# Allocations for Community Development Block Grant Disaster Recovery and Implementation of the CDBG-DR Consolidated Waivers and Alternative Requirements Notice

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2023-25875

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** November 27, 2023
- **Citation:** 88 FR 82982

## Text

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6428-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, U.S. Department of Housing and Urban Development (HUD).

ACTION:

Notice.

SUMMARY:

This Allocation Announcement Notice allocates $142 million of CDBG-DR funds appropriated by the Disaster Relief Supplemental Appropriations Act, 2023 for major disasters occurring in 2022 and 2023. This notice identifies grant requirements for these funds, including requirements in HUD's CDBG-DR Consolidated Notice (“Consolidated Notice”) found in appendix B, and a limited number of amendments to the Consolidated Notice that apply to CDBG-DR grants for disasters occurring in 2022 and January 2023. 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:
December 4, 2023.

FOR FURTHER INFORMATION CONTACT:

Tennille Smith Parker, Director, Office of Disaster Recovery, Department of Housing and Urban Development, 451 7th Street SW, Room 7282, Washington, DC 20410, telephone number 202-708-3587 (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit:
https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.
Facsimile inquiries may be sent to Ms. Parker at 202-708-0033 (this is not a toll-free number). Email inquiries may be sent to
disaster_recovery@hud.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Allocations

II. Use of Funds

A. Allocations of CDBG-DR Funds for Smaller Grants

III. Overview of Grant Process

A. Requirements Related to Administrative Funds

IV. Applicable Rules, Statutes, Waivers, and Alternative Requirements

A. Grant Administration

B. Clarifications to the Consolidated Notice

V. Duration of Funding

VI. Assistance Listing Numbers (Formerly Known as the CFDA Number)

VII. Finding of No Significant Impact

Appendix A: Allocation Methodology

Appendix B: CDBG-DR Consolidated Notice

I. Allocations

The Disaster Relief Supplemental Appropriations Act, 2023 (Pub. L. 117-328, Division N, Title X) approved December 29, 2022, makes available $3,000,000,000 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 that occurred in 2022 or later until such funds are fully allocated. The
Federal Register
notice published on May 18, 2023 (88 FR 32046) announced $2,837,849,000 from Public Law 117-328 to address recovery needs and mitigation activities for major disasters that occurred in 2022. Based on the unmet needs allocation methodology outlined in appendix A, this notice announces the remaining allocations of $142,151,000 from Public Law 117-328 (the “Appropriations Act”) for disasters occurring in 2022 and January 2023. The 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 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 Appropriations Act, HUD has identified MID areas based on the best available data for all eligible affected areas. A detailed explanation of HUD's allocation methodology is provided in appendix A of this notice. All of the grantees within this notice must use at least 80 percent of their allocations to address unmet disaster needs or mitigation activities in the HUD-identified MID areas, as identified in the last column of table 2. These grantees may use the remaining 20 percent of their allocation to address unmet disaster needs or mitigation activities in those areas that the grantee determines are “
most
impacted and distressed” within an area that received a Presidential major disaster declaration identified by the Federal Emergency Management Agency (FEMA) disaster numbers listed in column two of table 1. However, these grantees are not precluded from spending 100 percent of their allocation in the HUD-identified MID areas if they choose to do so. Detailed requirements related to MID areas are provided in section II.A.3. of the Consolidated Notice.

Based on a review of the impacts from the eligible disasters, and estimates of unmet need, HUD made the following allocations for disasters occurring in 2022 and January 2023:

1
Total Unmet Needs for DR 4652 were calculated at $16,961,434 before adjusting for the special Congressional appropriations for the Hermits Creek/Calf Canyon Fire (the “Hermit's Peak/Calf Canyon Fire Assistance Act,” Public Law 117-180, 136 Stat. 2114 (2022)). As such, HUD has calculated the mitigation for this disaster as 15 percent of those total unmet needs. The allocation for unmet needs is reduced to $1,587,000 to reflect that the special appropriation is anticipated to address many of the calculated unmet needs.

Table 1—Allocations for Unmet Needs and Mitigation Activities Under Public Law 117-328 for Disasters Occurring in 2022 and 2023

Year

FEMA
disaster No.

State
Grantee
Allocation for unmet needs from Public Law 117-328
CDBG-DR mitigation set-aside amounts from Public Law 117-328

Total allocated under this
notice from Public Law 117-328

2022
4652
New Mexico
State of New Mexico

1
$1,587,000

$2,544,000
$4,131,000

2023
4684
Alabama
State of Alabama
9,046,000
1,357,000
10,403,000

2023
4683
California
State of California
100,019,000
15,003,000
115,022,000

2023
4685
Georgia
State of Georgia
10,952,000
1,643,000
12,595,000

Totals

120,017,000
18,003,000
142,151,000

Table 2—Most Impacted and Distressed Areas for Disasters Occurring in 2022 and 2023

Grantee

Minimum amount from Public Law 117-328 that must be expended in the HUD-
identified “most
impacted and distressed”
areas in column 3

“Most impacted and distressed” areas

State of New Mexico
$3,304,800
87742 and 87745 (San Miguel County).

State of Alabama
8,322,400
36703 (Dallas County).

State of California
92,017,600
Merced, Santa Cruz, San Luis Obispo Counties; 95220 (San Joaquin County), 93001 (Ventura County).

State of Georgia
10,076,000
30223 (Spalding County).

II. Use of Funds

This Allocation Announcement Notice outlines requirements that apply to grantees receiving funds under this notice. Funds for disasters occurring in 2022 and 2023 announced in this notice are subject to the requirements of this Allocation Announcement Notice and the Consolidated Notice, included as appendix B, as amended. HUD makes amendments to the Consolidated Notice in this Allocation Announcement Notice to reflect the terms of the Appropriations Act. However, the Consolidated Notice in appendix B is the same Consolidated Notice included as appendix B in previous Allocation Announcements Notices published in the
Federal Register
(87 FR 6364, 87 FR 31636, 88 FR 3198, and 88 FR 32046). Sections III.A.1, III.A.1.a, and III.A.1.b of this Allocation Announcement Notice include instructions for a grantee submitting an early action plan for program administrative costs and will replace the alternative requirement in the Consolidated Notice at III.C.1 for purposes of accessing funds for program administrative costs prior to the Secretary's certification.

To comply with the statutory requirement in the Appropriations 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. USACE of Engineers (USACE). Grantees must verify whether FEMA or USACE funds are available prior to awarding CDBG-DR funds to specific activities or beneficiaries. Grantees may use CDBG-DR funds as the non-Federal match as described in section II.C.3 of the Consolidated Notice.

II.A. Allocations of CDBG-DR Funds for Smaller Grants

Paragraph III.C.1.b of the Consolidated Notice requires that CDBG-DR action plans “demonstrate a reasonably proportionate allocation of resources relative to areas and categories (
i.e.,
housing, economic revitalization, and infrastructure) of greatest needs identified in the grantee's impact and unmet needs assessment or provide an acceptable justification for a disproportional allocation.” Additionally, paragraph III.C.1.g of the Consolidated Notice requires grantees to “provide a budget for the full amount of the allocation that is reasonably proportionate to its unmet needs (or provide an acceptable justification for disproportional allocation) and is consistent with the requirements to integrate hazard mitigation measures into all its programs and projects.”

HUD recognizes that grantees receiving a relatively small allocation of funds for 2022 and 2023 disasters in this notice may most effectively advance recovery by more narrowly targeting these limited recovery and mitigation resources. Accordingly, for grantees receiving an allocation of less than $20 million for 2022 and 2023 disaster(s) announced in this notice, HUD will consider the small size of the grant and HUD's allocation methodology as acceptable justification for a grantee to propose a disproportional allocation when the grantee is allocating funds to address unmet affordable rental housing needs caused by or exacerbated by the disaster(s). Grantees exercising this option must continue to comply with the applicable requirements of this notice and the Consolidated Notice, including the CDBG-DR mitigation set-aside requirement in section IV.A.2 of this notice.

III. Overview of Grant Process

III.A. Requirements Related to Administrative Funds

III.A.1. Action plan submittal for program administrative costs.
The Appropriations 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 has previously provided additional guidance (“Fact Sheet”) with screenshots and step-by-step instructions describing the submittal process for this DRGR action plan for program administrative costs.
2

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.

2
The Fact Sheet describing the process to submit an action plan for program administrative costs in DRGR can be viewed at
https://files.hudexchange.info/resources/documents/DRGR-Fact-Sheet-PL117-43-Appropriation-Grantees.pdf.

III.A.1.d. Incorporation of the action plan for program administrative costs into the Public Action Plan.
The grantee shall describe the use of all grant funds for administrative costs in the Public Action Plan required by section III.C.1. Use of grant funds for administrative costs before approval of the Public Action Plan must be consistent with the action plan for administrative costs. Once the Public Action Plan is approved, the use of all grant funds must be consistent with the Public Action Plan. Upon HUD's approval of the Public Action Plan, the action plan for administrative costs shall only be relevant to administrative costs charged to the grant before the date of approval of the Public Action Plan.

III.A.2. Use of administrative funds across multiple grants.
The Appropriations Act authorize special treatment of grant administrative funds. Grantees that are receiving awards under this notice, and that have received CDBG-DR or Community Development Block Grant mitigation (CDBG-MIT) grants in the past or in any

future acts, may use eligible administrative funds (up to five percent of each grant award plus up to five percent of program income generated by the grant) appropriated by this act 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 each grant), review and modify its financial management policies and procedures regarding the tracking and accounting of administration costs, as necessary, and address the adoption of this treatment of administrative costs in the applicable portions of its Financial Management and Grant Compliance submissions as referenced in section III.A.1 of the Consolidated Notice. Grantees are reminded that all uses of funds for program administrative activities must qualify as an eligible administration cost.

IV. Applicable Rules, Statutes, Waivers, and Alternative Requirements

The Appropriations 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. The 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).
Grantees that received funds for disasters occurring in 2022 and 2023 must follow the requirements located in section IV.A. of the Consolidated Notice and the DOB requirements described in this section. The
Federal Register
notice published on June 2019, titled “Updates to Duplication of Benefits Requirements Under the Stafford Act for Community Development Block Grant (CDBG) Disaster Recovery Grantees” (84 FR 28836) (“2019 DOB Notice”), revised the DOB requirements that apply to CDBG-DR grants for disasters declared between January 1, 2016, and December 31, 2021. For these disasters, the 2019 DOB Notice also implemented temporary changes to the treatment of loans made by the Disaster Recovery Reform Act of 2018 (DRRA) (division D of Pub. L. 115-254), which sunsets on October 5, 2023.

This DRRA loan exception does not apply to disasters occurring in 2022 and 2023, therefore, subsidized loans may be a duplication of benefits for CDBG-DR grants announced in this notice (depending on a grantee's DOB analysis). Without the DRRA loan exception, most subsidized loans duplicate CDBG-DR funds for the same purpose (there are limited exceptions for declined, cancelled, or subsidized short-term loans to pay for eligible costs before CDBG-DR funds became available, as described in section IV.A.1. of the Consolidated Notice). Therefore, HUD's time-limited policy in the 2019 DOB Notice to permit reimbursement of costs paid with the proceeds of subsidized loans does not apply after the DRRA loan exception sunsets. Additionally, because the DRRA loan exception never applied to disasters occurring in 2022 or later, grantees receiving CDBG-DR funds for those disasters are not able to reimburse the costs paid by subsidized loans, including SBA loans, unless the exceptions in section IV.A.1.a. of the Consolidated Notice applies. These grantees must follow the duplication of benefits requirements described below and in section IV.A. of the Consolidated Notice.

This section of the notice describes the applicable laws and requirements related to DOB, including the general framework to calculate DOB. Section IV.A. of the Consolidated Notice describes the exceptions for when a subsidized loan that is cancelled or declined is not considered a duplication of benefits.

IV.A.1.(a). The Stafford Act.
The Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121-5207) (Stafford Act) is the primary legal authority establishing the framework for the Federal government to provide disaster and emergency assistance.

Section 312 of the Stafford Act directs Federal agencies that provide disaster assistance to assure that people, businesses, or other entities do not receive financial assistance that duplicates any part of their disaster loss covered by insurance or another source (42 U.S.C. 5155(a)). Section 312 also makes recipients of Federal disaster assistance liable for repayment of the amount of Federal disaster assistance that duplicates benefits available for the same purpose from another source (42 U.S.C. 5155(c)).

The Stafford Act also provides that when assistance covers only a part of the recipient's disaster needs, additional assistance to cover needs not met by other sources will not cause a DOB (42 U.S.C. 5155(b)(3)). CDBG-DR assistance may only pay for eligible activities to address unmet needs. This section advises grantees on the calculation of unmet needs through a duplication of benefits analysis.

IV.A.1.(b). CDBG-DR Appropriations Act and

Federal Register
Notices.
CDBG-DR funds are made available for “necessary expenses” by the Appropriations Act that contain statutory requirements on the use of the grant funds. Grantees are subject to the requirements of the Appropriations Act, this notice, and the Consolidated Notice.

Since 2013, as a condition of making any CDBG-DR grant, the Secretary must certify that the grantee has established adequate procedures to prevent DOB. To meet this requirement, grantees must submit DOB policies to HUD for review before HUD will award non-administrative funds. “Adequate” procedures are those that meet the requirements that HUD established in this notice, in the Consolidated Notice, and as reflected in the related checklists that are available online. HUD requires grantees to establish DOB policies that incorporate certain steps before committing or awarding assistance. Typically, the steps include determining

the total need for assistance, verifying the total assistance available from all sources of disaster assistance (using recent data available from FEMA, SBA, and other sources), excluding non-duplicative assistance from total assistance to calculate DOB, reducing the total award by the amount of the DOB, and obtaining an agreement from applicants to repay duplicative assistance.

This notice and the Consolidated Notice also require CDBG-DR grantees to consider projected sources of disaster assistance in the needs assessment that is part of an action plan for disaster recovery. Consideration of other potential sources of assistance when planning for the use of grant funds helps to limit the possibility of duplication between CDBG-DR and other assistance.

IV.A.1.(c). Necessary and Reasonable Requirements.
The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in subpart E of 2 CFR part 200 (the Cost Principles) applicable to all CDBG-DR grantees and their subrecipients require that costs are necessary and reasonable. The Cost Principles are made applicable to states by 24 CFR 570.489(p) and to local governments through 24 CFR 570.502. State grantees are also subject to 24 CFR 570.489(d), which requires that states shall have fiscal and administrative requirements to ensure that grant funds are used “for reasonable and necessary costs of operating programs.”

Under the Cost Principles, a cost assigned to a grant “is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost” (2 CFR 200.404).

Grantees must consider factors described at 2 CFR 200.404(a) through (e) when determining which types and amounts of cost items are necessary and reasonable. Based on these factors, HUD generally presumes that if a cost has been paid by another source, charging it to the Federal award violates the necessary and reasonable standard unless grant requirements permit reimbursement.

IV.A.1.(d). Basic Duplication of Benefits Calculation Framework.
The Stafford Act requires a fact specific inquiry into assistance received by each applicant. This notice refers to the subject of a DOB review as an “applicant” or “CDBG-DR applicant” and uses the term “applicant” to include individuals, businesses, households, or other entities that apply to the grantee or a subrecipient for CDBG-DR assistance, as well as entities that use CDBG-DR assistance for an activity without submitting an application (
e.g.,
the department or agency of the grantee administering the grant, other state or local departments or agencies, or local governments).

A grantee is prohibited from making a blanket determination that CDBG-DR assistance under one of its programs or activities does not duplicate another category or source of assistance. The grantee must conduct an individualized review of each applicant to determine that the amount of assistance will not cause a DOB by exceeding the unmet needs of that applicant. A review specific to each applicant is necessary because assistance available to each applicant varies widely based on individual insurance coverage, eligibility for various sources of assistance, and other factors.

This section establishes the primary considerations that must be part of a DOB analysis when providing CDBG-DR assistance, and a framework for analyzing need and avoiding DOB when calculating awards. CDBG-DR grantees have discretion to develop policies and procedures that tailor their DOB analyses to their own programs and activities so long as the grantee's policies and procedures are consistent with the requirements of this notice. If the grantee modifies its DOB procedures after the Secretary certifies that the grantee's DOB procedures are adequate, the grantee's modified procedures must meet standards HUD adopts to determine adequacy.

IV.A.1.(d)(i). Assess Applicant Need.
A grantee must determine an applicant's total need. Total need is calculated based on need estimates at a point in time; total need is the current need. However, if the grantee's action plan permits CDBG-DR assistance to reimburse costs of CDBG-DR eligible activities undertaken by the applicant before submitting an application the total need also includes these costs. Generally, total need is calculated without regard to the grantee's program-specific caps on the amount of assistance.

For rehabilitation, reconstruction, or new construction activities, the need can be reasonably documented using construction cost estimates.

For recovery programs of the grantee that do not entail physical rebuilding, such as special economic development activities to provide an affected business with working capital, the total need will be determined by the requirements or parameters of the program or activity. For special economic development activities, total need should be guided by standard underwriting guidelines (when required by section II.D.6. of the Consolidated Notice, CDBG-DR grantees and subrecipients must comply with the underwriting guidelines in appendix A to 24 CFR part 570 when assisting a for-profit entity as part of a special economic development project).

The grantee's assessment of total need must consider in-kind donations of materials or services that are known to the grantee at the time it calculates need and makes the award. In-kind donations are non-cash contributions, such as donations of professional services, use of construction equipment, or contributions of building materials. In-kind donations are not “financial assistance” that creates a DOB under the Stafford Act, but they do reduce the amount of CDBG-DR assistance for unmet need because the donated goods or services reduce activity costs.

IV.A.1.(d)(ii). Identify Total Assistance.
To calculate DOB, grantees are required to identify “total assistance.” For this notice, total assistance includes all reasonably identifiable financial assistance available to an applicant.

Total assistance includes resources such as cash awards, insurance proceeds, grants, and loans received by or available to each CDBG-DR applicant, including awards under local, state, or Federal programs, and from private or nonprofit charity organizations. At a minimum, the grantee's efforts to identify total assistance must include a review to determine whether the applicant received FEMA, SBA, insurance, and any other major forms of assistance (
e.g.,
state disaster assistance programs) generally available to applicants.

Total assistance does not include personal assets such as money in a checking or savings account (excluding insurance proceeds or disaster assistance deposited into the applicant's account); retirement accounts; credit cards and lines of credit; in-kind donations (although these non-cash contributions known to the grantee reduce total need); and private loans.

For this notice, a private loan is a loan that is not provided by or guaranteed by a governmental entity, and that requires the CDBG-DR applicant (the borrower) to repay the full amount of the loan (principal and interest) under typical commercial lending terms,
e.g.,
the loan is not forgivable. For DOB calculations, private loans are not financial assistance and need not be considered in the DOB calculation, regardless of whether the borrower is a person or entity.

By contrast, subsidized loans for the same purpose are to be included in the

DOB calculation unless an exception applies (see sections IV.A.1.a. or IV.A.1.b. of the Consolidated Notice).

Total assistance includes available assistance. Assistance is available if an applicant: (1) would have received it by acting in a reasonable manner, or in other words, by taking the same practical steps toward funding recovery as would disaster survivors faced with the same situation but not eligible to receive CDBG-DR assistance; or (2) has received the assistance and has legal control over it. Available assistance includes reasonably anticipated assistance that has been awarded and accepted but has not yet been received. For example, if a local government seeks CDBG-DR assistance to fund part of a project that also has been awarded FEMA Hazard Mitigation Grant Program (HMGP) assistance, the entire HMGP award must be included in the calculation of total assistance even if FEMA obligates the first award increment for the project, but subsequent increments remain unfunded until certain project milestones are met.

Applicants for CDBG-DR assistance are expected to seek insurance or other assistance to which they are legally entitled under existing policies and contracts, and to behave reasonably when negotiating payments to which they may be entitled. For example, it may be reasonable for an applicant to elect to receive an immediate lump sum insurance settlement based on estimated cost of rehabilitation instead of waiting for a longer period of time for the insurance company to calculate reimbursement based on actual replacement costs, even if the reimbursement based on actual costs would exceed the lump sum insurance settlement.

HUD generally considers assistance to be available if it is awarded to the applicant but is administered by another party instead of being directly deposited with the applicant. For example, if an entity administering homeowner rehabilitation assistance pays a contractor directly to complete the rehabilitation, the assistance is still considered available to the applicant.

By contrast, funds that are not available to an applicant must be excluded from the final CDBG-DR award calculation. For example, insurance or rehabilitation assistance received by a previous owner of a disaster damaged housing unit is not available to a current owner that acquired the unit by sale or transfer (including a current owner that inherited the unit as a result of the death of the previous owner) unless the current owner is a co-recipient of that assistance.

Funds are not available to an applicant if the applicant does not have legal control of the funds when they are received. For example, if a homeowner's mortgage requires insurance proceeds to be applied to reduce the unpaid mortgage principal, then the lender/mortgage holder (not the homeowner) has legal control over those funds. The homeowner is legally obligated to use insurance proceeds for the purpose of reducing the unpaid mortgage principal and does not have a choice in using them for any other purpose, such as to rehabilitate the house. Under these circumstances, insurance proceeds do not reduce CDBG-DR rehabilitation assistance eligibility.

Alternatively, if a lender requires use of insurance for rehabilitation, or a disaster-affected homeowner chooses to apply insurance proceeds received for damage to the building to reduce an unpaid mortgage principal, these insurance proceeds are treated as a DOB and reduce the amount of CDBG-DR funds the grantee may provide for rehabilitation.

IV.A.1.(d)(iii). Exclude Non-Duplicative Amounts.
Once a grantee has determined the total need and the total assistance, it determines which sources it must exclude as non-duplicative for the DOB calculation. Grantees must exclude amounts that are: (1) provided for a different purpose; or (2) provided for the same purpose (eligible activity), but for a different, allowable use (cost). Below, each of these categories is explained in greater detail.

IV.A.1.(d)(iii)(1). Funds for a Different Purpose.
Any assistance provided for a different purpose than the CDBG-DR eligible activity, or a general, non-specific purpose (
e.g.,
“disaster relief/recovery”) and not used for the same purpose must be excluded from total assistance when calculating the amount of the DOB.

Insurance proceeds for damage or destruction of a building are for the same purpose as CDBG-DR assistance to rehabilitate or reconstruct that building. On the other hand, grantees may exclude, as non-duplicative, insurance provided for a different purpose (
e.g.,
insurance proceeds for loss of contents and personal property, or insurance proceeds for loss of buildings (such as a detached garage) that the grantee has determined it will not assist with CDBG-DR funds). However, a grantee may treat all insurance proceeds as duplicative if it is impractical to identify the portion of insurance proceeds that are non-duplicative because they are for a different purpose than the CDBG-DR assistance.

Similarly, CDBG-DR assistance paid to a homeowner as a housing incentive for the purpose of inducing the homeowner to sell the home to the grantee (
e.g.,
in conjunction with a buyout) are for a different purpose than funds provided for interim housing (
e.g.,
temporary assistance for rental housing during a period when a household is unable to reside in its home). In such a case, interim housing assistance may be excluded from the final DOB calculation as non-duplicative of funds paid for the housing incentive.

IV.A.1.(d)(iii)(2). Funds for Same Purpose, Different Allowable Use.
Assistance provided for the same purpose as the CDBG-DR purpose (the CDBG-DR eligible activity) must be excluded when calculating the amount of the DOB if the applicant can document that actual specific use of the assistance was an allowable use of that assistance and was different than the use (cost) of the CDBG-DR assistance (
e.g.,
the purpose is housing rehabilitation, the use of the other assistance was roof replacement and the use of the CDBG-DR assistance is rehabilitation of the interior of the house). Grantees are advised to consult with HUD to determine what documentation is appropriate in this circumstance. As a starting point, grantees should consider whether the source of the assistance requires beneficiaries to maintain documentation of how the assistance was used.

Whether the use of the non-CDBG-DR assistance is an allowable use depends on the rules imposed by the source that provided the assistance. For example, assume that a CDBG-DR grantee is administering a homeowner rehabilitation program and an applicant to the program can document that he/she previously received and used FEMA funds for interim housing costs (
i.e.,
rent). If FEMA permitted the applicant to use its assistance for the general purpose of meeting any housing need, the CDBG-DR grantee can exclude the FEMA assistance used for interim housing as non-duplicative of the CDBG-DR assistance for rehabilitation.

If, on the other hand, FEMA limited the use of FEMA funds to housing rehabilitation, then the full amount of the FEMA assistance must be considered for the specific purpose of housing rehabilitation and cannot be excluded if the applicant used those funds for interim housing. If interim housing is not an allowable use, the amount of the FEMA housing rehabilitation assistance used for interim housing is considered a DOB. If

the grantee thinks the actual use of the FEMA assistance may be allowable, the CDBG-DR grantee should contact FEMA for clarification.

Assistance provided for the purpose of housing rehabilitation, including assistance provided for temporary or minor rehabilitation, is for the same purpose as CDBG-DR rehabilitation assistance. However, the grantee can exclude assistance used for different costs of the rehabilitation, which are a different allowable use (rehabilitation costs not assisted with CDBG-DR). For example, if the other assistance is used for minor or temporary rehabilitation which enabled the applicant family to live in their home instead of moving to temporary housing until rehabilitation can be completed, the grantee can undertake remaining work necessary to complete rehabilitation. The grantee's assessment of total need at the time of application may include the costs of replacing temporary materials with permanent construction and of completing mold remediation by removing drywall installed with other assistance. These types of costs to modify partially completed rehabilitation that the grantee determines are necessary to comply with the requirements of CDBG-DR assistance do not duplicate other assistance used for the partial rehabilitation.

Grantees are encouraged to contact HUD for further guidance in cases when it is unclear whether non-CDBG-DR assistance for the same general purpose can be excluded from the DOB calculation because it was used for a different allowable use.

IV.A.1.(d)(iv). Identify DOB Amount and Calculate the Total CDBG-DR Award.
The total DOB is calculated by subtracting non-duplicative exclusions from total assistance. Therefore, to calculate the total maximum amount of the CDBG-DR award, the grantee must: (1) identify total need; (2) identify total assistance; (3) subtract exclusions from total assistance to determine the amount of the DOB; and (4) subtract the amount of the DOB from the amount of the total need to determine the maximum amount of the CDBG-DR award.

Three considerations may change the maximum amount of the CDBG-DR award.

First, the grantee may impose a program cap that limits the amount of assistance an applicant is eligible to receive, which may reduce the potential CDBG-DR assistance available to the applicant.

Second, the grantee may increase the amount of an award if the applicant agrees to repay duplicative assistance it receives in the future (unless prohibited by a statutory order of assistance, as in the requirement to use FEMA or USACE assistance before CDBG-DR assistance discussed in sections II. and. IV.A.1.(f)). Section 312(b) of the Stafford Act permits a grantee to provide CDBG-DR assistance to an applicant who is or may be entitled to receive assistance that would be duplicative if: (1) the applicant has not received the other assistance at the time the CDBG-DR grantee makes its award; and (2) the applicant agrees to repay the CDBG-DR grantee for any duplicative assistance once it is received. The agreement to repay from future funds may enable a faster recovery in cases when other sources of assistance are delayed (
e.g.,
due to insurance litigation). HUD requires all grantees to enter into agreements with applicants before the applicant receives CDBG-DR assistance.

Third, the applicant's CDBG-DR award may increase if a reassessment shows that the applicant has additional unmet need.

IV.A.1.(d)(v). Reassess Unmet Need When Necessary.
Although long-term recovery is a process, disaster recovery needs are calculated at points in time. As a result, a subsequent change in an applicant's circumstances can affect that applicant's remaining unmet need, meaning the need that was not met by CDBG-DR and other sources of assistance. Oftentimes, unmet need does not become apparent until after CDBG-DR assistance has been provided. Examples may include: a subsequent disaster that causes further damage to a partially rehabilitated home or business; an increase in the cost of construction materials; vandalism; contractor fraud; or theft of materials. Unmet need may also change if other resources become available to pay for costs of the activity (such as FEMA or USACE), and reduce the need for CDBG-DR.

To the extent that an original disaster recovery need was not fully met or was exacerbated by factors beyond the control of the applicant, the grantee may provide additional CDBG-DR funds to meet the increased unmet need.

Grantees must be able to identify and document additional unmet need, for example, by completing a professional inspection to verify the revised estimate of costs to rehabilitate or reconstruct damaged property.

IV.A.1.(e). Special Considerations.
The potential for DOB arises most frequently under homeowner rehabilitation programs but is not limited solely to that type of activity. The following examples do not form an exhaustive list of all CDBG-DR funded programs or activities. They are included to illustrate instances when duplicative assistance can occur when assisting other recovery activities:

1. Assistance to businesses. Many grantees carry out economic revitalization programs that provide working capital assistance to businesses. Generally, working capital assistance is calculated after assessing a business's ability to use its current assets to pay its current liabilities. The grantee's DOB analysis must consider total assistance, which includes all sources of financial assistance available to the applicant to pay a portion of liabilities that will become due. For example, a downtown business alliance might award business recovery grants from its funds to cover some of the same liabilities. Even if the downtown business alliance does not call its assistance “working capital” assistance, the amount the business received from the downtown business alliance to pay the same costs as the CDBG-DR funds is a DOB. Therefore, a grantee's basis for calculating CDBG-DR economic development assistance and the purposes for which the applicant can use the assistance should be clearly identified so that grantees can prevent a DOB. As discussed above, assets such as cash and cash equivalents (excluding deposits of insurance proceeds or other disaster assistance), inventories, short-term investments and securities, accounts receivable, and other assets of the business are not financial assistance, although those assets may be relevant to underwriting.

2. Assistance for infrastructure. State grantees may assist state or local government entities by providing funding to restore infrastructure (public facilities and improvements) after a disaster. CDBG-DR funds used directly by state and local governments for public facilities and improvements, or other purposes are also subject to the DOB requirements of the Stafford Act. For example, a wastewater treatment facility owned by a local government may need to be rehabilitated. In this instance, total assistance, for a DOB analysis, would not only include any other Federal assistance available to rehabilitate the facility, but it must also include any local funds that are available for this activity. And if local funds were previously designated or planned for the activity, but are no longer available, the grantee should document that the local government recipient does not have funds set aside for the activity in any capital improvement plan (or similar document showing planned use of funds).

3. Payments made under the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA).

Grantees may provide a displaced person (as defined under 24 CFR 570.606) with rental assistance payments under the URA or provide temporary relocation assistance (as described in 49 CFR part 24,
appendix A, 49 CFR 24.2(a)(9)(ii)(D)
) to persons temporary relocated as a result of a project. Relocation payments made under the URA, as well as under CDBG's optional relocation assistance provisions of 24 CFR 570.606(d), are subject to DOB requirements in this notice and the Consolidated Notice, as well as DOB requirements under the URA that prohibit payments for the same “purpose and effect” as another payment to a displaced person (49 CFR 24.3). To comply with CDBG-DR DOB requirements, before issuance of rental assistance payments required by the URA, grantees must complete a DOB analysis. For example, a CDBG-DR grantee must check FEMA assistance data to determine that FEMA did not provide rental assistance payments during the same time period (under the URA or as part of a FEMA Individual Assistance Award). Please note that while you cannot duplicate assistance for the same purpose, advisory services and the provision of notices required under the URA are not subject to this analysis because they are not financial assistance to the person, and therefore must be provided in accordance with the URA.

Subsidized Loans.
For this notice, subsidized loans (including forgivable loans) are loans other than private loans. Subsidized loans are assistance that must be included in the DOB analysis unless an exception applies. Section IV.A. of the Consolidated Notice discusses these exceptions and related requirements for the treatment of subsidized loans in a duplication of benefits analysis. The full amount of a subsidized loan available to the applicant for the same purpose as CDBG-DR assistance is assistance that must be included in the DOB calculation unless one of the exceptions in IV.A.1. of the Consolidated Notice applies. A subsidized loan is available when it is accepted, meaning that the borrower has signed a note or other loan document that allows the lender to advance loan proceeds. Both SBA and FEMA provide subsidized loans for disaster recovery. Note that the statutory order of assistance provision pertaining to assistance from FEMA and USACE applies to grants and subsidized loans made by these agencies. Subsidized loans may also be available from other sources.

IV.A.1.(f). Order of Assistance.
CDBG-DR appropriations acts generally include a statutory order of assistance for Federal agencies. Although the language may vary among appropriations, the statutory order of assistance typically provides that CDBG-DR funds may not be used for activities reimbursable by or for which funds are made available by FEMA or USACE. This means that grantees must verify whether FEMA or USACE funds are available for an activity (
i.e.,
the application period is open) or the costs are reimbursable by FEMA or USACE (
i.e.,
the grantee will receive FEMA or USACE assistance to reimburse the costs of the activity) before awarding CDBG-DR assistance for costs of carrying out the same activity. If FEMA or USACE are accepting applications for the activity, the applicant must seek assistance from those sources before receiving CDBG-DR assistance. If the applicant's costs for the activity will be reimbursed by FEMA or USACE, the grantee cannot provide the CDBG-DR assistance for those costs. In the event that FEMA or USACE assistance is awarded after CDBG-DR to pay the same costs, it is the CDBG-DR grantee's responsibility to recapture CDBG-DR assistance that duplicates assistance from FEMA or USACE.

Under the Stafford Act, a Federal agency that provides duplicative assistance must collect that assistance. For CDBG-DR grants, the grantee is required to collect duplicative assistance it provides. A grantee that does not collect duplicative CDBG-DR assistance that it provides may resolve this noncompliance by reimbursing its program account with non-Federal funds in the amount of the duplication and reprograming the use of the funds in accordance with applicable requirements to avoid other corrective or remedial actions.

FEMA regulations at 44 CFR 206.191 set forth a delivery sequence that establishes which source of assistance is duplicative for certain programs. CDBG-DR assistance is not listed in FEMA's sequence, but as a practical matter, CDBG-DR assistance duplicates other sources received before CDBG-DR assistance for the same purpose and portion of need. Any amount received from other sources before the CDBG-DR assistance that is determined to be duplicative must be collected by the grantee. The mandatory agreement to repay (discussed in section IV.A.1.(i)below) can be used to prevent duplication by assistance that is available, but not yet received. If the duplicative assistance is received after CDBG-DR, the grantee must collect the DOB or contact HUD if it has questions about whether another Federal agency is responsible for collecting the duplication.

IV.A.1.(g). Multiple Disasters.
When multiple disasters occur in the same location, and the applicant has not recovered from the first disaster at the time of a second disaster, the assistance provided in response to the second disaster may duplicate assistance for the same purpose and need as assistance provided after the first disaster. HUD recognizes that in this scenario, DOB calculations can be complicated. Damage from a second disaster, for example, may destroy work funded and completed in response to the first disaster. The second disaster may also damage or destroy receipts and other documentation of how applicants expended assistance provided after the first disaster.

Therefore, HUD is adopting the following policy that is applicable to circumstances when two disasters occur in the same area, and the applicant has not fully recovered from the first disaster before the second disaster occurs: Applicants are not required to maintain documentation related to the use of public disaster assistance (Federal, state, and local) beyond the period required by the agency that provided the assistance. If documentation cannot be provided, the grantee may accept a self-certification regarding how the applicant used the other agency's assistance, provided that the applicant is advised of the criminal and civil penalties that apply in cases of false claims and fraud, and the grantee determines that the applicant's total need is consistent with data the grantee has about the nature of damage caused by the disasters (
e.g.,
flood inundation levels). For example, a second disaster strikes three years after an agency provided assistance in response to the first disaster, and that agency required applicants to maintain documentation for two years, the grantee may accept a self-certification regarding how the applicant used the other agency's assistance.

IV.A.1.(h). Recordkeeping.
The grantee must document compliance with DOB requirements. Policies and procedures for DOB may be specific for each program funded by the CDBG-DR grantee and should be commensurate with risk. Grantees should be especially careful to sufficiently document the DOB analysis for activities they are carrying out directly. Insufficient documentation on DOB can lead to findings, which can be difficult to resolve if records are missing, inadequate, or inaccurate to demonstrate compliance with DOB requirements.

When documenting its DOB analysis, grantees cannot rely on certification alone for proof of other sources of funds for the same purpose (unless authorized by this notice, see section IV.A.1.(g). above). Any certification by an applicant must be based on supporting evidence that will be kept available for inspection by HUD. For example, if an applicant certifies that other sources of funds were received and expended for a different purpose than the CDBG-DR funds, grantees must substantiate this assertion with an additional source of information (
e.g.,
physical inspections, credit card statements, work estimates, contractor invoices, flood inundation records, or receipts). For these reasons, HUD recommends that as soon as possible after a disaster, grantees advise the public and potential applicants to retain all receipts that document expenditures for recovery needs. Grantees should consult their CPD specialist or CPD representative with questions about the sufficiency of documentation.

IV.A.1.(i). Agreement to Repay.
The Stafford Act requires grantees to ensure that applicants agree to repay all duplicative assistance to the agency providing that Federal assistance. To address any potential DOB, each applicant must also enter into an agreement with the CDBG-DR grantee to repay any assistance later received for the same purpose for which the CDBG-DR funds were provided. This agreement can be in the form of a subrogation agreement or similar document and must be signed by every applicant before the grantee disburses any CDBG-DR assistance to the applicant.

In its policies and procedures, the grantee must establish a method to monitor each applicant's compliance with the agreement for a reasonable period after project completion (
i.e.,
a time period commensurate with risk). Additionally, section III.A.1. of the Consolidated Notice requires a grantee's agreement to also include the following language: “Warning: Any person who knowingly makes a false claim or statement to HUD may be subject to civil or criminal penalties under 18 U.S.C. 287, 1001 and 31 U.S.C. 3729.”

IV.A.1.(j). Collecting a Duplication.
If a potential DOB is discovered after CDBG-DR assistance has been provided, the grantee must reassess the applicant's need at that time (see section IV.A.1.(d)(v) above). If additional need is not demonstrated, CDBG-DR funds shall be recaptured to the extent they are in excess of the remaining need and duplicate other assistance received by the applicant for the same purpose. However, this determination may depend on what sources of assistance were last received by the applicant.

If a grantee fails to recapture funds from an applicant, HUD may impose corrective actions pursuant to 24 CFR 570.495 and 570.910, and
Federal Register
notices, as applicable. Also, HUD reminds grantees that the Stafford Act states that “A person receiving Federal assistance for a major disaster or emergency shall be liable to the United States to the extent that such assistance duplicates benefits available to the person for the same purpose from another source.” A grantee's failure to collect duplication of benefits does not remove an applicant's potential liability to the United States. A grantee that does not collect duplicative CDBG-DR assistance that it provides, should review HUD's guidance in the second paragraph of section
IV.A.1.(f).
above.

The grantee may refer to any relevant guidance or the debt collection procedures in place for the state or local government. HUD is available to provide guidance to grantees in establishing or revising the grantee's duplication of benefits policies and procedures.

CDBG-DR grantees awarded funds for disasters occurring in 2022 or later can find the additional DOB requirements in Section IV.A. of the Consolidated Notice.

IV.A.2. CDBG-DR mitigation set-aside.
The 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 fulfilled the requirement for the CDBG-DR mitigation set-aside.

Grantees may also meet the requirement of the CDBG-DR mitigation set-aside by including eligible recovery activities that both address the impacts of the disaster (
i.e.,
have “tie-back” to the specific qualified disaster) and incorporate mitigation measures into the recovery activities. In section II.A.2.b of the Consolidated Notice, grantees are instructed to incorporate mitigation measures when carrying out activities to construct, reconstruct, or rehabilitate residential or non-residential structures with CDBG-DR funds as part of activities eligible under 42 U.S.C. 5305(a) (including activities authorized by waiver and alternative requirement). Additionally, in section II.A.2.c of the Consolidated Notice, grantees are required to establish resilience performance metrics for those activities.

If grantees wish to count those activities towards the grantee's CDBG-DR mitigation set-aside, grantees must: (1) Document how those activities and the incorporated mitigation measures will meet the definition of mitigation, as provided above; and (2) Report those activities as a “MIT” activity type in DRGR so they are easily tracked.

IV.A.2.a. Mitigation needs assessment.
In addition to the requirements prescribed in section III.C.1.a of the Consolidated Notice that grantees must develop an impact and unmet needs assessment, grantees receiving an award under this Allocation Announcement Notice must also include in their action plan a mitigation needs assessment to inform the activities funded by the CDBG-DR mitigation set-aside. Each grantee must assess the characteristics and impacts of current and future hazards identified through its recovery from the qualified disaster and any other Presidentially declared disaster. Mitigation solutions designed to be resilient only for threats and hazards related to a prior disaster can leave a community vulnerable to negative effects from future extreme events related to other threats or hazards. When risks are identified

among other vulnerabilities during the framing and design of mitigation projects, implementation of those projects can enhance protection and save lives, maximize the utility of scarce resources, and benefit the community long after the projects are complete.

Accordingly, each grantee receiving a CDBG-DR allocation under this notice must conduct a risk-based assessment to inform the use of its CDBG-DR mitigation set-aside considering identified current and future hazards. Grantees must assess their mitigation needs in a manner that effectively addresses risks to indispensable services that enable continuous operation of critical business and government functions and are critical to human health and safety or economic security. In the mitigation needs assessment, each grantee must cite data sources and must, at a minimum, use the risks identified in the current FEMA-approved state or local Hazard Mitigation Plan (HMP). If a jurisdiction is currently updating an expired HMP, the grantee's agency administering the CDBG-DR funds must consult with the agency administering the HMP update to identify the risks that will be included in the assessment. Mitigation needs evolve over time and grantees are to amend the mitigation needs assessment and action plan as conditions change, additional mitigation needs are identified, and additional resources become available.

IV.A.2.b. Connection of programs and projects to the mitigation needs assessment.
Grantees are required by section III.C.1.b of the Consolidated Notice to describe the connection between identified unmet needs and the allocation of CDBG-DR resources. In a similar fashion, the plan must provide a clear connection between a grantee's mitigation needs assessment and its proposed activities in the MID areas funded by the CDBG-DR mitigation set-aside (or outside in connection to the MID areas as described in section II.A.3 of the Consolidated Notice). To maximize the impact of all available funds, grantees are encouraged to coordinate and align these funds with other projects funded with CDBG-DR and CDBG-MIT funds, as well as other disaster recovery activities funded by FEMA, USACE, the U.S. Forest Service, and other agencies as appropriate. Grantees are encouraged to fund planning activities that complement FEMA's Building Resilient Infrastructure and Communities (BRIC) program and to upgrade mapping, data, and other capabilities to better understand evolving disaster risks.

IV.A.3. Interchangeability of disaster funds.
The Appropriations 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 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 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 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 2023 and the MID areas for the 2023 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 2023 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 2023 disaster, the grantee must follow the rules and requirements outlined in the
Federal Register
notices applicable to its CDBG-DR grant for 2017 disasters.

IV.A.4. Assistance to utilities.
The Appropriations Act provides that funds “may be used by a grantee to assist utilities as part of a disaster-related eligible activity under section 105(a) of the Housing and Community Development Act of 1974 (42 U.S.C. 5305(a)).”

Accordingly, paragraph III.G.3 of the Consolidated Notice does not apply to funds under the Appropriations Act, and HUD is adding a modified alternative requirement that applies in lieu of paragraph III.G.3.

While it is possible that not every CDBG-DR assisted utility will serve predominantly low- and moderate-income (LMI) populations, HUD recognizes that LMI populations would benefit especially from the increased resilience and recovery of private utilities. HUD also recognizes that privately-owned, for-profit utilities have a means of obtaining private investment or otherwise recapturing costs from ratepayers. Therefore, HUD's alternative requirement below includes basic safeguards that HUD has determined are necessary to ensure that costs comply with the certification to give maximum feasible priority to activities that benefit LMI persons and that costs are necessary and reasonable and do not duplicate other financial assistance. The modified alternative requirement also makes clear that assistance to utilities is subject to all other requirements that apply to the use of funds, consistent with the requirement in the Appropriations 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 2022 and 2023 disasters under the 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. Clarifications to the Consolidated Notice

IV.B.1. Reimbursement Requirements for Grants Under the Appropriations Act.
This section sets out requirements for 2022 and 2023 disasters under the Appropriations Act. In paragraph III.F.5 of the Consolidated Notice, HUD permits grantees to charge to grants the pre-award and pre-application costs of homeowners, renters, businesses, and other qualifying entities for eligible costs these applicants have incurred in response to an eligible disaster covered under a grantee's applicable Allocation Announcement Notice. In addition to other requirements, paragraph III.F.5 stipulates that grantees may charge the eligible pre-application costs to the grant only if (1) the person or private entity incurred the expenses within one year after the applicability date of the grantee's Allocation Announcement Notice (or within one year after the date of the disaster, whichever is later); and (2) the person or entity pays for the cost before the date on which the person or entity applies for CDBG-DR assistance.

Congress may enact multiple supplemental appropriations of CDBG-DR funds for disasters occurring in the same year and HUD may then publish multiple notices announcing CDBG-DR grants for the same disaster. For example, HUD announced CDBG-DR grants for disasters occurring in 2022 and 2023 in this notice. If Congress appropriates additional funds for 2022 and 2023 disasters in a future appropriations act, grantees may find it difficult to track expenses incurred within one year after the applicability date of this notice and another Allocation Announcement Notice, given that funds for disasters occurring in 2022 and 2023 would be announced in different notices. To avoid confusion and to apply a uniform time frame to reimbursement of all pre-application costs for 2022 and 2023 disasters, the requirement in III.F.5.(1) in the Consolidated Notice that states, “The person or private entity incurred the expenses within one year after the applicability date of the grantee's Allocation Announcement Notice (or within one year after the date of the disaster, whichever is later)” shall not apply, and instead, grantees shall comply with the following alternative to that requirement in III.F.5.(1): “The person or private entity incurred the expenses within one year after the applicability date of the notice that announced the
initial
allocation of CDBG-DR funds (or within one year after the date of the disaster, whichever is later).” For grantees receiving an allocation for a 2022 and 2023 disaster, the notice that announced the initial allocation of CDBG-DR funds is this notice.

IV.B.2. Clarification of the green and resilient building standard.
Paragraph II.B.2.a. of the Consolidated Notice requires that all covered construction (new construction, reconstruction, and rehabilitation) that is assisted with CDBG-DR funds meet an industry-recognized standard that has achieved certain certifications described in the notice. In the Consolidated Notice, HUD updated its building standards to support the adoption and enforcement of modern and resilient codes and inadvertently omitted a standard.

Accordingly, HUD clarifies that paragraph II.B.2.a. in the Consolidated Notice allows a grantee to use either the ICC-700 National Green Building Standard (NGBS) Green or NGBS Green+ Resilience standard, among other industry-recognized standards. For grants made in response to disasters occurring in 2022 and 2023, this notice replaces paragraph II.B.2.a. in the Consolidated Notice with the following text:

II.B.2.a. Green and resilient building standard for new construction and reconstruction of housing. Grantees must meet the Green and Resilient Building Standard, as defined in this subparagraph, for: (i) all new construction and reconstruction (
i.e.,
demolishing a housing unit and rebuilding it on the same lot in substantially the same manner) of residential buildings and (ii) all rehabilitation activities of substantially damaged residential buildings, including changes to structural elements such as flooring systems, columns, or load-bearing interior or exterior walls.

The Green and Resilient Building Standard requires that all construction covered by the paragraph above and assisted with CDBG-DR funds meet an industry-recognized standard that has achieved certification under (i) Enterprise Green Communities; (ii) LEED (New Construction, Homes, Midrise, Existing Buildings Operations and Maintenance, or Neighborhood Development); (iii) ICC-700 National Green Building Standard (NGBS) Green or NGBS Green+ Resilience; (iv) Living Building Challenge; or (v) any other equivalent comprehensive green building program acceptable to HUD.

IV.B.3. Clarification of the Use of “Uncapped” Income Limits.
The Quality Housing and Work Responsibility Act of 1998 (Title V of Pub. L. 105-276) enacted a provision that directs the Department to grant exceptions to at least 10 jurisdictions that are currently “capped' under HUD's low and moderate-income limits. Under this exception, several CDBG entitlement grantees may use “uncapped” income limits that reflect 80 percent of the actual median income for the area. Each year, HUD publishes guidance on its website identifying which grantees may use uncapped limits.

Accordingly, HUD clarifies that, the annual uncapped income limits published by HUD applies to CDBG-DR funded activities in jurisdictions covered by the uncapped limits, including jurisdictions that receive disaster recovery funds from a state CDBG-DR grantee. This alternative requirement applies to grants made in response to disasters occurring in 2022 and 2023 that are subject to this notice (including requirements identified as a “Consolidated Notice” incorporated in this notice as appendix B).

V. Duration of Funding

The Appropriations Act made the funds available for obligation by HUD until expended. HUD waives the provisions at 24 CFR 570.494 and 570.902 regarding timely distribution and expenditure of funds and establishes an alternative requirement providing that each grantee must expend 100 percent of its allocation within six years of the date HUD signs the grant agreement. HUD may extend the time period in this alternative requirement and associated grant period of performance administratively, if good cause for such an extension exists at that time, as requested by the grantee, and approved by HUD. When the period of performance has ended, HUD will close out the grant and any remaining funds not expended by the grantee on appropriate programmatic purposes will be recaptured by HUD.

VI. Assistance Listing Numbers (Formerly Known as the CFDA Number).

The Assistance Listing Numbers (formerly known as the Catalog of Federal Domestic Assistance numbers) for the disaster recovery grants under this notice are as follows: 14.218; 14.228.

VII. Finding of No Significant Impact

A Finding of No Significant Impact (FONSI) with respect to the environment has been made in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is available online on HUD's CDBG-DR website at
https://www.hud.gov/program_offices/comm_planning/cdbg-dr.
Due to security measures at the HUD Headquarters building, an advance appointment to review the docket file must be scheduled by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit
https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs
.

Adrianne Todman,
Deputy Secretary.

Appendix A

Allocation of CDBG-DR Funds to Most Impacted and Distressed Areas Due to Presidentially Declared Disasters Occurring in 2022 and 2023

Background

The Disaster Relief Supplemental Appropriations Act, 2023 (Pub. L. 117-328, Division N, Title X) (approved on December 29, 2022) appropriated $3 billion of CDBG-DR for disasters “that occurred in 2022 or later until such funds are fully allocated”. The law instruct HUD that the funds are “for the same purposes and under the same terms and conditions as funds appropriated under such heading in title VIII of the Disaster Relief Supplemental Appropriations Act, 2022 (division B of Pub. L. 117-43)” except that such amounts shall be for major disasters that occurred in 2022 or later until such funds are fully allocated and the fourth, twentieth, and twenty-first provisos under such heading in the Disaster Relief Supplemental Appropriations Act, 2022 shall not apply.

The statutory text related to the allocation in Public Law 117-43 is as follows:

“. . . for necessary expenses for activities authorized under title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301
et seq.
) related to disaster relief, long-term recovery, restoration of infrastructure and housing, economic revitalization, and mitigation, in the most impacted and distressed areas resulting from a major disaster . . .
Provided,
That amounts made available under this heading in this Act shall be awarded directly to the State, unit of general local government, or Indian tribe (as such term is defined in section 102 of the Housing and Community Development Act of 1974 (42 U.S.C. 5302)) at the discretion of the Secretary:
Provided further,
That the Secretary shall allocate, using the best available data, an amount equal to the total estimate for unmet needs for qualifying disasters under this heading in this Act:
Provided further,
That any final allocation for the total estimate for unmet need made available under the preceding proviso shall include an additional amount of 15 percent of such estimate for additional mitigation: ”

Under a prior Notice, $2,837,849,000 of the funds allocated under Public Law 117-328 had been awarded. Of the remaining $162,151,000, $20 million is set aside for capacity building, HUD Administration, and Inspector General expenses, leaving $142,151,000 for allocations to additional disasters. Total unmet needs and mitigation needs for one disaster in 2022 (New Mexico) is calculated as discussed in a special section below at $4.131 million. In addition, for three disasters (California, Alabama, and Georgia)—all declared in January 2023—unmet needs and additional mitigation amounts were calculated at $241.728 million. HUD chose to allocate 57.10 percent of the unmet needs and additional mitigation amounts of each 2023 disaster to stay within the $138.020 million available after taking into account the $4.131 million for the 2022 New Mexico disaster ($138.020 million/$241.728 million = 57.10%).

Most Impacted and Distressed Areas

As with prior CDBG-DR appropriations, HUD is not obligated to allocate funds for all major disasters occurring in the statutory timeframes. HUD is directed to use the funds “in the most impacted and distressed areas.” HUD has implemented this directive by limiting CDBG-DR formula allocations to grantees with major disasters that meet these standards:

(1) Individual and Households Program (IHP) designation. HUD has limited allocations to those disasters where the Federal Emergency Management Agency (FEMA) had determined the damage was sufficient to declare the disaster as eligible to receive IHP funding.

(2) Concentrated damage. HUD has limited its estimate of serious unmet housing need to counties and/or counties with zip codes with high levels of damage, collectively referred to as “most impacted areas.” For this allocation, HUD is defining most impacted areas as either most impacted counties—counties exceeding $10 million in serious unmet housing needs—and most impacted Zip Codes—Zip Codes with $2 million or more of serious unmet housing needs. The calculation of serious unmet housing needs is described below.

For disasters that meet the most impacted threshold described above, the unmet need allocations are based on the following factors summed together:

(1) Repair estimates for seriously damaged owner-occupied units without insurance (with some exceptions) in most impacted areas after FEMA and Small Business Administration (SBA) repair grants or loans;

(2) Repair estimates for seriously damaged rental units occupied by very low-income renters in most impacted areas;

(3) Repair and content loss estimates for small businesses with serious damage denied by SBA; and

(4) The estimated local cost share for Public Assistance Category C to G projects.

Methods for Estimating Serious Unmet Needs for Housing

The data HUD uses to calculate unmet needs for qualifying disasters declared between November 1, 2022 and January 30, 2023 come from the FEMA IHP data on housing-unit damage as of April 6, 2023 and reflect disasters occurring in 2022 and/or 2023 and declared after October 30, 2022 and before January 30, 2023. The New Mexico (DR 4652) estimates uses the same data as discussed in the prior
Federal Register
Notice for 2022 disasters (88 FR 32046).

The core data on housing damage for both the unmet housing needs calculation and the concentrated damage are based on home inspection data for FEMA's IHP and SBA's disaster loan program. HUD calculates “unmet housing needs” as the number of housing units with unmet needs times the estimated cost to repair those units less repair funds estimated to be provided by FEMA and SBA.

Each of the FEMA IHP inspected owner units are categorized by HUD into one of five categories:

•
Minor-Low:
Less than $3,000 of FEMA inspected real property damage.

•
Minor-High:
$3,000 to $7,999 of FEMA inspected real property damage.

•
Major-Low:
$8,000 to $14,999 of FEMA inspected real property damage and/or 1 to 3.9 feet of flooding on the first floor.

•
Major-High:
$15,000 to $28,800 of FEMA inspected real property damage and/or 4 to 5.9 feet of flooding on the first floor.

•
Severe:
Greater than $28,800 of FEMA inspected real property damage or determined destroyed and/or six or more feet of flooding on the first floor.

When owner-occupied properties also have a personal property inspection or only have a personal property inspection, HUD reviews the personal property damage amounts such that if the personal property damage places the home into a higher need category over the real property assessment, the personal property amount is used. The personal property-based need categories for owner-occupied units are defined as follows:

•
Minor-Low:
Less than $2,500 of FEMA inspected personal property damage.

•
Minor-High:
$2,500 to $3,499 of FEMA inspected personal property damage.

•
Major-Low:
$3,500 to $4,999 of FEMA inspected personal property damage or 1 to 3.9 feet of flooding on the first floor.

•
Major-High:
$5,000 to $9,000 of FEMA inspected personal property damage or 4 to 5.9 feet of flooding on the first floor.

•
Severe:
Greater than $9,000 of FEMA inspected personal property damage or determined destroyed and/or 6 or more feet of flooding on the first floor.

To meet the statutory requirement of “most impacted” in this legislative language, homes are determined to have a high level of damage if they have damage of “major-low” or higher. That is, they have a FEMA inspected real property damage of $8,000 or above, personal property damage $3,500 or above, or flooding 1 foot or above on the first floor.

Furthermore, a homeowner with flooding outside the one percent risk flood hazard area is determined to have unmet needs if they reported damage and no flood insurance to cover that damage. For homeowners inside the one percent risk flood hazard area, homeowners without flood insurance with flood damage below the greater of national median or 120 percent of Area Median Income are determined to have unmet needs. For non-flood damage, homeowners without hazard insurance with incomes below the greater of national median or 120 percent of Area Median Income are included as having unmet needs. The unmet need categories for these types of homeowners are defined as above for real and personal property damage.

FEMA IHP does not inspect rental units for real property damage so personal property damage is used as a proxy for unit damage. Each of the FEMA-inspected renter units are categorized by HUD into one of five categories:

• Minor-Low: Less than $1,000 of FEMA inspected personal property damage.

•
Minor-High:
$1,000 to $1,999 of FEMA inspected personal property damage or determination of “Moderate” damage by the FEMA inspector.

•
Major-Low:
$2,000 to $3,499 of FEMA inspected personal property damage or 1 to 3.9 feet of flooding on the first floor or determination of “Major” damage by the FEMA inspector.

•
Major-High:
$3,500 to $7,500 of FEMA inspected personal property damage or 4 to 5.9 feet of flooding on the first floor.

•
Severe:
Greater than $7,500 of FEMA inspected personal property damage or determined destroyed and/or 6 or more feet of flooding on the first floor or determination of “Destroyed” by the FEMA inspector.

To meet the statutory requirement of “most impacted” for rental properties, homes are determined to have a high level of damage if they have damage of “major-low” or higher. That is, they have a FEMA personal property damage assessment of $2,000 or greater or flooding 1 foot or above on the first floor.

Furthermore, landlords are presumed to have adequate insurance coverage unless the unit is occupied by a renter with income less than the greater of the Federal poverty level or 50 percent of the area median income. Units occupied by a tenant with income less than the greater of the poverty level or 50 percent of the area median income are used to calculate likely unmet needs for affordable rental housing.

The average cost to fully repair a home for a specific disaster to code within each of the damage categories noted above is calculated using the median real property damage repair costs determined by the SBA for its disaster loan program based on a match comparing FEMA and SBA inspections by each of the FEMA damage categories described above.

If there is a match of 20 or more SBA inspections to FEMA inspections for any damage category, the median damage estimate for the SBA properties is used less the estimated average FEMA IHP repair grant and average SBA disaster loan grant weighted on take-up rates, which are generally high for IHP and low and for SBA. Except that no matched multiplier can be less than the 25th percentile for all IHP eligible disasters combined in eligible disaster years at the time of the allocation calculation or more than the 75th percentile for all IHP eligible disasters combined with data available as of the allocation.

If there is a match of fewer than 20 SBA inspections to FEMA inspections within individual damage categories, these multipliers are used which are based on the 2020 and 2021 disaster years:

Disaster type
Multipliers by disaster type
Major-low
Major-high
Severe

Dam/Levee Break
$33,007
$47,078
$47,078

Earthquake
27,141
33,714
134,503

Fire
22,971
82,582
134,503

Flood
47,074
57,856
64,513

Hurricane
36,800
45,952
45,952

Severe Ice Storm
33,528
33,714
36,592

Severe Storm(s)
22,971
37,299
37,299

Tornado
52,961
82,582
134,503

A separate multiplier is applied to mobile homes for all disaster types. Where there are fewer than 20 mobile homes for a match for a disaster, the mobile home multipliers are $49,571 for major-low, $60,189 for major-high, and $67,594 for severe. If there are 20 or more matches for a specific disaster's mobile homes, that specific disaster multiplier is used.

Methods for Estimating Serious Unmet Economic Revitalization Needs

Based on SBA disaster loans to businesses using data from as of April 5, 2023, HUD calculates the median real estate and content loss by the following damage categories for each disaster:

•
Category 1:
real estate + content loss = below $12,000

•
Category 2:
real estate + content loss = $12,000-$29,999

•
Category 3:
real estate + content loss = $30,000-$64,999

•
Category 4:
real estate + content loss = $65,000-$149,999

•
Category 5:
real estate + content loss = $150,000 and above

For properties with real estate and content loss of $30,000 or more, HUD calculates the estimated amount of unmet needs for small businesses by multiplying the median damage estimates for the categories above by the number of small businesses denied an SBA loan, including those denied a loan prior to inspection due to inadequate credit or income (or a decision had not been made), under the assumption that damage among those denied at pre-inspection have the same distribution of damage as those denied after inspection.

Methods for Estimating Unmet Infrastructure Needs

To calculate unmet needs for infrastructure projects, HUD received FEMA cost estimates on April 6, 2023, of the expected local cost share to repair the permanent public infrastructure (Categories C to G) to their pre-storm condition.

Allocation Calculation

Once eligible entities are identified using the above criteria, the allocation to individual grantees represents their proportional share of the estimated unmet needs. For the formula allocation, HUD calculates total unmet recovery needs for eligible disasters as the aggregate of:

• Serious unmet housing needs in most impacted and distressed areas;

• Serious unmet business needs; and

• Unmet infrastructure need.

Mitigation is calculated as 15 percent of the unmet need calculation, and then rounded to the nearest $1,000.
3

3

Correction.
In the
Federal Register
notice published on Thursday, May 18, 2023, at 88 FR 32046, HUD makes the following correction: On page 32059, in the Sub-Disaster Allocations for Local Governments section of appendix A, for DR 4673 FL the unmet need value reads as “$100 million” but should read as “$125 million.”

Adjustments for 2022 Disaster—DR 4652 (New Mexico)

When HUD made its March 2023 announcement for 2022 disasters, we had not made an allocation for the 2022 wildfires in New Mexico (DR 4652) because of separate appropriations ($3.95 billion appropriated in the “Continuing Appropriations Act, 2023,” Public Law 117-180, 136 Stat. 2114 (2022), and the “Disaster Relief Supplemental Appropriations Act, 2023” Public Law 117-328, 136 STAT. 4459 (2022)) to a claims fund (the “Hermit's Peak/Calf Canyon Fire Assistance Act,” Public Law 117-180, 136 Stat. 2114 (2022)) administered by FEMA for the Hermit's Peak/Calf Canyon Fire which was the larger fire covered by DR 4652. At the time we were seeking more information from the state and FEMA on how those claims funds could be used.

Absent the special appropriation, HUD had determined for this disaster $16.961 million in total unmet needs and $2.544 million in mitigation (15% of the unmet needs). A great deal of what HUD calculates for unmet needs would be covered by the claims fund.

According to FEMA,
4

“covered losses will include but are not limited to uninsured and uncompensated property loss; business and financial loss; and some heightened risk reduction to minimize impacts from heightened risks caused by the wildfires.” Individuals, businesses, non-federal government, Indian Tribes, and Not-for-Profit entities are eligible. (See 44 CFR part 296).

4

https://www.fema.gov/disaster/current/hermits-peak/frequently-asked-questions#:~:text=An%20additional%20%241.45%20billion%20was,business%20loss%20or%20financial%20loss.

According to 44 CFR 296.21, claims can be made for:

• Loss of property (examples: property loss, decrease in value of real property, damage to physical infrastructure, lost subsistence, cost reforestation, other.)

• Business loss (examples: damage to tangible assets or inventory, business interruption loss, overhead, employee wages, loss of business net income, other.)

• Financial loss (examples: increased mortgage interest cost, insurance deductible, temporary living or relocation expenses, lost wages or personal income, emergency staffing, debris removal and clean-up, other.)

• Personal injury (examples: general damages, medical expenses, injury-related lost wages/personal income

But there are items that are not eligible under the claims fund, including replacing lost affordable rental housing, business and infrastructure needs outside of the Hermits Peak/Calf Canyon fire claims fund area, and mitigation. As such, HUD has calculated this grant as the total unmet needs $16.961 million, plus mitigation based on the total unmet needs (15% of $16.961 million = $2.544 million), less the amount expected to be covered by the claims fund $15.374 million, resulting in an allocation of $4.131 million.

Pro-Rata Allocation for January 2023 Disasters

Consistent with long-standing practice when unmet needs for CDBG-DR exceed funding available, the allocation among eligible grantees is made proportionally. That is, the overall amount available—$138.020 million in funding—is divided by the total estimated unmet need and mitigation for the three disasters—$241.728 million to arrive at 57.1%. Each of the three grantees is being allocated 57.1 percent of their unmet needs and mitigation rounded to the nearest $1,000.

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.

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) and (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) and (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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2023-25875. Public record. Not legal advice.