# Allocations for Community Development Block Grant Disaster Recovery and Implementation of the CDBG-DR Consolidated Waivers and Alternative Requirements Notice > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2023-00721 ## Record - **Collection:** Federal Register - **Document type:** Notice - **Published:** January 18, 2023 - **Citation:** 88 FR 3198 ## Text DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR-6368-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 2022, HUD allocated nearly $3 billion in Community Development Block Grant Disaster Recovery (CDBG-DR) funds appropriated by the Disaster Relief Supplemental Appropriations Act, 2022 for major disasters occurring in 2020 and 2021. HUD allocated an additional $1.447 billion in CDBG-DR funds appropriated by the Continuing Appropriations Act, 2023 for major disasters occurring in 2021. 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 some amendments to the Consolidated Notice that apply to CDBG-DR grants for disasters occurring in 2020 and 2021. 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: January 23, 2023. FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Director, Office of Block Grant Assistance, Department of Housing and Urban Development, 451 7th Street SW, Room 10166, 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. Kome 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. Process for Accessing Funds Under the 2023 Appropriations Act (Pub. L. 117-180) for Disasters Occurring in 2021 B. Financial Management and Grant Compliance Certification Requirements C. 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. Modifications of the February 2022 Notice and the May 2022 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 In March 2022, HUD allocated $2,213,595,000 in CDBG-DR funds from the Disaster Relief Supplemental Appropriations Act, 2022 (Pub. L. 117-43 known as the “2022 Appropriations Act”) for disasters occurring in 2021. The Continuing Appropriations Act, 2023 (Pub. L. 117-180) approved September 30, 2022 (the “2023 Appropriations Act”) 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. This notice announces allocations of $1,446,629,000 from the 2023 Appropriations Act for disasters occurring in 2021. When additional data becomes available for disasters occurring in 2022, the remaining $553,371,000 will be allocated for those disasters in a subsequent notice. The 2023 Appropriations Act requires 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 2023 Appropriations Act provides that grants shall be awarded directly to a state, local government, or Indian tribe at the discretion of the Secretary. Pursuant to the 2023 Appropriations Act, HUD has identified the MID areas based on the best available data for all eligible affected areas. An explanation of where to find HUD's allocation methodology is provided in Appendix A of this notice. To comply with requirements that all funds are expended in MID areas, Lake Charles and Baton Rouge, LA; Detroit and Dearborn, MI; Philadelphia, PA; Nashville-Davidson, TN; and Houston, Dallas, and Fort Worth, TX 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. In this notice, HUD has also provided tables that include the disaster numbers, grant amounts, and MID areas for CDBG-DR grants allocated from the 2022 Appropriations Act for disasters occurring in 2020, for reference. 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 2021: BILLING CODE 4210-67-P EN18JA23.002 EN18JA23.003 EN18JA23.004 Table 2—Most Impacted and Distressed Areas for Disasters Occuring in 2021 Grantee Updated minimum amount under all notices from Public Law 117-43 and 117-180 that must be expended in the HUD-identified “most impacted and distressed” areas in column 3 “Most Impacted and Distressed” areas State of California $19,526,400 Plumas County. State of Colorado 9,808,800 80027 (Boulder County). State of Kentucky 99,148,800 Graves and Hopkins Counties; 41339 (Breathitt County) and 42101 (Warren County). Lake Charles, LA 17,818,000 Lake Charles, LA. Baton Rouge, LA 7,686,000 Baton Rouge, LA. State of Louisiana 1,683,078,400 Ascension, Assumption, Calcasieu, East Baton Rouge, Jefferson, Lafourche, Livingston, Orleans, Plaquemines, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Mary, St. Tammany, Tangipahoa, Terrebonne, and Washington Parishes; 70764 & 70788 (Iberville Parish) and 70767 (West Baton Rouge Parish). Detroit, MI 95,228,000 Detroit, MI. Dearborn, MI 27,005,000 Dearborn, MI. State of Michigan 15,917,600 Wayne County. State of Mississippi 11,120,000 39563 (Jackson County). State of North Carolina 10,548,800 28716 (Haywood County). State of New Jersey 302,060,000 Bergen, Essex, Hudson, Middlesex, Passaic, Somerset, and Union Counties. New York City, NY 248,653,600 Bronx, Queens, Kings, and Richmond County. State of New York 54,582,400 Westchester County. Philadelphia, PA 163,204,000 Philadelphia, PA. State of Pennsylvania 30,625,600 Delaware and Montgomery Counties. Nashville-Davidson, TN 8,518,000 Nashville-Davidson, TN. State of Tennessee 33,604,000 Humphreys County. Houston, TX 50,095,000 Houston, TX. Dallas, TX 40,400,000 Dallas, TX. Fort Worth, TX 27,472,000 Fort Worth, TX. State of Texas 34,905,600 Dallas, Harris, and Tarrant Counties. State of Washington 24,658,400 98295 (Whatcom County). EN18JA23.005 BILLING CODE 4210-67-C Table 4 (for Reference)—Most Impacted and Distressed Areas for Disasters Occuring in 2020 Grantee Updated minimum amount under all notices from Public Law 117-43 that must be expended in the HUD-identified “most impacted and distressed” areas in column 3 Updated “Most Impacted and Distressed” areas State of Alabama $401,001,600 Baldwin, Mobile, and Escambia Counties; 36545 (Clarke County). State of California 184,962,400 Butte, Napa, Santa Cruz, Los Angeles, and Siskiyou Counties; 95448 (Sonoma County), 95688 (Solano County), 93602 (Fresno County), 93664 (Fresno County), 94558 (Napa County), 94574 (Napa County), 95404 (Sonoma County), 95409 (Sonoma County), and 96047 (Shasta County). State of Florida 149,906,400 Escambia and Santa Rosa Counties. State of Iowa 46,052,800 Linn County. State of Louisiana 840,213,600 Allen, Beauregard, Caddo, Calcasieu, Cameron, Jefferson Davis, Lafayette, Natchitoches, Ouachita, and Rapides Parishes; 70510 (Vermilion Parish); 70517 (St. Martin Parish), 70526 (Acadia Parish), 70570 (St. Landry Parish), 71446 (Vernon Parish), and 70578 (Acadia Parish). State of Michigan 47,918,400 Midland and Saginaw Counties; 48612 (Gladwin County). State of Mississippi 29,347,200 Harrison County; 39563 (Jackson County). State of Oregon 337,828,800 Clackamas, Douglas, Jackson, Lane, Lincoln, and Marion Counties; 97358 (Linn County). Commonwealth of Puerto Rico 147,700,800 Guanica, Ponce, and Yauco; 00624 (Penuelas Municipio), 00656 (Guayanilla Municipio), 00667 (Lajas Municipio), and 00680 (Mayaguez Municipio). State of Tennessee 34,192,000 37208 (Davidson County), 38501 (Putnam County), and 37421 (Hamilton County). II. Use of Funds Funds for disasters occurring in 2021 announced in this notice are subject to the requirements of this Allocation Announcement Notice and the Consolidated Notice, included as Appendix B, as amended. All grantees receiving an allocation for 2021 disasters announced in this notice received an allocation announced in the notice published May 24, 2022 (87 FR 31636) (“May 2022 Notice”) that governs their initial allocations. Allocations announced in this notice are subject to the requirements of this Allocation Announcement Notice, and the Consolidated Notice, included as Appendix B, as amended. The requirements of the May 2022 Notice, as amended, which governs the first allocation for 2021 disasters, are also included in this notice. Therefore, grantees receiving funds for 2021 disasters can refer to this notice as a statement of requirements that apply to CDBG-DR awards for 2021 disasters. Although HUD makes amendments to the Consolidated Notice in this Allocation Announcement Notice to reflect the terms of the 2023 Appropriations Act, the Consolidated Notice provided in Appendix B remains unchanged from the notice published as Appendix B in the May 2022 Notice. 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 2023 Appropriations Act, grantees shall not use CDBG-DR funds for activities reimbursable by or for which funds are made available by FEMA or the U.S. Army Corps 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. Process for Accessing Funds Under the 2023 Appropriations Act (Pub. L. 117-180) for Disasters Occurring in 2021 Grantees may access allocations announced in this notice in one of two ways: a grantee may submit a substantial amendment to the Public Action Plan submitted in response to the May 2022 Notice or may submit one Public Action Plan that includes any combination of allocations announced in this notice, the February 3, 2022 notice (87 FR 6364) (“February 2022 Notice”), and the May 2022 Notice. Instructions and deadlines for both options are covered in the following paragraph. This combined administrative approach should ease grantee burden. If a grantee needs additional time to submit either a substantial amendment to the Public Action Plan or a single Public Action Plan, the grantee can submit formal correspondence to HUD requesting an extension. Regardless of which option the grantee chooses, since the funds are allocated under different appropriations acts or for different disasters, HUD will make separate grants, and each grant will have separate financial controls. II.A.1. Option 1—Single Public Action Plan. A grantee pursuing this option must include its allocation described in Table I together in a single Public Action Plan with any funds allocated under the 2022 Appropriations Act (under the May 2022 Notice or the February 2022 Notice) that have not been submitted to HUD in a Public Action Plan as of the applicability date of this notice (except those funds that will be included in an action plan for program administrative costs as described in section III.A.1.). The grantee must inform its HUD grant manager or CPD Representative within 30 days of the applicability date of this notice if it plans to exercise this option and submit one action plan that includes multiple allocations. Grantees pursuing this option must follow the requirements in section III.C.1 of the Consolidated Notice for that submission, which requires grantees to use the Public Action Plan in HUD's Disaster Recovery Grant Reporting (DRGR) system to submit their action plan and submit within 120 days of the applicability date of this notice. However, submission deadlines for this option are based on the applicability date of this notice. II.A.2. Option 2—Substantial Amendment to an existing Public Action Plan. A grantee pursuing this option must submit a substantial amendment to its Public Action Plan describing the use of funds allocated under the 2022 Appropriations Act to include the allocations announced in this notice, the substantial amendment must be submitted no later than 120 days after the initial action plan is approved, in whole or in part, by HUD, or not later than 120 days after the applicability date of this notice, whichever is later. The substantial amendment must include the additional allocation of funds and address the requirements of this notice. II.B. Financial Management and Grant Compliance Certification Requirements Paragraph III.A.1.b of the Consolidated Notice outlines when a grantee may or may not rely on its prior submissions to meet the Financial Management and Grant Compliance Certification Requirements in the Consolidated Notice. The Consolidated Notice allows a grantee to rely on prior submissions “unless 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.” Additionally, paragraph III.A.2.b of the Consolidated Notice provides the same criteria for when a grantee may or may not rely on its previously submitted implementation plan. The Consolidated Notice allows a grantee to rely on a previously submitted implementation plan “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.” No grantee receiving an allocation announcement under both this notice and the May 2022 Notice meets the three year or grant threshold criteria noted above. Therefore, the grantees covered by this notice may rely on their prior submissions if previously provided in response to the Financial Management and Grant Compliance Certification Requirements and the implementation plan in the Consolidated Notice. HUD reminds grantees that it will continue to monitor all of the grantee's submissions and updates made to policies and procedures and its capacity assessment during the normal course of business. The grantee must notify HUD of any substantial changes made to these submissions. In accordance with the 2023 Appropriations Act, grantees must spend an amount that is equal to 15 percent of their unmet need allocation, as outlined in Table 1, for mitigation activities as described in section IV.A.2. of this notice. Grantees must also incorporate mitigation measures into their recovery activities as required under section II.A.2 in the Consolidated Notice. Grantees must conduct or update the assessment of community impacts and unmet needs to inform the plan or substantial amendment and guide the development and prioritization of planned recovery activities, pursuant to section III.C.1.a of the Consolidated Notice. Additionally, with regard to the funds provided for mitigation activities, grantees must also prepare or update a mitigation needs assessment to inform their mitigation activities, as described in section IV.A.2.a of this notice. II.C. 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 2021 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 2021 disaster(s) 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 2023 Appropriations Act allows 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 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 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. 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. If a grantee receiving funds under this notice has previously received approval of the action plan and DRGR action plan for program administrative costs under the 2022 Appropriations Act (as permitted by the February 2022 Notice or the May 2022 Notice), the grantee may submit an amendment to HUD of its action plan for program administrative costs to budget funds for additional administrative costs. HUD will make a separate grant of funds for administrative costs associated with grant funds under the 2023 Appropriations Act, since each grant is subject to a separate five percent cap on the total amount of grant funds that can be used for administrative costs. Grantees may do this by using the template provided on HUD's website at: https://www.hud.gov/program_offices/comm_planning/cdbg-dr/grantees. After HUD's approval of the amended action plan for program administrative costs and issuance of a grant agreement, the grantee will amend the previously approved DRGR action plan for program administrative costs to access or draw funds. 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 2023 Appropriations Act authorizes 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 2023 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 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. Waivers and alternative requirements described below apply to all grantees under this notice. Under the requirements of the Appropriations Act, 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). HUD published a Federal Register notice on June 20, 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”), which revised the DOB requirements that apply to CDBG-DR grants for disasters declared between January 1, 2016 and December 31, 2021. To comply with the Stafford Act and the Appropriations Act, grantees must prevent the duplication of benefits and must have adequate policies and procedures for this purpose. Accordingly, grantees that received funds for disasters occurring in 2021 must follow all requirements in the 2019 DOB Notice and the requirements located in section IV.A of the Consolidated Notice. IV.A.2. CDBG-DR mitigation set-aside. The 2023 Appropriations Act requires 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 met the expenditure 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 2023 Appropriations Act 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 2023 Appropriations Act 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 2023 Appropriations Act or in any prior or future appropriation acts. Based on this authority, the Secretary authorizes grantees receiving a CDBG-DR grant under the 2023 Appropriations Act 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. 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 2021 and the MID areas for the 2021 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 2021 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 2021 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 2023 Appropriations Act provides that funds under that Act or the 2022 Appropriations Act “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 2023 Appropriations Act or the 2022 Appropriations Act, and HUD is adding a modified alternative requirement that applies in lieu of paragraph III.G.3. For funds subject to the February 2022 Notice and the May 2022 Notice, HUD made this change through an online waiver, which can be viewed at https://www.hud.gov/sites/dfiles/CPD/documents/CDBG-DR/CDBG-DR-Private-Utility-Req-for-grants-Public-Law-117-43_final.pdf. 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 2023 Appropriations Act 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 2021 disasters under the 2023 Appropriations Act, 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. Modifications of the February 2022 Notice and the May 2022 Notice IV.B.1. Reimbursement Requirements for Grants Under the 2023 Appropriations Act and Conforming Modifications of Requirements for the 2022 Appropriations Act. This section sets out requirements for 2021 disasters under the 2023 Appropriations Act and also modifies requirements for 2020 and 2021 disasters imposed by the February 2022 Notice and the May 2022 Notice. 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 2021 in the May 2022 Notice, based on the requirements of the 2022 Appropriations Act. Congress then appropriated additional funds for 2021 disasters in the 2023 Appropriations Act and this notice announces an additional $1,446,629,000 for all of the remaining unmet needs for those qualifying 2021 disasters. Similarly, some 2020 disasters received two allocations across two Allocation Announcement Notices. In these circumstances, grantees may find it difficult to track expenses incurred within one year after the applicability date of the grantee's Allocation Announcement Notice, given that funds for disasters occurring in 2020 and 2021 are announced in different notices. To avoid confusion and to apply a uniform time frame to reimbursement of all pre-application costs for 2020 and 2021 disasters, the requirement in III.F.5.(1) in the February 2022 Notice, the May 2022 Notice, and this 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 of the disaster, whichever is later)” shall not apply, and instead, grantees shall comply with the following alternative: The person or private entity incurred the expenses within one year after the applicability date of the notice (either the February 2022 Notice or the May 2022 Notice) that announced the initial allocation of CDBG-DR funds (or within one year after the date of the disaster, whichever is later). V. Duration of Funding The 2023 Appropriations Act makes 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 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 2021 This notice announces the balance of funds calculated for qualifying 2021 disasters. Appendix A of the May 2022 Notice describes the methodology for calculating allocations that HUD made for unmet recovery and mitigation needs for 2021 disasters. HUD used the same allocation methodology for 2021 disasters receiving funds under the 2023 Appropriations Act and under the 2022 Appropriations Act. At the time of the allocations under the 2022 Appropriations Act, HUD had calculated total unmet recovery and mitigation needs for 2021 disasters as $3,660,224,000. However, only $2,213,595,000 was available under the 2022 Appropriations Act for 2021 disasters. This new allocation under the 2023 Appropriations Act fills the gap of $1,446,629,000 (that is the calculated unmet recovery and mitigation needs of $3,660,224,000 less the $2,213,595,000 previously allocated). Of the $2 billion appropriated under the 2023 Appropriations Act, a future Federal Register notice will address the allocation of the remaining $553,371,000 for disasters occurring in 2022. 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 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 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, available at https://www.hud.gov/sites/dfiles/CPD/documents/CPD-Green-Building-Retrofit-Checklist.pdf. 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 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 (“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 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 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 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: 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 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 e [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2023-00721. Public record. Not legal advice.