[Federal Register Volume 79, Number 133 (Friday, July 11, 2014)]
[Notices]
[Pages 40133-40137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16316]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5696-N-10]
Additional Clarifying Guidance, Waivers, and Alternative
Requirements for Grantees in Receipt of Community Development Block
Grant Disaster Recovery FundsUnder 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 additional clarifying guidance, waivers,
and alternative requirements for all Community Development Block Grant
(CDBG) disaster recovery grantees in receipt of funds under the
Disaster Relief Appropriations Act, 2013 (Pub. L. 113-2).\1\ To date,
the Department has allocated $14.1 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.
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\1\ Luzerne, PA initially received disaster assistance under
Public Law 112-55 and was provided with additional assistance
through Pub. L. 113-2. The waiver in this Notice specific to
Luzerne, PA applies to both its 112-55 funds and 113-2 funds as
described herein.
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DATES: Effective Date: July 16, 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-
DR grants under the Appropriations Act to $15.18 billion. To date,
$14.1 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 Federal Register notices: March 5, 2013
(78 FR 14329), April 19, 2013 (78 FR 23578), May 29, 2013 (78 FR
32262), August 2, 2013 (78 FR 46999), November 18, 2013 (78 FR 69104),
March 27, 2014 (78 FR 17173), and June 3, 2014 (79 FR 31964), referred
to collectively in this Notice as the ``Prior Notices''). The
requirements of the Prior Notices continue to apply, except as modified
by this Notice.\2\
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\2\ 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/.
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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 HUD's
obligation or use by the recipient of these funds (except for
requirements related to fair housing, nondiscrimination, labor
standards, and the environment). Waivers and alternative requirements
are based upon a determination by the Secretary that good cause exists
and that the waiver or alternative requirement is not inconsistent with
the overall purposes of title I of the HCD Act. Regulatory waiver
authority is also provided by 24 CFR 5.110, 91.600, and 570.5.
This Notice clarifies or modifies requirements of the Prior
Notices. Except as noted, the waivers and alternative requirements in
this Notice apply to all grants under the Appropriations Act. 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. Reporting of contracts. Public Law 113-2 requires grantees ``to
maintain on a public Web site information accounting for how all grant
funds are
[[Page 40134]]
used, including details of all contracts and ongoing procurement
processes.'' To streamline the reporting requirements for grantees by
eliminating duplicative reporting efforts, and to provide greater
transparency regarding procured contracts, HUD is removing the
requirement that grantees identify contracts above $25,000 in HUD's
Disaster Recovery Reporting System (DRGR) because grantees are already
reporting this information in the Federal Subaward Reporting System
(FSRS) through USA Spending [usaspending.gov]. Grantees are still
required to post contract information as described below. HUD is
amending requirements described in the March 5, 2013 Notice as follows:
a. Paragraph 2.b. at 78 FR 14337 is amended to exclude the
requirement for grantees ``to identify in the DRGR system any contract
over $25,000,'' and now reads as follows: ``DRGR Action Plan. Each
grantee must enter its Action Plan for Disaster Recovery, including
performance measures, into HUD's DRGR system. As more detailed
information about uses of funds is identified by the grantee, it must
be entered into the DRGR system at a level of detail that is sufficient
to serve as the basis for acceptable performance reports, and permits
HUD review of compliance requirements.
The Action Plan must also be entered into the DRGR system so that
the grantee is able to draw its CDBG-DR funds. The grantee may enter
activities into DRGR before or after submission of the Action Plan to
HUD. To enter an activity into the DRGR system, the grantee must know
the activity type, national objective, and the organization that will
be responsible for the activity. In addition, a Data Universal
Numbering System (DUNS) number must be entered into the system for any
entity carrying out a CDBG-DR funded activity, including the grantee,
recipient(s) and subrecipient(s), contractor(s) and developers carrying
out a CDBG-DR activity.
Each activity entered into the DRGR system must also be categorized
under a ``project''. Typically, projects are based on groups of
activities that accomplish a similar, broad purpose (e.g., Housing,
Infrastructure, or Economic Development) or are based on an area of
service (e.g., Community A). If a grantee submits a partial Action Plan
or amendment to describe just one program (e.g., Single Family
Rehabilitation), that program is entered as a project in DRGR. Further,
the budget of the program would be identified as the project's budget.
If a State grantee has only identified the Method of Distribution (MOD)
upon HUD's approval of the published Action Plan, the MOD itself
typically serves as the projects in the DRGR system, rather than the
activities. As funds are distributed to subgrantees and subrecipients,
who decide which specific activities to fund, those activity fields are
then populated.
b. Paragraph 23 at 78 FR 14344 is amended to exclude the
requirement for grantees to ``enter information on contracts in the
DRGR system activity profiles (for all contracts valued over $25,000)''
and now reads as follows: ``Public Web site. The Appropriations Act
requires grantees to maintain a public Web site which provides
information accounting for how all grant funds are used, and managed/
administered, including details of all contracts and ongoing
procurement policies. To meet this requirement, each grantee must make
the following items available on its Web site: The Action Plan
(including all amendments); each QPR (as created using the DRGR
system); procurement policies and procedures; status of services or
goods currently being procured by the grantee--e.g., phase of the
procurement, requirements for proposals, etc.; a copy of contracts the
grantee has procured directly; and a summary of all procured contracts,
including those procured by the grantee, recipients, or subrecipients.
Grantees should post only those contracts subject to 24 CFR 85.36 or in
accordance with the State's procurement policies. To assist grantees
prepare this summary, HUD has developed a template. The template can be
accessed at: https://www.onecpd.info/cdbg-dr/. Grantees are required to
use this template, and attach an updated version to DRGR each quarter
as part of their QPR submissions. Updated summaries must also be posted
quarterly on each grantee's Web site.''
2. Incorporation of clarifications and requirements for grantees in
receipt of grant awards made by HUD in response to disasters occurring
in 2011 or 2012. Grantees in receipt of funds under the Appropriations
Act for disasters occurring in 2011 or 2012 (see the Notice published
in the Federal Register May 29, 2013, at 78 FR 32262) are advised that
the following paragraphs in section VI. (Applicable Rules, Statutes,
Waivers, and Alternative Requirements) of the Notice published November
18, 2013 apply to grant funds provided pursuant to Public Law 113-2:
3.b. (Liquid Fuel Supply Chain Assistance); 5. (Reimbursement of
disaster recovery expenses); 6. (Duplication of benefits); 7.
(Eligibility of needs assessment and risk analysis costs); 8.
(Eligibility of mold remediation); 9. (Eligibility of public services
and assistance to impacted households); 10. (Modification of the
alternative requirement related to small business assistance); and 11.
(Eligibility of Local Disaster Recovery Manager costs) (see 78 FR 69108
through 69110). These paragraphs impose or clarify general requirements
or provide additional flexibility in program design and implementation
to support resilient recovery following the 2011 and 2012 disasters,
while also ensuring that statutory requirements unique to the
Appropriations Act are met. Any new requirements established by this
paragraph are applicable to all programs initiated in an Action Plan
Amendment subsequent to the date of this Notice.
3. Tenant-based rental assistance (State of New Jersey, only). The
State of New Jersey has 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. Eligible assistance
includes rental assistance and utility payments and may also include
rental costs (i.e., security deposits and utility deposits) when the
grantee determines that such payments are necessary to help prevent a
household from being homeless. While existing CDBG regulations allow
payments for these purposes, those regulations limit assistance to a
period not to exceed three months. The State's tenant-based rental
assistance will be funded through its Supportive Services program, will
be limited to the beneficiaries of that program as described in the
State's approved Action Plan, and will not be tied to HUD's Section 8
program assistance.
As a result of Hurricane Sandy, thousands of households in New
Jersey were displaced and need housing at a time when the State's
housing stock had been substantially reduced. The decrease in the
housing supply placed upward pressure on housing costs, making housing
less affordable for households already strained by hurricane-related
expenses. To date, the State has invested more than $320 million to
support the rehabilitation or construction of new affordable rental
housing (to create approximately 7,000 units); however, the most
vulnerable of Sandy-displaced households--including very low-income
persons--continue to need immediate rental assistance until
construction of affordable rental units is completed and those units
become available.
The goal of this waiver is to minimize the time households are
homeless by
[[Page 40135]]
providing re-housing and rental assistance, and by linking the person
or family with services that can help them become stable and self-
sufficient. Throughout the rental period, assisted households will
receive referrals to available long-term units, as well as housing
counseling. Further, the State plans to establish a referral process
that will enable the targeted households to apply to live in the
affordable housing units created under other CDBG-DR funded programs.
The State's use of CDBG-DR funds for this purpose advances the
Department's priority to support 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 States of Louisiana and New York, as well as New
York City, similar waivers in response to Hurricanes Katrina, Rita, and
Sandy. After reviewing the State's request, HUD is waiving 42 U.S.C.
5305(a), to the extent necessary, to make eligible up to $17 million in
rental assistance and utility payments paid for up to 2 years on behalf
of homeless and at-risk low- and moderate-income households displaced
by Hurricane Sandy, when such assistance or payments are part of a
homeless prevention or rapid re-housing program or activity. The
Department is approving the State's request for a waiver to allow for
the payment of tenant-based rental assistance. This waiver is in effect
from January 1, 2014 to January 1, 2016.
4. Documentation of Low- and Moderate-Income National Objective for
Multi-Unit Housing Projects (State of New Jersey, 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, the State of New Jersey has
requested to measure the benefit to low- and moderate-income
households, in multiunit 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 State of New Jersey's Action Plan for Disaster
Recovery, and discussions with the State 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
State the requested additional flexibility in measuring program
benefit. Therefore, the waiver and alternative requirements allow the
State 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 State 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 State is reminded that per 2
CFR part 225, CDBG-DR costs must be necessary and reasonable. To meet
this requirement, the State must develop policies and procedures to
document its costs for housing investments are necessary and
reasonable. The State must also meet all civil rights and fair housing
requirements and comply with any applicable civil rights or fair
housing related voluntary compliance agreements, settlement agreements,
or consent decrees.
5. Limited purpose modification of overall benefit requirement
(Luzerne County, Pennsylvania, only). The primary objective of the
Housing and Community Development 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 et seq.). 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, Luzerne County, 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) and the May 29, 2013 Notice (FR
32262), which is applicable to Luzerne County. It allows a grantee to
request a further reduction of its overall benefit requirement by
submitting 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. After review of grantee requests,
under the Appropriations Act, HUD can grant such a waiver request only
if the Secretary finds a compelling need to reduce the overall benefit
below 50 percent.
[[Page 40136]]
In response to the above, Luzerne County submitted justification
addressing the required criteria. As described in the correspondence,
the county has received two awards of CDBG-DR funds (appropriated under
two separate laws and totaling more than $25.5 million) in response to
disasters that occurred in 2011 (Hurricane Irene and Tropical Storm
Lee). The county's first allocation was for $15,738,806 under Section
239 of the Department of Housing and Urban Development Appropriations
Act, 2012 (Pub. L. 112-55, approved November 18, 2011). The second
allocation to the county for $9,763,000 was made under Public Law 113-
2.
Initially, the county's first award allocated funds to acquisition/
buyouts, housing rehabilitation and mitigation, and infrastructure. The
county anticipated that buyouts would be primarily paid for using FEMA
funds under the FEMA's Hazard Mitigation Grant Program; CDBG-DR funds
would provide the local match (25 percent). However, following approval
of the county's CDBG-DR Action Plan, FEMA announced that requests for
acquisition far exceeded available funds. Thus, citizens and local
elected officials requested that CDBG-DR address this unmet need. In
response, the county participated in public meetings to gauge the scope
of unmet need. It was determined that approximately 100 residential
properties (across 14 jurisdictions) could not be funded by FEMA, but
those property owners wished to participate in a voluntary buyout
program. Additionally, while other citizens were no longer interested
in a buyout (they were either back in their homes or would be soon),
they were in need of assistance to elevate or otherwise mitigate their
disaster-impacted homes. As a result, the county amended its Action
Plan to pay 100 percent of the costs associated with acquiring
properties, and demolishing any structures, in order to assist
participating households' recovery in a safer area, and reduce future
flood hazards and prevent the loss of life. In counties such as Luzerne
with a history of flooding, the need for a buyout program is
particularly compelling. The county's buyout activities ($11,951,625
for residential properties and $1 million for commercial properties)
will use the majority of its first CDBG-DR allocation. The remainder of
funds are programmed to infrastructure ($1.2 million) and
administration and planning ($1.6 million). While the Action Plan
includes housing rehabilitation as an eligible activity, this will only
be funded if all buyout needs have been addressed and CDBG-DR funds are
available.
Of note, Luzerne County's residential buyout program is
prioritizing low- and moderate-income property owners. To date, of the
100 properties estimated to participate in the program, 68 property
owners have submitted pre-applications. An initial review shows that
only 30 of the 68 owners are low- and moderate-income households (44
percent). Approximately 44 percent of the households will be of low-
and moderate-income, and the county estimates that of the total amount
budgeted for residential buyouts, $3,940,715 will benefit low- and
moderate-income households. In addition, the county has plans to
address the needs of low- and moderate income households it moves out
of harm's way, through a down payment assistance to assist households
who require assistance in buying a replacement home. As applications
with the greatest need under the infrastructure program and the
commercial buyout programs are not in areas with significant low-and
moderate- income populations, these programs will not help the county
meet its overall benefit requirement. The county anticipates an overall
low- and moderate-income benefit of 27.82 percent for its first CDBG-DR
allocation.
In regards to the county's second award of CDBG-DR funds, the
primary activity to be funded is infrastructure ($8,786,700). The
remaining funds, $976,300, are for administration and planning. As the
census tracts and block groups most impacted by the 2011 disasters and
in need of assistance are not predominately low- and moderate-income,
and as infrastructure activities generally only meet the low- and
moderate-income national objective on an area basis, the county has
requested a reduction of the overall benefit requirement for this grant
as well. (The county is prioritizing infrastructure activities with
this grant due to the significant unmet needs demonstrated. Further,
market studies indicate little demand in the county for new housing
stock and the county's business assistance program received no
applications). Based on infrastructure applications received to date,
the county anticipates that three projects, totaling $3,268,000, will
benefit low- and moderate-income households on an area basis. Thus, the
overall low- and moderate-income benefit for the second grant award is
projected to be 37.19 percent.
To enable the county 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 27 percent for the county's
first allocation of CDBG-DR funds, and to not less than 37 percent for
the county's second allocation of CDBG-DR funds. Based on the county's
justification, the Secretary has found a compelling need for this
reduction due to the unique circumstances related to Luzerne County's
request. In particular, HUD notes that the county prioritized the needs
of low- and moderate-income populations with its first allocation; the
county 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 Luzerne's program for this purpose; and finally,
the waiver will enable the county to undertake critical infrastructure
activities necessary to its recovery. 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 county to
use funds appropriated by Public Law 112-55 for its residential buyout
program, to use funds appropriated by Public Law 113-2 for its
infrastructure program, as described by the county's Action Plans.
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.
[[Page 40137]]
Dated: July 7, 2014.
Clifford Taffet,
General Deputy Assistant Secretary for Community Planning and
Development.
[FR Doc. 2014-16316 Filed 7-10-14; 8:45 am]
BILLING CODE 4210-67-P