[Federal Register Volume 79, Number 59 (Thursday, March 27, 2014)]
[Notices]
[Pages 17173-17177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-06850]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5696-N-08]
Clarifying Guidance, Waivers, and Alternative Requirements for
Grantees in Receipt of Community Development Block Grant Disaster
Recovery Funds Under the Disaster Relief Appropriations Act, 2013
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Notice.
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SUMMARY: This Notice provides clarifying guidance, waivers, and
[[Page 17174]]
alternative requirements for Community Development Block Grant (CDBG)
disaster recovery grantees in receipt of funds under the Disaster
Relief Appropriations Act, 2013 (Pub. L. 113-2). To date, the
Department has allocated $10.6 billion under the Act to assist recovery
in the most impacted and distressed areas identified in major disaster
declarations due to Hurricane Sandy and other eligible events in
calendar years 2011, 2012 and 2013.
DATES: April 1, 2014.
FOR FURTHER INFORMATION CONTACT: Stan Gimont, Director, Office of Block
Grant Assistance, Department of Housing and Urban Development, 451 7th
Street SW., Room 7286, Washington, DC 20410, telephone number 202-708-
3587. Persons with hearing or speech impairments may access this number
via TTY by calling the Federal Relay Service at 800-877-8339. Facsimile
inquiries may be sent to Mr. Gimont at 202-401-2044. (Except for the
``800'' number, these telephone numbers are not toll-free.) Email
inquiries may be sent to [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. Applicable Rules, Statutes, Waivers, and Alternative
Requirements
III. Catalog of Federal Domestic Assistance
IV. Finding of No Significant Impact
I. Background
The Disaster Relief Appropriations Act, 2013 (Pub. L. 113-2,
approved January 29, 2013) (Appropriations Act) made available $16
billion in Community Development Block Grant (CDBG) funds for necessary
expenses related to disaster relief, long-term recovery, restoration of
infrastructure and housing, and economic revitalization in the most
impacted and distressed areas resulting from a major disaster declared
pursuant to the Robert T. Stafford Disaster Relief and Emergency
Assistance Act of 1974 (42 U.S.C. 5121 et seq.) (Stafford Act), due to
Hurricane Sandy and other eligible events in calendar years 2011, 2012,
and 2013. As the Appropriations Act requires funds to be awarded
directly to a State, or unit of general local government (hereinafter,
local government) at the discretion of the Secretary, the term
``grantee'' refers to any jurisdiction that has received a direct award
from HUD under the Appropriations Act.
On March 1, 2013, the President issued a sequestration order
pursuant to section 251A of the Balanced Budget and Emergency Deficit
Control Act, as amended (2 U.S.C. 901a), and reduced funding for CDBG
disaster recovery (CDBG-DR) grants under the Appropriations Act to
$15.18 billion. To date, a total of $10.6 billion has been allocated
for the areas most impacted by Hurricane Sandy and other disasters
occurring in 2011, 2012, and 2013. To describe these allocations and
the accompanying requirements, the Department published multiple
notices (collectively, the ``Prior Notices'') in the Federal Register.
The requirements of the Prior Notices continue to apply, except as
modified by this Notice.
Links to the Prior Notices, the text of the Appropriations Act, and
additional guidance prepared by the Department for CDBG-DR grants, are
available on HUD's Web site under the Office of Community Planning and
Development, Disaster Recovery Assistance: http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/communitydevelopment/programs/drsi. The same information is also
available on HUD's OneCPD Web site: https://www.onecpd.info/cdbg-dr/.
II. Applicable Rules, Statutes, Waivers, and Alternative Requirements
The Appropriations Act authorizes the Secretary to waive, or
specify alternative requirements for any provision of any statute or
regulation that the Secretary administers in connection with the
obligation by the Secretary or the use by the recipient of these funds
(except for requirements related to fair housing, nondiscrimination,
labor standards, and the environment). Waivers and alternative
requirements are based upon a determination by the Secretary that good
cause exists and that the waiver or alternative requirement is not
inconsistent with the overall purposes of title I of the Housing and
Community Development Act of 1974 (42 U.S.C. 5301 et seq.) (HCD Act).
Regulatory waiver authority is also provided by 24 CFR 5.110, 91.600,
and 570.5.
This Notice clarifies or modifies guidance provided by the Prior
Notices. For each waiver and alternative requirement described in this
Notice, the Secretary has determined that good cause exists and the
action is not inconsistent with the overall purpose of the HCD Act.
Grantees may request additional waivers and alternative requirements
from the Department as needed to address specific needs related to
their recovery activities. Under the requirements of the Appropriations
Act, waivers must be published in the Federal Register no later than
five days before the effective date of such waiver.
1. Action Plan for Disaster Recovery Waiver and Alternative
Requirement--Infrastructure Programs and Projects (Only Applicable to
Hurricane Sandy Grantees)
a. Definition of ``Benefits Multiple Counties''. The Notice
published November 18, 2013, describes additional requirements that
apply to major infrastructure projects (see paragraph 2g, under section
VI, Applicable Rules, Statutes, Waivers, and Alternative Requirements,
at 78 FR 69107). Specifically, the Notice states: ``HUD approval is
required for each major infrastructure project with such projects
defined as having a total cost of $50 million or more (including at
least $10 million of CDBG-DR funds), or benefits multiple counties.''
For purposes of the identifying major infrastructure projects under the
November 18, 2013 Notice, HUD defines ``benefits multiple counties'' to
mean that a major infrastructure project is physically located in more
than one county.
b. Obligated Public Assistance Grant Program Projects. Oftentimes,
CDBG-DR grantees are awarded recovery funds under FEMA's Public
Assistance (PA) Grant Program. Through the PA Program, FEMA provides
grant assistance to states, tribal and local governments, and certain
types of private nonprofit organizations for: Debris removal; emergency
protective measures; and the repair, replacement, or restoration of
disaster-damaged, publicly-owned facilities, and the facilities of
certain private, nonprofit organizations. The PA Program also
encourages protection of these damaged facilities from future events by
providing assistance for hazard mitigation measures during the recovery
process. The PA Program requires grantees to contribute a non-federal
share to a project--typically, 25 percent of the total project cost.
For example, if the repair of a public facility costs $1 million, FEMA
provides $750,000 while the grantee provides $250,000. However, in the
states of New York and New Jersey, due to the amount of damage caused
by the storm, FEMA has reduced the non-federal share for Hurricane
Sandy PA projects to 10 percent of the project's total cost (FEMA will
provide the remaining 90 percent). This reduction is allowed under FEMA
regulations.
Per the HCD Act (42 U.S.C. 5305(a)(9)), CDBG funds (including CDBG-
DR funds) may be used for the payment of the non-federal share required
in connection with a federal grant-in-aid program (e.g., the FEMA PA
[[Page 17175]]
Program) that provides funding for a CDBG-eligible activity. Prior to
HUD's Notice allocating a second round of funding for grantees in
response to Hurricane Sandy (78 FR 69104, published November 18, 2013),
many of these grantees had coordinated with FEMA to secure PA funding
for critical infrastructure projects. Thus, the infrastructure
requirements described in paragraph 2 at 78 FR 69107 will not apply to
Hurricane Sandy grantees with PA projects where funds have been
obligated by FEMA on or before November 25, 2013. The infrastructure
requirements described in paragraph 2 at 78 FR 69107 apply in full to
PA projects where funds have been obligated by FEMA after November 25,
2013.
c. Comprehensive Planning Process Required by Another Federal
Agency. Paragraph 2d, under section VI, Applicable Rules, Statutes,
Waivers, and Alternative Requirements (at 78 FR 69107) of the Notice
published November 18, 2013, is amended as necessary to allow the
following: Where a grantee provides a local match (using CDBG-DR funds)
for an infrastructure project that is covered by a comprehensive
planning process required by another Federal agency (e.g., FEMA, the
Department of Transportation, U.S. Army Corps of Engineers,
Environmental Protection Agency, etc.), HUD does not require the
grantee to repeat the analysis completed during that planning process
as part of its comprehensive risk analysis. Rather, that process may be
referenced and/or adopted to assist the grantee in meeting its
responsibility to conduct the comprehensive risk analysis required by
the November 18, 2013 Notice.
2. Documentation of Low- and Moderate-Income National Objective for
Multi-Unit Housing Projects (New York City Only)
Per the HCD Act and the Prior Notices, Hurricane Sandy CDBG-DR
grantees may fund the rehabilitation, reconstruction, and new
construction of housing. To further address its housing needs, New York
City has requested to measure the benefit to low- and moderate-income
households, in multi-unit residential projects, in a manner more
supportive of mixed income housing. In general, the applicable
regulation, 24 CFR 570.208(a)(3), requires at least 51 percent of the
units in an assisted multi-unit structure to be occupied by residents
that are income eligible. This method of calculating the benefit to
low- and moderate-income households is often referred to as the
structure basis.
HUD has reviewed other housing assistance programs that measure
benefit differently--only those units in a multi-unit structure
occupied by income eligible residents are used to calculate the benefit
to low- and moderate-income households. Under this ``unit'' approach,
when units are alike, the proportion of CDBG funds contributed to the
project may be no more than the proportion of units in the project that
will be occupied by income-eligible households. For this reason, this
approach is sometimes called the proportional units approach. In other
words, the rule under the structure approach is that a dollar of CDBG
assistance to a structure means that 51 percent of the units must meet
income requirements. Under the unit approach, the amount of assistance
provided is equal to the cost of units occupied by low- and moderate-
income households.
Based on HUD experience, the unit approach can be more compatible
with large-scale development of mixed-income housing. For example, in
response to the widespread devastation caused by Hurricanes Katrina and
Rita, HUD allowed the states of Louisiana and Mississippi to use this
approach under their respective CDBG-DR programs. Additionally--(1) the
CDBG program rule has a built-in exception that allows limited use of
the unit basis for multi-unit non-elderly new construction structures
with between 20 and 50 percent low- and moderate income occupancy, (2)
in the HOME Investment Partnerships program, HUD's primary housing
production program, HUD grantees use funds to pay for the cost of
affordable units, and (3) the Neighborhood Stabilization Program
permitted grantees to use a unit basis approach to meet the CDBG low-
and moderate-income benefit requirement.
After review of the city's Action Plan for Disaster Recovery, and
discussions with the city regarding its intent to encourage mixed-
income housing development, HUD has determined that it is consistent
with the overall purposes of the HCD Act to provide the city the
requested additional flexibility in measuring program benefit.
Therefore, the waiver and alternative requirements allow the city to
measure benefit within a housing development project: (1) According to
the existing CDBG requirements, or (2) according to the unit approach
described above for multi-unit housing projects involving
rehabilitation and/or reconstruction. However, the second option may
only be used if the units are generally comparable in size and
finishes. The city must select and use one method for each project. For
these purposes, the term ``project'' will have the same meaning as in
the HOME program at 24 CFR 92.2. The city is reminded that per 2 CFR
part 225, CDBG-DR costs must be necessary and reasonable. To meet this
requirement, the city must develop policies and procedures to document
its costs for housing investments are necessary and reasonable. The
city must also meet all civil rights and fair housing requirements.
3. Limited Purpose Modification of Overall Benefit Requirement (City of
Minot Only)
The primary objective of the HCD Act is the ``development of viable
urban communities, by providing decent housing and a suitable living
environment and expanding economic opportunities, principally for
persons of low and moderate income.'' 42 U.S.C. 5301(c). To carry out
this objective, the statute requires that 70 percent of the aggregate
of the grantee's CDBG program's funds be used to support activities
benefitting low- and moderate-income persons.
This target can be difficult, if not impossible, for many CDBG-DR
grantees to reach as a disaster impacts entire communities--regardless
of income. Further, it may prevent grantees from providing assistance
to the most damaged areas of need. Therefore, as described by the Prior
Notices, the city of Minot, in addition to the other grantees under the
Appropriations Act, received a waiver and alternative requirement--only
50 percent of funds must be used for activities that benefit low- and
moderate-income persons. Additional flexibility was provided in the
March 5, 2013 Notice (78 FR 14329). It allowed a grantee to request to
further reduce its overall benefit requirement if it submitted a
justification that, at a minimum: (a) Identifies the planned activities
that meet the needs of its low- and moderate-income population; (b)
describes proposed activity(ies) and/or program(s) that will be
affected by the alternative requirement, including their proposed
location(s) and role(s) in the grantee's long-term disaster recovery
plan; (c) describes how the activities/programs identified in (b)
prevent the grantee from meeting the 50 percent requirement; and (d)
demonstrates that the needs of non-low and moderate-income persons or
areas are disproportionately greater, and that the jurisdiction lacks
other resources to serve them. Upon HUD's review of the justification,
the request can be granted only if the Secretary found a compelling
need to reduce the overall benefit below 50 percent.
[[Page 17176]]
In response to the above, the city of Minot submitted a
justification addressing the required criteria. As described in that
letter, the city has received two awards of CDBG-DR funds (appropriated
by two separate laws) in response to the severe flooding of the city in
the summer of 2011. Early in the recovery process, the city identified
housing as the largest unmet need for the low- and moderate-income
population. Funding from the first allocation was used to fund housing
rehabilitation and reconstruction only for low- and moderate-income
households. In addition, the city obligated $2.2 million for
infrastructure and acquisition activities to support two affordable
rental housing projects (one will create 42 units of workforce housing,
the other will result in 40 units of senior housing), and $5.1 million
for infrastructure to support home development, as well as to provide
pads for mobile homes for low- and moderate-income families. Further,
the city is exploring the development of a homeless shelter, and
projects to provide 60 affordable rental units for Minot's low- and
moderate-income residents through a small rental rehabilitation and
reconstruction program. In sum, the city's first appropriation of CDBG-
DR funds, under Section 239 of the Department of Housing and Urban
Development Appropriations Act, 2012 (Pub. L. 112-55, approved November
18, 2011), was $67,575,964; over 52 percent of that allocation is
anticipated to benefit low- and moderate-income persons.
As the city moves forward with funding received under a second
appropriation law, the Appropriations Act, the focus of the recovery
has narrowed to the long-term needs of the city's Flood Inundation
Area. This area is four square miles and includes the downtown area and
the oldest and most heavily developed portion of the city. It was
inundated with two to fifteen feet of water during the 2011 flood and
sustained the most severe damage. According to the city, two types of
long-term activities, both located within the Flood Inundation Area,
are most urgent: Acquisition/buyout of properties and street repair and
improvements. In regards to acquisition/buyouts, the city has allocated
$14.8 million. These funds will act as a 25 percent match to funding
provided by the North Dakota State Water Commission, for a total
project cost of over $51 million. Additionally, $9.7 million has been
allocated for street repair and improvements. The balance of the city's
second allocation, $10.6 million, will be used for reimbursement of
home repairs, street repairs in an area located outside the Flood
Inundation Area, and planning and administrative costs.
HUD has reviewed the flood inundation data and maps, and the census
tract information provided by the city. Of the 14 block groups that
comprise the Flood Inundation Area, only four have low- and moderate-
income populations of at least 51 percent. An average of the 14 groups
demonstrates that the total low- and moderate income population of the
Flood Inundation Area is approximately 45.2 percent. According to the
HUD FY14 data, the median family income in Ward County, where Minot is
located, is $65,700. To be considered a low- and moderate-income
household, a family with four persons has an income equal to, or less
than, $53,200.
Thus, to enable the city to undertake the activities it has deemed
most critical for its recovery, and to ensure that low- and moderate-
income households are adequately served and/or assisted, HUD is
granting a limited waiver and alternative requirement to reduce the
overall benefit from 50 percent to not less than 23 percent. Based on
the city's justification, the Secretary has found a compelling need for
this reduction due to the unique circumstances related to Minot's
request. In particular, HUD notes that the City has already prioritized
the needs of low- and moderate-income populations with its first
allocation; the low- and moderate-income population in the Flood
Inundation Area is close enough to 50 percent that it nearly qualifies
under the overall benefit waiver in the March 5, 2013 Notice; given
that the Flood Inundation Area is likely to flood again, the City has
identified getting people out of harm's way as a top priority and this
waiver will allow low- and moderate-income families to take advantage
of Minot's program for this purpose; and finally, the waiver will
enable the City to leverage non-Federal funds for its buyout program.
This is a limited waiver modifying 42 U.S.C. 5301(c), 42 U.S.C.
5304(b)(3)(A), 24 CFR 570.484, and 570.200(a)(3) only to the extent
necessary to permit the City to use funds appropriated by Public Law
113-2 for flood buyout and street repair programs in the 14 block
groups of the Flood Inundation Area with a low- and moderate-income
population of approximately 45.2 percent, as described in its Action
Plan.
4. Tenant-Based Rental Assistance (Applicable to the State of New York
and the City of Joplin)
The State of New York and the city of Joplin have requested a
waiver of 42 U.S.C. 5305(a) in order to provide tenant-based rental
assistance to households impacted by disasters eligible under the
Appropriations Act. After reviewing each grantee's request, HUD is
waiving 42 U.S.C. 5305(a), to the extent necessary, to make eligible
rental assistance and utility payments paid for up to 2 years on behalf
of homeless and at-risk households when such assistance or payments are
part of a homeless prevention or rapid rehousing program or activity.
Eligible assistance may also include rental (i.e., security) deposits
and utility deposits when the grantee determines that such payments are
necessary to help prevent a family from being homeless. While existing
CDBG regulations may allow payments for these purposes, grantees under
the annual CDBG programs are subject to a much shorter time limitation
(3 months).
The goal of this waiver is to minimize the time households are
homeless by providing re-housing and rental assistance, and by linking
the individual or family with services that can help them become stable
and self-sufficient. Both grantees' use of CDBG-DR funds for this
purpose could measurably advance the Department's priority on
supporting forward-thinking solutions to help communities that are
struggling to house and serve persons and families that are homeless or
at risk of homelessness. In addition, HUD has previously granted the
State of Louisiana a similar waiver for its recovery in response to
Hurricanes Katrina and Rita. Further justification for granting the
waiver to both grantees, and the specifics of how the waiver will apply
to each grantee, are detailed below. Either grantee using these funds
in combination with an existing Section 8 Housing Choice Voucher (HCV)
program must coordinate with HUD's Office of Public and Indian Housing;
however, as this waiver is limited to two years from the effective date
of this Notice, grantees are strongly encouraged to ensure households
assisted in whole or in part with CDBG-DR funds are transitioned to an
alternate source of assistance, if necessary. Unless noted otherwise,
the term ``Section 8'' refers to the Section 8 HCV program.
a. State of New York. The State of New York anticipates up to $10
million of CDBG-DR funds will be used to support an emergency rehousing
program designed to assist households
[[Page 17177]]
that are homeless, or in imminent danger of becoming homeless, as
result of Hurricane Sandy, Hurricane Irene or Tropical Storm Lee. The
State anticipates the funds will be used in conjunction with the
State's Social Service Block Grant, which will support an intensive
case management system to help locate housing and stabilize the
household through a range of services.
Prior to seeking a waiver, the State explored all options available
to those most in need of housing assistance. To date, FEMA has approved
over $1 billion of assistance to more than 115,000 households located
in the State of New York. The State has launched significant housing
programs to address rehabilitation and reconstruction, however, these
programs are not specifically targeted to address the urgent needs of
the homeless--many of whom are still housed in shelters or other non-
permanent accommodations as a result of Sandy, Irene and Lee. For
example, it is estimated that Long Island's current homeless population
in shelters exceeds 2,000; approximately 1,000 of these individuals
were forced to the shelter as a result of Sandy. Meanwhile, the Section
8 rental assistance program is experiencing a tremendous demand and has
a limited supply of available housing, while HOME resources have been
reduced by sequestration. The State is aware of individuals being
served by the FEMA Temporary Rental Assistance Program, the
Transitional Sheltering Assistance, and the Disaster Housing Assistance
Program; however, many of these programs have reached funding limits,
or are not eligible sources of assistance for the majority of the
homeless.
Thus, for the State of New York, the Department is waiving 42
U.S.C. 5305(a), to the extent necessary, to make eligible tenant-based
rental assistance for the homeless population, or those at risk of
becoming homeless, due to the effects of Hurricane Sandy, Hurricane
Irene, or Tropical Storm Lee. Households will not be eligible for
tenant-based rental assistance if they have rejected public housing
assistance or declined a Section 8 voucher.
b. City of Joplin. As a result of the May 2011 tornado, Joplin's
housing stock, including its Section 8 voucher program, was severely
impacted. In regards to the Section 8 program, 85 voucher-holders were
displaced. Since the tornado, new housing units have gradually been
added to Joplin's inventory; however, many of these are more costly as
Joplin's rental market evolves. Compounding the issue, during its
recovery, the Joplin housing authority experienced a decrease in its
``fundable'' voucher population due to a lack of available units. As a
result of this decrease, the voucher budget provided to the city also
decreased, despite the needs of additional households that were
displaced. Thus, the city seeks the use of CDBG-DR funds to assist
Joplin's housing authority restore its program to reach pre-disaster
voucher levels. After reviewing the city's request, the Department is
waiving 42 U.S.C. 5305(a), to the extent necessary, to make eligible
tenant-based rental assistance so that the city may restore its Section
8 program to pre-disaster levels. Households will not be eligible for
tenant-based rental assistance if they have rejected public housing
assistance, or declined a Section 8 voucher. A maximum of $290,000 may
be provided by the city for this use.
Going forward, the city and the housing authority are strongly
encouraged to continue to assess the voucher program to ensure
households in need will have adequate resources available at the
expiration of this waiver.
III. Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance number for the
disaster recovery grants under this Notice is as follows: 14.269.
IV. Finding of No Significant Impact
A Finding of No Significant Impact (FONSI) with respect to the
environment has been made in accordance with HUD regulations at 24 CFR
part 50, which implement section 102(2)(C) of the National
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is
available for public inspection between 8 a.m. and 5 p.m. weekdays in
the Regulations Division, Office of General Counsel, Department of
Housing and Urban Development, 451 7th Street SW., Room 10276,
Washington, DC 20410-0500. Due to security measures at the HUD
Headquarters building, an advance appointment to review the docket file
must be scheduled by calling the Regulations Division at 202-708-3055
(this is not a toll-free number). Hearing or speech-impaired
individuals may access this number through TTY by calling the toll-free
Federal Relay Service at 800-877-8339.
Date: March 24, 2014.
Mark Johnston,
Deputy Assistant Secretary for Special Needs Programs.
[FR Doc. 2014-06850 Filed 3-26-14; 8:45 am]
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