47344 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Chapter V

[Docket No. FR–4254–N–01]

HUD Disaster Recovery Initiative

AGENCY: Office of Community Planning

and Development, HUD.

ACTION: Notice of disaster recovery

funds availability and waivers.

SUMMARY: The 1997 Emergency

Supplemental Appropriations Act for

Recovery from Natural Disasters, with

respect to the HUD Disaster Recovery

Initiative grant funds, requires the

publication of a Notice governing the

use of such funds in conjunction with

any program administered by the

Federal Emergency Management Agency

(FEMA) for buyouts of structures in

disaster areas. This Notice addresses

that requirement and provides other

guidance on the use of those funds.

EFFECTIVE DATE: June 12, 1997.

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, 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:

I. Empowering Communities for

Recovery

A. Purpose

1. This Notice describes policies and

procedures applicable to the HUD

Disaster Recovery Initiative.

2. When a community is hit hard by

a natural disaster, there is often a long,

difficult process of recovery. Most

impacted areas never fully recover

because of limited resources. HUD is

uniquely positioned to assist States and

communities with disaster recovery,

because of its mission and experience as

the Federal Government’s agency for

addressing a broad spectrum of needs

related to community viability (e.g.,

housing, economic and community

development).

3. HUD’s Disaster Recovery Initiative

helps communities impacted by

disasters receiving Presidential

declarations. When other agencies

cannot assist, HUD steps in with gap

funding for recovery activities—

providing the glue that holds together

the sometimes disconnected pieces of

disaster recovery. Because Federal

government resources will never be

sufficient to cover costs of total

recovery, HUD’s program requires a

partnership of Federal, State and local

governments, the business community

and citizens.

4. HUD Disaster Recovery funds are

intended to support the activities of

other Federal agencies and cannot be

used for activities reimbursable or for

which funds are made available by the

Federal Emergency Management Agency

(FEMA), the Small Business

Administration (SBA), or the U.S. Army

Corps of Engineers (USACE).

B. Benefiting Persons of Low and

Moderate Income

1. An objective of the program is the

redevelopment of viable urban

communities, by providing decent

housing and a suitable living

environment and expanding economic

opportunities, especially for persons of

low and moderate income.

2. A grantee must use at least 50

percent of its HUD Disaster Recovery

funds for activities that benefit persons

of low and moderate income. The

Secretary may waive this requirement

only on a case-by-case basis. HUD will

consider such a waiver after receiving a

request from a grantee that includes a

justification that establishes good cause

for the waiver and reflects a public

purpose.

C. Definitions

Regulatory references are in title 24 of

the Code of Federal Regulations (CFR),

unless otherwise cited.

Act means Title I of the Housing and

Community Development Act of 1974,

as amended (42 U.S.C. 5301 et seq.).

Buildings for the general conduct of

government means city halls, county

administrative buildings, State capitol

or office buildings or other facilities in

which the legislative, judicial or general

administrative affairs of the government

are conducted. Such term does not

include such facilities as neighborhood

service centers or special purpose

buildings located in low and moderate

income areas that house various

nonlegislative functions or services

provided by government at

decentralized locations.

Chief Executive Officer of a State or

unit of general local government means

the elected official or the legally

designated official, who has the primary

responsibility for the conduct of that

entity’s governmental affairs. Examples

of the ‘‘chief executive officer’’ of a unit

of general local government are: the

elected mayor of a municipality; the

elected county executive of a county;

the chairperson of a county commission

or board in a county that has no elected

county executive; and the official

designated pursuant to law by the

governing body of a unit of general local

government.

City means the following:

a. Any unit of general local

government that is classified as a

municipality by the United States

Bureau of the Census, or

b. Any other unit of general local

government that is a town or township

and that, in the determination of the

Secretary:

i. Possesses powers and performs

functions comparable to those

associated with municipalities;

ii. Is closely settled; and

iii. Contains within its boundaries no

incorporated places as defined by the

United States Bureau of the Census that

have not entered into cooperation

agreements with the town or township

for a period covering at least 3 years to

undertake or assist in the undertaking of

essential community development and

housing assistance activities. The

determination of eligibility of a town or

township to qualify as a city will be

based on information available from the

United States Bureau of the Census and

information provided by the town or

township and its included units of

general local government.

Grantee means:

a. A City that receives no less than

$200,000 under the disaster formula

allocation, has the capacity to carry out

this program, and remaining disaster

recovery needs; or that is in a State in

which HUD administers its community

development program.

b. A County that receives no less than

$200,000 under the disaster formula

allocation, has the capacity to carry out

this program, and remaining disaster

recovery needs; or that is in a State in

which HUD administers its community

development program. The county may

designate a local government or

governments to carry out the program

on its behalf.

c. A State government that receives a

HUD Disaster Recovery grant allocation

that includes funds calculated for places

that would have received an allocation

below the minimum grant size.

Household means all the persons who

occupy a housing unit. The occupants

may be a single family, one person

living alone, two or more families living

together, or any other group of related

or unrelated persons who share living

arrangements.
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations 47345

HUD means the Department of

Housing and Urban Development.

Income. For the purpose of city and

county grantees determining whether a

family or household is low- and

moderate-income, grantees may select

any of the three definitions listed below

for each activity, except that integrally

related activities of the same type and

qualifying under the same paragraph of

§ 570.208(a) shall use the same

definition of income. The option to

choose a definition does not apply to

activities that qualify under

§ 570.208(a)(1) (Area benefit activities),

except when the recipient carries out a

survey under § 570.208(a)(1)(vi).

Activities qualifying under

§ 570.208(a)(1) generally must use the

area income data supplied to recipients

by HUD.

a. The three definitions are as follows:

i. Annual income as defined under

the Section 8 Housing Assistance

Payments program at § 813.106 (except

that if the HUD Disaster Recovery

Initiative assistance being provided is

homeowner rehabilitation, the value of

the homeowner’s primary residence

may be excluded from any calculation

of Net Family Assets); or

ii. Annual Income as reported under

the Census long-form for the most recent

available decennial Census. This

definition includes:

(1) Wages, salaries, tips, commissions,

etc.;

(2) Self-employment income from

own non-farm business, including

proprietorships and partnerships;

(3) Farm self-employment income;

(4) Interest, dividends, net rental

income, or income from estates or trusts;

(5) Social Security or railroad

retirement;

(6) Supplemental Security Income,

Aid to Families with Dependent

Children, or other public assistance or

public welfare programs;

(7) Retirement, survivor, or disability

pensions; and

(8) Any other sources of income

received regularly, including Veterans’

(VA) payments, unemployment

compensation, and alimony; or

iii. Adjusted gross income as defined

for purposes of reporting under Internal

Revenue Service (IRS) Form 1040 for

individual Federal annual income tax

purposes.

b. Estimate the annual income of a

family or household by projecting the

prevailing rate of income of each person

at the time assistance is provided for the

individual, family, or household (as

applicable). Estimated annual income

shall include income from all family or

household members, as applicable.

Income or asset enhancement derived

from the HUD Disaster Recovery grantassisted activity shall not be considered

in calculating estimated annual income.

Indian tribe means any Indian tribe,

band, group, and nation, including

Alaska Indians, Aleuts, and Eskimos

and any Alaska Native Village, of the

United States that is considered an

eligible recipient under the Indian SelfDetermination and Education

Assistance Act (Pub. L. 93–638) or

under the State and Local Fiscal

Assistance Act of 1972 (Pub. L. 92–512).

Low- and moderate-income household

means a household having an income

equal to or less than the Section 8 lowincome limit established by HUD.

Low- and moderate-income person

means a member of a family having an

income equal to or less than the Section

8 low-income limit established by HUD.

Unrelated individuals will be

considered as one-person families for

this purpose.

Low-income household means a

household having an income equal to or

less than the Section 8 very low-income

limit established by HUD.

Low-income person means a member

of a family that has an income equal to

or less than the Section 8 very lowincome limit established by HUD.

Unrelated individuals shall be

considered as one-person families for

this purpose.

Moderate-income household means a

household having an income equal to or

less than the Section 8 low-income limit

and greater than the Section 8 very lowincome limit, established by HUD.

Moderate-income person means a

member of a family that has an income

equal to or less than the Section 8 lowincome limit and greater than the

Section 8 very low-income limit,

established by HUD. Unrelated

individuals shall be considered as oneperson families for this purpose.

Secretary means the Secretary of

Housing and Urban Development.

Small business means a business that

meets the criteria set forth in section

3(a) of the Small Business Act (15 U.S.C.

631, 636, 637).

State means any State of the United

States, or an instrumentality thereof

approved by the Governor; and the

Commonwealth of Puerto Rico.

Unit of general local government

means any city, county, town, township,

parish, village or other general purpose

political subdivision of a State; Guam,

the Northern Mariana Islands, the Virgin

Islands, and American Samoa or a

general purpose political subdivision

thereof; a combination of such political

subdivisions recognized by the

Secretary; and the District of Columbia.

D. Allocation of Funds

1. $500 million has been appropriated

for the HUD Disaster Recovery Initiative

under Title II, Chapter 10 of the 1997

Emergency Supplemental

Appropriations Act for Recovery from

Natural Disasters (Pub. L. 105–18;

approved June 12, 1997) (the 1997

Supplemental Appropriations Act).

2. HUD will generally allocate funds

to grantees based on a formula that

reflects disaster recovery needs that are

not met by other Federal programs

provided that the grantee has the

capacity to carry out this program, and

on remaining needs.

E. Submission Requirements

1. Prerequisites to a grantee’s receipt

of a HUD Disaster Recovery grant

include a citizen participation plan;

publication of Plan proposals by

grantees; notice and comment; and

submission of an Action Plan for

Disaster Recovery.

2. Each city or county grantee must

submit to HUD, for approval, an Action

Plan for Disaster Recovery that

describes:

a. The recovery needs resulting from

the covered disaster;

b. The grantee’s overall plan for

recovery;

c. Expected Federal, non-Federal

public, and private resources, and their

relationship, if any, to activities to be

funded with HUD Disaster Recovery

funds;

d. The projected uses for the HUD

Disaster Recovery funds; and

e. In the case of a new HUD grantee,

it should describe how expenditure of

its funds fits within a current local or

State recovery plan.

3. The city or county grantee must

describe monitoring standards and

procedures pursuant to § 91.230 and

include certifications pursuant to:

a. § 91.225(a)(1), affirmatively

furthering fair housing;

b. § 91.225(a)(3), drug-free workplace;

c. § 91.225(a)(4), anti-lobbying;

d. § 91.225(a)(7), acquisition and

relocation, except as waived;

e. § 91.225(b)(1), citizen participation,

except as waived;

f. § 91.225(b)(5), excessive force;

g. § 91.225(b)(6), compliance with

anti-discrimination laws;

h. § 91.225(b)(7), compliance with

lead-based paint procedures; and

i. § 91.225(b)(8), compliance with

applicable laws.

4. Each State grantee must submit to

HUD, for approval, an Action Plan for

Disaster Recovery that describes:

a. The recovery needs resulting from

the covered disaster;
47346 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations

b. The grantee’s overall plan for

recovery;

c. Expected Federal, non-Federal

public, and private resources, and their

relationship, if any, to activities to be

funded with HUD Disaster Recovery

funds; and

d. The State’s method of distribution.

5. A State grantee may distribute HUD

Disaster Recovery funds to units of

general local government, including city

and county grantees that otherwise

receive HUD Disaster Recovery funds,

and to Indian tribes.

6. The State grantee must describe

monitoring standards and procedures

pursuant to § 91.330 and include

certifications pursuant to:

a. § 91.325(a)(1), affirmatively

furthering fair housing;

b. § 91.325(a)(3), drug-free workplace;

c. § 91.325(a)(4), anti-lobbying;

d. § 91.325(a)(5), authority of the State

to carry out the program;

e. § 91.325(a)(7), acquisition and

relocation, except as waived;

f. § 91.325(b)(1), citizen participation,

except as waived;

g. § 91.325(b)(2), consultation with

local governments;

h. § 91.325(b)(5), compliance with

antidiscrimination laws;

i. § 91.325(b)(6), excessive force;

j. § 91.325(b)(7), compliance with

applicable laws.

7. Citizen participation

a. In order to permit public

examination and appraisal of the Action

Plan for Disaster Recovery, to enhance

the public accountability of grantees,

and to facilitate coordination of

activities with different levels of

government, the grantee (or unit of

general local government receiving a

grant from a State) shall in a timely

manner—

i. Furnish citizens or, as appropriate,

units of general local government

information concerning the amount of

funds available for proposed HUD

Disaster Recovery grant activities and

the range of activities that may be

undertaken, including the estimated

amount proposed to be used for

activities that will benefit persons of

low and moderate income;

ii. Publish a proposed Action Plan for

Disaster Recovery in such manner to

afford affected citizens or, as

appropriate, units of general local

government an opportunity to examine

its content and to submit comments on

the proposed disaster recovery

performance and on the community

development performance of the

grantee; and

iii. Provide citizens or, as appropriate,

units of general local government with

reasonable notice of, and opportunity to

comment on, any substantial change

proposed to be made in the use of funds

received under this grant from one

eligible activity to another or in the

method of distribution of such funds.

In preparing the Action Plan for

Disaster Recovery, the grantee shall

consider any such comments and views

and may, if deemed appropriate by the

grantee, modify the proposed Action

Plan for Disaster Recovery. The Action

Plan for Disaster Recovery shall be made

available to the public, and a copy shall

be furnished to the Secretary together

with the certifications required under

sections 3. and 5. above. Any Action

Plan for Disaster Recovery may be

modified or amended from time to time

by the grantee in accordance with the

same procedures required in this

paragraph for the preparation and

submission of such Action Plan for

Disaster Recovery.

b. A HUD Disaster Recovery grant

may be made only if the grantee certifies

that it is following a detailed citizen

participation plan that:

i. Provides for and encourages citizen

participation, with particular emphasis

on areas in which HUD Disaster

Recovery funds are proposed to be used;

ii. Provides citizens with information

and records relating to the grantee’s

proposed use of funds, and relating to

the actual use of HUD Disaster Recovery

funds; and

iii. Identifies how the needs of nonEnglish speaking residents will be met

in the case of public hearings where a

significant number of non-English

speaking residents can be reasonably

expected to participate.

This paragraph may not be construed

to restrict the responsibility or authority

of the grantee for the development and

execution of its HUD Disaster Recovery

Initiative.

F. Eligible Activities

1. Grantees may not use HUD Disaster

Recovery funds for activities

reimbursable or for which funds are

made available by the Federal

Emergency Management Agency

(FEMA), the Small Business

Administration (SBA), or the U.S. Army

Corps of Engineers (USACE).

2. Disaster Recovery funds may be

used for activities that are relevant to

disaster recovery, as described in this

Notice. Grantees must use funds

appropriated under Title II, Chapter 10

of the 1997 Emergency Supplemental

Appropriations Act for Recovery from

Natural Disasters (Pub. L. 105–18) for

buyouts, relocation, long-term recovery,

and mitigation related to a covered

disaster. These funds will supplement,

not replace, Federal Emergency

Management Agency (FEMA) and other

Federal funds. Those activities include:

a. Acquisition of real property

(including the buying out of properties

in a flood plain and the acquisition of

relocation property);

b. Relocation payments and assistance

for displaced persons, businesses,

organizations, and farm operations;

c. Debris removal, clearance, and

demolition;

d. Rehabilitation or reconstruction of

residential and non-residential

structures;

e. Acquisition, construction,

reconstruction, or installation of public

facilities and improvements, such as

water and sewer facilities, streets,

neighborhood centers, and the

conversion of school buildings for

eligible purposes;

f. Code enforcement in deteriorated or

deteriorating areas, e.g., disaster areas;

g. Assistance to facilitate

homeownership among low and

moderate income persons, e.g.,

downpayment assistance, interest rate

subsidies, loan guarantees;

h. Provision of public services,

limiting costs to no more than 25

percent of the grant amount;

i. Activities relating to energy

conservation and renewable energy

resources, incorporated into recovery;

j. Provision of assistance to profitmotivated businesses to carry out

economic development or recovery

activities that benefit the public through

job creation/retention; and

k. Planning and administration costs

up to 20 percent of the grant (e.g.,

planning, urban environmental design

and policy-planning-managementcapacity building activities and

payment of reasonable program

administration costs for: general

management, oversight and

coordination; public information; fair

housing activities; indirect costs

charged to the HUD Disaster Recovery

Initiative under a cost allocation plan

prepared in accordance with OMB

Circulars A–21, A–87, or A–122 as

applicable; and submission of

applications for Federal programs; as

well as,

l. Acquisition, construction, or

reconstruction of buildings for the

general conduct of government damaged

or destroyed as a direct result of a

Presidentially declared disaster; and

m. Construction of new replacement

housing by units of general local

government damaged or destroyed as a

direct result of a Presidentially declared

disaster.

3. Determination of eligibility. An

activity may be assisted in whole or in

part with HUD Disaster Recovery funds
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations 47347

only if all of the following requirements

are met:

a. Compliance with section F. Each

activity must meet the eligibility

requirements of section F of this notice.

b. Compliance with national

objectives. Grant recipients under the

HUD Disaster Recovery Initiative must

certify that their projected use of funds

has been developed so as to give

maximum feasible priority to activities

that will carry out one of the national

objectives of benefit to low- and

moderate-income families or aid in the

prevention or elimination of slums or

blight; the projected use of funds may

also include activities that the recipient

certifies are designed to meet other

community development needs having a

particular urgency because existing

conditions pose a serious and

immediate threat to the health or

welfare of the community where other

financial resources are not available to

meet such needs. Consistent with the

foregoing, each recipient must ensure,

and maintain evidence, that each of its

activities assisted with HUD Disaster

Recovery funds meets one of the three

national objectives as contained in its

certification. Criteria for determining

whether an activity addresses one or

more of these objectives are contained at

§ 570.208.

c. Compliance with the primary

objective. The primary objective of the

HUD Disaster Recovery Initiative is the

redevelopment of viable urban

communities, by providing decent

housing and a suitable living

environment and expanding economic

opportunities, especially for persons of

low and moderate income. In

determining the percentage of funds

expended for such activities:

i. Costs of administration and

planning eligible under section F.1. of

this notice will be assumed to benefit

low- and moderate-income persons in

the same proportion as the remainder of

the HUD Disaster Recovery funds and,

accordingly, shall be excluded from the

calculation;

ii. Funds expended for the

acquisition, new construction or

rehabilitation of property for housing

that qualifies under § 570.208(a)(3) must

be counted for this purpose but shall be

limited to an amount determined by

multiplying the total cost (including

HUD Disaster Recovery grant and nonHUD Disaster Recovery grant costs) of

the acquisition, construction or

rehabilitation by the percent of units in

such housing to be occupied by lowand moderate-income persons.

iii. Funds expended for any other

activities qualifying under § 570.208(a)

must be counted for this purpose in

their entirety.

d. Compliance with environmental

review procedures. The environmental

review procedures set forth at 24 CFR

part 58 must be completed for each

activity (or project as defined in 24 CFR

part 58), as applicable.

4. Special policies governing facilities.

The following special policies apply to:

a. Facilities containing both eligible

and ineligible uses. A public facility

otherwise eligible for assistance under

the HUD Disaster Recovery Initiative

may be provided with HUD Disaster

Recovery funds even if it is part of a

multiple use building containing

ineligible uses, if:

i. The facility that is otherwise

eligible and proposed for assistance will

occupy a designated and discrete area

within the larger facility; and

ii. The recipient can determine the

costs attributable to the facility

proposed for assistance as separate and

distinct from the overall costs of the

multiple-use building and/or facility.

Allowable costs are limited to those

attributable to the eligible portion of the

building or facility.

b. Fees for use of facilities. Reasonable

fees may be charged for the use of the

facilities assisted with HUD Disaster

Recovery funds, but charges such as

excessive membership fees, which will

have the effect of precluding low- and

moderate-income persons from using

the facilities, are not permitted.

5. Special assessments under the HUD

Disaster Recovery Initiative. The

following policies relate to special

assessments under the HUD Disaster

Recovery Initiative:

a. Definition of special assessment.

The term ‘‘special assessment’’ means

the recovery of the capital costs of a

public improvement, such as streets,

water or sewer lines, curbs, and gutters,

through a fee or charge levied or filed

as a lien against a parcel of real estate

as a direct result of benefit derived from

the installation of a public

improvement, or a one-time charge

made as a condition of access to a

public improvement. This term does not

relate to taxes, or the establishment of

the value of real estate for the purpose

of levying real estate, property, or ad

valorem taxes, and does not include

periodic charges based on the use of a

public improvement, such as water or

sewer user charges, even if such charges

include the recovery of all or some

portion of the capital costs of the public

improvement.

b. Special assessments to recover

capital costs. Where HUD Disaster

Recovery funds are used to pay all or

part of the cost of a public

improvement, special assessments may

be imposed as follows:

i. Special assessments to recover the

HUD Disaster Recovery funds may be

made only against properties owned and

occupied by persons not of low and

moderate income. Such assessments

constitute program income.

ii. Special assessments to recover the

non-HUD Disaster Recovery grant

portion may be made provided that

HUD Disaster Recovery funds are used

to pay the special assessment in behalf

of all properties owned and occupied by

low and moderate income persons;

except that HUD Disaster Recovery

funds need not be used to pay the

special assessments in behalf of

properties owned and occupied by

moderate-income persons if the grant

recipient certifies that it does not have

sufficient HUD Disaster Recovery funds

to pay the assessments in behalf of all

of the low- and moderate-income

owner-occupant persons. Funds

collected through such special

assessments are not program income.

c. Public improvements not initially

assisted with HUD Disaster Recovery

funds. The payment of special

assessments with HUD Disaster

Recovery funds constitutes HUD

Disaster Recovery assistance to the

public improvement. Therefore, HUD

Disaster Recovery funds may be used to

pay special assessments provided:

i. The installation of the public

improvements was carried out in

compliance with requirements

applicable to activities assisted under

this initiative, including environmental,

citizen participation, and Davis-Bacon

requirements;

ii. The installation of the public

improvement meets a criterion for

national objectives in § 570.208 (a)(1),

(b), or (c); and

iii. The requirements of

§ 570.200(c)(2)(ii) are met.

6. Limitation on planning and

administrative costs.

a. No more than 20 percent of the sum

of any grant, plus program income, shall

be expended for planning and program

administrative costs, paragraph F.1.k.

HUD will consider requests for waiver

and modification of this limitation

under extraordinary disaster recovery

circumstances on a case-by-case basis.

b. State administrative costs. The

State is responsible for the

administration of its HUD Disaster

Recovery Initiative. The amount of HUD

Disaster Recovery funds used to pay

administrative costs incurred by the

State in carrying out its responsibilities

under this program shall not exceed 2

percent of the aggregate of the State’s

grant.
47348 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations

7. Reimbursement for pre-award costs.

The effective date of the grant agreement

is the program year start date.

a. Prior to the effective date of the

grant agreement, a recipient may incur

costs beginning on or after the incident

date of the Presidentially declared

disaster, and then after the effective date

of the grant agreement pay for those

costs using its HUD Disaster Recovery

funds, provided that for city and county

grantees:

i. The activity for which the costs are

being incurred is included in its Action

Plan for Disaster Recovery prior to the

costs being paid;

ii. Citizens are advised of the extent

to which these pre-award costs will

affect the HUD Disaster Recovery funds;

iii. The costs and activities funded are

in compliance with the requirements of

this initiative and with the

Environmental Review Procedures

stated in 24 CFR part 58;

iv. HUD Disaster Recovery grant

payments for pre-award costs will be

made during a time no longer than the

next 24 months following the effective

date of the grant agreement or

amendment in which the activity is first

included; and

v. The total amount of pre-award costs

to be paid during any program year

pursuant to this provision is no more

than the greater of 25 percent of the

amount of the grant made for that year

or $300,000.

b. Upon the written request of the

recipient, HUD may authorize payment

of pre-award costs for activities that do

not meet the criteria at paragraphs 7.a.iv

or 7.a.v. of this section, if HUD

determines, in writing, that there is

good cause for granting an exception

upon consideration of the following

factors, as applicable:

i. Whether granting the authority

would result in a significant

contribution to the goals and purposes

of the HUD Disaster Recovery Initiative;

ii. Whether failure to grant the

authority would result in undue

hardship to the recipient or

beneficiaries of the activity;

iii. Whether granting the authority

would not result in a violation of a

statutory provision;

iv. Whether circumstances are clearly

beyond the recipient’s control; or

v. Any other relevant considerations.

8. Activities outside the jurisdiction of

the unit of general local government.

HUD Disaster Recovery funds may assist

an activity located outside the

jurisdiction of the unit of general local

government that receives the HUD

Disaster Recovery funds, provided the

unit of general local government

determines that the activity is meeting

its disaster recovery needs and

reasonable benefits accrue to residents

of the jurisdiction.

G. Guidelines for Evaluating and

Selecting Economic Development

Projects

HUD provides guidelines to assist the

recipient to evaluate and select

activities to be carried out for economic

development purposes. These

guidelines are composed of two

components: guidelines for evaluating

project costs and financial requirements;

and standards for evaluating public

benefit. The standards for evaluating

public benefit are mandatory, but the

guidelines for evaluating projects costs

and financial requirements are not.

They may be found at § 570.482 (e) and

(f) for States and at § 570.209 for cities

and counties. HUD may consider the

waiver of such standards on a case-bycase basis upon submission of a written

justification as to why the recipient

cannot meet the requirement and a

proposed alternative that assures at least

a minimum level of public benefit.

H. Ineligible Activities

1. General government expenses.

Except as otherwise specifically

authorized in this Notice, or under OMB

Circular A–87, expenses required to

carry out the regular responsibilities of

the unit of general local government are

not eligible for assistance.

2. The following activities may not be

assisted with HUD Disaster Recovery

funds unless authorized under

provisions of section 105(a)(15) of the

Act.

a. Purchase of equipment. The

purchase of equipment with HUD

Disaster Recovery funds is generally

ineligible.

i. Construction equipment. The

purchase of construction equipment is

ineligible, but compensation for the use

of such equipment through leasing,

depreciation, or use allowances

pursuant to OMB Circulars A–21, A–87

or A–122 as applicable for an otherwise

eligible activity is an eligible use of

HUD Disaster Recovery funds. However,

the purchase of construction equipment

for use as part of a solid waste disposal

facility is eligible.

ii. Fire protection equipment. Fire

protection equipment is considered for

this purpose to be an integral part of a

public facility and thus, purchase of

such equipment would be eligible.

iii. Furnishings and personal

property. The purchase of equipment,

fixtures, motor vehicles, furnishings, or

other personal property not an integral

structural fixture is generally ineligible.

HUD Disaster Recovery funds may be

used, however, to purchase or to pay

depreciation or use allowances (in

accordance with OMB Circulars A–21,

A–87 or A–122, as applicable) for such

items when necessary for use by a

recipient or its subrecipients in the

administration of activities assisted with

HUD Disaster Recovery funds, or when

eligible as fire fighting equipment, or

when such items constitute all or part

of a public service.

b. Operating and maintenance

expenses. The general rule is that any

expense associated with repairing,

operating or maintaining public

facilities, improvements and services is

ineligible. Specific exceptions to this

general rule are operating and

maintenance expenses associated with

public service activities, interim

assistance, and office space for program

staff employed in carrying out the HUD

Disaster Recovery Initiative. For

example, the use of HUD Disaster

Recovery funds to pay the allocable

costs of operating and maintaining a

facility used in providing a public

service would be eligible, even if no

other costs of providing such a service

are assisted with such funds. Examples

of ineligible operating and maintenance

expenses are:

i. Maintenance and repair of publicly

owned streets, parks, playgrounds,

water and sewer facilities, neighborhood

facilities, senior centers, centers for

persons with disabilities, parking and

other public facilities and

improvements. Examples of

maintenance and repair activities for

which HUD Disaster Recovery funds

may not be used include the filling of

pot holes in streets, repairing of cracks

in sidewalks, the mowing of recreational

areas, and the replacement of expended

street light bulbs; and

ii. Payment of salaries for staff, utility

costs and similar expenses necessary for

the operation of public works and

facilities.

c. Income payments. The general rule

is that HUD Disaster Recovery funds

may not be used for income payments.

For purposes of the HUD Disaster

Recovery Initiative, ‘‘income payments’’

means a series of subsistence-type grant

payments made to an individual or

family for items such as food, clothing,

housing (rent or mortgage), or utilities,

but excludes emergency grant payments

made over a period of up to three

consecutive months to the provider of

such items or services on behalf of an

individual or family. HUD may consider

a waiver request for exceptional

circumstances on a case-by-case basis.
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations 47349

I. Criteria for National Objectives

The criteria at § 570.483 and § 570.208

shall be used for States and for cities

and counties, respectively, to determine

whether a HUD Disaster Recovery

Initiative-assisted activity complies with

one or more of the national objectives.

J. Treatment of Program Income

For cities and counties, program

income generated by HUD Disaster

Recovery Initiative becomes program

income to the grantee’s CDBG program,

not to its HUD Disaster Recovery grant.

(For new grantees, not participating in

the CDBG program, program income is

governed by the provisions of

§ 570.426). Therefore, any program

income generated by HUD Disaster

Recovery funds is to be included in cost

cap calculations and program

requirements for use of the CDBG funds.

However, for States, the program

income shall be returned to the State as

program income for the year in which

the State redistributes those funds.

K. Acquisition (Buyouts) of FloodDamaged Properties

1. Payment of Pre-flood Values for

Buyouts. HUD Disaster Recovery

Initiative grantees have the discretion to

pay pre-flood or post-flood values for

the acquisition of properties located in

a flood way or flood plain. In using

HUD Disaster Recovery funds for such

acquisitions, the grantee must uniformly

apply whichever valuation method it

chooses.

2. Duplication of Benefits and

Optional Relocation Payments with

Buyouts. a. Optional relocation

assistance should only be provided to

the extent necessary for displaced

persons to relocate in a ‘‘comparable

replacement dwelling,’’ as defined in 42

U.S.C. 4601(10) and 49 CFR 24.2(d),

except as provided by HUD with prior

approval on a case by case basis when

sufficient cause exists due to

extraordinary erosive economic impact

of relocation, and shall not exceed the

difference between the housing

replacement cost and the sum of:

i. The net proceeds from any flood

insurance payment (proceeds net of the

cost of documented repairs of flood

damage),

ii. Personal tax savings that result

from an owner’s tax deduction of capital

loss on displacement property,

iii. FEMA Hazard Mitigation Grant

Program acquisition proceeds, and

iv. SBA disaster loan assistance.

3. Buyout of Undamaged Properties.

a. Many buyout projects contain some

properties that were undamaged by the

floods. Local administrators sometimes

seek to offer buyouts to owners of

undamaged properties to maximize

clearance of the floodplain. Purchase of

such properties with HUD Disaster

Recovery funding is permitted if the

properties are incidental to the project

as a whole.

4. Ownership and Maintenance of

Acquired Property. a. Any property

acquired with HUD Disaster Recovery

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 will 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 must require that the

property be dedicated and maintained

for compatible uses in perpetuity.

5. Future Federal Assistance to

Owners Remaining in Floodplain.

a. Section 582 of the National Flood

Insurance Reform Act of 1994 (in Title

V of Pub. L. 103–325) (42 U.S.C. 5154a)

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

self-implementing without regulations.)

This means that a grantee may not

provide disaster assistance for the

above-mentioned repair, replacement, or

restoration to a person that has failed to

meet this requirement.

b. Section 582 also implies a

responsibility for a grantee that receives

HUD Disaster Recovery funds or that,

under section 122 of the Act, 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.

c. 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:

i. 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

ii. 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.

d. Failure To Notify. If a transferor

fails to make notification and,

subsequent to the transfer of the

property:

i. The transferee fails to obtain or

maintain flood insurance, in accordance

with applicable Federal law, with

respect to the property;

ii. The property is damaged by a flood

disaster; and

iii. 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.

e. 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 property, if such

assistance was conditioned upon

obtaining flood insurance in accordance

with applicable Federal law with

respect to such property.

f. The term ‘‘Federal disaster relief

assistance’’ applies to HUD or other

Federal assistance for disaster relief in

‘‘flood disaster areas.’’ This prohibition

applies only to 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,
47350 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations

etc.). The term ‘‘flood disaster area’’ is

defined in section 582(d)(2) to mean an

area receiving a Presidential declaration

of a major disaster or emergency as a

result of flood conditions.

L. Other Program Requirements

1. General. This section L. enumerates

laws that the Secretary will treat as

applicable to the HUD Disaster Recovery

Initiative grants to cities and counties,

including statutes expressly made

applicable by the Act and certain other

statutes and Executive Orders for which

the Secretary has enforcement

responsibility. The absence of mention

herein of any other statute for which the

Secretary does not have direct

enforcement responsibility is not

intended to be taken as an indication

that, in the Secretary’s opinion, such

statute or Executive Order is not

applicable to activities assisted under

the Act. States are governed by

applicable laws.

2. Labor standards.

In part because Davis-Bacon

requirements are not applicable to

Federal Emergency Management Agency

(FEMA) disaster grants, it is necessary to

clarify the applicability of Davis-Bacon

requirements in relationship to the use

of HUD Disaster Recovery funds in

disaster recovery efforts. This section of

this Notice addresses Davis-Bacon

applicability to use of HUD Disaster

Recovery funds to reimburse property

owners for construction work either

completed or in process at the time use

of those funds is contemplated.

In accordance with Section 110(a) of

the Act, construction work financed in

whole or in part with HUD Disaster

Recovery funds is subject to Federal

labor standards provisions including the

payment of Davis-Bacon Act prevailing

wage rates. Additionally, such work is

subject to the requirements of the

Copeland Act governing the certification

and submission of weekly payroll

reports and prohibiting kick-backs and

other impermissible deductions from

wages, and the overtime requirements of

the Contract Work Hours and Safety

Standards Act. The requirements found

in Department of Labor (DOL)

regulations for Davis-Bacon

administration and enforcement (29

CFR parts 1, 3, 5, 6, and 7) also apply.

a. Applicability. HUD Disaster

Recovery activities are subject to

program policies and parameters for

Federal labor standards applicability at

§ 570.603. The labor provisions apply to

rehabilitation of residential property

only if such property contains 8 or more

units.

b. Volunteers. Section 110(b) of the

Act provides for the use of volunteer

labor on construction work subject to

Federal labor standards. Volunteers may

be utilized to the extent permitted under

the regulations in 24 CFR part 70.

c. Work in progress. In accordance

with 29 CFR 1.6(g), if HUD Disaster

Recovery funds are approved after start

of construction (e.g., rehabilitation),

Davis-Bacon requirements apply to the

construction work. In such cases, the

appropriate Davis-Bacon wage decision

and contract standards must be

incorporated into the contract

specifications retroactively to the date of

award or start of construction,

whichever was first. However, HUD

may request and the DOL may approve

a wage determination effective on the

date the Disaster Recovery funding is

approved (i.e., not retroactively to the

start of construction), provided that

HUD considers and DOL agrees that it

is necessary and proper in the public

interest to prevent injustice or undue

hardship, and provided further that

there is no evidence of intent to apply

for Federal funding or assistance prior

to contract award or start of

construction, as appropriate.

d. Reimbursement for completed

construction work. When HUD Disaster

Recovery funds are proposed to

reimburse property owners for

construction work performed and fully

completed as disaster damage

rehabilitation, Federal labor standards

provisions (i.e., Davis-Bacon wage rates

and related requirements) are not

applicable to the completed work

provided that:

i. Neither the owner nor the city or

county grantee, or for States, the unit of

general local government, contemplated

use of or reimbursement by HUD

Disaster Recovery funds for the

rehabilitation(s) before or during the

time construction work was underway;

and

ii. No other Federal funding requiring

the payment of Davis-Bacon wage rates

was used to carry out the work.

In these cases, the use of HUD

Disaster Recovery funds to reimburse

owners for completed rehabilitation

does not constitute financing of

construction work within the meaning

of the labor standards provisions of

Section 110 of the Act.

e. Davis-Bacon Streamlining. The

HUD Office of Labor Relations has

instituted a number of streamlining

measures that significantly reduce the

paperwork/recordkeeping burdens

commonly attributed to Davis-Bacon

projects. In addition, Labor Relations

headquarters and field staff are

committed to providing expedited

processing on all matters related to HUD

Disaster Recovery activities.

Note that most forms of HUD Disaster

Recovery assistance to homeowners

would not trigger Davis-Bacon

requirements. Grantees should contact

Richard S. Allan, Assistant to the

Secretary for Labor Relations (Acting),

or Jade M. Banks at (202)708–0370 for

assistance in determining whether and

to what extent Davis-Bacon

requirements apply to specific activities

undertaken with HUD Disaster Recovery

funds. Information about Federal labor

standards provisions and HUD programs

is also available on the HUD Homepage

at: http://www.hud.gov/olr/

olrlint2.html.

3. National Flood Insurance Program.

a. Cities and counties may not use HUD

Disaster Recovery Initiative funding in

flood hazard areas for acquisition or

construction projects in communities

that have been identified by FEMA as

nonparticipating, noncompliant

communities under the National Flood

Insurance Program. Specific guidance

can be found in the references in

paragraph 3.b. for cities and counties.

Though State-administered formula

programs are statutorily exempt from

flood insurance purchase requirements,

HUD strongly encourages States to

adopt a similar policy if they have the

authority to do so. Listings of

participating, nonparticipating, and

suspended communities are in the

FEMA Federal Insurance

Administration’s ‘‘National Flood

Insurance Program Community Status

Book,’’ available on the World Wide

Web at http://www.fema.gov/home/

fema/csb.htm for viewing or

downloading. FEMA’s revised

publication, ‘‘Mandatory Purchase of

Flood Insurance Guidelines,’’ reflecting

new provisions of the National Flood

Insurance Reform Act of 1994 is also

available on the World Wide Web at

http://www/fema.gov/nfip/mpurfi.htm.

b. Section 202(a) of the Flood Disaster

Protection Act of 1973 (42 U.S.C. 4106)

provides that no Federal officer or

agency shall approve any financial

assistance for acquisition or

construction purposes (as defined under

section 3(a) of said Act (42 U.S.C.

4003(a)), one year after a community has

been formally notified of its

identification as a community

containing an area of special flood

hazard, for use in any area that has been

identified by the Director of the Federal

Emergency Management Agency as an

area having special flood hazards unless

the community in which such area is

situated is then participating in the

National Flood Insurance Program.

Notwithstanding the date of HUD

approval of a city’s or county’s Action

Plan for Disaster Recovery funds shall
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations 47351

1These circulars are available from the American

Communities Center by calling the following tollfree numbers: (800) 998–9999 or (800) 483–2209

(TTY).

not be expended for acquisition or

construction purposes in an area that

has been identified by the Federal

Emergency Management Agency

(FEMA) as having special flood hazards

unless the community in which the area

is situated is participating in the

National Flood Insurance Program in

accordance with 44 CFR parts 59–79, or

less than a year has passed since FEMA

notification to the community regarding

such hazards; and, where the

community is participating, flood

insurance is obtained in accordance

with section 102(a) of the Flood Disaster

Protection Act of 1973 (42 U.S.C.

4012(a).)

M. Waiver of Statutory and Regulatory

Requirements That Would Otherwise

Apply to the HUD Disaster Recovery

Initiative

1. Title II, Chapter 10 of the 1997

Supplemental Appropriations Act

provides that in administering these

amounts, the Secretary 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. As noted,

the Secretary may not waive statutory

requirements related to civil rights, fair

housing and nondiscrimination, the

environment, or labor standards. The

procedures set forth in this notice reflect

the waiver of the statutory and

regulatory requirements that the

Secretary considered necessary for the

implementation of the HUD Disaster

Recovery Initiative, and that are

authorized to be waived under Title II,

Chapter 10 of the 1997 Supplemental

Appropriations Act. The statutory and

regulatory requirements that have been

waived pertain to requirements

governing consolidated planning

submissions, CDBG program

requirements, acquisition and relocation

requirements, and other program related

requirements. Appendix A to this notice

lists the specific statutory and

regulatory requirements that have been

waived and sets forth the reasons for the

waivers. With respect to the waivers of

these statutory and regulatory

requirements, no further action need be

taken by the grantees.

2. HUD may issue additional waivers

(beyond those already waived by the

Secretary in the implementation of this

initiative) deemed appropriate under

this authority. HUD will consider

additional waivers on a case-by-case

basis, as requested by grantees. Such

waivers will receive expedited review.

3. Grantees should give priority to

projects that benefit low-and moderateincome individuals to the maximum

extent possible.

II. Ensuring the Public Trust

A. Program Administrative,

Recordkeeping and Reporting

Requirements

The program administrative

requirements at §§ 570.489–570.492 for

States and at §§ 570.500–570.513 for

cities and counties, which are not

otherwise waived, shall apply, except

that, with respect to reporting:

1. States must submit a Performance

Evaluation Report (PER) pursuant to 24

CFR 91.520, separately for the HUD

Disaster Recovery Initiative, similar in

all other respects to that which is

required for the CDBG program

regulated at 24 CFR part 570. The first

PER for the HUD Disaster Recovery

Initiative will be due ninety (90) days

after the 12-month period following the

effective date of the grant and each 12-

month period thereafter until all funds

are spent. The PER must include a

special narrative that discusses how the

State assured that activities met the

requirements of this Notice with respect

to the buyout of structures in a disaster

area.

2. Cities and counties must submit a

Performance Report for the HUD

Disaster Recovery Initiative in

accordance with 24 CFR 91.520. The

Performance Report will be due ninety

(90) days after each 12-month period

following the effective date of the grant

each year until all funds are spent. The

final Performance Report will be due

ninety (90) days after all funds are

spent. It also must include a special

narrative that discusses how the city or

county assured that activities met the

requirements of this Notice with respect

to the buyout of structures in a disaster

area.

3. In addition, Congress has required

that quarterly reports be submitted on

all disbursements and use of funds for

or associated with buyouts. Therefore,

each grantee must submit a quarterly

report, as HUD will prescribe, no later

than 30 days following each calendar

quarter, beginning after the first full

calendar quarter after grant award. That

report will include information on the

project name, activity, location, national

objective, funds budgeted and

expended, non-HUD Disaster Recovery

Initiative Federal source and funds,

numbers of properties and housing

units, and numbers of low- and

moderate-income households. HUD will

seek approval from OMB for any new

information collection requirements in

accordance with the Paperwork

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

3520).

B. Cost Principles

1. Direct and Indirect Cost principles.

Costs incurred, whether charged on a

direct or an indirect basis, must be in

conformance with OMB Circulars A–87,

‘‘Cost Principles for State, Local and

Indian Tribal Governments’’; A–122,

‘‘Cost Principles for Non-profit

Organizations’’; or A–21, ‘‘Cost

Principles for Educational Institutions,’’

as applicable. 1 All items of cost listed

in Attachment B of these Circulars that

require prior Federal agency approval

are allowable without prior approval of

HUD to the extent they comply with the

general policies and principles stated in

Attachment A of such circulars and are

otherwise eligible under the HUD

Disaster Recovery Initiative, except for

the following:

i. Depreciation methods for fixed

assets shall not be changed without

HUD’s specific approval or, if charged

through a cost allocation plan, the

Federal cognizant agency.

ii. Fines and penalties (including

punitive damages) are unallowable costs

to the HUD Disaster Recovery Initiative.

iii. Pre-award costs for city and

county grantees are limited to those

authorized under § 570.200(h).

2. Uniform administrative

requirements and cost principles. The

city or county grantee, its agencies or

instrumentalities, and subrecipients

shall comply with the policies,

guidelines, and requirements of 24 CFR

part 85 and OMB Circulars A–87, A–110

(implemented at 24 CFR part 84), A–

122, A–133 (implemented at 24 CFR

part 45), as applicable, as they relate to

the acceptance and use of Federal funds,

HUD Disaster Recovery grants. The

applicable sections of 24 CFR parts 84

and 85 are set forth at § 570.502. States

shall comply with the applicable

requirements of § 570.489 that are not

otherwise waived.

3. Consultant activities. Consulting

services are eligible for assistance for

professional assistance in program

planning, development of community

development objectives, and other

general professional guidance relating to

program execution. The use of
47352 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations

consultants is governed by the

following:

a. Employer-employee type of

relationship. No person providing

consultant services in an employeremployee type of relationship shall

receive more than a reasonable rate of

compensation for personal services paid

with HUD Disaster Recovery funds. In

no event, however, shall such

compensation exceed the equivalent of

the daily rate paid for Level IV of the

Executive Schedule. Such services shall

be evidenced by written agreements

between the parties that detail the

responsibilities, standards, and

compensation.

b. Independent contractor

relationship. Consultant services

provided under an independent

contractor relationship are governed by

the procurement requirements in 24

CFR 85.36 and are not subject to the

Level IV limitation.

C. Public Law 88–352 and Public Law

90–284; Affirmatively Furthering Fair

Housing; Executive Order 11063

1. The following requirements apply

to HUD Disaster Recovery Initiative:

a. Public Law 88–352, which is title

VI of the Civil Rights Act of 1964 (42

U.S.C. 2000d et seq.), and implementing

regulations in 24 CFR part 1.

b. Public Law 90–284, which is the

Fair Housing Act (42 U.S.C. 3601–3620).

In accordance with the Fair Housing

Act, the Secretary requires that grantees

administer all programs and activities

related to housing and community

development in a manner to

affirmatively further the policies of the

Fair Housing Act. Furthermore, for each

grantee receiving a HUD Disaster

Recovery grant, the certification that the

grantee will affirmatively further fair

housing shall specifically require the

grantee to assume the responsibility of

fair housing planning by conducting an

analysis to identify impediments to fair

housing choice within its jurisdiction,

taking appropriate actions to overcome

the effects of any impediments

identified through that analysis, and

maintaining records reflecting the

analysis and actions in this regard.

2. Executive Order 11063, as amended

by Executive Order 12259 (3 CFR, 1959–

1963 Comp., p. 652; 3 CFR, 1980 Comp.,

p. 307)(Equal Opportunity in Housing),

and implementing regulations in 24 CFR

part 107, also apply.

D. Section 109 of the Act

1. No person in the United States

shall on the ground of race, color,

religion, national origin or sex, be

excluded from participation in, be

denied the benefits of, or be subjected

to discrimination under, any program or

activity funded in whole or in part with

HUD Disaster Recovery funds made

available pursuant to the Act. For

purposes of this requirement, ‘‘program

or activity’’ is defined as any function

conducted by an identifiable

administrative unit of the recipient, or

by any unit of government, subrecipient,

or private contractor receiving HUD

Disaster Recovery grant funds or loans

from the recipient. ‘‘Funded in whole or

in part with HUD community

development funds’’ means that HUD

Disaster Recovery funds have been

transferred by the recipient or a

subrecipient to an identifiable

administrative unit and disbursed in a

program or activity. The term

‘‘recipient’’ means recipient as defined

in § 1.2(f).

2. Specific discriminatory actions

prohibited and corrective actions. a. A

recipient may not, under any program or

activity, directly or through contractual

or other arrangements, on the ground of

race, color, religion, national origin, or

sex:

i. Deny any individual any facilities,

services, financial aid or other benefits

provided under the program or activity.

ii. Provide any facilities, services,

financial aid or other benefits that are

different, or are provided in a different

form, from that provided to others under

the program or activity.

iii. Subject an individual to segregated

or separate treatment in any facility in,

or in any matter of process related to

receipt of any service or benefit under

the program or activity.

iv. Restrict an individual in any way

in access to, or in the enjoyment of, any

advantage or privilege enjoyed by others

in connection with facilities, services,

financial aid or other benefits under the

program or activity.

v. Treat an individual differently from

others in determining whether the

individual satisfies any admission,

enrollment, eligibility, membership, or

other requirement or condition that the

individual must meet in order to be

provided any facilities, services or other

benefit provided under the program or

activity.

vi. Deny an individual an opportunity

to participate in a program or activity as

an employee.

b. A recipient may not use criteria or

methods of administration that have the

effect of subjecting persons to

discrimination on the basis of race,

color, religion, national origin, or sex, or

have the effect of defeating or

substantially impairing accomplishment

of the objectives of the program or

activity with respect to persons of a

particular race, color, religion, national

origin, or sex.

c. A recipient, in determining the site

or location of housing or facilities

provided in whole or in part with funds,

may not make selections of such site or

location that have the effect of

excluding persons from, denying them

the benefits of, or subjecting them to

discrimination on the ground of race,

color, religion, national origin, or sex; or

that have the purpose or effect of

defeating or substantially impairing the

accomplishment of the objectives of the

Act.

d. i. In administering a program or

activity funded in whole or in part with

HUD Disaster Recovery funds regarding

which the recipient has previously

discriminated against persons on the

ground of race, color, religion, national

origin or sex, or if there is sufficient

evidence to conclude that such

discrimination existed, the recipient

must take remedial affirmative action to

overcome the effects of prior

discrimination. The word ‘‘previously’’

does not exclude current discriminatory

practices.

ii. In the absence of discrimination, a

recipient, in administering a program or

activity funded in whole or in part with

HUD Disaster Recovery funds, may take

any nondiscriminatory affirmative

action necessary to ensure that the

program or activity is open to all

without regard to race, color, religion,

national origin or sex.

iii. After a finding of noncompliance

or after a recipient has a firm basis to

conclude that discrimination has

occurred, a recipient shall not be

prohibited from taking any eligible

action to ameliorate an imbalance in

services or facilities provided to any

geographic area or specific group of

persons within its jurisdiction, where

the purpose of such action is to remedy

prior discriminatory practice or usage.

e. Notwithstanding anything to the

contrary, nothing contained herein shall

be construed to prohibit any recipient

from maintaining or constructing

separate living facilities or rest room

facilities for the different sexes.

Furthermore, selectivity on the basis of

sex is not prohibited when institutional

or custodial services can properly be

performed only by a member of the

same sex as the recipients of the

services.

3. Any prohibition against

discrimination on the basis of age under

the Age Discrimination Act of 1975 (42

U.S.C. 6101 et seq.) or with respect to

an otherwise qualified handicapped

person as provided in section 504 of the

Rehabilitation Act of 1973 (29 U.S.C.

794) shall also apply to any program or
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations 47353

activity funded in whole or in part with

HUD Disaster Recovery funds. HUD

regulations implementing the Age

Discrimination Act are contained in 24

CFR part 146 and the regulations

implementing section 504 are contained

in 24 CFR part 8.

E. Environmental Review Requirements

1. Prior to the commitment of any

HUD Disaster Recovery funds, grantees

must comply with the regulations in 24

CFR part 58. These regulations require:

the analysis of potential environmental

impacts; consultation with interested

parties; and public notification of the

results of the analysis and intent to

request release of funds from HUD.

Also, they require that the State or local

government assume compliance with

these rules by execution of the grant

agreement with HUD, and a State or

local government certification that it

will comply with all the applicable

Federal environmental rules.

2. Disaster Recovery Assistance in a

Flood Plain. a. Grantees must follow the

eight-step decision-making process

required by Executive Order 11988,

Flood Plain Management, codified for

HUD programs at § 55.20. The Order

covers the proposed acquisition,

construction, improvement, disposition,

financing, and use of property in a flood

plain. Other related Federal

environmental laws and authorities

noted at § 58.5 may also apply.

b. The Office of Management and

Budget (OMB) and the Council on

Environmental Quality (CEQ) jointly

issued a memorandum on February 18,

1997 entitled ‘‘Floodplain Management

and Procedures For Evaluation and

Review of Levee and Associated

Restoration Projects,’’ which

emphasizes the need to consider

nonstructural alternatives, e.g.,

‘‘buyouts,’’ in flood disaster recovery

activities and the need for coordination

among all levels of government.

3. Environmental assessments and

reviews may be tiered to eliminate

duplication and to save time and

resources. For other Federal programs,

environmental assessments and reviews

are not carried out by grantees as they

are for the HUD Disaster Recovery

Initiative, but are usually undertaken by

Federal staff or contractors. Therefore,

grantees must coordinate with other

Federal agencies, e.g., FEMA, to tier

environmental assessments and reviews

for activities funded by programs of

both Federal agencies.

4. Joint Environmental Assessments

between HUD and Other Federal

Agencies. a. In addition to the

provisions of § 58.33, the following

special procedures may be employed

when a project related to recovery from

a covered disaster is jointly funded by

HUD and other Federal agencies.

b. A State or local government

administering Federal environmental

requirements for the HUD Disaster

Recovery Initiative may enter into

cooperating agreements with other

Federal agencies to prepare an

environmental assessment for a HUD

Disaster Recovery Initiative-funded

project. The cooperating agreement will

identify the project, all Federal agencies

party to the agreement (including State

and local governments acting for HUD

under the provisions of 24 CFR part 58),

which agency will be the lead agency

and prepare the environment

assessment, and the scope of the

assessment, including the size and area

of potential impact. The lead agency

will prepare the assessment, using its

own CEQ-approved procedures, and

conduct all required reviews,

consultations and public notifications

under applicable related laws and

authorities.

c. The provisions of 24 CFR part 58

would apply if a State or local

government administering a HUDfunded program that is subject to part 58

(e.g., the HUD Disaster Recovery

Initiative) is the lead agency.

d. If the State or local government that

assumes the HUD environmental review

responsibilities is not the lead agency,

then that government must review the

completed environmental assessment

that was prepared by a lead agency

under the cooperating agreement. If the

review of the document determines that

the information is not accurate or

complete or does not meet the

requirements of 24 CFR part 58, a State

or local government administering the

provisions of 24 CFR part 58 must reject

the assessment and prepare its own

independent assessment as required in

24 CFR part 58. A State or local

government acting as a cooperating

agency remains responsible for review

under authorities that may be unique to

HUD-assisted projects under part 58,

i.e., HUD environmental standards in 24

CFR part 51 and HUD policy regarding

toxic or hazardous materials. However,

if a lead agency’s assessment meets the

requirements of part 58, except for a

lack of coverage of these particular

areas, the cooperating agency need not

reject the assessment. In these cases, the

cooperating agency may add its own

review of these areas and its own

findings regarding the overall

environmental impact of the project.

e. If an assessment showing no

significant environmental impact is

adopted by a State or local government

administering the provisions of 24 CFR

part 58, it must formally record its

adoption pursuant to § 58.38, prepare a

statement that the proposed HUD

funding of the proposed project

produces no significant environmental

impact (FONSI), and follow the

provisions for release of funds as stated

in subpart H of 24 CFR part 58,

including notice to the public and the

statutory waiting period.

F. Displacement, Relocation,

Acquisition, and Replacement of

Housing

1. General policy for minimizing

displacement. Consistent with the other

goals and objectives of the HUD Disaster

Recovery Initiative, grantees (or States

or State recipients, as applicable) shall

assure that they have taken all

reasonable steps to minimize the

displacement of persons (families,

individuals, businesses, nonprofit

organizations, and farms) as a result of

activities assisted under this program.

2. Relocation assistance for displaced

persons at URA levels. a. A displaced

person shall be provided with relocation

assistance at the levels described in, and

in accordance with the requirements of,

49 CFR part 24, which contains the

government-wide regulations

implementing the Uniform Relocation

Assistance and Real Property

Acquisition Policies Act of 1970 (URA)

(42 U.S.C. 4601–4655).

b. Displaced person. i. For purposes of

paragraph 2. of this section, the term

‘‘displaced person’’ means any person

(family, individual, business, nonprofit

organization, or farm) that moves from

real property, or moves his or her

personal property from real property,

permanently and involuntarily, as a

direct result of rehabilitation,

demolition, or acquisition for an activity

assisted under this initiative. A

permanent, involuntary move for an

assisted activity includes a permanent

move from real property that is made:

(1) After notice by the grantee (or the

State recipient, if applicable) to move

permanently from the property, if the

move occurs after the initial official

submission to HUD (or the State, as

applicable) for grant, loan, or loan

guarantee funds under this initiative

that are later provided or granted.

(2) After notice by the property owner

to move permanently from the property,

if the move occurs after the date of the

submission of a request for financial

assistance by the property owner (or

person in control of the site) that is later

approved for the requested activity.

(3) Before the date described in

paragraph 2.b.i.(1) or (2), if either HUD

or the grantee (or State, as applicable)

determines that the displacement
47354 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations

directly resulted from acquisition,

rehabilitation, or demolition for the

requested activity.

(4) If the person is the tenantoccupant of a dwelling unit and any one

of the following two situations occurs:

(a) The tenant is required to relocate

temporarily for the activity but the

tenant is not offered payment for all

reasonable out-of-pocket expenses

incurred in connection with the

temporary relocation, including the cost

of moving to and from the temporary

location and any increased housing

costs, or other conditions of the

temporary relocation are not reasonable;

and the tenant does not return to the

building/complex; or

(b) The tenant is required to move to

another unit in the building/complex,

but is not offered reimbursement for all

reasonable out-of-pocket expenses

incurred in connection with the move.

ii. Notwithstanding the provisions of

paragraph 2.b.i., the term ‘‘displaced

person’’ does not include:

(1) A person who is evicted for cause

based upon serious or repeated

violations of material terms of the lease

or occupancy agreement. To exclude a

person on this basis, the grantee (or

State or State recipient, as applicable)

must determine that the eviction was

not undertaken for the purpose of

evading the obligation to provide

relocation assistance under this section;

(2) A person who moves into the

property after the date of the notice

described in paragraph 2.b.i. (1) or (2) of

this section, but who received a written

notice of the expected displacement

before occupancy.

(3) A person who is not displaced as

described in 49 CFR 24.2(g)(2).

(4) A person who the grantee (or State,

as applicable) determines is not

displaced as a direct result of the

acquisition, rehabilitation, or

demolition for an assisted activity. To

exclude a person on this basis, HUD

must concur in that determination.

iii. A grantee (or State or State

recipient, as applicable) may, at any

time, request HUD to determine whether

a person is a displaced person under

this section.

3. Optional relocation assistance. In

connection with the use of HUD

Disaster Recovery funds for buyouts, a

grantee may provide (or the State may

permit the State recipient to provide, as

applicable) relocation payments and

other relocation assistance to persons

displaced by activities that are not

subject to paragraphs 2. or 3. The

grantee may also provide (or the State

may also permit the State recipient to

provide, as applicable) relocation

assistance to persons receiving

assistance under paragraphs 2. or 3. of

this section at levels in excess of those

required by these paragraphs. Unless

such assistance is provided under State

or local law, the grantee (or State

recipient, as applicable) shall provide

such assistance only upon the basis of

a written determination that the

assistance is appropriate. The grantee

(or State recipient, as applicable) must

adopt a written policy available to the

public that describes the relocation

assistance that the grantee (or State

recipient, as applicable) has elected to

provide and that provides for equal

relocation assistance within each class

of displaced persons.

4. Acquisition of real property. The

acquisition of real property for an

assisted activity is subject to 49 CFR

part 24, subpart B.

5. Appeals. If a person disagrees with

the determination of the grantee (or the

State recipient, as applicable)

concerning the person’s eligibility for,

or the amount of, a relocation payment

under this section, the person may file

a written appeal of that determination

with the grantee (or the State recipient,

as applicable). The appeal procedures to

be followed are described in 49 CFR

24.10. In addition, a low- or moderateincome household that has been

displaced from a dwelling may file a

written request for review of the

grantee’s decision to the HUD Field

Office. For purposes of State HUD

Disaster Recovery funds, a low- or

moderate-income household may file a

written request for review of the State

recipient’s decision with the State.

6. Responsibility of grantee or State. a.

The grantee (or State, if applicable) is

responsible for ensuring compliance

with these requirements,

notwithstanding any third party’s

contractual obligation to the grantee to

comply with the provisions of this

section. For purposes of State HUD

Disaster Recovery funds, the State shall

require State recipients to certify that

they will comply with the requirements

of this section.

b. The cost of assistance required

under this section may be paid from

local public funds, funds provided

under this initiative, or funds available

from other sources.

c. The grantee (or State and State

recipient, as applicable) must maintain

records in sufficient detail to

demonstrate compliance with the

provisions of this section.

G. Employment and Contracting

Opportunities

1. Grantees shall comply with

Executive Order 11246, as amended by

Executive Orders 11375, 11478, 12086,

and 12107 (3 CFR, 1964–1965 Comp., p.

339; 3 CFR, 1966–1970 Comp., p. 684;

3 CFR, 1966–1970 Comp., p. 803; 3 CFR,

1978 Comp., p. 230; and 3 CFR, 1978

Comp., p. 264) (Equal Employment

Opportunity) and the implementing

regulations at 41 CFR chapter 60; and

2. Though requirements of Section 3

of the Housing and Urban Development

Act of 1968 (12 U.S.C. 1701u) and

implementing regulations at 24 CFR part

135, are waived, HUD encourages each

grantee to give priority to the hiring of

local low and moderate income persons

and contractors in carrying out its

disaster recovery activities.

3. Contracting with small and

minority firms, women’s business

enterprises and labor surplus area firms.

a. The grantee and subgrantee must take

all necessary affirmative steps to assure

that minority firms, women’s business

enterprises, and labor surplus area firms

are used when possible.

b. Affirmative steps include:

i. Placing qualified small and

minority businesses and women’s

business enterprises on solicitation lists;

ii. Assuring that small and minority

businesses and women’s business

enterprises are solicited whenever they

are potential sources;

iii. Dividing total requirements, when

economically feasible, into smaller tasks

or quantities to permit maximum

participation by small and minority

businesses, and women’s business

enterprises;

iv. Establishing delivery schedules,

where the requirement permits, which

encourage participation by small and

minority businesses, and women’s

business enterprises;

v. Using the services and assistance of

SBA and the Minority Business

Development Agency of the U.S.

Department of Commerce; and

vi. Requiring the prime contractor, if

subcontracts are to be let, to take the

affirmative steps listed in subparagraphs

(1) through (5) above.

Lead-Based Paint

1. Requirements for city and county

grantees. City and county grantees shall

comply with the requirements of

§ 570.608.

2. Requirements for State grantees.

States shall comply with the provisions

of § 570.487(c).

Architectural Barriers Act and the

Americans With Disabilities Act

1. The Architectural Barriers Act of

1968 (42 U.S.C. 4151–4157) requires

certain Federal and Federally funded

buildings and other facilities to be

designed, constructed, or altered in

accordance with standards that insure
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations 47355

accessibility to, and use by, physically

handicapped people. A building or

facility designed, constructed, or altered

with funds allocated or reallocated

under this initiative after December 11,

1995, and that meets the definition of

‘‘residential structure’’ as defined in 24

CFR 40.2 or the definition of ‘‘building’’

as defined in 41 CFR 101–19.602(a) is

subject to the requirements of the

Architectural Barriers Act of 1968 (42

U.S.C. 4151–4157) and shall comply

with the Uniform Federal Accessibility

Standards (Appendix A to 24 CFR part

40 for residential structures, and

Appendix A to 41 CFR part 101–19,

subpart 101–19.6, for general type

buildings).

2. The Americans with Disabilities

Act (42 U.S.C. 12131; 47 U.S.C. 155,

201, 218 and 225) (ADA) provides

comprehensive civil rights to

individuals with disabilities in the areas

of employment, public

accommodations, State and local

government services, and

telecommunications. It further provides

that discrimination includes a failure to

design and construct facilities for first

occupancy no later than January 26,

1993 that are readily accessible to and

usable by individuals with disabilities.

Further, the ADA requires the removal

of architectural barriers and

communication barriers that are

structural in nature in existing facilities,

where such removal is readily

achievable—that is, easily

accomplishable and able to be carried

out without much difficulty or expense.

J. Constitutional Prohibition

1. In accordance with First

Amendment church/state principles, as

a general rule, HUD Disaster Recovery

Grant assistance may not be used for

religious activities or provided to

primarily religious entities for any

activities, including secular activities.

2. The following restrictions and

limitations therefore apply to the use of

HUD Disaster Recovery funds.

a. HUD Disaster Recovery funds may

not be used for the acquisition of

property or the construction or

rehabilitation (including historic

preservation and removal of

architectural barriers) of structures to be

used for religious purposes or purposes

that will otherwise promote religious

interests. This limitation includes the

acquisition of property for ownership by

primarily religious entities and the

construction or rehabilitation (including

historic preservation and removal of

architectural barriers) of structures

owned by such entities (except as

permitted under paragraph 2.b. of this

section with respect to rehabilitation

and under paragraph 2.d. of this section

with respect to repairs undertaken in

connection with public services)

regardless of the use to be made of the

property or structure. Property owned

by primarily religious entities may be

acquired with HUD Disaster Recovery

funds at no more than fair market value

for a non-religious use.

b. HUD Disaster Recovery funds may

be used to rehabilitate buildings owned

by primarily religious entities to be used

for a wholly secular purpose under the

following conditions:

i. The building (or portion thereof)

that is to be improved with the HUD

Disaster Recovery Initiative assistance

has been leased to an existing or newly

established wholly secular entity (which

may be an entity established by the

religious entity);

ii. The HUD Disaster Recovery

Initiative assistance is provided to the

lessee (and not the lessor) to make the

improvements;

iii. The leased premises will be used

exclusively for secular purposes

available to persons regardless of

religion;

iv. The lease payments do not exceed

the fair market rent of the premises as

they were before the improvements are

made;

v. The portion of the cost of any

improvements that also serve a nonleased part of the building will be

allocated to and paid for by the lessor;

vi. The lessor enters into a binding

agreement that unless the lessee, or a

qualified successor lessee, retains the

use of the leased premises for a wholly

secular purpose for at least the useful

life of the improvements, the lessor will

pay to the lessee an amount equal to the

residual value of the improvements;

vii. The lessee must remit the amount

received from the lessor under

paragraph b.vi. of this section to the

recipient or subrecipient from which the

HUD Disaster Recovery funds were

derived.

viii. The lessee can also enter into a

management contract authorizing the

lessor religious entity to use the

building for its intended secular

purpose, e.g., homeless shelter,

provision of public services. In such

case, the religious entity must agree in

the management contract to carry out

the secular purpose in a manner free

from religious influences in accordance

with the principles set forth in

paragraph c.

c. As a general rule, HUD Disaster

Recovery funds may be used for eligible

public services to be provided through

a primarily religious entity, where the

religious entity enters into an agreement

with the recipient or subrecipient from

which the HUD Disaster Recovery funds

are derived that, in connection with the

provision of such services:

i. It will not discriminate against any

employee or applicant for employment

on the basis of religion and will not

limit employment or give preference in

employment to persons on the basis of

religion;

ii. It will not discriminate against any

person applying for such public services

on the basis of religion and will not

limit such services or give preference to

persons on the basis of religion;

iii. It will provide no religious

instruction or counseling, conduct no

religious worship or services, engage in

no religious proselytizing, and exert no

other religious influence in the

provision of such public services;

iv. Where the public services

provided under paragraph 2.c. are

carried out on property owned by the

primarily religious entity, HUD Disaster

Recovery funds may also be used for

minor repairs to such property that are

directly related to carrying out the

public services where the cost

constitutes in dollar terms only an

incidental portion of the HUD Disaster

Recovery grant expenditure for the

public services.

K. Political Activities

HUD Disaster Recovery funds may not

be used to finance the use of facilities

or equipment for political purposes or to

engage in other partisan political

activities, such as candidate forums,

voter transportation, or voter

registration. However, a facility

originally assisted with HUD Disaster

Recovery funds may be used on an

incidental basis to hold political

meetings, candidate forums, or voter

registration campaigns, provided that all

parties and organizations have access to

the facility on an equal basis, and are

assessed equal rent or use charges, if

any.

L. Use of Debarred, Suspended, or

Ineligible Contractors or Subrecipients

The requirements set forth in 24 CFR

part 24 apply to this program.

M. Conflict of Interest

1. In the procurement of supplies,

equipment, construction, and services

by city and county grantees and by their

subrecipients, the conflict of interest

provisions in §§ 85.36 and 84.42,

respectively, shall apply. States and

their recipients shall be governed by the

provisions of § 570.489(g).

2. In all cases not governed by 24 CFR

85.36 and 84.42, the following

provisions shall apply. Such cases

include the acquisition and disposition
47356 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations

of real property and the provision of

assistance by the recipient or by its

subrecipients to individuals, businesses,

and other private entities under eligible

activities that authorize such assistance

(e.g., rehabilitation, preservation, and

other improvements of private

properties or facilities pursuant to

§ 570.202; or grants, loans, and other

assistance to businesses, individuals,

and other private entities pursuant to

§§ 570.203, 570.204, or 570.703(i)).

3. Conflicts prohibited. The general

rule is that no persons described in

paragraph 4. who exercise or have

exercised any functions or

responsibilities with respect to HUD

Disaster Recovery Initiative activities, or

who are in a position to participate in

a decisionmaking process or gain inside

information with regard to such

activities, may obtain a financial interest

or benefit from a HUD Disaster Recovery

grant, or have a financial interest in any

contract, subcontract, or agreement with

respect to a HUD Disaster Recovery

grant, or with respect to the proceeds of

the HUD Disaster Recovery Initiativeassisted activity, either for themselves

or those with whom they have business

or immediate family ties, during their

tenure or for one year thereafter.

4. Persons covered. The conflict of

interest provisions of paragraph 2. of

this section apply to any person who is

an employee, agent, consultant, officer,

or elected official or appointed official

of the recipient, or of any designated

public agencies, or of subrecipients that

are receiving HUD Disaster Recovery

funds.

5. Exceptions. Upon the written

request of a city or county grantee, HUD

may grant an exception to the

provisions of paragraph 2. of this

section on a case-by-case basis when it

has satisfactorily met the threshold

requirements of paragraph 5.a., taking

into account the cumulative effects of

paragraph 5.b. State grantees shall

follow the provisions of § 570.489(h)

covering exceptions to the provisions of

paragraph 2.

a. Threshold requirements. HUD will

consider an exception only after the

recipient has provided the following

documentation:

i. A disclosure of the nature of the

conflict, accompanied by an assurance

that there has been public disclosure of

the conflict and a description of how the

public disclosure was made; and

ii. An opinion of the recipient’s

attorney that the interest for which the

exception is sought would not violate

State or local law.

b. Factors to be considered for

exceptions. In determining whether to

grant a requested exception after the

recipient has satisfactorily met the

requirements of paragraph 5.a., HUD

shall conclude that such an exception

will serve to further the purposes of the

HUD Disaster Recovery Initiative and

the effective and efficient

administration of the recipient’s

program or project, taking into account

the cumulative effect of the following

factors, as applicable:

i. Whether the exception would

provide a significant cost benefit or an

essential degree of expertise to the

program or project that would otherwise

not be available;

ii. Whether an opportunity was

provided for open competitive bidding

or negotiation;

iii. Whether the person affected is a

member of a group or class of low-or

moderate-income persons intended to

be the beneficiaries of the assisted

activity, and the exception will permit

such person to receive generally the

same interests or benefits as are being

made available or provided to the group

or class;

iv. Whether the affected person has

withdrawn from his or her functions or

responsibilities, or the decisionmaking

process with respect to the specific

assisted activity in question;

v. Whether the interest or benefit was

present before the affected person was

in a position as described in paragraph

b. of this section;

vi. Whether undue hardship will

result either to the recipient or the

person affected when weighed against

the public interest served by avoiding

the prohibited conflict; and

vii. Any other relevant considerations.

N. Performance Reviews and Dispute

Resolution and Enforcement Actions

The provisions of 24 CFR subparts I

and O apply to States and to cities and

counties, respectively, regarding HUD’s

review of grantee performance,

resolution of disputes regarding grantee

performance, and adjudicative, remedial

and enforcement actions that HUD may

take to resolve noncompliance matters.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic

Assistance numbers for the HUD

Disaster Recovery Initiative are as

follows: 14.218; 14.219; 14.228.

Dated: September 3, 1997.

Jacquie M. Lawing,

General Deputy Assistant Secretary for

Community Planning and Development.

Appendix A—Waiver of Requirements for

Community Development Block Grant Funds

Under the 1997 Emergency Supplemental

Appropriations Act for Recovery From

Natural Disasters (Public Law 105–18)

Title II, Chapter 10 of the 1997 Emergency

Supplemental Appropriations Act for

Recovery from Natural Disasters (the Act),

appropriates $500 million in Community

Development Block Grant (CDBG) funds to

use for buyouts, relocation, long-term

recovery, and mitigation in communities

affected by the flooding in the upper

Midwest and other covered natural disasters.

With respect to these supplemental funds,

the Act authorizes the Secretary of HUD 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 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.’’

In conjunction with this statutory

provision 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 Chapter 10 of the Act, the

following provisions have been 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 91.105(c) and 91.115(c), to the extent

that expedited amendment of the grantee’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), 24 CFR 91.220, 24 CFR 91.235, 24

CFR 31.320 and 24 CFR 570.420(d).

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 cities, counties and states receiving

annual allocations of regular CDBG funding);

24 CFR 91.235 contains the requirements for

Abbreviated Consolidated Plans (for nonentitled units of general local government not

receiving CDBG funding through a state). 42
Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations 47357

U.S.C. 5304(m) contains the requirement for

submission of a Community Development

Plan describing a grantee’s priority nonhousing community development needs.

Paragraph I. E. of the Federal Register Notice

implementing the Disaster Recovery

Initiative establishes streamlined, alternative

planning and submission requirements for

Disaster Recovery Initiative funding which

meet the intent of the National Affordable

Housing Act and the Housing and

Community Development Act. All city,

county and state grantees which 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 91.100 through 91.115, 24 CFR

570.405(h), 24 CFR 570.431 and 24 CFR

570.486(a).

Justification: To provide the flexibility to

expedite the availability of disaster recovery

assistance, if necessary. Paragraph I. E. 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.

Community Development Block Grant

Program

Description of Requirements Waived

• The definition of a ‘‘unit of general local

government’’ at 42 U.S.C. 5302(a)(1) and 24

CFR 570.3.

Justification: The statutory and regulatory

definitions of a unit of general local

government have, over time, become

outdated. The definition includes the Trust

Territory of the Pacific Islands. Since this

definition was first enacted, all jurisdictions

within the Trust Territory of the Pacific have

become independent nations. The definition

of a unit of general local government

included in the Federal Register Notice

implementing the Disaster Recovery

Initiative excludes the Trust Territory of the

Pacific.

• Requirements at 42 U.S.C. 5301(c), 42

U.S.C. 5304(b)(3)(A), 24 CFR 570.200(a)(3)

(for cities and counties) 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: Because the damage to

community development and housing is

without regard to income, it is important to

give grantees maximum flexibility to carrying

activities within the confines of the CDBG

program national objectives. Paragraph I.B.2

of the Federal Register Notice implementing

the Disaster Recovery Initiative establishes

alternative requirements for complying with

the statutory mandate that each grantee’s

program principally (at least 50%) benefit

low- and moderate-income persons.

• Requirements at 42 U.S.C. 5301(c), 42

U.S.C. 5304(b)(3)(A), 24 CFR 570.200(a)(3) for

the CDBG entitlement program and 570.484

for the State CDBG program that 70 percent

of funds, over a period not to exceed three

years, are for activities that benefit low and

moderate income persons.

Justification: Because the damage to

community development and housing is

without regard to income, it is important to

give grantees maximum flexibility to carrying

activities within the confines of the CDBG

program national objectives.

• Requirements at 42 U.S.C. 5305(a), 24

CFR 570.200 (a)(1) and (e) through (h), 24

CFR 570.201 through 570.207, 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

paragraph I.F.1 of the Federal Register Notice

implementing the Disaster Recovery

Initiative. These requirements will ensure

compliance with the eligibility requirements

of Title II, Chapter 10 of Public Law 105–18,

and will ensure accountability in the use of

funds.

• Prohibitions on new housing

construction at 24 CFR 570.207(b)(3) and

modifying 42 U.S.C. 5305(a) to provide for

the use of such designated funds for new

housing construction.

24 CFR 570.207(b)(3) prohibits use of funds

for new housing construction except for

assisted housing under section 17 of the

United States Housing Act of 1937, housing

constructed by a special subrecipient,

pursuant to § 570.204(a), and last resort

housing under the Uniform Relocation Act

pursuant to 49 CFR Part 24.

Justification: If a large number of housing

units are destroyed as a result of the disaster,

the flexibility to permit grantees to directly

provide new construction assistance would

be essential in furthering the purposes of

disaster recovery.

• Restrictions on the repair or

reconstruction of buildings used for the

general conduct of government at 42 U.S.C.

5305 (a)(2) and (a)(14), and 24 CFR

570.207(a)(1).

Justification: Required if there is significant

damage to public buildings. Waiver of this

provision would permit repair and

reconstruction.

• 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.

• The limitation on the amount of funds

used for public services at 42 U.S.C.

5305(a)(8) and 24 CFR 570.201 (e)(1) or (2),

as applicable to the affected grantee, to

hereby modify those provisions to allow an

increase of 10 percent above the previous

limitation.

Justification: Disaster response may require

additional level of public services and public

services not previously provided by grantees

during emergency and recovery periods, e.g.,

day care, housing counseling, legal services,

health services, safety services.

• 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 that the State grantees

must match the amount of CDBG funds used

for the administration of the State’s CDBG

program at 42 U.S.C. 5306(d)(3)(A) and 24

CFR 570.489(a)(1) with respect to funds

designated for disaster recovery under 42

U.S.C. 5321.

Justification: Waiving these provisions

would prevent undue hardship on the State

and further the purposes of disaster recovery.

• 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 nonentitlement 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. HUD is waiving a number

of statutory definitions for purposes of the

Disaster Recovery Initiative. HUD has

determined that it is necessary to apply

certain program requirements of the Disaster

Recovery Initiative uniformly to city, county

and State grantees. 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) 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.F.6.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
47358 Federal Register / Vol. 62, No. 173 / Monday, September 8, 1997 / Rules and Regulations

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.

• 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

570.606(c)(1), 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.

Requires 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.

Justification: 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)(2), in order 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).

The statutory requirements of the URA are

also applicable to the administration of

FEMA’s assistance, and disparities in rental

assistance payments for activities funds by

HUD and that agency will thus be eliminated.

Justification: 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 moderateincome 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(d)(8)(ii),

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.

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 are reasonable

for the jurisdiction and take 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

24.303(a)(1).

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.

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.’’

Justification: Failure to waive Section 414

would impede disaster recovery,

discouraging grantees from the acquisition,

demolition or rehabilitation of disasterdamaged 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.

[FR Doc. 97–23752 Filed 9–4–97; 11:50 am]

BILLING CODE 4210–29–P