physical accessibility
is not achievable, grantees must give priority
to alternative methods of product or
information delivery that offer programs and
activities to qualified individuals with
disabilities in the most integrated setting
appropriate. When conducting a virtual
hearing, the grantee must allow questions in
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real time, with answers coming directly from
the grantee representatives to all ‘‘attendees.’’
For both virtual and in person hearings,
grantees must update their citizen
participation plans to provide that hearings
be held at times and locations convenient to
potential and actual beneficiaries, with
accommodation for persons with disabilities
and appropriate auxiliary aids and services to
ensure effective communication, and specify
how they will meet these requirements. See
24 CFR 8.6 for HUD’s regulations about
effective communication. Grantees must also
provide meaningful access for individuals
with LEP at both in-person and virtual
hearings. In their citizen participation plan,
state and local government grantees shall
identify how the needs of non-English
speaking residents will be met in the case of
virtual and in-person public hearings where
a significant number of non-English speaking
residents can be reasonably expected to
participate. In addition, for both virtual or inperson hearings, the grantee shall provide
reasonable notification and access for
citizens in accordance with the grantee’s
certifications at III.F.7.g., timely responses to
all citizen questions and issues, and public
access to all questions and responses.
III.D.1.c. Consideration of public
comments. The grantee must provide a
reasonable time frame (no less than 30 days)
and method(s) (including electronic
submission) for receiving comments on the
action plan or substantial amendment. The
grantee must consider all oral and written
comments on the action plan or any
substantial amendment. Any updates or
changes made to the action plan in response
to public comments should be clearly
identified in the action plan. A summary of
comments on the plan or amendment, and
the grantee’s response to each, must be
included (e.g., uploaded) in DRGR with the
action plan or substantial amendment.
Grantee responses shall address the
substance of the comment rather than merely
acknowledge that the comment was received.
III.D.1.d. Availability and accessibility of
documents. The grantee must make the
action plan, any substantial amendments,
vital documents, and all performance reports
available to the public on its website. See the
following guidance for more information on
vital documents: https://www.lep.gov/
guidance/HUD_guidance_Jan07.pdf. In
addition, the grantee must make these
documents available in a form accessible to
persons with disabilities and those with LEP.
Grantees must take reasonable steps to ensure
meaningful access to their programs and
activities by LEP persons, including members
of protected classes, vulnerable populations,
and individuals from underserved
communities. In their citizen participation
plan, state and local government grantees
shall describe their procedures for assessing
their language needs and identify any need
for translation of notices and other vital
documents. At a minimum, the citizen
participation plan shall require that the state
or local government grantee take reasonable
steps to provide language assistance to
ensure meaningful access to participation by
non-English-speaking residents of the
grantee’s jurisdiction.
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III.D.1.e. Public website. The grantee must
maintain a public website that permits
individuals and entities awaiting assistance
and the general public to see how all grant
funds are used and administered. The
website must include copies of all relevant
procurement documents and, except as noted
in the next paragraph, all grantee
administrative contracts, details of ongoing
procurement processes, and action plans and
amendments. The public website must be
accessible to persons with disabilities and
individuals with LEP.
To meet this requirement, each grantee
must make the following items available on
its website: the action plan created using
DRGR (including all amendments); each
performance report (as created using the
DRGR system); citizen participation plan;
procurement policies and procedures; all
contracts, as defined in 2 CFR 200.22, that
will be paid with CDBG–DR funds
(including, but not limited to, subrecipients’
contracts); and a summary including the
description and status of services or goods
currently being procured by the grantee or
the subrecipient (e.g., phase of the
procurement, requirements for proposals,
etc.). Contracts and procurement actions that
do not exceed the micro-purchase threshold,
as defined in 2 CFR 200.1, are not required
to be posted to a grantee’s website.
III.D.1.f. Application status. The grantee
must provide multiple methods of
communication, such as websites, toll-free
numbers, TTY and relay services, email
address, fax number, or other means to
provide applicants for recovery assistance
with timely information to determine the
status of their application.
III.D.1.g. Citizen complaints. The grantee
will provide a timely written response to
every citizen complaint. The grantee
response must be provided within fifteen
working days of the receipt of the complaint,
or the grantee must document why additional
time for the response was required.
Complaints regarding fraud, waste, or abuse
of government funds should be forwarded to
the HUD OIG Fraud Hotline (phone: 1–800–
347–3735 or email: hotline@hudoig.gov).
III.D.1.h. General requirements. For plan
publication, the comprehensive disaster
recovery website and vital documents must
ensure effective communication for
individuals with disabilities, as required by
24 CFR 8.6 and the Americans with
Disabilities Act, as applicable. In addition to
ensuring the accessibility of the
comprehensive disaster recovery website and
vital documents, this obligation includes the
requirement to provide auxiliary aids and
services where necessary to ensure effective
communication with individuals with
disabilities, which may take the form of the
furnishing of the above referenced materials
in alternative formats (24 CFR 8.6(a)(1)).
When required by III.D.1.d., grantees must
take reasonable steps to ensure meaningful
access for individuals with LEP.
III.E. Program Income
III.E.1. Program income waiver and
alternative requirement. For state and unit of
general local government grantees, HUD is
waiving all applicable program income rules
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at 42 U.S.C. 5304(j), 24 CFR 570.489(e), 24
CFR 570.500, and 24 CFR 570.504 and
providing the alternative requirement
described below. Program income earned by
Indian tribes that receive an allocation from
HUD will be governed by the regulations at
24 CFR 1003.503 until grant closeout and not
by the waivers and alternative requirements
in this Consolidated Notice. Program income
earned by Indian tribes that are subrecipients
of state grantees or local government grantees
will be subject to the program income
requirements for subrecipients of those
grantees.
III.E.1.a. Definition of program income.
‘‘Program income’’ is defined as gross income
generated from the use of CDBG–DR funds,
except as provided in III.E.1.b., and received
by a state, local government, Indian tribe
receiving funds from a grantee, or their
subrecipients. When income is generated by
an activity that is only partially assisted with
CDBG–DR funds, the income shall be
prorated to reflect the percentage of CDBG–
DR funds used (e.g., a single loan supported
by CDBG–DR funds and other funds, or a
single parcel of land purchased with CDBG–
DR funds and other funds). If CDBG funds are
used with CDBG–DR funds on an activity,
any income earned on the CDBG portion
would not be subject to the waiver and
alternative requirement in the Consolidated
Notice.
Program income includes, but is not
limited to, the following:
(i) Proceeds from the disposition by sale or
long-term lease of real property purchased or
improved with CDBG–DR funds.
(ii) Proceeds from the disposition of
equipment purchased with CDBG–DR funds.
(iii) Gross income from the use or rental of
real or personal property acquired by a state,
local government, or subrecipient thereof
with CDBG–DR funds, less costs incidental to
generation of the income.
(iv) Gross income from the use or rental of
real property owned by a state, local
government, or subrecipient thereof, that was
constructed or improved with CDBG–DR
funds, less costs incidental to generation of
the income.
(v) Payments of principal and interest on
loans made using CDBG–DR funds.
(vi) Proceeds from the sale of loans made
with CDBG–DR funds.
(vii) Proceeds from the sale of obligations
secured by loans made with CDBG–DR funds.
(viii) Interest earned on program income
pending disposition of the income, including
interest earned on funds held in a revolving
fund account.
(ix) Funds collected through special
assessments made against nonresidential
properties and properties owned and
occupied by non-LMI households, where the
special assessments are used to recover all or
part of the CDBG–DR portion of a public
improvement.
(x) Gross income paid to a state, local
government, or subrecipient thereof, from the
ownership interest in a for-profit entity in
which the income is in return for the
provision of CDBG–DR assistance.
III.E.1.b. Program income—does not
include:
(i) The total amount of funds that is less
than $35,000 received in a single year and
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retained by a state, local government, or a
subrecipient thereof.
(ii) Amounts generated by activities
eligible under section 105(a)(15) of the HCDA
and carried out by an entity under the
authority of section 105(a)(15) of the HCDA.
III.E.1.c. Retention of program income.
State grantees may permit a local government
that receives or will receive program income
to retain the program income but are not
required to do so.
III.E.1.d. Program income—use, close out,
and transfer.
(i) Program income received (and retained,
if applicable) before or after closeout of the
grant that generated the program income, and
used to continue disaster recovery activities,
is treated as additional CDBG–DR funds
subject to the requirements of the
Consolidated Notice and must be used in
accordance with the grantee’s action plan for
disaster recovery. To the maximum extent
feasible, program income shall be used or
distributed before additional withdrawals
from the U.S. Treasury are made, except as
provided in III.E.1.e. below.
(ii) In addition to the alternative
requirements dealing with program income
required above, the following rules apply:
(1) a state or local government grantee may
transfer program income to its annual CDBG
program before closeout of the grant that
generated the program income. In addition,
state grantees may transfer program income
before closeout to any annual CDBG-funded
activities carried out by a local government
within the state.
(2) Program income received by a grantee,
or received and retained by a subrecipient,
after closeout of the grant that generated the
program income, may also be transferred to
a grantee’s annual CDBG award.
(3) In all cases, any program income
received that is not used to continue the
disaster recovery activity will not be subject
to the waivers and alternative requirements
of the Consolidated Notice. Rather, those
funds will be subject to the state or local
government grantee’s regular CDBG program
rules. Any other transfer of program income
not specifically addressed in the
Consolidated Notice may be carried out if the
grantee first seeks and then receives HUD’s
approval.
III.E.1.e. Revolving funds. State and local
government grantees may establish revolving
funds to carry out specific, identified
activities. State grantees may also establish a
revolving fund to distribute funds to local
governments or tribes to carry out specific,
identified activities. A revolving fund, for
this purpose, is a separate fund (with a set
of accounts that are independent of other
program accounts) established to carry out
specific activities. These activities must
generate payments used to support similar
activities going forward. These payments to
the revolving fund are program income and
must be substantially disbursed from the
revolving fund before additional grant funds
are drawn from the U.S. Treasury for
payments that could be funded from the
revolving fund. Such program income is not
required to be disbursed for nonrevolving
fund activities. A revolving fund established
by a CDBG–DR grantee shall not be directly
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funded or capitalized with CDBG–DR grant
funds, pursuant to 24 CFR 570.489(f)(3).
III.F. Other General Waivers and Alternative
Requirements
III.F.1. Consolidated Plan waiver. HUD is
temporarily waiving the requirement for
consistency with the consolidated plan
(requirements at 42 U.S.C. 12706, 24 CFR
91.225(a)(5), and 24 CFR 91.325(a)(5)),
because the effects of a major disaster alter
a grantee’s priorities for meeting housing,
employment, and infrastructure needs. In
conjunction, 42 U.S.C. 5304(e) is also
waived, to the extent that it would require
HUD to annually review grantee performance
under the consistency criteria. These waivers
apply only for 24 months after the
applicability date of the grantee’s applicable
Allocation Announcement Notice. If the
grantee is not scheduled to submit a new
three-to five-year consolidated plan within
the next two years, the grantee must update
its existing three-to five-year consolidated
plan to reflect disaster-related needs no later
than 24 months after the applicability date of
the grantee’s applicable Allocation
Announcement Notice.
III.F.2. Overall benefit requirement. The
primary objective of the HCDA is the
‘‘development of viable urban communities,
by providing decent housing and a suitable
living environment and expanding economic
opportunities, principally for persons of low
and moderate income’’ (42 U.S.C. 5301(c)).
Consistent with the HCDA, this notice
requires grantees to comply with the overall
benefit requirements in the HCDA and 24
CFR 570.484, 24 CFR 570.200(a)(3), and 24
CFR 1003.208, which require that 70 percent
of funds be used for activities that benefit
LMI persons. For purposes of a CDBG–DR
grant, HUD is establishing an alternative
requirement that the overall benefit test shall
apply only to the grant of CDBG–DR funds
described in the Allocation Announcement
Notice and related program income.
A grantee may seek to reduce the overall
benefit requirement below 70 percent of the
total grant, but must submit a substantial
amendment as provided in section III.C.6.a.
in the Consolidated Notice, and provide a
justification that, at a minimum: (a) identifies
the planned activities that meet the needs of
its LMI population; (b) describes proposed
activities and programs that will be affected
by the alternative requirement, including
their proposed location(s) and role(s) in the
grantee’s long-term disaster recovery plan; (c)
describes how the activities/programs
identified in (b) prevent the grantee from
meeting the 70 percent requirement; (d)
demonstrates that LMI persons’ disasterrelated needs have been sufficiently met and
that the needs of non-LMI persons or areas
are disproportionately greater, and that the
jurisdiction lacks other resources to serve
non-LMI persons; and (e) demonstrates a
compelling need for HUD to lower the
percentage of the grant that must benefit lowand moderate-income persons.
III.F.3. Use of the urgent need national
objective. Because HUD provides CDBG–DR
funds only to grantees with documented
disaster-related impacts and each grantee is
limited to spending funds only for the benefit
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of areas that received a Presidential disaster
declaration, the Secretary finds good cause to
waive the urgent need national objective
criteria in section 104(b)(3) of the HCDA and
to establish the following alternative
requirement for any CDBG–DR grantee using
the urgent need national objective for a
period of 36 months after the applicability
date of the grantee’s Allocation
Announcement Notice.
Pursuant to this alternative requirement,
grantees that use the urgent need national
objective must: (1) describe in the impact and
unmet needs assessment why specific needs
have a particular urgency, including how the
existing conditions pose a serious and
immediate threat to the health or welfare of
the community; (2) identify each program or
activity in the action plan that will use the
urgent need national objective—either
through its initial action plan submission or
through a substantial amendment submitted
by the grantee within 36 months of the
applicability date of the grantee’s Allocation
Announcement Notice; and (3) document
how each program and/or activity funded
under the urgent need national objective in
the action plan responds to the urgency, type,
scale, and location of the disaster-related
impact as described in the grantee’s impact
and unmet needs assessment.
The grantee’s action plan must address all
three criteria described above to use the
alternative urgent need national objective for
the program and/or activity. This alternative
urgent need national objective is in effect for
a period of 36 months following the
applicability date of the grantee’s Allocation
Announcement Notice. After 36 months, the
grantee will be required to follow the criteria
established in section 104(b)(3) of the HCDA
and its implementing regulations in 24 CFR
part 570 when using the urgent need national
objective for any new programs and/or
activities added to an action plan.
III.F.4. Reimbursement of disaster recovery
expenses by a grantee or subrecipient. The
provisions of 24 CFR 570.489(b) are applied
to permit a state grantee to charge to the grant
otherwise allowable costs incurred by the
grantee, its recipients or subrecipients
(including Indian tribes and PHAs) on or
after the incident date of the covered disaster.
A local government grantee is subject to the
provisions of 24 CFR 570.200(h) but may
reimburse itself or its subrecipients for
otherwise allowable costs incurred on or after
the incident date of the covered disaster.
Section 570.200(h)(1)(i) is waived to the
extent that it requires pre-agreement
activities to be included in the local
government’s consolidated plan. As an
alternative requirement, grantees must
include any pre-agreement activities in their
action plans, including any costs of eligible
activities that were funded with short-term
loans (e.g., bridge loans) and that the grantee
intends to reimburse or otherwise charge to
the grant, consistent with applicable program
requirements.
III.F.5. Reimbursement of pre-application
costs of homeowners, renters, businesses, and
other qualifying entities. Grantees are
permitted to charge to grants the pre-award
and pre-application costs of homeowners,
renters, businesses, and other qualifying
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entities for eligible costs these applicants
have incurred in response to an eligible
disaster covered under a grantees’ applicable
Allocation Announcement Notice. For
purposes of the Consolidated Notice, preapplication costs are costs incurred by an
applicant to CDBG–DR funded programs
before the time of application to a grantee or
subrecipient, which may be before (preaward) or after the grantee signs its CDBG–
DR grant agreement. In addition to the terms
described in the remainder of the
Consolidated Notice, grantees may only
charge costs to the grant that meet the
following requirements:
• Grantees may only charge the costs for
rehabilitation, demolition, and
reconstruction of single family, multifamily,
and nonresidential buildings, including
commercial properties, owned by private
individuals and entities, incurred before the
owner applies to a CDBG–DR grantee,
recipient, or subrecipient for CDBG–DR
assistance;
• For rehabilitation and reconstruction
costs, grantees may only charge costs for
activities completed within the same
footprint of the damaged structure, sidewalk,
driveway, parking lot, or other developed
area;
• As required by 2 CFR 200.403(g), costs
must be adequately documented; and
• Grantees must complete a duplication of
benefits check before providing assistance
pursuant to section IV.A. in the Consolidated
Notice.
Grantees are required to ensure that all
costs charged to a CDBG–DR grant are
necessary expenses related to authorized
recovery purposes. Grantees may charge to
CDBG–DR grants the eligible pre-application
costs of individuals and private entities
related to single family, multifamily, and
nonresidential buildings, only if: (1) the
person or private entity incurred the
expenses within one year after the
applicability date of the grantee’s Allocation
Announcement Notice (or within one year
after the date of the disaster, whichever is
later); and (2) the person or entity pays for
the cost before the date on which the person
or entity applies for CDBG–DR assistance.
Exempt activities as defined at 24 CFR 58.34,
but not including 24 CFR 58.34(a)(12), and
categorical exclusions as defined at 24 CFR
58.35(b) are not subject to the time limit on
pre-application costs outlined above. Actions
that convert or potentially convert to exempt
under 24 CFR 58.34(a)(12) remain subject to
the reimbursement requirements provided
herein. If a grantee cannot meet all
requirements at 24 CFR part 58, the preapplication costs cannot be reimbursed with
CDBG–DR or other HUD funds.
Grantees must comply with the necessary
and reasonable cost principles for state, local,
and Indian tribal governments (described at
2 CFR 200.403). Grantees must incorporate
into their policies and procedures the basis
for determining that the assistance provided
under the terms of this provision is necessary
and reasonable.
A grantee may not charge such pre-award
or pre-application costs to grants if the
grantee cannot meet all requirements at 24
CFR part 58. Under CDBG–DR authorizing
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legislation and HUD’s environmental
regulations in 24 CFR part 58, the CDBG–DR
‘‘recipient’’ (as defined in 24 CFR part
58.2(a)(5), which differs from the definition
in 2 CFR part 200) is the responsible entity
that assumes the responsibility for
completing environmental reviews under
Federal laws and authorities. The responsible
entity assumes all legal liability for the
application, compliance, and enforcement of
these requirements. Pre-award costs are also
allowable when CDBG–DR assistance is
provided for the rehabilitation, demolition,
or reconstruction of government buildings,
public facilities, and infrastructure. However,
in such instances, the environmental review
must occur before the underlying activity
(e.g., rehabilitation of a government building)
begins.
Grantees are also required to consult with
the State Historic Preservation Officer, Fish
and Wildlife Service, and National Marine
Fisheries Service, to obtain formal
agreements for compliance with section 106
of the National Historic Preservation Act (54
U.S.C. 306108) and section 7 of the
Endangered Species Act of 1973 (16 U.S.C.
1536) when designing a reimbursement
program.
All grantees must follow all cross-cutting
requirements, as applicable, for all CDBG–DR
funded activities including but not limited to
the environmental requirements above, the
Davis Bacon Act, Civil Rights Requirements,
HUD’s Lead Safe Housing Rule, and the URA.
III.F.6. Alternative requirement for the
elevation of structures when using CDBG–DR
funds as the non-Federal match in a FEMAfunded project. Currently, CDBG–DR grantees
using FEMA and CDBG–DR funds on the
same activity have encountered challenges in
certain circumstances in reconciling CDBG–
DR elevation requirements and those
established by FEMA. 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. However, 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. While FEMA
may change its standards for elevation in the
future, as long as the CDBG–DR grantee is
following a FEMA-approved flood standard
this waiver and alternative requirement will
continue to apply.
FEMA funded projects generally
commence well in advance of the availability
of CDBG–DR funds and 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. For
these reasons, the Secretary finds good cause
to establish an alternative requirement for the
use of an alternative, FEMA-approved flood
standard instead of the elevation
requirements established in section II.B.2.c.
and II.C.2. of the Consolidated Notice.
The alternative requirements apply when:
(a) CDBG–DR funds are used as the non-
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Federal match for FEMA assistance; (b) the
FEMA-assisted activity, for which CDBG–DR
funds will be used as match, commenced
before HUD’s obligation of CDBG–DR funds
to the grantee; and (c) the grantee has
determined and demonstrated with records
in the activity file that implementation costs
of the required CDBG–DR elevation or flood
proofing requirements are not reasonable
costs, as that term is defined in the
applicable cost principles at 2 CFR 200.404.
III.F.7. Certifications waiver and
alternative requirement. Sections 104(b)(4),
(c), and (m) of the HCDA (42 U.S.C.
5304(b)(4), (c) & (m)), sections 106(d)(2)(C) &
(D) of the HCDA (42 U.S.C. 5306(d)(2)(C) &
(D)), and section 106 of the CranstonGonzalez National Affordable Housing Act
(42 U.S.C. 12706), and regulations at 24 CFR
91.225 and 91.325 are waived and replaced
with the following alternative. Each grantee
receiving an allocation under an Allocation
Announcement Notice must make the
following certifications with its action plan:
a. The grantee certifies that it has in effect
and is following a residential antidisplacement and relocation assistance plan
(RARAP) in connection with any activity
assisted with CDBG–DR grant funds that
fulfills the requirements of section 104(d), 24
CFR part 42, and 24 CFR part 570, as
amended by waivers and alternative
requirements.
b. The grantee certifies its compliance with
restrictions on lobbying required by 24 CFR
part 87, together with disclosure forms, if
required by part 87.
c. The grantee certifies that the action plan
for disaster recovery is authorized under state
and local law (as applicable) and that the
grantee, and any entity or entities designated
by the grantee, and any contractor,
subrecipient, or designated public agency
carrying out an activity with CDBG–DR
funds, possess(es) the legal authority to carry
out the program for which it is seeking
funding, in accordance with applicable HUD
regulations as modified by waivers and
alternative requirements.
d. The grantee certifies that activities to be
undertaken with CDBG–DR funds are
consistent with its action plan.
e. The grantee certifies that it will comply
with the acquisition and relocation
requirements of the URA, as amended, and
implementing regulations at 49 CFR part 24,
as such requirements may be modified by
waivers or alternative requirements.
f. The grantee certifies that it will comply
with section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701u)
and implementing regulations at 24 CFR part
75.
g. The grantee certifies that it is following
a detailed citizen participation plan that
satisfies the requirements of 24 CFR 91.115
or 91.105 (except as provided for in waivers
and alternative requirements). Also, each
local government receiving assistance from a
state grantee must follow a detailed citizen
participation plan that satisfies the
requirements of 24 CFR 570.486 (except as
provided for in waivers and alternative
requirements).
h. State grantee certifies that it has
consulted with all disaster-affected local
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governments (including any CDBGentitlement grantees), Indian tribes, and any
local public housing authorities in
determining the use of funds, including the
method of distribution of funding, or
activities carried out directly by the state.
i. The grantee certifies that it is complying
with each of the following criteria:
(1) Funds will be used solely for necessary
expenses related to disaster relief, long-term
recovery, restoration of infrastructure and
housing, economic revitalization, and
mitigation in the most impacted and
distressed areas for which the President
declared a major disaster pursuant to the
Robert T. Stafford Disaster Relief and
Emergency Assistance Act of 1974 (42 U.S.C.
5121 et seq.).
(2) With respect to activities expected to be
assisted with CDBG–DR funds, the action
plan has been developed so as to give the
maximum feasible priority to activities that
will benefit low- and moderate-income
families.
(3) The aggregate use of CDBG–DR funds
shall principally benefit low- and moderateincome families in a manner that ensures that
at least 70 percent (or another percentage
permitted by HUD in a waiver) of the grant
amount is expended for activities that benefit
such persons.
(4) The grantee will not attempt to recover
any capital costs of public improvements
assisted with CDBG–DR grant funds, by
assessing any amount against properties
owned and occupied by persons of low- and
moderate-income, including any fee charged
or assessment made as a condition of
obtaining access to such public
improvements, unless: (a) disaster recovery
grant funds are used to pay the proportion of
such fee or assessment that relates to the
capital costs of such public improvements
that are financed from revenue sources other
than under this title; or (b) for purposes of
assessing any amount against properties
owned and occupied by persons of moderate
income, the grantee certifies to the Secretary
that it lacks sufficient CDBG funds (in any
form) to comply with the requirements of
clause (a).
j. State and local government grantees
certify that the grant will be conducted and
administered in conformity with title VI of
the Civil Rights Act of 1964 (42 U.S.C.
2000d), the Fair Housing Act (42 U.S.C.
3601–3619), and implementing regulations,
and that it will affirmatively further fair
housing. An Indian tribe grantee certifies that
the grant will be conducted and administered
in conformity with the Indian Civil Rights
Act.
k. The grantee certifies that it has adopted
and is enforcing the following policies, and,
in addition, state grantees must certify that
they will require local governments that
receive their grant funds to certify that they
have adopted and are enforcing:
(1) A policy prohibiting the use of
excessive force by law enforcement agencies
within its jurisdiction against any
individuals engaged in nonviolent civil rights
demonstrations; and
(2) A policy of enforcing applicable state
and local laws against physically barring
entrance to or exit from a facility or location
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that is the subject of such nonviolent civil
rights demonstrations within its jurisdiction.
l. The grantee certifies that it (and any
subrecipient or administering entity)
currently has or will develop and maintain
the capacity to carry out disaster recovery
activities in a timely manner and that the
grantee has reviewed the requirements
applicable to the use of grant funds.
m. The grantee certifies to the accuracy of
its Financial Management and Grant
Compliance Certification Requirements, or
other recent certification submission, if
approved by HUD, and related supporting
documentation as provided in section III.A.1.
of the Consolidated Notice and the grantee’s
implementation plan and related
submissions to HUD as provided in section
III.A.2. of the Consolidated Notice.
n. The grantee certifies that it will not use
CDBG–DR funds for any activity in an area
identified as flood prone for land use or
hazard mitigation planning purposes by the
state, local, or tribal government or
delineated as a Special Flood Hazard Area (or
100-year floodplain) in FEMA’s most current
flood advisory maps, unless it also ensures
that the action is designed or modified to
minimize harm to or within the floodplain,
in accordance with Executive Order 11988
and 24 CFR part 55. The relevant data source
for this provision is the state, local, and tribal
government land use regulations and hazard
mitigation plans and the latest-issued FEMA
data or guidance, which includes advisory
data (such as Advisory Base Flood
Elevations) or preliminary and final Flood
Insurance Rate Maps.
o. The grantee certifies that its activities
concerning lead-based paint will comply
with the requirements of 24 CFR part 35,
subparts A, B, J, K, and R.
p. The grantee certifies that it will comply
with environmental requirements at 24 CFR
part 58.
q. The grantee certifies that it will comply
with the provisions of title I of the HCDA and
with other applicable laws.
Warning: Any person who knowingly
makes a false claim or statement to HUD may
be subject to civil or criminal penalties under
18 U.S.C. 287, 1001, and 31 U.S.C. 3729.
III.G. Ineligible Activities in CDBG–DR
Any activity that is not authorized under
section 105(a) of the HCDA is ineligible to be
assisted with CDBG–DR funds, unless
explicitly allowed by waiver and alternative
requirement in the Consolidated Notice.
Additionally, the uses described below are
explicitly prohibited.
III.G.1. Prohibition on compensation.
Grantees shall not use CDBG–DR funds to
provide compensation to beneficiaries for
losses stemming from disaster related
impacts. Grantees may, however, reimburse
disaster-impacted beneficiaries based on the
pre-application costs incurred by the
beneficiary to complete an eligible activity.
Reimbursement of beneficiaries for eligible
activity costs are subject to the requirements
established in section III.F.5. of the
Consolidated Notice.
III.G.2. Prohibition on forced mortgage
payoff. A forced mortgage payoff occurs
when homeowners with an outstanding
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mortgage balance are required, under the
terms of their loan agreement, to repay the
balance of the mortgage loan before using
assistance to rehabilitate or reconstruct their
homes. CDBG–DR funds, however, shall not
be used for a forced mortgage payoff. The
ineligibility of a forced mortgage payoff with
CDBG–DR funds does not affect HUD’s
longstanding guidance that when other nonCDBG disaster assistance is taken by lenders
for a forced mortgage payoff, those funds are
not considered to be available to the
homeowner and do not constitute a
duplication of benefits for the purpose of
housing rehabilitation or reconstruction.
III.G.3. Prohibiting assistance to private
utilities. HUD is adopting the following
alternative requirement to section 105(a) and
prohibiting the use of CDBG–DR funds to
assist a privately-owned utility for any
purpose.
IV. Other Program Requirements
IV.A. Duplication of Benefits
The grantee must comply with section 312
of the Stafford Act, as amended, which
prohibits any person, business concern, or
other entity from receiving financial
assistance with respect to any part of a loss
resulting from a major disaster for which
such person, business concern, or other
entity has received financial assistance under
any other program or from insurance or any
other source. To comply with section 312, a
person or entity may receive financial
assistance only to the extent that the person
or entity has a disaster recovery need that has
not been fully met. Grantees must also
establish policies and procedures to provide
for the repayment of a CDBG–DR award
when assistance is subsequently provided for
that same purpose from any other source.
Grantees may be subject to additional DOB
requirements described in a separate notice.
The applicable Allocation Announcement
Notice will describe any additional
requirements, as applicable.
Subsidized loans are financial assistance
and therefore can duplicate financial
assistance provided from another source
unless an exception in IV.A.1. applies.
IV.A.1. Exceptions when subsidized loans
are not a duplication. When an exception
described in paragraphs IV.A.1.a. or IV.A.1.b.
applies, documentation required by those
paragraphs must be maintained by the
grantee. Without this documentation, any
approved but undisbursed portion of a
subsidized loan must be included in the
grantee’s calculation of the total assistance
amount unless another exception applies. For
cancelled SBA loans, the grantee must notify
the SBA that the applicant has agreed to not
take any actions to reinstate the cancelled
loan or draw any additional undisbursed
loan amounts.
IV.A.1.a. Short-term subsidized loans for
costs later reimbursed with CDBG–DR.
CDBG–DR funds may be used to reimburse
pre-award costs of the grantee or subrecipient
for eligible activities on or after the date of
the disaster. If the grantee or subrecipient
obtained a subsidized short-term loan to pay
for eligible costs before CDBG–DR funds
became available (for example, a low-interest
loan from a local tax increment financing
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fund), the reimbursement of the costs paid by
the loan does not create a duplication.
IV.A.1.b. Declined or cancelled subsidized
loans. The amount of a subsidized loan that
is declined or cancelled is not a DOB. To
exclude declined or cancelled loan amounts
from the DOB calculation, the grantee must
document that all or a portion of the
subsidized loan is cancelled or declined.
(i) Declined SBA Loans: Declined loan
amounts are loan amounts that were
approved or offered by a lender in response
to a loan application, but were turned down
by the applicant, meaning the applicant
never signed loan documents to receive the
loan proceeds.
CDBG–DR grantees shall not treat declined
subsidized loans, including declined SBA
loans, as a DOB (but are not prohibited from
considering declined subsidized loans for
other reasons, such as underwriting). A
grantee is only required to document
declined loans if information available to the
grantee (e.g., the data the grantee receives
from FEMA, SBA, or other sources) indicates
that the applicant received an offer for
subsidized loan assistance, and the grantee is
unable to determine from that available
information that the applicant declined the
loan. If the grantee is aware that the applicant
received an offer of loan assistance and
cannot ascertain from available data that the
applicant declined the loan, the grantee must
obtain a written certification from the
applicant that the applicant did not accept
the subsidized loan by signing loan
documents and did not receive the loan.
(ii) Cancelled Loans: Cancelled loans are
loans (or portions of loans) that were initially
accepted, but for a variety of reasons, all or
a portion of the loan amount was not
disbursed and is no longer available to the
applicant.
The cancelled loan amount is the amount
that is no longer available. The loan
cancellation may be due to default of the
borrower, agreement by both parties to cancel
the undisbursed portion of the loan, or
expiration of the term for which the loan was
available for disbursement. The following
documentation is sufficient to demonstrate
that any undisbursed portion of an accepted
subsidized loan is cancelled and no longer
available: (a) A written communication from
the lender confirming that the loan has been
cancelled and undisbursed amounts are no
longer available to the applicant; or (b) a
legally binding agreement between the
CDBG–DR grantee (or local government,
Indian tribe, or subrecipient administering
the CDBG–DR assistance) and the applicant
that indicates that the period of availability
of the loan has passed and the applicant
agrees not to take actions to reinstate the loan
or draw any additional undisbursed loan
amounts.
IV.B. Procurement
For a grantee to have proficient
procurement processes, a grantee must:
indicate the procurement standards that
apply to its use of CDBG–DR funds; indicate
the procurement standards for subrecipients
or local governments as applicable; comply
with the standards it certified to HUD that it
follows (and update the certification
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submissions when substantial changes are
made); post the required documentation to
the official website as described below; and
include periods of performance and date of
completion in all CDBG–DR contracts.
State grantees must comply with the
procurement requirements at 24 CFR
570.489(g) and the following alternative
requirements: The grantee must evaluate the
cost or price of the product or service being
procured. State grantees shall establish
requirements for procurement processes for
local governments and subrecipients based
on full and open competition consistent with
the requirements of 24 CFR 570.489(g), and
shall require a local government or
subrecipient to evaluate the cost or price of
the product or service being procured with
CDBG–DR funds. Additionally, if the state
agency designated as the administering
agency chooses to provide funding to another
state agency, the administering agency must
specify in its procurement processes whether
the agency implementing the CDBG–DR
activity must follow the procurement
processes that the administering agency is
subject to, or whether the agency must follow
the same processes to which other local
governments and subrecipients are subject, or
its own procurement processes.
A grantee shall administer CDBG–DR grant
funds in accordance with all applicable laws
and regulations. As an alternative
requirement, grantees may not delegate, by
contract, or otherwise, the responsibility for
administering such grant funds.
HUD is establishing an additional
alternative requirement for all contracts with
contractors used to provide goods and
services, as follows:
1. The grantee (or procuring entity) is
required to clearly state the period of
performance or date of completion in all
contracts;
2. The grantee (or procuring entity) must
incorporate performance requirements and
liquidated damages into each procured
contract. Contracts that describe work
performed by general management consulting
services need not adhere to the requirement
on liquidated damages but must incorporate
performance requirements; and
3. The grantee (or procuring entity) may
contract for administrative support, in
compliance with 2 CFR 200.459, but may not
delegate or contract to any other party any
inherently governmental responsibilities
related to oversight of the grant, including
policy development, fair housing and civil
rights compliance, and financial
management.
IV.C. Use of the ‘‘Upper Quartile’’ or
‘‘Exception Criteria’’
The LMA benefit requirement is modified
when fewer than one quarter of the
populated-block groups in its jurisdictions
contain 51 percent or more LMI persons. In
such a community, 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
determines the lowest proportion a grantee
may use to qualify an area for this purpose
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and advises the grantee, accordingly. The
‘‘exception criteria’’ applies to CDBG–DR
funded activities in jurisdictions covered by
such criteria, including jurisdictions that
receive disaster recovery funds from a state.
Disaster recovery grantees are required to use
the most recent data available in
implementing the exception criteria (https://
www.hudexchange.info/programs/acs-lowmod-summary-data/acs-low-mod-summarydata-exception-grantees/).
IV.D. Environmental Requirements
IV.D.1. Clarifying note on the process for
environmental release of funds when a state
carries out activities directly. For CDBG–DR
grants, HUD allows state grantees to carry out
activities directly and to distribute funds to
subrecipients. Per 24 CFR 58.4(b)(1), when a
state carries out activities directly (including
through subrecipients that are not units of
general local government), the state must
submit the Certification and Request for
Release of Funds to HUD for approval.
IV.D.2. Adoption of another agency’s
environmental review. Appropriations acts
allow recipients of funds that use such funds
to supplement Federal assistance provided
under section 402, 403, 404, 406, 407,
408(c)(4), or 502 of the Stafford Act to adopt,
without review or public comment, any
environmental review, approval, or permit
performed by a Federal agency. Such
adoption shall satisfy the responsibilities of
the recipient with respect to such
environmental review, approval, or permit.
This provision allows the recipient of
supplemental assistance to adopt another
Federal agency’s review where the HUD
assistance supplements the Stafford Act, and
the other Federal agency performed an
environmental review for assistance under
section 402, 403, 404, 406, 407, or 502 of the
Stafford Act.
The other agency’s environmental review
must cover all project activities funded by
the HUD recipient for each project. The
grantee is only required to supplement the
other agency’s environmental review to
comply with HUD regulations (e.g.,
publication or posting requirements for
Notice of Finding of No Significant Impact
(FONSI), Notice of Intent to Request Release
of Funds (NOI–RROF), concurrent or
combined notices, or HUD approval period
for objections) if the activity is modified so
the other agency’s environmental review no
longer covers the activity. The recipient’s
environmental review obligations are
considered complete when adopting another
agency’s environmental review. To be
adequate:
1. The grantee must obtain a completed
electronic or paper copy of the Federal
agency’s review and retain a copy in its
environmental records.
2. The grantee must notify HUD on the
Request for Release of Funds (RROF) Form
7015.15 (or the state, if the state is acting as
HUD under 24 CFR 58.18) that another
agency review is being used. The grantee
must include the name of the other Federal
agency, the name of the project, and the date
of the project’s review as prepared by the
other Federal agency.
When permitted by the applicable
appropriations acts, and notwithstanding 42
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U.S.C. 5304(g)(2), the Secretary or a state
may, upon receipt of a Request for Release of
Funds and Certification, immediately
approve the release of funds for an activity
or project assisted with CDBG–DR funds if
the recipient has adopted an environmental
review, approval, or permit under this
section, or if the activity or project is
categorically excluded from review under the
National Environmental Policy Act of 1969
(42 U.S.C. 4321 et seq.) (NEPA).
IV.D.3. Historic preservation reviews. The
responsible entity must comply with section
106 of the National Historic Preservation Act
of 1966 (54 U.S.C. 306108). Early
coordination under section 106 is important
to the recovery process and required by 24
CFR 58.5(a).
IV.D.4. Tiered environmental reviews.
Tiering, as described at 40 CFR 1508.1(ff) and
24 CFR 58.15, is a means of making the
environmental review process more efficient
by allowing parties to ‘‘eliminate repetitive
discussions of the same issues, focus on the
actual issues ripe for decision, and exclude
from consideration issues already decided or
not yet ripe at each level of environmental
review’’ (40 CFR 1501.11(a)). Tiering is
appropriate when a responsible entity is
evaluating a single-family housing program
with similar activities within a defined local
geographic area and timeframe (e.g.,
rehabilitating single-family homes within a
city district or county over the course of one
to five years) but where the specific sites and
activities are not yet known. Public notice
and the Request for Release of Funds (HUDForm 7015.15) are processed at a broad-level,
eliminating the need for publication at the
site-specific level. However, funds cannot be
spent or committed on a specific site or
activity until the site-specific review has
been completed and approved.
IV.E. Flood Insurance Requirements
Grantees, recipients, and subrecipients
must implement procedures and mechanisms
to ensure that assisted property owners
comply with all flood insurance
requirements, including the purchase and
notification requirements described below,
before providing assistance.
IV.E.1. Flood insurance purchase
requirements. When grantees use CDBG–DR
funds to rehabilitate or reconstruct existing
residential buildings in a Special Flood
Hazard Area (or 100-year floodplain), the
grantee must comply with applicable
Federal, state, local, and tribal laws and
regulations related to both flood insurance
and floodplain management. The grantee
must comply with section 102(a) of the Flood
Disaster Protection Act of 1973 (42 U.S.C.
4012a) which mandates the purchase of flood
insurance protection for any HUD-assisted
property within a Special Flood Hazard Area.
Therefore, a HUD-assisted homeowner for a
property located in a Special Flood Hazard
Area must obtain and maintain flood
insurance in the amount and duration
prescribed by FEMA’s National Flood
Insurance Program.
IV.E.2. Federal assistance to owners
remaining in a floodplain.
IV.E.2.a. Prohibition on flood disaster
assistance for failure to obtain and maintain
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flood insurance. Grantees must comply with
section 582 of the National Flood Insurance
Reform Act of 1994, as amended, (42 U.S.C.
5154a), which prohibits flood disaster
assistance in certain circumstances. No
Federal disaster relief assistance made
available in a flood disaster area may be used
to make a payment (including any loan
assistance payment) to a person for ‘‘repair,
replacement, or restoration’’ for damage to
any personal, residential, or commercial
property if that person at any time has
received Federal flood disaster assistance
that was conditioned on the person first
having obtained flood insurance under
applicable Federal law and the person has
subsequently failed to obtain and maintain
flood insurance as required under applicable
Federal law on such property.
A grantee may not provide disaster
assistance for the repair, replacement, or
restoration of a property to a person who has
failed to satisfy the Federal requirement to
obtain and maintain flood insurance and
must implement a process to verify and
monitor for compliance with section 582 and
the requirement to obtain and maintain flood
insurance. Grantees are reminded that
CDBG–DR funds may be used to assist
beneficiaries in the purchase of flood
insurance to comply with this requirement,
subject to the requirements of cost
reasonableness and other federal cost
principles.
IV.E.2.b. Prohibition on flood disaster
assistance for households above 120 percent
of AMI for failure to obtain flood insurance.
When a homeowner located in the floodplain
allows their flood insurance policy to lapse,
it is assumed that the homeowner is unable
to afford insurance and/or is accepting
responsibility for future flood damage to the
home. Higher income homeowners who
reside in a floodplain, but who failed to
secure or decided to not maintain their flood
insurance, should not be assisted at the
expense of lower income households. To
ensure that adequate recovery resources are
available to assist lower income homeowners
who reside in a floodplain but who are
unlikely to be able to afford flood insurance,
the Secretary finds good cause to establish an
alternative requirement.
The alternative requirement to 42 U.S.C.
5305(a)(4) is as follows: Grantees receiving
CDBG–DR funds are prohibited from
providing CDBG–DR assistance for the
rehabilitation/reconstruction of a house, if (i)
the combined household income is greater
than either 120 percent of AMI or the
national median, (ii) the property was located
in a floodplain at the time of the disaster, and
(iii) the property owner did not obtain flood
insurance on the damaged property, even
when the property owner was not required to
obtain and maintain such insurance.
IV.E.2.c. Responsibility to inform property
owners to obtain and maintain flood
insurance. Section 582 of the National Flood
Insurance Reform Act of 1994, as amended,
(42 U.S.C. 5154a) is a statutory requirement
that property owners receiving disaster
assistance that triggers the flood insurance
purchase requirement have a statutory
responsibility to notify any transferee of the
requirement to obtain and maintain flood
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insurance and to maintain such written
notification in the documents evidencing the
transfer of the property, and that the
transferring owner may be liable if he or she
fails to do so. A grantee or subrecipient
receiving CDBG–DR funds must notify
property owners of their responsibilities
under section 582.
IV.F. URA, Section 104(d), and Related CDBG
Program Requirements
Activities and projects undertaken with
CDBG–DR funds may be subject to the URA,
section 104(d) of the HCDA (42 U.S.C.
5304(d)), and CDBG program requirements
related to displacement, relocation,
acquisition, and replacement of housing,
except as modified by waivers and
alternative requirements provided in this
notice. The implementing regulations for the
URA are at 49 CFR part 24. The regulations
implementing section 104(d) are at 24 CFR
part 42. The regulations for applicable CDBG
program requirements are at 24 CFR 570.488
and 24 CFR 570.606. HUD is waiving or
providing alternative requirements in this
section for the purpose of promoting the
availability of decent, safe, and sanitary
housing with respect to the use of CDBG–DR
funds allocated under the Consolidated
Notice.
IV.F.1. Section 104(d) one-for-one
replacement of lower-income dwelling units.
One-for-one replacement requirements at
section 104(d)(2)(A)(i) and (ii) and 104(d)(3)
of the HCDA and 24 CFR 42.375 are waived
for owner-occupied lower-income dwelling
units that are damaged by the disaster and
not suitable for rehabilitation. The section
104(d) one-for-one replacement housing
requirements apply to occupied and vacant
occupiable lower-income dwelling units
demolished or converted in connection with
a CDBG assisted activity. This waiver
exempts all disaster-damaged owneroccupied lower-income dwelling units that
meet the grantee’s definition of ‘‘not suitable
for rehabilitation,’’ from the one-for-one
replacement housing requirements of 24 CFR
42.375. Before carrying out activities that
may be subject to the one-for-one
replacement housing requirements, the
grantee must define ‘‘not suitable for
rehabilitation’’ in its action plan or in
policies/procedures governing these
activities. Grantees are reminded that tenantoccupied and vacant occupiable lowerincome dwelling units demolished or
converted to another use other than lowerincome housing in connection with a CDBG–
DR assisted activity are generally subject to
one-for-one replacement requirements at 24
CFR 42.375 and that these provisions are not
waived.
HUD is waiving the section 104(d) one-forone replacement requirement for owneroccupied lower-income dwelling units that
are damaged by the disaster and not suitable
for rehabilitation because the one-for-one
replacement requirements do not account for
the large, sudden changes that a major
disaster may cause to the local housing stock,
population, or economy. Disaster-damaged
housing structures that are not suitable for
rehabilitation can pose a threat to public
health and safety and to economic
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revitalization. Prior to the implementation of
this waiver and alternative requirement,
grantees must reassess post-disaster
population and housing needs to determine
the appropriate type and amount of lowerincome dwelling units (both rental and
owner-occupied units) to rehabilitate and/or
reconstruct. Grantees should note that the
demolition and/or disposition of public
housing units continue to be subject to
section 18 of the United States Housing Act
of 1937, as amended, and 24 CFR part 970.
IV.F.2. Section 104(d) relocation
assistance. The relocation assistance
requirements at section 104(d)(2)(A)(iii) and
(B) of the HCDA and 24 CFR 42.350, are
waived to the extent that an eligible
displaced person, as defined under 24 CFR
42.305 of the section 104(d) implementing
regulations, may choose to receive either
assistance under the URA and implementing
regulations at 49 CFR part 24, or assistance
under section 104(d) and implementing
regulations at 24 CFR 42.350. This waiver
does not impact a person’s eligibility as a
displaced person under section 104(d), it
merely limits the amounts and types of
relocation assistance that a section 104(d)
eligible displaced person is eligible to
receive. A section 104(d) eligible displaced
person is eligible to receive the amounts and
types of assistance for displaced persons
under the URA, as may be modified by the
waivers and alternative requirements in this
notice for activities related to disaster
recovery. Without this waiver, disparities
exist in relocation assistance associated with
activities typically funded by HUD and
FEMA (e.g., buyouts and relocation). Both
FEMA and CDBG funds are subject to the
requirements of the URA; however, CDBG
funds are subject to section 104(d), while
FEMA funds are not. This limited waiver of
the section 104(d) relocation assistance
requirements assures uniform and equitable
treatment for individuals eligible to receive
benefits under section 104(d) by establishing
that all forms of relocation assistance to those
individuals must be in the amounts and for
the types of assistance provided to displaced
persons under URA requirements.
IV.F.3. URA replacement housing
payments for tenants. The requirements of
sections 204 and 205 of the URA (42 U.S.C.
4624 and 42 U.S.C. 4625), and 49 CFR
24.2(a)(6)(vii), 24.2(a)(6)(ix), and 24.402(b)
are waived to the extent necessary to permit
a grantee to meet all or a portion of a
grantee’s replacement housing payment
obligation to a displaced tenant by offering
rental housing through a rental housing
program subsidy (to include, but not limited
to, a housing choice voucher), provided that
comparable replacement dwellings are made
available to the tenant in accordance with 49
CFR 24.204(a) where the owner is willing to
participate in the program and the period of
authorized assistance is at least 42 months.
This waiver and alternative requirement is
subject to the following: if assistance is
provided through a HUD program, it is
subject to the applicable HUD program
requirements, including the requirement that
the tenant must be eligible for the rental
housing program. Failure to grant this waiver
would impede disaster recovery whenever
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rental program subsidies are available but
funds for cash replacement housing
payments are limited and such payments are
required by the URA to be based on a 42month term.
IV.F.4. URA voluntary acquisition—
homebuyer primary residence purchase.
Grantees may implement disaster recovery
program activities that provide financial
assistance to eligible homebuyers to purchase
and occupy residential properties as their
primary residence. Such purchases are
generally considered voluntary acquisitions
under the URA and subject to the URA
regulatory requirements at 49 CFR
24.101(b)(2). For CDBG–DR, 49 CFR
24.101(b)(2) is waived to the extent that it
applies to a homebuyer, who does not have
the power of eminent domain, and uses
CDBG–DR funds in connection with the
voluntary purchase and occupancy of a home
the homebuyer intends to make their primary
residence. This waiver is necessary to reduce
burdensome administrative requirements for
homebuyers following a disaster. Tenants
displaced by these voluntary acquisitions
may be eligible for relocation assistance.
IV.F.5. CDBG displacement, relocation,
acquisition, and replacement housing
program regulations—Optional relocation
assistance. The regulations at 24 CFR
570.606(d) are waived to the extent that they
require optional relocation policies to be
established at the grantee level. Unlike with
the regular CDBG program, states may carry
out disaster recovery activities directly or
through subrecipients, but 24 CFR 570.606(d)
does not account for this distinction. This
waiver makes clear that grantees receiving
CDBG–DR funds may establish optional
relocation policies or permit their
subrecipients to establish separate optional
relocation policies. The written policy must:
be available to the public, describe the
relocation assistance that the grantee, state
recipient (i.e., a local government receiving a
subgrant from the state through a method of
distribution), or subrecipient (as applicable)
has elected to provide, and provide for equal
relocation assistance within each class of
displaced persons according to 24 CFR
570.606(d). This waiver is intended to
provide states with maximum flexibility in
developing optional relocation policies with
CDBG–DR funds.
IV.F.6. Waiver of Section 414 of the
Stafford Act. Section 414 of the Stafford Act
(42 U.S.C. 5181) provides that
‘‘Notwithstanding any other provision of law,
no person otherwise eligible for any kind of
replacement housing payment under the
Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970
(Pub. L. 91–646) [42 U.S.C. 4601 et seq.]
[‘‘URA’’] shall be denied such eligibility as a
result of his being unable, because of a major
disaster as determined by the President, to
meet the occupancy requirements set by [the
URA].’’ Accordingly, homeowner occupants
and tenants displaced from their homes as a
result of the identified disasters and who
would have otherwise been displaced as a
direct result of any acquisition,
rehabilitation, or demolition of real property
for a federally funded program or project may
become eligible for a replacement housing
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payment notwithstanding their inability to
meet occupancy requirements prescribed in
the URA. Section 414 of the Stafford Act and
its implementing regulation at 49 CFR
24.403(d)(1) are waived to the extent that
they would apply to real property
acquisition, rehabilitation, or demolition of
real property for a CDBG–DR funded project
commencing more than one year after the
date of the latest applicable Presidentially
declared disaster undertaken by the grantees,
or subrecipients, provided that the project
was not planned, approved, or otherwise
underway before the disaster.
For purposes of this waiver, a CDBG–DR
funded project shall be determined to have
commenced on the earliest of: (1) the date of
an approved Request for Release of Funds
and certification; (2) the date of completion
of the site-specific review when a program
utilizes Tiering; or (3) the date of sign-off by
the approving official when a project
converts to exempt under 24 CFR
58.34(a)(12).
The waiver will simplify the
administration of the disaster recovery
process and reduce the administrative
burden associated with the implementation
of Stafford Act section 414 requirements for
projects commencing more than one year
after the date of the Presidentially declared
disaster considering most of such persons
displaced by the disaster will have returned
to their dwellings or found another place of
permanent residence.
This waiver does not apply with respect to
persons that meet the occupancy
requirements to receive a replacement
housing payment under the URA nor does it
apply to persons displaced or relocated
temporarily by other HUD-funded programs
or projects. Such persons’ eligibility for
relocation assistance and payments under the
URA is not impacted by this waiver.
IV.F.7. RARAP Section 104(d). CDBG–DR
grantees must certify that they have in effect
and are following a RARAP as required by
section 104(d)(1) and (2) of the HCDA and 24
CFR 42.325. In addition to the requirements
in 24 CFR 42.325 and 24 CFR 570.488 or 24
CFR 570.606(c), as applicable, HUD is
specifying the following alternative
requirements:
Grantees who are following an existing
RARAP for CDBG purposes must either: (1)
amend their existing RARAP; or (2) create a
separate RARAP for CDBG–DR purposes, to
reflect the following requirements and
applicable waivers and alternative
requirements as modified by the
Consolidated Notice.
Grantees who do not have an existing
RARAP in place because they do not manage
CDBG programs must create a separate
RARAP for CDBG–DR purposes, to reflect the
following CDBG–DR requirements and
applicable waivers and alternative
requirements as modified by the
Consolidated Notice.
(1) RARAP requirements for CDBG–DR. As
each grantee establishes and supports
feasible and cost-effective recovery efforts to
make communities more resilient against
future disasters, the CDBG–DR RARAP must
describe how the grantee plans to minimize
displacement of members of families and
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Fmt 4701
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individuals from their homes and
neighborhoods as a result of any CDBG–DR
assisted activities, including disaster
recovery activities where displacement can
be prevented (e.g., housing rehabilitation
programs). Across disaster recovery
activities—such as buyouts and other eligible
acquisition activities, where minimizing
displacement is not reasonable, feasible, or
cost-efficient and would not help prevent
future or repetitive loss—the grantee must
describe how it plans to minimize the
adverse impacts of displacement.
The description shall focus on proposed
disaster recovery activities that may directly
or indirectly result in displacement and the
assistance that shall be required for those
displaced. This description must focus on
relocation assistance under the URA and its
implementing regulations at 49 CFR part 24,
section 104(d) and implementing regulations
at 24 CFR part 42 (to the extent applicable),
24 CFR 570.488 and/or 24 CFR 570.606, and
relocation assistance pursuant to this section
of the Consolidated Notice, as well as any
other assistance being made available to
displaced persons. The CDBG–DR RARAP
must include a description of how the
grantee will plan programs or projects in
such a manner that recognizes the substantial
challenges experienced by displaced
individuals, families, businesses, farms, and
nonprofit organizations and develop
solutions to minimize displacement or the
adverse impacts of displacement especially
among vulnerable populations. The
description must be scoped to the complexity
and nature of the anticipated displacing
activities, including the evaluation of the
grantee’s available resources to carry out
timely and orderly relocations in compliance
with all applicable relocation requirements.
V. Performance Reviews
Under 42 U.S.C. 5304(e) and 24 CFR
1003.506(a), the Secretary shall, at least on an
annual basis, make such reviews and audits
as may be necessary or appropriate to
determine whether the grantee has carried
out its activities in a timely manner
(consistent process to meet its expenditure
requirement), whether the grantee’s activities
and certifications are carried out in
accordance with the requirements and the
primary objectives of the HCDA and other
applicable laws, and whether the grantee has
the continuing capacity to carry out those
activities in a timely manner.
V.A. Timely Distribution and Expenditure of
Funds
HUD waives the provisions at 24 CFR
570.494 and 24 CFR 570.902 regarding timely
distribution and expenditure of funds, and
establishes an alternative requirement
providing that each grantee must expend 100
percent of its allocation within six years of
the date HUD signs the grant agreement. HUD
may extend the period of performance
administratively, if good cause for such an
extension exists at that time, as requested by
the grantee, and approved by HUD. When the
period of performance has ended, HUD will
close out the grant and any remaining funds
not expended by the grantee on appropriate
programmatic purposes will be recaptured by
HUD.
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V.B. Review of Continuing Capacity
Upon a determination by HUD that the
grantee has not carried out its CDBG–DR
activities and certifications in accordance
with the requirements in the Consolidated
Notice, HUD will undertake a further review
to determine if the grantee has the continuing
capacity to carry out its activities in a timely
manner. In making this determination, HUD
will consider the nature and extent of the
recipient’s performance deficiencies, the
actions taken by the recipient to address the
deficiencies, and the success or likely
success of such actions. HUD may then apply
the following corrective and remedial actions
as appropriate:
V.B.1. Corrective and remedial actions. To
effectively administer the CDBG–DR program
in a manner that facilitates recovery,
particularly the alternative requirements
permitting states to act directly to carry out
eligible activities, HUD is waiving 42 U.S.C.
5304(e) to the extent necessary to establish
the following alternative requirement: HUD
may undertake corrective and remedial
actions for states in accordance with the
authorities for CDBG Entitlement grantees in
subpart O (including corrective and remedial
actions in 24 CFR 570.910, 570.911, and
570.913) or under subpart I of the CDBG
regulations at 24 CFR part 570. In response
to a deficiency, HUD may issue a warning
letter followed by a corrective action plan
that may include a management plan which
assigns responsibility for further
administration of the grant to specific entities
or persons. Failure to comply with a
corrective action may result in the
termination, reduction, or limitation of
payments to grantees receiving CDBG–DR
funds.
V.B.2. Reduction, withdrawal, or
adjustment of a grant, or other appropriate
action. Before a reduction, withdrawal, or
adjustment of a CDBG–DR grant, or other
actions taken pursuant to this section, the
recipient shall be notified of the proposed
action and be given an opportunity for an
informal consultation. Consistent with the
procedures described in the Consolidated
Notice, HUD may adjust, reduce, or withdraw
the CDBG–DR grant (except funds that have
been expended for eligible, approved
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21:24 May 17, 2023
Jkt 259001
activities) or take other actions as
appropriate.
V.B.3. Additional criteria and specific
conditions to mitigate risk. To ensure
effective grantee implementation of the
financial controls, procurement processes,
and other procedures that are the subject of
the certification by the Secretary, HUD has
and may continue to establish specific
criteria and conditions for each grant award
as provided for at 2 CFR 200.206 and
200.208, respectively, to mitigate the risk of
the grant. The Secretary shall specify any
such criteria and the resulting conditions in
the grant conditions governing the award.
These criteria may include, but need not be
limited to, a consideration of the internal
control framework established by the grantee
to ensure compliant implementation of its
financial controls, procurement processes
and payment of funds to eligible entities, as
well as the grantee’s risk management
strategy for information technology systems
established to implement CDBG–DR funded
programs. Additionally, the Secretary may
amend the grant conditions to mitigate risk
of a grant award at any point at which the
Secretary determines a condition to be
required to protect the Federal financial
interest or to advance recovery.
V.C. Grantee Reporting Requirements in the
DRGR System
V.C.1. DRGR-related waivers and
alternative requirements. The Consolidated
Notice waives the requirements for
submission of a performance report pursuant
to 42 U.S.C. 12708(a), 24 CFR 91.520, and
annual status and evaluation reports that are
due each fiscal year under 24 CFR
1003.506(a). Alternatively, HUD is requiring
that grantees enter information in the DRGR
system on a quarterly basis through the
performance reports. The information in
DRGR and the performance reports must
contain sufficient detail to permit HUD’s
review of grantee performance and to enable
remote review of grantee data to allow HUD
to assess compliance and risk.
At a minimum, each grantee must:
a. Enter its action plan and amendments as
described in III.C.1, including performance
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Fmt 4701
Sfmt 9990
32081
measures, into the Public Action Plan in
DRGR;
b. Enter activities into the DRGR Action
Plan at a level of detail sufficient to allow
HUD to determine grantee compliance (when
the activity type, national objective, and the
organization that will be responsible for the
activity is known);
c. Categorize activities in DRGR under a
‘‘project’’;
d. Enter into the DRGR system summary
information on grantees’ monitoring visits
and reports, audits, and technical assistance
it conducts as part of its oversight of its
disaster recovery programs;
e. Use the DRGR system to draw grant
funds for each activity;
f. Use the DRGR system to track program
income receipts, disbursements, revolving
loan funds, and leveraged funds (if
applicable);
g. Submit a performance report through the
DRGR system no later than 30 days following
the end of each calendar quarter. For all
activities, the address of each CDBG–DR
assisted property must be recorded in the
performance report; and
h. Publish a version of the performance
report that omits personally identifiable
information reported in the performance
reports submitted to HUD on the grantee’s
official website within three days of
submission to HUD, or in the event a
performance report is rejected by HUD,
publish the revised version, as approved by
HUD, within three days of HUD approval.
The grantee’s first performance report is
due after the first full quarter after HUD signs
the grant agreement. Performance reports
must be submitted on a quarterly basis until
all funds have been expended and all
expenditures and accomplishments have
been reported. If a satisfactory report is not
submitted in a timely manner, HUD may
suspend access to CDBG–DR funds until a
satisfactory report is submitted, or may
withdraw and reallocate funding if HUD
determines, after notice and opportunity for
a hearing, that the jurisdiction did not submit
a satisfactory report.
[FR Doc. 2023–10598 Filed 5–17–23; 8:45 am]
BILLING CODE 4210–67–P
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]]>Agencies
[Federal Register Volume 88, Number 96 (Thursday, May 18, 2023)]
[Notices]
[Pages 32046-32081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10598]
[[Page 32045]]
Vol. 88
Thursday,
No. 96
May 18, 2023
Part V
Department of Housing and Urban Development
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Allocations for Community Development Block Grant Disaster Recovery and
Implementation of the CDBG-DR Consolidated Waivers and Alternative
Requirements Notice; Notice
Federal Register / Vol. 88 , No. 96 / Thursday, May 18, 2023 /
Notices
[[Page 32046]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6393-N-01]
Allocations for Community Development Block Grant Disaster
Recovery and Implementation of the CDBG-DR Consolidated Waivers and
Alternative Requirements Notice
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: In March 2023, HUD allocated more than $3 billion in Community
Development Block Grant Disaster Recovery (CDBG-DR) funds appropriated
by the Continuing Appropriations Act, 2023 and the Department of
Housing and Urban Development Appropriations Act, 2023 for major
disasters occurring in 2022. This Allocation Announcement Notice
identifies grant requirements for these funds, including requirements
in HUD's CDBG-DR Consolidated Notice (``Consolidated Notice'') found in
Appendix B, and a limited number of amendments to the Consolidated
Notice that apply to CDBG-DR grants for disasters occurring in 2020,
2021, and 2022. The Consolidated Notice, as amended by this Allocation
Announcement Notice, includes waivers and alternative requirements,
relevant regulatory requirements, the grant award process, criteria for
action plan approval, and eligible disaster recovery activities.
DATES: Applicability Date: May 23, 2023.
FOR FURTHER INFORMATION CONTACT: Tennille Smith Parker, Director,
Office of Disaster Recovery, Department of Housing and Urban
Development, 451 7th Street SW, Room 7282, Washington, DC 20410,
telephone number 202-708-3587 (this is not a toll-free number). HUD
welcomes and is prepared to receive calls from individuals who are deaf
or hard of hearing, as well as individuals with speech or communication
disabilities. To learn more about how to make an accessible telephone
call, please visit: https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. Facsimile inquiries may be sent
to Ms. Parker at 202-708-0033 (this is not a toll-free number). Email
inquiries may be sent to [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Allocations
II. Use of Funds
A. Allocations of CDBG-DR Funds for Smaller Grants
III. Overview of Grant Process
A. Requirements Related to Administrative Funds
IV. Applicable Rules, Statutes, Waivers, and Alternative
Requirements
A. Grant Administration
B. Clarifications to the Consolidated Notice
V. Duration of Funding
VI. Assistance Listing Numbers (formerly known as the CFDA Number)
VII. Finding of No Significant Impact
Appendix A: Allocation Methodology
Appendix B: CDBG-DR Consolidated Notice
I. Allocations
The Continuing Appropriations Act, 2023 (Pub. L. 117-180, Division
A) approved September 30, 2022, makes available $2,000,000,000 in CDBG-
DR funds. These CDBG-DR funds are for necessary expenses for activities
authorized under title I of the Housing and Community Development Act
of 1974 (42 U.S.C. 5301 et seq.) (HCDA) related to disaster relief,
long-term recovery, restoration of infrastructure and housing, economic
revitalization, and mitigation in the ``most impacted and distressed''
(MID) areas resulting from a qualifying major disaster in 2021 or 2022.
Additionally, the Department of Housing and Urban Development
Appropriations Act, 2023 (Pub. L. 117-328, Division L, Title II)
approved December 29, 2022, makes available $3,000,000,000 in CDBG-DR
funds for major disasters that occurred in 2022 or later until such
funds are fully allocated. This notice announces allocations of
$3,391,220,000 from Public Laws 117-180 and 117-328 (collectively, the
``Appropriations Acts'') for disasters occurring in 2022. The
Appropriations Acts require HUD to include with any final allocation
for the total estimate of unmet need an additional amount of 15 percent
of that estimate for mitigation activities that reduce risk in the MID
areas (see Table 1).
The Appropriations Acts provide that grants shall be awarded
directly to a state, local government, or Indian tribe at the
discretion of the Secretary.
Pursuant to the Appropriations Acts, HUD has identified MID areas
based on the best available data for all eligible affected areas. A
detailed explanation of HUD's allocation methodology is provided in
Appendix A of this notice. To comply with requirements that all funds
are expended in MID areas, Lee County, Florida; Volusia County,
Florida; Orange County, Florida; Sarasota County, Florida; St. Clair
County, Illinois; St. Louis County, Missouri; and St. Louis City,
Missouri must use 100 percent of the total funds allocated to address
unmet disaster needs or mitigation activities within the HUD-identified
MID areas identified in the last column in Table 2.
All other grantees must use at least 80 percent of their
allocations to address unmet disaster needs or mitigation activities in
the HUD-identified MID areas, as identified in the last column of Table
2. These grantees may use the remaining 20 percent of their allocation
to address unmet disaster needs or mitigation activities in those areas
that the grantee determines are ``most impacted and distressed'' within
an area that received a Presidential major disaster declaration
identified by the Federal Emergency Management Agency (FEMA) disaster
numbers listed in column two of Table 1. However, these grantees are
not precluded from spending 100 percent of their allocation in the HUD-
identified MID areas if they choose to do so. Detailed requirements
related to MID areas are provided in section II.A.3. of the
Consolidated Notice.
Based on a review of the impacts from the eligible disasters, and
estimates of unmet need, HUD made the following allocations for
disasters occurring in 2022:
Table 1--Allocations for Unmet Needs and Mitigation Activities Under Public Law 117-180 and 117-328 for Disasters Occuring in 2022
--------------------------------------------------------------------------------------------------------------------------------------------------------
CDBG-DR Total allocated
Allocation for mitigation Allocation for CDBG-DR under this
FEMA disaster unmet needs set-aside unmet needs mitigation set- notice from
Year No. State Grantee from Public amounts from Public Law aside amounts Public Law 117-
Law 117-180 from Public 117-328 from Public Law 180 and 117-328
Law 117-180 117-328
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2022.............. 4672 Alaska........... State of Alaska.. $0 $0 $33,472,000 $5,021,000 $38,493,000
2022.............. 4673 Florida.......... Lee County....... 0 0 963,375,000 144,506,000 1,107,881,000
2022.............. 4673 Florida.......... Volusia County... 0 0 286,009,000 42,901,000 328,910,000
[[Page 32047]]
2022.............. 4673 Florida.......... Orange County.... 0 0 191,054,000 28,658,000 219,712,000
2022.............. 4673 Florida.......... Sarasota County.. 0 0 175,248,000 26,287,000 201,535,000
2022.............. 4673 Florida.......... State of Florida. 0 0 791,847,000 118,777,000 910,624,000
2022.............. 4676 Illinois......... St. Clair County. 0 0 26,110,000 3,917,000 30,027,000
2022.............. 4663 Kentucky......... State of Kentucky 259,125,000 38,869,000 0 0 297,994,000
2022.............. 4665 Missouri......... St. Louis County. 49,065,000 7,360,000 0 0 56,425,000
2022.............. 4665 Missouri......... St. Louis City... 22,464,000 3,370,000 0 0 25,834,000
2022.............. 4657 & 4670 Oklahoma......... State of Oklahoma 6,498,000 975,000 0 0 7,473,000
2022.............. 4649 & 4671 Commonwealth of Commonwealth of 144,039,000 21,606,000 580,000 87,000 166,312,000
Puerto Rico. Puerto Rico.
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Totals........ .............. ................. ................. 481,191,000 72,180,000 2,467,695,000 370,154,000 3,391,220,000
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Note: Grantees in Kentucky, Missouri, and Oklahoma are funded under PL 117-180; the grant for Puerto Rico is split $165,645,000 under PL 117-180 and
$667,000 under PL 117-328; Grantees in Alaska, Florida, and Illinois are funded completely under PL 117-328. The Oklahoma allocation is based on both
a county and tribal geography because declarations include both a tribal area and counties.
Table 2--Most Impacted and Distressed Areas for Disasters Occuring in 2022
----------------------------------------------------------------------------------------------------------------
Minimum amount Minimum amount
from Public Law from Public Law
117-180 that must 117-328 that must
be expended in be expended in
Grantee the HUD- the HUD- ``Most impacted and distressed''
identified ``most identified ``most areas
impacted and impacted and
distressed'' distressed''
areas in column 4 areas in column 4
----------------------------------------------------------------------------------------------------------------
State of Alaska....................... $0 $30,794,400 Bering Strait Regional Education,
Lower Yukon Regional Education;
99563 (Kashunamiut Regional
Education).
Lee County............................ 0 1,107,881,000 Lee County.
Volusia County........................ 0 328,910,000 Volusia County.
Orange County......................... 0 219,712,000 Orange County.
Sarasota County....................... 0 201,535,000 Sarasota County.
State of Florida...................... 0 728,499,200 Brevard, Charlotte, Collier,
DeSoto, Hardee, Highlands,
Hillsborough, Manatee, Monroe,
Osceola, Pinellas, Polk, Seminole
Counties; 32177 (Putnam County).
St. Clair County...................... 0 30,027,000 St. Clair County.
State of Kentucky..................... 238,395,200 0 Breathitt, Knott, Letcher, Perry
Counties; 41572 (Pike County).
St. Louis County...................... 56,425,000 0 St. Louis County.
St. Louis City........................ 25,834,000 0 St. Louis City.
State of Oklahoma..................... 5,978,400 0 Muscogee (Creek) OTSA/74447
(Okmulgee County).
Commonwealth of Puerto Rico........... 132,516,000 533,600 Salinas Municipio; 00610 (Anasco
Municipio), 00612 (Arecibo
Municipio), 00794 (Barranquitas
Municipio), 00623 (Cabo Rojo
Municipio), 00725 (Caguas
Municipio), 00729 (Canovanas
Municipio), 00646 (Dorado
Municipio), 00784 (Guayama
Municipio), 00660 (Hormigueros
Municipio), 00791 (Humacao
Municipio), 00795 (Juana Diaz
Municipio), 00667 (Lajas
Municipio), 00771 (Las Piedras
Municipio), 00719 (Naranjito
Municipio), 00720 (Orocovis
Municipio), 00728 (Ponce
Municipio), 00754 (San Lorenzo
Municipio), 00757 (Santa Isabel
Municipio), 00949 (Toa Baja
Municipio), 00693 (Vega Baja
Municipio), 00767 (Yabucoa
Municipio), 00698 (Yauco
Municipio).
----------------------------------------------------------------------------------------------------------------
II. Use of Funds
Funds for disasters occurring in 2022 announced in this notice are
subject to the requirements of this Allocation Announcement Notice and
the Consolidated Notice, included as Appendix B, as amended. HUD makes
amendments to the Consolidated Notice in this Allocation Announcement
Notice to reflect the terms of the Appropriations Acts. However, the
Consolidated Notice in Appendix B is the same Consolidated Notice
included as Appendix B in previous Allocation Announcements Notices
published in the Federal Register (87 FR 6364, 87 FR 31636, and 88 FR
3198). Sections III.A.1, III.A.1.a, and III.A.1.b of this Allocation
Announcement Notice include instructions for a grantee submitting an
early action plan for program administrative costs and will replace the
alternative requirement in the Consolidated Notice at III.C.1 for
purposes of accessing funds for program administrative costs prior to
the Secretary's certification.
To comply with the statutory requirement in the Appropriations
Acts, grantees shall not use CDBG-DR funds
[[Page 32048]]
for activities reimbursable by or for which funds are made available by
FEMA or the U.S. USACE of Engineers (USACE). Grantees must verify
whether FEMA or USACE funds are available prior to awarding CDBG-DR
funds to specific activities or beneficiaries. Grantees may use CDBG-DR
funds as the non-Federal match as described in section II.C.3 of the
Consolidated Notice.
II.A. Allocations of CDBG-DR Funds for Smaller Grants
Paragraph III.C.1.b of the Consolidated Notice requires that CDBG-
DR action plans ``demonstrate a reasonably proportionate allocation of
resources relative to areas and categories (i.e., housing, economic
revitalization, and infrastructure) of greatest needs identified in the
grantee's impact and unmet needs assessment or provide an acceptable
justification for a disproportional allocation.'' Additionally,
paragraph III.C.1.g of the Consolidated Notice requires grantees to
``provide a budget for the full amount of the allocation that is
reasonably proportionate to its unmet needs (or provide an acceptable
justification for disproportional allocation) and is consistent with
the requirements to integrate hazard mitigation measures into all its
programs and projects.''
HUD recognizes that grantees receiving a relatively small
allocation of funds for 2022 disasters in this notice may most
effectively advance recovery by more narrowly targeting these limited
recovery and mitigation resources. Accordingly, for grantees receiving
an allocation of less than $20 million for 2022 disaster(s) announced
in this notice, HUD will consider the small size of the grant and HUD's
allocation methodology as acceptable justification for a grantee to
propose a disproportional allocation when the grantee is allocating
funds to address unmet affordable rental housing needs caused by or
exacerbated by the disaster(s). Grantees exercising this option must
continue to comply with the applicable requirements of this notice and
the Consolidated Notice, including the CDBG-DR mitigation set-aside
requirement in section IV.A.2 of this notice.
III. Overview of Grant Process
III.A. Requirements Related to Administrative Funds
III.A.1. Action plan submittal for program administrative costs.
The Appropriations Acts allow grantees receiving an award under this
notice to access funding for program administrative costs prior to the
Secretary's certification of financial controls and procurement
processes, and adequate procedures for proper grant management. To
implement this authority, the following alternative requirement will
replace the alternative requirement in the Consolidated Notice at
III.C.1.
If a grantee chooses to access funds for program administrative
costs prior to the Secretary's certification, it must first prepare an
action plan describing its use of funds for program administrative
costs, subject to the five percent cap on the use of grant funds for
such costs. Instead of following requirements in section III.C.1 of the
Consolidated Notice, which require grantees to use the Public Action
Plan in HUD's DRGR system to submit their action plans, grantees will
follow a different process to access funds for program administrative
costs prior to the Secretary's certification.
As part of the process of accessing funds for these costs, grantees
must submit to HUD an action plan describing their use of funds for
program administrative costs. The action plan will be developed outside
of DRGR and must include all proposed uses of funds for program
administrative costs incurred prior to a final action plan being
submitted and approved. The action plan for program administrative
costs must also include the criteria for eligibility and the amount to
be budgeted for that activity. If a grantee chooses to submit the
action plan for program administrative costs, the grantee should
calculate its need to cover program administrative costs over the life
of the grant and consider how much of its available program
administrative funds may be reasonably budgeted at this very early
stage of its grant lifecycle.
III.A.1.a. Publication of the action plan for program
administrative costs and opportunity for public comment. The grantee
must publish the proposed action plan for program administrative costs,
and substantial amendments to the plan, for public comment. To permit a
more streamlined process and ensure that grants for program
administrative costs are awarded in a timely manner in order to allow
grantees to more rapidly design and launch recovery activities,
provisions of 42 U.S.C. 5304(a)(2) and (3), 42 U.S.C. 12707, 24 CFR
570.486, 24 CFR 1003.604, 24 CFR 91.105(b) through (d), and 24 CFR
91.115(b) through (d), with respect to citizen participation
requirements, are waived and replaced by the alternative requirements
in section III.A.1 that apply only to action plans for program
administrative costs and substantial amendments to these plans.
Additionally, for these action plans only, grantees are not subject to
the Consolidated Notice action plan requirements in sections III.B.2.i,
III.C.2, III.C.3, III.C.6, and III.D.1.a-c.
The manner of publication of the action plan for program
administrative costs must include prominent posting on the grantee's
official disaster recovery website and must afford residents, affected
local governments, and other interested parties a reasonable
opportunity to review the contents of the plan or substantial
amendment. Subsequent to publication of the action plan or substantial
amendment to that plan, the grantee must provide a reasonable time
frame (no less than seven days) and multiple methods (including
electronic submission) for receiving comments on the action plan or
substantial amendment for program administrative costs. At a minimum,
the topic of disaster recovery on the grantee's website, including the
posted action plan or substantial amendment, must be navigable by
interested parties from the grantee homepage and must link to the
disaster recovery website as required by section III.D.1.e of the
Consolidated Notice. The grantee's records must demonstrate that it has
notified affected parties through electronic mailings, press releases,
statements by public officials, media advertisements, public service
announcements, and/or contacts with neighborhood organizations.
Grantees are not required to hold any public hearings on the proposed
action plan or substantial amendment for program administrative costs.
The grantee must consider all oral and written comments on the
action plan or any substantial amendment. Any updates or changes made
to the action plan in response to public comments should be clearly
identified in the action plan. A summary of comments on the plan or
amendment, and the grantee's response to each, must be included with
the action plan or substantial amendment. Grantee responses shall
address the substance of the comment rather than merely acknowledge
that the comment was received.
After the grantee responds to public comments, it will then submit
its action plan or substantial amendment for program administrative
costs (which includes Standard Form 424 (SF-424)) to HUD for approval.
There is no due date for this plan as it may be submitted any time
prior to the grantee's Public Action Plan. HUD will review the action
plan or substantial amendment for
[[Page 32049]]
program administrative costs within 15 days from date of receipt and
determine whether to approve the action plan or substantial amendment
to that plan per the criteria identified in this notice.
III.A.1.b. Certifications waiver and alternative requirement.
Sections 104(b)(4), (c), and (m) of the HCDA (42 U.S.C. 5304(b)(4),
(c), and (m)), sections 106(d)(2)(C) and (D) of the HCDA (42 U.S.C.
5306(d)(2)(C) and (D)), and section 106 of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12706), and regulations at
24 CFR 91.225 and 91.325 are waived and replaced with the following
alternative. Each grantee choosing to submit an action plan for program
administrative costs must make the following certifications listed in
section III.F.7 of the Consolidated Notice and include them with the
submission of this plan: paragraphs b, c, d, g, i, j, k, l, p, and q.
Additionally, HUD is waiving section 104(a)-(c) and (d)(1) of the HCDA
(42 U.S.C. 5304), section 106(c)(1) and (d) of the HCDA (42 U.S.C.
5306), section 210 of the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4630),
section 305 of the URA (42 U.S.C. 4655), and regulations at 24 CFR
91.225(a)(2), (6), and (7), 91.225(b)(7), 91.325(a)(2), (6), and (7),
49 CFR 24.4(a), and 24 CFR 42.325 only to the extent necessary to allow
grantees to receive a portion of their allocation as a grant for
program administrative costs before submitting other statutorily
required certifications. Each grantee must make all certifications
included in section III.F.7 of the Consolidated Notice and submit them
to HUD when it submits its Public Action Plan in DRGR described in
III.C.1.
III.A.1.c. Submission of the action plan for program administrative
costs in DRGR. After HUD's approval of the action plan for program
administrative costs, the grantee enters the activities from its
approved action plan into the DRGR system if it has not previously done
so and submits its DRGR action plan to HUD (funds can be drawn from the
line of credit only for activities that are established in the DRGR
system). HUD has previously provided additional guidance (``Fact
Sheet'') with screenshots and step-by-step instructions describing the
submittal process for this DRGR action plan for program administrative
costs.\1\ This process will allow a grantee to access funds for program
administrative costs while the grantee begins developing its Public
Action Plan in DRGR as provided in section III.C.1 of the Consolidated
Notice.
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\1\ The Fact Sheet describing the process to submit an action
plan for program administrative costs in DRGR can be viewed at
https://files.hudexchange.info/resources/documents/DRGR-Fact-Sheet-PL117-43-Appropriation-Grantees.pdf.
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III.A.1.d. Incorporation of the action plan for program
administrative costs into the Public Action Plan. The grantee shall
describe the use of all grant funds for administrative costs in the
Public Action Plan required by section III.C.1. Use of grant funds for
administrative costs before approval of the Public Action Plan must be
consistent with the action plan for administrative costs. Once the
Public Action Plan is approved, the use of all grant funds must be
consistent with the Public Action Plan. Upon HUD's approval of the
Public Action Plan, the action plan for administrative costs shall only
be relevant to administrative costs charged to the grant before the
date of approval of the Public Action Plan.
III.A.2. Use of administrative funds across multiple grants. The
Appropriations Acts authorize special treatment of grant administrative
funds. Grantees that are receiving awards under this notice, and that
have received CDBG-DR or Community Development Block Grant mitigation
(CDBG-MIT) grants in the past or in any future acts, may use eligible
administrative funds (up to five percent of each grant award plus up to
five percent of program income generated by the grant) appropriated by
these acts for the cost of administering any CDBG-DR or CDBG-MIT grant
without regard to the particular disaster appropriation from which such
funds originated. If the grantee chooses to exercise this authority,
the grantee must have appropriate financial controls to comply with the
requirement that the amount of grant administration expenditures for
each CDBG-DR or CDBG-MIT grant will not exceed five percent of the
total grant award for each grant (plus five percent of program income
generated by the grant), review and modify its financial management
policies and procedures regarding the tracking and accounting of
administration costs, as necessary, and address the adoption of this
treatment of administrative costs in the applicable portions of its
Financial Management and Grant Compliance submissions as referenced in
section III.A.1 of the Consolidated Notice. Grantees are reminded that
all uses of funds for program administrative activities must qualify as
an eligible administration cost.
IV. Applicable Rules, Statutes, Waivers, and Alternative Requirements
The Appropriations Acts authorize the Secretary to waive or specify
alternative requirements for any provision of any statute or regulation
that the Secretary administers in connection with the obligation by the
Secretary, or use by the recipient, of these funds, except for
requirements related to fair housing, nondiscrimination, labor
standards, and the environment. This section of the notice and the
Consolidated Notice describe rules, statutes, waivers, and alternative
requirements that apply to allocations under this notice. For each
waiver and alternative requirement in this notice and incorporated
through the Consolidated Notice, the Secretary has determined that good
cause exists, and the waiver or alternative requirement is not
inconsistent with the overall purpose of title I of the HCDA. The
waivers and alternative requirements provide flexibility in program
design and implementation to support full and swift recovery following
eligible disasters, while ensuring that statutory requirements are met.
Grantees may request additional waivers and alternative
requirements from the Department as needed to address specific needs
related to their recovery and mitigation activities. Grantees should
work with the assigned CPD representative to request any additional
waivers or alternative requirements from HUD headquarters. The waivers
and alternative requirements described below apply to all grantees
under this notice. Under the requirements of the Appropriations Acts,
waivers and alternative requirements are effective five days after they
are published in the Federal Register or on the website of the
Department.
IV.A. Grant Administration
IV.A.1. Duplication of Benefits (DOB). Grantees that received funds
for disasters occurring in 2022 must follow the requirements located in
section IV.A. of the Consolidated Notice and the DOB requirements
described in this section. The Federal Register notice published on
June 2019, titled ``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''),
revised the DOB requirements that apply to CDBG-DR grants for disasters
declared between January 1, 2016, and December 31, 2021. For these
disasters, the 2019 DOB Notice also implemented
[[Page 32050]]
temporary changes to the treatment of loans made by the Disaster
Recovery Reform Act of 2018 (DRRA) (division D of Pub. L. 115-254),
which sunsets on October 5, 2023.
This DRRA loan exception does not apply to disasters occurring in
2022, therefore, subsidized loans may be a duplication of benefits for
CDBG-DR grants announced in this notice (depending on a grantee's DOB
analysis). Without the DRRA loan exception, most subsidized loans
duplicate CDBG-DR funds for the same purpose (there are limited
exceptions for declined, cancelled, or subsidized short-term loans to
pay for eligible costs before CDBG-DR funds became available, as
described in section IV.A.1. of the Consolidated Notice). Therefore,
HUD's time-limited policy in the 2019 DOB Notice to permit
reimbursement of costs paid with the proceeds of subsidized loans does
not apply after the DRRA loan exception sunsets. Additionally, because
the DRRA loan exception never applied to disasters occurring in 2022 or
later, grantees receiving CDBG-DR funds for those disasters are not
able to reimburse the costs paid by subsidized loans, including SBA
loans, unless the exceptions in section IV.A.1.a. of the Consolidated
Notice applies. These grantees must follow the duplication of benefits
requirements described below and in section IV.A. of the Consolidated
Notice.
This section of the notice describes the applicable laws and
requirements related to DOB, including the general framework to
calculate DOB. Section IV.A. of the Consolidated Notice describes the
exceptions for when a subsidized loan that is cancelled or declined is
not considered a duplication of benefits.
IV.A.1.(a). The Stafford Act. The Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C. 5121-5207) (Stafford
Act) is the primary legal authority establishing the framework for the
Federal government to provide disaster and emergency assistance.
Section 312 of the Stafford Act directs Federal agencies that
provide disaster assistance to assure that people, businesses, or other
entities do not receive financial assistance that duplicates any part
of their disaster loss covered by insurance or another source (42
U.S.C. 5155(a)). Section 312 also makes recipients of Federal disaster
assistance liable for repayment of the amount of Federal disaster
assistance that duplicates benefits available for the same purpose from
another source (42 U.S.C. 5155(c)).
The Stafford Act also provides that when assistance covers only a
part of the recipient's disaster needs, additional assistance to cover
needs not met by other sources will not cause a DOB (42 U.S.C.
5155(b)(3)). CDBG-DR assistance may only pay for eligible activities to
address unmet needs. This section advises grantees on the calculation
of unmet needs through a duplication of benefits analysis.
IV.A.1.(b). CDBG-DR Appropriations Acts and Federal Register
Notices. CDBG-DR funds are made available for ``necessary expenses'' by
the Appropriations Acts that contain statutory requirements on the use
of the grant funds. Grantees are subject to the requirements of the
Appropriations Acts, this notice, and the Consolidated Notice.
Since 2013, as a condition of making any CDBG-DR grant, the
Secretary must certify that the grantee has established adequate
procedures to prevent DOB. To meet this requirement, grantees must
submit DOB policies to HUD for review before HUD will award non-
administrative funds. ``Adequate'' procedures are those that meet the
requirements that HUD established in this notice, in the Consolidated
Notice, and as reflected in the related checklists that are available
online. HUD requires grantees to establish DOB policies that
incorporate certain steps before committing or awarding assistance.
Typically, the steps include determining the total need for assistance,
verifying the total assistance available from all sources of disaster
assistance (using recent data available from FEMA, SBA, and other
sources), excluding non-duplicative assistance from total assistance to
calculate DOB, reducing the total award by the amount of the DOB, and
obtaining an agreement from applicants to repay duplicative assistance.
This notice and the Consolidated Notice also require CDBG-DR
grantees to consider projected sources of disaster assistance in the
needs assessment that is part of an action plan for disaster recovery.
Consideration of other potential sources of assistance when planning
for the use of grant funds helps to limit the possibility of
duplication between CDBG-DR and other assistance.
IV.A.1.(c). Necessary and Reasonable Requirements. The Uniform
Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards in subpart E of 2 CFR part 200 (the Cost Principles)
applicable to all CDBG-DR grantees and their subrecipients require that
costs are necessary and reasonable. The Cost Principles are made
applicable to states by 24 CFR 570.489(p) and to local governments
through 24 CFR 570.502. State grantees are also subject to 24 CFR
570.489(d), which requires that states shall have fiscal and
administrative requirements to ensure that grant funds are used ``for
reasonable and necessary costs of operating programs.''
Under the Cost Principles, a cost assigned to a grant ``is
reasonable if, in its nature and amount, it does not exceed that which
would be incurred by a prudent person under the circumstances
prevailing at the time the decision was made to incur the cost'' (2 CFR
200.404).
Grantees must consider factors described at 2 CFR 200.404(a)
through (e) when determining which types and amounts of cost items are
necessary and reasonable. Based on these factors, HUD generally
presumes that if a cost has been paid by another source, charging it to
the Federal award violates the necessary and reasonable standard unless
grant requirements permit reimbursement.
IV.A.1.(d). Basic Duplication of Benefits Calculation Framework.
The Stafford Act requires a fact specific inquiry into assistance
received by each applicant. This notice refers to the subject of a DOB
review as an ``applicant'' or ``CDBG-DR applicant'' and uses the term
``applicant'' to include individuals, businesses, households, or other
entities that apply to the grantee or a subrecipient for CDBG-DR
assistance, as well as entities that use CDBG-DR assistance for an
activity without submitting an application (e.g., the department or
agency of the grantee administering the grant, other state or local
departments or agencies, or local governments).
A grantee is prohibited from making a blanket determination that
CDBG-DR assistance under one of its programs or activities does not
duplicate another category or source of assistance. The grantee must
conduct an individualized review of each applicant to determine that
the amount of assistance will not cause a DOB by exceeding the unmet
needs of that applicant. A review specific to each applicant is
necessary because assistance available to each applicant varies widely
based on individual insurance coverage, eligibility for various sources
of assistance, and other factors.
This section establishes the primary considerations that must be
part of a DOB analysis when providing CDBG-DR assistance, and a
framework for analyzing need and avoiding DOB when calculating awards.
CDBG-DR grantees have discretion to develop policies and procedures
that tailor their DOB
[[Page 32051]]
analyses to their own programs and activities so long as the grantee's
policies and procedures are consistent with the requirements of this
notice. If the grantee modifies its DOB procedures after the Secretary
certifies that the grantee's DOB procedures are adequate, the grantee's
modified procedures must meet standards HUD adopts to determine
adequacy.
IV.A.1.(d)(i). Assess Applicant Need. A grantee must determine an
applicant's total need. Total need is calculated based on need
estimates at a point in time; total need is the current need. However,
if the grantee's action plan permits CDBG-DR assistance to reimburse
costs of CDBG-DR eligible activities undertaken by the applicant before
submitting an application the total need also includes these costs.
Generally, total need is calculated without regard to the grantee's
program-specific caps on the amount of assistance.
For rehabilitation, reconstruction, or new construction activities,
the need can be reasonably documented using construction cost
estimates.
For recovery programs of the grantee that do not entail physical
rebuilding, such as special economic development activities to provide
an affected business with working capital, the total need will be
determined by the requirements or parameters of the program or
activity. For special economic development activities, total need
should be guided by standard underwriting guidelines (when required by
section II.D.6. of the Consolidated Notice, CDBG-DR grantees and
subrecipients must comply with the underwriting guidelines in Appendix
A to 24 CFR part 570 when assisting a for-profit entity as part of a
special economic development project).
The grantee's assessment of total need must consider in-kind
donations of materials or services that are known to the grantee at the
time it calculates need and makes the award. In-kind donations are non-
cash contributions, such as donations of professional services, use of
construction equipment, or contributions of building materials. In-kind
donations are not ``financial assistance'' that creates a DOB under the
Stafford Act, but they do reduce the amount of CDBG-DR assistance for
unmet need because the donated goods or services reduce activity costs.
IV.A.1.(d)(ii). Identify Total Assistance. To calculate DOB,
grantees are required to identify ``total assistance.'' For this
notice, total assistance includes all reasonably identifiable financial
assistance available to an applicant.
Total assistance includes resources such as cash awards, insurance
proceeds, grants, and loans received by or available to each CDBG-DR
applicant, including awards under local, state or Federal programs, and
from private or nonprofit charity organizations. At a minimum, the
grantee's efforts to identify total assistance must include a review to
determine whether the applicant received FEMA, SBA, insurance, and any
other major forms of assistance (e.g., state disaster assistance
programs) generally available to applicants.
Total assistance does not include personal assets such as money in
a checking or savings account (excluding insurance proceeds or disaster
assistance deposited into the applicant's account); retirement
accounts; credit cards and lines of credit; in-kind donations (although
these non-cash contributions known to the grantee reduce total need);
and private loans.
For this notice, a private loan is a loan that is not provided by
or guaranteed by a governmental entity, and that requires the CDBG-DR
applicant (the borrower) to repay the full amount of the loan
(principal and interest) under typical commercial lending terms, e.g.,
the loan is not forgivable. For DOB calculations, private loans are not
financial assistance and need not be considered in the DOB calculation,
regardless of whether the borrower is a person or entity.
By contrast, subsidized loans for the same purpose are to be
included in the DOB calculation unless an exception applies (see
sections IV.A.1.a. or IV.A.1.b. of the Consolidated Notice).
Total assistance includes available assistance. Assistance is
available if an applicant: (1) would have received it by acting in a
reasonable manner, or in other words, by taking the same practical
steps toward funding recovery as would disaster survivors faced with
the same situation but not eligible to receive CDBG-DR assistance; or
(2) has received the assistance and has legal control over it.
Available assistance includes reasonably anticipated assistance that
has been awarded and accepted but has not yet been received. For
example, if a local government seeks CDBG-DR assistance to fund part of
a project that also has been awarded FEMA Hazard Mitigation Grant
Program (HMGP) assistance, the entire HMGP award must be included in
the calculation of total assistance even if FEMA obligates the first
award increment for the project, but subsequent increments remain
unfunded until certain project milestones are met.
Applicants for CDBG-DR assistance are expected to seek insurance or
other assistance to which they are legally entitled under existing
policies and contracts, and to behave reasonably when negotiating
payments to which they may be entitled. For example, it may be
reasonable for an applicant to elect to receive an immediate lump sum
insurance settlement based on estimated cost of rehabilitation instead
of waiting for a longer period of time for the insurance company to
calculate reimbursement based on actual replacement costs, even if the
reimbursement based on actual costs would exceed the lump sum insurance
settlement.
HUD generally considers assistance to be available if it is awarded
to the applicant but is administered by another party instead of being
directly deposited with the applicant. For example, if an entity
administering homeowner rehabilitation assistance pays a contractor
directly to complete the rehabilitation, the assistance is still
considered available to the applicant.
By contrast, funds that are not available to an applicant must be
excluded from the final CDBG-DR award calculation. For example,
insurance or rehabilitation assistance received by a previous owner of
a disaster damaged housing unit is not available to a current owner
that acquired the unit by sale or transfer (including a current owner
that inherited the unit as a result of the death of the previous owner)
unless the current owner is a co-recipient of that assistance.
Funds are not available to an applicant if the applicant does not
have legal control of the funds when they are received. For example, if
a homeowner's mortgage requires insurance proceeds to be applied to
reduce the unpaid mortgage principal, then the lender/mortgage holder
(not the homeowner) has legal control over those funds. The homeowner
is legally obligated to use insurance proceeds for the purpose of
reducing the unpaid mortgage principal and does not have a choice in
using them for any other purpose, such as to rehabilitate the house.
Under these circumstances, insurance proceeds do not reduce CDBG-DR
rehabilitation assistance eligibility.
Alternatively, if a lender requires use of insurance for
rehabilitation, or a disaster-affected homeowner chooses to apply
insurance proceeds received for damage to the building to reduce an
unpaid mortgage principal, these insurance proceeds are treated as a
DOB and reduce the amount of CDBG-DR
[[Page 32052]]
funds the grantee may provide for rehabilitation.
IV.A.1.(d)(iii). Exclude Non-Duplicative Amounts. Once a grantee
has determined the total need and the total assistance, it determines
which sources it must exclude as non-duplicative for the DOB
calculation. Grantees must exclude amounts that are: (1) provided for a
different purpose; or (2) provided for the same purpose (eligible
activity), but for a different, allowable use (cost). Below, each of
these categories is explained in greater detail.
IV.A.1.(d)(iii)(1). Funds for a Different Purpose. Any assistance
provided for a different purpose than the CDBG-DR eligible activity, or
a general, non-specific purpose (e.g., ``disaster relief/recovery'')
and not used for the same purpose must be excluded from total
assistance when calculating the amount of the DOB.
Insurance proceeds for damage or destruction of a building are for
the same purpose as CDBG-DR assistance to rehabilitate or reconstruct
that building. On the other hand, grantees may exclude, as non-
duplicative, insurance provided for a different purpose (e.g.,
insurance proceeds for loss of contents and personal property, or
insurance proceeds for loss of buildings (such as a detached garage)
that the grantee has determined it will not assist with CDBG-DR funds).
However, a grantee may treat all insurance proceeds as duplicative if
it is impractical to identify the portion of insurance proceeds that
are non-duplicative because they are for a different purpose than the
CDBG-DR assistance.
Similarly, CDBG-DR assistance paid to a homeowner as a housing
incentive for the purpose of inducing the homeowner to sell the home to
the grantee (e.g., in conjunction with a buyout) are for a different
purpose than funds provided for interim housing (e.g., temporary
assistance for rental housing during a period when a household is
unable to reside in its home). In such a case, interim housing
assistance may be excluded from the final DOB calculation as non-
duplicative of funds paid for the housing incentive.
IV.A.1.(d)(iii)(2). Funds for Same Purpose, Different Allowable
Use. Assistance provided for the same purpose as the CDBG-DR purpose
(the CDBG-DR eligible activity) must be excluded when calculating the
amount of the DOB if the applicant can document that actual specific
use of the assistance was an allowable use of that assistance and was
different than the use (cost) of the CDBG-DR assistance (e.g., the
purpose is housing rehabilitation, the use of the other assistance was
roof replacement and the use of the CDBG-DR assistance is
rehabilitation of the interior of the house). Grantees are advised to
consult with HUD to determine what documentation is appropriate in this
circumstance. As a starting point, grantees should consider whether the
source of the assistance requires beneficiaries to maintain
documentation of how the assistance was used.
Whether the use of the non-CDBG-DR assistance is an allowable use
depends on the rules imposed by the source that provided the
assistance. For example, assume that a CDBG-DR grantee is administering
a homeowner rehabilitation program and an applicant to the program can
document that he/she previously received and used FEMA funds for
interim housing costs (i.e., rent). If FEMA permitted the applicant to
use its assistance for the general purpose of meeting any housing need,
the CDBG-DR grantee can exclude the FEMA assistance used for interim
housing as non-duplicative of the CDBG-DR assistance for
rehabilitation.
If, on the other hand, FEMA limited the use of FEMA funds to
housing rehabilitation, then the full amount of the FEMA assistance
must be considered for the specific purpose of housing rehabilitation
and cannot be excluded if the applicant used those funds for interim
housing. If interim housing is not an allowable use, the amount of the
FEMA housing rehabilitation assistance used for interim housing is
considered a DOB. If the grantee thinks the actual use of the FEMA
assistance may be allowable, the CDBG-DR grantee should contact FEMA
for clarification.
Assistance provided for the purpose of housing rehabilitation,
including assistance provided for temporary or minor rehabilitation, is
for the same purpose as CDBG-DR rehabilitation assistance. However, the
grantee can exclude assistance used for different costs of the
rehabilitation, which are a different allowable use (rehabilitation
costs not assisted with CDBG-DR). For example, if the other assistance
is used for minor or temporary rehabilitation which enabled the
applicant family to live in their home instead of moving to temporary
housing until rehabilitation can be completed, the grantee can
undertake remaining work necessary to complete rehabilitation. The
grantee's assessment of total need at the time of application may
include the costs of replacing temporary materials with permanent
construction and of completing mold remediation by removing drywall
installed with other assistance. These types of costs to modify
partially completed rehabilitation that the grantee determines are
necessary to comply with the requirements of CDBG-DR assistance do not
duplicate other assistance used for the partial rehabilitation.
Grantees are encouraged to contact HUD for further guidance in
cases when it is unclear whether non-CDBG-DR assistance for the same
general purpose can be excluded from the DOB calculation because it was
used for a different allowable use.
IV.A.1.(d)(iv). Identify DOB Amount and Calculate the Total CDBG-DR
Award. The total DOB is calculated by subtracting non-duplicative
exclusions from total assistance. Therefore, to calculate the total
maximum amount of the CDBG-DR award, the grantee must: (1) identify
total need; (2) identify total assistance; (3) subtract exclusions from
total assistance to determine the amount of the DOB; and (4) subtract
the amount of the DOB from the amount of the total need to determine
the maximum amount of the CDBG-DR award.
Three considerations may change the maximum amount of the CDBG-DR
award.
First, the grantee may impose a program cap that limits the amount
of assistance an applicant is eligible to receive, which may reduce the
potential CDBG-DR assistance available to the applicant.
Second, the grantee may increase the amount of an award if the
applicant agrees to repay duplicative assistance it receives in the
future (unless prohibited by a statutory order of assistance, as in the
requirement to use FEMA or USACE assistance before CDBG-DR assistance
discussed in sections II. and IV.A.1.(f)). Section 312(b) of the
Stafford Act permits a grantee to provide CDBG-DR assistance to an
applicant who is or may be entitled to receive assistance that would be
duplicative if: (1) the applicant has not received the other assistance
at the time the CDBG-DR grantee makes its award; and (2) the applicant
agrees to repay the CDBG-DR grantee for any duplicative assistance once
it is received. The agreement to repay from future funds may enable a
faster recovery in cases when other sources of assistance are delayed
(e.g., due to insurance litigation). HUD requires all grantees to enter
into agreements with applicants before the applicant receives CDBG-DR
assistance.
Third, the applicant's CDBG-DR award may increase if a reassessment
shows that the applicant has additional unmet need.
[[Page 32053]]
IV.A.1.(d)(v). Reassess Unmet Need When Necessary. Although long-
term recovery is a process, disaster recovery needs are calculated at
points in time. As a result, a subsequent change in an applicant's
circumstances can affect that applicant's remaining unmet need, meaning
the need that was not met by CDBG-DR and other sources of assistance.
Oftentimes, unmet need does not become apparent until after CDBG-DR
assistance has been provided. Examples may include: a subsequent
disaster that causes further damage to a partially rehabilitated home
or business; an increase in the cost of construction materials;
vandalism; contractor fraud; or theft of materials. Unmet need may also
change if other resources become available to pay for costs of the
activity (such as FEMA or USACE), and reduce the need for CDBG-DR.
To the extent that an original disaster recovery need was not fully
met or was exacerbated by factors beyond the control of the applicant,
the grantee may provide additional CDBG-DR funds to meet the increased
unmet need.
Grantees must be able to identify and document additional unmet
need, for example, by completing a professional inspection to verify
the revised estimate of costs to rehabilitate or reconstruct damaged
property.
IV.A.1.(e). Special Considerations. The potential for DOB arises
most frequently under homeowner rehabilitation programs but is not
limited solely to that type of activity. The following examples do not
form an exhaustive list of all CDBG-DR funded programs or activities.
They are included to illustrate instances when duplicative assistance
can occur when assisting other recovery activities:
1. Assistance to businesses. Many grantees carry out economic
revitalization programs that provide working capital assistance to
businesses. Generally, working capital assistance is calculated after
assessing a business's ability to use its current assets to pay its
current liabilities. The grantee's DOB analysis must consider total
assistance, which includes all sources of financial assistance
available to the applicant to pay a portion of liabilities that will
become due. For example, a downtown business alliance might award
business recovery grants from its funds to cover some of the same
liabilities. Even if the downtown business alliance does not call its
assistance ``working capital'' assistance, the amount the business
received from the downtown business alliance to pay the same costs as
the CDBG-DR funds is a DOB. Therefore, a grantee's basis for
calculating CDBG-DR economic development assistance and the purposes
for which the applicant can use the assistance should be clearly
identified so that grantees can prevent a DOB. As discussed above,
assets such as cash and cash equivalents (excluding deposits of
insurance proceeds or other disaster assistance), inventories, short-
term investments and securities, accounts receivable, and other assets
of the business are not financial assistance, although those assets may
be relevant to underwriting.
2. Assistance for infrastructure. State grantees may assist state
or local government entities by providing funding to restore
infrastructure (public facilities and improvements) after a disaster.
CDBG-DR funds used directly by state and local governments for public
facilities and improvements, or other purposes are also subject to the
DOB requirements of the Stafford Act. For example, a wastewater
treatment facility owned by a local government may need to be
rehabilitated. In this instance, total assistance, for a DOB analysis,
would not only include any other Federal assistance available to
rehabilitate the facility, but it must also include any local funds
that are available for this activity. And if local funds were
previously designated or planned for the activity, but are no longer
available, the grantee should document that the local government
recipient does not have funds set aside for the activity in any capital
improvement plan (or similar document showing planned use of funds).
3. Payments made under the Uniform Relocation Assistance and Real
Property Acquisition Policies Act (URA). Grantees may provide a
displaced person (as defined under 24 CFR 570.606) with rental
assistance payments under the URA or provide temporary relocation
assistance (as described in 49 CFR part 24, Appendix A, 49 CFR
24.2(a)(9)(ii)(D)) to persons temporary relocated as a result of a
project. Relocation payments made under the URA, as well as under
CDBG's optional relocation assistance provisions of 24 CFR 570.606(d),
are subject to DOB requirements in this notice and the Consolidated
Notice, as well as DOB requirements under the URA that prohibit
payments for the same ``purpose and effect'' as another payment to a
displaced person (49 CFR 24.3). To comply with CDBG-DR DOB
requirements, before issuance of rental assistance payments required by
the URA, grantees must complete a DOB analysis. For example, a CDBG-DR
grantee must check FEMA assistance data to determine that FEMA did not
provide rental assistance payments during the same time period (under
the URA or as part of a FEMA Individual Assistance Award). Please note
that while you cannot duplicate assistance for the same purpose,
advisory services and the provision of notices required under the URA
are not subject to this analysis because they are not financial
assistance to the person, and therefore must be provided in accordance
with the URA.
Subsidized Loans. For this notice, subsidized loans (including
forgivable loans) are loans other than private loans. Subsidized loans
are assistance that must be included in the DOB analysis, unless an
exception applies. Section IV.A. of the Consolidated Notice discusses
these exceptions and related requirements for the treatment of
subsidized loans in a duplication of benefits analysis. The full amount
of a subsidized loan available to the applicant for the same purpose as
CDBG-DR assistance is assistance that must be included in the DOB
calculation unless one of the exceptions in IV.A.1. of the Consolidated
Notice applies. A subsidized loan is available when it is accepted,
meaning that the borrower has signed a note or other loan document that
allows the lender to advance loan proceeds. Both SBA and FEMA provide
subsidized loans for disaster recovery. Note that the statutory order
of assistance provision pertaining to assistance from FEMA and USACE
applies to grants and subsidized loans made by these agencies.
Subsidized loans may also be available from other sources.
IV.A.1.(f). Order of Assistance. CDBG-DR appropriations acts
generally include a statutory order of assistance for Federal agencies.
Although the language may vary among appropriations, the statutory
order of assistance typically provides that CDBG-DR funds may not be
used for activities reimbursable by or for which funds are made
available by FEMA or USACE. This means that grantees must verify
whether FEMA or USACE funds are available for an activity (i.e. the
application period is open) or the costs are reimbursable by FEMA or
USACE (i.e., the grantee will receive FEMA or USACE assistance to
reimburse the costs of the activity) before awarding CDBG-DR assistance
for costs of carrying out the same activity. If FEMA or USACE are
accepting applications for the activity, the applicant must seek
assistance from those sources before receiving CDBG-DR assistance. If
the applicant's costs for the activity will be reimbursed by FEMA or
USACE, the grantee cannot provide the CDBG-DR assistance for those
costs. In the event that FEMA or USACE assistance is
[[Page 32054]]
awarded after CDBG-DR to pay the same costs, it is the CDBG-DR
grantee's responsibility to recapture CDBG-DR assistance that
duplicates assistance from FEMA or USACE.
Under the Stafford Act, a Federal agency that provides duplicative
assistance must collect that assistance. For CDBG-DR grants, the
grantee is required to collect duplicative assistance it provides. A
grantee that does not collect duplicative CDBG-DR assistance that it
provides may resolve this noncompliance by reimbursing its program
account with non-Federal funds in the amount of the duplication and
reprograming the use of the funds in accordance with applicable
requirements to avoid other corrective or remedial actions.
FEMA regulations at 44 CFR 206.191 set forth a delivery sequence
that establishes which source of assistance is duplicative for certain
programs. CDBG-DR assistance is not listed in FEMA's sequence, but as a
practical matter, CDBG-DR assistance duplicates other sources received
before CDBG-DR assistance for the same purpose and portion of need. Any
amount received from other sources before the CDBG-DR assistance that
is determined to be duplicative must be collected by the grantee. The
mandatory agreement to repay (discussed in section IV.A.1.(i)below) can
be used to prevent duplication by assistance that is available, but not
yet received. If the duplicative assistance is received after CDBG-DR,
the grantee must collect the DOB or contact HUD if it has questions
about whether another Federal agency is responsible for collecting the
duplication.
IV.A.1.(g). Multiple Disasters. When multiple disasters occur in
the same location, and the applicant has not recovered from the first
disaster at the time of a second disaster, the assistance provided in
response to the second disaster may duplicate assistance for the same
purpose and need as assistance provided after the first disaster. HUD
recognizes that in this scenario, DOB calculations can be complicated.
Damage from a second disaster, for example, may destroy work funded and
completed in response to the first disaster. The second disaster may
also damage or destroy receipts and other documentation of how
applicants expended assistance provided after the first disaster.
Therefore, HUD is adopting the following policy that is applicable
to circumstances when two disasters occur in the same area, and the
applicant has not fully recovered from the first disaster before the
second disaster occurs: Applicants are not required to maintain
documentation related to the use of public disaster assistance
(Federal, state, and local) beyond the period required by the agency
that provided the assistance. If documentation cannot be provided, the
grantee may accept a self-certification regarding how the applicant
used the other agency's assistance, provided that the applicant is
advised of the criminal and civil penalties that apply in cases of
false claims and fraud, and the grantee determines that the applicant's
total need is consistent with data the grantee has about the nature of
damage caused by the disasters (e.g., flood inundation levels). For
example, a second disaster strikes three years after an agency provided
assistance in response to the first disaster, and that agency required
applicants to maintain documentation for two years, the grantee may
accept a self-certification regarding how the applicant used the other
agency's assistance.
IV.A.1.(h). Recordkeeping. The grantee must document compliance
with DOB requirements. Policies and procedures for DOB may be specific
for each program funded by the CDBG-DR grantee and should be
commensurate with risk. Grantees should be especially careful to
sufficiently document the DOB analysis for activities they are carrying
out directly. Insufficient documentation on DOB can lead to findings,
which can be difficult to resolve if records are missing, inadequate,
or inaccurate to demonstrate compliance with DOB requirements.
When documenting its DOB analysis, grantees cannot rely on
certification alone for proof of other sources of funds for the same
purpose (unless authorized by this notice, see section IV.A.1.(g).
above). Any certification by an applicant must be based on supporting
evidence that will be kept available for inspection by HUD. For
example, if an applicant certifies that other sources of funds were
received and expended for a different purpose than the CDBG-DR funds,
grantees must substantiate this assertion with an additional source of
information (e.g., physical inspections, credit card statements, work
estimates, contractor invoices, flood inundation records, or receipts).
For these reasons, HUD recommends that as soon as possible after a
disaster, grantees advise the public and potential applicants to retain
all receipts that document expenditures for recovery needs. Grantees
should consult their CPD specialist or CPD Representative with
questions about the sufficiency of documentation.
IV.A.1.(i). Agreement to Repay. The Stafford Act requires grantees
to ensure that applicants agree to repay all duplicative assistance to
the agency providing that Federal assistance. To address any potential
DOB, each applicant must also enter into an agreement with the CDBG-DR
grantee to repay any assistance later received for the same purpose for
which the CDBG-DR funds were provided. This agreement can be in the
form of a subrogation agreement or similar document and must be signed
by every applicant before the grantee disburses any CDBG-DR assistance
to the applicant.
In its policies and procedures, the grantee must establish a method
to monitor each applicant's compliance with the agreement for a
reasonable period after project completion (i.e., a time period
commensurate with risk). Additionally, section III.A.1. of the
Consolidated Notice requires a grantee's agreement to also include the
following language: ``Warning: Any person who knowingly makes a false
claim or statement to HUD may be subject to civil or criminal penalties
under 18 U.S.C. 287, 1001 and 31 U.S.C. 3729.''
IV.A.1.(j). Collecting a Duplication. If a potential DOB is
discovered after CDBG-DR assistance has been provided, the grantee must
reassess the applicant's need at that time (see section IV.A.1.(d)(v)
above). If additional need is not demonstrated, CDBG-DR funds shall be
recaptured to the extent they are in excess of the remaining need and
duplicate other assistance received by the applicant for the same
purpose. However, this determination may depend on what sources of
assistance were last received by the applicant.
If a grantee fails to recapture funds from an applicant, HUD may
impose corrective actions pursuant to 24 CFR 570.495, 24 CFR 570.910,
and Federal Register notices, as applicable. Also, HUD reminds grantees
that the Stafford Act states that ``A person receiving Federal
assistance for a major disaster or emergency shall be liable to the
United States to the extent that such assistance duplicates benefits
available to the person for the same purpose from another source.'' A
grantee's failure to collect duplication of benefits does not remove an
applicant's potential liability to the United States. A grantee that
does not collect duplicative CDBG-DR assistance that it provides,
should review HUD's guidance in the second paragraph of section
IV.A.1.(f). above.
The grantee may refer to any relevant guidance or the debt
collection procedures in place for the state or local government. HUD
is available to
[[Page 32055]]
provide guidance to grantees in establishing or revising the grantee's
duplication of benefits policies and procedures.
CDBG-DR grantees awarded funds for disasters occurring in 2022 can
find the additional DOB requirements in Section IV.A. of the
Consolidated Notice.
IV.A.2. CDBG-DR mitigation set-aside. The Appropriations Acts
require HUD to include in any allocation of CDBG-DR funds for unmet
needs an additional amount of 15 percent for mitigation activities
(``CDBG-DR mitigation set-aside''). Grantees should consult Table 1 for
the amount allocated specifically for the CDBG-DR mitigation set-aside.
For purposes of grants under this notice, mitigation activities are
defined as those activities that increase resilience to disasters and
reduce or eliminate the long-term risk of loss of life, injury, damage
to and loss of property, and suffering and hardship, by lessening the
impact of future disasters.
In the grantee's action plan, it must identify how the proposed use
of the CDBG-DR mitigation set-aside will: (1) meet the definition of
mitigation activities; (2) address the current and future risks as
identified in the grantee's mitigation needs assessment in the MID
areas; (3) be CDBG-eligible activities under title I of the HCDA or
otherwise eligible pursuant to a waiver or alternative requirement; and
(4) meet a national objective.
Unlike recovery activities where grantees must demonstrate that
their activities ``tie-back'' to the specific disaster and address a
specific unmet recovery need for which the CDBG-DR funds were
appropriated, activities funded by the CDBG-DR mitigation set-aside do
not require such a ``tie-back'' to the specific qualified disaster that
has served as the basis for the grantee's allocation. Instead, grantees
must demonstrate that activities funded by the CDBG-DR mitigation set-
aside meet the provisions included as (1) through (4) in the prior
paragraph, to be eligible. Grantees must report activities as a ``MIT''
activity type in DRGR so that HUD and the public can determine that the
grantee has fulfilled the requirement for the CDBG-DR mitigation set-
aside.
Grantees may also meet the requirement of the CDBG-DR mitigation
set-aside by including eligible recovery activities that both address
the impacts of the disaster (i.e., have ``tie-back'' to the specific
qualified disaster) and incorporate mitigation measures into the
recovery activities. In section II.A.2.b of the Consolidated Notice,
grantees are instructed to incorporate mitigation measures when
carrying out activities to construct, reconstruct, or rehabilitate
residential or non-residential structures with CDBG-DR funds as part of
activities eligible under 42 U.S.C. 5305(a) (including activities
authorized by waiver and alternative requirement). Additionally, in
section II.A.2.c of the Consolidated Notice, grantees are required to
establish resilience performance metrics for those activities.
If grantees wish to count those activities towards the grantee's
CDBG-DR mitigation set-aside, grantees must: (1) Document how those
activities and the incorporated mitigation measures will meet the
definition of mitigation, as provided above; and (2) Report those
activities as a ``MIT'' activity type in DRGR so they are easily
tracked.
IV.A.2.a. Mitigation needs assessment. In addition to the
requirements prescribed in section III.C.1.a of the Consolidated Notice
that grantees must develop an impact and unmet needs assessment,
grantees receiving an award under this Allocation Announcement Notice
must also include in their action plan a mitigation needs assessment to
inform the activities funded by the CDBG-DR mitigation set-aside. Each
grantee must assess the characteristics and impacts of current and
future hazards identified through its recovery from the qualified
disaster and any other Presidentially declared disaster. Mitigation
solutions designed to be resilient only for threats and hazards related
to a prior disaster can leave a community vulnerable to negative
effects from future extreme events related to other threats or hazards.
When risks are identified among other vulnerabilities during the
framing and design of mitigation projects, implementation of those
projects can enhance protection and save lives, maximize the utility of
scarce resources, and benefit the community long after the projects are
complete.
Accordingly, each grantee receiving a CDBG-DR allocation under this
notice must conduct a risk-based assessment to inform the use of its
CDBG-DR mitigation set-aside considering identified current and future
hazards. Grantees must assess their mitigation needs in a manner that
effectively addresses risks to indispensable services that enable
continuous operation of critical business and government functions and
are critical to human health and safety or economic security. In the
mitigation needs assessment, each grantee must cite data sources and
must, at a minimum, use the risks identified in the current FEMA-
approved state or local Hazard Mitigation Plan (HMP). If a jurisdiction
is currently updating an expired HMP, the grantee's agency
administering the CDBG-DR funds must consult with the agency
administering the HMP update to identify the risks that will be
included in the assessment. Mitigation needs evolve over time and
grantees are to amend the mitigation needs assessment and action plan
as conditions change, additional mitigation needs are identified, and
additional resources become available.
IV.A.2.b. Connection of programs and projects to the mitigation
needs assessment. Grantees are required by section III.C.1.b of the
Consolidated Notice to describe the connection between identified unmet
needs and the allocation of CDBG-DR resources. In a similar fashion,
the plan must provide a clear connection between a grantee's mitigation
needs assessment and its proposed activities in the MID areas funded by
the CDBG-DR mitigation set-aside (or outside in connection to the MID
areas as described in section II.A.3 of the Consolidated Notice). To
maximize the impact of all available funds, grantees are encouraged to
coordinate and align these funds with other projects funded with CDBG-
DR and CDBG-MIT funds, as well as other disaster recovery activities
funded by FEMA, USACE, the U.S. Forest Service, and other agencies as
appropriate. Grantees are encouraged to fund planning activities that
complement FEMA's Building Resilient Infrastructure and Communities
(BRIC) program and to upgrade mapping, data, and other capabilities to
better understand evolving disaster risks.
IV.A.3. Interchangeability of disaster funds. The Appropriations
Acts gives the Secretary authority to authorize grantees that receive
an award in this Allocation Announcement Notice and under prior or
future appropriations to use those funds interchangeably and without
limitation for the same activities related to unmet recovery needs in
the MID areas resulting from a major disaster in the Appropriations
Acts or in prior or future appropriation acts, when the MID areas
overlap and when the use of the funds will address unmet recovery needs
of major disasters in the Appropriations Acts or in any prior or future
appropriation acts.
Based on this authority, the Secretary authorizes grantees
receiving a CDBG-DR grant under the Appropriations Acts and prior or
future appropriation acts for activities authorized under title I of
the HCDA for a specific qualifying disaster(s) to use these funds
interchangeably and without limitation for the same activities in MID
areas resulting from a major disaster in prior or future appropriation
acts, as long as the MID areas overlap and the activities address unmet
needs of both disasters.
[[Page 32056]]
Grantees are reminded that expanding the eligible beneficiaries of
activities in an action plan funded by any prior or future acts to
include those impacted by the specific qualifying disaster(s) in this
notice requires the submission of a substantial action plan amendment
in accordance with section III.C.6 of the Consolidated Notice.
Additionally, all waivers and alternative requirements associated with
a CDBG-DR grant apply to the use of the funds provided by that grant,
regardless of which disaster the funded activity will address.
For example, if a grantee is receiving funds under this notice for
a disaster occurring in 2022 and the MID areas for the 2022 disaster
overlap with the MID areas for a disaster that occurred in 2017, the
grantee may choose to use the funds allocated under this notice to
address unmet needs of both the 2017 disaster and the 2022 disaster. In
doing so, the grantee must follow the rules and requirements outlined
in this notice. However, if the grantee chooses to use its CDBG-DR
grant awarded due to a disaster that occurred in 2017 to address unmet
needs of both that disaster and the 2022 disaster, the grantee must
follow the rules and requirements outlined in the Federal Register
notices applicable to its CDBG-DR grant for 2017 disasters.
IV.A.4. Assistance to utilities. The Appropriations Acts provide
that funds ``may be used by a grantee to assist utilities as part of a
disaster-related eligible activity under section 105(a) of the Housing
and Community Development Act of 1974 (42 U.S.C. 5305(a)).''
Accordingly, paragraph III.G.3 of the Consolidated Notice does not
apply to funds under the Appropriations Acts, and HUD is adding a
modified alternative requirement that applies in lieu of paragraph
III.G.3.
While it is possible that not every CDBG-DR assisted utility will
serve predominantly low- and moderate-income (LMI) populations, HUD
recognizes that LMI populations would benefit especially from the
increased resilience and recovery of private utilities. HUD also
recognizes that privately-owned, for-profit utilities have a means of
obtaining private investment or otherwise recapturing costs from
ratepayers. Therefore, HUD's alternative requirement below includes
basic safeguards that HUD has determined are necessary to ensure that
costs comply with the certification to give maximum feasible priority
to activities that benefit LMI persons and that costs are necessary and
reasonable and do not duplicate other financial assistance. The
modified alternative requirement also makes clear that assistance to
utilities is subject to all other requirements that apply to the use of
funds, consistent with the requirement in the Appropriations Acts that
funds must be for an ``eligible activity under section 105(a).'' If a
grantee needs to submit a substantial amendment to add any activity
based on these new alternative requirements, they must follow section
III.C.6.a in the Consolidated Notice.
For grants made in response to 2022 disasters under the
Appropriations Acts, the following alternative requirement applies:
A grantee may assist private for-profit, non-profit, or publicly
owned utilities as part of disaster-related activities that are
eligible under section 105(a) of the HCDA, or otherwise made eligible
through a waiver or alternative requirement, provided that the grantee
complies with the following:
1. The funded activity must comply with applicable CDBG-DR
requirements, including the requirements that the assisted activity
will meet a national objective, the activity will address an unmet
recovery need or a risk identified in the grantee's mitigation needs
assessment, and if the assistance is provided to a for-profit entity
for an economic development project under section 105(a)(17), the
grantee must first comply with the underwriting requirements in section
II.D.6 of the Consolidated Notice.
2. Each grantee must carry out the grant consistent with the
grantee's certification that ``With respect to activities expected to
be assisted with CDBG-DR funds, the action plan has been developed so
as to give the maximum feasible priority to activities that will
benefit low- and moderate-income families.''
To fortify compliance with the existing certification, if the
grantee carries out activities that assist privately-owned, for-profit
utilities, the grantee must prioritize assistance to for-profit
utilities that will benefit areas where at least 51 percent of the
residents are LMI persons and demonstrate how assisting the private,
for-profit utility will benefit those areas.
3. The grantee must determine that the costs of the activity to
assist a utility are necessary and reasonable and that they do not
duplicate other financial assistance. To fortify these requirements and
achieve a targeted use of funds and to safeguard against the potential
over-subsidization when assistance is used to carry out activities that
benefit private, for-profit utilities, the grantee must document that
the level of assistance provided to a private, for-profit utility
addresses only the actual identified needs of the utility.
Additionally, the grantee must establish policies and procedures to
ensure that the CDBG-DR funds that assist private, for-profit utilities
reflect the actual identified financing needs of the assisted
businesses by establishing a mix of financing terms (loan, forgivable
loan, and/or grant) for each assisted private, for-profit utility,
based on the business's financial capacity, in order to ensure that
assistance is based on actual identified need.
IV.B. Clarifications to the Consolidated Notice
IV.B.1. Reimbursement Requirements for Grants Under the
Appropriations Acts. This section sets out requirements for 2022
disasters under the Appropriations Acts. In paragraph III.F.5 of the
Consolidated Notice, HUD permits grantees to charge to grants the pre-
award and pre-application costs of homeowners, renters, businesses, and
other qualifying entities for eligible costs these applicants have
incurred in response to an eligible disaster covered under a grantee's
applicable Allocation Announcement Notice. In addition to other
requirements, paragraph III.F.5 stipulates that grantees may charge the
eligible pre-application costs to the grant only if (1) the person or
private entity incurred the expenses within one year after the
applicability date of the grantee's Allocation Announcement Notice (or
within one year after the date of the disaster, whichever is later);
and (2) the person or entity pays for the cost before the date on which
the person or entity applies for CDBG-DR assistance.
Congress may enact multiple supplemental appropriations of CDBG-DR
funds for disasters occurring in the same year and HUD may then publish
multiple notices announcing CDBG-DR grants for the same disaster. For
example, HUD announced CDBG-DR grants for disasters occurring in 2022
in this notice. If Congress appropriates additional funds for 2022
disasters in a future appropriations act, grantees may find it
difficult to track expenses incurred within one year after the
applicability date of this notice and another Allocation Announcement
Notice, given that funds for disasters occurring in 2022 would be
announced in different notices. To avoid confusion and to apply a
uniform time frame to reimbursement of all pre-application costs for
2022 disasters, the requirement in III.F.5.(1) in the Consolidated
Notice that states, ``The person or private entity incurred the
expenses within one year after the applicability date of the grantee's
Allocation Announcement Notice (or within one year after the date
[[Page 32057]]
of the disaster, whichever is later)'' shall not apply, and instead,
grantees shall comply with the following alternative to that
requirement in III.F.5.(1): ``The person or private entity incurred the
expenses within one year after the applicability date of the notice
that announced the initial allocation of CDBG-DR funds (or within one
year after the date of the disaster, whichever is later).'' For
grantees receiving an allocation for a 2022 disaster, the notice that
announced the initial allocation of CDBG-DR funds is this notice.
IV.B.2. Clarification of the green and resilient building standard.
Paragraph II.B.2.a. of the Consolidated Notice requires that all
covered construction (new construction, reconstruction, and
rehabilitation) that is assisted with CDBG-DR funds meet an industry-
recognized standard that has achieved certain certifications described
in the notice. HUD updated its building standards to support the
adoption and enforcement of modern and resilient codes for grants
subject to the Federal Register notices published on February 3, 2022,
at 87 FR 6364; May 24, 2022 at 87 FR 31636; January 18, 2023, at 88 FR
3198; and this notice (including requirements identified as the
``Consolidated Notice'' incorporated by each of these notices as an
Appendix B). During this update, HUD inadvertently omitted a standard.
Accordingly, HUD clarifies that paragraph II.B.2.a. in the
``Consolidated Notice '' (as defined in the previous sentence) allows a
grantee to use either the ICC-700 National Green Building Standard
(NGBS) Green or NGBS Green+ Resilience standard, among other industry-
recognized standards. For grants made in response to disasters
occurring in 2020, 2021, and 2022, this notice replaces paragraph
II.B.2.a. in the Appendix B Consolidated Notice attached to this notice
and to the document titled ``Consolidated Notice'' in Appendix B to
each of the Federal Register notices published on February 3, 2022, at
87 FR 6364; May 24, 2022 at 87 FR 31636; January 18, 2023, at 88 FR
3198; and this notice. In lieu of the text originally published in
paragraph II.B.2.a. of those appendices (which is hereby replaced), the
following alternative requirement applies:
II.B.2.a. Green and resilient building standard for new
construction and reconstruction of housing. Grantees must meet the
Green and Resilient Building Standard, as defined in this subparagraph,
for: (i) all new construction and reconstruction (i.e., demolishing a
housing unit and rebuilding it on the same lot in substantially the
same manner) of residential buildings and (ii) all rehabilitation
activities of substantially damaged residential buildings, including
changes to structural elements such as flooring systems, columns, or
load-bearing interior or exterior walls.
The Green and Resilient Building Standard requires that all
construction covered by the paragraph above and assisted with CDBG-DR
funds meet an industry-recognized standard that has achieved
certification under (i) Enterprise Green Communities; (ii) LEED (New
Construction, Homes, Midrise, Existing Buildings Operations and
Maintenance, or Neighborhood Development); (iii) ICC-700 National Green
Building Standard (NGBS) Green or NGBS Green+ Resilience; (iv) Living
Building Challenge; or (v) any other equivalent comprehensive green
building program acceptable to HUD.
IV.B.3. Clarification of the Use of ``Uncapped'' Income Limits. The
Quality Housing and Work Responsibility Act of 1998 (Title V of Pub. L.
105-276) enacted a provision that directs the Department to grant
exceptions to at least 10 jurisdictions that are currently ``capped'
under HUD's low and moderate-income limits. Under this exception,
several CDBG entitlement grantees may use ``uncapped'' income limits
that reflect 80 percent of the actual median income for the area. Each
year, HUD publishes guidance on its website identifying which grantees
may use uncapped limits.
Accordingly, HUD clarifies that, the annual uncapped income limits
published by HUD applies to CDBG-DR funded activities in jurisdictions
covered by the uncapped limits, including jurisdictions that receive
disaster recovery funds from a state CDBG-DR grantee. This alternative
requirement applies to grants made in response to disasters occurring
in 2020, 2021, and 2022 that are subject to Federal Register notices
published on February 3, 2022, at 87 FR 6364; May 24, 2022 at 87 FR
31636; January 18, 2023, at 88 FR 3198; and this notice (including
requirements identified as a ``Consolidated Notice'' incorporated by
each of these notices as an Appendix B).
V. Duration of Funding
The Appropriations Acts make the funds available for obligation by
HUD until expended. HUD waives the provisions at 24 CFR 570.494 and 24
CFR 570.902 regarding timely distribution and expenditure of funds and
establishes an alternative requirement providing that each grantee must
expend 100 percent of its allocation within six years of the date HUD
signs the grant agreement. HUD may extend the time period in this
alternative requirement and associated grant period of performance
administratively, if good cause for such an extension exists at that
time, as requested by the grantee, and approved by HUD. When the period
of performance has ended, HUD will close out the grant and any
remaining funds not expended by the grantee on appropriate programmatic
purposes will be recaptured by HUD.
VI. Assistance Listing Numbers (Formerly Known as the CFDA Number)
The Assistance Listing Numbers (formerly known as the Catalog of
Federal Domestic Assistance numbers) for the disaster recovery grants
under this notice are as follows: 14.218; 14.228.
VII. Finding of No Significant Impact
A Finding of No Significant Impact (FONSI) with respect to the
environment has been made in accordance with HUD regulations at 24 CFR
part 50, which implement section 102(2)(C) of the National
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is
available online on HUD's CDBG-DR website at https://www.hud.gov/program_offices/comm_planning/cdbg-dr. 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). HUD welcomes and is prepared to
receive calls from individuals who are deaf or hard of hearing, as well
as individuals with speech or communication disabilities. To learn more
about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.
Adrianne Todman,
Deputy Secretary.
Appendix A
Allocation of CDBG-DR Funds to Most Impacted and Distressed Areas Due
to Presidentially Declared Disasters Occurring in 2022
Background
The Continuing Appropriation Act, 2023 (Pub. L. 117-180,
Division A) (approved September 30, 2022) appropriated $2 billion in
CDBG-Disaster Recovery (CDBG-DR) funds for ``major disasters that
occurred in 2021 or 2022'' and the Department of Housing and Urban
Development Appropriations Act, 2023 (Pub. L. 117-328, Division L,
Title II) (approved on December
[[Page 32058]]
29, 2022) appropriated $3 billion of CDBG-DR for disasters ``that
occurred in 2022 or later until such funds are fully allocated''.
Both laws instruct HUD that the funds are ``for the same purposes
and under the same terms and conditions as funds appropriated under
such heading in title VIII of the Disaster Relief Supplemental
Appropriations Act, 2022 (division B of Pub. L. 117-43)''.
The statutory text related to the allocation in Public Law 117-
43 is as follows:
``. . . for necessary expenses for activities authorized under
title I of the Housing and Community Development Act of 1974 (42
U.S.C. 5301 et seq.) related to disaster relief, long-term recovery,
restoration of infrastructure and housing, economic revitalization,
and mitigation, in the most impacted and distressed areas resulting
from a major disaster. . . . Provided, That amounts made available
under this heading in this Act shall be awarded directly to the
State, unit of general local government, or Indian tribe (as such
term is defined in section 102 of the Housing and Community
Development Act of 1974 (42 U.S.C. 5302)) at the discretion of the
Secretary: Provided further, That the Secretary shall allocate,
using the best available data, an amount equal to the total estimate
for unmet needs for qualifying disasters under this heading in this
Act: Provided further, That any final allocation for the total
estimate for unmet need made available under the preceding proviso
shall include an additional amount of 15 percent of such estimate
for additional mitigation: ''
This methodology applies to allocations for disasters occurring on
or after January 1, 2022 and had been declared major disasters as of
October 30, 2022. It reflects the $553,371,000 remaining from the $2
billion appropriated under Public Law 117-180 ($1.44 billion had
been provided for 2021 disasters in an earlier allocation) and
$2,837,849,000 under Public Law 117-328.
Most Impacted and Distressed Areas
As with prior CDBG-DR appropriations, HUD is not obligated to
allocate funds for all major disasters occurring in the statutory
timeframes. HUD is directed to use the funds ``in the most impacted
and distressed areas.'' HUD has implemented this directive by
limiting CDBG-DR formula allocations to grantees with major
disasters that meet these standards:
(1) Individual and Households Program (IHP) designation. HUD has
limited allocations to those disasters where the Federal Emergency
Management Agency (FEMA) had determined the damage was sufficient to
declare the disaster as eligible to receive IHP funding.
(2) Concentrated damage. HUD has limited its estimate of serious
unmet housing need to counties and/or counties with zip codes with
high levels of damage, collectively referred to as ``most impacted
areas.'' For this allocation, HUD is defining most impacted areas as
either most impacted counties--counties exceeding $10 million in
serious unmet housing needs--and most impacted Zip Codes--Zip Codes
with $2 million or more of serious unmet housing needs. The
calculation of serious unmet housing needs is described below.
For disasters that meet the most impacted threshold described
above, the unmet need allocations are based on the following factors
summed together:
(1) Repair estimates for seriously damaged owner-occupied units
without insurance (with some exceptions) in most impacted areas
after FEMA and Small Business Administration (SBA) repair grants or
loans;
(2) Repair estimates for seriously damaged rental units occupied
by very low-income renters in most impacted areas;
(3) Repair and content loss estimates for small businesses with
serious damage denied by SBA; and
(4) The estimated local cost share for Public Assistance
Category C to G projects.
Methods for Estimating Serious Unmet Needs for Housing
The data HUD uses to calculate unmet needs for 2022 qualifying
disasters come from the FEMA IHP data on housing-unit damage as of
January 10, 2023, and reflect disasters occurring in 2022 and
declared on or before October 30, 2022.
The core data on housing damage for both the unmet housing needs
calculation and the concentrated damage are based on home inspection
data for FEMA's IHP and SBA's disaster loan program. HUD calculates
``unmet housing needs'' as the number of housing units with unmet
needs times the estimated cost to repair those units less repair
funds estimated to be provided by FEMA and SBA.
Each of the FEMA IHP inspected owner units are categorized by
HUD into one of five categories:
Minor-Low: Less than $3,000 of FEMA inspected real
property damage.
Minor-High: $3,000 to $7,999 of FEMA inspected real
property damage.
Major-Low: $8,000 to $14,999 of FEMA inspected real
property damage and/or 1 to 3.9 feet of flooding on the first floor.
Major-High: $15,000 to $28,800 of FEMA inspected real
property damage and/or 4 to 5.9 feet of flooding on the first floor.
Severe: Greater than $28,800 of FEMA inspected real
property damage or determined destroyed and/or six or more feet of
flooding on the first floor.
When owner-occupied properties also have a personal property
inspection or only have a personal property inspection, HUD reviews
the personal property damage amounts such that if the personal
property damage places the home into a higher need category over the
real property assessment, the personal property amount is used. The
personal property-based need categories for owner-occupied units are
defined as follows:
Minor-Low: Less than $2,500 of FEMA inspected personal
property damage.
Minor-High: $2,500 to $3,499 of FEMA inspected personal
property damage.
Major-Low: $3,500 to $4,999 of FEMA inspected personal
property damage or 1 to 3.9 feet of flooding on the first floor.
Major-High: $5,000 to $9,000 of FEMA inspected personal
property damage or 4 to 5.9 feet of flooding on the first floor.
Severe: Greater than $9,000 of FEMA inspected personal
property damage or determined destroyed and/or 6 or more feet of
flooding on the first floor.
To meet the statutory requirement of ``most impacted'' in this
legislative language, homes are determined to have a high level of
damage if they have damage of ``major-low'' or higher. That is, they
have a FEMA inspected real property damage of $8,000 or above,
personal property damage $3,500 or above, or flooding 1 foot or
above on the first floor.
Furthermore, a homeowner with flooding outside the one percent
risk flood hazard area is determined to have unmet needs if they
reported damage and no flood insurance to cover that damage. For
homeowners inside the one percent risk flood hazard area, homeowners
without flood insurance with flood damage below the greater of
national median or 120 percent of Area Median Income are determined
to have unmet needs. For non-flood damage, homeowners without hazard
insurance with incomes below the greater of national median or 120
percent of Area Median Income are included as having unmet needs.
The unmet need categories for these types of homeowners are defined
as above for real and personal property damage.
FEMA IHP does not inspect rental units for real property damage
so personal property damage is used as a proxy for unit damage. Each
of the FEMA-inspected renter units are categorized by HUD into one
of five categories:
Minor-Low: Less than $1,000 of FEMA inspected personal
property damage.
Minor-High: $1,000 to $1,999 of FEMA inspected personal
property damage or determination of ``Moderate'' damage by the FEMA
inspector.
Major-Low: $2,000 to $3,499 of FEMA inspected personal
property damage or 1 to 3.9 feet of flooding on the first floor or
determination of ``Major'' damage by the FEMA inspector.
Major-High: $3,500 to $7,500 of FEMA inspected personal
property damage or 4 to 5.9 feet of flooding on the first floor.
Severe: Greater than $7,500 of FEMA inspected personal
property damage or determined destroyed and/or 6 or more feet of
flooding on the first floor or determination of ``Destroyed'' by the
FEMA inspector.
To meet the statutory requirement of ``most impacted'' for
rental properties, homes are determined to have a high level of
damage if they have damage of ``major-low'' or higher. That is, they
have a FEMA personal property damage assessment of $2,000 or greater
or flooding 1 foot or above on the first floor.
Furthermore, landlords are presumed to have adequate insurance
coverage unless the unit is occupied by a renter with income less
than the greater of the Federal poverty level or 50 percent of the
area median income. Units occupied by a tenant with income less than
the greater of the poverty level or 50 percent of the area median
income are used to calculate likely unmet needs for affordable
rental housing.
The average cost to fully repair a home for a specific disaster
to code within each of the damage categories noted above is
calculated using the median real property damage repair costs
determined by the SBA for its disaster loan program based on a match
comparing FEMA and SBA inspections by each of the FEMA damage
categories described above.
[[Page 32059]]
If there is a match of 20 or more SBA inspections to FEMA
inspections for any damage category, the median damage estimate for
the SBA properties is used less the estimated average FEMA IHP
repair grant and average SBA disaster loan grant weighted on take-up
rates, which are generally high for IHP and low and for SBA. Except
that no matched multiplier can be less than the 25th percentile for
all IHP eligible disasters combined in eligible disaster years at
the time of the allocation calculation or more than the 75th
percentile for all IHP eligible disasters combined with data
available as of the allocation.
If there is a match of fewer than 20 SBA inspections to FEMA
inspections within individual damage categories, these multipliers
are used which are based on the 2020 and 2021 disaster years:
----------------------------------------------------------------------------------------------------------------
Multipliers by disaster type
----------------------------------------------------------------------------------------------------------------
Disaster type Major-low Major-high Severe
----------------------------------------------------------------------------------------------------------------
Dam/Levee Break................................................. $33,007 $47,078 $47,078
Earthquake...................................................... 27,141 33,714 134,503
Fire............................................................ 22,971 82,582 134,503
Flood........................................................... 47,074 57,856 64,513
Hurricane....................................................... 36,800 45,952 45,952
Severe Ice Storm................................................ 33,528 33,714 36,592
Severe Storm(s)................................................. 22,971 37,299 37,299
Tornado......................................................... 52,961 82,582 134,503
----------------------------------------------------------------------------------------------------------------
A separate multiplier is applied to mobile homes for all
disaster types. Where there are fewer than 20 mobile homes for a
match for a disaster, the mobile home multipliers are $49,571 for
major-low, $60,189 for major-high, and $67,594 for severe. If there
are 20 or more matches for a specific disaster's mobile homes, that
specific disaster multiplier is used.
Methods for Estimating Serious Unmet Economic Revitalization Needs
Based on SBA disaster loans to businesses using data for 2022
disasters from as of January 4, 2023, HUD calculates the median real
estate and content loss by the following damage categories for each
disaster:
Category 1: real estate + content loss = below $12,000
Category 2: real estate + content loss = $12,000-$29,999
Category 3: real estate + content loss = $30,000-$64,999
Category 4: real estate + content loss = $65,000-$149,999
Category 5: real estate + content loss = $150,000 and above
For properties with real estate and content loss of $30,000 or
more, HUD calculates the estimated amount of unmet needs for small
businesses by multiplying the median damage estimates for the
categories above by the number of small businesses denied an SBA
loan, including those denied a loan prior to inspection due to
inadequate credit or income (or a decision had not been made), under
the assumption that damage among those denied at pre-inspection have
the same distribution of damage as those denied after inspection.
Methods for Estimating Unmet Infrastructure Needs
To calculate 2022 unmet needs for infrastructure projects, HUD
received FEMA cost estimates on January 10, 2023, of the expected
local cost share to repair the permanent public infrastructure
(Categories C to G) to their pre-storm condition.
Allocation Calculation
Once eligible entities are identified using the above criteria,
the allocation to individual grantees represents their proportional
share of the estimated unmet needs. For the formula allocation, HUD
calculates total unmet recovery needs for eligible disasters as the
aggregate of:
Serious unmet housing needs in most impacted and
distressed areas;
Serious unmet business needs; and
Unmet infrastructure need.
Mitigation is calculated as 15 percent of the unmet need
calculation, and then rounded to the nearest $1,000.
Sub-Disaster Allocations for Local Governments
Sub-allocations to local governments are made from this disaster
level allocation. Each disaster that has allocations to local
governments has a slightly different methodology reflecting best
available data for that disaster at the local level and program
administration considerations.
DR4665-MO. This disaster is concentrated in two
entitlement areas. Local data from this July 2022 disaster allows
for consideration of housing, business, and infrastructure data for
all impacted counties. St. Louis County has the greatest serious
housing damage for a most impacted and distressed area designation
while St. Louis City has the greatest concentration of public
assistance category C to G match requirements in excess of $10
million for a Most Impacted and Distressed area designation.
DR4657 & DR4670-OK. These two Oklahoma major disaster
declarations were for the same event, DR 4657 received an IHP
designation for several counties in Oklahoma and DR 4670 a Public
Assistance designation for Muscogee (Creek). This disaster was made
eligible based on a concentration of damage in a zip code. To ease
program administration the Most Impacted and Distressed Areas are
defined as both Okmulgee County and Muscogee (Creek) Oklahoma Tribal
Statistical Area (OTSA). These areas overlap and HUD has identified
both as most impacted and distressed areas for purposes of this
allocation.
DR 4673-FL. Hurricane Ian has led to the designation of
18 Most Impacted Counties and 1 Most Impacted Zip Code. Within those
areas are dozens of affected regular CDBG entitlement areas. There
are four counties, however, that are entitlement counties under the
regular CDBG Urban County program and, when their need is combined
with the 6 city entitlement cities within them, each have more than
$100 million in serious unmet housing needs, which is a natural
break in the distribution from the other CDBG program entitlement
communities. With administrative costs capped at 5 percent, larger
grants offer more program efficiencies, HUD is allocating directly
to the most seriously impacted counties to serve their entire county
(including all cities within them) and the state to serve the areas
for the other counties where funds are not directly allocated.
Appendix B--The Consolidated Notice
CDBG-DR Consolidated Notice Waivers and Alternative Requirements
Table of Contents
I. Waivers and Alternative Requirements
II. Eligible Activities
A. Clarification of Disaster-Related Activities
B. Housing and Related Floodplain Issues
C. Infrastructure (Public Facilities, Public Improvements)
D. Economic Revitalization
III. Grant Administration
A. Pre-Award Evaluation of Management and Oversight of Funds
B. Administration, Planning, and Financial Management
C. Action Plan for Disaster Recovery Waiver and Alternative
Requirement
D. Citizen Participation Requirements
E. Program Income
F. Other General Waivers and Alternative Requirements
G. Ineligible Activities in CDBG-DR
IV. Other Program Requirements
A. Duplication of Benefits
B. Procurement
C. Use of the ``Upper Quartile'' or ``Exception Criteria''
D. Environmental Requirements
E. Flood Insurance Requirements
F. URA, Section 104(d) and Related CDBG Program Requirements
V. Performance Reviews
A. Timely Distribution and Expenditure of Funds
[[Page 32060]]
B. HUD's Review of Continuing Capacity
C. Grantee Reporting Requirements in the DRGR System
I. Waivers and Alternative Requirements
CDBG-DR grantees that are subject to this Consolidated Notice,
as indicated in each Federal Register notice that announces
allocations of the appropriated CDBG-DR funds (``Allocation
Announcement Notice''), must comply with all waivers and alternative
requirements in the Consolidated Notice, unless expressly made
inapplicable (e.g., a waiver that applies to states only does not
apply to units of general local governments and Indian tribes).
Except as described in applicable waivers and alternative
requirements, the statutory and regulatory provisions governing the
CDBG program (and for Indian tribes, the Indian CDBG program) shall
apply to grantees receiving a CDBG-DR allocation. Statutory
provisions (title I of the HCDA) that apply to all grantees can be
found at 42 U.S.C. 5301 et seq. and regulatory requirements, which
differ for each type of grantee, are described in each of the three
paragraphs below.
Except as modified, the State CDBG program rules shall apply to
state grantees receiving a CDBG-DR allocation. Applicable State CDBG
program regulations are found at 24 CFR part 570, subpart I. For
insular areas, HUD waives the provisions of 24 CFR part 570, subpart
F and imposes the following alternative requirement: Insular areas
shall administer their CDBG-DR allocations in accordance with the
regulatory and statutory provisions governing the State CDBG
program, as modified by the Consolidated Notice.
Except as modified, statutory and regulatory provisions
governing the Entitlement CDBG Program shall apply to unit of
general local government grantees (often referred to as local
government grantees in appropriations acts). Applicable Entitlement
CDBG Program regulations are found at 24 CFR part 570, as described
in 570.1(a).
Except as modified, CDBG-DR grants made by HUD to Indian tribes
shall be subject to the statutory provisions in title I of the HCDA
that apply to Indian tribes and the regulations in 24 CFR part 1003
governing the Indian CDBG program, except those requirements in part
1003 related to the funding application and selection process.
References to the action plan in the above regulations shall
refer to the action plan required by the Consolidated Notice and not
to the consolidated plan action plan required by 24 CFR part 91. All
references pertaining to timelines and/or deadlines are in terms of
calendar days unless otherwise noted.
II. Eligible Activities
II.A. Clarification of Disaster-Related Activities
CDBG-DR funds are provided for necessary expenses for activities
authorized under title I of the HCDA related to disaster relief,
long-term recovery, restoration of infrastructure and housing,
economic revitalization, and mitigation of risk associated with
activities carried out for these purposes, in the ``most impacted
and distressed'' areas (identified by HUD or the grantee) resulting
from a major disaster. All CDBG-DR funded activities must address an
impact of the disaster for which funding was allocated. Accordingly,
each activity must: (1) address a direct or indirect impact from the
disaster in a most impacted and distressed area; (2) be a CDBG-
eligible activity (or be eligible under a waiver or alternative
requirement); and (3) meet a national objective. When appropriations
acts provide an additional allocation amount for mitigation of
hazard risks that does not require a connection to the qualifying
major disaster, requirements for the use of those funds will be
included in the Allocation Announcement Notice.
II.A.1. Documenting a Connection to the Disaster. Grantees must
maintain records that document how each funded activity addresses a
direct or indirect impact from the disaster. Grantees may do this by
linking activities to a disaster recovery need that is described in
the impact and unmet needs assessment in the action plan
(requirements for the assessment are addressed in section
III.C.1.a.). Sufficient documentation of physical loss must include
damage or rebuilding estimates, insurance loss reports, images, or
similar information that documents damage caused by the disaster.
Sufficient documentation for non-physical disaster-related impacts
must clearly show how the activity addresses the disaster impact,
e.g., for economic development activities, data about job loss or
businesses closing after the disaster or data showing how pre-
disaster economic stressors were aggravated by the disaster; or for
housing activities, a post-disaster housing analysis that describes
the activities that are necessary to address the post-disaster
housing needs.
II.A.2. Resilience and hazard mitigation. The Consolidated
Notice will help to improve long-term community resilience by
requiring grantees to fully incorporate mitigation measures that
will protect the public, including members of protected classes,
vulnerable populations, and underserved communities, from the risks
identified by the grantee among other vulnerabilities. This approach
will better ensure the revitalization of the community long after
the recovery projects are complete.
Accordingly, HUD is adopting the following alternative
requirement to section 105(a): Grantees may carry out the activities
described in section 105(a), as modified by waivers and alternative
requirements, to the extent that the activities comply with the
following:
II.A.2.a. Alignment with mitigation plans. Grantees must ensure
that the mitigation measures identified in their action plan will
align with existing hazard mitigation plans submitted to the Federal
Emergency Management Agency (FEMA) under section 322 of the Robert
T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5165) or other state, local, or tribal hazard mitigation plans.
II.A.2.b. Mitigation measures. Grantees must incorporate
mitigation measures when carrying out activities to construct,
reconstruct, or rehabilitate residential or non-residential
structures with CDBG-DR funds as part of activities eligible under
42 U.S.C. 5305(a) (including activities authorized by waiver and
alternative requirement). To meet this alternative requirement,
grantees must demonstrate that they have incorporated mitigation
measures into CDBG-DR activities as a construction standard to
create communities that are more resilient to the impacts of
recurring natural disasters and the impacts of climate change. When
determining which mitigation measures to incorporate, grantees
should design and construct structures to withstand existing and
future climate impacts expected to occur over the service life of
the project.
II.A.2.c. Resilience performance metrics. Before carrying out
CDBG-DR funded activities to construct, reconstruct, or rehabilitate
residential or non-residential structures, the grantee must
establish resilience performance metrics for the activity,
including: (1) an estimate of the projected risk to the completed
activity from natural hazards, including those hazards that are
influenced by climate change (e.g., high winds destroying newly
built homes), (2) identification of the mitigation measures that
will address the projected risks (e.g., using building materials
that are able to withstand high winds), and (3) an assessment of the
benefit of the grantee's measures through verifiable data (e.g., 10
newly built homes will withstand high winds up to 100 mph).
II.A.3. Most impacted and distressed (MID) areas. Funds must be
used for costs related to unmet needs in the MID areas resulting
from qualifying disasters. HUD allocates funds using the best
available data that cover the eligible affected areas and identifies
MID areas. Grantees are required to use 80 percent of all CDBG-DR
funds to benefit the HUD-identified MID areas. The HUD-identified
MID areas and the minimum dollar amount that must be spent to
benefit those areas will be identified for each grantee in the
applicable Allocation Announcement Notice. If a grantee seeks to add
other areas to the HUD-identified MID area, the grantee must contact
its CPD Representative or CPD Specialist and submit the request with
a data-driven analysis that illustrates the basis for designating
the additional area as most impacted and distressed as a result of
the qualifying disaster.
Grantees may use up to five percent of the total grant award for
grant administration. Therefore, HUD will include 80 percent of a
grantee's expenditures for grant administration in its determination
that 80 percent of the total award has benefited the HUD-identified
MID area. Expenditures for planning activities may also be counted
towards the HUD-identified MID area requirement, if the grantee
describes in its action plan how those planning activities benefit
those areas.
HUD may identify an entire jurisdiction or a ZIP code as a MID
area. If HUD designates a ZIP code as a MID area for the purposes of
allocating funds, the grantee may expand program operations to the
whole county or counties that overlap with the HUD designated ZIP
code. A grantee must indicate the decision to expand eligibility to
the whole county or counties in its action plan.
Grantees must determine where to use the remaining amount of the
CDBG-DR grant, but
[[Page 32061]]
that portion of the allocation may only be used to address unmet
needs and that benefit those areas that the grantee determines are
most impacted and distressed (``grantee-identified MID areas'')
within areas that received a presidential major disaster declaration
identified by the disaster numbers listed in the applicable
Allocation Announcement Notice. The grantee must use quantifiable
and verifiable data in its analysis, as referenced in its action
plan, to identify the MID areas where it will use the remaining
amount of CDBG-DR funds.
Grantee expenditures for eligible unmet needs outside of the
HUD-identified or grantee-identified MID areas are allowable,
provided that the grantee can demonstrate how the expenditure of
CDBG-DR funds outside of the MID areas will address unmet needs
identified within the HUD-identified or grantee-identified MID area
(e.g., upstream water retention projects to reduce downstream
flooding in the HUD-identified MID area).
II.B. Housing Activities and Related Floodplain Issues
Grantees may use CDBG-DR funds for activities that may include,
but are not limited to, new construction, reconstruction, and
rehabilitation of single-family or multifamily housing,
homeownership assistance, buyouts, and rental assistance. The
broadening of eligible CDBG-DR activities related to housing under
the HCDA is necessary following major disasters in which housing,
including large numbers of affordable housing units, have been
damaged or destroyed. The following waivers and alternative
requirements will assist grantees in addressing the full range of
unmet housing needs arising from a disaster.
II.B.1. New housing construction waiver and alternative
requirement. 42 U.S.C. 5305(a) and 24 CFR 570.207(b)(3) are waived
to the extent necessary to permit new housing construction, subject
to the following alternative requirement. When a CDBG-DR grantee
carries out a new housing construction activity, 24 CFR 570.202
shall apply and shall be read to extend to new construction in
addition to rehabilitation assistance. Private individuals and
entities must remain compliant with federal accessibility
requirements as well as with the applicable site selection
requirements of 24 CFR 1.4(b)(3) and 8.4(b)(5).
II.B.2. Construction standards for new construction,
reconstruction, and rehabilitation. HUD is adopting an alternative
requirement to require grantees to adhere to the applicable
construction standards in II.B.2.a. through II.B.2.d. when carrying
out activities to construct, reconstruct, or rehabilitate
residential structures with CDBG-DR funds as part of activities
eligible under 42 U.S.C. 5305(a) (including activities authorized by
waiver and alternative requirement). For purposes of the
Consolidated Notice, the terms ``substantial damage'' and
``substantial improvement'' shall be as defined in 44 CFR 59.1
unless otherwise noted.
II.B.2.a. Green and resilient building standard for new
construction and reconstruction of housing. Grantees must meet the
Green and Resilient Building Standard, as defined in this
subparagraph, for: (i) all new construction and reconstruction
(i.e., demolishing a housing unit and rebuilding it on the same lot
in substantially the same manner) of residential buildings and (ii)
all rehabilitation activities of substantially damaged residential
buildings, including changes to structural elements such as flooring
systems, columns, or load-bearing interior or exterior walls.
The Green and Resilient Building Standard requires that all
construction covered by the paragraph above and assisted with CDBG-
DR funds meet an industry-recognized standard that has achieved
certification under (i) Enterprise Green Communities; (ii) LEED (New
Construction, Homes, Midrise, Existing Buildings Operations and
Maintenance, or Neighborhood Development); (iii) ICC-700 National
Green Building Standard Green+ Resilience; (iv) Living Building
Challenge; or (v) any other equivalent comprehensive green building
program acceptable to HUD. Additionally, all such covered
construction must achieve a minimum energy efficiency standard, such
as (i) ENERGY STAR (Certified Homes or Multifamily High-Rise); (ii)
DOE Zero Energy Ready Home; (iii) EarthCraft House, EarthCraft
Multifamily; (iv) Passive House Institute Passive Building or
EnerPHit certification from the Passive House Institute US (PHIUS),
International Passive House Association; (v) Greenpoint Rated New
Home, Greenpoint Rated Existing Home (Whole House or Whole Building
label); (vi) Earth Advantage New Homes; or (vii) any other
equivalent energy efficiency standard acceptable to HUD. Grantees
must identify, in each project file, which of these Green and
Resilient Building Standards will be used for any building subject
to this paragraph. However, grantees are not required to use the
same standards for each project or building.
II.B.2.b. Standards for rehabilitation of nonsubstantially
damaged residential buildings. For rehabilitation other than the
rehabilitation of substantially damaged residential buildings
described in section II.B.2.a. above, grantees must follow the
guidelines specified in the HUD CPD Green Building Retrofit
Checklist.
Grantees must apply these guidelines to the extent applicable
for the rehabilitation work undertaken, for example, the use of mold
resistant products when replacing surfaces such as drywall. Products
and appliances replaced as part of the rehabilitation work, must be
ENERGY STAR-labeled, WaterSense-labeled, or Federal Energy
Management Program (FEMP)-designated products or appliances.
II.B.2.c. Elevation standards for new construction,
reconstruction, and rehabilitation of substantial damage, or
rehabilitation resulting in substantial improvements. The following
elevation standards apply to new construction, rehabilitation of
substantial damage, or rehabilitation resulting in substantial
improvement of residential structures located in an area delineated
as a special flood hazard area or equivalent in FEMA's data sources.
24 CFR 55.2(b)(1) provides additional information on data sources,
which apply to all floodplain designations. All structures, defined
at 44 CFR 59.1, designed principally for residential use, and
located in the one percent annual chance (or 100-year) floodplain,
that receive assistance for new construction, reconstruction,
rehabilitation of substantial damage, or rehabilitation that results
in 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 one percent annual chance floodplain elevation
(base flood elevation). Mixed-use structures with no dwelling units
and no residents below two feet above base flood elevation, must be
elevated or floodproofed, in accordance with FEMA floodproofing
standards at 44 CFR 60.3(c)(3)(ii) or successor standard, up to at
least two feet above base flood elevation.
All Critical Actions, as defined at 24 CFR 55.2(b)(3), within
the 500-year (or 0.2 percent annual chance) floodplain must be
elevated or floodproofed (in accordance with FEMA floodproofing
standards at 44 CFR 60.3(c)(2)-(3) or successor standard) to the
higher of the 500-year floodplain elevation or three feet above the
100-year floodplain elevation. If the 500-year floodplain is
unavailable, and the Critical Action is in the 100-year floodplain,
then the structure must be elevated or floodproofed (in accordance
with FEMA floodproofing standards at 44 CFR 60.3(c)(2)-(3) or
successor standard) at least three feet above the 100-year
floodplain elevation. Critical Actions are defined as ``any activity
for which even a slight chance of flooding would be too great,
because such flooding might result in loss of life, injury to
persons or damage to property.'' For example, Critical Actions
include hospitals, nursing homes, emergency shelters, police
stations, fire stations, and principal utility lines.
In addition to other requirements in this section, grantees must
comply with applicable state, local, and tribal codes and standards
for floodplain management, including elevation, setbacks, and
cumulative substantial damage requirements. Grantees using CDBG-DR
funds as the non-Federal match in a FEMA-funded project may apply
the alternative requirement for the elevation of structures
described in section III.F.6. Structures that are elevated must meet
federal accessibility standards.
II.B.2.d. Broadband infrastructure in housing. Any substantial
rehabilitation, as defined by 24 CFR 5.100, reconstruction, or new
construction of a building with more than four rental units must
include installation of broadband infrastructure, except where the
grantee documents that: (i) the location of the new construction or
substantial rehabilitation makes installation of broadband
infrastructure infeasible; (ii) the cost of installing broadband
infrastructure would result in a fundamental alteration in the
nature of its program or activity, or in an undue financial burden;
or (iii) the structure of the housing to be substantially
rehabilitated makes installation of broadband infrastructure
infeasible.
II.B.3. Applicable affordability periods for new construction of
affordable rental housing. To meet the low- and moderate-income
housing national objective, rental
[[Page 32062]]
housing assisted with CDBG-DR funds must be rented to low- and
moderate-income (LMI) households at affordable rents, and a grantee
must define ``affordable rents'' in its action plan. Because the
waiver and alternative requirement in II.B.1. authorizes the use of
grant funds for new housing construction, HUD is imposing the
following alternative requirement to modify the low- and moderate-
income housing national objective criteria in 24 CFR 570.208(a)(3)
and 570.483(b)(3) for activities involving the new construction of
affordable rental housing of five or more units. For activities that
will construct five or more units, in addition to other applicable
criteria in 24 CFR 570.208(a)(3) and 570.483(b)(3), in its action
plan, a grantee must define the affordability standards, including
``affordable rents,'' the enforcement mechanisms, and applicable
timeframes, that will apply to the new construction of affordable
rental housing, i.e., when the activity will result in construction
of five or more units, the affordability requirements described in
the action plan apply to the units that will be occupied by LMI
households. The minimum timeframes and other related requirements
acceptable for compliance with this alternative requirement are the
HOME Investment Partnerships Program (HOME) requirements at 24 CFR
92.252(e), including the table listing the affordability periods at
the end of 24 CFR 92.252(e). Therefore, the grantee must adopt and
implement enforceable affordability standards that comply with or
exceed requirements at 24 CFR 92.252(e)(1) for the new construction
of affordable rental housing in structures containing five or more
units.
II.B.4. Affordability period for new construction of homes built
for LMI households. In addition to alternative requirements in
II.B.1., the following alternative requirement applies to activities
to construct new single-family units for homeownership that will
meet the LMI housing national objective criteria. Grantees must
establish affordability restrictions on all newly constructed
single-family housing (for purposes of the Consolidated Notice,
single-family housing is defined as four units or less), that, upon
completion, will be purchased and occupied by LMI homeowners. The
minimum affordability period acceptable for compliance are the HOME
requirements at 24 CFR 92.254(a)(4). If a grantee applies other
standards, the periods of affordability applied by a grantee must
meet or exceed the applicable HOME requirements in 24 CFR
92.254(a)(4) and the table of affordability periods directly
following that provision. Grantees shall establish resale or
recapture requirements for housing funded pursuant to this paragraph
and shall describe those requirements in the action plan or
substantial amendment in which the activity is proposed. The resale
or recapture requirements must clearly describe the terms of resale
or recapture and the specific circumstances under which resale or
recapture will be used. Affordability restrictions must be
enforceable and imposed by recorded deed restrictions, covenants, or
other similar mechanisms. The affordability restrictions, including
the affordability period requirements in this paragraph do not apply
to housing units newly constructed or reconstructed for an owner-
occupant to replace the owner-occupant's home that was damaged by
the disaster.
II.B.5. Homeownership assistance waiver and alternative
requirement. 42 U.S.C. 5305(a)(24) is waived and replaced with the
following alternative requirement:
``Provision of direct assistance to facilitate and expand
homeownership among persons at or below 120 percent of area median
income (except that such assistance shall not be considered a public
service for purposes of 42 U.S.C. 5305(a)(8)) by using such
assistance to--
(A) subsidize interest rates and mortgage principal amounts for
homebuyers with incomes at or below 120 percent of area median
income;
(B) finance the acquisition of housing by homebuyers with
incomes at or below 120 percent of area median income that is
occupied by the homebuyers;
(C) acquire guarantees for mortgage financing obtained by
homebuyers with incomes at or below 120 percent of area median
income from private lenders, meaning that if a private lender
selected by the homebuyer offers a guarantee of the mortgage
financing, the grantee may purchase the guarantee to ensure
repayment in case of default by the homebuyer. This subparagraph
allows the purchase of mortgage insurance by the household but not
the direct issuance of mortgage insurance by the grantee;
(D) provide up to 100 percent of any down payment required from
homebuyers with incomes at or below 120 percent of area median
income; or
(E) pay reasonable closing costs (normally associated with the
purchase of a home) incurred by homebuyers with incomes at or below
120 percent of area median income.''
While homeownership assistance, as described above, may be
provided to households with incomes at or below 120 percent of the
area median income, HUD will only consider those funds used for
households with incomes at or below 80 percent of the area median
income to qualify as meeting the LMI person benefit national
objective.
II.B.6. Limitation on emergency grant payments--interim mortgage
assistance. 42 U.S.C. 5305(a)(8), 24 CFR 570.201(e), 24 CFR
570.207(b)(4), and 24 CFR 1003.207(b)(4) are modified to extend
interim mortgage assistance (IMA) to qualified individuals from
three months to up to twenty months. IMA must be used in conjunction
with a buyout program, or the rehabilitation or reconstruction of
single-family housing, during which mortgage payments may be due but
the home is not habitable. A grantee using this alternative
requirement must document, in its policies and procedures, how it
will determine that the amount of assistance to be provided is
necessary and reasonable.
II.B.7. Buyout activities. CDBG-DR grantees may carry out
property acquisition for a variety of purposes, but buyouts are a
type of acquisition for the specific purpose of reducing the risk of
property damage. HUD has determined that creating a new activity and
alternative requirement for buyouts is necessary for consistency
with the application of other Federal resources commonly used for
this type of activity. Therefore, HUD is waiving 42 U.S.C. 5305(a)
and establishing an alternative requirement only to the extent
necessary to create a new eligible activity for buyouts. The term
``buyouts'' means the acquisition of properties located in a
floodway, floodplain, or other Disaster Risk Reduction Area that is
intended to reduce risk from future hazards. Grantees can designate
a Disaster Risk Reduction Area, as defined below.
Grantees carrying out buyout activities must establish an open
space management plan or equivalent, if one has not already been
established, before implementation. The plan must establish full
transparency about the planned use of acquired properties post-
buyout, or the process by which the planned use will be determined
and enforced.
Buyout activities are subject to all requirements that apply to
acquisition activities generally including but not limited to, the
Uniform Relocation Assistance and Real Property Acquisition Policies
Act of 1970 (URA) (42 U.S.C. 4601, et seq.) and its implementing
regulations at 49 CFR part 24, subpart B, unless waived or modified
by alternative requirements. Only acquisitions that meet the
definition of a ``buyout'' are subject to the post-acquisition land
use restrictions imposed by the alternative requirement (II.B.7.a.
below). The key factor in determining whether the acquisition is a
buyout is whether the intent of the purchase is to reduce risk of
property damage from future flooding or other hazards in a floodway,
floodplain, or a Disaster Risk Reduction Area. A grantee that will
buyout properties in a Disaster Risk Reduction Area must establish
criteria in its policies and procedures to designate an area as a
Disaster Risk Reduction Area for the buyout, pursuant to the
following requirements:
(1) the area has been impacted by the hazard that has been
caused or exacerbated by the disaster for which the grantee received
its CDBG-DR allocation;
(2) the hazard identified must be a predictable environmental
threat to the safety and well-being of program beneficiaries,
including members of protected classes, vulnerable populations, and
underserved communities, as evidenced by the best available data
(e.g., FEMA Repetitive Loss Data, EPA's Environmental Justice
Screening and Mapping Tool, HHS's climate change related guidance
and data, etc.) and science (such as engineering and structural
solutions propounded by FEMA, USACE, other federal agencies, etc.);
and
(3) the area must be clearly delineated so that HUD and the
public may easily determine which properties are located within the
designated area.
Grantees may only redevelop an acquired property if the property
is not acquired through a buyout program (i.e., the purpose of
acquisition was something other than risk reduction). When
acquisitions are not acquired through a buyout program, the purchase
price must be consistent with 2 CFR part 200, subpart E--Cost
Principles
[[Page 32063]]
(``cost principles'') and the pre-disaster fair market value may not
be used.
II.B.7.a. Buyout requirements:
(i) Property to be acquired or accepted must be located within a
floodway, floodplain, or Disaster Risk Reduction Area.
(ii) Any property acquired or accepted must be dedicated and
maintained in perpetuity for a use that is compatible with open
space, recreational, floodplain and wetlands management practices,
or other disaster-risk reduction practices.
(iii) No new structure will be erected on property acquired or
accepted under the buyout program other than:
(a) a public facility that is open on all sides and functionally
related to a designated open space (e.g., a park, campground, or
outdoor recreation area);
(b) a restroom; or
(c) a flood control structure, provided that:
(1) the structure does not reduce valley storage, increase
erosive velocities, or increase flood heights on the opposite bank,
upstream, or downstream; and
(2) the local floodplain manager approves the structure, in
writing, before commencement of construction of the structure.
(iv) After the purchase of a buyout property with CDBG-DR funds,
the owner of the buyout property (including subsequent owners) is
prohibited from making any applications to any Federal entity in
perpetuity for additional disaster assistance for any purpose
related to the property acquired through the CDBG-DR funded buyout,
unless the assistance is for an allowed use as described in
paragraph (ii) above. The entity acquiring the property may lease or
sell it to adjacent property owners or other parties for compatible
uses that comply with buyout requirements in return for a
maintenance agreement.
(v) A deed restriction or covenant running with the property
must require that the buyout property be dedicated and maintained
for compatible uses that comply with buyout requirements in
perpetuity.
(vi) Grantees must choose from one of two valuation methods
(pre-disaster value or post-disaster value) for a buyout program (or
a single buyout activity). The grantee must apply its valuation
method for all buyouts carried out under the program. If the grantee
determines the post-disaster value of a property is higher than the
pre-disaster value, a grantee may provide exceptions to its
established valuation method on a case-by-case basis. The grantee
must describe the process for such exceptions and how it will
analyze the circumstances to permit an exception in its buyout
policies and procedures. Each grantee must adopt policies and
procedures on how it will demonstrate that the amount of assistance
for a buyout is necessary and reasonable.
(vii) All buyout activities must be classified using the
``buyout'' activity type in the Disaster Recovery and Grant
Reporting (DRGR) system.
(viii) Any state grantee implementing a buyout program or
activity must consult with local or tribal governments within the
areas in which buyouts will occur.
II.B.8. Safe housing incentives in disaster-affected
communities.
The limitation on eligible activities in section 42 U.S.C.
5305(a) is waived and HUD is establishing the following alternative
requirement to establish safe housing incentives as an eligible
activity. A safe housing incentive is any incentive provided to
encourage households to relocate to suitable housing in a lower risk
area or in an area promoted by the community's comprehensive
recovery plan. Displaced persons must receive any relocation
assistance to which they are entitled under other legal authorities,
such as the URA, section 104(d) of the HCDA, or those described in
the Consolidated Notice. The grantee may offer safe housing
incentives in addition to the relocation assistance that is legally
required.
Grantees must maintain documentation, at least at a programmatic
level, describing how the grantee determined the amount of
assistance for the incentive was necessary and reasonable, how the
incentive meets a national objective, and that the incentives are in
accordance with the grantee's approved action plan and published
program design(s). A grantee may require the safe housing incentive
to be used for a particular purpose by the household receiving the
assistance. However, this waiver does not permit a compensation
program meaning that funds may not be provided to a beneficiary to
compensate the beneficiary for an estimated or actual amount of loss
from the declared disaster. Grantees are prohibited from offering
housing incentives to a homeowner as an incentive to induce the
homeowner to sell a second home, consistent with the prohibition and
definition of second home in section II.B.12.
II.B.9. National objectives for buyouts and safe housing
incentives.
Activities that assist LMI persons and meet the criteria for the
national objectives described below, including in II.B.10., will be
considered to benefit LMI persons unless there is substantial
evidence to the contrary and will count towards the calculation of a
grantee's overall LMI benefit requirement as described in section
III.F.2. The grantee shall appropriately ensure that activities that
meet the criteria for any of the national objectives below do not
benefit moderate-income persons to the exclusion of low-income
persons.
When undertaking buyout activities, to demonstrate that a buyout
meets the low- and moderate-income housing (LMH) national objective,
grantees must meet all requirements of the HCDA, and applicable
regulatory criteria described below. 42 U.S.C. 5305(c)(3) provides
that any assisted activity that involves the acquisition of property
to provide housing shall be considered to benefit LMI persons only
to the extent such housing will, upon completion, be occupied by
such persons. In addition, 24 CFR 570.483(b)(3), 24 CFR
570.208(a)(3), and 24 CFR 1003.208(c) apply the LMH national
objective to an eligible activity carried out for the purpose of
providing or improving permanent residential structures that, upon
completion, will be occupied by LMI households.
A buyout program that merely pays homeowners to leave their
existing homes does not guarantee that those homeowners will occupy
a new residential structure. Therefore, acquisition-only buyout
programs cannot satisfy the LMH national objective criteria.
To meet a national objective that benefits a LMI person, buyout
programs can be structured in one of the following ways:
(1) The buyout activity combines the acquisition of properties
with another direct benefit--LMI housing activity, such as down
payment assistance--that results in occupancy and otherwise meets
the applicable LMH national objective criteria;
(2) The activity meets the low- and moderate-income area (LMA)
benefit criteria and documents that the acquired properties will
have a use that benefits all the residents in a particular area that
is primarily residential, where at least 51 percent of the residents
are LMI persons. Grantees covered by the ``exception criteria'' as
described in section IV.C. of the Consolidated Notice may apply it
to these activities. To satisfy LMA criteria, grantees must define
the service area based on the end use of the buyout properties; or
(3) The program meets the criteria for the low- and moderate-
income limited clientele (LMC) national objective by restricting
buyout program eligibility to exclusively LMI persons and benefiting
LMI sellers by acquiring their properties for more than current fair
market value (in accordance with the valuation requirements in
section II.B.7.a.(vi)).
II.B.10. For LMI Safe Housing Incentive (LMHI). The following
alternative requirement establishes new LMI national objective
criteria that apply to safe housing incentive (LMHI) activities that
benefit LMI households. HUD has determined that providing CDBG-DR
grantees with an additional method to demonstrate how safe housing
incentive activities benefit LMI households will ensure that
grantees and HUD can account for and assess the benefit that CDBG-DR
assistance for these activities has on LMI households.
The LMHI national objective may be used when a grantee uses
CDBG-DR funds to carry out a safe housing incentive activity that
benefits one or more LMI persons. To meet the LMHI national
objective, the incentive must be (a.) tied to the voluntary
acquisition of housing (including buyouts) owned by a qualifying LMI
household and made to induce a move outside of the affected
floodplain or disaster risk reduction area to a lower-risk area or
structure; or (b.) for the purpose of providing or improving
residential structures that, upon completion, will be occupied by a
qualifying LMI household and will be in a lower risk area.
II.B.11. Redevelopment of acquired properties. Although
properties acquired through a buyout program may not be redeveloped,
grantees may redevelop other acquired properties. For non-buyout
acquisitions, HUD has not permitted the grantee to base acquisition
cost on pre-disaster fair market value. The acquisition cost must
comply with applicable cost principles and with the acquisition
requirements at 49 CFR 24, Subpart B, as revised by the Consolidated
Notice waivers
[[Page 32064]]
and alternative requirements. In addition to the purchase price,
grantees may opt to provide optional relocation assistance, as
allowable under section 104 and 105 of the HCDA (42 U.S.C. 5304 and
42 U.S.C. 5305) and 24 CFR 570.606(d), and as expanded by section
IV.F.5. of the Consolidated Notice, to the owner of a property that
will be redeveloped if: (a.) the property is purchased by the
grantee or subrecipient through voluntary acquisition; and (b.) the
owner's need for additional assistance is documented. Any optional
relocation assistance must provide equal relocation assistance
within each class of displaced persons, including but not limited to
providing reasonable accommodation exceptions to persons with
disabilities. See 24 CFR 570.606(d) for more information on optional
relocation assistance. In addition, tenants displaced by these
voluntary acquisitions may be eligible for URA relocation
assistance. In carrying out acquisition activities, grantees must
ensure they are in compliance with the long-term redevelopment plans
of the community in which the acquisition and redevelopment is to
occur.
II.B.12. Alternative requirement for housing rehabilitation--
assistance for second homes. HUD is instituting an alternative
requirement to the rehabilitation provisions at 42 U.S.C. 5305(a)(4)
as follows: properties that served as second homes at the time of
the disaster, or following the disaster, are not eligible for
rehabilitation assistance or safe housing incentives. This
prohibition does not apply to acquisitions that meet the definition
of a buyout. A second home is defined for purposes of the
Consolidated Notice as a home that is not the primary residence of
the owner, a tenant, or any occupant at the time of the disaster or
at the time of application for CDBG-DR assistance. Grantees can
verify a primary residence using a variety of documentation
including, but not limited to, voter registration cards, tax
returns, homestead exemptions, driver's licenses, and rental
agreements. Acquisition of second homes at post-disaster fair market
value is not prohibited.
II.C. Infrastructure (Public Facilities, Public Improvements),
Match, and Elevation of Non-Residential Structures
HUD is adopting an alternative requirement to require grantees
to adhere to the applicable construction standards and requirements
in II.C.1., II.C.2. and II.C.4., which apply only to those eligible
activities described in those paragraphs.
II.C.1. Infrastructure planning and design. All newly
constructed infrastructure that is assisted with CDBG-DR funds must
be designed and constructed to withstand extreme weather events and
the impacts of climate change. To satisfy this requirement, the
grantee must identify and implement resilience performance metrics
as described in section II.A.2.
For purposes of this requirement, an infrastructure activity
includes any activity or group of activities (including acquisition
or site or other improvements), whether carried out on public or
private land, that assists the development of the physical assets
that are designed to provide or support services to the general
public in the following sectors: Surface transportation, including
roadways, bridges, railroads, and transit; aviation; ports,
including navigational channels; water resources projects; energy
production and generation, including from renewable, nuclear, and
hydro sources; electricity transmission; broadband; pipelines;
stormwater and sewer infrastructure; drinking water infrastructure;
schools, hospitals, and housing shelters; and other sectors as may
be determined by the Federal Permitting Improvement Steering
Council. For purposes of this requirement, an activity that falls
within this definition is an infrastructure activity regardless of
whether it is carried out under sections 105(a)(2), 105(a)(4),
105(a)(14), another section of the HCDA, or a waiver or alternative
requirement established by HUD. Action plan requirements related to
infrastructure activities are found in section III.C.1.e. of the
Consolidated Notice.
II.C.2. Elevation of nonresidential structure. Nonresidential
structures, including infrastructure, assisted with CDBG-DR funds
must be elevated to the standards described in this paragraph or
floodproofed, in accordance with FEMA floodproofing standards at 44
CFR 60.3(c)(3)(ii) or successor standard, up to at least two feet
above the 100-year (or one percent annual chance) floodplain. All
Critical Actions, as defined at 24 CFR 55.2(b)(3), within the 500-
year (or 0.2 percent annual chance) floodplain must be elevated or
floodproofed (in accordance with FEMA floodproofing standards at 44
CFR 60.3(c)(2)-(3) or successor standard) to the higher of the 500-
year floodplain elevation or three feet above the 100-year
floodplain elevation. If the 500-year floodplain or elevation is
unavailable, and the Critical Action is in the 100-year floodplain,
then the structure must be elevated or floodproofed at least three
feet above the 100-year floodplain elevation. Activities subject to
elevation requirements must comply with applicable federal
accessibility mandates.
In addition to the other requirements in this section, the
grantee must comply with applicable state, local, and tribal codes
and standards for floodplain management, including elevation,
setbacks, and cumulative substantial damage requirements. Grantees
using CDBG-DR funds as the non-Federal match in a FEMA-funded
project may apply the alternative requirement for the elevation of
structures described in section IV.D.5.
II.C.3. CDBG-DR funds as match. As provided by the HCDA, grant
funds may be used to satisfy a match requirement, share, or
contribution for any other Federal program when used to carry out an
eligible CDBG-DR activity. This includes programs or activities
administered by the FEMA or the U.S. Army Corps of Engineers
(USACE). By law, (codified in the HCDA as a note to section 105(a))
only $250,000 or less of CDBG-DR funds may be used for the non-
Federal cost-share of any project funded by USACE. Appropriations
acts prohibit the use of CDBG-DR funds for any activity reimbursable
by, or for which funds are also made available by FEMA or USACE.
In response to a disaster, FEMA may implement, and grantees may
elect to follow, alternative procedures for FEMA's Public Assistance
Program, as authorized pursuant to section 428 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (``Stafford
Act''). Like other projects, grantees may use CDBG-DR funds as a
matching requirement, share, or contribution for section 428 Public
Assistance Projects. For all match activities, grantees must
document that CDBG-DR funds have been used for the actual costs
incurred for the assisted project and for costs that are eligible,
meet a national objective, and meet other applicable CDBG
requirements.
II.C.4. Requirements for flood control structures. Grantees that
use CDBG-DR funds to assist flood control structures (i.e., dams and
levees) are prohibited from using CDBG-DR funds to enlarge a dam or
levee beyond the original footprint of the structure that existed
before the disaster event, without obtaining pre-approval from HUD
and any Federal agencies that HUD determines are necessary based on
their involvement or potential involvement with the levee or dam.
Grantees that use CDBG-DR funds for levees and dams are required to:
(1) register and maintain entries regarding such structures with the
USACE National Levee Database or National Inventory of Dams; (2)
ensure that the structure is admitted in the USACE PL 84-99 Program
(Levee Rehabilitation and Inspection Program); (3) ensure the
structure is accredited under the FEMA National Flood Insurance
Program; (4) enter the exact location of the structure and the area
served and protected by the structure into the DRGR system; and (5)
maintain file documentation demonstrating that the grantee has
conducted a risk assessment before funding the flood control
structure and documentation that the investment includes risk
reduction measures.
II.D. Economic Revitalization and Section 3 Requirements on
Economic Opportunities
CDBG-DR funds can be used for CDBG-DR eligible activities
related to economic revitalization. The attraction, retention, and
return of businesses and jobs to a disaster-impacted area is
critical to long-term recovery. Accordingly, for CDBG-DR purposes,
economic revitalization may include any CDBG-DR eligible activity
that demonstrably restores and improves the local economy through
job creation and retention or by expanding access to goods and
services. The most common CDBG-DR eligible activities to support
economic revitalization are outlined in 24 CFR 570.203 and 570.204
and sections 105(a)(14), (15), and (17) of the HCDA.
Based on the U.S. Change Research Program's Fourth National
Climate Assessment, climate-related natural hazards, extreme events,
and natural disasters disproportionately affect LMI individuals who
belong to underserved communities because they are less able to
prepare for, respond to, and recover from the impacts of extreme
events and natural hazards, or are members of communities that have
experienced significant disinvestment and historic discrimination.
Therefore, HUD is imposing the following alternative
[[Page 32065]]
requirement: When funding activities under section 105(a) of the
HCDA that support economic revitalization, grantees must prioritize
those underserved communities that have been impacted by the
disaster and that were economically distressed before the disaster,
as described further below in II.D.1.
The term ``underserved communities'' refers to populations
sharing a particular characteristic, as well as geographic
communities, that have been systematically denied a full opportunity
to participate in aspects of economic, social, and civic life.
Underserved communities that were economically distressed before the
disaster include, but are not limited to, those areas that were
designated as a Promise Zone, Opportunity Zone, a Neighborhood
Revitalization Strategy Area, a tribal area, or those areas that
meet at least one of the distress criteria established for the
designation of an investment area of Community Development Financial
Institution at 12 CFR 1805.201(b)(3)(ii)(D).
Grantees undertaking an economic revitalization activity must
maintain supporting documentation to demonstrate how the grantee has
prioritized underserved communities for purposes of its activities
that support economic revitalization, as described below in II.D.1.
II.D.1. Prioritizing economic revitalization assistance--
alternative requirement. When funding activities outlined in 24 CFR
570.203 and 570.204 and sections 105(a)(14), (15), and (17) of the
HCDA, HUD is instituting an alternative requirement in addition to
the other requirements in these provisions to require grantees to
prioritize assistance to disaster-impacted businesses that serve
underserved communities and spur economic opportunity for
underserved communities that were economically distressed before the
disaster.
II.D.2. National objective documentation for activities that
support economic revitalization. 24 CFR 570.208(a)(4)(i)&(ii), 24
CFR 570.483(b)(4)(i)&(ii), 24 CFR 570.506(b)(5)&(6), and 24 CFR
1003.208(d) are waived to allow the grantees under the Consolidated
Notice to identify the LMI jobs benefit by documenting, for each
person employed, the name of the business, type of job, and the
annual wages or salary of the job. HUD will consider the person
income-qualified if the annual wages or salary of the job is at or
under the HUD-established income limit for a one-person family. This
method replaces the standard CDBG requirement--in which grantees
must review the annual wages or salary of a job in comparison to the
person's total household income and size (i.e., the number of
persons). Thus, this method streamlines the documentation process by
allowing the collection of wage data for each position created or
retained from the assisted businesses, rather than from each
individual household.
II.D.3. Public benefit for activities that support economic
revitalization. When applicable, the public benefit provisions set
standards for individual economic development activities (such as a
single loan to a business) and for the aggregate of all economic
development activities. Economic development activities support
economic revitalization. Currently, public benefit standards limit
the amount of CDBG assistance per job retained or created, or the
amount of CDBG assistance per LMI person to whom goods or services
are provided by the activity. These dollar thresholds can impede
recovery by limiting the amount of assistance the grantee may
provide to a critical activity.
HUD waives the public benefit standards at 42 U.S.C. 5305(e)(3),
24 CFR 570.482(f)(1), (2), (3), (4)(i), (5), and (6), and
570.209(b)(1), (2), (3)(i), (4), and 24 CFR 1003.302(c) for all
economic development activities. Paragraph (g) of 24 CFR 570.482 and
paragraph (c) and (d) under 570.209 are also waived to the extent
these provisions are related to public benefit. However, grantees
that choose to take advantage of this waiver in lieu of complying
with public benefit standards under the existing regulatory
requirements shall be subject to the following condition: grantees
shall collect and maintain documentation in the project file on the
creation and retention of total jobs; the number of jobs within
appropriate salary ranges, as determined by the grantee; the average
amount of assistance provided per job, by activity or program; and
the types of jobs. Additionally, grantees shall report the total
number of jobs created and retained and the applicable national
objective in the DRGR system.
II.D.4. Clarifying note on Section 3 worker eligibility and
documentation requirements. Section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701u) (section 3) applies to
CDBG-DR activities that are section 3 projects, as defined at 24 CFR
75.3(a)(2). The purpose of section 3 is to ensure that economic
opportunities, most importantly employment, generated by certain HUD
financial assistance shall be directed to low- and very low-income
persons, particularly those who are recipients of government
assistance for housing or residents of the community in which the
Federal assistance is spent. CDBG-DR grantees are directed to HUD's
guidance published in CPD Notice 2021-09, ``Section 3 of the Housing
and Urban Development Act of 1968, as amended by the Housing and
Community Development Act of 1992, final rule requirements for CDBG,
CDBG-CV, CDBG-DR, CDBG-Mitigation (CDBG-MIT), NSP, section 108, and
RHP projects,'' as amended (https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-09cpdn.pdf). All direct recipients of CDBG-DR funding
must report section 3 information through the DRGR system.
II.D.5. Waiver and modification of the job relocation clause to
permit assistance to help a business return. CDBG requirements
prevent program participants from providing assistance to a business
to relocate from one labor market area to another if the relocation
is likely to result in a significant loss of jobs in the labor
market from which the business moved. This prohibition can be a
critical barrier to reestablishing and rebuilding a displaced
employment base after a major disaster. Therefore, 42 U.S.C.
5305(h), 24 CFR 570.210, 24 CFR 570.482(h), and 24 CFR 1003.209, are
waived to allow a grantee to provide assistance to any business that
was operating in the disaster-declared labor market area before the
incident date of the applicable disaster and has since moved, in
whole or in part, from the affected area to another state or to
another labor market area within the same state to continue
business.
II.D.6. Underwriting. Notwithstanding section 105(e)(1) of the
HCDA, no CDBG-DR funds may be provided to a for-profit entity for an
economic development project under section 105(a)(17) of the HCDA
unless such project has been evaluated and selected in accordance
with guidelines developed by HUD pursuant to section 105(e)(2) of
the HCDA for evaluating and selecting economic development projects.
Grantees and their subrecipients are required to comply with the
underwriting guidelines in Appendix A to 24 CFR part 570 if they are
using grant funds to provide assistance to a for-profit entity for
an economic development project under section 105(a)(17) of the
HCDA. The underwriting guidelines are found at Appendix A of 24 CFR
part 570.
II.D.7. Limitation on use of funds for eminent domain. CDBG-DR
funds may not be used to support any Federal, state, or local
projects that seek to use the power of eminent domain, unless
eminent domain is employed only for a public use. For purposes of
this paragraph, public use shall not be construed to include
economic development that primarily benefits private entities. The
following shall be considered a public use for the purposes of
eminent domain: any use of funds for (1) mass transit, railroad,
airport, seaport, or highway projects; (2) utility projects that
benefit or serve the general public, including energy related,
communication-related, water related, and wastewater-related
infrastructure; (3) other structures designated for use by the
general public or which have other common-carrier or public-utility
functions that serve the general public and are subject to
regulation and oversight by the government; and (4) projects for the
removal of an immediate threat to public health and safety,
including the removal of a brownfield as defined in the Small
Business Liability Relief and Brownfields Revitalization Act (Pub.
L. 107-118).
III. Grant Administration
III.A. Pre-Award Evaluation of Management and Oversight of Funds
III.A.1. Certification of financial controls and procurement
processes, and adequate procedures for proper grant management.
Appropriations acts require that the Secretary certify that the
grantee has in place proficient financial controls and procurement
processes and has established adequate procedures to prevent any
duplication of benefits as defined by section 312 of the Stafford
Act, 42 U.S.C. 5155, to ensure timely expenditure of funds, to
maintain a comprehensive website regarding all disaster recovery
activities assisted with these funds, and to detect and prevent
waste, fraud, and abuse of funds.
III.A.1.a. Documentation requirements. To enable the Secretary
to make this certification, each grantee must submit to HUD the
certification documentation listed below. This information must be
submitted within 60 days of the applicability date of the
[[Page 32066]]
Allocation Announcement Notice, or with the grantee's submission of
its action plan in DRGR as described in section III.C.1, whichever
date is earlier. If required by appropriations acts, grant
agreements will not be executed until the Secretary has issued a
certification for the grantee. For each of the items (1) through (6)
below (collectively referred to as the ``Financial Management and
Grant Compliance Certification Requirements'') the grantee must
certify to the accuracy of its submission when submitting the
Financial Management and Grant Compliance Certification Checklist
(the ``Certification Checklist''). The Certification Checklist is a
document that incorporates all of the Financial Management and Grant
Compliance Certification Requirements. Not all of the requirements
in (1) through (6) below are appropriate or applicable to Indian
tribes. Therefore, Indian tribes that receive an allocation directly
from HUD may request an alternative method to document support for
the Secretary's certification.
(1) Proficient financial management controls. A grantee has
proficient financial management controls if each of the following
criteria is satisfied:
(a) The grantee agency administering this grant submits its most
recent single audit and consolidated annual financial report (CAFR),
which in HUD's determination indicates that the grantee has no
material weaknesses, deficiencies, or concerns that HUD considers to
be relevant to the financial management of CDBG, CDBG-DR, or CDBG-
MIT funds. If the single audit or CAFR identified weaknesses or
deficiencies, the grantee must provide documentation satisfactory to
HUD showing how those weaknesses have been removed or are being
addressed.
(b) The grantee has completed and submitted the certification
documentation required in the applicable Certification Checklist.
The grantee's documentation must demonstrate that the standards meet
the requirements in the Consolidated Notice and the Certification
Checklist.
(2) Each grantee must provide HUD its procurement processes for
review, so HUD may evaluate the grantee's processes to determine
that they are based on principles of full and open competition. A
grantee's procurement processes must comply with the procurement
requirements at section IV.B.
(a) A state grantee has proficient procurement processes if HUD
determines that its processes uphold the principles of full and open
competition and include an evaluation of the cost or price of the
product or service, and if its procurement processes reflect that
it:
(i) adopted 2 CFR 200.318 through 200.327;
(ii) follows its own state procurement policies and procedures
and establishes requirements for procurement processes for local
governments and subrecipients based on full and open competition
pursuant to 24 CFR 570.489(g), and the requirements for the state,
its local governments, and subrecipients include evaluation of the
cost or price of the product or service; or
(iii) adopted 2 CFR 200.317, meaning that it will follow its own
state procurement processes and evaluate the cost or price of the
product or service, but impose 2 CFR 200.318 through 200.327 on its
subrecipients.
(b) A local government grantee has proficient procurement
processes if the processes are consistent with the specific
applicable procurement standards identified in 2 CFR 200.318 through
200.327. When the grantee provides a copy of its procurement
processes, it must indicate the sections that incorporate these
provisions.
(c) An Indian tribe grantee has proficient procurement processes
if its procurement standards are consistent with procurement
requirements in 2 CFR part 200 imposed by 24 CFR 1003.501, and
additional procurement requirements in 1003.509(e) and 1003.510.
(3) Duplication of benefits. A grantee has adequate policies and
procedures to prevent the duplication of benefits (DOB) if the
grantee submits and identifies a uniform process that reflects the
requirements in section IV.A of the Consolidated Notice, including:
(a) determining all disaster assistance received by the grantee
or applicant and all reasonably identifiable financial assistance
available to the grantee or applicant, as applicable, before
committing funds or awarding assistance;
(b) determining a grantee's or an applicant's unmet need(s) for
CDBG-DR assistance before committing funds or awarding assistance;
and
(c) requiring beneficiaries to enter into a signed agreement to
repay any duplicative assistance if they later receive additional
assistance for the same purpose for which the CDBG-DR award was
provided. The grantee must identify a method to monitor compliance
with the agreement for a reasonable period (i.e., a time period
commensurate with risk) and must articulate this method in its
policies and procedures, including the basis for the period during
which the grantee will monitor compliance. This agreement must also
include the following language: ``Warning: Any person who knowingly
makes a false claim or statement to HUD or causes another to do so
may be subject to civil or criminal penalties under 18 U.S.C. 2,
287, 1001 and 31 U.S.C. 3729.''
Policies and procedures of the grantee submitted to support the
certification must provide that before the award of assistance, the
grantee will use the best, most recent available data from FEMA, the
Small Business Administration (SBA), insurers, and any other sources
of local, state, and Federal sources of funding to prevent the
duplication of benefits.
(4) Timely expenditures. A grantee has adequate policies and
procedures to determine timely expenditures if it submits policies
and procedures that indicate the following to HUD: how it will track
and document expenditures of the grantee and its subrecipients (both
actual and projected reported in performance reports); how it will
account for and manage program income; how it will reprogram funds
in a timely manner for activities that are stalled; and how it will
project expenditures of all CDBG-DR funds within the period provided
for in section V.A.
(5) Comprehensive disaster recovery website. A grantee has
adequate policies and procedures to maintain a comprehensive
accessible website if it submits policies and procedures indicating
to HUD that the grantee will have a separate web page dedicated to
its disaster recovery activities assisted with CDBG-DR funds that
includes the information described at section III.D.1.d.--e. The
procedures must also indicate the frequency of website updates. At
minimum, grantees must update their website quarterly.
(6) Procedures to detect and prevent fraud, waste, and abuse. A
grantee has adequate procedures to detect and prevent fraud, waste,
and abuse if it submits procedures that indicate:
(a) how the grantee will verify the accuracy of information
provided by applicants;
(b) the criteria to be used to evaluate the capacity of
potential subrecipients;
(c) the frequency with which the grantee will monitor other
agencies of the grantee that will administer CDBG-DR funds, and how
it will monitor subrecipients, contractors, and other program
participants, and why monitoring is to be conducted and which items
are to be monitored;
(d) it has or will hire an internal auditor that provides both
programmatic and financial oversight of grantee activities, and has
adopted policies that describes the auditor's role in detecting
fraud, waste, and abuse, which policies must be submitted to HUD;
(e) (i) for states or grantees subject to the same requirements
as states, a written standard of conduct and conflicts of interest
policy that complies with the requirements of 24 CFR 570.489(g) and
(h) and subparagraph III.A.1.a(2)(a) of the Consolidated Notice,
which policy includes the process for promptly identifying and
addressing such conflicts;
(ii) for units of general local government or grantees subject
to the same requirements as units of general local government, a
written standard of conduct and conflicts of interest policy that
complies with 24 CFR 570.611 and 2 CFR 200.318, as applicable, which
includes the process for promptly identifying and addressing such
conflicts;
(iii) for Indian tribes, a written standard of conduct and
conflicts of interest policy that complies with 24 CFR 1003.606, as
applicable; and
(f) it assists in investigating and taking action when fraud
occurs within the grantee's CDBG-DR activities and/or programs. All
grantees receiving CDBG-DR funds for the first time shall attend and
require subrecipients to attend fraud related training provided by
HUD OIG, when offered, to assist in the proper management of CDBG-DR
grant funds. Instances of fraud, waste, and abuse should be referred
to the HUD OIG Fraud Hotline (phone: 1-800-347-3735 or email:
[email protected]).
Following a disaster, property owners and renters are frequently
the targets of persons fraudulently posing as government employees,
creditors, mortgage servicers, insurance adjusters, and contractors.
The grantee's procedures must address how the grantee will make
CDBG-DR beneficiaries
[[Page 32067]]
aware of the risks of contractor fraud and other potentially
fraudulent activity that can occur in communities recovering from a
disaster. Grantees must provide CDBG-DR beneficiaries with
information that raises awareness of possible fraudulent activity,
how the fraud can be avoided, and what local or state agencies to
contact to take action and protect the grantee and beneficiary
investment. The grantee's procedures must address the steps it will
take to assist a CDBG-DR beneficiary if the beneficiary experiences
contractor or other fraud. If the beneficiary is eligible for
additional assistance as a result of the fraudulent activity and the
creation of remaining unmet need, the procedures must also address
what steps the grantee will follow to provide the additional
assistance.
III.A.1.b. Relying on prior submissions--financial management
and grant compliance certification requirements. This section only
applies once a grantee has received a CDBG-DR grant through an
Allocation Announcement Notice that makes the Consolidated Notice
applicable. After that original grant, if a CDBG-DR grantee is
awarded a subsequent CDBG-DR grant, HUD will rely on the grantee's
prior submissions provided in response to the Financial Management
and Grant Compliance Certification Requirements in the Consolidated
Notice. HUD will continue to monitor the grantee's submissions and
updates made to policies and procedures during the normal course of
business. The grantee must notify HUD of any substantial changes
made to these submissions.
If a CDBG-DR grantee is awarded a subsequent CDBG-DR grant, and
it has been more than three years since the executed grant agreement
for the original CDBG-DR grant or a subsequent grant is equal to or
greater than ten times the amount of the original CDBG-DR grant,
grantees must update and resubmit the documentation required by
paragraph III.A.1.a. with the completed Certification Checklist to
enable the Secretary to certify that the grantee has in place
proficient financial controls and procurement processes, and
adequate procedures for proper grant management. However, the
Secretary may require any CDBG-DR grantee to update and resubmit the
documentation required by paragraph III.A.1.a., if there is good
cause to require it.
III.A.2. Implementation plan. HUD requires each grantee to
demonstrate that it has sufficient capacity to manage the CDBG-DR
funds and the associated risks. Grantees must evidence their
management capacity through their implementation plan submissions.
These submissions must meet the criteria below and must be submitted
within 120 days of the applicability date of the governing
Allocation Announcement Notice or with the grantee's submission of
its action plan, whichever is earlier, unless the grantee has
requested, and HUD has approved an extension of the submission
deadline.
III.A.2.a. To enable HUD to assess risk as described in 2 CFR
200.206, the grantee will submit an implementation plan to HUD. The
implementation plan must describe the grantee's capacity to carry
out the recovery and how it will address any capacity gaps. HUD will
determine that the grantee has sufficient management capacity to
adequately reduce risk if the grantee submits implementation plan
documentation that addresses (1) through (3) below:
(1) Capacity assessment. The grantee identifies the lead agency
responsible for implementation of the CDBG-DR award and indicates
that the head of that agency will report directly to the chief
executive officer of the jurisdiction. The grantee has conducted an
assessment of its capacity to carry out CDBG-DR recovery efforts and
has developed a timeline with milestones describing when and how the
grantee will address all capacity gaps that are identified. The
assessment must include a list of any open CDBG-DR findings and an
update on the corrective actions undertaken to address each finding.
(2) Staffing. The grantee must submit an organizational chart of
its department or division and must also provide a table that
clearly indicates which personnel or organizational unit will be
responsible for each of the Financial Management and Grant
Compliance Certification Requirements identified in section
III.A.1.a. along with staff contact information, if available (i.e.,
personnel responsible for conducting DOB analysis, timely
expenditure, website management, monitoring and compliance, and
financial management). The grantee must also submit documentation
demonstrating that it has assessed staff capacity and identified
positions for the purpose of: case management in proportion to the
applicant population; program managers who will be assigned
responsibility for each primary recovery area; staff who have
demonstrated experience in housing, infrastructure (as applicable),
and economic revitalization (as applicable); staff responsible for
procurement/contract management, regulations implementing section 3
of the Housing and Urban Development Act of 1968, as amended (24 CFR
part 75) (section 3), fair housing compliance, and environmental
compliance. An adequate plan must also demonstrate that the internal
auditor and responsible audit staff report independently to the
chief elected or executive officer or board of the governing body of
any designated administering entity.
The grantee's implementation plan must describe how it will
provide technical assistance for any personnel that are not employed
by the grantee at the time of action plan submission, and to fill
gaps in knowledge or technical expertise required for successful and
timely recovery. State grantees must also include how it plans to
provide technical assistance to subgrantees and subrecipients,
including units of general local government.
(3) Internal and interagency coordination. The grantee's plan
must describe how it will ensure effective communication between
different departments and divisions within the grantee's
organizational structure that are involved in CDBG-DR-funded
recovery efforts, mitigation efforts, and environmental review
requirements, as appropriate; between its lead agency and
subrecipients responsible for implementing the grantee's action
plan; and with other local and regional planning efforts to ensure
consistency. The grantee's submissions must demonstrate how it will
consult with other relevant government agencies, including the State
Hazard Mitigation Officer (SHMO), State or local Disaster Recovery
Coordinator, floodplain administrator, and any other state and local
emergency management agencies, such as public health and
environmental protection agencies, that have primary responsibility
for the administration of FEMA or USACE funds.
III.A.2.b. Relying on prior submissions--Implementation plan.
This section only applies once a grantee has received a CDBG-DR
grant through an Allocation Announcement Notice that makes the
Consolidated Notice applicable. After that original grant, if a
CDBG-DR grantee is awarded a subsequent CDBG-DR grant, HUD will rely
on the grantee's implementation plan submitted for its original
CDBG-DR grant unless it has been more than three years since the
executed grant agreement for the original CDBG-DR grant or the
subsequent grant is equal to or greater than ten times the amount of
its original CDBG-DR grant.
If a CDBG-DR grantee is awarded a subsequent CDBG-DR grant, and
it has been more than three years since the executed grant agreement
for its original CDBG-DR grant or a subsequent grant is equal to or
greater than ten times the amount of the original CDBG-DR grant, the
grantee is to update and resubmit its implementation plan to reflect
any changes to its capacity, staffing, and coordination.
III.B. Administration, Planning, and Financial Management
III.B.1. Grant administration and planning.
III.B.1.a. Grantee responsibilities. Each grantee shall
administer its award in compliance with all applicable laws and
regulations and shall be financially accountable for the use of all
awarded funds. CDBG-DR grantees must comply with the recordkeeping
requirements of 24 CFR 570.506 and 24 CFR 570.490, as amended by the
Consolidated Notice waivers and alternative requirements. All
grantees must maintain records of performance in DRGR, as described
elsewhere in the Consolidated Notice.
III.B.1.b. Grant administration cap. Up to five percent of the
grant (plus five percent of program income generated by the grant)
can be used for administrative costs by the grantee, units of
general local government, or subrecipients. Thus, the total of all
costs classified as administrative for a CDBG-DR grant must be less
than or equal to the five percent cap (plus five percent of program
income generated by the grant). The cap for administrative costs is
subject to the combined technical assistance and administrative cap
for state grantees as discussed in section III.B.2.a.
III.B.1.c. Use of funds for administrative costs across multiple
grants. The Additional Supplemental Appropriations for Disaster
Relief Act, 2019 (Pub. L. 116-20) authorized special treatment for
eligible administrative costs for grantees that received awards
under Public Laws 114-113, 114-223, 114-254, 115-31, 115-56, 115-
123, 115-254, 116-20, or any future act. The Consolidated Notice
[[Page 32068]]
permits grantees to use eligible administrative funds (up to five
percent of each grant award plus up to five percent of program
income generated by the grant) for the cost of administering any of
these grants awarded under the identified Public Laws (including
future Acts) without regard to the particular disaster appropriation
from which such funds originated. To exercise this authority, the
grantee must ensure that it has appropriate financial controls to
guarantee that the amount of grant administration expenditures for
each of the aforementioned grants will not exceed five percent of
the total grant award for each grant (plus five percent of program
income generated by the grant). The grantee must review and modify
any financial management policies and procedures regarding the
tracking and accounting of administration costs as necessary.
III.B.1.d. Planning expenditures cap. Both state and local
government grantees are limited to spending a maximum of fifteen
percent of their total grant amount on planning costs. Planning
costs subject to the 15 percent cap are those defined in 42 U.S.C.
5305(a)(12) and more broadly in 24 CFR 570.205.
III.B.2. State grantees only.
III.B.2.a. Combined technical assistance and administrative cap
(state grantees only). The provisions of 42 U.S.C. 5306(d) and 24
CFR 570.489(a)(1)(i) and (iii), and 24 CFR 570.489(a)(2) shall not
apply to the extent that they cap administration and technical
assistance expenditures, limit a state's ability to charge a nominal
application fee for grant applications for activities the state
carries out directly, and require a dollar-for-dollar match of state
funds for administrative costs exceeding $100,000. 42 U.S.C.
5306(d)(5) and (6) are waived and replaced with the alternative
requirement that the aggregate total for administrative and
technical assistance expenditures must not exceed five percent of
the grant, plus five percent of program income generated by the
grant.
III.B.2.b. Planning-only activities (state grantees only). The
State CDBG Program requires that, for planning-only grants, local
government grant recipients must document that the use of funds
meets a national objective. In the CDBG Entitlement Program, these
more general planning activities are presumed to meet a national
objective under the requirements at 24 CFR 570.208(d)(4). HUD notes
that almost all effective recoveries in the past have relied on some
form of area-wide or comprehensive planning activity to guide
overall redevelopment independent of the ultimate source of
implementation funds. To assist state grantees, HUD is waiving the
requirements at 24 CFR 570.483(b)(5) and (c)(3), which limit the
circumstances under which the planning activity can meet a low- and
moderate-income or slum-and-blight national objective. Instead, as
an alternative requirement, 24 CFR 570.208(d)(4) applies to states
when funding disaster recovery-assisted, planning-only grants, or
when directly administering planning activities that guide disaster
recovery. In addition, 42 U.S.C. 5305(a)(12) is waived to the extent
necessary so the types of planning activities that states may fund
or undertake are expanded to be consistent with those of CDBG
Entitlement grantees identified at 24 CFR 570.205.
III.B.2.c. Direct grant administration and means of carrying out
eligible activities (state grantees only). Requirements at 42 U.S.C.
5306(d) are waived to allow a state to use its disaster recovery
grant allocation directly to carry out state-administered activities
eligible under the Consolidated Notice, rather than distribute all
funds to local governments. Pursuant to this waiver and alternative
requirement, the standard at 24 CFR 570.480(c) and the provisions at
42 U.S.C. 5304(e)(2) will also include activities that the state
carries out directly. Activities eligible under the Consolidated
Notice may be carried out by a state, subject to state law and
consistent with the requirement of 24 CFR 570.200(f), through its
employees, through procurement contracts, or through assistance
provided under agreements with subrecipients. State grantees
continue to be responsible for civil rights, labor standards, and
environmental protection requirements, for compliance with 24 CFR
570.489(g) and (h), and subparagraph III.A.1.a.(2)(a) of the
Consolidated Notice relating to conflicts of interest, and for
compliance with 24 CFR 570.489(m) relating to monitoring and
management of subrecipients.
A state grantee may also carry out activities in tribal areas. A
state must coordinate with the Indian tribe with jurisdiction over
the tribal area when providing CDBG-DR assistance to beneficiaries
in tribal areas. State grantees carrying out projects in tribal
areas, either directly or through its employees, through procurement
contracts, or through assistance provided under agreements with
subrecipients, must obtain the consent of the Indian tribe with
jurisdiction over the tribal area to allow the state grantee to
carry out or to fund CDBG-DR projects in the area.
III.B.2.d. Waiver and alternative requirement for distribution
to CDBG metropolitan cities and urban counties (state grantees
only). 42 U.S.C. 5302(a)(7) (definition of ``nonentitlement area'')
and related provisions of 24 CFR part 570, including 24 CFR 570.480,
are waived to permit state grantees to distribute CDBG-DR funds to
units of local government and Indian tribes.
III.B.2.e. Use of subrecipients (state grantees only). Paragraph
III.B.2.c. provides a waiver and alternative requirement that a
state may carry out activities directly, including through
assistance provided under agreements with subrecipients. Therefore,
when states carry out activities directly through subrecipients, the
following alternative requirements apply: the state is subject to
the definition of subrecipients at 24 CFR 570.500(c) and must adhere
to the requirements for agreements with subrecipients at 24 CFR
570.503. Additionally, 24 CFR 570.503(b)(4) is modified to require
the subrecipient to comply with applicable uniform requirements, as
described in 24 CFR 570.502, except that the subrecipient shall
follow procurement requirements imposed by the state in accordance
with subparagraph III.A.1.a.(2) of the Consolidated Notice. When 24
CFR 570.503 applies, notwithstanding 24 CFR 570.503(b)(5)(i), units
of general local government that are subrecipients are defined as
recipients under 24 CFR part 58 and are therefore responsible
entities that assume environmental review responsibilities, as
described in III.F.5. Grantees are reminded that they are
responsible for providing on-going oversight and monitoring of
subrecipients and are ultimately responsible for subrecipient
compliance with all CDBG-DR requirements.
III.B.2.f. Recordkeeping (state grantees only). When a state
carries out activities directly, 24 CFR 570.490(b) is waived and the
following alternative provision shall apply: a state grantee shall
establish and maintain such records as may be necessary to
facilitate review and audit by HUD of the state's administration of
CDBG-DR funds, under 24 CFR 570.493 and reviews and audits by the
state under III.B.2.h. Consistent with applicable statutes,
regulations, waivers and alternative requirements, and other Federal
requirements, the content of records maintained by the state shall
be sufficient to: (a) enable HUD to make the applicable
determinations described at 24 CFR 570.493; (b) make compliance
determinations for activities carried out directly by the state; and
(c) show how activities funded are consistent with the descriptions
of activities proposed for funding in the action plan and/or DRGR
system. For fair housing and equal opportunity purposes, and as
applicable, such records shall include data on the racial, ethnic,
and gender characteristics of persons who are applicants for,
participants in, or beneficiaries of the program.
III.B.2.g. Change of use of real property (state grantees only).
This alternative requirement conforms the change of use of real
property rule to the waiver allowing a state to carry out activities
directly. For purposes of these grants, all references to ``unit of
general local government'' in 24 CFR 570.489(j), shall be read as
``state, local governments, or Indian tribes (either as
subrecipients or through a method of distribution), or other state
subrecipient.''
III.B.2.h. Responsibility for review and handling of
noncompliance (state grantees only). This change is in conformance
with the waiver allowing a state to carry out activities directly.
24 CFR 570.492 is waived, and the following alternative requirement
applies for any state receiving a direct award: the state shall make
reviews and audits, including on-site reviews of any local
governments or Indian tribes (either as subrecipients or through a
method of distribution) designated public agencies, and other
subrecipients, as may be necessary or appropriate to meet the
requirements of section 104(e)(2) of the HCDA, as amended, and as
modified by the Consolidated Notice. In the case of noncompliance
with these requirements, the state shall take such actions as may be
appropriate to prevent a continuance of the deficiency, mitigate any
adverse effects or consequences, and prevent a recurrence. The state
shall establish remedies for noncompliance by any subrecipients,
designated public agencies, or local governments.
III.B.2.i. Consultation (state grantees only). Currently, the
HCDA and regulations require
[[Page 32069]]
a state grantee to consult with affected local governments in
nonentitlement areas of the state in determining the state's
proposed method of distribution. HUD is waiving 42 U.S.C.
5306(d)(2)(C)(iv), 42 U.S.C. 5306(d)(2)(D), 24 CFR 91.325(b)(2), and
24 CFR 91.110, and imposing an alternative requirement that states
receiving an allocation of CDBG-DR funds consult with all disaster-
affected local governments (including any CDBG-entitlement
grantees), Indian tribes, and any public housing authorities in
determining the use of funds. This approach ensures that a state
grantee sufficiently assesses the recovery needs of all areas
affected by the disaster.
III.C. Action Plan for Disaster Recovery Waiver and Alternative
Requirement
Requirements for CDBG actions plans, located at 42 U.S.C.
5304(a)(1), 42 U.S.C. 5304(m), 42 U.S.C. 5306(a)(1), 42 U.S.C.
5306(d)(2)(C)(iii), 42 U.S.C. 12705(a)(2), and 24 CFR 91.220 and
91.320, are waived for CDBG-DR grants. Instead, grantees must submit
to HUD an action plan for disaster recovery which will describe
programs and activities that conform to applicable requirements as
specified in the Consolidated Notice and the applicable Allocation
Announcement Notice. HUD will monitor the grantee's actions and use
of funds for consistency with the plan, as well as meeting the
performance and timeliness objectives therein. The Secretary will
disapprove all action plans that are substantially incomplete if it
is determined that the plan does not satisfy all of the required
elements identified in the Consolidated Notice and the applicable
Allocation Announcement Notice.
III.C.1. Action plan. The grantee's action plan must identify
the use of all funds--including criteria for eligibility and how the
uses address long-term recovery needs, restoration of infrastructure
and housing, economic revitalization, and the incorporation of
mitigation measures in the MID areas. HUD created the Public Action
Plan in DRGR which is a function that allows grantees to develop and
submit their action plans for disaster recovery directly into DRGR.
Grantees must use HUD's Public Action Plan in DRGR to develop all
CDBG-DR action plans and substantial amendments submitted to HUD for
approval. The Public Action Plan is different from the DRGR Action
Plan, which is a comprehensive description of projects and
activities in DRGR.
The grantee must describe the steps it will follow to make the
action plan, substantial amendments, performance reports, and other
relevant program materials available in a form accessible to persons
with disabilities and those with limited English proficiency (LEP).
All grantees must include sufficient information in its action plan
so that all interested parties will be able to understand and
comment on the action plan. The action plan (and subsequent
amendments) must include a single chart or table that illustrates,
at the most practical level, how all funds are budgeted (e.g., by
program, subrecipient, grantee-administered activity, or other
category). The grantee must certify, as required by section
III.F.7., that activities to be undertaken with CDBG-DR funds are
consistent with its action plan.
The action plan must contain:
III.C.1.a. An impact and unmet needs assessment. Each grantee
must develop an impact and unmet needs assessment to understand the
type and location of community needs and to target limited resources
to those areas with the greatest need. CDBG-DR grantees must conduct
an impact and unmet needs assessment to inform the use of the grant.
Grantees must cite data sources in the impact and unmet needs
assessment. At a minimum, the impact and unmet needs assessment
must:
Evaluate all aspects of recovery including housing
(interim and permanent, owner and rental, single family and
multifamily, affordable and market rate, and housing to meet the
needs of persons who were experiencing homelessness pre-disaster),
infrastructure, and economic revitalization needs, while also
incorporating mitigation needs into activities that support recovery
as required in section II.A.2.;
Estimate unmet needs to ensure CDBG-DR funds meet needs
that are not likely to be addressed by other sources of funds by
accounting for the various forms of assistance available to, or
likely to be available to, affected communities (e.g., projected
FEMA funds) and individuals (e.g., estimated insurance) and, using
the most recent available data, estimating the portion of need
unlikely to be addressed by insurance proceeds, other Federal
assistance, or any other funding sources;
Assess whether public services (e.g., housing
counseling, legal advice and representation, job training, mental
health, and general health services) are necessary to complement
activities intended to address housing, infrastructure, and economic
revitalization and how those services would need to be made
accessible to individuals with disabilities including, but not
limited to, mobility, sensory, developmental, emotional, cognitive,
and other impairments;
Describe the extent to which expenditures for planning
activities, including the determination of land use goals and
policies, will benefit the HUD-identified MID areas, as described in
section II.A.3.;
Describe disaster impacts geographically by type at the
lowest level practicable (e.g., county/parish level or lower if
available for states, and neighborhood or census tract level for
cities); and
Take into account the costs and benefits of
incorporating hazard mitigation measures to protect against the
specific identified impacts of future extreme weather events and
other natural hazards. This analysis should factor in historical and
projected data on risk that incorporates best available science
(e.g., the most recent National Climate Assessment).
Disaster recovery needs evolve over time and grantees must amend
the impact and unmet needs assessment and action plan as additional
needs are identified and additional resources become available. At a
minimum, grantees must revisit and update the impact and unmet needs
assessment when moving funds from one program to another through a
substantial amendment.
III.C.1.b. Connection of programs and projects to unmet needs.
The grantee must describe the connection between identified unmet
needs and the allocation of CDBG-DR resources. The plan must provide
a clear connection between a grantee's impact and unmet needs
assessment and its proposed programs and projects in the MID areas
(or outside in connection to the MID areas as described in section
II.A.3). Such description must demonstrate a reasonably
proportionate allocation of resources relative to areas and
categories (i.e., housing, economic revitalization, and
infrastructure) of greatest needs identified in the grantee's impact
and unmet needs assessment or provide an acceptable justification
for a disproportional allocation, while also incorporating hazard
mitigation measures to reduce the impacts of recurring natural
disasters and the long-term impacts of climate change. Grantee
action plans may provide for the allocation of funds for
administration and planning activities and for public service
activities, subject to the caps on such activities as described in
the Consolidated Notice.
III.C.1.c. Public housing, affordable rental housing, and
housing for vulnerable populations. Each grantee must include a
description of how it has analyzed, identified, and will address
(with CDBG-DR or other sources) the disaster-related rehabilitation,
reconstruction, and new construction needs in the MID-area of the
types of housing described below. Specifically, a grantee must
assess and describe how it will address unmet needs in the following
types of housing, subject to the applicable HUD program
requirements: public housing, affordable rental housing (including
both subsidized and market rate affordable housing), and housing for
vulnerable populations (See section III.C.1.c.iii below), including
emergency shelters and permanent housing for persons experiencing
homelessness, in the areas affected by the disaster. Grantees must
coordinate with local public housing authorities (PHA) in the MID
areas to ensure that the grantee's representation in the action plan
reflects the input of those entities as well as coordinating with
State Housing Finance agencies to make sure that all funding sources
that are available and opportunities for leverage are noted in the
action plan.
(i) Public housing: Describe unmet public housing needs of each
disaster-impacted PHA within its jurisdiction, if applicable. The
grantee must work directly with impacted PHAs in identifying
necessary and reasonable costs and ensuring that adequate funding
from all available sources is dedicated to addressing the unmet
needs of damaged public housing (e.g., FEMA, insurance, and funds
available from programs administered by HUD's Office of Public and
Indian Housing).
(ii) Affordable rental housing: Describe unmet affordable rental
housing needs for LMI households as a result of the disaster or
exacerbated by the disaster, including private market units
receiving project-based rental assistance or with tenants that
participate in the section 8 Housing Choice Voucher Program, and any
other housing that is
[[Page 32070]]
assisted under a HUD program in the MID areas. Identify funding to
specifically address these unmet needs for affordable rental housing
to LMI households. If a grantee is proposing an allocation of CDBG-
DR funds for affordable rental housing needs, the action plan must,
at a minimum, meet the requirements described in II.B.3.
(iii) Housing for vulnerable populations: Describe how CDBG-DR
or other funding sources available will promote housing for
vulnerable populations, as defined in section III.C.1.d., in the MID
area, including how it plans to address: (1) transitional housing,
including emergency shelters and housing for persons experiencing
homelessness, permanent supportive housing, and permanent housing
needs of individuals and families (including subpopulations) that
are experiencing or at risk of experiencing homelessness; (2) the
prevention of low-income individuals and families with children
(especially those with incomes below thirty percent of the area
median) from becoming homeless; (3) the special needs of persons who
are not experiencing homelessness but require supportive housing
(i.e., elderly, frail elderly, persons with disabilities (mental,
physical, developmental, etc.), victims of domestic violence,
persons with alcohol or other substance-use disorder, persons with
HIV/AIDS and their families, and public housing residents, as
identified in 24 CFR 91.315(e)).
III.C.1.d. Fair housing, civil rights data, and advancing
equity.
The grantee must use its CDBG-DR funds in a manner that complies
with its fair housing and nondiscrimination obligations, including
title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq.,
the Fair Housing Act, 42 U.S.C. 3601--19, section 504 of the
Rehabilitation Act of 1973, 29 U.S.C. 794, the Americans with
Disabilities Act of 1990, 42 U.S.C. 12131 et seq., and section 109
of the HCDA, 42 U.S.C. 5309. To ensure that the activities performed
in connection with the action plan will comply with these
requirements, the grantee must provide an assessment of whether its
planned use of CDBG-DR funds will have an unjustified discriminatory
effect on or failure to benefit racial and ethnic minorities in
proportion to their communities' needs, particularly in racially and
ethnically concentrated areas of poverty, and how it will address
the recovery needs of impacted individuals with disabilities.
Grantees should also consider the impact of their planned use of
CDBG-DR funds on other protected class groups under fair housing and
civil rights laws, vulnerable populations, and other historically
underserved communities. For purposes of the Consolidated Notice,
HUD defines vulnerable populations as a group or community whose
circumstances present barriers to obtaining or understanding
information or accessing resources. In the action plan, grantees
should identify those populations (i.e., which protected class,
vulnerable population, and historically underserved groups were
considered) and how those groups can be expected to benefit from the
activities set forth in the plan consistent with the civil rights
requirements set forth above.
To perform such an assessment, grantees must include data for
the HUD-identified and grantee-identified MID areas that identifies
the following information, as it is available:
Racial and ethnic make-up of the population, including
relevant sub-populations depending on activities and programs
outlined in the plan (this would include renters and homeowners if
eligibility is dependent on housing tenure) and the specific sub-
geographies in the MID areas in which those programs and activities
will be carried out;
LEP populations, including number and percentage of
each identified group;
Number and percentage of persons with disabilities;
Number and percentage of persons belonging to Federally
protected classes under the Fair Housing Act (race, color, national
origin, religion, sex--which includes sexual orientation and gender
identity--familial status, and disability) and other vulnerable
populations as determined by the grantee;
Indigenous populations and tribal communities,
including number and percentage of each identified group;
Racially and ethnically concentrated areas and
concentrated areas of poverty; and
Historically distressed and underserved communities;
Grantees must explain how the use of funds will reduce barriers
that individuals may face when enrolling in and accessing CDBG-DR
assistance, for example, barriers imposed by a lack of outreach to
their community or by the lack of information in non-English
languages or accessible formats for individuals with different types
of disabilities.
Grantees are strongly encouraged to include examples of how
their proposed allocations, selection criteria, and other actions
can be expected to advance equity for protected class groups.
Grantees are strongly encouraged to explain and provide examples of
how their actions can be expected to advance the following
objectives:
Equitably benefit protected class groups in the MID
areas, including racial and ethnic minorities, and sub geographies
in the MID areas in which residents belonging to such groups are
concentrated;
To the extent consistent with purposes and uses of
CDBG-DR funds, overcome prior disinvestment in infrastructure and
public services for protected class groups, and areas in which
residents belonging to such groups are concentrated, when addressing
unmet needs;
Enhance for individuals with disabilities in the MID
areas (a) the accessibility of disaster preparedness, resilience, or
recovery services, including the accessibility of evacuation
services and shelters; (b) the provision of critical disaster-
related information in accessible formats; and/or (c) the
availability of integrated, accessible housing and supportive
services.
Grantees must identify the proximity of natural and
environmental hazards (e.g., industrial corridors, sewage treatment
facilities, waterways, EPA superfund sites, brownfields, etc.) to
affected populations in the MID area, including members of protected
classes, vulnerable populations, and underserved communities and
explore how CDBG-DR activities may mitigate environmental concerns
and increase resilience among these populations to protect against
the effects of extreme weather events and other natural hazards.
Grantees must also describe how their use of CDBG-DR funds is
consistent with their obligation to affirmatively further fair
housing. HUD regulations at 24 CFR 5.151 provide that affirmatively
furthering fair housing means taking meaningful actions, in addition
to combating discrimination, that overcome patterns of segregation
and foster inclusive communities free from barriers that restrict
access to opportunity based on protected characteristics.
Specifically, affirmatively furthering fair housing means taking
meaningful actions that, taken together, address significant
disparities in housing needs and in access to opportunity, replacing
segregated living patterns with truly integrated and balanced living
patterns, transforming racially or ethnically concentrated areas of
poverty into areas of opportunity, and fostering and maintaining
compliance with civil rights and fair housing laws.
State and local government grantees must submit a certification
to AFFH in accordance with 24 CFR 5.150, et. seq. CDBG-DR grantees
must also comply with the recordkeeping requirements of 24 CFR
570.506 and 24 CFR 570.490(b), as amended by the Consolidated
Notice.
III.C.1.e. Infrastructure. In its action plan, each grantee must
include a description of how it plans to meet the requirements of
the Consolidated Notice, including how it will: promote sound,
sustainable long-term recovery planning as described in this
section; adhere to the elevation requirements established in section
II.C.2.; and coordinate with local and regional planning efforts as
described in section III.B.2.i and III.D.1.a. All infrastructure
investments must be designed and constructed to withstand chronic
stresses and extreme events by identifying and implementing
resilience performance metrics as described in section II.A.2.c.
If a grantee is allocating funds for infrastructure, its
description must include:
(1) How it will address the construction or rehabilitation of
disaster-related systems (e.g., storm water management systems) or
other disaster-related community-based mitigation systems (e.g.,
using FEMA's community lifelines). State grantees carrying out
infrastructure activities must work with units of general local
government and Indian tribes in the MID areas to identify the unmet
needs and associated costs of needed disaster-related infrastructure
improvements;
(2) How mitigation measures and strategies to reduce natural
hazard risks, including climate-related risks, will be integrated
into rebuilding activities;
(3) The extent to which CDBG-DR funded infrastructure activities
will achieve objectives outlined in regionally or locally
established plans and policies that are designed to reduce future
risk to the jurisdiction;
(4) How the grantee will evaluate the costs and benefits in
selecting infrastructure projects to assist with CDBG-DR funds;
[[Page 32071]]
(5) How the grantee will align infrastructure investments with
other planned federal, state, or local capital improvements and
infrastructure development efforts, and will work to foster the
potential for additional infrastructure funding from multiple
sources, including state and local capital improvement projects in
planning, and the potential for private investment;
(6) How the grantee will employ adaptable and reliable
technologies to prevent premature obsolescence of infrastructure;
and
(7) How the grantee will invest in restoration of infrastructure
and related long-term recovery needs within historically underserved
communities that lacked adequate investments in housing,
transportation, water, and wastewater infrastructure prior to the
disaster.
III.C.1.f. Minimize Displacement. A description of how the
grantee plans to minimize displacement of persons or entities, and
assist any persons or entities displaced, and ensure accessibility
needs of displaced persons with disabilities. Specifically, grantees
must detail how they will meet the Residential Anti-displacement and
Relocation Assistance Plan (RARAP) requirements in section IV.F.7.
Grantees must indicate to HUD whether they will be amending an
existing RARAP or creating a new RARAP specific to CDBG-DR. Grantees
must meet the requirements related to the RARAP prior to
implementing any activity with CDBG-DR grant funds, such as buyouts
and other disaster recovery activities. Grantees must seek to
minimize displacement or adverse impacts from displacement,
consistent with the requirements of Section IV.F of the Consolidated
Notice, section 104(d) of the HCDA (42 U.S.C. 5304(d)) and
implementing regulations at 24 CFR part 42, and 24 CFR 570.488 or 24
CFR 570.606, as applicable. Grantees must describe how they will
plan and budget for relocation activities in the action plan.
III.C.1.g. Allocation and award caps. The grantee must provide a
budget for the full amount of the allocation that is reasonably
proportionate to its unmet needs (or provide an acceptable
justification for disproportional allocation) and is consistent with
the requirements to integrate hazard mitigation measures into all
its programs and projects. The grantee shall provide a description
of each disaster recovery program or activity to be funded,
including the CDBG-DR eligible activities and national objectives
associated with each program and the eligibility criteria for
assistance. The grantee shall also describe the maximum amount of
assistance (i.e., award cap) available to a beneficiary under each
of the grantee's disaster recovery programs. A grantee may find it
necessary to provide exceptions on a case-by-case basis to the
maximum amount of assistance and must describe the process it will
use to make such exceptions in its action plan. At a minimum, each
grantee must adopt policies and procedures that communicate how it
will analyze the circumstances under which an exception is needed
and how it will demonstrate that the amount of assistance is
necessary and reasonable. Each grantee must also indicate in its
action plan that it will make exceptions to the maximum award
amounts when necessary, to comply with federal accessibility
standards or to reasonably accommodate a person with disabilities.
III.C.1.h. Cost controls and warranties. The grantee must
provide a description of the standards to be established for
construction contractors performing work in the jurisdiction and the
mechanisms to be used by the grantee to assist beneficiaries in
responding to contractor fraud, poor quality work, and associated
issues. Grantees must require a warranty period post-construction
with a formal notification to beneficiaries on a periodic basis
(e.g., 6 months and one month before expiration date of the
warranty). Each grantee must also describe its controls for assuring
that construction costs are reasonable and consistent with market
costs at the time and place of construction.
III.C.1.i. Resilience planning. Resilience is defined as a
community's ability to minimize damage and recover quickly from
extreme events and changing conditions, including natural hazard
risks. At a minimum, the grantee's action plan must contain a
description of how the grantee will: (a) emphasize high quality
design, durability, energy efficiency, sustainability, and mold
resistance; (b) support adoption and enforcement of modern and/or
resilient building codes that mitigate against natural hazard risks,
including climate-related risks (e.g., sea level rise, high winds,
storm surge, flooding, volcanic eruption, and wildfire risk, where
appropriate and as may be identified in the jurisdiction's rating
and identified weaknesses (if any) in building code adoption using
FEMA's Nationwide Building Code Adoption Tracking (BCAT) portal),
and provide for accessible building codes and standards, as
applicable; (c) establish and support recovery efforts by funding
feasible, cost-effective measures that will make communities more
resilient against a future disaster; (d) make land-use decisions
that reflect responsible and safe standards to reduce future natural
hazard risks, e.g., by adopting or amending an open space management
plan that reflects responsible floodplain and wetland management and
takes into account continued sea level rise, if applicable, and (e)
increase awareness of the hazards in their communities (including
for members of protected classes, vulnerable populations, and
underserved communities) through outreach to the MID areas.
While the purpose of CDBG-DR funds is to recover from a
Presidentially declared disaster, integrating hazard mitigation and
resilience planning with recovery efforts will promote a more
resilient and sustainable long-term recovery. The action plan must
include a description of how the grantee will promote sound,
sustainable long-term recovery planning informed by a post-disaster
evaluation of hazard risk, including climate-related natural hazards
and the creation of resilience performance metrics as described in
paragraph II.A.2.c. of the Consolidated Notice. This information
should be based on the history of FEMA and other federally-funded
disaster mitigation efforts and, as appropriate, take into account
projected increases in sea level, the frequency and intensity of
extreme weather events, and worsening wildfires. Grantees must use
the FEMA-approved Hazard Mitigation Plan (HMP), Community Wildfire
Protection Plan (CWPP), or other resilience plans to inform the
evaluation, and it should be referenced in the action plan.
III.C.2. Additional action plan requirements for states. For
state grantees, the action plan must describe how the grantee will
distribute grant funds, either through specific programs and
projects the grantee will carry out directly (through employees,
contractors, or through subrecipients), or through a method of
distribution of funds to local governments and Indian tribes (as
permitted by III.B.2.d.). The grantee shall describe how the method
of distribution to local governments or Indian tribes, or programs/
projects carried out directly, will result in long-term recovery
from specific impacts of the disaster.
All states must include in their action plan the information
outlined in (1) through (7) below (in addition to other information
required by section III.C.). For states using a method of
distribution, if some required information is unknown when the
grantee is submitting its action plan to HUD (e.g., the list of
programs or activities required by III.C.1.g. or the projected use
of CDBG-DR funds by responsible entity as required by subparagraph
(5) below), the grantee must update the action plan through a
substantial amendment once the information is known. If necessary to
comply with a statutory requirement that a grantee shall submit a
plan detailing the proposed use of all funds prior to HUD's
obligation of grant funds, HUD may obligate only a portion of grant
funds until the substantial amendment providing the required
information is submitted and approved by HUD.
(1) How the impact and unmet needs assessment informs funding
determinations, including the rationale behind the decision(s) to
provide funds to most impacted and distressed areas.
(2) When funds are subgranted to local governments or Indian
tribes (either as subrecipients or through a method of
distribution), all criteria used to allocate and award the funds
including the relative importance of each criterion (including any
priorities). If the criteria are unknown when the grantee is
submitting the initial action plan to HUD, the grantee must update
the action plan through a substantial amendment once the information
is known. The substantial amendment must be submitted and approved
before distributing the funds to a local government or Indian tribe.
(3) How the distribution and selection criteria will address
disaster-related unmet needs in a manner that does not have an
unjustified discriminatory effect based on race or other protected
class and ensure the participation of minority residents and those
belonging to other protected class groups in the MID areas. Such
description should include an assessment of who may be expected to
benefit, the timing of who will be prioritized, and the amount or
proportion of benefits expected to be received by different
communities or groups (e.g., the
[[Page 32072]]
proportion of benefits going to different locations within the MID
or to homeowners versus renters).
(4) The threshold factors and recipient or beneficiary grant
size limits that are to be applied.
(5) The projected uses for the CDBG-DR funds, by responsible
entity, activity, and geographic area.
(6) For each proposed program and/or activity, its respective
CDBG activity eligibility category (or categories), national
objective(s), and what disaster-related impact is addressed, as
described in section II.A.1.
(7) When applications are solicited for programs carried out
directly, all criteria used to select applications for funding,
including the relative importance of each criterion, and any
eligibility requirements. If the criteria are unknown when the
grantee is submitting the initial action plan to HUD, the grantee
must update the action plan through a substantial amendment once the
information is known. The substantial amendment must be submitted
and approved before selecting applications.
III.C.3. Additional action plan requirements for local
governments. For local governments grantees, the action plan shall
describe specific programs and/or activities they will carry out.
The action plan must also describe:
(1) How the impact and unmet needs assessment informs funding
determinations, including the rationale behind the decision(s) to
provide funds to most impacted and distressed areas.
(2) All criteria used to select applications (including any
priorities), including the relative importance of each criterion,
and any eligibility requirements. If the criteria are unknown when
the grantee is submitting the initial action plan to HUD, the
grantee must update the action plan through a substantial amendment
once the information is known. The substantial amendment must be
submitted and approved before selecting applications.
(3) How the distribution and selection criteria will address
disaster-related unmet needs in a manner that does not have an
unjustified discriminatory effect and ensures the participation of
minority residents and those belonging to other protected class
groups in the MID areas, including with regards to who may benefit,
the timing of who will be prioritized, and the amount or proportion
of benefits expected to be received by different communities or
groups (e.g., the proportion of benefits going to different
locations within the MID or to homeowners versus renters).
(4) The threshold factors and grant size limits that are to be
applied.
(5) The projected uses for the CDBG-DR funds, by responsible
entity, activity, and geographic area.
(6) For each proposed program and/or activity, its respective
CDBG activity eligibility category (or categories), national
objective(s), and what disaster-related impact is addressed, as
described in section II.A.1. of the Consolidated Notice.
III.C.4. Waiver of 45-day review period for CDBG-DR action plans
to 60 days. HUD may disapprove an action plan or substantial action
plan amendment if it is incomplete. HUD works with grantees to
resolve or provide additional information during the review period
to avoid the need to disapprove an action plan or substantial action
plan amendments. There are several issues related to the action plan
as submitted that can be fully resolved via further discussion and
revision during an extended review period, rather than through HUD
disapproval of the plan, which in turn would require grantees to
take additional time to revise and resubmit their respective plan.
Therefore, the Secretary has determined that good cause exists and
waives 24 CFR 91.500(a) to extend HUD's action plan review period
from 45 days to 60 days.
The action plan (including SF-424 and certifications) must be
submitted to HUD for review and approval using DRGR. By submitting
required standard forms (that must be submitted with the action
plan), the grantee is providing assurances that it will comply with
statutory requirements, including, but not limited to civil rights
requirements. Applicants and recipients are required to submit
assurances of compliance with federal civil rights requirements. A
grantee will use DRGR's upload function to include the SF 424
(including SF 424B and SF 424D, as applicable) and certifications
with its action plan. Grantees receiving an allocation are required
to submit an action plan within 120 days of the applicability date
of the Allocation Announcement Notice, unless the grantee has
requested, and HUD has approved an extension of the submission
deadline. HUD will then review each action plan within 60 days from
the date of receipt.
During its review, HUD typically provides grantees with comments
on the submitted plan to avoid the need to disapprove an action plan
and offers a grantee the opportunity to make updates to the action
plan during the first forty-five days of HUD's initial sixty-day
review period. If a grantee wants to make updates to the action
plan, HUD will reject the Public Action Plan in DRGR to return the
plan to the grantee. Then, once the grantee resubmits the plan, HUD
reviews the revised plan within the initial sixty-day period. HUD is
establishing an alternative process that offers a grantee the option
to voluntarily provide a revised action plan, updated to respond to
HUD's comments, no later than day forty-five in HUD's sixty-day
review. A grantee is not required to participate in the revisions of
the action plan during this time, but with the understanding that an
action plan may be determined to be substantially incomplete. The
Secretary may disapprove an action plan as substantially incomplete
if HUD determines that the action plan does not meet the
requirements of the Consolidated Notice and the applicable
Allocation Announcement Notice.
III.C.5. Obligation and expenditure of funds. Once HUD approves
the action plan and approves certifications if required by
appropriations acts, it will then sign a grant agreement obligating
allocated funds to the grantee. The grantee will continue the action
plan process in DRGR to draw funds (see section V.C.1.).
The grantee must meet the applicable environmental requirements
before the use or commitment of funds for each activity. After the
Responsible Entity (1) completes environmental review(s) pursuant to
24 CFR part 58 and receives from HUD an approved Request for Release
of Funds and certification (as applicable), or (2) adopts another
Federal agency's environmental review, approval, or permit and
receives from HUD (or the state) an approved Request for Release of
Funds and certification (as applicable), the grantee may draw down
funds from the line of credit for an activity. The disbursement of
grant funds must begin no later than 180 calendar days after HUD
executes a grant agreement with the grantee. Failure to draw funds
within this timeframe may result in HUD's review of the grantee's
certification of its financial controls, procurement processes, and
capacity, and may result in the imposition of any corrective actions
deemed appropriate by HUD pursuant to 24 CFR 570.495, 24 CFR
570.910, or 24 CFR 1003.701.
III.C.6. Amending the action plan. The grantee must amend its
action plan to update its needs assessment, modify or create new
activities, or reprogram funds, as necessary, in the DRGR system.
Each amendment must be published on the grantee's official website
and describe the changes within the context of the entire action
plan. A grantee's current version of its entire action plan must be
accessible for viewing as a single document at any given point in
time, rather than require the public or HUD to view and cross-
reference changes among multiple amendments. HUD's DRGR system will
include the capabilities necessary for a grantee to sufficiently
identify the changes for each amendment. When a grantee has finished
amending the content in the Public Action Plan, the grantee will
click ``Submit Plan'' in the DRGR system. The DRGR system will
prompt the grantee to select the ``Public Action Plan'' and identify
the amendment type (substantial or nonsubstantial). The grantee will
complete this cover page to describe each amendment. At a minimum,
the grantee must: (1) identify exactly what content is being added,
deleted, or changed; (2) clearly illustrate where funds are coming
from and where they are moving to; and (3) include a revised budget
allocation table that reflects the entirety of all funds, as
amended.
III.C.6.a. Substantial amendment. In its action plan, each
grantee must specify criteria for determining what changes in the
grantee's plan constitute a substantial amendment to the plan. At a
minimum, the following modifications will constitute a substantial
amendment: a change in program benefit or eligibility criteria; the
addition or deletion of an activity; a proposed reduction in the
overall benefit requirement, as outlined in III.F.2.; or the
allocation or reallocation of a monetary threshold specified by the
grantee in their action plan. For all substantial amendments, the
grantee must follow the same procedures required for the preparation
and submission of an action plan for disaster recovery, with the
exception of the public hearing requirements described in section
III.D.1.b. and the consultation requirements described in section
III.D.1.a., which are not required for substantial amendments. A
substantial action plan
[[Page 32073]]
amendment shall require a 30-day public comment period.
III.C.6.b Nonsubstantial amendment. The grantee must notify HUD,
but is not required to seek public comment, when it makes any plan
amendment that is not substantial. Although nonsubstantial
amendments do not require HUD's approval to become effective, the
DRGR system must approve the amendment to change the status of the
Public Action Plan to ``reviewed and approved.'' The DRGR system
will automatically approve the amendment by the fifth day, if not
completed by HUD sooner.
III.C.7. Projection of expenditures and outcomes. Each grantee
must submit projected expenditures and outcomes with the action
plan. The projections must be based on each quarter's expected
performance--beginning with the first quarter funds are available to
the grantee and continuing each quarter until all funds are
expended. The grantee will use DRGR's upload feature to include
projections and accomplishments for each program created.
III.D. Citizen Participation Requirements
III.D.1. Citizen participation waiver and alternative
requirement. To permit a more streamlined process and ensure
disaster recovery grants are awarded in a timely manner, provisions
of 42 U.S.C. 5304(a)(2) and (3), 42 U.S.C. 12707, 24 CFR 570.486, 24
CFR 1003.604, 24 CFR 91.105(b) through (d), and 24 CFR 91.115(b)
through (d), with respect to citizen participation requirements, are
waived and replaced by the alternative requirements in this section.
The streamlined requirements require the grantee to include public
hearings on the proposed action plan and provide a reasonable
opportunity (at least 30 days) for citizen comment.
The grantee must follow a detailed citizen participation plan
that satisfies the requirements of 24 CFR 91.115 or 91.105 (except
as provided for in notices providing waivers and alternative
requirements). Each local government receiving assistance from a
state grantee must follow a detailed citizen participation plan that
satisfies the requirements of 24 CFR 570.486 (except as provided for
in notices providing waivers and alternative requirements).
In addition to the requirements above, the streamlined citizen
participation alternative requirements for CDBG-DR grants are as
follows:
III.D.1.a. Requirement for consultation during plan preparation.
All grantees must consult with states, Indian tribes, local
governments, Federal partners, nongovernmental organizations, the
private sector, and other stakeholders and affected parties in the
surrounding geographic area, including organizations that advocate
on behalf of members of protected classes, vulnerable populations,
and underserved communities impacted by the disaster, to ensure
consistency of the action plan with applicable regional
redevelopment plans. A grantee must consult with other relevant
government agencies, including state and local emergency management
agencies that have primary responsibility for the administration of
FEMA funds, if applicable.
III.D.1.b. Publication of the action plan and opportunity for
public comment. Following the creation of the action plan or
substantial amendment in DRGR and before the grantee submits the
action plan or substantial amendment to HUD, the grantee must
publish the proposed plan or amendment for public comment. The
manner of publication must include prominent posting on the
grantee's official disaster recovery website and must afford
citizens, affected local governments, and other interested parties a
reasonable opportunity to review the plan or substantial amendment.
Grantees shall consider if there are potential barriers that may
limit or prohibit vulnerable populations or underserved communities
and individuals affected by the disaster from providing public
comment on the grantee's action plan or substantial amendment. If
the grantee identifies barriers that may limit or prohibit equitable
participation, the grantee must take reasonable measures to increase
coordination, communication, affirmative marketing, targeted
outreach, and engagement with underserved communities and
individuals, including persons with disabilities and persons with
LEP.
At a minimum, the topic of disaster recovery on the grantee's
website must be navigable by all interested parties from the grantee
homepage and must link to the disaster recovery website required by
section III.D.1.e. The grantee's records must demonstrate that it
has notified affected citizens through electronic mailings, press
releases, statements by public officials, media advertisements,
public service announcements, and/or contacts with neighborhood
organizations.
Additionally, the CDBG-DR grantee must convene at least one
public hearing on the proposed action plan after it has published on
its website to solicit public comment and before submittal of the
action plan to HUD. If the grantee holds more than one public
hearing, it must hold each hearing in a different location within
the MID area in locations that the grantee determines will promote
geographic balance and maximum accessibility. The minimum number of
public hearings a grantee must convene on the action plan to obtain
interested parties' views and to respond to comments and questions
shall be determined by the amount of the grantee's CDBG-DR
allocation: (1) CDBG-DR grantees with allocations under $500 million
are required to hold at least one public hearing in a HUD-identified
MID area; and (2) CDBG-DR grantees with allocations over $500
million or more shall convene at least two public hearings in HUD-
identified MID areas.
Grantees may convene public hearings virtually (alone, or in
concert with an in-person hearing). All in-person hearings must be
held in facilities that are physically accessible to persons with
disabilities. HUD's implementing regulations for section 504 of the
Rehabilitation Act (24 CFR part 8, subpart C) provide that where
physical accessibility is not achievable, grantees must give
priority to alternative methods of product or information delivery
that offer programs and activities to qualified individuals with
disabilities in the most integrated setting appropriate. When
conducting a virtual hearing, the grantee must allow questions in
real time, with answers coming directly from the grantee
representatives to all ``attendees.''
For both virtual and in person hearings, grantees must update
their citizen participation plans to provide that hearings be held
at times and locations convenient to potential and actual
beneficiaries, with accommodation for persons with disabilities and
appropriate auxiliary aids and services to ensure effective
communication, and specify how they will meet these requirements.
See 24 CFR 8.6 for HUD's regulations about effective communication.
Grantees must also provide meaningful access for individuals with
LEP at both in-person and virtual hearings. In their citizen
participation plan, state and local government grantees shall
identify how the needs of non-English speaking residents will be met
in the case of virtual and in-person public hearings where a
significant number of non-English speaking residents can be
reasonably expected to participate. In addition, for both virtual or
in-person hearings, the grantee shall provide reasonable
notification and access for citizens in accordance with the
grantee's certifications at III.F.7.g., timely responses to all
citizen questions and issues, and public access to all questions and
responses.
III.D.1.c. Consideration of public comments. The grantee must
provide a reasonable time frame (no less than 30 days) and method(s)
(including electronic submission) for receiving comments on the
action plan or substantial amendment. The grantee must consider all
oral and written comments on the action plan or any substantial
amendment. Any updates or changes made to the action plan in
response to public comments should be clearly identified in the
action plan. A summary of comments on the plan or amendment, and the
grantee's response to each, must be included (e.g., uploaded) in
DRGR with the action plan or substantial amendment. Grantee
responses shall address the substance of the comment rather than
merely acknowledge that the comment was received.
III.D.1.d. Availability and accessibility of documents. The
grantee must make the action plan, any substantial amendments, vital
documents, and all performance reports available to the public on
its website. See the following guidance for more information on
vital documents: https://www.lep.gov/guidance/HUD_guidance_Jan07.pdf. In addition, the grantee must make these
documents available in a form accessible to persons with
disabilities and those with LEP. Grantees must take reasonable steps
to ensure meaningful access to their programs and activities by LEP
persons, including members of protected classes, vulnerable
populations, and individuals from underserved communities. In their
citizen participation plan, state and local government grantees
shall describe their procedures for assessing their language needs
and identify any need for translation of notices and other vital
documents. At a minimum, the citizen participation plan shall
require that the state or local government grantee take reasonable
steps to provide language assistance to ensure meaningful access to
participation by non-English-speaking residents of the grantee's
jurisdiction.
[[Page 32074]]
III.D.1.e. Public website. The grantee must maintain a public
website that permits individuals and entities awaiting assistance
and the general public to see how all grant funds are used and
administered. The website must include copies of all relevant
procurement documents and, except as noted in the next paragraph,
all grantee administrative contracts, details of ongoing procurement
processes, and action plans and amendments. The public website must
be accessible to persons with disabilities and individuals with LEP.
To meet this requirement, each grantee must make the following
items available on its website: the action plan created using DRGR
(including all amendments); each performance report (as created
using the DRGR system); citizen participation plan; procurement
policies and procedures; all contracts, as defined in 2 CFR 200.22,
that will be paid with CDBG-DR funds (including, but not limited to,
subrecipients' contracts); and a summary including the description
and status of services or goods currently being procured by the
grantee or the subrecipient (e.g., phase of the procurement,
requirements for proposals, etc.). Contracts and procurement actions
that do not exceed the micro-purchase threshold, as defined in 2 CFR
200.1, are not required to be posted to a grantee's website.
III.D.1.f. Application status. The grantee must provide multiple
methods of communication, such as websites, toll-free numbers, TTY
and relay services, email address, fax number, or other means to
provide applicants for recovery assistance with timely information
to determine the status of their application.
III.D.1.g. Citizen complaints. The grantee will provide a timely
written response to every citizen complaint. The grantee response
must be provided within fifteen working days of the receipt of the
complaint, or the grantee must document why additional time for the
response was required. Complaints regarding fraud, waste, or abuse
of government funds should be forwarded to the HUD OIG Fraud Hotline
(phone: 1-800-347-3735 or email: [email protected]).
III.D.1.h. General requirements. For plan publication, the
comprehensive disaster recovery website and vital documents must
ensure effective communication for individuals with disabilities, as
required by 24 CFR 8.6 and the Americans with Disabilities Act, as
applicable. In addition to ensuring the accessibility of the
comprehensive disaster recovery website and vital documents, this
obligation includes the requirement to provide auxiliary aids and
services where necessary to ensure effective communication with
individuals with disabilities, which may take the form of the
furnishing of the above referenced materials in alternative formats
(24 CFR 8.6(a)(1)). When required by III.D.1.d., grantees must take
reasonable steps to ensure meaningful access for individuals with
LEP.
III.E. Program Income
III.E.1. Program income waiver and alternative requirement. For
state and unit of general local government grantees, HUD is waiving
all applicable program income rules at 42 U.S.C. 5304(j), 24 CFR
570.489(e), 24 CFR 570.500, and 24 CFR 570.504 and providing the
alternative requirement described below. Program income earned by
Indian tribes that receive an allocation from HUD will be governed
by the regulations at 24 CFR 1003.503 until grant closeout and not
by the waivers and alternative requirements in this Consolidated
Notice. Program income earned by Indian tribes that are
subrecipients of state grantees or local government grantees will be
subject to the program income requirements for subrecipients of
those grantees.
III.E.1.a. Definition of program income. ``Program income'' is
defined as gross income generated from the use of CDBG-DR funds,
except as provided in III.E.1.b., and received by a state, local
government, Indian tribe receiving funds from a grantee, or their
subrecipients. When income is generated by an activity that is only
partially assisted with CDBG-DR funds, the income shall be prorated
to reflect the percentage of CDBG-DR funds used (e.g., a single loan
supported by CDBG-DR funds and other funds, or a single parcel of
land purchased with CDBG-DR funds and other funds). If CDBG funds
are used with CDBG-DR funds on an activity, any income earned on the
CDBG portion would not be subject to the waiver and alternative
requirement in the Consolidated Notice.
Program income includes, but is not limited to, the following:
(i) Proceeds from the disposition by sale or long-term lease of
real property purchased or improved with CDBG-DR funds.
(ii) Proceeds from the disposition of equipment purchased with
CDBG-DR funds.
(iii) Gross income from the use or rental of real or personal
property acquired by a state, local government, or subrecipient
thereof with CDBG-DR funds, less costs incidental to generation of
the income.
(iv) Gross income from the use or rental of real property owned
by a state, local government, or subrecipient thereof, that was
constructed or improved with CDBG-DR funds, less costs incidental to
generation of the income.
(v) Payments of principal and interest on loans made using CDBG-
DR funds.
(vi) Proceeds from the sale of loans made with CDBG-DR funds.
(vii) Proceeds from the sale of obligations secured by loans
made with CDBG-DR funds.
(viii) Interest earned on program income pending disposition of
the income, including interest earned on funds held in a revolving
fund account.
(ix) Funds collected through special assessments made against
nonresidential properties and properties owned and occupied by non-
LMI households, where the special assessments are used to recover
all or part of the CDBG-DR portion of a public improvement.
(x) Gross income paid to a state, local government, or
subrecipient thereof, from the ownership interest in a for-profit
entity in which the income is in return for the provision of CDBG-DR
assistance.
III.E.1.b. Program income--does not include:
(i) The total amount of funds that is less than $35,000 received
in a single year and retained by a state, local government, or a
subrecipient thereof.
(ii) Amounts generated by activities eligible under section
105(a)(15) of the HCDA and carried out by an entity under the
authority of section 105(a)(15) of the HCDA.
III.E.1.c. Retention of program income. State grantees may
permit a local government that receives or will receive program
income to retain the program income but are not required to do so.
III.E.1.d. Program income--use, close out, and transfer.
(i) Program income received (and retained, if applicable) before
or after closeout of the grant that generated the program income,
and used to continue disaster recovery activities, is treated as
additional CDBG-DR funds subject to the requirements of the
Consolidated Notice and must be used in accordance with the
grantee's action plan for disaster recovery. To the maximum extent
feasible, program income shall be used or distributed before
additional withdrawals from the U.S. Treasury are made, except as
provided in III.E.1.e. below.
(ii) In addition to the alternative requirements dealing with
program income required above, the following rules apply:
(1) a state or local government grantee may transfer program
income to its annual CDBG program before closeout of the grant that
generated the program income. In addition, state grantees may
transfer program income before closeout to any annual CDBG-funded
activities carried out by a local government within the state.
(2) Program income received by a grantee, or received and
retained by a subrecipient, after closeout of the grant that
generated the program income, may also be transferred to a grantee's
annual CDBG award.
(3) In all cases, any program income received that is not used
to continue the disaster recovery activity will not be subject to
the waivers and alternative requirements of the Consolidated Notice.
Rather, those funds will be subject to the state or local government
grantee's regular CDBG program rules. Any other transfer of program
income not specifically addressed in the Consolidated Notice may be
carried out if the grantee first seeks and then receives HUD's
approval.
III.E.1.e. Revolving funds. State and local government grantees
may establish revolving funds to carry out specific, identified
activities. State grantees may also establish a revolving fund to
distribute funds to local governments or tribes to carry out
specific, identified activities. A revolving fund, for this purpose,
is a separate fund (with a set of accounts that are independent of
other program accounts) established to carry out specific
activities. These activities must generate payments used to support
similar activities going forward. These payments to the revolving
fund are program income and must be substantially disbursed from the
revolving fund before additional grant funds are drawn from the U.S.
Treasury for payments that could be funded from the revolving fund.
Such program income is not required to be disbursed for nonrevolving
fund activities. A revolving fund established by a CDBG-DR grantee
shall not be directly
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funded or capitalized with CDBG-DR grant funds, pursuant to 24 CFR
570.489(f)(3).
III.F. Other General Waivers and Alternative Requirements
III.F.1. Consolidated Plan waiver. HUD is temporarily waiving
the requirement for consistency with the consolidated plan
(requirements at 42 U.S.C. 12706, 24 CFR 91.225(a)(5), and 24 CFR
91.325(a)(5)), because the effects of a major disaster alter a
grantee's priorities for meeting housing, employment, and
infrastructure needs. In conjunction, 42 U.S.C. 5304(e) is also
waived, to the extent that it would require HUD to annually review
grantee performance under the consistency criteria. These waivers
apply only for 24 months after the applicability date of the
grantee's applicable Allocation Announcement Notice. If the grantee
is not scheduled to submit a new three-to five-year consolidated
plan within the next two years, the grantee must update its existing
three-to five-year consolidated plan to reflect disaster-related
needs no later than 24 months after the applicability date of the
grantee's applicable Allocation Announcement Notice.
III.F.2. Overall benefit requirement. The primary objective of
the HCDA is the ``development of viable urban communities, by
providing decent housing and a suitable living environment and
expanding economic opportunities, principally for persons of low and
moderate income'' (42 U.S.C. 5301(c)). Consistent with the HCDA,
this notice requires grantees to comply with the overall benefit
requirements in the HCDA and 24 CFR 570.484, 24 CFR 570.200(a)(3),
and 24 CFR 1003.208, which require that 70 percent of funds be used
for activities that benefit LMI persons. For purposes of a CDBG-DR
grant, HUD is establishing an alternative requirement that the
overall benefit test shall apply only to the grant of CDBG-DR funds
described in the Allocation Announcement Notice and related program
income.
A grantee may seek to reduce the overall benefit requirement
below 70 percent of the total grant, but must submit a substantial
amendment as provided in section III.C.6.a. in the Consolidated
Notice, and provide a justification that, at a minimum: (a)
identifies the planned activities that meet the needs of its LMI
population; (b) describes proposed activities and programs that will
be affected by the alternative requirement, including their proposed
location(s) and role(s) in the grantee's long-term disaster recovery
plan; (c) describes how the activities/programs identified in (b)
prevent the grantee from meeting the 70 percent requirement; (d)
demonstrates that LMI persons' disaster-related needs have been
sufficiently met and that the needs of non-LMI persons or areas are
disproportionately greater, and that the jurisdiction lacks other
resources to serve non-LMI persons; and (e) demonstrates a
compelling need for HUD to lower the percentage of the grant that
must benefit low- and moderate-income persons.
III.F.3. Use of the urgent need national objective. Because HUD
provides CDBG-DR funds only to grantees with documented disaster-
related impacts and each grantee is limited to spending funds only
for the benefit of areas that received a Presidential disaster
declaration, the Secretary finds good cause to waive the urgent need
national objective criteria in section 104(b)(3) of the HCDA and to
establish the following alternative requirement for any CDBG-DR
grantee using the urgent need national objective for a period of 36
months after the applicability date of the grantee's Allocation
Announcement Notice.
Pursuant to this alternative requirement, grantees that use the
urgent need national objective must: (1) describe in the impact and
unmet needs assessment why specific needs have a particular urgency,
including how the existing conditions pose a serious and immediate
threat to the health or welfare of the community; (2) identify each
program or activity in the action plan that will use the urgent need
national objective--either through its initial action plan
submission or through a substantial amendment submitted by the
grantee within 36 months of the applicability date of the grantee's
Allocation Announcement Notice; and (3) document how each program
and/or activity funded under the urgent need national objective in
the action plan responds to the urgency, type, scale, and location
of the disaster-related impact as described in the grantee's impact
and unmet needs assessment.
The grantee's action plan must address all three criteria
described above to use the alternative urgent need national
objective for the program and/or activity. This alternative urgent
need national objective is in effect for a period of 36 months
following the applicability date of the grantee's Allocation
Announcement Notice. After 36 months, the grantee will be required
to follow the criteria established in section 104(b)(3) of the HCDA
and its implementing regulations in 24 CFR part 570 when using the
urgent need national objective for any new programs and/or
activities added to an action plan.
III.F.4. Reimbursement of disaster recovery expenses by a
grantee or subrecipient. The provisions of 24 CFR 570.489(b) are
applied to permit a state grantee to charge to the grant otherwise
allowable costs incurred by the grantee, its recipients or
subrecipients (including Indian tribes and PHAs) on or after the
incident date of the covered disaster. A local government grantee is
subject to the provisions of 24 CFR 570.200(h) but may reimburse
itself or its subrecipients for otherwise allowable costs incurred
on or after the incident date of the covered disaster. Section
570.200(h)(1)(i) is waived to the extent that it requires pre-
agreement activities to be included in the local government's
consolidated plan. As an alternative requirement, grantees must
include any pre-agreement activities in their action plans,
including any costs of eligible activities that were funded with
short-term loans (e.g., bridge loans) and that the grantee intends
to reimburse or otherwise charge to the grant, consistent with
applicable program requirements.
III.F.5. Reimbursement of pre-application costs of homeowners,
renters, businesses, and other qualifying entities. Grantees are
permitted to charge to grants the pre-award and pre-application
costs of homeowners, renters, businesses, and other qualifying
entities for eligible costs these applicants have incurred in
response to an eligible disaster covered under a grantees'
applicable Allocation Announcement Notice. For purposes of the
Consolidated Notice, pre-application costs are costs incurred by an
applicant to CDBG-DR funded programs before the time of application
to a grantee or subrecipient, which may be before (pre-award) or
after the grantee signs its CDBG-DR grant agreement. In addition to
the terms described in the remainder of the Consolidated Notice,
grantees may only charge costs to the grant that meet the following
requirements:
Grantees may only charge the costs for rehabilitation,
demolition, and reconstruction of single family, multifamily, and
nonresidential buildings, including commercial properties, owned by
private individuals and entities, incurred before the owner applies
to a CDBG-DR grantee, recipient, or subrecipient for CDBG-DR
assistance;
For rehabilitation and reconstruction costs, grantees
may only charge costs for activities completed within the same
footprint of the damaged structure, sidewalk, driveway, parking lot,
or other developed area;
As required by 2 CFR 200.403(g), costs must be
adequately documented; and
Grantees must complete a duplication of benefits check
before providing assistance pursuant to section IV.A. in the
Consolidated Notice.
Grantees are required to ensure that all costs charged to a
CDBG-DR grant are necessary expenses related to authorized recovery
purposes. Grantees may charge to CDBG-DR grants the eligible pre-
application costs of individuals and private entities related to
single family, multifamily, and nonresidential buildings, only if:
(1) the person or private entity incurred the expenses within one
year after the applicability date of the grantee's Allocation
Announcement Notice (or within one year after the date of the
disaster, whichever is later); and (2) the person or entity pays for
the cost before the date on which the person or entity applies for
CDBG-DR assistance. Exempt activities as defined at 24 CFR 58.34,
but not including 24 CFR 58.34(a)(12), and categorical exclusions as
defined at 24 CFR 58.35(b) are not subject to the time limit on pre-
application costs outlined above. Actions that convert or
potentially convert to exempt under 24 CFR 58.34(a)(12) remain
subject to the reimbursement requirements provided herein. If a
grantee cannot meet all requirements at 24 CFR part 58, the pre-
application costs cannot be reimbursed with CDBG-DR or other HUD
funds.
Grantees must comply with the necessary and reasonable cost
principles for state, local, and Indian tribal governments
(described at 2 CFR 200.403). Grantees must incorporate into their
policies and procedures the basis for determining that the
assistance provided under the terms of this provision is necessary
and reasonable.
A grantee may not charge such pre-award or pre-application costs
to grants if the grantee cannot meet all requirements at 24 CFR part
58. Under CDBG-DR authorizing
[[Page 32076]]
legislation and HUD's environmental regulations in 24 CFR part 58,
the CDBG-DR ``recipient'' (as defined in 24 CFR part 58.2(a)(5),
which differs from the definition in 2 CFR part 200) is the
responsible entity that assumes the responsibility for completing
environmental reviews under Federal laws and authorities. The
responsible entity assumes all legal liability for the application,
compliance, and enforcement of these requirements. Pre-award costs
are also allowable when CDBG-DR assistance is provided for the
rehabilitation, demolition, or reconstruction of government
buildings, public facilities, and infrastructure. However, in such
instances, the environmental review must occur before the underlying
activity (e.g., rehabilitation of a government building) begins.
Grantees are also required to consult with the State Historic
Preservation Officer, Fish and Wildlife Service, and National Marine
Fisheries Service, to obtain formal agreements for compliance with
section 106 of the National Historic Preservation Act (54 U.S.C.
306108) and section 7 of the Endangered Species Act of 1973 (16
U.S.C. 1536) when designing a reimbursement program.
All grantees must follow all cross-cutting requirements, as
applicable, for all CDBG-DR funded activities including but not
limited to the environmental requirements above, the Davis Bacon
Act, Civil Rights Requirements, HUD's Lead Safe Housing Rule, and
the URA.
III.F.6. Alternative requirement for the elevation of structures
when using CDBG-DR funds as the non-Federal match in a FEMA-funded
project. Currently, CDBG-DR grantees using FEMA and CDBG-DR funds on
the same activity have encountered challenges in certain
circumstances in reconciling CDBG-DR elevation requirements and
those established by FEMA. 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. However, 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. While FEMA may change its standards for
elevation in the future, as long as the CDBG-DR grantee is following
a FEMA-approved flood standard this waiver and alternative
requirement will continue to apply.
FEMA funded projects generally commence well in advance of the
availability of CDBG-DR funds and 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. For these
reasons, the Secretary finds good cause to establish an alternative
requirement for the use of an alternative, FEMA-approved flood
standard instead of the elevation requirements established in
section II.B.2.c. and II.C.2. of the Consolidated Notice.
The alternative requirements apply when: (a) CDBG-DR funds are
used as the non-Federal match for FEMA assistance; (b) the FEMA-
assisted activity, for which CDBG-DR funds will be used as match,
commenced before HUD's obligation of CDBG-DR funds to the grantee;
and (c) the grantee has determined and demonstrated with records in
the activity file that implementation costs of the required CDBG-DR
elevation or flood proofing requirements are not reasonable costs,
as that term is defined in the applicable cost principles at 2 CFR
200.404.
III.F.7. Certifications waiver and alternative requirement.
Sections 104(b)(4), (c), and (m) of the HCDA (42 U.S.C. 5304(b)(4),
(c) & (m)), sections 106(d)(2)(C) & (D) of the HCDA (42 U.S.C.
5306(d)(2)(C) & (D)), and section 106 of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12706), and regulations
at 24 CFR 91.225 and 91.325 are waived and replaced with the
following alternative. Each grantee receiving an allocation under an
Allocation Announcement Notice must make the following
certifications with its action plan:
a. The grantee certifies that it has in effect and is following
a residential anti-displacement and relocation assistance plan
(RARAP) in connection with any activity assisted with CDBG-DR grant
funds that fulfills the requirements of section 104(d), 24 CFR part
42, and 24 CFR part 570, as amended by waivers and alternative
requirements.
b. The grantee certifies its compliance with restrictions on
lobbying required by 24 CFR part 87, together with disclosure forms,
if required by part 87.
c. The grantee certifies that the action plan for disaster
recovery is authorized under state and local law (as applicable) and
that the grantee, and any entity or entities designated by the
grantee, and any contractor, subrecipient, or designated public
agency carrying out an activity with CDBG-DR funds, possess(es) the
legal authority to carry out the program for which it is seeking
funding, in accordance with applicable HUD regulations as modified
by waivers and alternative requirements.
d. The grantee certifies that activities to be undertaken with
CDBG-DR funds are consistent with its action plan.
e. The grantee certifies that it will comply with the
acquisition and relocation requirements of the URA, as amended, and
implementing regulations at 49 CFR part 24, as such requirements may
be modified by waivers or alternative requirements.
f. The grantee certifies that it will comply with section 3 of
the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and
implementing regulations at 24 CFR part 75.
g. The grantee certifies that it is following a detailed citizen
participation plan that satisfies the requirements of 24 CFR 91.115
or 91.105 (except as provided for in waivers and alternative
requirements). Also, each local government receiving assistance from
a state grantee must follow a detailed citizen participation plan
that satisfies the requirements of 24 CFR 570.486 (except as
provided for in waivers and alternative requirements).
h. State grantee certifies that it has consulted with all
disaster-affected local governments (including any CDBG-entitlement
grantees), Indian tribes, and any local public housing authorities
in determining the use of funds, including the method of
distribution of funding, or activities carried out directly by the
state.
i. The grantee certifies that it is complying with each of the
following criteria:
(1) Funds will be used solely for necessary expenses related to
disaster relief, long-term recovery, restoration of infrastructure
and housing, economic revitalization, and mitigation in the most
impacted and distressed areas for which the President declared a
major disaster pursuant to the Robert T. Stafford Disaster Relief
and Emergency Assistance Act of 1974 (42 U.S.C. 5121 et seq.).
(2) With respect to activities expected to be assisted with
CDBG-DR funds, the action plan has been developed so as to give the
maximum feasible priority to activities that will benefit low- and
moderate-income families.
(3) The aggregate use of CDBG-DR funds shall principally benefit
low- and moderate-income families in a manner that ensures that at
least 70 percent (or another percentage permitted by HUD in a
waiver) of the grant amount is expended for activities that benefit
such persons.
(4) The grantee will not attempt to recover any capital costs of
public improvements assisted with CDBG-DR grant funds, by assessing
any amount against properties owned and occupied by persons of low-
and moderate-income, including any fee charged or assessment made as
a condition of obtaining access to such public improvements, unless:
(a) disaster recovery grant funds are used to pay the proportion of
such fee or assessment that relates to the capital costs of such
public improvements that are financed from revenue sources other
than under this title; or (b) for purposes of assessing any amount
against properties owned and occupied by persons of moderate income,
the grantee certifies to the Secretary that it lacks sufficient CDBG
funds (in any form) to comply with the requirements of clause (a).
j. State and local government grantees certify that the grant
will be conducted and administered in conformity with title VI of
the Civil Rights Act of 1964 (42 U.S.C. 2000d), the Fair Housing Act
(42 U.S.C. 3601-3619), and implementing regulations, and that it
will affirmatively further fair housing. An Indian tribe grantee
certifies that the grant will be conducted and administered in
conformity with the Indian Civil Rights Act.
k. The grantee certifies that it has adopted and is enforcing
the following policies, and, in addition, state grantees must
certify that they will require local governments that receive their
grant funds to certify that they have adopted and are enforcing:
(1) A policy prohibiting the use of excessive force by law
enforcement agencies within its jurisdiction against any individuals
engaged in nonviolent civil rights demonstrations; and
(2) A policy of enforcing applicable state and local laws
against physically barring entrance to or exit from a facility or
location
[[Page 32077]]
that is the subject of such nonviolent civil rights demonstrations
within its jurisdiction.
l. The grantee certifies that it (and any subrecipient or
administering entity) currently has or will develop and maintain the
capacity to carry out disaster recovery activities in a timely
manner and that the grantee has reviewed the requirements applicable
to the use of grant funds.
m. The grantee certifies to the accuracy of its Financial
Management and Grant Compliance Certification Requirements, or other
recent certification submission, if approved by HUD, and related
supporting documentation as provided in section III.A.1. of the
Consolidated Notice and the grantee's implementation plan and
related submissions to HUD as provided in section III.A.2. of the
Consolidated Notice.
n. The grantee certifies that it will not use CDBG-DR funds for
any activity in an area identified as flood prone for land use or
hazard mitigation planning purposes by the state, local, or tribal
government or delineated as a Special Flood Hazard Area (or 100-year
floodplain) in FEMA's most current flood advisory maps, unless it
also ensures that the action is designed or modified to minimize
harm to or within the floodplain, in accordance with Executive Order
11988 and 24 CFR part 55. The relevant data source for this
provision is the state, local, and tribal government land use
regulations and hazard mitigation plans and the latest-issued FEMA
data or guidance, which includes advisory data (such as Advisory
Base Flood Elevations) or preliminary and final Flood Insurance Rate
Maps.
o. The grantee certifies that its activities concerning lead-
based paint will comply with the requirements of 24 CFR part 35,
subparts A, B, J, K, and R.
p. The grantee certifies that it will comply with environmental
requirements at 24 CFR part 58.
q. The grantee certifies that it will comply with the provisions
of title I of the HCDA and with other applicable laws.
Warning: Any person who knowingly makes a false claim or
statement to HUD may be subject to civil or criminal penalties under
18 U.S.C. 287, 1001, and 31 U.S.C. 3729.
III.G. Ineligible Activities in CDBG-DR
Any activity that is not authorized under section 105(a) of the
HCDA is ineligible to be assisted with CDBG-DR funds, unless
explicitly allowed by waiver and alternative requirement in the
Consolidated Notice. Additionally, the uses described below are
explicitly prohibited.
III.G.1. Prohibition on compensation. Grantees shall not use
CDBG-DR funds to provide compensation to beneficiaries for losses
stemming from disaster related impacts. Grantees may, however,
reimburse disaster-impacted beneficiaries based on the pre-
application costs incurred by the beneficiary to complete an
eligible activity. Reimbursement of beneficiaries for eligible
activity costs are subject to the requirements established in
section III.F.5. of the Consolidated Notice.
III.G.2. Prohibition on forced mortgage payoff. A forced
mortgage payoff occurs when homeowners with an outstanding mortgage
balance are required, under the terms of their loan agreement, to
repay the balance of the mortgage loan before using assistance to
rehabilitate or reconstruct their homes. CDBG-DR funds, however,
shall not be used for a forced mortgage payoff. The ineligibility of
a forced mortgage payoff with CDBG-DR funds does not affect HUD's
longstanding guidance that when other non-CDBG disaster assistance
is taken by lenders for a forced mortgage payoff, those funds are
not considered to be available to the homeowner and do not
constitute a duplication of benefits for the purpose of housing
rehabilitation or reconstruction.
III.G.3. Prohibiting assistance to private utilities. HUD is
adopting the following alternative requirement to section 105(a) and
prohibiting the use of CDBG-DR funds to assist a privately-owned
utility for any purpose.
IV. Other Program Requirements
IV.A. Duplication of Benefits
The grantee must comply with section 312 of the Stafford Act, as
amended, which prohibits any person, business concern, or other
entity from receiving financial assistance with respect to any part
of a loss resulting from a major disaster for which such person,
business concern, or other entity has received financial assistance
under any other program or from insurance or any other source. To
comply with section 312, a person or entity may receive financial
assistance only to the extent that the person or entity has a
disaster recovery need that has not been fully met. Grantees must
also establish policies and procedures to provide for the repayment
of a CDBG-DR award when assistance is subsequently provided for that
same purpose from any other source. Grantees may be subject to
additional DOB requirements described in a separate notice. The
applicable Allocation Announcement Notice will describe any
additional requirements, as applicable.
Subsidized loans are financial assistance and therefore can
duplicate financial assistance provided from another source unless
an exception in IV.A.1. applies.
IV.A.1. Exceptions when subsidized loans are not a duplication.
When an exception described in paragraphs IV.A.1.a. or IV.A.1.b.
applies, documentation required by those paragraphs must be
maintained by the grantee. Without this documentation, any approved
but undisbursed portion of a subsidized loan must be included in the
grantee's calculation of the total assistance amount unless another
exception applies. For cancelled SBA loans, the grantee must notify
the SBA that the applicant has agreed to not take any actions to
reinstate the cancelled loan or draw any additional undisbursed loan
amounts.
IV.A.1.a. Short-term subsidized loans for costs later reimbursed
with CDBG-DR. CDBG-DR funds may be used to reimburse pre-award costs
of the grantee or subrecipient for eligible activities on or after
the date of the disaster. If the grantee or subrecipient obtained a
subsidized short-term loan to pay for eligible costs before CDBG-DR
funds became available (for example, a low-interest loan from a
local tax increment financing fund), the reimbursement of the costs
paid by the loan does not create a duplication.
IV.A.1.b. Declined or cancelled subsidized loans. The amount of
a subsidized loan that is declined or cancelled is not a DOB. To
exclude declined or cancelled loan amounts from the DOB calculation,
the grantee must document that all or a portion of the subsidized
loan is cancelled or declined.
(i) Declined SBA Loans: Declined loan amounts are loan amounts
that were approved or offered by a lender in response to a loan
application, but were turned down by the applicant, meaning the
applicant never signed loan documents to receive the loan proceeds.
CDBG-DR grantees shall not treat declined subsidized loans,
including declined SBA loans, as a DOB (but are not prohibited from
considering declined subsidized loans for other reasons, such as
underwriting). A grantee is only required to document declined loans
if information available to the grantee (e.g., the data the grantee
receives from FEMA, SBA, or other sources) indicates that the
applicant received an offer for subsidized loan assistance, and the
grantee is unable to determine from that available information that
the applicant declined the loan. If the grantee is aware that the
applicant received an offer of loan assistance and cannot ascertain
from available data that the applicant declined the loan, the
grantee must obtain a written certification from the applicant that
the applicant did not accept the subsidized loan by signing loan
documents and did not receive the loan.
(ii) Cancelled Loans: Cancelled loans are loans (or portions of
loans) that were initially accepted, but for a variety of reasons,
all or a portion of the loan amount was not disbursed and is no
longer available to the applicant.
The cancelled loan amount is the amount that is no longer
available. The loan cancellation may be due to default of the
borrower, agreement by both parties to cancel the undisbursed
portion of the loan, or expiration of the term for which the loan
was available for disbursement. The following documentation is
sufficient to demonstrate that any undisbursed portion of an
accepted subsidized loan is cancelled and no longer available: (a) A
written communication from the lender confirming that the loan has
been cancelled and undisbursed amounts are no longer available to
the applicant; or (b) a legally binding agreement between the CDBG-
DR grantee (or local government, Indian tribe, or subrecipient
administering the CDBG-DR assistance) and the applicant that
indicates that the period of availability of the loan has passed and
the applicant agrees not to take actions to reinstate the loan or
draw any additional undisbursed loan amounts.
IV.B. Procurement
For a grantee to have proficient procurement processes, a
grantee must: indicate the procurement standards that apply to its
use of CDBG-DR funds; indicate the procurement standards for
subrecipients or local governments as applicable; comply with the
standards it certified to HUD that it follows (and update the
certification
[[Page 32078]]
submissions when substantial changes are made); post the required
documentation to the official website as described below; and
include periods of performance and date of completion in all CDBG-DR
contracts.
State grantees must comply with the procurement requirements at
24 CFR 570.489(g) and the following alternative requirements: The
grantee must evaluate the cost or price of the product or service
being procured. State grantees shall establish requirements for
procurement processes for local governments and subrecipients based
on full and open competition consistent with the requirements of 24
CFR 570.489(g), and shall require a local government or subrecipient
to evaluate the cost or price of the product or service being
procured with CDBG-DR funds. Additionally, if the state agency
designated as the administering agency chooses to provide funding to
another state agency, the administering agency must specify in its
procurement processes whether the agency implementing the CDBG-DR
activity must follow the procurement processes that the
administering agency is subject to, or whether the agency must
follow the same processes to which other local governments and
subrecipients are subject, or its own procurement processes.
A grantee shall administer CDBG-DR grant funds in accordance
with all applicable laws and regulations. As an alternative
requirement, grantees may not delegate, by contract, or otherwise,
the responsibility for administering such grant funds.
HUD is establishing an additional alternative requirement for
all contracts with contractors used to provide goods and services,
as follows:
1. The grantee (or procuring entity) is required to clearly
state the period of performance or date of completion in all
contracts;
2. The grantee (or procuring entity) must incorporate
performance requirements and liquidated damages into each procured
contract. Contracts that describe work performed by general
management consulting services need not adhere to the requirement on
liquidated damages but must incorporate performance requirements;
and
3. The grantee (or procuring entity) may contract for
administrative support, in compliance with 2 CFR 200.459, but may
not delegate or contract to any other party any inherently
governmental responsibilities related to oversight of the grant,
including policy development, fair housing and civil rights
compliance, and financial management.
IV.C. Use of the ``Upper Quartile'' or ``Exception Criteria''
The LMA benefit requirement is modified when fewer than one
quarter of the populated-block groups in its jurisdictions contain
51 percent or more LMI persons. In such a community, 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 determines the lowest proportion a grantee may use to
qualify an area for this purpose and advises the grantee,
accordingly. The ``exception criteria'' applies to CDBG-DR funded
activities in jurisdictions covered by such criteria, including
jurisdictions that receive disaster recovery funds from a state.
Disaster recovery grantees are required to use the most recent data
available in implementing the exception criteria (https://www.hudexchange.info/programs/acs-low-mod-summary-data/acs-low-mod-summary-data-exception-grantees/).
IV.D. Environmental Requirements
IV.D.1. Clarifying note on the process for environmental release
of funds when a state carries out activities directly. For CDBG-DR
grants, HUD allows state grantees to carry out activities directly
and to distribute funds to subrecipients. Per 24 CFR 58.4(b)(1),
when a state carries out activities directly (including through
subrecipients that are not units of general local government), the
state must submit the Certification and Request for Release of Funds
to HUD for approval.
IV.D.2. Adoption of another agency's environmental review.
Appropriations acts allow recipients of funds that use such funds to
supplement Federal assistance provided under section 402, 403, 404,
406, 407, 408(c)(4), or 502 of the Stafford Act to adopt, without
review or public comment, any environmental review, approval, or
permit performed by a Federal agency. Such adoption shall satisfy
the responsibilities of the recipient with respect to such
environmental review, approval, or permit.
This provision allows the recipient of supplemental assistance
to adopt another Federal agency's review where the HUD assistance
supplements the Stafford Act, and the other Federal agency performed
an environmental review for assistance under section 402, 403, 404,
406, 407, or 502 of the Stafford Act.
The other agency's environmental review must cover all project
activities funded by the HUD recipient for each project. The grantee
is only required to supplement the other agency's environmental
review to comply with HUD regulations (e.g., publication or posting
requirements for Notice of Finding of No Significant Impact (FONSI),
Notice of Intent to Request Release of Funds (NOI-RROF), concurrent
or combined notices, or HUD approval period for objections) if the
activity is modified so the other agency's environmental review no
longer covers the activity. The recipient's environmental review
obligations are considered complete when adopting another agency's
environmental review. To be adequate:
1. The grantee must obtain a completed electronic or paper copy
of the Federal agency's review and retain a copy in its
environmental records.
2. The grantee must notify HUD on the Request for Release of
Funds (RROF) Form 7015.15 (or the state, if the state is acting as
HUD under 24 CFR 58.18) that another agency review is being used.
The grantee must include the name of the other Federal agency, the
name of the project, and the date of the project's review as
prepared by the other Federal agency.
When permitted by the applicable appropriations acts, and
notwithstanding 42 U.S.C. 5304(g)(2), the Secretary or a state may,
upon receipt of a Request for Release of Funds and Certification,
immediately approve the release of funds for an activity or project
assisted with CDBG-DR funds if the recipient has adopted an
environmental review, approval, or permit under this section, or if
the activity or project is categorically excluded from review under
the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et
seq.) (NEPA).
IV.D.3. Historic preservation reviews. The responsible entity
must comply with section 106 of the National Historic Preservation
Act of 1966 (54 U.S.C. 306108). Early coordination under section 106
is important to the recovery process and required by 24 CFR 58.5(a).
IV.D.4. Tiered environmental reviews. Tiering, as described at
40 CFR 1508.1(ff) and 24 CFR 58.15, is a means of making the
environmental review process more efficient by allowing parties to
``eliminate repetitive discussions of the same issues, focus on the
actual issues ripe for decision, and exclude from consideration
issues already decided or not yet ripe at each level of
environmental review'' (40 CFR 1501.11(a)). Tiering is appropriate
when a responsible entity is evaluating a single-family housing
program with similar activities within a defined local geographic
area and timeframe (e.g., rehabilitating single-family homes within
a city district or county over the course of one to five years) but
where the specific sites and activities are not yet known. Public
notice and the Request for Release of Funds (HUD-Form 7015.15) are
processed at a broad-level, eliminating the need for publication at
the site-specific level. However, funds cannot be spent or committed
on a specific site or activity until the site-specific review has
been completed and approved.
IV.E. Flood Insurance Requirements
Grantees, recipients, and subrecipients must implement
procedures and mechanisms to ensure that assisted property owners
comply with all flood insurance requirements, including the purchase
and notification requirements described below, before providing
assistance.
IV.E.1. Flood insurance purchase requirements. When grantees use
CDBG-DR funds to rehabilitate or reconstruct existing residential
buildings in a Special Flood Hazard Area (or 100-year floodplain),
the grantee must comply with applicable Federal, state, local, and
tribal laws and regulations related to both flood insurance and
floodplain management. The grantee must comply with section 102(a)
of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a) which
mandates the purchase of flood insurance protection for any HUD-
assisted property within a Special Flood Hazard Area. Therefore, a
HUD-assisted homeowner for a property located in a Special Flood
Hazard Area must obtain and maintain flood insurance in the amount
and duration prescribed by FEMA's National Flood Insurance Program.
IV.E.2. Federal assistance to owners remaining in a floodplain.
IV.E.2.a. Prohibition on flood disaster assistance for failure
to obtain and maintain
[[Page 32079]]
flood insurance. Grantees must comply with section 582 of the
National Flood Insurance Reform Act of 1994, as amended, (42 U.S.C.
5154a), which prohibits flood disaster assistance in certain
circumstances. No Federal disaster relief assistance made available
in a flood disaster area may be used to make a payment (including
any loan assistance payment) to a person for ``repair, replacement,
or restoration'' for damage to any personal, residential, or
commercial property if that person at any time has received Federal
flood disaster assistance that was conditioned on the person first
having obtained flood insurance under applicable Federal law and the
person has subsequently failed to obtain and maintain flood
insurance as required under applicable Federal law on such property.
A grantee may not provide disaster assistance for the repair,
replacement, or restoration of a property to a person who has failed
to satisfy the Federal requirement to obtain and maintain flood
insurance and must implement a process to verify and monitor for
compliance with section 582 and the requirement to obtain and
maintain flood insurance. Grantees are reminded that CDBG-DR funds
may be used to assist beneficiaries in the purchase of flood
insurance to comply with this requirement, subject to the
requirements of cost reasonableness and other federal cost
principles.
IV.E.2.b. Prohibition on flood disaster assistance for
households above 120 percent of AMI for failure to obtain flood
insurance. When a homeowner located in the floodplain allows their
flood insurance policy to lapse, it is assumed that the homeowner is
unable to afford insurance and/or is accepting responsibility for
future flood damage to the home. Higher income homeowners who reside
in a floodplain, but who failed to secure or decided to not maintain
their flood insurance, should not be assisted at the expense of
lower income households. To ensure that adequate recovery resources
are available to assist lower income homeowners who reside in a
floodplain but who are unlikely to be able to afford flood
insurance, the Secretary finds good cause to establish an
alternative requirement.
The alternative requirement to 42 U.S.C. 5305(a)(4) is as
follows: Grantees receiving CDBG-DR funds are prohibited from
providing CDBG-DR assistance for the rehabilitation/reconstruction
of a house, if (i) the combined household income is greater than
either 120 percent of AMI or the national median, (ii) the property
was located in a floodplain at the time of the disaster, and (iii)
the property owner did not obtain flood insurance on the damaged
property, even when the property owner was not required to obtain
and maintain such insurance.
IV.E.2.c. Responsibility to inform property owners to obtain and
maintain flood insurance. Section 582 of the National Flood
Insurance Reform Act of 1994, as amended, (42 U.S.C. 5154a) is a
statutory requirement that property owners receiving disaster
assistance that triggers the flood insurance purchase requirement
have a statutory responsibility to notify any transferee of the
requirement to obtain and maintain flood insurance and to maintain
such written notification in the documents evidencing the transfer
of the property, and that the transferring owner may be liable if he
or she fails to do so. A grantee or subrecipient receiving CDBG-DR
funds must notify property owners of their responsibilities under
section 582.
IV.F. URA, Section 104(d), and Related CDBG Program Requirements
Activities and projects undertaken with CDBG-DR funds may be
subject to the URA, section 104(d) of the HCDA (42 U.S.C. 5304(d)),
and CDBG program requirements related to displacement, relocation,
acquisition, and replacement of housing, except as modified by
waivers and alternative requirements provided in this notice. The
implementing regulations for the URA are at 49 CFR part 24. The
regulations implementing section 104(d) are at 24 CFR part 42. The
regulations for applicable CDBG program requirements are at 24 CFR
570.488 and 24 CFR 570.606. HUD is waiving or providing alternative
requirements in this section for the purpose of promoting the
availability of decent, safe, and sanitary housing with respect to
the use of CDBG-DR funds allocated under the Consolidated Notice.
IV.F.1. Section 104(d) one-for-one replacement of lower-income
dwelling units. One-for-one replacement requirements at section
104(d)(2)(A)(i) and (ii) and 104(d)(3) of the HCDA and 24 CFR 42.375
are waived for owner-occupied lower-income dwelling units that are
damaged by the disaster and not suitable for rehabilitation. The
section 104(d) one-for-one replacement housing requirements apply to
occupied and vacant occupiable lower-income dwelling units
demolished or converted in connection with a CDBG assisted activity.
This waiver exempts all disaster-damaged owner-occupied lower-income
dwelling units that meet the grantee's definition of ``not suitable
for rehabilitation,'' from the one-for-one replacement housing
requirements of 24 CFR 42.375. Before carrying out activities that
may be subject to the one-for-one replacement housing requirements,
the grantee must define ``not suitable for rehabilitation'' in its
action plan or in policies/procedures governing these activities.
Grantees are reminded that tenant-occupied and vacant occupiable
lower-income dwelling units demolished or converted to another use
other than lower-income housing in connection with a CDBG-DR
assisted activity are generally subject to one-for-one replacement
requirements at 24 CFR 42.375 and that these provisions are not
waived.
HUD is waiving the section 104(d) one-for-one replacement
requirement for owner-occupied lower-income dwelling units that are
damaged by the disaster and not suitable for rehabilitation because
the one-for-one replacement requirements do not account for the
large, sudden changes that a major disaster may cause to the local
housing stock, population, or economy. Disaster-damaged housing
structures that are not suitable for rehabilitation can pose a
threat to public health and safety and to economic revitalization.
Prior to the implementation of this waiver and alternative
requirement, grantees must reassess post-disaster population and
housing needs to determine the appropriate type and amount of lower-
income dwelling units (both rental and owner-occupied units) to
rehabilitate and/or reconstruct. Grantees should note that the
demolition and/or disposition of public housing units continue to be
subject to section 18 of the United States Housing Act of 1937, as
amended, and 24 CFR part 970.
IV.F.2. Section 104(d) relocation assistance. The relocation
assistance requirements at section 104(d)(2)(A)(iii) and (B) of the
HCDA and 24 CFR 42.350, are waived to the extent that an eligible
displaced person, as defined under 24 CFR 42.305 of the section
104(d) implementing regulations, may choose to receive either
assistance under the URA and implementing regulations at 49 CFR part
24, or assistance under section 104(d) and implementing regulations
at 24 CFR 42.350. This waiver does not impact a person's eligibility
as a displaced person under section 104(d), it merely limits the
amounts and types of relocation assistance that a section 104(d)
eligible displaced person is eligible to receive. A section 104(d)
eligible displaced person is eligible to receive the amounts and
types of assistance for displaced persons under the URA, as may be
modified by the waivers and alternative requirements in this notice
for activities related to disaster recovery. Without this waiver,
disparities exist in relocation assistance associated with
activities typically funded by HUD and FEMA (e.g., buyouts and
relocation). Both FEMA and CDBG funds are subject to the
requirements of the URA; however, CDBG funds are subject to section
104(d), while FEMA funds are not. This limited waiver of the section
104(d) relocation assistance requirements assures uniform and
equitable treatment for individuals eligible to receive benefits
under section 104(d) by establishing that all forms of relocation
assistance to those individuals must be in the amounts and for the
types of assistance provided to displaced persons under URA
requirements.
IV.F.3. URA replacement housing payments for tenants. The
requirements of sections 204 and 205 of the URA (42 U.S.C. 4624 and
42 U.S.C. 4625), and 49 CFR 24.2(a)(6)(vii), 24.2(a)(6)(ix), and
24.402(b) are waived to the extent necessary to permit a grantee to
meet all or a portion of a grantee's replacement housing payment
obligation to a displaced tenant by offering rental housing through
a rental housing program subsidy (to include, but not limited to, a
housing choice voucher), provided that comparable replacement
dwellings are made available to the tenant in accordance with 49 CFR
24.204(a) where the owner is willing to participate in the program
and the period of authorized assistance is at least 42 months. This
waiver and alternative requirement is subject to the following: if
assistance is provided through a HUD program, it is subject to the
applicable HUD program requirements, including the requirement that
the tenant must be eligible for the rental housing program. Failure
to grant this waiver would impede disaster recovery whenever
[[Page 32080]]
rental program subsidies are available but funds for cash
replacement housing payments are limited and such payments are
required by the URA to be based on a 42-month term.
IV.F.4. URA voluntary acquisition--homebuyer primary residence
purchase. Grantees may implement disaster recovery program
activities that provide financial assistance to eligible homebuyers
to purchase and occupy residential properties as their primary
residence. Such purchases are generally considered voluntary
acquisitions under the URA and subject to the URA regulatory
requirements at 49 CFR 24.101(b)(2). For CDBG-DR, 49 CFR
24.101(b)(2) is waived to the extent that it applies to a homebuyer,
who does not have the power of eminent domain, and uses CDBG-DR
funds in connection with the voluntary purchase and occupancy of a
home the homebuyer intends to make their primary residence. This
waiver is necessary to reduce burdensome administrative requirements
for homebuyers following a disaster. Tenants displaced by these
voluntary acquisitions may be eligible for relocation assistance.
IV.F.5. CDBG displacement, relocation, acquisition, and
replacement housing program regulations--Optional relocation
assistance. The regulations at 24 CFR 570.606(d) are waived to the
extent that they require optional relocation policies to be
established at the grantee level. Unlike with the regular CDBG
program, states may carry out disaster recovery activities directly
or through subrecipients, but 24 CFR 570.606(d) does not account for
this distinction. This waiver makes clear that grantees receiving
CDBG-DR funds may establish optional relocation policies or permit
their subrecipients to establish separate optional relocation
policies. The written policy must: be available to the public,
describe the relocation assistance that the grantee, state recipient
(i.e., a local government receiving a subgrant from the state
through a method of distribution), or subrecipient (as applicable)
has elected to provide, and provide for equal relocation assistance
within each class of displaced persons according to 24 CFR
570.606(d). This waiver is intended to provide states with maximum
flexibility in developing optional relocation policies with CDBG-DR
funds.
IV.F.6. Waiver of Section 414 of the Stafford Act. Section 414
of the Stafford Act (42 U.S.C. 5181) provides that ``Notwithstanding
any other provision of law, no person otherwise eligible for any
kind of replacement housing payment under the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970 (Pub.
L. 91-646) [42 U.S.C. 4601 et seq.] [``URA''] shall be denied such
eligibility as a result of his being unable, because of a major
disaster as determined by the President, to meet the occupancy
requirements set by [the URA].'' Accordingly, homeowner occupants
and tenants displaced from their homes as a result of the identified
disasters and who would have otherwise been displaced as a direct
result of any acquisition, rehabilitation, or demolition of real
property for a federally funded program or project may become
eligible for a replacement housing payment notwithstanding their
inability to meet occupancy requirements prescribed in the URA.
Section 414 of the Stafford Act and its implementing regulation at
49 CFR 24.403(d)(1) are waived to the extent that they would apply
to real property acquisition, rehabilitation, or demolition of real
property for a CDBG-DR funded project commencing more than one year
after the date of the latest applicable Presidentially declared
disaster undertaken by the grantees, or subrecipients, provided that
the project was not planned, approved, or otherwise underway before
the disaster.
For purposes of this waiver, a CDBG-DR funded project shall be
determined to have commenced on the earliest of: (1) the date of an
approved Request for Release of Funds and certification; (2) the
date of completion of the site-specific review when a program
utilizes Tiering; or (3) the date of sign-off by the approving
official when a project converts to exempt under 24 CFR
58.34(a)(12).
The waiver will simplify the administration of the disaster
recovery process and reduce the administrative burden associated
with the implementation of Stafford Act section 414 requirements for
projects commencing more than one year after the date of the
Presidentially declared disaster considering most of such persons
displaced by the disaster will have returned to their dwellings or
found another place of permanent residence.
This waiver does not apply with respect to persons that meet the
occupancy requirements to receive a replacement housing payment
under the URA nor does it apply to persons displaced or relocated
temporarily by other HUD-funded programs or projects. Such persons'
eligibility for relocation assistance and payments under the URA is
not impacted by this waiver.
IV.F.7. RARAP Section 104(d). CDBG-DR grantees must certify that
they have in effect and are following a RARAP as required by section
104(d)(1) and (2) of the HCDA and 24 CFR 42.325. In addition to the
requirements in 24 CFR 42.325 and 24 CFR 570.488 or 24 CFR
570.606(c), as applicable, HUD is specifying the following
alternative requirements:
Grantees who are following an existing RARAP for CDBG purposes
must either: (1) amend their existing RARAP; or (2) create a
separate RARAP for CDBG-DR purposes, to reflect the following
requirements and applicable waivers and alternative requirements as
modified by the Consolidated Notice.
Grantees who do not have an existing RARAP in place because they
do not manage CDBG programs must create a separate RARAP for CDBG-DR
purposes, to reflect the following CDBG-DR requirements and
applicable waivers and alternative requirements as modified by the
Consolidated Notice.
(1) RARAP requirements for CDBG-DR. As each grantee establishes
and supports feasible and cost-effective recovery efforts to make
communities more resilient against future disasters, the CDBG-DR
RARAP must describe how the grantee plans to minimize displacement
of members of families and individuals from their homes and
neighborhoods as a result of any CDBG-DR assisted activities,
including disaster recovery activities where displacement can be
prevented (e.g., housing rehabilitation programs). Across disaster
recovery activities--such as buyouts and other eligible acquisition
activities, where minimizing displacement is not reasonable,
feasible, or cost-efficient and would not help prevent future or
repetitive loss--the grantee must describe how it plans to minimize
the adverse impacts of displacement.
The description shall focus on proposed disaster recovery
activities that may directly or indirectly result in displacement
and the assistance that shall be required for those displaced. This
description must focus on relocation assistance under the URA and
its implementing regulations at 49 CFR part 24, section 104(d) and
implementing regulations at 24 CFR part 42 (to the extent
applicable), 24 CFR 570.488 and/or 24 CFR 570.606, and relocation
assistance pursuant to this section of the Consolidated Notice, as
well as any other assistance being made available to displaced
persons. The CDBG-DR RARAP must include a description of how the
grantee will plan programs or projects in such a manner that
recognizes the substantial challenges experienced by displaced
individuals, families, businesses, farms, and nonprofit
organizations and develop solutions to minimize displacement or the
adverse impacts of displacement especially among vulnerable
populations. The description must be scoped to the complexity and
nature of the anticipated displacing activities, including the
evaluation of the grantee's available resources to carry out timely
and orderly relocations in compliance with all applicable relocation
requirements.
V. Performance Reviews
Under 42 U.S.C. 5304(e) and 24 CFR 1003.506(a), the Secretary
shall, at least on an annual basis, make such reviews and audits as
may be necessary or appropriate to determine whether the grantee has
carried out its activities in a timely manner (consistent process to
meet its expenditure requirement), whether the grantee's activities
and certifications are carried out in accordance with the
requirements and the primary objectives of the HCDA and other
applicable laws, and whether the grantee has the continuing capacity
to carry out those activities in a timely manner.
V.A. Timely Distribution and Expenditure of Funds
HUD waives the provisions at 24 CFR 570.494 and 24 CFR 570.902
regarding timely distribution and expenditure of funds, and
establishes an alternative requirement providing that each grantee
must expend 100 percent of its allocation within six years of the
date HUD signs the grant agreement. HUD may extend the period of
performance administratively, if good cause for such an extension
exists at that time, as requested by the grantee, and approved by
HUD. When the period of performance has ended, HUD will close out
the grant and any remaining funds not expended by the grantee on
appropriate programmatic purposes will be recaptured by HUD.
[[Page 32081]]
V.B. Review of Continuing Capacity
Upon a determination by HUD that the grantee has not carried out
its CDBG-DR activities and certifications in accordance with the
requirements in the Consolidated Notice, HUD will undertake a
further review to determine if the grantee has the continuing
capacity to carry out its activities in a timely manner. In making
this determination, HUD will consider the nature and extent of the
recipient's performance deficiencies, the actions taken by the
recipient to address the deficiencies, and the success or likely
success of such actions. HUD may then apply the following corrective
and remedial actions as appropriate:
V.B.1. Corrective and remedial actions. To effectively
administer the CDBG-DR program in a manner that facilitates
recovery, particularly the alternative requirements permitting
states to act directly to carry out eligible activities, HUD is
waiving 42 U.S.C. 5304(e) to the extent necessary to establish the
following alternative requirement: HUD may undertake corrective and
remedial actions for states in accordance with the authorities for
CDBG Entitlement grantees in subpart O (including corrective and
remedial actions in 24 CFR 570.910, 570.911, and 570.913) or under
subpart I of the CDBG regulations at 24 CFR part 570. In response to
a deficiency, HUD may issue a warning letter followed by a
corrective action plan that may include a management plan which
assigns responsibility for further administration of the grant to
specific entities or persons. Failure to comply with a corrective
action may result in the termination, reduction, or limitation of
payments to grantees receiving CDBG-DR funds.
V.B.2. Reduction, withdrawal, or adjustment of a grant, or other
appropriate action. Before a reduction, withdrawal, or adjustment of
a CDBG-DR grant, or other actions taken pursuant to this section,
the recipient shall be notified of the proposed action and be given
an opportunity for an informal consultation. Consistent with the
procedures described in the Consolidated Notice, HUD may adjust,
reduce, or withdraw the CDBG-DR grant (except funds that have been
expended for eligible, approved activities) or take other actions as
appropriate.
V.B.3. Additional criteria and specific conditions to mitigate
risk. To ensure effective grantee implementation of the financial
controls, procurement processes, and other procedures that are the
subject of the certification by the Secretary, HUD has and may
continue to establish specific criteria and conditions for each
grant award as provided for at 2 CFR 200.206 and 200.208,
respectively, to mitigate the risk of the grant. The Secretary shall
specify any such criteria and the resulting conditions in the grant
conditions governing the award. These criteria may include, but need
not be limited to, a consideration of the internal control framework
established by the grantee to ensure compliant implementation of its
financial controls, procurement processes and payment of funds to
eligible entities, as well as the grantee's risk management strategy
for information technology systems established to implement CDBG-DR
funded programs. Additionally, the Secretary may amend the grant
conditions to mitigate risk of a grant award at any point at which
the Secretary determines a condition to be required to protect the
Federal financial interest or to advance recovery.
V.C. Grantee Reporting Requirements in the DRGR System
V.C.1. DRGR-related waivers and alternative requirements. The
Consolidated Notice waives the requirements for submission of a
performance report pursuant to 42 U.S.C. 12708(a), 24 CFR 91.520,
and annual status and evaluation reports that are due each fiscal
year under 24 CFR 1003.506(a). Alternatively, HUD is requiring that
grantees enter information in the DRGR system on a quarterly basis
through the performance reports. The information in DRGR and the
performance reports must contain sufficient detail to permit HUD's
review of grantee performance and to enable remote review of grantee
data to allow HUD to assess compliance and risk.
At a minimum, each grantee must:
a. Enter its action plan and amendments as described in III.C.1,
including performance measures, into the Public Action Plan in DRGR;
b. Enter activities into the DRGR Action Plan at a level of
detail sufficient to allow HUD to determine grantee compliance (when
the activity type, national objective, and the organization that
will be responsible for the activity is known);
c. Categorize activities in DRGR under a ``project'';
d. Enter into the DRGR system summary information on grantees'
monitoring visits and reports, audits, and technical assistance it
conducts as part of its oversight of its disaster recovery programs;
e. Use the DRGR system to draw grant funds for each activity;
f. Use the DRGR system to track program income receipts,
disbursements, revolving loan funds, and leveraged funds (if
applicable);
g. Submit a performance report through the DRGR system no later
than 30 days following the end of each calendar quarter. For all
activities, the address of each CDBG-DR assisted property must be
recorded in the performance report; and
h. Publish a version of the performance report that omits
personally identifiable information reported in the performance
reports submitted to HUD on the grantee's official website within
three days of submission to HUD, or in the event a performance
report is rejected by HUD, publish the revised version, as approved
by HUD, within three days of HUD approval.
The grantee's first performance report is due after the first
full quarter after HUD signs the grant agreement. Performance
reports must be submitted on a quarterly basis until all funds have
been expended and all expenditures and accomplishments have been
reported. If a satisfactory report is not submitted in a timely
manner, HUD may suspend access to CDBG-DR funds until a satisfactory
report is submitted, or may withdraw and reallocate funding if HUD
determines, after notice and opportunity for a hearing, that the
jurisdiction did not submit a satisfactory report.
[FR Doc. 2023-10598 Filed 5-17-23; 8:45 am]
BILLING CODE 4210-67-P
