[Federal Register Volume 67, Number 99 (Wednesday, May 22, 2002)]
[Notices]
[Pages 36017-36020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-12715]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4732-N-04]
Statutory and Regulatory Waivers Granted to New York State for
Recovery from the September 11, 2001 Terrorist Attacks
AGENCY: Office of Community Planning and Development, HUD.
ACTION: Notice of waivers granted.
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SUMMARY: This notice advises the public of waivers of regulations and
statutory provisions granted to the State of New York for the purpose
of assisting in the recovery from the September 11, 2001, terrorist
attacks on New York City. As described in the Supplementary Information
section of this notice, HUD is authorized by statute to waive statutory
and regulatory requirements and specify alternative requirements for
this purpose. This notice lists the provisions being waived and
alternative requirements specified.
Dates: Effective Date: May 28, 2002.
FOR FURTHER INFORMATION CONTACT: Jan C. Opper, Senior Program Officer,
Office of Block Grant Assistance, Department of Housing and Urban
Development, Room 7286, 451 Seventh Street, SW., Washington, DC 20410,
telephone number (202) 708-3587. Persons with hearing or speech
impairments may access this number via TTY by calling the Federal
Information Relay Service at (800) 877-8339. FAX inquiries may be sent
to Mr. Opper at (202) 401-2044. (Except for the ``800'' number, these
telephone numbers are not toll-free.)
SUPPLEMENTARY INFORMATION:
Authority to Grant Waivers
Chapter 13 of division B of the Department of Defense and Emergency
Supplemental Appropriations for Recovery from and Response to Terrorist
Attacks on the United States Act, 2002 (Publ. L. 107-117, approved
January 10, 2002) appropriates $2.0 billion in Community Development
Block Grant funds and makes applicable the first six provisos of
section 434 of the Departments of Veterans Affairs and Housing and
Urban Development, and Independent Agencies Appropriations Act, 2002
(Publ. L. 107-73, approved November 26, 2001). Section 434 provides for
the use of CDBG funds made available from the Emergency Response Fund
by the fifth proviso under the 2001 Emergency Supplemental
Appropriations Act for Recovery from and Response to Terrorist Attacks
on the United States (Publ. L. 107-38, approved September 18, 2001) to
New York State for properties and businesses damaged by, and economic
revitalization related to, the September 11, 2001 terrorist attacks on
New York City. Prior to the $2.0 billion appropriation, $700 million
was made available from the Emergency Response Fund. The third proviso
of section 434 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 use by the recipient of these funds,
except for requirements related to fair housing, nondiscrimination,
labor standards, and the environment.
The Department finds that the following waivers and alternative
requirements are necessary to facilitate the use of both the $700
million awarded to New York State's Empire State Development
Corporation and the $2.0 billion awarded to New York State's Lower
Manhattan Development Corporation. This notice of waivers granted and
alternative requirements supersede those published on January 28, 2002,
at 67 FR 4164, and the correction published on February 7, 2002, at 67
FR 5845. (This notice does not supersede waivers and alternative
requirements published on March 18, 2002, at 67 FR 12042, with respect
to payment of compensation for economic loss.) The Department also
finds that such uses of funds, as described below, are not inconsistent
with the overall purpose of the Housing and Community Development Act
of 1974, as amended, or the Cranston-Gonzalez National Affordable
Housing Act, as amended.
Except as noted by published waivers and alternative requirements,
statutory and regulatory provisions governing the Community Development
Block Grant program for states, including those at 24 CFR subpart I,
shall apply to the use of these funds.
Description and Justification of Requirements Waived or Alternative
Requirements Specified and Note of Applicability
1. Waive the requirement that 70% of the CDBG funds received by the
state over a one-to-three year period be for activities that benefit
persons of low and moderate income. 42 U.S.C. 5301(c) and 5304(b)(3),
and 24 CFR 570.484 and 24 CFR 91.325(b)(4)(ii) with respect to the 70%
overall benefit requirement are waived with respect to CDBG funds
appropriated under the Emergency Response Fund. HUD expects the grantee
will make a good faith effort to maximize benefit to low- and moderate-
income persons, and maintain documentation of such efforts.
2. Streamline citizen participation requirements. Provisions of 42
U.S.C. 5304(a)(2) and (3), 42 U.S.C. 12707, 24 CFR 540.486, and 24 CFR
91.115(b) with respect to citizen participation requirements are waived
and replaced by the requirements below. The streamlined requirements do
not mandate public hearings, but do provide for a reasonable
opportunity for citizen comment and for ongoing citizen access to
information about the use of grant funds. The streamlined requirements
for this grant are:
a. Before the State adopts the action plan (or a part of an action
plan) for this grant or any substantial amendment to this grant, the
State will publish the proposed plan or amendment (including the
information required in waiver eight (8)). Publication will be carried
out in a manner that affords citizens, New York
[[Page 36018]]
City and other interested parties a reasonable opportunity to examine
the plan or amendment's contents and to submit comments. The State's
plans to minimize displacement of persons or entities and to assist any
persons or entities displaced must be published with the action plan.
Subsequent to publication, the State must provide a reasonable period
to receive comments on the plan or substantial amendment.
b. In the action plan, the State will specify the criteria for
determining what changes in the State's activities constitute a
substantial amendment to the plan. At a minimum, adding or deleting an
activity or changing the planned beneficiaries of an activity will
constitute a substantial change.
c. The State must consider all comments received on the action plan
or any substantial amendment and submit to HUD a summary of these
comments and the State's response with the action plan or substantial
amendment.
d. The State must make the action plan, any substantial amendments,
and all performance reports available to the public, on request. Also
on request, the State must make these documents available in a form
accessible to persons with disabilities. During the term of this grant,
the State will provide citizens, New York City, and other interested
parties reasonable and timely access to information and records
relating to the action plan and the State's use of this grant.
e. The State will provide a timely written response to every
citizen complaint. Such response will be provided within 15 working
days of the complaint, if practicable.
3. Modify requirement for consultation with local governments.
Currently, the statute and regulations require consultation with
affected units of local government in the non-entitlement area of the
State regarding the State's proposed method of distribution. HUD is
waiving 42 U.S.C. 5306(d)(2)(C)(iv), 24 CFR 91.325(b), and 24 CFR
91.110, with the alternative requirement that the State consult with
New York City in determining the use of funds.
4. Remove requirements for consistency with the consolidated plan.
Requirements at 42 U.S.C. 12706 and 24 CFR 91.325(a)(6), that require
that housing activities undertaken with CDBG, HOME, ESG, and HOPWA
funds be consistent with the strategic plan, are waived. Also, 24 CFR
570.903, which requires HUD to annually review grantee performance
under the consistency criteria, is also waived.
5. Clarifying note on the process for environmental release of
funds when a State carries out activities directly. Usually, a State
distributes CDBG funds to units of local government and takes on HUD's
role in receiving environmental certifications from the grant
recipients and approving releases of funds. For this grant, waiver
seven (7) below allows New York State to also carry out activities
directly instead of distributing them to other governments. According
to the environmental regulations at 24 CFR 58.4, when a State carries
out activities directly, the State must submit the certification and
request for request of funds to HUD for approval.
6. Allow reimbursement for pre-agreement costs. The provisions of
24 CFR 570.489(b) are applied to permit New York State or New York City
to reimburse itself for otherwise allowable costs incurred on or after
September 11, 2001.
7. Distribution and use of funds to and in a metropolitan city.
Provisions of 42 U.S.C. 5306 currently require a State to distribute
CDBG funds to units of general local government in nonmetropolitan
areas for use in nonmetropolitan areas rather than carrying activities
out directly. These provisions are waived with alternative requirements
with respect to CDBG funds appropriated under the Emergency Response
Fund to permit the State of New York to carry out activities directly
in New York City and to permit the State to distribute these funds to
New York City. Additionally, because New York State may carry out
activities directly, HUD is applying the regulations at 24 CFR
570.480(c) with respect to the basis for HUD determining the State has
failed to carry out its certifications so that such basis shall be that
the State has failed to carry out its certifications in compliance with
applicable program requirements. Also, 24 CFR 570.494 regarding timely
distribution of funds is waived. However, HUD expects New York State to
expeditiously obligate and expend all funds, including any recaptured
funds or program income, in carrying out activities in a timely manner.
8. Action Plan for Disaster Recovery. Current State CDBG
requirements for an action plan envision a State using a method for
distributing substantially all CDBG funds received to other governments
and not carrying out activities directly. This waiver allows the State
to submit an action plan that may include activities directly
undertaken by the State. With respect to CDBG funds appropriated under
the Emergency Response Fund, the last sentence of 42 U.S.C. 5304
(a)(1), and provisions of 42 U.S.C.12705, 24 CFR 570.485, 24 CFR 91.320
and 91.325(a)(5) are waived with alternative requirements that the
State submit an action plan for disaster recovery that includes the
following:
a. Information specified at 24 CFR 91.220(a), (b), (d) and (g).
b. A description of the activities the state will assist with grant
funds. This description of activities shall estimate the number and
type of beneficiaries of the proposed activities, proposed
accomplishments, and a target date for completion of each activity.
This information must be submitted in a form prescribed by HUD.
9. Change the limitations on administrative and planning expenses.
The current law and regulations require that 50 percent of any
administrative expenses, in excess of $100,000, that do not exceed 2
percent of the grant be paid from the grant. Provisions at 42 U.S.C.
5306(d)(3)(A), 24 CFR 570.489(a)(1)(i) and 24 CFR 570.489(a)(3) are
waived to allow use of CDBG disaster grant funds for planning and
administrative expenses that do not exceed 10 percent of the grant
amount plus program income with respect to the $700 million grant and 5
percent of the grant amount plus program income with respect to the
$2.0 billion grant.
10. Administrative costs and reimbursement. To facilitate the use
of funds for administrative costs of the Lower Manhattan Development
Corporation incurred in relation to revitalization and redevelopment of
lower Manhattan in New York City, New York in response to the September
11, 2001 terrorist attacks on New York City including such costs not
directly related to this CDBG disaster assistance but related to
revitalization of lower Manhattan, section 105(a)(13) of the Housing
and Community Development Act of 1974, as amended, 42 U.S.C.
5305(a)(13) is modified solely to the extent necessary for this use of
administrative costs. Temporary use of funds under HUD grant number B-
01-DW-36-0001 for payment of administrative costs incurred prior to
award of HUD grant number B-02-DW-36-0001, and reimbursement of such
costs paid from HUD grant number B-01-DW-36-0001 with funds awarded
under HUD grant number B-02-DW-36-0001 is authorized.
11. Permitting a further range of eligible economic revitalization
activities. The limitation at 42 U.S.C. 5305(a) on eligible activities
in the CDBG program to the list of activities in section 105(a) is
waived, in recognition of the requirements of section 434 of
[[Page 36019]]
Public Law 107-73 that funds be used, in part, for economic
revitalization related to the September 11, 2001 terrorist attacks on
New York City for the affected area. This change also establishes an
alternative requirement by adding the following to the list of eligible
activities:
a. Provision of assistance directly to individuals and entities for
purposes of economic revitalization of lower Manhattan by retaining and
attracting residents.
b. Provision of assistance to nonprofit organizations for purposes
of economic revitalization of lower Manhattan by creating and retaining
jobs.
12. Public benefit standards for economic development activities.
Currently, grantees are limited in the amount of CDBG assistance per
job retained or created, or amount of CDBG assistance per low- and
moderate-income person to which goods or services are provided by the
activity, that will be considered to meet public benefit standards.
Public benefit standards at 42 U.S.C. 5305(e)(3) and 24 CFR
570.482(f)(1), (2), (3), (4)(i), (5), and (6) are waived, except that
the grantee shall report and maintain documentation on the creation and
retention of (a) total jobs, (b) number of jobs within certain salary
ranges, and (c) types of jobs. Paragraph (g) of 24 CFR 570.482 is also
waived to the extent its provisions are related to public benefit.
13. Underwriting Requirements for Certain Economic Development
Activities. To facilitate the use of funds for economic development
activities identified in an action plan submitted by the Empire State
Development Corporation or the Lower Manhattan Development Corporation
as the ``WTC Job Creation and Retention Program,'' ``Small Firm
Attraction and Retention Grants,'' and the ``WTC Business Recovery Loan
Fund'' the project cost and financial requirements at section 105(e)(2)
of the Housing and Community Development Act of 1974, as amended, (42
U.S.C. 5305(e)(2)) for eligible activities under section 105(a)(14),
(15), and (17) in the CDBG program are waived, and the following
alternative requirements are established:
WTC Job Creation and Retention Program
For the WTC Job Creation and Retention Program (JCRP), in
determining the amount of assistance, Empire State Development
Corporation must consider:
a. Other existing incentive transactions and offers received by the
business;
b. Alternative locations the business may be considering;
c. Analysis of the risk that:
z The business if located South of Canal Street at the time of the
disaster will not remain within lower Manhattan;
z The business if located South of Canal Street at the time of the
disaster and that has temporarily relocated elsewhere because of the
disaster would not return;
z The New York City business that suffered significant economic
dislocation because substantial numbers of its major customers were
businesses south of Canal Street would not remain in New York City; or
z The business seeking to locate new operations and create new jobs
in lower Manhattan would not otherwise locate there;
d. Employment and economic benefit/cost analysis; and
e. The fiscal impact on State and city revenues.
Small Firm Attraction and Retention Grants
For the Small Firm Attraction and Retention Grants (SFARG), in
determining eligibility and funding level of firms, Empire State
Development Corporation's decision shall be based on the location,
minimum lease terms, and assistance per full-time equivalent employee,
as stated in the action plan for the use of funds under the SFARG
program. (A description is available on the web at www.nylovesbiz.com/wtc/sfarg-program.htm)
WTC Business Recovery Loan Fund
For the WTC Business Recovery Loan Fund (BRLF), in which financing
will be provided by experienced institutional, quasi-public, and
nonprofit lenders, the amount, terms, and conditions for CDBG and CDBG-
backed loans shall be established through standard, generally accepted
underwriting analyses. Such underwriting analysis shall, among other
factors, include reasonableness of project costs, and project financial
feasibility with recognition of the potential for enhanced levels of
risk.
13. Duplication of benefits. The CDBG funds appropriated under the
Emergency Response Fund may not be used to provide funds for the same
specific uses as disaster loans made available by the Small Business
Administration (SBA), in compliance with 15 U.S.C. 636(b)(1)(A). If the
needs for assistance are more than the SBA disaster loan amount, CDBG
disaster assistance may be used to fund such additional need. New York
State should encourage the use of SBA physical damage and economic
injury disaster loans; they offer low interest rates and favorable
terms. Additionally, CDBG disaster assistance may not be used for the
same specific uses as disaster assistance made available by the Federal
Emergency Management Agency, e.g., for public works and facilities, in
compliance with duplication of benefits prohibitions of 42 U.S.C. 5155
(section 312 of the Robert T. Stafford Disaster Assistance and
Emergency Relief Act, as amended).
14. Use of subrecipients. The State CDBG program rule does not make
specific provision for the treatment of subrecipients. CDBG entitlement
communities frequently use subrecipients and the rule for that program
specifically describes the requirements for subrecipient agreements and
financial requirements. The waiver allowing the state to carry out
activities directly creates a situation in which the state is more
likely to use Subrecipients to carry out activities in a manner similar
to entitlement communities. Therefore the following alternative
requirement applies:
a. 24 CFR 570.503, except that specific references to 24 CFR 85
need not be included in subrecipient agreements.
b. 570.502(b).
15. Recordkeeping. Recognizing that the State will carry out
activities directly, 24 CFR 570.490(b) is waived and this provision
shall apply:
State records. The State shall establish and maintain such
records as may be necessary to facilitate review and audit by HUD of
the State's administration of CDBG funds under 570.493.
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:
enable HUD to make the applicable determinations described at
570.493; make compliance determinations for activities
carried out directly by the state; and show how activities funded
are consistent with the descriptions of activities proposed for
funding in the action plan. 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.''
24 CFR 570.490(c) and (d) shall also apply.
16. Performance reports. Generally, grantees submit an annual
performance report ninety days after the jurisdiction's program year.
The conferees for Public Law 107-73 requested that HUD submit reports
to the Committees on Appropriations
[[Page 36020]]
quarterly on the obligation and expenditure of the CDBG funds
appropriated under the Emergency Response Fund. Therefore, 42 U.S.C.
12708(a)(1) and 24 CFR 91.520 are waived with respect to these funds,
and HUD is establishing an alternative requirement that the State must
submit a quarterly report, as HUD prescribes, no later than 30 days
following each calendar quarter, beginning after the first full
calendar quarter after grant award and continuing until all funds have
been expended and that expenditure reported. Each quarterly report will
include information on the project name, activity, location, national
objective, funds budgeted and expended, Federal source and funds (other
than CDBG disaster funds), numbers and North American Industry
Classification System (NAICS) codes of businesses assisted by activity,
total number of jobs created and retained by activity, numbers of such
jobs by salary ranges (to be defined by HUD), numbers of properties and
housing units assisted; for activities benefiting low- and moderate-
income persons, the number of jobs taken by persons of low- and
moderate-income, and numbers of low- and moderate-income households
benefiting. Quarterly reports must be submitted using HUD's web-based
Disaster Recovery Grant Reporting system. Annually (i.e., with every
fourth submission), the report shall include a financial reconciliation
of funds budgeted and expended, and calculation of the status of
administrative costs.
17. Allow flexibility in use of program income during grant and
provide for disposition at grant closeout. A combination of CDBG
provisions limits the flexibility available to the State and city for
the use of program income. Generally, program income earned on disaster
grants has been program income to the regular CDBG program of the
applicable entitlement or State and has lost its disaster grant
identity, thus losing use of the waivers and streamlined alternative
requirements. Also, the State CDBG program rule and law are designed
for a program in which the State distributes all funds rather than
carrying out activities directly and the law specifically provides for
local governments receiving grants to retain program income if they use
it for additional eligible activities under the regular CDBG program.
This waiver and the alternate requirements allow program income to the
disaster grant to be governed by the original grant's requirements and
waivers and to remain the State's until grant closeout, at which point
any program income on hand or received subsequently will become program
income to New York City's regular entitlement CDBG program. Therefore,
42 U.S.C. 5304(j), 24 CFR 570.481(a) to the extent it relates to
defining program income, and 24 CFR 570.489(e) are waived and the
following alternative requirements apply:
a. Program income is defined at 24 CFR 570.500(a);
b. 24 CFR 570.504(a) and (c);
c. Program income received before grant closeout may be retained by
the recipient if the income is treated as additional funds under this
grant subject to all of this grant's applicable requirements;
d. Substantially all program income other than any held in
revolving funds shall be disbursed for eligible activities before
additional cash withdrawals are made from the U.S. Treasury. Program
income in the form of repayments to, or interest earned on, a revolving
fund as defined in 24 CFR 570.500(b) shall be substantially disbursed
from the fund before additional cash withdrawals are made from the U.S.
Treasury for the same activity; and
e. Program income on hand at the time of grant closeout and program
income received after grant closeout shall be program income to the
ongoing CDBG entitlement program of New York City.
18. Modification of the anti-pirating clause to permit assistance
to help a business return. 42 U.S.C. 5305(h) is hereby waived only to
allow the State to provide assistance under this grant to any business
that was operating in the covered disaster area before September 11,
2001, and has since moved in whole or in part from the affected area to
continue business.
19. Change of use of real property. This section is written in the
context of the regular State CDBG program in which the State
distributes funds to units of general local governments and does not
carry out activities directly. This change grants a waiver allowing the
State to carry out activities directly. For purposes of this program,
in 24 CFR 570.489(j), (j)(1), and the last sentence of (j)(2), ``unit
of general local government'' shall be read as ``unit of general local
government or State.''
20. Responsibility for State review and handling of noncompliance.
This change conforms the rule with the waiver allowing the State to
carry out activities directly. 24 CFR 570.492 is waived and the
following alternative requirement applies:
The State shall make reviews and audits including on-site
reviews of any subrecipients, designated public agencies, and units
of general local government as may be necessary or appropriate to
meet the requirements of section 104(e)(2) of the Act.
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 designated public agencies or units of general
local governments and for its subrecipients.
Section 434 of Public Law 107-73 requires HUD to publish these
waivers in the Federal Register no later than five days before their
effective date. The effective date of these waivers is May 28, 2002.
Dated: May 14, 2002.
Roy A. Bernardi,
Assistant Secretary for Community Planning and Development.
[FR Doc. 02-12715 Filed 5-21-02; 8:45 am]
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