1999 HUD Disaster Recovery Initiative Waivers and Modifications of Requirements for Community Development Block Grant Funds Under the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999

SUMMARY: Elsewhere in today's Federal Register, HUD published a notice

governing the allocation and use of funds under the 1999 Disaster

Recovery Initiative. In implementing this Initiative, HUD is authorized

by statute to waive statutory and regulatory requirements. This notice

lists the provisions being waived and provides justifications for these

waivers.

FOR FURTHER INFORMATION CONTACT: Jan C. Opper, Senior Program Officer,

Office of Block Grant Assistance, Department of Housing and Urban

Development, Room 7286, 451 Seventh Street, S.W., Washington, DC 20410,

telephone number (202) 708-3587. Persons with hearing or speech

impairments may access this number via TTY by calling the Federal

Information Relay Service at (800) 877-8339. FAX inquiries may be sent

to Mr. Opper at (202) 401-2044. (Except for the ``800'' number, these

telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION: The Omnibus Consolidated and Emergency

Supplemental Appropriations Act, 1999 (Public Law 105-277, 112 Stat.

2681, approved October 21, 1998)(1999 Supplemental Appropriations Act),

under division B, title IV, chapter 7, appropriates $250 million in

Community Development Block Grant (CDBG) funds to use for disaster

relief, long-term recovery, and mitigation in communities affected by

Presidentially declared natural disasters designated during fiscal year

1998 and 1999.

With respect to these supplemental funds, the Act provides that the

Secretary of HUD:

may waive or specify alternative requirements for, any provision of

any statute or regulation that the Secretary administers in

connection with the obligation by the Secretary or the use by the

recipient of these funds, except for statutory requirements related

to civil rights, fair housing and nondiscrimination, the

environment, and labor standards, upon a finding that such waiver is

required to facilitate the use of such funds and would not be

inconsistent with the overall purpose of the statute: Provided

further, That the Secretary may waive the requirements that

activities benefit persons of low-and moderate-income, except that

at least 50 percent of the funds under this head must benefit

primarily persons of low-and moderate-income unless the Secretary

makes a finding of compelling need. Provided further, That, upon a

finding of compelling need, the Secretary must provide an

explanation of the finding to the Committees on Appropriations.

In conjunction with these statutory provisions and pursuant to 24

CFR 5.110, the Department has determined that it has good cause to

waive certain regulatory provisions governing the use of Disaster

Recovery Initiative funds. Therefore, to facilitate the use of the

Disaster Recovery Initiative funds appropriated under division B, title

IV, chapter 7 of the 1999 Supplemental Appropriations Act, the

following provisions are waived for the reasons set forth below. These

waivers apply to activities funded under the Act with Disaster Recovery

Initiative funds.

Consolidated Submissions for Community Planning and Development

Programs

Description of Requirements Waived

Citizen participation requirements at 42 U.S.C. 5304(a), 42 U.S.C.

5306(d)(5)(C), 24 CFR 91.115(c), to the extent that expedited amendment

of the State's Consolidated Plan is necessary to ensure timely delivery

of assistance, except that grantees must provide alternative procedures

for public notice of funding availability, as approved by HUD.

Justification: To provide the flexibility to expedite the

availability of disaster recovery assistance, if necessary.

The requirements at 42 U.S.C. 12705(a)(2), 42 U.S.C. 5304(a)(1), 42

U.S.C. 5304(m), and 24 CFR 91.320.

Justification: To provide the flexibility to expedite the

availability of disaster recovery assistance, if necessary. These

requirements concern the submission of an Annual Action Plan (for

States receiving annual allocations of regular CDBG funding). 42 U.S.C.

5304(m) contains the requirement for submission of a Community

Development Plan describing a grantee's priority non-housing community

development needs. Section I.G. of the Federal Register notice,

published elsewhere in today's Federal Register, implementing the

Disaster Recovery Initiative establishes streamlined, alternative

planning and submission requirements for Disaster Recovery Initiative

funding which meet the intent of the Cranston-Gonzalez National

Affordable Housing Act and the Housing and Community Development Act.

All State grantees that receive formula allocations of CDBG funding

have already met the statutory and regulatory requirements for the

five-year strategic plan in the Consolidated Plan.

Citizen participation requirements at 42 U.S.C. 5304(a)(2) and

(a)(3)(A) through (E), 24 CFR 91.110 and 91.115, and 24 CFR 570.486(a).

Justification: To provide the flexibility to expedite the

availability of disaster recovery assistance, if necessary. Section

I.G. of the Federal Register notice implementing the Disaster Recovery

Initiative establishes streamlined, alternative citizen participation

requirements for Disaster Recovery Initiative funding which meet the

intent of the National Affordable Housing Act and the Housing and

Community Development Act. Such requirements provide for public notice,

appraisal, examination, and comment on the activities proposed for the

use of DRI funds, but do not specifically require public hearings.

Community Development Block Grant Program

Description of Requirements Waived

Requirements at 42 U.S.C. 5301(c), 42 U.S.C. 5304(b)(3)(A) and 24

CFR 570.484 (for States) that 70 percent of funds, over a period not to

exceed three years, are for activities that benefit low and moderate

income persons.

Justification: Grantees should give maximum feasible priority to

funding activities that benefit persons of low and moderate income.

Because the damage to community development and housing is without

regard to income, and income-producing jobs are often lost following a

disaster for a period of time, it is important to give grantees maximum

flexibility to carry out recovery activities within the confines of the

CDBG program national objectives, which are not waived. Also, with

mitigation activities such as the buyout of flood-prone properties, it

is within the community's interest and consistent with Federal disaster

and floodplain policy to reduce the risks to health and safety and to

lessen future disaster damage and related costs by buying out all

properties with areas at risk, rather than taking a patchwork approach.

Section I.C.2 of the Federal Register notice implementing the Disaster

Recovery Initiative establishes requirements for complying with the

statutory mandate that each grantee's program principally (at least

50%) benefit low- and moderate-income persons.

[[Page 72873]]

Requirements at 42 U.S.C. 5305(a) and 24 CFR 570.482(a) through

(d), concerning activities eligible for funding under the Disaster

Recovery Initiative.

Justification: To give maximum flexibility to grantees in

addressing the wide variety of needs resulting from natural disasters,

the Department has established alternative requirements for eligible

activities at section I.H. of the Federal Register notice implementing

the Disaster Recovery Initiative. These requirements will ensure

compliance with the eligibility requirements of the Act and will ensure

accountability in the use of funds.

The 50 percent of downpayment limitation on direct homeownership

assistance for low or moderate income homebuyers at 42 U.S.C.

5305(a)(24)(D).

Justification: Required to provide additional assistance to low/

moderate income disaster victims in instances in which direct

homeownership assistance with 50 percent of a downpayment is

insufficient.

Provisions of 42 U.S.C. Chapter 69--Community Development and 24

CFR part 570 that would prohibit States electing to receive CDBG funds

from distributing such funds to units of general local government in

entitlement communities and to Indian tribes, including 42 U.S.C.

5306(d)(1) and (2)(A) and 24 CFR 570.480(a), to the extent that such

provisions limit the distribution of funds to units of general local

government located in nonentitlement areas and to Indian tribes.

Justification: This provides the State the flexibility necessary to

meet a wide range of recovery needs in any areas of the State,

including those in entitlement communities and on Indian reservations,

that have been affected by the disaster.

Requirements at 24 CFR 570.480(a), 570.481(a) and 570.486(b).

Justification: These provisions describe requirements which are

specific to States' administration of CDBG funding for non-entitlement

areas. 24 CFR 570.480(a) indicates that other subparts of Part 570 are

generally not applicable to the State CDBG program; 24 CFR 570.481(a)

indicates that HUD will defer to States' interpretations of the

definitions of terms contained in 42 U.S.C. 5300 et seq.; 24 CFR

570.486(b) governs activities serving beneficiaries outside the

jurisdiction of the unit of general local government. The Act permits

HUD to specify alternative requirements for purposes of the Disaster

Recovery Initiative. Where possible, the Federal Register notice

implementing the Disaster Recovery Initiative retains the

administrative flexibility provided to States in the State CDBG

program.

Requirements of 42 U.S.C. 5306(d)(3)(A) and 24 CFR 570.489(a)(1)

concerning the use of Disaster Recovery Initiative funds for State

administrative costs, including matching funds requirements.

Justification: Waiving these provisions would prevent undue

hardship on States and would further the purposes of disaster recovery,

by eliminating the requirement that Disaster Recovery Initiative funds

spent on State administrative costs be matched with State funding.

Paragraph I.H.8.b. of the Federal Register notice implementing the

Disaster Recovery Initiative establishes alternative requirements for

States' use of funds for costs incurred in administering this funding.

The provisions at 42 U.S.C. 5304(j) and 24 CFR 570.489(e), for the

State CDBG program, that require States to allow units of local

government to retain program income. All program income will be

returned to the State and will become program income for the year in

which the State redistributes those funds.

Justification: Waiver of this provision will also allow States to

quickly utilize all program income for other eligible activities,

except that for States not participating in the CDBG program, program

income received by a State after closeout of its grant shall not be

subject to any Federal requirement.

Requirements of 42 U.S.C. 5306(d)(2)(C)(iii) concerning

restrictions on a State's ability to limit activities eligible for

funding.

Justification: Waiving these requirements will increase State

grantees' flexibility in prioritizing and responding to disaster

recovery needs.

Acquisition and Relocation Requirements For CDBG Disaster

Supplemental Funds

Description of Requirements Waived

One-for-one replacement requirements at 42 U.S.C. 5304(d)(2) and 24

CFR 570.488, 570.606(c) and 42.375(a), for low and moderate income

dwelling units (1) damaged by the disaster, (2) for which CDBG funds

are used for demolition, and (3) which are not suitable for

rehabilitation.

Justification: These requirements provide that all occupied and

vacant occupiable low/moderate income dwelling units that are

demolished or converted to a use other than as low/moderate income

dwelling units in connection with a CDBG activity must be replaced with

low/moderate income dwelling units.

These requirements are waived provided the grantee assures HUD it

will use all resources at its disposal, including DRI funds authorized

to be used for a program of optional relocation assistance under 42

U.S.C. 505(a)(11), to ensure no displaced homeowner will be denied

access to decent, safe and sanitary suitable replacement housing

because he or she has not received sufficient financial assistance.

Not waiving this provision would discourage grantees from

demolition and clearance of dwelling units that would otherwise be

appropriate for CDBG assistance. Such inaction would inhibit recovery

efforts and add to health and safety problems.

Relocation requirements at 42 U.S.C. 5304(d)(2)(iii) and (iv) and

24 CFR 570.606(c) and 42.350(e), to permit a grantee to meet all or

part of its obligation to provide relocation benefits to displaced

persons under sections 204 and 205 of the Uniform Relocation Assistance

and Real Property Acquisition Policies Act of 1970, as amended (42

U.S.C. 4601 et seq) (URA).

Justification: The statutory requirements of the URA are also

applicable to the administration of FEMA assistance, and disparities in

rental assistance payments for activities funded by HUD and that agency

will thus be eliminated.

FEMA is subject to the requirements of the URA. Pursuant to this

authority, FEMA requires that rental assistance payments be calculated

on the basis of the amount necessary to lease or rent comparable

housing for a period of 42 months. HUD is also subject to these

requirements, but is also covered by alternative relocation provisions

authorized under 42 U.S.C. 5304(d)(2)(iii) and (iv) and implementing

regulations at 24 CFR 570.606(c)(2). These alternative relocation

benefits, available to low-and moderate-income displacees opting to

receive them in certain HUD programs, require the calculation of

similar rental assistance payments on the basis of 60 months, rather

than 42 months, thereby creating a disparity between the available

benefits offered by HUD and FEMA, respectively. The waiver assures

uniform and equitable treatment for all such tenants under the URA, as

qualified by this waiver.

Requirements at 49 CFR 24.2, 24.402(b)(2) and 24.404, to the extent

that they require grantees to provide URA financial assistance

sufficient to reduce the displaced person's post-displacement rent/

utility cost to 30 percent of household income.

[[Page 72874]]

Justification: The failure to suspend these requirements would

impede disaster recovery. To the extent that a tenant has been paying

rents in excess of 30 percent of household income without demonstrable

hardship, rental assistance payments to reduce tenant costs to 30

percent would not be required.

Requirements of Sections 204 and 205 of the URA, and 49 CFR Part

24, to the extent necessary to permit a grantee to meet all or a

portion of a grantee's replacement housing financial assistance

obligation to a displaced renter who elects to relocate to rental

housing through a tenant-based rental assistance (TBRA) housing program

subsidy (e.g., Section 8 rental voucher or certificate) provided that

the renter is also provided referrals to suitable, available rental

replacement dwellings where the owner is willing to participate in the

TBRA program, and the period of authorized assistance is at least 42

months.

Justification: Failure to grant the waiver would impede disaster

recovery whenever TBRA program subsidies are available but funds for

cash relocation assistance are limited. The change conforms URA policy

with Section 104(d) relocation assistance.

Requirements of Section 202(b) of the URA and 49 CFR 24.302, to the

extent that they require a grantee to offer a person displaced from a

dwelling unit the option to receive a ``moving expense and dislocation

allowance'' based on the current schedule of allowances prepared by the

Federal Highway Administration, provided that the grantee establishes

and offers the person a moving expense and dislocation allowance under

a schedule of allowances that is reasonable for the jurisdiction and

takes into account the number of rooms in the displacement dwelling,

whether the person owns and must move the furniture, and, at a minimum,

the kinds of expenses described in 49 CFR 24.301.

Justification: Failure to suspend this provision would impede

disaster recovery by requiring grantees to offer allowances that do not

reflect local labor and transportation costs. Persons displaced from a

dwelling remain entitled to choose a payment for actual reasonable

moving and related expenses if they find that approach preferable to

the locally established moving expense and dislocation allowance.

Requirements of Section 414 of the Stafford Disaster Relief and

Emergency Assistance Act (42 U.S.C. 5181) so that Uniform Relocation

Act provisions do not apply when a homeowner displaced by the disaster

is assisted.

Justification: Section 414 States: ``Notwithstanding any other

provision of law, no person otherwise eligible for any kind of

replacement housing payment under the Uniform Relocation Assistance and

Real Property Acquisition Policies Act of 1970 (P.L. 91-646) shall be

denied such eligibility as a result of his being unable, because of a

major disaster as determined by the President, to meet the occupancy

requirements set by such Act.''

Failure to waive section 414 would impede disaster recovery,

discouraging grantees from the acquisition, demolition or

rehabilitation of disaster-damaged housing because of excessive costs

that would result from replacement housing payments made to former

homeowners displaced by the disaster. Homeowners actually displaced by

a HUD-assisted disaster recovery project will continue to receive URA

assistance. Homeowners displaced by the disaster may apply for

assistance under available disaster recovery programs.

Other Applicable Requirements

Requirements of 12 U.S.C. 1701u, 24 CFR 570.607(b) and 24 CFR part

135, concerning the requirements of Section 3 of the Housing and Urban

Development Act of 1968.

Justification: Waiving these requirements will increase grantees'

flexibility in responding to disaster recovery needs and will increase

the efficiency with which activities may be implemented to meet those

needs. However, in the Federal Register notice implementing the

Disaster Recovery Initiative funding, HUD encourages grantees to give

priority to the hiring of local low-and moderate-income persons and

contractors in carrying out its activities.

Requirements of 24 CFR 570.612 and 24 CFR part 52, concerning

applicability of Executive Order 12372 regarding intergovernmental

consultation and review of activities proposed for Federal funding.

Justification: Waiving these requirements will increase grantees'

flexibility in responding to disaster recovery needs and will increase

the efficiency with which activities may be implemented to meet those

needs.

Additionally, section 107(e)(2) of the Housing and Community

Development Act of 1974, as amended (42 U.S.C. 5307(e)(2)) authorizes

HUD to waive the provisions of section 109 and 110 in connection with

grants to Indian tribes. HUD is exercising this authority to now waive

labor standards requirements of section 110 (42 U.S.C. 5310) as they

would otherwise apply to Indian tribes.

Justification: Waiving the cited labor standards requirements for

the use of Disaster Recovery Initiative grants to Indian tribes

conforms with Departmental policy for the Indian Community Development

Block Grant program.

Finding of No Significant Impact

A Finding of No Significant Impact 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). The Finding of No Significant Impact is

available for public inspection between 7:30 a.m. and 5:30 p.m.

weekdays in the Office of the Rules Docket Clerk, Office of General

Counsel, Department of Housing and Urban Development, Room 10276, 451

Seventh Street, SW, Washington, DC 20410.

Dated: December 21, 1999.

Joseph D'Agosta,

General Deputy Assistant Secretary for Community Planning and

Development.

[FR Doc. 99-33674 Filed 12-27-99; 8:45 am]

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