62372 Federal Register / Vol. 71, No. 205 / Tuesday, October 24, 2006 / Notices 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

[Docket No. FR–5051–N–07] 

Additional Waivers Granted to and 

Alternative Requirements for the State 

of Mississippi Under Public Law 109– 

148 

AGENCY: Office of the Assistant 

Secretary for Community Planning and 

Development, HUD. 

ACTION: Notice of waivers and 

alternative requirements. 

SUMMARY: 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 grant, upon the 

request of the state grantee. This Notice 

describes the additional waivers for the 

disaster recovery grants made to the 

State of Mississippi under the subject 

appropriations act. 

DATES: Effective Date: October 30, 2006. 

FOR FURTHER INFORMATION CONTACT: Jan 

C. Opper, Director, Disaster Recovery 

and Special Issues Division, 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 

A Federal fiscal year 2006 

supplemental appropriation for the 

Community Development Block Grant 

(CDBG) program was in the Department 

of Defense, Emergency Supplemental 

Appropriations to Address Hurricanes 

in the Gulf of Mexico, and Pandemic 

Influenza Act, 2006 (Pub. L. 109–148, 

approved December 30, 2005), that 

appropriated $11.5 billion for necessary 

expenses related to disaster relief, longterm recovery, and restoration of 

infrastructure in the most impacted and 

distressed areas related to the 

consequences of the covered disasters. 

The 2006 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 and guarantees, 

except for requirements related to fair 

housing, nondiscrimination, labor 

standards, and the environment, upon a 

request by the state and a finding by the 

Secretary that such a waiver would not 

be inconsistent with the overall purpose 

of the statute. The following additional 

waivers and alternative requirements for 

funds provided under the 2006 Act are 

in response to requests from the State of 

Mississippi. 

The Secretary finds that the following 

waivers and alternative requirements, as 

described below, are not inconsistent 

with the overall purpose of Title I of the 

Housing and Community Development 

Act of 1974, as amended (the 1974 Act), 

or the Cranston-Gonzalez National 

Affordable Housing Act, as amended. 

Under the requirements of the 

Department of Housing and Urban 

Development Act, as amended (42 

U.S.C. 3535(q)), regulatory waivers must 

be published in the Federal Register. 

Except as described in this and other 

notices applicable to these grants, 

statutory and regulatory provisions 

governing the Community Development 

Block Grant program for states, 

including those at 24 CFR part 570, 

shall apply to the use of these funds. In 

accordance with the appropriations act 

cited above, HUD will reconsider every 

waiver in this Notice on the two-year 

anniversary of the day this Notice is 

published. 

Waiver Justification 

In general, waivers already granted to 

the State of Mississippi and alternative 

requirements already specified for 

CDBG disaster recovery grant funds 

provided under Public Law 109–148 

apply. The notices in which these prior 

waivers and alternative requirements 

applicable to Mississippi appear are 71 

FR 7666, published February 13, 2006, 

and 71 FR 34457, published June 14, 

2006. 

The provisions of this Notice do not 

apply to funds provided under the 

annual CDBG program. The provisions 

provide additional flexibility in program 

design and implementation and 

implement statutory requirements 

unique to this appropriation. 

Eligibility—wind pool reinsurance 

premium. The state requested that HUD 

grant an eligibility waiver to permit it to 

pay reinsurance costs for two years for 

the wind pool for insurance maintained 

by the Mississippi Windstorm 

Underwriting Association (MWUA). 

HUD was initially concerned that 

allowing this activity would artificially 

depress the costs of insurance in the 

wind pool area and result in people 

making redevelopment decisions that 

did not take into account the real 

balance of risks and benefits of living in 

the impacted areas. The state responded 

by pointing out that even with the 

reinsurance in place insurance rates 

would still rise substantially, that the 

state would disclose to ratepayers the 

risk that rates would increase more if 

reinsurance rates remained high after 

grant assistance ended, and that the 

state was simultaneously working to 

raise building standards to help 

ameliorate actual risks and possibly 

lower eventual insurance costs. HUD 

considered the request and the state’s 

response and agreed that it is consistent 

with the overall purposes of the 1974 

Act for the state to fund, in accordance 

with the terms described in the state’s 

Action Plan, the reinsurance coverage 

for the wind pool maintained by 

MWUA. 

Low- and moderate-income household 

benefit for multi-unit housing projects. 

Rehabilitation and reconstruction of 

housing is an eligible CDBG activity. 

HUD has already granted the state an 

eligibility waiver to allow new 

construction of housing. Now the state 

has requested a related waiver to allow 

it to fund multi-unit projects and to 

measure benefit to low- and moderateincome households in such projects in 

a manner more supportive of mixedincome housing than the structure basis 

required by 24 CFR 570.483(b)(3). 

(Under the cited regulation, the general 

rule is that at least 51 percent of the 

residents of an assisted structure must 

be income eligible.) 

HUD has reviewed other housing 

assistance programs that measure 

benefit differently: by the housing unit. 

Under the unit approach, one or more 

of the units in a structure must house 

income-eligible families, but the 

remainder of the units may be marketrate, so long as the proportion of 

assistance provided compared to the 

overall project budget is no more than 

the proportion of units that will be 

occupied by income-eligible households 

compared to the number of units in the 

overall project. In other words, the rule 

under the structure approach is that a 

nickel of CDBG assistance to a structure 

means that 51 percent of the units must 

meet income requirements. Under the 

proportional units approach, the 

number of income-eligible units is 

proportional to the amount of assistance 

provided. Based on HUD experience, 

the second approach is generally more 

compatible with large-scale 

development of mixed-income housing. 

There is HUD precedent for using the 

proportional unit basis in two programs 

familiar to the state: (1) the CDBG 

program rule has a built-in exception 

that allows limited use of the unit basis 

for multi-unit non-elderly new 


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Federal Register / Vol. 71, No. 205 / Tuesday, October 24, 2006 / Notices 62373 

construction structures with between 20 

and 50 percent low- and moderateincome occupancy, and (2) the HOME 

Investment Partnerships program, 

HUD’s primary housing production 

program, successfully uses its own 

variation on the proportional unit 

approach. After review of the state’s 

Action Plan for Disaster Recovery and 

learning more about the state’s intention 

to encourage mixed-income housing 

development, HUD has determined that 

it is consistent with the overall purposes 

of the 1974 Act to provide the state the 

requested additional flexibility in 

measuring program benefit. 

Therefore, the waiver and alternative 

requirements allow the state a choice. 

The state may measure benefit within a 

housing development project (1) 

according to the existing CDBG 

requirements, (2) according to the 

HOME program requirements at 24 CFR 

92.205(d) or (3) according to the 

modified CDBG alternative 

requirements specified in this notice, 

which extend the CDBG exception 

noted above. The state must select and 

use just one method for each project. 

For these purposes, the term ‘‘project’’

will have the same meaning as in the 

HOME program at 24 CFR 92.2. 

Unlike the HOME program, the CDBG 

program does not regulate the maximum 

amount of assistance per unit, require 

unit and income reviews in the years 

following initial occupancy, require a 

specific form of subsidy layering review, 

or define affordability. The state is 

reminded, however, that CDBG does 

require that costs be necessary and 

reasonable and that the state must 

develop procedures and documentation 

to ensure that its housing investments 

meet this requirement. The state must 

also meet all civil rights and fair 

housing requirements. 

Overall Benefit to Low- and ModerateIncome Persons 

The State of Mississippi has repeated 

its request that the Secretary waive the 

requirement that 50 percent of the 

CDBG funds received by the state under 

the grant made under Public Law 109–

148 be for activities that benefit persons 

of low and moderate income (see 71 FR 

7666, published February 13, 2006, for 

the waiver granted under Public Law 

109–148 to the original 70 percent 

requirement). In a June 14, 2006, notice 

(71 FR 34457) the Secretary granted a 

waiver of the overall benefit 

requirement for the Public Law 109–148 

grant to the extent that the state could 

carry out the activity of compensation 

for housing loss, (the costs of which the 

state believed at the time would 

consume the majority of its grant), in an 

‘‘income-blind’’ manner because the 

disaster affected households without 

regard to income. Because the current 

$1.3 billion estimate of demand for this 

program under the eligibility criteria 

specified by the state is substantially 

less than the approximately $3.255 

billion estimated and approved in the 

Action Plan, the state now plans to 

modify the activity and reallocate funds 

to additional beneficiary groups or to 

other activities through a substantial 

amendment to its Action Plan. Note that 

the June 14 waiver does not cover 

activities added or modified under such 

a substantial amendment. To recognize 

the actual size of the program and 

because the state subsequently repeated 

its request for an overall benefit waiver 

that covers all activities, HUD is 

replacing the June 14 waiver and 

alternative requirements with the 

updated waiver and alternative 

requirements in this notice. (Substantial 

amendments to the state’s program after 

the date of this notice may trigger 

further updates.) 

To grant this waiver, the Secretary 

must find that it is ‘‘not inconsistent’’

with the CDBG program’s primary 

purpose. This purpose is stated at 42 

U.S.C. 5301(c): 

‘‘The primary objective of this chapter and 

of the community development program of 

each grantee under this chapter is the 

development of viable urban communities, 

by providing decent housing and a suitable 

living environment and expanding economic 

opportunities, principally for persons of low 

and moderate income.’’

Further, Public Law 109–148 

stipulates that, to decrease or eliminate 

the overall benefit requirement below 50 

percent, the Secretary of HUD must also 

make a finding of ‘‘compelling need’’ for 

the waiver. 

The Secretaries of HUD have granted 

very few overall benefit waivers for past 

disaster recoveries. The Secretary reset 

the percentage requirement for Grand 

Forks, North Dakota, to the actual prestorm percentage of income-eligible 

residents in the affected area, and 

included the proviso that the City serve 

low- and moderate-income persons first, 

whenever feasible. HUD also allowed 

the State of Maine, following severe ice 

storms, an overall benefit waiver that 

permitted the state to use its entire grant 

to assist private utilities with uninsured 

service restoration costs. Logically, a 

utility grid or service area cannot be 

restored for one income group alone, 

and this type of disaster affects everyone 

in an area, regardless of income. There 

was no practical methodology in this 

example for allocating costs among 

income groups. In these two cases, the 

waiver supported some area-wide 

activity such as buyouts or 

infrastructure that arguably resulted in a 

larger total number of assisted low- and 

moderate-income households than if 

more targeted and measurable assistance 

had been provided. 

The case in Mississippi is more 

complicated than those in Maine and 

Grand Forks, because of the large 

number of political sub-jurisdictions, 

choice of possible activities, the effects 

of the mix of activities, population 

movement, and the catastrophic scale of 

the disaster. As in Maine, whole areas 

of Mississippi were impacted regardless 

of income (and far more severely in 

Mississippi than in Maine), so many of 

the state’s proposed activities are areaor sector-wide. As in Grand Forks, the 

majority of Mississippians in the most 

impacted areas were not income-eligible 

prior to the storm so the state’s recovery 

strategy must necessarily address the 

needs of a range of income groups. 

Mississippi has a much larger CDBG 

grant than either Maine or Grand Forks. 

Although the state plans to use the 

homeowner assistance funds very 

rapidly, it will take somewhat longer to 

budget and to use the remainder of the 

grant, and to determine the final benefit 

figures for the programs it plans to 

undertake. 

In considering the waiver request, 

HUD again examined the available postdisaster data on unmet recovery needs 

and the percentages of low- and 

moderate-income populations residing 

in the most impacted areas at the time 

of the disaster (Hancock County: 43 

percent, Harrison County: 41 percent, 

Jackson County: 37 percent, Pearl River 

County: 41 percent.). HUD accepts the 

position of the state that one of the 

state’s compelling needs for assistance 

in the disaster-affected area is to help reestablish homeowners outside the 

floodplain who suffered major 

uninsured flood damage. (The state 

designated this as its ‘‘primary need.’’) 

HUD also considered the other CDBG 

disaster recovery activities the state is 

undertaking. After the June 14 waiver, 

the state made Action Plan amendments 

including some additional CDBG 

disaster recovery activities that do not 

qualify under the low- and moderateincome national objective, such as 

assistance to private utilities, wind pool 

re-insurance (mentioned elsewhere in 

this notice) and regional infrastructure 

development. In its Action Plan, the 

state described how these activities 

would address its disaster recovery 

needs. However, the state has not yet 

published Action Plan amendments 

describing the uses of all grant funds. 

HUD considered the data and the 

state’s justification for its request. 


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62374 Federal Register / Vol. 71, No. 205 / Tuesday, October 24, 2006 / Notices 

Considering that the state has not yet 

budgeted all of its grant funds in the 

Action Plan, it has a large amount of 

unbudgeted funds, it will be reallocating 

previously budgeted funds, and a 

substantial number of low- and 

moderate-income persons were 

impacted by the disaster, HUD decided 

that the Department does not have 

enough information to conclude that the 

state has compelling need for a waiver 

of overall benefit for the entire grant at 

this time. 

Based on the compelling need 

presented for the activities already 

included in the Action Plan for Disaster 

Recovery for the grant made under 

Public Law 109–148, HUD is granting 

the state a waiver of the requirement 

that at least 50 percent of the 

supplemental CDBG grant funds 

provided under Public Law 109–148 

primarily benefit persons of low and 

moderate income, to the extent 

necessary to permit Mississippi to carry 

out the activities contained in its March 

31, June 28, and July 12, 2006, Action 

Plan submissions, provided that the 

state must give reasonable priority for 

the balance of its funds to activities that 

will primarily benefit persons of low 

and moderate income. HUD expects the 

grantee to maintain low- and moderateincome benefit documentation for each 

activity providing such benefit. This 

waiver of overall benefit does not cover 

activities that may be added or modified 

under a substantial amendment to the 

activities mentioned in the Action Plan 

submissions listed above. 

Previously, the state agreed to 

examine other housing needs and to 

pursue other sources of funding to 

provide assistance for other compelling 

housing needs, such as for homeless and 

special needs populations, for lowincome renters, and for uninsured lowincome homeowners. HUD expects the 

state to continue these efforts. 

HUD is not granting the state’s request 

that all of its activities be carried out 

under the national objective of ‘‘urgent 

need’’ because such a waiver would 

effectively grant an overall benefit 

waiver for the entire grant. HUD expects 

the state to principally benefit low- and 

moderate-income persons in activities 

where such design is feasible and 

reasonable, and to design its activities to 

meet the ‘‘slum-blight’’ or urgent need 

national objective otherwise. Consistent 

with the principles discussed above, 

HUD will be open to considering a 

further extension of the waiver when 

the uses of the balance of the available 

funds are proposed by the state. 

HUD also reminds the state that, 

pursuant to the instruction in Public 

Law 109–148, all waivers in this notice 

must be reconsidered on the two-year 

anniversary date of this notice. 

Applicable Rules, Statutes, Waivers, 

and Alternative Requirements 

1. General note. Except as described 

in this Notice, the statutory, regulatory, 

and notice provisions that shall apply to 

the use of these funds are: 

a. Those governing the funds 

appropriated under Public Law 109–148 

and already published in the Federal 

Register, including those in Notices 71 

FR 7666, published February 13, 2006; 

and 71 FR 34457, published June 14, 

2006; and 

b. Those governing the Community 

Development Block Grant program for 

states, including those at 42 U.S.C. 5301 

et seq. and 24 CFR part 570. 

2. Low- and moderate-income benefit 

for multi-unit housing projects. HUD 

will consider assistance for a multi-unit 

housing project to benefit low- and 

moderate-income households in the 

following circumstances: 

(a)(i) The CDBG assistance defrays the 

development costs of a housing project 

providing eligible permanent residential 

units that, upon completion, will be 

occupied by low- and moderate-income 

households; and 

(ii) If the project is rental, the units 

occupied by low- and moderate-income 

households will be leased at affordable 

rents. The grantee or unit of general 

local government shall adopt and make 

public its standards for determining 

‘‘affordable rents’’ for this purpose; and 

(iii) The proportion of the total cost of 

developing the project to be borne by 

CDBG funds is no greater than the 

proportion of units in the project that 

will be occupied by low- and moderateincome households; or 

(b) When CDBG funds defray the 

development costs of eligible permanent 

residential units, such funds shall be 

considered to benefit low and moderate 

income persons if the grantee follows 

the provisions of 24 CFR 92.205(d); or 

(c) The requirements of 24 CFR 

570.483(b)(3) are met. 

(d) The state must select and use just 

one method for each project. 

(e) The term ‘‘project’’ will have the 

same meaning as in the HOME program 

at 24 CFR 92.2. 

(f) If the state applies option (a) or (b) 

above to a housing project, 24 CFR 

570.483(b)(3) is waived for that project. 

3. Eligibility—wind pool reinsurance 

premium. 42 U.S.C. 5305(a) is waived to 

the extent necessary to make eligible 

payment of wind pool reinsurance 

premiums in accordance with the state’s 

approved Action Plan and published 

program design. 

4. Overall benefit. 42 U.S.C. 5301(c) 

and 5304(b)(3), and 24 CFR 570.484 and 

24 CFR 91.325(b)(4)(ii) with respect to 

the overall benefit requirement are 

waived to the extent necessary to permit 

Mississippi to carry out the activities 

contained in its March 31, June 28, and 

July 12, 2006, Action Plan submissions, 

provided that: 

a. The state must give reasonable 

priority for the balance of its funds to 

activities which will primarily benefit 

persons of low and moderate income; 

and 

b. The State will maintain 

documentation of the low- and 

moderate-income benefit attributable to 

each assisted activity, if feasible, and 

report on such benefit to HUD as part 

of the regular quarterly reports. 

5. Information collection approval 

note. HUD has approval for information 

collection requirements in accordance 

with the Paperwork Reduction Act of 

1995 (44 U.S.C. 3501–3520) under OMB 

control number 2506–0165, which 

expires August 31, 2007. In accordance 

with the Paperwork Reduction Act, 

HUD may not conduct or sponsor, nor 

is a person required to respond to, a 

collection of information unless the 

collection displays a valid control 

number. 

Catalog of Federal Domestic Assistance 

The Catalog of Federal Domestic 

Assistance numbers for the disaster 

recovery grants under this Notice are as 

follows: 14.219; 14.228. 

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. 

4321(2)(C)). The FONSI is available for 

public inspection between 8 a.m. and 5 

p.m. weekdays in the Regulations 

Division, Office of General Counsel, 

Department of Housing and Urban 

Development, 451 Seventh Street, SW., 

Room 10276, Washington, DC 20410–

0500. Due to security measures at the 

HUD Headquarters building, please 

schedule an appointment to review the 

finding by calling the Regulations 

Division at (202) 708–3055 (this is not 

a toll-free number). 

Dated: October 19, 2006. 

Roy A. Bernardi, 

Deputy Secretary. 

[FR Doc. 06–8856 Filed 10–19–06; 3:19 pm] 

BILLING CODE 4210–67–P 


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