72100 Federal Register / Vol. 69, No. 237 / Friday, December 10, 2004 / Notices 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

[Docket No. FR–4959–N–01] 

Waivers Granted to and Alternative 

Requirements for CDBG Disaster 

Recovery Grantees Under the Military 

Construction Appropriations and 

Emergency Hurricane Supplemental 

Appropriations Act, 2005

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of allocation method, 

waivers granted, alternative 

requirements applied, and statutory 

program requirements. 

SUMMARY: This notice advises the public 

of the allocation method for grant funds, 

the list of grantees and proposed grant 

amounts, and the waivers of regulations 

and statutory provisions granted to 

CDBG disaster recovery grantees for the 

purpose of assisting in the recovery 

from the federally declared disasters 

that occurred between August 31, 2003 

and October 1, 2004. As described in the 

SUPPLEMENTARY INFORMATION section of 

this notice, HUD is authorized by statute 

to waive statutory and regulatory 

requirements and specify alternative 

requirements for this purpose. This 

notice describes the fund allocation 

basis, lists the provisions being waived 

and alternative requirements specified, 

and notes statutory changes affecting 

program design and implementation.

DATES: Effective Date: December 15, 

2004.

FOR FURTHER INFORMATION CONTACT: Jan 

C. Opper, Director, Disaster Recovery 

and Special Issues, Office of Block Grant 

Assistance, Department of Housing and 

Urban Development, Room 7286, 451 

Seventh Street, SW., Washington, DC 

20410, telephone number (202) 708–

3587. Persons with hearing or speech 

impairments may access this number 

via TTY by calling the Federal 

Information Relay Service at (800) 877–

8339. FAX inquiries may be sent to Mr. 

Opper at (202) 401–2044. (Except for the 

‘‘800’’ number, these telephone numbers 

are not toll-free.)

SUPPLEMENTARY INFORMATION: 

Authority To Grant Waivers 

The Military Construction 

Appropriations and Emergency 

Hurricane Supplemental Appropriations 

Act, 2005 (Pub. L. 108–324, approved 

October 13, 2004) appropriates $150 

million in Community Development 

Block Grant funds for disaster relief, 

long-term recovery, and mitigation 

directly related to the effects of the 

covered disasters. The 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, 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. 

The Secretary finds that the following 

waivers and alternative requirements 

are necessary to facilitate the use of 

these funds for their required purposes. 

The Secretary also finds that such uses 

of funds, as described below, are not 

inconsistent with the overall purpose of 

Title I of the Housing and Community 

Development Act of 1974, as amended, 

or the Cranston-Gonzalez National 

Affordable Housing Act, as amended. 

Under the requirements of the HUD 

Reform Act, regulatory waivers must be 

justified and published in the Federal 

Register. The Department is also using 

this notice to provide information about 

other ways in which the requirements 

for this grant vary from regular CDBG 

program rules. Therefore, HUD is using 

this notice to make public alternative 

requirements and to note the 

applicability of disaster recovery-related 

statutory provisions. Compiling this 

information in a single notice creates a 

helpful resource for grant administrators 

and HUD field staff. 

Except as described in this notice for 

states, statutory and regulatory 

provisions governing the Community 

Development Block Grant program for 

states, including those at 24 CFR part 

570 subpart I, shall apply to the use of 

these funds. Except as described in this 

notice for Indian tribes, the statutory 

and regulatory provisions governing the 

Indian Community Development Block 

Grant program for Indian tribes and not 

related to the funding application and 

selection process will apply, including 

those at 24 CFR 1003 et seq.

Allocations 

Public Law 108–324 (signed October 

13, 2004) provides $150 million of 

supplemental appropriation for the 

CDBG program for:

use only for disaster relief, long-term 

recovery, and mitigation in communities 

affected by disasters designated by the 

President between August 31, 2003 and 

October 1, 2004, except those activities 

reimbursable by the Federal Emergency 

Management Agency or available through the 

Small Business Administration. * * *

The law further notes:

That all funds under this heading shall be 

awarded by the Secretary to states (including 

Indian tribes for all purposes under this 

heading) to be administered by each state in 

conjunction with its community 

development block grants program: Provided 

further, That notwithstanding 42 U.S.C. 

5306(d)(2), states are authorized to provide 

such assistance to entitlement communities.

HUD has developed an allocation 

method based on data available from the 

Small Business Administration (SBA) 

and the Federal Emergency Management 

Agency (FEMA) on unmet housing, 

business, and public assistance needs 

for all designated areas in covered major 

disaster declarations. To receive 

funding, a state must submit a plan in 

accordance with this notice describing 

how funds will be used to address its 

greatest unmet need(s) and listing 

expected accomplishments. HUD may 

reallocate to other funded states any 

funds not used by a state or recaptured 

from a state. 

The Congressional conference report 

(H.Rep.108–773) directs HUD to provide 

funds ‘‘to areas facing the greatest 

need.’’ Thus, the allocation reflects the 

relative recovery needs among the 

grantees having disasters that received 

Presidential declarations between 

August 31, 2003 and October 1, 2004. 

This weighting is designed to direct 

funds to the areas of greatest need, with 

an emphasis on housing. 

The basic allocation formula is: 

Æ 50 percent of the funds go toward 

unmet housing needs; 

Æ 25 percent of the funds go toward 

unmet business needs; 

Æ 25 percent of the funds go toward 

unmet public assistance needs. 

Each state will receive its allocation 

based on its proportion of the unmet 

need aggregated from all covered 

disasters in that state relative to the sum 

of the unmet need for all states with 

declared disasters. 

In addition to allocating the funds 

based on proportion of unmet need, 

HUD has established a minimum grant 

threshold. The minimum grant amount 

was set to ensure that grantees would 

receive sufficient funding to make 

significant progress toward the statutory 

objective of long-term disaster recovery. 

If any state would have otherwise been 

allocated less than $1.5 million under 

the allocation formula described above, 

it will not receive a grant allocation and 

the remaining funds will be reallocated 

proportionate to need to the grantees 

receiving grants greater or equal to $1.5 

million. 

The proposed allocations are as 

follows:

Federal Register / Vol. 69, No. 237 / Friday, December 10, 2004 / Notices 72101

State Disaster type Amount reserved 

Alabama ........... Hurricane Ivan (FEMA–DR–1549) ........................................................................................................................ $10,965,311 

California .......... Wildfires (1498). San Simeon earthquake (1505), flooding from levee break (1529) ......................................... 10,547,928 

Florida ............... Hurricane Charley (1539) ..................................................................................................................................... ........................

Hurricane Frances (1545) ..................................................................................................................................... ........................

Hurricane Ivan (1551) ........................................................................................................................................... ........................

Hurricane Jeanne (1561) ...................................................................................................................................... ........................

Subtotal Florida .................................................................................................................................................... 100,915,626 

Maryland ........... Hurricane Isabel (1492) ........................................................................................................................................ 2,737,133 

Hurricane Isabel (1490), Tropical Storm Frances (1546), ................................................................................... ........................

North Carolina .. Hurricane Ivan (1553) ........................................................................................................................................... 4,569,982 

Ohio .................. Landslide, mudslides, severe storm, flooding (1507, 1519, 1556) ...................................................................... 1,971,541 

Pennsylvania .... Tropical Storms Henri & Isabel (1497), severe storms & flooding (1538), Tropical Depressions Frances & 

Ivan (1555 & 1557).

2,528,243 

Puerto Rico ....... Severe storms, flooding, mudslides, & landslides (1501), Tropical Storm Jeanne (1552) .................................. 7,998,964 

Virginia .............. Hurricane Isabel (1491), severe storms and flooding (1502), severe storms, tornadoes & flooding (1525), 

Tropical Depression Gaston (1544).

5,724,016 

West Virginia .... Hurricane Isabel (1496), severe storms, flooding, landslides (1500, 1522, 1536, 1538) .................................... 2,041,256 

HUD will invite each state named 

above to submit an Action Plan for 

Disaster Recovery in accordance with 

this notice.

The Department is compelled to 

enforce the provision of the 

appropriations statute that requires 

funds be used only for disaster relief, 

long-term recovery, and mitigation. The 

Department is also compelled to follow 

the conference report direction that 

funds be directed to areas with greatest 

need. Each grantee will describe in its 

Action Plan for Disaster Recovery how 

each use of funds meets these 

requirements. HUD will monitor 

compliance with this direction and may 

be compelled to consider disallowing 

expenditures if it finds uses of funds are 

not disaster-related or are clearly not for 

greatest needs. HUD encourages 

grantees to contact HUD field offices for 

guidance in complying with these 

requirements during development of 

their Action Plans for Disaster Recovery 

or if they have any questions regarding 

meeting these requirements. 

The appropriations act treats Indian 

tribes as states for ‘‘all purposes under 

this heading.’’ As a result, the balance 

of this Notice will use the term 

‘‘grantee’’ to mean a state or Indian tribe 

receiving a disaster recovery grant under 

this Notice. The terms ‘‘state’’ and 

‘‘Indian tribe’’ will be used when 

necessary to distinguish between the 

two. 

Waiver Justification 

This section of the notice briefly 

describes the necessary basis for each 

waiver and provides an explanation of 

related alternative requirements, if 

additional explanation is necessary. 

This Waiver Justification section also 

highlights some of the statutory items 

and alternative requirements described 

in the Applicable Rules, Statutes, 

Waivers and Alternative Requirements

section that follows. 

Each state eligible for a disaster 

recovery grant receives annual CDBG 

allocations, has a consolidated plan, a 

citizen participation plan, a monitoring 

plan, and has made CDBG certifications. 

Indian tribes have regular experience 

operating within CDBG program 

requirements based on the same statute. 

HUD encourages each CDBG disaster 

recovery grantee to carry out CDBG 

disaster recovery activities in the 

context of its ongoing community 

development program to the extent 

feasible (for example, by selecting 

activities consistent with the 

consolidated plan, by providing overall 

benefit to at least 70 percent low- and 

moderate-income persons, and by 

holding hearings or meetings to solicit 

public comment). 

The waivers, alternative requirements, 

and statutory changes apply only to the 

CDBG supplemental disaster recovery 

funds appropriated in Public Law 108–

324. They provide additional flexibility 

in program design and implementation 

and implement statutory requirements 

unique to this appropriation. 

Pre-Grant Process 

The first group of waivers and 

alternative requirements concerns the 

pre-grant process, including citizen 

participation, the Action Plan for 

Disaster Recovery, fund distribution, 

and the overall benefit criteria. 

Pursuant to explicit authority in the 

appropriations act, an overall benefit 

waiver allows for up to 50 percent of the 

grant to assist activities under the urgent 

need or prevention or elimination of 

slums and blight national objectives, 

rather than the 30 percent allowed in 

the regulation. The Housing and 

Community Development Act requires 

grantees to give maximum feasible 

priority to funding activities that benefit 

persons of low and moderate income, 

prevent or eliminate slums and blight, 

or meet community needs of particular 

urgency. Because major disaster damage 

to community development and housing 

is without regard to income, and 

income-producing jobs are often lost for 

a period of time following a disaster, 

HUD is waiving this requirement to give 

grantees maximum flexibility to carry 

out recovery activities within the 

confines of the CDBG program national 

objectives. The requirement that every 

activity meet one of the three national 

objectives is not waived. 

The regulatory waiver allowing 

distribution of funds by a state to 

entitlement communities and Indian 

tribes is consistent with the provision of 

the appropriations law that specifically 

allows distribution of disaster recovery 

grant funds to entitlement communities 

and is also consistent with waivers 

granted for previous similar disaster 

recovery cases. 

HUD is waiving the requirement for 

consistency with the consolidated plan 

because the effects of a major disaster 

usually alter a grantee’s priorities for 

meeting housing, employment, and 

infrastructure needs. HUD is limiting 

the scope of the waiver for consistency 

with the consolidated plan; it applies 

only until the grantee first updates its 

consolidated plan following the 

disaster. 

HUD is waiving the action plans 

requirements and substituting a 

streamlined Action Plan for Disaster 

Recovery. These actions will allow 

rapid implementation of disaster 

recovery grant programs and ensure 

conformance with provisions of the 

appropriations act. Where possible, the 

streamlined disaster recovery Action 

Plan, including certifications, does not 

repeat common action plan elements the 

72102 Federal Register / Vol. 69, No. 237 / Friday, December 10, 2004 / Notices 

grantee has already committed to carry 

out as part of its annual CDBG 

submission. 

The citizen participation waiver and 

alternative requirements will permit a 

speedier public process, but one that 

still provides for public notice, 

appraisal, examination, and comment 

on the activities proposed for the use of 

CDBG disaster recovery grant funds. The 

waiver removes the requirement at both 

the grantee and state grant recipient 

levels for public hearings or meetings as 

the method for disseminating 

information or collecting citizen 

comments.

Eligibility and Allowable Costs 

The requirements under this heading 

in the Applicable Rules, Statutes, 

Waivers, and Alternative Requirements

section include activity eligibility 

waivers, alternative requirements, and 

notes about the applicability of grantrelated disaster recovery provisions of 

law. Justification for the waivers 

follows. 

The waiver that allows new housing 

construction and payment of up to 100 

percent of a housing down payment is 

necessary following major disasters in 

which large numbers of affordable 

housing units have been damaged or 

destroyed, as is the case in many of the 

disasters eligible under this notice, 

particularly those in Florida. 

The limited waiver of the anti-pirating 

clause allows the flexibility to provide 

assistance to a business located in 

another state if the business was 

displaced from the grantee’s jurisdiction 

by the disaster and the business wishes 

to return. This waiver is necessary to 

allow a grantee affected by a major 

disaster to rebuild its employment base. 

The waiver of the state match for 

program administration requirement is 

provided so that the state has the 

flexibility to direct money to other 

recovery needs rather than being 

restricted to using the funding for 

administration. 

Relocation Requirements 

HUD is providing a limited waiver of 

the relocation requirements. HUD will 

consider providing additional waivers 

on a case-by-case basis if a grantee 

chooses to fund a flood buyout program 

with both HUD and FEMA funds and 

requires the waivers to develop a 

workable program design. 

HUD is waiving the one-for-one 

replacement of low- and moderateincome housing units demolished or 

converted using CDBG funds 

requirement for housing units damaged 

by one or more disasters. HUD is 

waiving this requirement because it 

does not take into account the large, 

sudden changes a major disaster may 

cause to the local housing stock or local 

economy. Further, the requirement does 

not take into account the threats to 

public health and safety and to 

economic revitalization that may be 

caused by the presence of disasterdamaged structures that are unsuitable 

for rehabilitation. As it stands, the 

requirement would impede disaster 

recovery and discourage grantees from 

acquiring, converting, or demolishing 

disaster-damaged housing because of 

excessive costs that would result from 

replacing all such units within the 

specified timeframe. 

Reporting 

HUD is waiving the annual reporting 

requirement because the Congressional 

conferees requested quarterly reports 

from HUD on activities funded with 

these grants. To ensure that HUD can 

comply with this request, HUD is 

requiring each grantee to report 

quarterly to HUD using the online 

Disaster Recovery Grant Reporting 

system. 

Match 

There are no waivers in this section. 

Certifications 

HUD is waiving the standard 

certifications and substituting 

alternative certifications. The alternative 

certifications are tailored to CDBG 

disaster recovery grants and remove 

certifications and references that are 

redundant or appropriate to the annual 

CDBG formula program.

Applicable Rules, Statutes, Waivers, 

and Alternative Requirements 

Pre-grant Process 

1. General note. Prerequisites to a 

grantee’s receipt of CDBG disaster 

recovery assistance include adoption of 

a citizen participation plan; publication 

of its proposed Action Plan for Disaster 

Recovery; public notice and comment; 

and submission to HUD of an Action 

Plan for Disaster Recovery, including 

certifications. Except as described in 

this notice for states, statutory and 

regulatory provisions governing the 

Community Development Block Grant 

program for states, including those at 24 

CFR 570 subpart I, shall apply to the use 

of these funds. Except as described in 

this notice for Indian tribes, the 

statutory and regulatory provisions 

governing the Indian Community 

Development Block Grant program for 

Indian tribes and not related to the 

funding application and selection 

process will apply, including those at 24 

CFR 1003 et seq.

2. Overall Benefit waiver and 

alternative requirement. The 

requirements at 42 U.S.C. 5301(c), 42 

U.S.C. 5304(b)(3)(A), 24 CFR 570.484 

(for states), and 24 CFR 1003.208 (for 

tribes) that 70 percent of funds are for 

activities that benefit low- and 

moderate-income persons are waived to 

stipulate that at least 50 percent of 

disaster recovery grant funds are for 

activities that benefit low and moderate 

income persons. 

3. Consolidated Plan waiver.

Requirements at 42 U.S.C. 12706 and 24 

CFR 91.325(a)(6), that housing activities 

undertaken with CDBG funds be 

consistent with the strategic plan, are 

waived. Further, 24 CFR 570.903, which 

requires HUD to annually review 

grantee performance under the 

consistency criteria, is also waived. The 

waiver of consistency with the 

consolidated plan applies only until the 

grantee first updates the consolidated 

plan priorities following the disaster or 

until the completion of all grant 

activities, whichever comes first. 

4. Citizen participation waiver and 

alternative requirement. Provisions of 

42 U.S.C. 5304(a)(2) and (3), 42 U.S.C. 

12707, 24 CFR 570.486, 24 CFR 

1003.604, and 24 CFR 91.115(b) with 

respect to citizen participation 

requirements are waived and replaced 

by the requirements below. The 

streamlined requirements do not 

mandate public hearings at either the 

state or local government level, but do 

require providing a reasonable 

opportunity for citizen comment and 

ongoing citizen access to information 

about the use of grant funds. The 

streamlined citizen participation 

requirements for this grant are: 

a. Before the grantee adopts the action 

plan (or a part of an action plan) for this 

grant or any substantial amendment to 

this grant, the grantee will publish the 

proposed plan or amendment (including 

the information required in this notice 

for an Action Plan for Disaster 

Recovery). The manner of publication 

(including prominent posting on the 

state, local, or other relevant Web site) 

must afford citizens, affected local 

governments and other interested 

parties a reasonable opportunity to 

examine the plan or amendment’s 

contents. Subsequent to publication, the 

grantee must provide a reasonable time 

period and method(s) (including 

electronic submission) for receiving 

comments on the plan or substantial 

amendment. The grantee’s plans to 

minimize displacement of persons or 

entities and to assist any persons or 

entities displaced must be published 

with the action plan. 

Federal Register / Vol. 69, No. 237 / Friday, December 10, 2004 / Notices 72103

b. In the action plan, each grantee will 

specify the criteria for determining what 

changes in the grantee’s activities 

constitute a substantial amendment to 

the plan. At a minimum, adding or 

deleting an activity or changing the 

planned beneficiaries of an activity will 

constitute a substantial change. Any 

action plan may be modified or 

amended by the grantee in accordance 

with the same procedures required in 

this notice for the preparation and 

submission of an Action Plan for 

Disaster Recovery. 

c. The grantee must consider all 

comments received on the action plan 

or any substantial amendment and 

submit to HUD a summary of those 

comments and the grantee’s response 

with the action plan or substantial 

amendment. 

d. The grantee must make the action 

plan, any substantial amendments, and 

all performance reports available to the 

public. In addition, the grantee must 

make these documents available in a 

form accessible to persons with 

disabilities. During the term of this 

grant, the grantee will provide citizens, 

affected local governments, and other 

interested parties reasonable and timely 

access to information and records 

relating to the action plan and the 

grantee’s use of this grant, including 

posting such information to the Internet. 

e. The grantee will provide a timely 

written response to every citizen 

complaint. Such response will be 

provided within 15 working days of the 

complaint, if practicable. 

5. Action Plan waiver and alternative 

requirement. The requirements at 42 

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

42 U.S.C. 5304(m), 42 U.S.C. 

5306(d)(2)(C)(iii), 24 CFR 1003.604, and 

24 CFR 91.320 are waived for these 

disaster recovery grants. Each grantee 

must submit to HUD an Action Plan for 

Disaster Recovery that describes: 

a. The greatest recovery needs 

resulting from the covered disaster that 

have not been addressed by insurance 

proceeds, federal assistance or any other 

funding source; 

b. The grantee’s overall plan for 

disaster recovery; 

c. Expected Federal, non-Federal 

public, and private resources, and their 

relationship, if any, to activities to be 

funded with CDBG disaster recovery 

assistance; and 

d. The state’s method of distribution. 

The method of distribution shall 

include a description of: 

(1) All criteria used to select 

applications from local governments for 

funding, including the relative 

importance of the criteria (does not 

apply to tribal grantees), and including 

a description of how the disaster 

recovery grant resources will be 

allocated to areas of greatest need 

among all funding categories and the 

threshold factors and grant size limits 

that are to be applied, or 

(2) The projected uses for the CDBG 

disaster recovery funds by project, 

program or activity and geographic area, 

and 

(3) How the allocation method or use 

of funds (project, program or activity) 

described in accordance with 

subparagraphs (A) or (B) above will 

result in uses of grant funds related to 

disaster relief or recovery from specific 

effects of the disaster(s); and 

(4) Sufficient information so that units 

of general local government will be able 

to understand and comment on the 

action plan and be able to prepare 

responsive applications (does not apply 

to tribal grantees). 

e. Monitoring standards and 

procedures (if a state will apply those 

already developed for the consolidated 

plan under section 24 CFR 91.330, so 

affirm); 

f. Required certifications (see the 

applicable Certifications section of this 

notice); 

g. The specific sources from which 

the match requirement (see the NonFederal Public Matching Funds 

Requirement section of this notice) will 

be achieved; and 

h. A completed and executed Federal 

form SF–424.

6. Waiver and alternative requirement 

for distribution to CDBG metropolitan 

cities and urban counties. The 

appropriations law allows a grantee to 

distribute disaster recovery grant funds 

to metropolitan cities and urban 

counties (i.e., ‘‘entitlement 

communities’’). Section 5302(a)(7) of 

title 42, United States Code (definition 

of ‘‘nonentitlement area’’) and 

provisions of 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, are waived, 

including 24 CFR 570.480(a), to the 

extent that such provisions limit the 

distribution of funds to units of general 

local government located in entitlement 

areas and to Indian tribes. The 

appropriations law supersedes the 

statutory distribution prohibition at 42 

U.S.C. 5306(d)(1) and (2)(A). 

Alternatively, the state is required to 

distribute funds without regard to a 

local government or Indian tribe status 

under any other CDBG program. 

Eligibility and Allowable Costs 

7. Note that use of grant funds must 

relate to the covered disaster. In 

addition to being eligible under 42 

U.S.C. 5305(a) or this notice and 

meeting a CDBG national objective, 

activities funded under this notice must 

also be related to disaster relief, longterm recovery, and mitigation in 

communities affected by Presidentially 

declared disasters occurring between 

August 31, 2003, and September 30, 

2004. 

8. Note on duplication of benefits and 

disaster impact. Pursuant to the 

appropriations act and the Robert T. 

Stafford Disaster Assistance and 

Emergency Relief Act (42 U.S.C. 5155), 

no entity may receive disaster recovery 

grant assistance with respect to any part 

of a disaster loss that is reimbursable by 

FEMA or eligible for Small Business 

Administration (SBA) assistance or as to 

which it has received financial 

assistance under any other program or 

from insurance or any other source. For 

example, a grantee may not use funds 

under this notice for activity costs that 

are reimbursable or for which funds are 

made available by FEMA or SBA. 

Further, the grantee may not provide 

CDBG disaster recovery grant assistance 

to a project or activity underway prior 

to a Presidential disaster declaration 

during the time period specified in the 

appropriations act unless the disaster 

directly impacted the project. 

9. Program income alternative 

requirement. If, under 24 CFR 

570.489(e)(3) a state determines that a 

state grant recipient is continuing a 

disaster recovery grant assisted activity 

from which program income is derived, 

it must permit the recipient to retain the 

program income. For such continuing 

activities, the program income will 

retain its CDBG disaster recovery grant 

identity and be covered by this notice. 

However, if the state does not make 

such a determination, then program 

income earned by the activity will be 

regular CDBG program income under 

the provisions of 24 CFR 570.489(e) and 

disaster recovery grant requirements 

and waivers will no longer apply. 

For Indian tribes that are state grant 

recipients or HUD grantees, the 

regulations at 24 CFR 1003.503 will 

govern program income generated by a 

disaster recovery grant activity. Program 

income generated by disaster recovery 

grant activities will retain its CDBG 

disaster recovery grant identity and be 

covered by this notice until the state or 

HUD, as applicable, closes out its grant 

with the tribe. 

If a grantee receives disaster recovery 

grant program income (e.g., if a state 

72104 Federal Register / Vol. 69, No. 237 / Friday, December 10, 2004 / Notices 

requires a state grant recipient to remit 

the funds to the state), the program 

income will retain its CDBG disaster 

recovery grant identity and be covered 

by this notice until the HUD closes out 

the disaster recovery grant to the state. 

10. Housing-related eligibility waivers.

Section 5305(a) of title 42, United States 

Code and 24 CFR 570.482(a) through (d) 

are waived to the extent necessary to 

allow down payment assistance for up 

to 100% of the down payment (42 

U.S.C. 5305(a)(24)(D)) and to allow new 

housing construction. 

11. Waiver and modification of the 

anti-pirating clause to permit assistance 

to help a business return. Section 

5305(h) of title 42 United States Code is 

hereby waived only to allow the grantee 

to provide assistance under this grant to 

any business that was operating in the 

covered disaster area before the incident 

date of a Presidentially declared disaster 

between August 31, 2003, and 

September 30, 2004, and has since 

moved in whole or in part from the 

affected area to continue business. 

12. Note on reimbursement of CDBG 

formula funds. The appropriations law 

authorizes the use of CDBG disaster 

recovery grant funds to reimburse 

expenditures incurred from the regular 

CDBG program allocation used to 

achieve the same purposes as the 

disaster recovery grant appropriation. 

13. Waiver of the limitation on 

planning and administrative costs and 

alternative requirement. Section 

5306(d)(3)(A) of title 42 United States 

Code and 24 CFR 570.489(a)(1) 

concerning the use of disaster recovery 

grant funds for state administrative 

costs, including the matching funds 

requirements are waived. The amount of 

grant funds used to pay administrative 

costs incurred by a state in carrying out 

its responsibilities under this notice 

shall not exceed 2 percent of the 

aggregate of the state’s disaster recovery 

grant. The grantee may use no more 

than 20 percent of the sum of any CDBG 

disaster recovery grant, plus program 

income, for planning and program 

administrative costs, including 

administration and planning by state 

grant recipients. 

Relocation Requirements

15. Waiver of one-for-one replacement 

of units damaged by disaster. One-forone replacement requirements at 42 

U.S.C. 5304(d)(2) and 24 CFR 570.488, 

570.606(c) and 42.375(a) are waived 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. These 

requirements are waived provided the 

grantee assures HUD it will use all 

resources at its disposal 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. Also, state grant 

recipients must provide such assurances 

to the state. 

16. Notes on flood buyouts:

a. Payment of pre-flood values for 

buyouts. HUD disaster recovery state 

grant recipients and Indian tribes have 

the discretion to pay pre-flood or postflood values for the acquisition of 

properties located in a flood way or 

floodplain. In using CDBG disaster 

recovery funds for such acquisitions, the 

grantee must uniformly apply 

whichever valuation method it chooses. 

b. Ownership and maintenance of 

acquired property. Any property 

acquired with disaster recovery grants 

funds being used to match FEMA 

Section 404 Hazard Mitigation Grant 

Program funds is subject to section 

404(b)(2) of the Robert T. Stafford 

Disaster Relief and Emergency 

Assistance Act, as amended, which 

requires that such property be dedicated 

and maintained in perpetuity for a use 

that is compatible with open space, 

recreational, or wetlands management 

practices. In addition, with minor 

exceptions, no new structure may be 

erected on the property and no 

subsequent application for Federal 

disaster assistance may be made for any 

purpose. The acquiring entity may want 

to lease such property to adjacent 

property owners or other parties for 

compatible uses in return for a 

maintenance agreement. Although 

Federal policy encourages leasing rather 

than selling such property, the property 

may be sold. In all cases, a deed 

restriction or covenant running with the 

land must require that the property be 

dedicated and maintained for 

compatible uses in perpetuity. 

c. Future Federal assistance to owners 

remaining in floodplain. 

(1) Section 582 of the National Flood 

Insurance Reform Act of 1994, as 

amended, (42 U.S.C. 5154(a)) prohibits 

flood disaster assistance in certain 

circumstances. In general, it provides 

that no Federal disaster relief assistance 

made available in a flood disaster area 

may be used to make a payment 

(including any loan assistance payment) 

to a person for repair, replacement, or 

restoration for damage to any personal, 

residential, or commercial property, if 

that person at any time has received 

flood disaster assistance that was 

conditional on the person first having 

obtained flood insurance under 

applicable Federal law and the person 

has subsequently failed to obtain and 

maintain flood insurance as required 

under applicable Federal law on such 

property. (Section 582 is selfimplementing without regulations.) This 

means that a grantee may not provide 

disaster assistance for the abovementioned repair, replacement, or 

restoration to a person that has failed to 

meet this requirement. 

(2) Section 582 also implies a 

responsibility for a grantee that receives 

CDBG disaster recovery funds or that, 

under 42 U.S.C. 5321, designates 

annually appropriated CDBG funds for 

disaster recovery. That responsibility is 

to inform property owners receiving 

disaster assistance that triggers the flood 

insurance purchase requirement that 

they have a statutory responsibility to 

notify any transferee of the requirement 

to obtain and maintain flood insurance, 

and that the transferring owner may be 

liable if he or she fails to do so. These 

requirements are described below. 

(3) Duty to notify. In the event of the 

transfer of any property described in 

paragraph e., the transferor shall, not 

later than the date on which such 

transfer occurs, notify the transferee in 

writing of the requirements to: 

(a) Obtain flood insurance in 

accordance with applicable Federal law 

with respect to such property, if the 

property is not so insured as of the date 

on which the property is transferred; 

and 

(b) Maintain flood insurance in 

accordance with applicable Federal law 

with respect to such property. Such 

written notification shall be contained 

in documents evidencing the transfer of 

ownership of the property. 

(4) Failure to notify. If a transferor 

fails to provide notice as described 

above and, subsequent to the transfer of 

the property: 

(a) The transferee fails to obtain or 

maintain flood insurance, in accordance 

with applicable Federal law, with 

respect to the property; 

(b) The property is damaged by a 

flood disaster; and 

(c) Federal disaster relief assistance is 

provided for the repair, replacement, or 

restoration of the property as a result of 

such damage, the transferor must 

reimburse the Federal Government in an 

amount equal to the amount of the 

Federal disaster relief assistance 

provided with respect to the property.

d. The notification requirements 

apply to personal, commercial, or 

residential property for which Federal 

disaster relief assistance made available 

in a flood disaster area has been 

provided, prior to the date on which the 

property is transferred, for repair, 

replacement, or restoration of the 

Federal Register / Vol. 69, No. 237 / Friday, December 10, 2004 / Notices 72105

property, if such assistance was 

conditioned upon obtaining flood 

insurance in accordance with applicable 

Federal law with respect to such 

property. 

e. The term ‘‘Federal disaster relief 

assistance’’ applies to HUD or other 

Federal assistance for disaster relief in 

‘‘flood disaster areas.’’ The prohibition 

in subparagraph (1) above applies only 

when the new disaster relief assistance 

was given for a loss caused by flooding. 

It does not apply to disaster assistance 

caused by other sources (i.e., 

earthquakes, fire, wind, etc.). The term 

‘‘flood disaster area’’ is defined in 

section 582(d)(2) to include an area 

receiving a Presidential declaration of a 

major disaster or emergency as a result 

of flood conditions. 

Reporting 

17. Waiver of performance evaluation 

report and alternative requirement. The 

requirements for submission of a 

Performance Evaluation Report (PER) 

pursuant to 42 U.S.C. 12708 and 24 CFR 

91.520 are waived. 

The alternative requirement is that 

a. Each grantee must enter its Action 

Plan for Disaster Recovery into HUD’s 

Web-based Disaster Recovery Grant 

Reporting (DRGR) system. As additional 

detail about uses of funds becomes 

available to the grantee, the grantee 

must enter this detail into DRGR, in 

sufficient detail to serve as the basis for 

acceptable performance reports. 

b. Each grantee must submit a 

quarterly performance report, as HUD 

prescribes, no later than 30 days 

following each calendar quarter, 

beginning after the first full calendar 

quarter after grant award and continuing 

until all funds have been expended and 

that expenditure reported. Each 

quarterly report will include 

information about the uses of funds 

including (but not limited to) the project 

name, activity, location, national 

objective, funds budgeted and 

expended, the funding source and total 

amount of any non-CDBG disaster funds 

(including matching funds), numbers of 

properties and housing units, beginning 

and ending dates of activities, and 

numbers of low- and moderate-income 

persons or households benefiting. 

Quarterly reports must be submitted 

using HUD’s Web-based Disaster 

Recovery Grant Reporting (DRGR) 

system. At least annually (i.e., with 

every fourth submission), the report 

shall include a financial reconciliation 

of funds budgeted and expended, 

calculation of administrative and public 

service limitations, and of the overall 

percent of benefit to low- and moderateincome persons. 

18. Information collection approval 

note. HUD has approval from OMB for 

information collection requirements in 

accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501–

3520). OMB approval is under OMB 

control number 2506–0165, which 

expires August 31, 2007. In accordance 

with the Paperwork Reduction Act, 

HUD may not conduct or sponsor and 

a person is not required to respond to, 

a collection of information unless the 

collection displays a valid control 

number. 

Non-Federal Public Matching Funds 

Requirement 

19. Match note. In accordance with 

the appropriations act (Pub. L. 108–324) 

each grantee shall provide not less than 

10 percent in non-Federal public 

matching funds or its equivalent value 

(other than administrative costs) for any 

HUD disaster recovery grant funds it 

receives from that appropriation. Each 

grantee will provide match payments 

that meet the following criteria. 

a. Match contributions must be made 

to disaster recovery activities related to 

covered disasters.

b. Match may be provided by any 

public entity from non-Federal cash 

(e.g., general or dedicated revenues), 

real estate, or other similar assets owned 

or controlled by the public entity or the 

value of public improvements and 

public facilities activities, or force 

account undertaken. 

c. Match funds must be reasonably 

valued. For example, base the value of 

cash grants on the dollar value of the 

grant; value below market interest rate 

loans on the present discounted cash 

value of the amount of subsidy; value 

taxes forgiven for future years based on 

the present discounted cash value of the 

revenue foregone; and value a donation 

of real estate based on a professional 

appraisal. 

d. The grantee must make match 

contributions before all CDBG disaster 

recovery grant funds are expended. 

Match contributions must total not less 

than 10 percent of the disaster recovery 

grant funds drawn from the grantee’s 

line of credit, excluding funds drawn for 

administrative and planning costs. 

e. Grantees may not count 

administrative and planning costs 

toward the required non-Federal public 

matching funds or equivalent value. 

f. Contributions that have been or will 

be counted as satisfying a matching 

requirement of another Federal grant or 

award, including any other disaster 

recovery grant, may not count as 

satisfying the matching contribution 

requirement for a HUD Disaster 

Recovery grant. 

g. Match contributions must be 

contributed permanently to a disasterrelated activity. To receive match credit 

for the full amount of a loan made with 

non-Federal public funds to a disaster 

recovery funded activity, all repayment, 

interest, or other return on the loan 

must be treated as CDBG program 

income. 

h. The following are examples that do 

not count toward meeting a grantee’s 

matching contribution requirement: 

(1) Contributions made with or 

derived from Federal resources of funds, 

regardless of when the Federal resources 

or funds were received or expended. 

CDBG funds (defined at 24 CFR 570.3) 

are Federal funds for this purpose; 

(2) Contributions made with private 

resources or funds, regardless of when 

the private resources or funds were 

received or expended; 

(3) The interest rate subsidy 

attributable to the Federal tax 

exemption on financing or the value 

attributable to Federal tax credits; 

i. Contributions are credited at time 

the contribution is made and reported to 

HUD quarterly, as follows: 

(1) Credit a cash contribution when 

the funds are expended for a disasterrelated activity or at the time the grantee 

awards disaster recovery grant funds if 

the activity was completed before the 

award of CDBG disaster recovery funds. 

(2) Credit the subsidy value of a 

below-market interest rate loan at the 

time of the loan closing. 

(3) Credit the value of state or local 

taxes, fees, or other charges that are 

normally and customarily imposed but 

waived, foregone, or deferred at the time 

the grantee or state grant recipient or 

other public entity officially waives, 

forgoes, or defers the taxes, fees, or other 

charges. 

(4) Credit the value of donated land or 

other real property at the time 

ownership of the property is transferred 

to the public entity carrying out the 

disaster-recovery-grant-assisted or 

disaster-related activity. 

(5) Credit the direct cost of relocation 

payments and services at the time that 

the payments and services are provided. 

j. For projects involving more than 

one grantee, the grantee that makes the 

match contribution may decide to retain 

the match credit or permit the other 

grantee to claim the credit. 

Certifications 

20. Certifications for state 

governments, waiver and alternative 

requirement. Section 91.325 of title 24 

Code of Federal Regulations is waived. 

Each state must make the following 

certifications prior to receiving a CDBG 

disaster recovery grant: 

72106 Federal Register / Vol. 69, No. 237 / Friday, December 10, 2004 / Notices 

a. The state certifies that it will 

affirmatively further fair housing, which 

means that it will conduct an analysis 

to identify impediments to fair housing 

choice within the state, take appropriate 

actions to overcome the effects of any 

impediments identified through that 

analysis, and maintain records reflecting 

the analysis and actions in this regard. 

(See 24 CFR 570.487(b)(2)(ii).) 

b. The state certifies that it has in 

effect and is following a residential antidisplacement and relocation assistance 

plan in connection with any activity 

assisted with funding under the CDBG 

program. 

c. The state certifies that it is 

complying with requirements regarding 

drug-free workplace required by 24 CFR 

part 24, subpart F, together with the 

appropriate forms. 

d. The state certifies its compliance 

with restrictions on lobbying required 

by 24 CFR part 87, together with 

disclosure forms, if required by that 

part. 

e. The state certifies that the Action 

Plan for Disaster Recovery is authorized 

under state law and that the state 

possesses the legal authority to carry out 

the program for which it is seeking 

funding, in accordance with applicable 

HUD regulations and this notice. 

f. The state certifies that it will 

comply with the acquisition and 

relocation requirements of the Uniform 

Relocation Assistance and Real Property 

Acquisition Policies Act of 1970, as 

amended, and implementing regulations 

at 49 CFR part 24, except where waivers 

or alternative requirements are provided 

for this grant. 

g. The state certifies that it will 

comply with section 3 of the Housing 

and Urban Development Act of 1968 (12 

U.S.C. 1701u), and implementing 

regulations at 24 CFR part 135. 

h. The state certifies that it is 

following a detailed citizen 

participation plan that satisfies the 

requirements of 24 CFR 91.115 (except 

as provided for in notices providing 

waivers and alternative requirements for 

this grant), and that each unit of general 

local government that is receiving 

assistance from the state is following a 

detailed citizen participation plan that 

satisfies the requirements of Sec. 

570.486 (except as provided for in 

notices providing waivers and 

alternative requirements for this grant). 

i. The state certifies that: 

(1) It has consulted with affected units 

of local government in counties 

designated in covered major disaster 

declarations in the nonentitlement, 

entitlement and tribal areas of the state 

in determining the method of 

distribution of funding; and 

(2) Each unit of general local 

government to be distributed funds will 

be required to identify its disaster 

recovery needs, including the needs of 

low-income and moderate-income 

families, and the disaster recovery 

activities to be undertaken to meet these 

needs. 

j. The state certifies that it has 

complied with each of the following 

criteria:

(1) Funds will be used solely for 

disaster relief, long-term recovery, and 

mitigation related to a major disaster 

declared by the President between 

August 31, 2003, and October 1, 2004. 

(2) Funds will be provided to areas 

facing the greatest need. 

(3) With respect to activities expected 

to be assisted with CDBG disaster 

recovery 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. 

(4) The aggregate use of CDBG disaster 

recovery funds shall principally benefit 

low- and moderate-income families in a 

manner that ensures that at least 50 

percent of the amount is expended for 

activities that benefit such persons 

during the designated period. 

(5) The state will not attempt to 

recover any capital costs of public 

improvements assisted with CDBG 

disaster recovery grant funds, by 

assessing any amount against properties 

owned and occupied by persons of lowand moderate-income, including any fee 

charged or assessment made as a 

condition of obtaining access to such 

public improvements, unless (A) 

disaster recovery grant funds are used to 

pay the proportion of such fee or 

assessment that relates to the capital 

costs of such public improvements that 

are financed from revenue sources other 

that under this title; or (B) for purposes 

of assessing any amount against 

properties owned and occupied by 

persons of moderate income, the grantee 

certifies to the Secretary that it lacks 

sufficient CDBG funds (in any form) to 

comply with the requirements of clause 

(A). 

k. The state certifies that the grant 

will be conducted and administered in 

conformity with title VI of the Civil 

Rights Act of 1964 (42 U.S.C. 2000d) 

and the Fair Housing Act (42 U.S.C. 

3601–3619) and implementing 

regulations. 

l. The state certifies that it will require 

units of general local government that 

receive grant funds to certify that they 

have adopted and are enforcing: 

(1) A policy prohibiting the use of 

excessive force by law enforcement 

agencies within its jurisdiction against 

any individuals engaged in non-violent 

civil rights demonstrations; and 

(2) A policy of enforcing applicable 

state and local laws against physically 

barring entrance to or exit from a facility 

or location that is the subject of such 

non-violent civil rights demonstrations 

within its jurisdiction. 

m. The state certifies that each state 

grant recipient has the capacity to carry 

out disaster recovery activities in a 

timely manner, or the state has a plan 

to increase the capacity of any state 

grant recipient(s) who lacks such 

capacity. 

n. The state certifies that it will 

comply with applicable laws. 

21. Certifications for Indian tribes, 

waiver and alternative requirement.

Instead of following paragraph 20, 

above, each Indian tribe will make the 

following certifications. 

a. The tribe certifies that it will 

comply with the requirements of Title II 

of Public Law 90–284 (25 U.S.C. 1301) 

(the Indian Civil Rights Act) and any 

applicable anti-discrimination laws. 

b. The tribe certifies that it will 

provide the drug-free workplace 

required by 24 CFR part 24, subpart F. 

c. The tribe certifies that it will 

comply with restrictions on lobbying 

required by 24 CFR part 87, together 

with disclosure forms, if required by 

that part. 

d. The tribe certifies that it possesses 

the legal authority to apply for the 

disaster recovery grant and execute the 

proposed program. 

e. Except as waived, that it will 

comply with the acquisition and 

relocation requirements of the Uniform 

Relocation Assistance and Real Property 

Acquisition Policies Act of 1970, as 

amended, and implementing regulations 

at 49 CFR part 24. 

f. Prior to submission of its 

application to HUD, that it has met the 

citizen participation requirements of 

this notice. 

g. The Action Plan for Disaster 

Recovery has been developed so that 

more than 50 percent of the funds 

received under this grant will be used 

for activities that benefit low- and 

moderate-income persons (as the term 

‘‘’activities benefiting low- and 

moderate-income persons’’’ is used at 24 

CFR 570.483(b)). 

h. The tribe certifies that it will 

comply with all applicable laws. 

Duration of Funding 

The appropriation accounting 

provisions in 31 U.S.C. 1551–1557, 

added by section 1405 of the National 

Defense Authorization Act for Fiscal 

Year 1991 (Pub. L. 101–510), limit the 

availability of certain appropriations for 

Federal Register / Vol. 69, No. 237 / Friday, December 10, 2004 / Notices 72107

expenditure. This limitation may not be 

waived. HUD may place shorter 

deadlines on the expenditure of those 

funds by grant agreement conditions. 

Catalog of Federal Domestic Assistance 

The Catalog of Federal Domestic 

Assistance numbers for the 1999 HUD 

Disaster Recovery Initiative are as 

follows: 14.219; 14.228. 

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 8 a.m. and 5 

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–

0500.

Dated: December 6, 2004. 

Roy A. Bernardi, 

Deputy Secretary.

[FR Doc. 04–27201 Filed 12–8–04; 10:18 am] 

BILLING CODE 4210–32–P