`[Federal Register Volume 90, Number 5 (Wednesday, January 8, 2025)]
[Notices]
[Pages 1754-1797]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-31621]



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Vol. 90

Wednesday,

No. 5

January 8, 2025

Part IV





Department of Housing and Urban Development





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Common Application, Waivers, and Alternative Requirements for Community 
Development Block Grant Disaster Recovery Grantees: The Universal 
Notice; Notice

  Federal Register / Vol. 90 , No. 5 / Wednesday, January 8, 2025 / 
Notices  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6489-N-01]


Common Application, Waivers, and Alternative Requirements for 
Community Development Block Grant Disaster Recovery Grantees: The 
Universal Notice

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Notice.

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SUMMARY: This notice contains a preamble and the Community Development 
Block Grant Disaster Recovery Universal Notice: Waivers and Alternative 
Requirements (the ``Universal Notice''). The Universal Notice describes 
the processes, procedures, timelines, waivers, and alternative 
requirements that U.S. Department of Housing and Urban Development 
(HUD) intends to implement with each allocation of Community 
Development Block Grant Disaster Recovery (CDBG-DR) funding after a 
qualifying presidential disaster declaration. Specifically, following 
the appropriation of CDBG-DR funds for qualifying disasters, HUD will 
publish an Allocation Announcement Notice in the Federal Register that 
incorporates, via cross-reference, the waivers and alternative 
requirements provided in the Universal Notice, as appropriate, along 
with any other new requirements imposed by the specific appropriation. 
This notice also describes the grant award process, pre-award 
certification submissions, criteria for Action Plan approval, and 
eligible disaster recovery activities to streamline post-disaster 
processes for future grantees. By publishing the Universal Notice, HUD 
intends to provide grantees and the public with increased transparency, 
consistency, and more timely access to CDBG-DR funds, helping to 
minimize program delays and accelerate recovery.

DATES: Applicability Date: January 13, 2025.

FOR FURTHER INFORMATION CONTACT: Tennille Parker, Director, Office of 
Disaster Recovery (ODR), HUD, 451 7th Street SW, Room 7282, Washington, 
DC 20410, telephone number 202-708-3587 (this is not a toll-free 
number). HUD welcomes and is prepared to receive calls from individuals 
who are deaf or hard of hearing, as well as individuals with speech or 
communication disabilities. To learn more about how to make an 
accessible telephone call, please visit: https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. Email inquiries may be 
sent to [email protected].

Table of Contents

Preamble
Community Development Block Grant Disaster Recovery Universal 
Notice: Waivers and Alternative Requirements (the ``Universal 
Notice'')
I. Phase One: The Action Plan
    I.A. CDBG-DR Action Plans Defined
    I.B. Admin Action Plan
    I.C. Action Plan
II. Phase Two: Financial Certification and Oversight of Funds
    II.A. Certification of Adequate Financial Controls and 
Procurement Processes, and Procedures for Proper Grant Management
    II.B. Relying on Prior Financial Certification Submissions
    II.C. Obligation and Expenditure of Funds
III. Phase Three: Implementation of Universal Notice Requirements
    III.A. Policies and Procedures--Universal Notice Requirements
    III.B. Grant Administration
    III.C. State Grantee Only Requirements
    III.D. Waivers and Alternative Requirements Related to Eligible 
Activities
    III.E. Ineligible Activities in CDBG-DR
    III.F. Performance Reviews
    III.G. Grantee Reporting Requirements in the Disaster Recovery 
Grant Reporting (DRGR) System
IV. Assistance Listing Numbers
V. Finding of No Significant Impact
Appendix A. Certifications Waiver and Alternative Requirement for 
Admin Action Plan Submission
Appendix B. Certifications Waiver and Alternative Requirement for 
Action Plan Submission
Appendix C. Duplication of Benefits (DOB)
Appendix D. Detailed Table of Contents to the Universal Notice

SUPPLEMENTARY INFORMATION:

Preamble

Purpose and Policy Objectives

    HUD has developed this preamble and the Universal Notice, to assist 
States, local governments, Indian Tribes, CDBG-DR subrecipients, and 
the public in planning for the award of CDBG-DR funds. Because not all 
the requirements in the Universal Notice are appropriate or applicable 
to Indian Tribes, HUD will publish an Addendum to the Universal Notice 
at a later date to establish requirements that will apply when Indian 
Tribes receive a CDBG-DR grant directly from HUD. This process will 
allow HUD to ensure that the requirements imposed are fair and 
consistent with the Indian Community Development Block Grant (ICDBG) 
Program.
    In December 2022, HUD published a Request for Information (RFI) for 
HUD's Community Development Block Grant Disaster Recovery (CDBG-DR) 
Rules, Waivers, and Alternative Requirements (FR-6336-N-01) \1\ seeking 
public input to strengthen and improve CDBG-DR requirements. Based on 
the feedback received through the RFI,\2\ HUD is establishing a revised 
process for CDBG-DR grants for qualifying disasters whereby HUD will 
incorporate applicable provisions of the Universal Notice, to the 
extent they are consistent with future appropriations acts, in a 
Federal Register notice that announces allocations of the appropriated 
CDBG-DR funds (the ``Allocation Announcement Notice''). The Allocation 
Announcement Notice (AAN) will impose the waivers and alternative 
requirements of the Universal Notice for the subject CDBG-DR grants. 
The AAN will also add or modify requirements of the Universal Notice as 
necessary to comply with statutory provisions.
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    \1\ View the request for information notice (FR-6336-N-01) here: 
https://www.govinfo.gov/content/pkg/FR-2022-12-20/pdf/2022-27547.pdf.
    \2\ View a summary of the comments received, and HUD's responses 
here: https://www.hud.gov/program_offices/comm_planning/cdbg-dr/universal_notice_grantees.
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    The Universal Notice has no legal effect on a CDBG-DR grant until 
funds are appropriated by Congress and the appropriation authorizes the 
HUD Secretary to waive or specify alternative requirements for the 
assistance, and the AAN that incorporates appropriate provisions of the 
Universal Notice is published by the Department and goes into effect. 
HUD will make the required findings in support of the waivers and 
alternative requirements incorporated into and made effective through 
AANs contemporaneously with the publication of each AAN. Because the 
Universal Notice has no legal effect on its own but rather requires 
authority provided by Congress through enacting special disaster 
appropriations and contemporaneous publication of an AAN by HUD, this 
is being published as a notice and is not a rulemaking.
    The Universal Notice is designed to inform potential CDBG-DR 
grantees and other stakeholders about each phase of the CDBG-DR grant 
process, including but not limited to, pre-award grantee submissions; 
grantee steps and timelines; and Action Plan development, submittal, 
and implementation.
    Through the Universal Notice, HUD seeks to:
     Outline a comprehensive and uniform set of waivers and 
alternative requirements that HUD intends to apply to govern future 
allocations of CDBG-DR funds, including all timelines, documentation, 
and other requirements

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for pre-award grantee submission to reduce the administrative burden 
for future CDBG-DR grantees and assigned HUD Community Planning and 
Development (CPD) staff member (e.g., CPD Representative, CPD 
Specialist, etc. . . .);
     Encourage intentional and early coordination between CDBG-
DR grantees; other agencies/departments at the Federal, State, or local 
level; and other regional or local planning efforts to better align 
disaster recovery assistance and projects with the goals of regional 
redevelopment plans, resilience plans, long-term recovery plans, and 
State and local Hazard Mitigation Plans (HMP);
     Increase awareness of the availability of disaster 
recovery assistance and advance fair disaster recovery outcomes, 
including community engagement efforts and pre-disaster planning for 
targeted assistance to historically marginalized groups that can be 
adversely affected by disasters that often exacerbate inequalities for 
residents of underserved communities, members of protected classes 
under fair housing and civil rights laws, and vulnerable populations; 
and
     Improve long-term community resilience by fully 
integrating resilience planning and hazard mitigation activities into 
disaster recovery to reduce the impacts of a changing climate and 
future disasters, encourage green recovery efforts (focusing on 
healthier water and air, and effective debris and waste management), 
address environmental justice concerns associated with disaster 
recovery efforts, and address recovery needs for accessible, resilient, 
and affordable housing for low- and moderate-income persons.

Management and Oversight

    Prior to accessing CDBG-DR funding, grantees must demonstrate that 
they have the capacity to administer funds in a compliant manner as 
described by the Universal Notice. Consistent with 2 CFR 200.206(b) of 
the Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards (Uniform Requirements), HUD will 
evaluate each CDBG-DR grantee's capacity to effectively manage its 
funds through a review of its pre-award submissions as provided in 
section II. of the Universal Notice, which includes the grantee's 
submissions in response to the Financial Management and Grant 
Compliance Certification Requirements in section II.A.1. of the 
Universal Notice.

Authority To Grant Waivers

    CDBG-DR grants are generally subject to CDBG regulations outlined 
in 24 CFR part 570.\3\ The appropriations acts (i.e., public laws) that 
provide CDBG-DR funds typically allow the Secretary to waive 
requirements 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 grantee of CDBG-
DR funds. Generally, the appropriations acts specify that there are 
four types of requirements that the Secretary cannot waive under that 
authority, these include fair housing, nondiscrimination, labor 
standards, and the environment. However, HUD may also exercise its 
regulatory waiver authority under 24 CFR 5.110, 91.600, and 570.5.\4\
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    \3\ View 24 CFR part 570--Community Development Block Grants 
Regulations here: https://www.ecfr.gov/current/title-24/subtitle-B/chapter-V/subchapter-C/part-570.
    \4\ View HUD's policy concerning the procedures that govern the 
waiver of regulations and directives issued by HUD here: https://www.govinfo.gov/content/pkg/FR-2024-08-06/pdf/2024-17034.pdf.
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    The waivers and alternative requirements in the Universal Notice 
draw from HUD's knowledge of the needs of grantees, public feedback, 
and HUD's previously established waivers and alternative requirements 
and the determinations by the Secretary regarding good cause and 
consistency with the overall purposes of title I of the HCDA that 
supported the waivers and alternative requirements. Historically, HUD 
has established waivers and alternative requirements based on findings 
of good cause that they provided additional flexibility to grantees in 
program design and implementation, supported a full and swift recovery 
from the most devasting disasters, and streamlined administrative 
requirements that would otherwise increase the time it takes for 
disaster funds to reach those most in need.
    Unless otherwise provided, HUD intends to make these same findings 
of good cause when the waivers and alternative requirements in the 
Universal Notice are incorporated into and made effective through later 
AANs. HUD will provide a statement regarding the Secretary's finding of 
good cause and consistency with the purpose of title I of the HCDA, or 
such other applicable standard, in each AAN. If HUD's findings of good 
cause differ on certain waivers or alternative requirements from the 
findings identified in this Universal Notice, HUD will include the 
updated findings in support of those waivers and alternative 
requirements in the AAN. CDBG-DR activities will be governed by the 
regulations cited in the requirements of this notice, as incorporated 
in the applicable AAN, as may be amended.
    Grantees who have received previous allocations of CDBG-DR funds 
must follow the requirements outlined in their applicable Federal 
Register notice(s). However, any CDBG-DR grantee may request waivers 
and alternative requirements to better align requirements across 
grants, as long as good cause is provided. In addition, the waivers and 
alternative requirements herein do not apply to funds provided under 
the annual State or Entitlement CDBG programs or those provided under 
any other component of the CDBG program, such as the Section 108 Loan 
Guarantee Program.
    After Congress appropriates CDBG-DR funds and HUD announces the 
allocations, grantees may request that HUD grant additional waivers and 
alternative requirements to address specific needs related to their 
recovery activities. Waiver requests must be accompanied by supporting 
data and must be submitted to the assigned HUD CPD staff member and to 
the ODR mailbox at [email protected]. HUD will aim to publish 
grantee-specific waivers and alternative requirements at least 
quarterly in the Federal Register or on HUD's website. Grantees may 
consult with their assigned HUD CPD staff member for anticipated 
Federal Register publication timelines ahead of any waiver request 
submittal.

Overview of Grant Life Cycle

    To begin expending CDBG-DR funds, the following expedited steps are 
necessary as broken out by each phase:
    (1) Phase One: The Action Plan
    a. Grantee follows its citizen participation plan for disaster 
recovery (I.C.2.).
    i. Grantee consults with stakeholders, including all required 
consultations (I.C.2.a.).
    ii. Grantee publishes its Action Plan on its website for no less 
than 30 calendar days to solicit public comment (I.C.2.b.).
    iii. Grantee responds to public comments and incorporates feedback 
into its Action Plan.
    b. Grantee submits its Action Plan (including the SF-424, SF-424B 
and SF-424D, as applicable) within 90 calendar days from the 
applicability date of the AAN (I.C.3.).
    c. Grantee requests and receives Disaster Recovery Grant Reporting 
(DRGR) system access (if the grantee

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does not already have DRGR access) and may enter activities into the 
DRGR system before or after submission of the Action Plan to HUD.
    d. HUD reviews the Action Plan (allotted 45 calendar days from date 
of receipt) and approves the Action Plan according to criteria 
identified in this notice (I.C.5.).
    e. HUD sends an Action Plan approval letter to the grantee. If the 
Action Plan is not approved, HUD will notify the grantee of the 
deficiencies. The grantee must then resubmit the Action Plan within 45 
calendar days of the written notification. HUD will respond to approve 
or disapprove the Action Plan within 30 calendar days of receiving the 
revisions or resubmission.
    (2) Phase Two: Financial Certification and Oversight of Funds.
    a. Within 135 calendar days of the applicability date of the AAN, 
the grantee submits documentation for the certification of financial 
controls and procurement processes, and adequate procedures for grant 
management (II.A.).
    b. HUD will review the grantee's documentation for the 
certification of financial controls and procurement processes, and 
adequate procedures for grant management or any provided updates if the 
grantee is relying on a prior certification (allotted 45 calendar days 
from date of receipt).
    c. The Secretary will certify to the proficiency of the grantee's 
financial controls and procurement processes, and adequate procedures 
for grant management in accordance with the requirements and HUD will 
send the grantee the grant agreement.
    d. Grantee signs and returns the grant agreement to HUD.
    e. HUD signs and returns a fully executed grant agreement to the 
grantee with a period of performance identified.
    f. Grantee publishes the final HUD-approved Action Plan on its 
official disaster recovery website.
    g. HUD establishes the grantee's line of credit.
    h. Grantee enters the activities from its approved Action Plan into 
the DRGR system if it has not previously done so and submits its DRGR 
action plan to HUD (funds can be drawn from the line of credit only for 
activities that are in an approved DRGR Action Plan).
    i. The grantee may draw down funds from the line of credit for an 
activity after the Responsible Entity (1) completes an environmental 
review(s) pursuant to 24 CFR part 58 and receives from HUD or the 
State, as outlined in 24 CFR 58.18, an approved Request for Release of 
Funds (RROF) and certification (as applicable), or (2) adopts another 
Federal agency's environmental review and receives from HUD or the 
State an approved RROF and certification (as applicable).
    (3) Phase Three: Implementation of Universal Notice Requirements.
    a. Within one year from the applicability date of the AAN, the 
grantee must create and finalize policies and procedures for its 
housing programs. If the grantee is not funding housing programs, see 
section III.A. for more details.
    b. Within eighteen months from the applicability date of the AAN, 
the grantee must create and finalize policies and procedures governing 
the rest of its CDBG-DR funded programs (e.g., economic revitalization, 
public service, infrastructure programs, etc.).
    c. Within two years from the applicability date of the AAN, these 
policies and procedures will be subject to HUD review.
    d. The grantee should begin to draw down funds from DRGR no later 
than 180 calendar days after HUD executes a grant agreement with the 
grantee (II.C.) or HUD approves the Action Plan and financial 
certification and oversight of funds, whichever is later. Additionally, 
all funds must be expended within six years of the date of obligation 
(III.F.1.).
    HUD provides additional flexibility to streamline access to CDBG-DR 
funds, through the following options:
    (1) Grantees may submit an Optional Action Plan for Program 
Administrative Costs (``Admin Action Plan'') to access administrative 
funds prior to the grantee's submission of its Action Plan (I.B.).
    (2) Previous grantees covered by the Universal Notice or other 
prior notices may rely on their previous financial certification 
submissions as described in section II.B.
    There may be times when appropriations acts allow additional 
flexibilities for timing of financial certification and action plan 
submissions, signing of grant agreements, and the availability of 
administrative funds. HUD will adapt this grant life cycle to be in 
compliance with any additional flexibilities provided in the 
appropriations acts.

Community Development Block Grant Disaster Recovery Universal Notice: 
Waivers and Alternative Requirements (the ``Universal Notice'')

    The Universal Notice outlines the waivers and alternative 
requirements that grantees are required to demonstrate compliance with 
over the course of three phases of the grant life cycle which include: 
(1) Phase One: The Action Plan, (2) Phase Two: Financial Certification 
and Oversight of Funds, and (3) Phase Three: Implementation of 
Universal Notice Requirements. Any references to the ``Universal 
Notice'' or ``this notice'' in this document refer to sections I. 
through V. and the attached appendices.
    CDBG-DR grantees that are subject to the Universal Notice, must 
comply with all waivers and alternative requirements, unless expressly 
made inapplicable (e.g., a State only waiver does not apply to local 
governments). Except as described in applicable waivers and alternative 
requirements, the statutory and regulatory provisions governing the 
CDBG program shall apply to grantees receiving a CDBG-DR allocation. 
Statutory provisions (title I of the HCDA) that apply to all grantees 
can be found at 42 U.S.C. 5301 et seq. and regulatory requirements, 
which differ for each type of grantee, are described in each of the 
paragraphs below.
    Except as modified, the State CDBG program rules shall apply to 
State grantees receiving a CDBG-DR allocation. Applicable State CDBG 
program regulations are found at 24 CFR part 570, subpart I.
    For insular areas (as defined under 42 U.S.C. 5302(a)(24)), HUD 
waives the provisions of 24 CFR 570, subpart F and imposes the 
following alternative requirement: Insular areas shall administer their 
CDBG-DR allocations in accordance with the regulatory and statutory 
provisions governing the State CDBG program, as modified by the 
Universal Notice.
    Except as modified, statutory and regulatory provisions governing 
the Entitlement CDBG program shall apply to local government grantees 
(often referred to as units of local government in appropriations 
acts). Applicable Entitlement CDBG program regulations are found at 24 
CFR 570, as described in Sec.  570.1(a).

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    Each grantee shall administer its award in compliance with all 
applicable laws and regulations and shall be financially accountable 
for the use of all awarded funds. CDBG-DR grantees must comply with the 
recordkeeping requirements of 24 CFR 570.506 or 24 CFR 570.490, as 
amended by the Universal Notice waivers and alternative requirements. 
All grantees must follow all cross-cutting requirements, as applicable, 
for all CDBG-DR funded activities including but not limited to the 
environmental requirements outlined in the Universal Notice,\5\ the 
Davis Bacon Act, Civil Rights Requirements, the Lead Safe Housing Rule, 
and the Uniform Relocation Assistance and Real Property Acquisition 
Policies Act of 1970, as amended (``URA'') and its implementing 
regulations.
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    \5\ View HUD's guidance on addressing Radon in the Environmental 
Review process published in CPD Notice 23-103 here: https://www.hud.gov/sites/dfiles/CPD/documents/CPD_Notice_on_Addressing_Radon_in_the_Environmental_Review_Process.pdf.
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    All grantees must maintain records of performance in DRGR, as 
described elsewhere in the Universal Notice. Additionally, grantees 
must comply with the requirements in the Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards at 2 CFR part 200, as amended (Uniform Requirements).
    Any references to ``subrecipient'' in this notice refer to the term 
as defined in 24 CFR 570.500(c). Subrecipients include, but are not 
limited to, nonprofit organizations, units of general local government, 
partner agencies, subgrantees, and Indian Tribes.

I. Phase One: The Action Plan

I.A. CDBG-DR Action Plans Defined

    The action plan is a key mechanism for grantees to inform the 
public and HUD of the intended use of the funds within their community 
and how this plan connects to the community's remaining unmet needs and 
mitigation needs associated with the qualifying disaster(s). It is 
important that grantees understand the difference between the two 
action plans associated with CDBG-DR funds.
     Admin Action Plan (Optional Action Plan for Program 
Administrative Costs): This is an optional submission that allows a 
grantee to access their funds for program administrative costs prior to 
the award of the full grant (e.g., to increase staffing and capacity to 
develop the required Action Plan). The Admin Action Plan has 
streamlined requirements, including no public comment period or 
deadline for submission, and is sent to HUD for review (as described in 
the applicable AAN).
     Action Plan: The Action Plan is a required plan that a 
grantee must develop to have access to grant funds. The Action Plan 
must identify the use of all CDBG-DR funds--including criteria for 
eligibility and how the uses address long-term recovery needs, 
restoration of infrastructure and housing, economic revitalization, and 
mitigation in the most impacted and distressed (MID) areas. The Action 
Plan has a required 30-day public comment period, must be submitted 
within 90 days of a grantee's AAN, and is sent to HUD for review (the 
submission process will be described in the applicable AAN). References 
to the ``Action Plan'' shall mean the Action Plan required by the 
Universal Notice and not the consolidated plan or action plan required 
by 24 CFR part 91.

I.B. Admin Action Plan

    Typically, CDBG-DR awards are all subject to a five percent 
administrative cap as specified by the appropriations acts and outlined 
in section III.B.3. of this notice. Recent appropriations acts have 
allowed the special treatment of administrative funds (as described in 
section III.B.3.a.) and allowed grantees to access funding for program 
administrative costs prior to the Secretary's certification as 
described in section II.A. Note, the appropriations acts typically 
require that all CDBG-DR funds be used pursuant to an action plan. 
Grantees will follow the process described in this section, which 
includes the submission of the Admin Action Plan, to access funds for 
program administrative costs prior to the Secretary's certification.
    I.B.1. Developing the Admin Action Plan. The grantee shall describe 
the use of all grant funds for administrative costs in the Admin Action 
Plan, including for any eligible pre-award program administrative costs 
the grantee plans to reimburse itself or its subrecipients as described 
in section III.B.14.a. The Admin Action Plan must include the criteria 
for eligibility of administrative activities and the amount to be 
budgeted for administrative activities. If a grantee submits the Admin 
Action Plan, the grantee must consider the need to cover program 
administrative costs over the life of the grant, which is six years 
from HUD's signature on the initial grant agreement as described in 
section III.F.1. of this notice. Therefore, grantees are strongly 
encouraged to budget for these costs early in the grant lifecycle.
    I.B.2. Submission and publication of the Admin Action Plan. 
Normally, a grantee must publish any proposed action plan and 
substantial amendments to the plan for public comment. However, because 
the Admin Action Plan will only include program administrative costs, 
and to allow for a more streamlined process and timely awarding of 
grants, no public comment period is required.
    Therefore, for Admin Action Plans and substantial amendments to 
these plans only, the provisions of 42 U.S.C. 5304(a)(2) and (3), 42 
U.S.C. 12707, 24 CFR 570.486, 24 CFR 1003.604, 24 CFR 91.105(b) through 
(d), and 24 CFR 91.115(b) through (d), with respect to citizen 
participation requirements, are waived and replaced by the alternative 
requirements in this section. Additionally, for Admin Action Plans 
only, grantees are not subject to the action plan requirements in 
section I.C.
    Grantees must publish the Admin Action Plan online when it is 
submitted to HUD (as described in the applicable AAN). The manner of 
publication of the Admin Action Plan must include prominent posting on 
the grantee's official disaster recovery website and include any 
substantial amendments to the Admin Action Plan. When the grantee 
submits its Admin Action Plan or substantial amendment to the Admin 
Action Plan to HUD for approval, it must include the Standard Form 424 
(SF-424). There is no due date for the Admin Action Plan as it is 
optional and may be submitted any time prior to the grantee's Action 
Plan. HUD will review the Admin Action Plan or substantial amendment to 
the Admin Action Plan within 15 calendar days from the date of receipt 
and determine whether to approve the Admin Action Plan per the criteria 
identified here in section I.B. of the Universal Notice.
    I.B.3. Entering administrative activities into DRGR. After HUD's 
approval of the Admin Action Plan, the grantee enters the 
administrative activities from its approved Admin Action Plan (or 
substantial amendment to that plan) into the DRGR system, as described 
in section III.G. Grantees are required to populate their DRGR Action 
Plan since grant funds can only be drawn from the line of credit 
through projects and activities that are established in the DRGR 
system. This process will allow a grantee to access funds for program 
administrative costs while the grantee begins developing its Action 
Plan.
    I.B.4. Applicability of the Admin Action Plan. A grantee's use of 
grant funds for program administrative costs before approval of the 
Action Plan must

[[Page 1758]]

be consistent with the Admin Action Plan. Once the Action Plan is 
approved, the use of all grant funds must be consistent with the Action 
Plan. Upon HUD's approval of the Action Plan, the optional Admin Action 
Plan shall only be relevant to administrative costs charged to the 
grant before the date of approval of the Action Plan.
    I.B.5. Admin Action Plan certifications waiver and alternative 
requirement. Sections 104(b)(4), (c), and (m) of the HCDA (42 U.S.C. 
5304(b)(4), (c), and (m)), sections 106(d)(2)(C) and (D) of the HCDA 
(42 U.S.C. 5306(d)(2)(C) and (D)), and section 106 of the Cranston-
Gonzalez National Affordable Housing Act of 1990, as amended (42 U.S.C. 
12706), and regulations at 24 CFR 91.225 and 91.325 are waived and 
replaced with the following alternative requirement. Each grantee 
choosing to submit an Admin Action Plan must also complete the 
certifications in Appendix A and submit them with the Admin Action 
Plan.
    Additionally, HUD is waiving section 104(a)-(c) and (d)(1) of the 
HCDA (42 U.S.C. 5304), section 106(c)(1) and (d) of the HCDA (42 U.S.C. 
5306), section 210 of the URA (42 U.S.C. 4630), section 305 of the URA 
(42 U.S.C. 4655), and regulations at 24 CFR 91.225(a)(2), (6), and (7), 
91.225(b)(7), 91.325(a)(2), (6), and (7), 49 CFR 24.4(a), and 24 CFR 
42.325 only to the extent necessary to allow grantees to receive a 
portion of their allocation for program administrative costs before 
submitting other statutorily required certifications.

I.C. Action Plan

    Requirements for CDBG actions plans, located at 42 U.S.C. 
5304(a)(1), 42 U.S.C. 5304(m), 42 U.S.C. 5306(a)(1), 42 U.S.C. 
5306(d)(2)(C)(iii), 42 U.S.C. 12705(a)(2), and 24 CFR 91.220 and 
91.320, are waived for CDBG-DR grants. Instead, grantees must submit to 
HUD an action plan for disaster recovery which will describe programs 
and activities that conform to applicable requirements as specified in 
the Universal Notice and the applicable AAN. HUD will return all Action 
Plans that are substantially incomplete as described in section I.C.5. 
The Action Plan is substantially incomplete if the plan does not 
satisfy all the required elements identified in the Universal Notice 
and the applicable AAN. Grantees receiving an allocation are required 
to submit an Action Plan within 90 calendar days of the applicability 
date of the AAN, unless the grantee has requested, and HUD has approved 
an extension of the submission deadline. HUD will monitor the grantee's 
actions and use of funds for consistency with the Action Plan, as well 
as meeting the performance and timeliness objectives therein.
    I.C.1. Developing the Action Plan. The Action Plan must identify 
the use of all CDBG-DR funding, including eligibility criteria for 
accessing the funds and how the proposed uses will address long-term 
recovery needs. At a minimum, the Action Plan must cover the impacts of 
the qualifying disaster, restoration of housing, infrastructure, 
economic revitalization, and mitigation in the MID areas. The CDBG-DR 
allocations are based on the unmet needs of specific communities, which 
are the least likely to fully recover without additional assistance. 
Therefore, it is critical that the Action Plan demonstrates the 
following, as described in the referenced sections:
    1. An unmet needs assessment (review section I.C.1.a.).
    2. A mitigation needs assessment (review section I.C.1.b.).
    3. A fair housing and civil rights data assessment (review section 
I.C.1.c.).
    4. Connection between proposed programs and projects and unmet 
needs, mitigation needs, and fair housing and civil rights assessments 
(review section I.C.1.d.).
    5. Set allocation and award caps (review section I.C.1.e.).
    6. Establish funding criteria (review section I.C.1.f.).
    7. Establish protocols for substantial amendments (review section 
I.C.1.g.).
    As grantees develop their Action Plan, they must consult with 
various stakeholders, including the public (i.e., citizen 
participation) and inform residents about their funding decisions prior 
to submitting the Action Plan to HUD for review. Grantees will receive 
specific instructions for Action Plan submittal in the applicable AAN. 
Note, the citizen participation requirements to develop the action plan 
are described in section I.C.2.
    I.C.1.a. Unmet needs assessment. Each grantee must develop an unmet 
needs assessment to strategically inform the use of the grant funds. 
The unmet needs assessment will help a grantee evaluate community needs 
across its jurisdiction by assessing the remaining effects of the 
qualifying disaster as they relate to housing, infrastructure, and the 
economy. Note, HUD can assist grantees in obtaining FEMA data to 
support the development of the Action Plan and implementation of 
recovery programs.\6\
---------------------------------------------------------------------------

    \6\ View more information about how to access this data on HUD's 
website here: https://www.hud.gov/program_offices/comm_planning/cdbg-dr/data-sharing.
---------------------------------------------------------------------------

    I.C.1.a.(i). Unmet needs in the MID areas. A grantee must describe 
the unmet need in the MID areas (see section III.D.2.), as the 
allocations are based on the unmet needs of these specific communities, 
which are the least likely to fully recover without additional 
assistance. Grantees are required to use at least 80 percent of the 
CDBG-DR award to benefit the HUD-identified MID areas. Local government 
grantees whose HUD-identified MID areas include their entire 
jurisdiction, must use 100 percent of the CDBG-DR award to benefit the 
HUD-identified MID area. However, HUD encourages all grantees to 
consider using 100 percent of its award to benefit HUD-identified MID 
areas since the data from these areas were used to determine the amount 
of the award. If allowed, and the grantee does choose to spend a 
portion (i.e., up to 20 percent) of its award outside of the HUD-
identified MID area, it will determine and identify in the Action Plan 
where the grantee will use that amount (``grantee-identified MID 
areas''), and that portion of the allocation may only be used to 
address those areas that the grantee determines are most impacted and 
distressed, meaning the areas that have the greatest amount of damage 
and unmet need outside of the HUD-identified MID areas. Additionally, 
any grantee-identified MID areas must have received a presidential 
major disaster declaration identified by the disaster numbers listed in 
the applicable AAN. The grantee must use quantifiable and verifiable 
data in its analysis, and reference it in its Action Plan, to identify 
the grantee-identified MID areas and indicate how the proposed use of 
funds will prioritize the remaining unmet needs for low- and moderate-
income (LMI) individuals and areas. The addition of a grantee-
identified MID area after the submittal of the initial Action Plan 
would result in a substantial amendment to the grantee's Action Plan 
(see section I.C.1.g.).
    I.C.1.a.(ii). Unmet needs assessment requirements. At a minimum, 
the unmet needs assessment must include the following, as they relate 
to the HUD-identified and grantee-identified MID areas, and cite the 
appropriate data sources:
    1. Description of the effects of the qualifying disaster(s) and the 
greatest remaining recovery needs that have not been addressed by other 
sources of funds, including insurance proceeds, other Federal 
assistance, or any other funding source; and
    2. Evaluation of the three core aspects of recovery--housing, 
infrastructure, and the economy (e.g., estimated job losses), which 
considers the pre-disaster needs (e.g., a lack of affordable housing)

[[Page 1759]]

that have been exacerbated by the disaster. The assessment of housing 
needs must address: (1) emergency shelters; (2) interim and permanent 
housing; (3) rental and owner-occupied single family and multifamily 
housing; (4) public housing (including HUD-assisted housing) and other 
types of affordable housing, including housing for vulnerable 
populations (including those who were unhoused prior to the disaster).
    Disaster recovery needs evolve over time and grantees must amend 
the Action Plan, including the unmet needs assessment, as additional 
needs are identified, and/or additional resources become available. At 
a minimum, grantees must revisit and update the unmet needs assessment 
when reallocating funds from one program to another through a 
substantial amendment (as described in section I.C.1.g.).
    I.C.1.b. Mitigation needs assessment. While the purpose of CDBG-DR 
funds is to recover from a Presidentially declared disaster, 
integrating hazard mitigation and resilience planning with recovery 
efforts will promote a more resilient long-term recovery. Mitigation 
solutions designed to be resilient only for threats and hazards related 
to a prior disaster can leave a community vulnerable to negative 
effects from future extreme events related to other threats or hazards. 
For purposes of grants subject to the Universal Notice, mitigation 
activities are defined as those activities that increase resilience and 
reduce or eliminate the long-term risk of loss of life, injury, damage 
to and loss of property, and suffering and hardship, by lessening the 
impact of future disasters.
    At a minimum, the mitigation needs assessment must include a risk-
based assessment to identify current and future hazards (e.g., sea 
level rise, strong winds, tornados, storm surge, flooding, volcanic 
activity, earthquakes, extreme heat, drought, and wildfire risk, where 
appropriate). The assessment must describe how the hazards do or can 
impact the HUD-identified and grantee-identified MID areas and cite the 
appropriate data sources. Grantees must explain how the risk-based 
assessment will inform the use of the CDBG-DR funds and identify if 
other sources of funding are available to address its identified 
mitigation needs.
    At a minimum, grantees must use the risks identified in the current 
FEMA-approved State or local HMP, Community Wildfire Protection Plan 
(CWPP), or other resilience or long-term recovery plans to inform the 
assessment. If a jurisdiction is currently updating an expired HMP, the 
grantee's agency administering the CDBG-DR funds must consult with the 
agency administering the HMP update to identify the risks that will be 
included in the assessment.
    A grantee may choose to simply cite the current FEMA-approved HMP, 
CWPP, or other resilience or long-term recovery plan to address the 
mitigation needs assessment, if there is a clear connection of programs 
and projects to the mitigation needs. If a grantee chooses this option, 
the grantee must make the HMP, CWPP, or other resilience or long-term 
recovery plan available on the grantee's official disaster recovery 
website and provide a direct link to the selected plan in the 
mitigation needs assessment section of the Action Plan.
    Mitigation needs evolve over time and grantees must amend the 
mitigation needs assessment and Action Plan as conditions change, as 
additional mitigation needs are identified, and additional resources 
become available. At a minimum, grantees must revisit and update the 
mitigation needs assessment when reallocating funds from one program to 
another through a substantial amendment (as described in section 
I.C.1.g.).

I.C.1.c. Fair Housing and Civil Rights Assessment

    I.C.1.c.(i). Fair housing and civil rights laws and terminology 
defined. The grantee must use its CDBG-DR funds in a manner that 
complies with its fair housing and nondiscrimination obligations,\7\ 
which include:
---------------------------------------------------------------------------

    \7\ Visit HUD's Office of Fair Housing and Equal Opportunity's 
website for more information about fair housing and civil rights 
obligations here: https://www.hud.gov/fairhousing.
---------------------------------------------------------------------------

     Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d 
et seq.;
     Title VIII of the Civil Rights Act of 1968 (The Fair 
Housing Act), 42 U.S.C. 3601-19;
     Section 504 and 508 of the Rehabilitation Act of 1973, 29 
U.S.C. 794;
     The Americans with Disabilities Act of 1990,42 U.S.C. 
12131 et seq.; and
     Section 109 of the HCDA, 42 U.S.C. 5309.
    For purposes of the Universal Notice, HUD defines the following 
terms as they relate to the requirements set forth in the Universal 
Notice:
     Protected Classes: Race, color, national origin, religion, 
sex (including sexual orientation and gender identity), familial 
status, and disability.
     Vulnerable Populations: Groups or communities whose 
circumstances present barriers to obtaining or understanding 
information or accessing resources which may include: (1) persons at 
risk of or experiencing homelessness; (2) older adults; (3) persons 
with disabilities (mental, physical, developmental); (4) survivors of 
domestic violence, dating violence, sexual assault, or stalking; (5) 
persons with alcohol or other substance-use disorder; (6) persons with 
HIV/AIDS and their families; or (7) public housing residents.
     Underserved Communities: Populations or geographic 
communities, often comprised of protected classes, sharing a particular 
characteristic that have been systematically denied a full opportunity 
to participate in aspects of economic, social, and civic life. 
Underserved communities that were economically distressed before the 
disaster include, but are not limited to, those areas that were 
designated as a Promise Zone, Opportunity Zone, a Neighborhood 
Revitalization Strategy Area, a Tribal area, a Community Disaster 
Resilience Zone (CDRZ), or those areas that meet at least one of the 
distress criteria established for the designation of an investment area 
of a Community Development Financial Institution at 12 CFR 
1805.201(b)(3)(ii)(D).
    Grantees must take the following actions to comply with 
affirmatively furthering fair housing (AFFH): \8\
---------------------------------------------------------------------------

    \8\ Visit HUD's Office of Fair Housing and Equal Opportunity's 
website for more information about requirements for affirmatively 
furthering fair housing here: https://www.hud.gov/program_offices/fair_housing_equal_opp/affh.
---------------------------------------------------------------------------

    1. Submit a certification to AFFH in accordance with 24 CFR 91.225 
or 325, as applicable and 24 CFR 5.150, et seq.;
    2. Update any policies and procedures to remain in compliance with 
AFFH requirements, as amended by HUD and reflected in updated HUD 
guidance and rules; and
    3. Use their CDBG-DR funds in a manner that affirmatively furthers 
fair housing.
    I.C.1.c.(ii). Fair housing and civil rights data collection. 
Collecting fair housing and civil rights data will position the grantee 
to provide a fair and holistic recovery. At a minimum, the grantee must 
collect the following data in terms of number and percentage for each 
identified group, as defined above, and as they relate to the HUD-
identified and grantee-identified MID areas and cite the appropriate 
data sources:
    1. Populations with Limited English Proficiency (LEP) by language 
spoken;
    2. Persons belonging to protected classes;

[[Page 1760]]

    3. Persons belonging to protected classes by housing tenure (i.e., 
homeowner vs renter);
    4. Persons belonging to vulnerable populations;
    5. Persons belonging to historically distressed and underserved 
communities;
    6. Indigenous populations and Tribal communities; and
    7. Racially or ethnically concentrated areas of poverty (R/ECAPs).
    Grantees are encouraged to consider housing tenure as it relates to 
these data sets when available.
    I.C.1.d. Connection of proposed programs and projects to unmet 
needs, mitigation needs, and fair housing and civil rights assessments. 
The grantee must describe the connection between identified unmet 
needs, mitigation needs, fair housing and civil rights data, and the 
allocation of CDBG-DR resources within its Action Plan. At a minimum, 
the Action Plan must:
    1. Provide a clear connection between a grantee's assessments and 
its proposed programs and projects in the MID areas (or outside in 
connection to the MID areas as described in section III.D.2.). Such 
description must demonstrate a reasonably proportionate allocation of 
resources relative to areas and categories (i.e., housing, economic 
revitalization, and infrastructure) of greatest needs identified in the 
grantee's unmet needs and mitigation needs assessments or provide an 
acceptable justification for a disproportional allocation.
    2. Describe how the grantee is incorporating hazard mitigation 
measures to reduce the impacts of future disasters and considering all 
hazard risks, as identified in its mitigation needs assessment.
    3. Based on the fair housing and civil rights data collected, the 
grantee must:
     Describe how protected classes will benefit from CDBG-DR 
funds in proportion to their communities' needs.
     Assess the impact of its planned use of CDBG-DR funds on 
identified vulnerable populations and other identified historically 
underserved communities. If programs are aimed at these groups, the 
Action Plan should clearly define those populations.
    4. Describe all reasonable efforts the grantee will take to 
minimize displacement of persons or entities, assist any persons or 
entities displaced, and ensure accessibility needs of displaced persons 
with disabilities.
    I.C.1.e. Allocation and award caps. It is critical for grantees to 
demonstrate their planned use of funds through their Action Plan so the 
public can understand what types of assistance disaster survivors can 
apply for and what limits there are on possible awards.
    Therefore, grantees must create a high-level budget for the full 
amount of the CDBG-DR allocation so the public can understand how funds 
will be split among program administration (subject to the five percent 
cap, plus five percent of program income generated, as described in 
section III.B.3.), planning (subject to the 15 percent cap, as 
described in section III.B.4.), housing, infrastructure, and economic 
revitalization (e.g., by program, subrecipient, grantee-administered 
activity, or other category).
    Grantees are also encouraged to budget for any planned public 
service activities. The grantee's budget should also be consistent with 
the requirements to integrate hazard mitigation into all its programs 
and projects that involve construction, as described in section 
III.D.3. Finally, grantees must develop an executive summary describing 
the contents of the Action Plan and its proposed use of funds so that 
interested parties will be able to understand and comment on the Action 
Plan.
    For each program it intends to fund, the grantee must include the 
following in its Action Plan:
    1. Provide a description of the disaster recovery program to be 
funded;
    2. Identify the CDBG-DR eligible activity and national objective, 
including only those allowed under title I of the HCDA or otherwise 
eligible pursuant to a waiver or alternative requirement;
    3. Identify the responsible entity assuming the authority for the 
decision making and completion of the environmental review per 24 CFR 
58.4. State grantees who exercise HUD's environmental review 
responsibilities must follow the requirements per 24 CFR 58.4(b)(2) and 
24 CFR 58.18;
    4. Identify which geographic areas (i.e., HUD-identified and/or 
grantee-identified MID areas) that may benefit from CDGB-DR funds;
    5. Explain how the grantee will identify and then reduce barriers 
that individuals face or may face to access assistance, including 
protected classes, vulnerable populations, and other historically 
underserved communities;
    6. If the appropriations act that funded the grantee's award 
includes additional funds for mitigation, the grantee must also 
identify how the proposed use of CDBG-DR mitigation set-aside funds 
will meet the definition of mitigation activities (as described in 
section I.C.1.b.);
    7. Describe (1) the maximum amount of assistance (i.e., award cap) 
available to a beneficiary under each of the grantee's disaster 
recovery programs and (2) the maximum income (i.e., income cap) of any 
beneficiary receiving CDBG-DR assistance for direct-benefit activities. 
Each grantee must also indicate in its Action Plan that it will make 
exceptions to the maximum award amounts, when necessary, to comply with 
Federal accessibility standards or to reasonably accommodate a person 
with disabilities. If the maximum amount of assistance is unknown for a 
specific program or project when the grantee is submitting the initial 
Action Plan to HUD, the grantee must update the Action Plan through a 
substantial amendment (as described in section I.C.1.g.) once the 
information is known. The substantial amendment must be submitted and 
approved before awarding funds to applicants; and
    8. Any other known eligibility criteria established by the grantee 
for assistance (e.g., priority intake).
    I.C.1.e.(i). Prioritization for allocations less than $20 million. 
Section I.C.1.d. requires that the Action Plan demonstrates a 
reasonably proportionate allocation of resources relative to areas and 
categories (i.e., housing, economic revitalization, and infrastructure) 
of greatest needs identified in the grantee's unmet needs and 
mitigation needs assessments or provide an acceptable justification to 
HUD for a disproportional allocation.
    HUD recognizes that grantees receiving an allocation of less than 
$20 million for a qualifying disaster(s) may most effectively advance 
recovery by more narrowly targeting these limited recovery and 
mitigation resources. HUD will consider the small size of the grant and 
HUD's allocation methodology as an acceptable justification for a 
grantee to propose a disproportional allocation when the grantee is 
allocating funds to address: (1) unmet affordable rental housing needs 
in a MID area caused by or exacerbated by the disaster(s) that 
incorporates mitigation, or (2) unmet infrastructure needs necessary to 
build affordable rental housing in a MID area that incorporates 
mitigation.
    I.C.1.f. Funding criteria. The Action Plan must describe how the 
grantee will distribute its grant funds, which can include the 
following methodologies:
    1. Direct implementation (through employees, contractors, or 
through subrecipients); or
    2. A method of distribution to local governments and Indian Tribes 
(for States, as permitted by III.C.4.); or
    3. A combination of a direct implementation model and a method of 
distribution model.
    Because grantees must spend at least 80 percent of the CDBG-DR 
award to

[[Page 1761]]

benefit the HUD-identified MID area (see section III.D.2.), they should 
consider how they will meet this requirement when developing funding 
criteria. At a minimum, the grantee must establish the following 
criteria within its Action Plan so the public can clearly understand 
its funding criteria for funds sub-granted to eligible entities through 
a method of distribution or for applications that the grantee solicits 
for programs to be carried out directly:
    1. All criteria used to allocate and award the funds, including the 
relative importance of each criterion and any priorities;
    2. Establish the maximum grant size available;
    3. Describe how the distribution and selection criteria will 
address disaster-related unmet needs or mitigation needs in a manner 
that does not have an unjustified discriminatory effect on nor a 
failure to benefit protected classes in proportion to their 
communities' needs, including in racially and ethnically concentrated 
areas of poverty; and
    4. Describe the steps to be followed to encourage the participation 
of those belonging to protected classes. Such description must include 
an assessment of the following: (1) who may be expected to benefit, (2) 
the timing of who will be prioritized, and (3) the amount or proportion 
of benefits expected to be received.
    If some required information is unknown when the grantee is 
submitting its initial Action Plan to HUD, the grantee must update the 
Action Plan through a substantial amendment once the information is 
known. Historically, appropriations acts require a grantee to submit a 
plan detailing the proposed use of all funds before HUD can obligate 
funding to the grantee. Without all the required information in the 
initial Action Plan, HUD may obligate only a portion of the grant funds 
until the substantial amendment providing the required information is 
submitted and approved by HUD.
    I.C.1.g. Protocols for substantial amendments. In its Action Plan, 
each grantee must specify criteria for determining what changes in the 
grantee's Action Plan would constitute a substantial amendment to the 
Action Plan and thus require public comment. At a minimum, the 
following modifications will constitute a substantial amendment:
    1. A change in program benefit or eligibility criteria (including 
the expansion of eligible beneficiaries (e.g., establishing a new 
grantee-identified MID area));
    2. The addition or deletion of an activity;
    3. A proposed reduction in the overall benefit requirement (as 
described in section III.B.1.);
    4. The allocation or reallocation of a reasonable monetary 
threshold specified by the grantee in its Action Plan; and
    5. An update to the submitted initial Action Plan if the original 
submission was incomplete as allowed under section I.C.1.e. paragraph 7 
and section I.C.1.f.
    Once a grantee has set a reasonable monetary threshold in which a 
reallocation or allocation of funds would constitute a substantial 
amendment, grantees cannot disregard this threshold by submitting 
multiple nonsubstantial amendments back-to-back in order to avoid 
following a substantial amendment process (e.g., submitting two budget 
reallocations within 30 days of each other that if taken together would 
require a substantial amendment).
    I.C.2. Citizen participation requirements. To permit a more 
streamlined process and ensure disaster recovery grants are awarded in 
a timely manner, provisions of 42 U.S.C. 5304(a)(2) and (3), 42 U.S.C. 
12707, 24 CFR 570.486, 24 CFR 1003.604, 24 CFR 91.105(b) through (d), 
and 24 CFR 91.115(b) through (d), with respect to citizen participation 
requirements, are waived and replaced by the alternative requirements 
in this section. Under the streamlined requirements, the grantee may be 
required to hold a public hearing(s) on the proposed Action Plan and 
must provide a reasonable opportunity (i.e., at least 30 calendar days) 
for public comment.
    The grantee must follow a detailed citizen participation plan that 
satisfies the requirements of 24 CFR 91.115 or 91.105 (except as 
provided for in notices providing waivers and alternative 
requirements). Each local government receiving assistance from a State 
grantee must follow its citizen participation requirements at 24 CFR 
570.486 (except as provided for in notices providing waivers and 
alternative requirements). The grantee's records must demonstrate that 
it has notified affected residents through electronic mailings, press 
releases, statements by public officials, media advertisements, social 
media, public service announcements, and/or contacts with neighborhood 
organizations.
    In addition to the requirements above, the streamlined citizen 
participation alternative requirements for CDBG-DR grants are as 
follows:
     Requirement for consultation during plan preparation (see 
section I.C.2.a.);
     Publication of the Action Plan and opportunity for public 
comment (see section I.C.2.b.);
     Consideration of public comments (see section I.C.2.c.).
    I.C.2.a. Consultation during Action Plan preparation. All grantees 
must consult with States, Indian Tribes, local governments, Federal 
partners, nongovernmental organizations, the private sector, and other 
stakeholders and affected parties in the surrounding geographic area 
during Action Plan preparation to ensure consistency of the Action Plan 
with applicable regional development plans. This requirement also 
includes consulting with organizations that advocate on behalf of 
members of protected classes, vulnerable populations, and other 
underserved communities impacted by the disaster to help address 
requirements defined in section I.C.1.c. for the fair housing and civil 
rights data collection. A grantee must consult with other relevant 
government and local agencies, including State and local emergency 
management agencies that have primary responsibility for the 
administration of FEMA funds, agencies that manage local Continuum of 
Care,\9\ Public Housing Agencies,\10\ and HUD-approved housing 
counseling agencies,\11\ as applicable. Grantees must coordinate with 
State Housing Finance Agencies to verify that all available funding 
sources and opportunities for leverage are noted in the Action Plan. 
Given the extensive coordination that is required to develop a 
grantee's Action Plan, HUD recommends that grantees give their partners 
a clear timeline on receiving feedback and create a consistent process 
for how feedback will be received from these stakeholders.
---------------------------------------------------------------------------

    \9\ Find your local Continuum of Care here: https://www.hudexchange.info/grantees/.
    \10\ Find your local Public Housing Agency on HUD's website 
here: https://www.hud.gov/program_offices/public_indian_housing/pha/contacts.
    \11\ Find a HUD-approved housing counseling agency on HUD's 
website here: https://answers.hud.gov/housingcounseling/s/?language=en_US.
---------------------------------------------------------------------------

    I.C.2.b. Public comment period and minimum public hearing 
requirement. Following the creation of the Action Plan or substantial 
amendment, the grantee must publish the proposed Action Plan or 
substantial amendment for public comment. The manner of publication 
must include prominent posting on the grantee's official disaster 
recovery website and must afford residents, affected local governments,

[[Page 1762]]

and other interested parties a reasonable opportunity to review the 
Action Plan or substantial amendment (i.e., at least 30 calendar days). 
Grantees shall identify and redress any potential barriers that may 
limit or prohibit protected classes, vulnerable populations, or other 
underserved communities and individuals affected by the disaster from 
providing public comment on the grantee's Action Plan or substantial 
amendments. For example, grantees should consider how to address 
barriers like lack of childcare and/or transportation that can limit 
certain populations or communities from participating in public 
hearings, providing comments, or other engagement events or techniques.
    HUD anticipates that every community and every grantee will have 
some identified barriers to address. Based on the specific barriers the 
grantee identifies, particularly those that may limit or prohibit 
equitable participation, the grantee must describe the reasonable 
measures it will take to increase coordination, such as affirmative 
marketing, targeted outreach, and engagement with underserved 
communities and individuals, including protected classes such as 
persons with disabilities and persons with LEP.
    HUD strongly encourages grantees to hold as many hearings or 
convenings as may be necessary to ensure they capture all citizen 
comments to inform the comprehensive development of their Action Plan. 
The minimum number of public hearings a grantee must convene on the 
Action Plan to obtain interested parties' views and to respond to 
comments and questions shall be determined by the amount of the 
grantee's CDBG-DR allocation: (1) CDBG-DR grantees with allocations 
under $20 million are not required to hold a public hearing; (2) CDBG-
DR grantees with allocations equal to or greater than $20 million but 
less than $100 million are required to hold at least one public 
hearing; (3) CDBG-DR grantees with allocations equal to or greater than 
$100 million but less than $500 million are required to hold at least 
two public hearings; and (4) CDBG-DR grantees with allocations equal to 
or greater than $500 million shall convene at least three public 
hearings. These are only minimum hearing requirements and the form and 
structure of the hearings and convenings may vary to effectively 
solicit meaningful engagement and feedback. Grantees may find they need 
additional hearings to adequately capture and address all citizen 
questions, concerns, and comments.
    If the grantee is required to hold multiple public hearings, and a 
grantee holds those hearings in-person, it must hold each hearing in a 
different location within the HUD-identified MID area. Specifically, 
the grantee should select locations that will promote a geographic 
balance and maximize accessibility for stakeholders to actively 
participate.

   Figure One: Minimum Public Hearing Requirement Based on Grant Size
------------------------------------------------------------------------
                                               Minimum public  hearing
            CDBG-DR grant value                      requirement
------------------------------------------------------------------------
<$20 Million..............................  No public hearing
                                             requirement.
>=$20 Million but < $100 Million..........  One (1) public hearing
                                             required.
>=$100 Million but < $500 Million.........  Two (2) public hearings
                                             required.
>=$500 Million............................  Three (3) public hearings
                                             required.
------------------------------------------------------------------------

    Grantees may convene public hearings virtually (alone, or in 
concert with an in-person hearing). All in-person hearings must be held 
within HUD-identified MID areas and in facilities that are physically 
accessible to persons with disabilities. When conducting a virtual 
hearing, the grantee must allow questions in real time, with answers 
coming directly from the grantee representatives to all attendees.
    A grantee's citizen participation plan must specify that it will 
meet the requirements in the previous paragraph and the requirements in 
section III.B.8.a. of this notice on vital documents. Additionally, for 
both virtual and in-person hearings, the citizen participation plan 
must include how the grantee will complete the following: (1) hold 
hearings at times and locations convenient to potential and actual 
beneficiaries, (2) provide accommodations for persons with 
disabilities, and (3) to ensure effective communication for individuals 
with disabilities, including through the provision of auxiliary aids 
and services. See 24 CFR 8.6 for HUD's regulations about effective 
communication.
    Grantees must also provide meaningful access for individuals with 
LEP at both in-person and virtual hearings. Meaningful access may 
include live translation of attendees' questions and comments. In the 
citizen participation plan, State and local government grantees shall 
identify how the needs of non-English-speaking residents will be met in 
the case of virtual and in-person public hearings where a significant 
number of non-English-speaking residents live in the MID areas. In 
addition, for both virtual or in-person hearings, the grantee shall 
provide reasonable notification and access for residents in accordance 
with the grantee's certifications at section I.C.4., timely responses 
to all citizen questions and issues, and public access to all questions 
and responses.
    I.C.2.c. Consideration of public comments. The grantee must provide 
a reasonable time frame (no less than 30 calendar days) and reasonable 
method(s) (including but not limited to electronic submission) for 
receiving comments on the Action Plan or substantial amendment. The 
grantee must consider all oral and written comments on the Action Plan 
or any substantial amendment. Any updates or changes made to the Action 
Plan in response to public comments should be clearly identified in the 
Action Plan. A summary of comments on the Action Plan or amendment, and 
the grantee's response to each, must be included with the Action Plan 
or substantial amendment. Grantee responses shall address the substance 
of the comment rather than merely acknowledge that the comment was 
received.
    I.C.3. Submission of the Action Plan. The Action Plan (including 
the SF-424, SF-424B and SF-424D, as applicable) and the certifications 
included in Appendix B of the Universal Notice must be submitted to HUD 
for review and approval. Note, the submission process will be described 
in the applicable AAN. HUD will review each Action Plan within 45 
calendar days from the date of receipt, as described in section I.C.5. 
By submitting the required standard forms, the grantee is providing 
assurances that it and its recipients will comply with statutory 
requirements, including, but not limited to Federal civil rights 
requirements.
    I.C.4. Action Plan certifications waiver and alternative 
requirement. Sections 104(b)(4), (c), and (m) of the HCDA (42 U.S.C. 
5304(b)(4), (c) and (m)), sections 106(d)(2)(C) and (D) of the HCDA (42 
U.S.C. 5306(d)(2)(C) and (D)), section 106 of the Cranston-Gonzalez 
National Affordable Housing Act (42 U.S.C. 12706), and regulations at 
24 CFR 91.225 and 91.325 are waived and replaced with the following 
alternative requirement. Each grantee receiving an allocation under an 
AAN must make all the certifications included in Appendix B of the 
Universal Notice.
    I.C.5. HUD Action Plan review process. HUD may return an Action 
Plan or substantial amendment to an Action Plan if it is incomplete. 
HUD will work with grantees to resolve or provide additional 
information during the review period to avoid having to unnecessarily 
formally disapprove an

[[Page 1763]]

Action Plan or substantial amendments. There may be several issues 
related to the Action Plan or substantial amendments, as submitted, 
that can be fully resolved through discussion and revision during the 
review period, rather than through HUD's formal disapproval of the 
Action Plan or substantial amendment. Therefore, the Secretary has 
determined that good cause exists and is waiving 24 CFR 91.500 and 
providing the alternative requirement described below.
    I.C.5.a. General HUD review of an Action Plan. HUD will review the 
Action Plan upon receipt. The Action Plan will be deemed approved 45 
calendar days after HUD receives the plan, unless before that date HUD 
notifies the jurisdiction that the plan is being returned or 
disapproved (see definitions below). The grantee must publish the final 
HUD-approved Action Plan on its official disaster recovery website.
    I.C.5.b. Standard of review of an Action Plan. HUD may disapprove 
or return an Action Plan or a portion of an Action Plan if it is 
inconsistent with the purposes of the Cranston-Gonzalez National 
Affordable Housing Act (42 U.S.C. 12703), if it is substantially 
incomplete, or if the certifications under section I.C.4. of the 
Universal Notice are not satisfactory to the Secretary in accordance 
with 24 CFR 570.304 or 570.485(c), as applicable. The following are 
examples of an Action Plan that is substantially incomplete:
     An Action Plan that fails to satisfy a required element in 
the Universal Notice or applicable AAN (for example, an Action Plan 
that was developed without the required citizen participation or the 
required consultation); or
     An Action Plan that fails to describe how protected 
classes would benefit from CDBG-DR funds in proportion to their 
communities' needs.
    I.C.5.c. Written notice of return of an Action Plan. HUD is 
establishing an alternative process that offers a grantee the option to 
voluntarily provide a revised Action Plan if HUD has identified 
sections of the Action Plan that are substantially incomplete. If HUD 
finds errors with the Action Plan submission, no later than day twenty 
in HUD's 45-day review, HUD may return the Action Plan to the grantee 
to resolve the identified errors. The review timeline will pause while 
the grantee is updating the Action Plan for resubmission to HUD. Once 
the grantee has resubmitted the Action Plan, the review timeline will 
resume. A grantee is not required to revise the Action Plan submission, 
but if they choose not to after being notified of errors, the Secretary 
may disapprove the Action Plan as substantially incomplete if HUD 
determines the Action Plan does not meet the requirements of the 
Universal Notice and the applicable AAN.
    I.C.5.d. Written notice of disapproval of an Action Plan. Within 15 
calendar days after HUD notifies a grantee that it is disapproving its 
Action Plan (initial notice should occur via email), it must inform the 
jurisdiction in writing of the reasons for disapproval and actions that 
the jurisdiction could take to meet the criteria for approval.
    I.C.5.e. Revisions and resubmission of an Action Plan. After the 
first notification of disapproval, the grantee must revise or resubmit 
an Action Plan within 45 calendar days. HUD must respond to approve or 
disapprove the Action Plan within 30 calendar days of receiving the 
revisions or resubmission.
    I.C.6. Amendments to the Action Plan. The grantee must amend its 
Action Plan to update its needs assessments, modify or create new 
activities, or reprogram funds, as necessary. Each amendment must be 
published on the grantee's official website and describe the changes 
within the context of the entire Action Plan. A grantee's current 
version of its entire Action Plan must be accessible for viewing as a 
single document at any given point in time, rather than require the 
public or HUD to view and cross reference changes among multiple 
amendments.
    I.C.6.a. Substantial amendment. In its Action Plan, each grantee 
must specify criteria outlined in section I.C.1.g. to clearly define 
what changes constitute a substantial amendment to the Action Plan. For 
all substantial amendments, the grantee must follow the same procedures 
required for the preparation and submission of an Action Plan for 
disaster recovery, with the exception of the public hearing 
requirements described in section I.C.2.b. and the consultation 
requirements described in section I.C.2.a., which are not required for 
substantial amendments. Every amendment to the Action Plan (substantial 
and nonsubstantial) must be numbered sequentially and posted on the 
grantee's website. A substantial amendment shall require a 30-day 
public comment period and must be posted on the grantee's website.
    I.C.6.a.(i). General HUD review of a substantial amendment to an 
Action Plan. HUD will review a substantial amendment to an Action Plan 
upon receipt. The substantial amendment will be deemed approved 45 
calendar days after HUD receives the amendment, unless before that date 
HUD has notified the jurisdiction that the amendment is disapproved.
    I.C.6.a.(ii). Standard of review of a substantial amendment to an 
Action Plan. HUD may disapprove a substantial amendment to an Action 
Plan if it is substantially incomplete. HUD must notify the grantee in 
writing that it is disapproving the substantial amendment and must 
include the reasons for disapproval and actions that the jurisdiction 
could take to meet the criteria for approval.
    I.C.6.a.(iii). Revisions and resubmission of a substantial 
amendment to an Action Plan. After the first notification of 
disapproval, the grantee must revise or resubmit the substantial 
amendment to the Action Plan within 45 calendar days. HUD must respond 
to approve or disapprove the substantial amendment within 30 calendar 
days of receiving the revisions or resubmission.
    I.C.6.b. Nonsubstantial amendment. The grantee must notify HUD, but 
is not required to seek public comment, when it makes any amendment to 
the Action Plan that is not substantial. HUD must be notified at least 
five business days before the amendment becomes effective. However, as 
mentioned above, every amendment to the Action Plan (substantial and 
nonsubstantial) must be numbered sequentially and posted on the 
grantee's website. The Department will acknowledge receipt of the 
notification of nonsubstantial amendments via email within five 
business days.

II. Phase Two: Financial Certification and Oversight of Funds

II.A. Certification of Adequate Financial Controls and Procurement 
Processes, and Procedures for Proper Grant Management

    Appropriations acts typically require that the Secretary certify 
that the grantee has proficient financial controls and procurement 
processes and procedures in place to prevent any duplication of 
benefits (DOB) as defined by section 312 of the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act of 1974, as amended (``the 
Stafford Act''), (42 U.S.C. 5155), to ensure timely expenditure of 
funds, to maintain a comprehensive website regarding all disaster 
recovery activities assisted with these funds, and to detect and 
prevent waste, fraud, and abuse of funds.
    II.A.1. Documentation requirements. To enable the Secretary to make 
this certification, each grantee must submit to HUD the certification 
documentation listed below. This information must be submitted within 
135 calendar days of

[[Page 1764]]

the applicability date of the AAN. Historically, grant agreements have 
not been executed until the Secretary has issued a certification for 
the grantee. For each of the items outlined in sections II.A.1.a. 
through II.A.1.g. below (collectively referred to as the ``Financial 
Management and Grant Compliance Certification Requirements''), the 
grantee must certify to the accuracy of its submission when submitting 
the Financial Management and Grant Compliance Certification Checklist 
(the ``Certification Checklist''). The Certification Checklist is a 
document that incorporates all of the Financial Management and Grant 
Compliance Certification Requirements. HUD will review the grantee's 
certification documentation within 45 calendar days from the date of 
receipt.
    II.A.1.a. Proficient financial management controls. A grantee has 
proficient financial management controls if the grantee's agency 
administering this grant submits its most recent single audit and 
Annual Comprehensive Financial Report (ACFR), which in HUD's 
determination indicates that the grantee has no material weaknesses, 
deficiencies, or concerns that HUD considers to be relevant to the 
financial management of CDBG, CDBG-DR, or Community Development Block 
Grant Mitigation (CDBG-MIT) funds. If the single audit or ACFR 
identified weaknesses or deficiencies, the grantee must provide 
documentation satisfactory to HUD showing how those weaknesses have 
been removed or are being addressed.
    II.A.1.b. Procedures for procurement. Each grantee must provide HUD 
with its procurement processes for review, so HUD may evaluate the 
grantee's processes to determine that they are based on principles of 
full and open competition. A grantee has adequate procurement processes 
if the grantee complies with the procurement requirements at section 
III.B.7., including:
    (i) A State grantee has proficient procurement processes if HUD 
determines that its procurement processes reflect that it:
    (1) adopted 2 CFR 200.318 through 200.327 for both its own 
procurement processes and for its subrecipients;
    (2) follows its own State procurement policies and procedures based 
on full and open competition and establishes requirements for 
procurement processes for local governments and subrecipients based on 
full and open competition pursuant to 24 CFR 570.489(g), and the 
requirements for the State, its local governments, and subrecipients to 
evaluate the cost or price of the product or service and comply with 2 
CFR 570.489(l); or
    (3) adopted 2 CFR 200.317, meaning that it will follow its own 
State procurement processes based on full and open competition, 
evaluate the cost or price of the product or service, and comply with 2 
CFR 570.489(l), but impose 2 CFR 200.318 through 200.327 on its 
subrecipients.
    Additionally, if the State agency designated as the administering 
agency chooses to provide funding to another State agency, the 
administering agency must specify in its procurement processes whether 
the agency implementing the CDBG-DR activity must follow either i.) the 
procurement processes that the administering agency is subject to, or 
ii.) the same processes to which other local governments and 
subrecipients are subject, or iii.) the procurement processes that the 
agency carrying out the activity normally follows.
    (ii) A local government grantee has proficient procurement 
processes if the processes are consistent with the specific applicable 
procurement standards identified in 2 CFR 200.318 through 200.327, and 
200.214. When the grantee provides a copy of its procurement processes, 
it must indicate the sections that incorporate these provisions.
    II.A.1.c. Policies and procedures to maintain a comprehensive 
disaster recovery website. A grantee has adequate policies and 
procedures to maintain a comprehensive and accessible disaster recovery 
website if it submits policies and procedures indicating to HUD that 
the grantee will have a separate web page dedicated to its CDBG-DR 
funded activities including the information described at section 
III.B.8. The procedures must also indicate the frequency of website 
updates. At a minimum, grantees must update their official disaster 
recovery website quarterly.
    II.A.1.d. Procedures to detect and prevent fraud, waste, and abuse. 
A grantee has adequate procedures to detect and prevent fraud, waste, 
and abuse if it submits procedures that indicate:
    (i) how the grantee will verify the accuracy of information 
provided by applicants;
    (ii) the criteria to be used to evaluate the capacity of potential 
subrecipients;
    (iii) the frequency with which the grantee will monitor other 
agencies of the grantee that will administer CDBG-DR funds, and how it 
will monitor subrecipients, contractors, and other program 
participants, and why monitoring is to be conducted, and which items 
are to be monitored;
    (iv) if the grant size is $100 million or more, the grantee has or 
will employ an internal auditor that provides both programmatic and 
financial oversight of grantee activities and has adopted policies that 
describe the auditor's role in detecting and preventing fraud, waste, 
and abuse;
    (v) (1) for States or grantees subject to the same requirements as 
States, a written standard of conduct and conflicts of interest policy 
that complies with the requirements of 24 CFR 570.489(g), (h), and (l) 
and subparagraph II.A.1.b.(i) Procedures for procurement of the 
Universal Notice, which policy includes the process for promptly 
identifying and addressing such conflicts;
    (2) for local government grantees, a written standard of conduct 
and conflicts of interest policy that complies with 24 CFR 570.611 and 
2 CFR 200.318, as applicable, which policy includes the process for 
promptly identifying and addressing such conflicts; and
    (vi) how it will assist in investigating and taking action when 
fraud occurs within the grantee's CDBG-DR activities and/or programs. 
Following a disaster, property owners and renters are frequently the 
targets of people fraudulently posing as government employees, 
creditors, mortgage servicers, insurance adjusters, and contractors. 
All grantees receiving CDBG-DR funds for the first time shall attend 
and require subrecipients to attend fraud related training provided by 
HUD Office of Inspector General (OIG), when offered, to assist in the 
proper management of CDBG-DR grant funds. Grantees must report to the 
appropriate HUD CPD staff member that it met this requirement and who 
attended the training. In accordance with 2 CFR 200.113, grantees and 
subrecipients of CDBG-DR must promptly inform in writing the OIG and 
HUD when it has credible evidence of violations of Federal criminal law 
involving fraud, bribery, or gratuities or a violation of the civil 
False Claims Act that could potentially affect the Federal award at 
https://www.hudoig.gov/hotline/report-fraud (a subrecipient of CDBG-DR 
must also inform the CDBG-DR grantee that awarded it funding). All 
other instances of fraud, waste, and abuse should be referred to the 
HUD OIG Fraud Hotline (phone: 1-800-347-3735 or email: 
[email protected]).
    Grantees must address in their policies and procedures:
    (1) how it will provide CDBG-DR beneficiaries with information that

[[Page 1765]]

raises awareness of possible fraudulent activity, how fraud can be 
avoided, and what local or State agencies to contact to take action and 
protect the grantee and beneficiary investment:
    (2) how the grantee will make CDBG-DR beneficiaries aware of the 
risks of contractor fraud and other potentially fraudulent activity 
that can occur in communities recovering from a disaster; and
    (3) the steps it will take to assist a CDBG-DR beneficiary if the 
beneficiary experiences contractor or other fraud. If the beneficiary 
is eligible for additional CDBG-DR assistance because the fraudulent 
activity results in the creation of additional unmet need, the 
procedures must also address what steps the grantee will follow to 
provide additional assistance.
    II.A.1.e. Policies and procedures to prevent DOB. A grantee has 
adequate policies and procedures to prevent the DOB if the grantee 
submits and identifies a uniform process that reflects the requirements 
in Appendix C of the Universal Notice, including:
    (i) determining all disaster assistance received by the grantee or 
applicant and all reasonably identifiable financial assistance 
available to the grantee or applicant, as applicable, before committing 
funds or awarding assistance;
    (ii) determining a grantee's or an applicant's unmet need(s) for 
CDBG-DR assistance before committing funds or awarding assistance;
    (iii) requiring beneficiaries to enter into a signed agreement to 
repay any duplicative assistance if they later receive assistance for 
the same purpose for which the CDBG-DR award was provided. The grantee 
must identify a method to monitor compliance with the agreement for a 
reasonable period (i.e., a time period commensurate with risk) and must 
articulate this method in its policies and procedures, including the 
basis for the period during which the grantee will monitor compliance. 
This agreement must also include the following language: ``Warning: Any 
person who knowingly makes a false claim or statement to HUD or causes 
another to do so may be subject to civil or criminal penalties under 18 
U.S.C. 2, 287, 1001 and 31 U.S.C. 3729.''; and
    (iv) verifying that CDBG-DR funds will not be used for activities 
reimbursable by, or for which funds are made available by, FEMA or the 
U.S. Army Corps of Engineers (USACE). Although the language may vary 
among appropriations acts, CDBG-DR funds may not be used for activities 
reimbursable by, or for which funds are made available by FEMA or the 
USACE.
    Policies and procedures of the grantee submitted to support the 
certification must provide that before the award of assistance, the 
grantee will use the best, most recent available data from FEMA, the 
Small Business Administration (SBA), insurers, and any other sources of 
local, State, and Federal sources of funding to prevent a DOB.
    Additionally, HUD can assist CDBG-DR grantees with access to the 
necessary data to support a DOB review.\12\
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    \12\ View more information about how to access this data, visit 
HUD's website here: https://www.hud.gov/program_offices/comm_planning/cdbg-dr/data-sharing.
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    II.A.1.f. Policies and procedures for timely expenditures of grant 
funds. A grantee has adequate policies and procedures to determine 
timely expenditures if it submits policies and procedures that indicate 
the following to HUD:
    (i) how it will track and document expenditures of the grantee and 
its subrecipients (both actual and projected reported in performance 
reports);
    (ii) how it will ensure proper reporting, tracking, and expenditure 
of program income, including how it will ensure that program income is 
substantially disbursed before making additional withdrawals from the 
United States Treasury, except when carrying out the same activities 
through a revolving fund (see section III.B.12. and section III.B.13. 
for additional requirements);
    (iii) how it will reprogram funds in a timely manner for activities 
that are stalled (e.g., a project is more than six months behind 
schedule); and
    (iv) how it will project expenditures of all CDBG-DR funds within 
the period provided for in section III.F.1.
    II.A.1.g. Capacity assessment and staffing analysis. To enable HUD 
to assess risk as described in 2 CFR 200.206, the grantee must submit a 
capacity assessment and staffing analysis to HUD. The capacity 
assessment must describe the grantee's capacity to carry out the 
recovery and how it will address any capacity gaps. HUD will determine 
that the grantee has sufficient management capacity to adequately 
reduce risk if the grantee submits a capacity assessment and staffing 
analysis that meets the following requirements.
    II.A.1.g.(i). Capacity assessment.
    (1) Identify the lead agency responsible for implementation of the 
CDBG-DR award and indicate that the head of that agency will report 
directly to the chief executive officer of the jurisdiction.
    (2) Conduct an assessment of its capacity to carry out CDBG-DR 
recovery efforts.
    (3) Develop a timeline with milestones describing when and how the 
grantee will address all capacity gaps that are identified.
    (4) Include a list of any open monitoring and HUD OIG audit 
findings related to any CPD program and an update on the corrective 
actions undertaken to address each finding.
    II.A.1.g.(ii). Staffing analysis.
    (1) Submit an organizational chart of the department or division 
and provide a table that clearly indicates which personnel, or 
organizational unit will be responsible for each of the Financial 
Management and Grant Compliance Certification Requirements identified 
in section II.A.1.a. through f. along with staff contact information, 
if available.
    (2) Submit documentation demonstrating that it has assessed staff 
capacity and identified positions for the purpose of: case management 
in proportion to the applicant pool; program managers who will be 
assigned responsibility for each primary recovery area (e.g., housing, 
infrastructure, and economic revitalization); staff who have 
demonstrated experience in housing, infrastructure (as applicable), and 
economic revitalization (as applicable); staff responsible for 
procurement/contract management, regulations implementing Section 3 of 
the Housing and Urban Development Act of 1968, as amended (24 CFR 75) 
(Section 3), URA and its implementing regulations, section 104(d) of 
the HCDA and its implementing regulations, and CDBG acquisition and 
relocation requirements, fair housing compliance, and environmental 
compliance. Additionally, demonstrate that the internal auditor, if 
applicable, and responsible audit staff report independently to the 
chief elected or executive officer or board of the governing body of 
any designated administering entity.
    (3) Describe how it will provide training and technical assistance 
for any personnel that are not employed by the grantee at the time of 
Action Plan submission, and how it will fill gaps in knowledge or 
technical expertise required for successful and timely recovery. 
Grantees must also include how it will provide training and technical 
assistance to its subrecipients.
    To fully complete the certification process, the grantee must have 
completed and submitted the certification documentation required in the 
applicable Certification Checklist. The grantee's documentation must 
demonstrate that the standards meet the

[[Page 1766]]

requirements in the Universal Notice and the Certification Checklist.

II.B. Relying on Prior Financial Certification Submissions

    This section applies to a grantee that has received CDBG-DR funds 
that are subject to the requirements of the Universal Notice or that 
received CDBG-DR funds under Public Laws 117-43, 117-180, and 117-328.
    For five years after the execution of a grant agreement for an 
initial allocation of funds a grantee received subject to the Universal 
Notice, HUD will rely on the grantee's prior submissions provided in 
response to the Financial Management and Grant Compliance Certification 
Requirements for any subsequent allocation of funds that is also 
subject to the Universal Notice. HUD will continue to monitor the 
grantee's submissions and updates to policies and procedures during the 
normal course of business.\13\
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    \13\ View the Community Planning and Development's Monitoring 
Handbook for more information on HUD monitoring here: https://www.hud.gov/program_offices/administration/hudclips/handbooks/cpd/6509.2.
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    For grantees that have received CDBG-DR funds under Public Laws 
117-43, 117-180, and 117-328, HUD may rely on a grantee's prior 
submissions provided in response to the Financial Management and Grant 
Compliance Certification Requirements for five years after the 
execution of a grant agreement for an initial allocation of funds under 
those Public Laws.
    If it has been more than five years since the executed grant 
agreement for the original CDBG-DR grant under the Universal Notice or 
under Public Laws 117-43, 117-180, and 117-328, grantees must update 
and resubmit the documentation required by section II.A.1. with the 
completed Certification Checklist. However, the Secretary may require 
any CDBG-DR grantee to update and resubmit the documentation required 
by section II.A.1., if there is good cause to require it.

II.C. Obligation and Expenditure of Funds

    Once HUD approves the Action Plan and makes the required 
certification of financial controls and procurement processes, and 
adequate procedures for proper grant management HUD will then sign a 
grant agreement obligating funds to the grantee. In addition, HUD will 
establish the line of credit, and the grantee will receive DRGR system 
access (if it does not already have DRGR system access). The grantee 
will follow the DRGR Action Plan process to draw funds (see section 
III.G.).
    The grantee must meet the applicable environmental requirements 
before the use or commitment of funds for each activity. After the 
responsible entity (1) completes an environmental review(s) pursuant to 
24 CFR part 58 and receives from HUD or the State, as outlined in 24 
CFR 58.18, an approved RROF and certification (as applicable), or (2) 
adopts another Federal agency's environmental review and receives from 
HUD or the State, an approved RROF and certification (as applicable), 
the grantee may draw down funds from the line of credit for an 
activity. The disbursement of CDBG-DR funds must begin no later than 
180 calendar days after HUD (1) executes a grant agreement with the 
grantee, or (2) approves the Action Plan and financial certification 
and oversight of funds, whichever is later. Failure to draw funds 
within this timeframe may result in HUD's review of the grantee's 
certification of its financial controls, procurement processes, and 
capacity, and may result in the imposition of any corrective actions 
deemed appropriate by HUD pursuant to 24 CFR 570.495, 24 CFR 570.910, 
or 24 CFR 1003.

III. Phase Three: Implementation of Universal Notice Requirements

III.A. Policies and Procedures--Universal Notice Requirements

    III.A.1. Development of program-specific policies and procedures. 
Grantees must develop program-specific policies and procedures 
governing the use of funds. The Universal Notice requires each grantee 
to prioritize policies and procedures for its programs that address its 
unmet housing recovery needs. Grantees must create and finalize 
policies and procedures for their housing programs no later than one 
year from the applicability date of the AAN. Not later than eighteen 
months from the applicability date of the AAN, grantees must create and 
finalize policies and procedures governing the rest of its CDBG-DR 
funded programs (e.g., economic revitalization, infrastructure, public 
service activities, and any other eligible activities the grantee will 
fund) that shall be subject to HUD review. If a grantee has determined 
that it does not have unmet housing needs in the MID areas, the grantee 
must create policies and procedures for its other programs and 
activities no later than one year from the applicability date of the 
AAN.
    III.A.2. Required policies and procedures for all CDBG-DR funded 
programs. This section outlines the specific requirements that grantees 
must adhere to when developing their policies and procedures. Grantees 
must ensure their procedures comply with several key requirements, such 
as fair housing and civil rights compliance and minimizing 
displacement. Additionally, there are program-specific requirements 
that grantees must meet depending on the type of program (e.g., housing 
programs). Beyond the requirements described below, each grantee's 
program-specific policies and procedures must adhere to the overarching 
policies and procedures they certified to (refer to Phase Two: 
Financial Certification and Oversight of Funds of the Universal Notice) 
including the requirement to build procedures to detect and prevent 
fraud, waste, and abuse; and any requirements set forth in this notice 
or the regulations on other cross-cutting requirements (e.g., 
environmental reviews, Davis Bacon Act, Section 3, Lead Safe Housing, 
etc.). Additionally, the grantee's program-specific policies and 
procedures must align with the information in the Action Plan 
(including the grantee's proposed allocations), as amended and approved 
by HUD.
    III.A.2.a. Fair housing and civil rights policies and procedures. 
Each program-specific policy and procedure must address the following 
requirements on fair housing and civil rights:
    (i) a description of how the grantee's use of their CDBG-DR funds 
is consistent with their obligation to AFFH. For example, grantees may 
undertake a variety of actions consistent with the requirements to AFFH 
such as: (1) overcoming prior disinvestment in housing, infrastructure, 
and public services for protected class groups in the MID areas, 
especially where such groups are highly concentrated; (2) enhancing (a) 
the accessibility of disaster preparedness, resilience, or recovery 
services, including the accessibility of evacuation services and 
shelters for individuals with disabilities in the MID areas; (b) the 
provision of critical disaster-related information in accessible 
formats; and/or (c) the availability of integrated, accessible housing 
and supportive services; or (3) using CDBG-DR funds to mitigate 
environmental concerns and increase resilience among protected class 
groups to protect against the effects of extreme weather events and 
other natural hazards in the MID areas. Note, grantees must update 
these policies and procedures to remain in compliance with AFFH 
requirements as HUD may update its guidance and rules;
    (ii) a description of how their proposed allocations to projects 
and activities, selection criteria, and other actions can be expected 
to reduce

[[Page 1767]]

barriers for individuals, vulnerable populations, protected classes, 
and other underserved communities (as applicable);
    (iii) a description of how each program will enhance for 
individuals with disabilities in the MID areas (1) the accessibility of 
disaster preparedness, resilience, or recovery services, including the 
accessibility of evacuation services and shelters; (2) the provision of 
critical disaster-related information in accessible formats; and/or (3) 
the availability of integrated, accessible housing and supportive 
services;
    (iv) identification of the proximity of natural and environmental 
hazards (e.g., industrial corridors, sewage treatment facilities, 
waterways, EPA superfund sites, brownfields, etc.) to affected 
populations in the MID area, including members of protected classes, 
vulnerable populations, and other underserved communities; and a 
description of how each program will mitigate these specific 
environmental concerns and increase resilience among these populations 
in the MID area to protect against current and future hazard risks.
    III.A.2.b. Minimizing displacement and relocation policies and 
procedures. Each program-specific policy and procedure must address the 
following requirements on minimizing displacement and relocation 
assistance, as appropriate:
    (i) a description of how the grantee plans to minimize displacement 
of persons or entities, and assist any persons or entities displaced, 
and ensure accessibility needs of displaced persons with disabilities. 
Grantees must seek to minimize displacement or the adverse impacts from 
displacement, consistent with the requirements of section III.B.15.a. 
of the Universal Notice, Section 104(d) of the HCDA (42 U.S.C. 5304(d)) 
and implementing regulations at 24 CFR part 42, and 24 CFR 570.488 or 
24 CFR 570.606, as applicable;
    (ii) grantees must amend an existing Residential Anti-displacement 
and Relocation Assistance Plan (RARAP) or create a new RARAP specific 
to CDBG-DR. Grantees must meet the requirements in section III.B.15.a., 
related to the RARAP prior to implementing any activity with CDBG-DR 
grant funds, such as buyouts and other disaster recovery activities; 
and
    (iii) grantees must also describe how they will provide relocation 
assistance to persons or entities displaced under the URA and its 
implementing regulations at 49 CFR part 24, and under an optional 
relocation policy under 24 CFR 570.606(d), when applicable. Grantees 
must also plan and budget for such relocation activities. The 
description will outline methods for identifying the needs of the 
potentially displaced persons including site visits, interviews, and 
orientations. It will also cover budget development variables like 
housing market conditions, acquisition costs, relocation payments, and 
professional services costs. Planning and budgeting must precede any 
action that will cause displacement and/or temporary relocation 
(including programmatic optional relocation) and should be scoped to 
the complexity and nature of the anticipated displacing activity 
including an evaluation of program resources available to carry out 
timely and orderly relocations.
    Finally, not all eligible activities will trigger displacement 
(e.g., planning). In such cases, the grantee should include in its 
policies and procedures an explanation that minimizing displacement is 
not applicable because displacement will not occur.
    III.A.2.c. Mitigation policies and procedures. Each program-
specific policy and procedure must address the following requirements 
on mitigation and resilience:
    (i) how mitigation measures and strategies to reduce natural hazard 
risks will be integrated into the construction, reconstruction, or 
rehabilitation of residential or non-residential buildings;
    (ii) how CDBG-DR investments will be designed and constructed to 
withstand chronic stresses and extreme events related to a changing 
climate by identifying and implementing resilience performance measures 
in DRGR.
    III.A.2.d. Timeliness policies and procedures. As part of the 
development of a grantee's program-specific policies and procedures, 
each grantee must also develop projected expenditures and outcomes. The 
projections must be based on each quarter's expected performance--
beginning with the first quarter funds are available to the grantee and 
continuing each quarter until all funds are expended. The grantee must 
include in its policies and procedures how it will monitor its 
expenditures and outcomes against the projections. The grantee must 
upload these projections into DRGR and then post this information on 
its public website as required by section III.B.8.
    III.A.3. Required policies and procedures for housing programs.
    In addition to the requirements in III.A.2., all policies and 
procedures related to housing activities must also address the 
following requirements:
    (i) a description of the process the grantee will use to provide 
exceptions to the maximum amount of assistance on a case-by-case basis. 
At a minimum, the grantee's policies and procedures must communicate 
how it will analyze the circumstances under which an exception is 
needed and how it will demonstrate that the amount of assistance is 
necessary and reasonable;
    (ii) a description of how its program will align and build upon any 
funding received from HUD's Rapid Unsheltered Survivor Housing (RUSH) 
program, as applicable;
    (iii) a description of the building standards and codes to be used 
by construction contractors performing work in the jurisdiction and the 
mechanisms to be used by the grantee to assist beneficiaries in 
responding to contractor fraud, poor quality work, and associated 
issues. Grantee policies and procedures must require a warranty period 
post-construction with a formal notification to beneficiaries on a 
periodic basis (e.g., one year and one month before expiration date of 
the warranty);
    (iv) a description of the grantee's affordability standards, 
including ``affordable rents,'' the enforcement mechanisms, and 
applicable timeframes, that will apply to the new construction of 
affordable rental housing of five or more units, as required in section 
III.D.5.d;
    (v) a description of how the grantee will use social media 
platforms to alert its residents when its applications for housing 
activities are open and when it is holding public hearings on CDBG-DR 
plans or projects;
    (vi) a description of the grantee's process for accepting 
alternative methods for documenting ownership. Grantees may include the 
following documentation as acceptable: deed, title, mortgage 
documentation, tax receipts or bills, home insurance, home purchase 
contracts, will or affidavit or heirship naming them as heir, receipts 
of major repairs completed prior to the disaster, court documents, 
letter from a manufactured housing community owner or public official, 
self-certification, or utility bills; and
    (vii) a description of the basic DOB framework for housing 
activities. Grantee policies and procedures must follow the process 
outlined in Appendix C in the Universal Notice and include how the 
grantee will carry out the following steps for each beneficiary: (1) 
assess applicant's total need; (2) identify total assistance; (3) 
exclude non-duplicative amounts; (4) exclude funds for a different 
purpose; (5) exclude funds for the same purpose, different allowable 
use; (6) identify a final DOB amount (if any) and calculate the CDBG-DR 
award; and (7) reassess

[[Page 1768]]

unmet need when necessary. Grantees must include the requirement to 
have beneficiaries sign an agreement to repay any assistance later 
received for the same purpose as the CDBG-DR funds (e.g., a subrogation 
agreement) and include any other required steps listed in Appendix C.
    A grantee that will be coordinating with a HUD-approved Housing 
Counseling Agency \14\ would include what information and services it 
will make available to both renters and homeowners.
---------------------------------------------------------------------------

    \14\ View additional information to locate a HUD-approved 
Housing Counseling Agency here: https://apps.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?weblistaction=summary.
---------------------------------------------------------------------------

    III.A.4. Required policies and procedures for infrastructure 
programs. In addition to the requirements in section III.A.2., all 
policies and procedures related to infrastructure activities must also 
address the following requirements:
    (i) how the grantee will address the construction or rehabilitation 
of disaster-related systems (e.g., storm water management systems) or 
other disaster-related community-based mitigation systems (e.g., using 
FEMA's community lifelines). State grantees carrying out infrastructure 
activities must work with local governments and Indian Tribes in the 
MID areas to identify the unmet needs and associated costs of disaster-
related infrastructure improvements;
    (ii) how the grantee will plan for the long-term operation and 
maintenance of infrastructure and public facility projects funded by 
CDBG-DR, as maintenance and repair of public facilities and 
improvements is generally ineligible. Grantees must plan for the long-
term sustainability of these projects, including who will pay these 
costs and who will operate and maintain the projects once they are 
complete;
    (iii) the extent to which CDBG-DR funded infrastructure activities 
will achieve objectives outlined in regionally or locally established 
plans and policies that are designed to reduce future risk to the 
jurisdiction;
    (iv) how the grantee will align infrastructure investments with 
other planned Federal, State, or local capital improvements and 
infrastructure development efforts, and will work to foster the 
potential for additional infrastructure funding from multiple sources, 
including State and local capital improvement projects and private 
investment;
    (v) how the grantee will prioritize infrastructure within 
historically underserved communities that lacked adequate investments 
in housing, transportation, water, and wastewater infrastructure prior 
to the disaster; and
    (vi) a description of the basic DOB framework for infrastructure 
activities. Grantee policies and procedures must follow the process 
outlined in Appendix C in the Universal Notice and include how the 
grantee will carry out the following steps for each entity (e.g., local 
government) assisted: (1) assess applicant's total need; (2) identify 
total assistance; (3) exclude non-duplicative amounts; (4) exclude 
funds for a different purpose; (5) exclude funds for the same purpose, 
different allowable use; (6) identify a final DOB amount (if any) and 
calculate the CDBG-DR award; and (7) reassess unmet need when 
necessary. In its policies and procedures, the grantee must include how 
it will identify whether any local or State funds are available for 
these types of activities. And if local or State funds were previously 
designated or planned for the activity, but are no longer available, 
the grantee must describe how it will document that the local 
government recipient does not have funds set aside for the activity in 
any capital improvement plan (or similar document showing planned use 
of funds). The grantee must include any other required steps listed in 
Appendix C.
    III.A.5. Required policies and procedures for economic 
revitalization programs. In addition to the requirements in section 
III.A.2., all policies and procedures related to economic 
revitalization activities must also address the following requirements:
    (i) a description of how the grantee will prioritize underserved 
communities that have been impacted by the disaster and that were 
economically distressed before the disaster, as described in section 
III.D.7.a. While HUD defines the minimum standard for underserved 
communities in section I.C.1.c., grantees must describe how they will 
further define areas that are considered underserved communities;
    (ii) a description of how the grantee will use social media 
platforms to alert its residents when its applications for economic 
development activities are open and when it is holding public hearings 
on CDBG-DR plans or projects; and
    (iii) a description of the basic DOB framework for economic 
revitalization activities. Grantee policies and procedures must follow 
the process outlined in Appendix C in the Universal Notice and include 
how the grantee will carry out the following steps for each business 
assisted: (1) assess applicant's total need; (2) identify total 
assistance; (3) exclude non-duplicative amounts; (4) exclude funds for 
a different purpose; (5) exclude funds for the same purpose, different 
allowable use; (6) identify a final DOB amount (if any) and calculate 
the CDBG-DR award; and (7) reassess unmet need when necessary. Grantees 
must include the requirement to have entities sign an agreement to 
repay any assistance later received for the same purpose as the CDBG-DR 
funds (e.g., a subrogation agreement) and include any other required 
steps listed in Appendix C.
    III.A.6. Consultation and website requirements for program 
implementation policies. To promote effective program design and public 
transparency, grantees must comply with the consultation and disaster 
recovery website requirements for program implementation policies as 
described in this section. Note, grantees are not expected to release 
all program policies and procedures at once and can develop and publish 
program-specific policies and procedures in phases, as programs are 
ready to launch. However, grantees must comply with the timelines 
identified in section III.A.1. of the Universal Notice for creating and 
finalizing program-specific policies and procedures. The grantee must 
also update its citizen participation plan (see section I.C.2.) to 
describe how it will comply with the requirements of sections 
III.A.6.a. and III.A.6.b.
    III.A.6.a. Consultation with citizen advisory groups. Grantees are 
required to gather feedback and recommendations on key program 
decisions from its citizen advisory group at least annually. A citizen 
advisory group is a body composed of individuals from a community who 
volunteer or are appointed to provide input, advice, and 
recommendations on various issues and policies affecting their 
community. These groups typically serve as a bridge between the general 
public and decision-makers, offering insights, perspectives, and 
expertise to help inform and shape decisions that impact the 
community's well-being and development. A citizen advisory group will 
look different in each community because each community is unique. 
Generally, the individuals who volunteer or are appointed should 
represent the demographics of the community it is supporting. For 
example, a citizen advisory group in a community that is predominantly 
renters should include individuals who are renters. A citizen advisory 
group in a community that has a large share of a specific racial or 
ethnic minority group should include

[[Page 1769]]

members of that specific racial or ethnic minority group. Each grantee 
can determine the cadence of meetings and how the group will provide 
feedback to the grantee. As an example, a citizen advisory group may 
review program-specific policies and procedures to determine if 
programs are adequately reaching and assisting intended beneficiaries 
and are achieving intended program outcomes. The grantee must describe 
the process it will follow for the citizen advisory group in its 
citizen participation plan.
    III.A.6.b. Publication of program-specific policies and procedures. 
Grantees must prominently post final program-specific policies and 
procedures on their official disaster recovery website within the 
timeline identified in section III.A.1. of the Universal Notice. In 
addition, these program-specific policies and procedures must be 
available to the public on the website before the grantee formally 
begins accepting applications for that program. Grantees must also 
comply with the general website requirements of section III.B.8. of the 
Universal Notice.
    III.A.7. HUD program-specific policies and procedures review 
process. Within two years from the applicability date of the AAN, HUD 
will review the grantee's program-specific policies and procedures, 
either onsite or through remote monitoring, for compliance with the 
requirements in section III. If a grantee's program-specific policies 
and procedures are not in compliance with the requirements of the 
Universal Notice, HUD may undertake corrective and remedial actions as 
described in section III.F.2.a. HUD will continue to monitor the 
grantee's program-specific policies and procedures during the normal 
course of business (i.e., CPD's Monitoring Handbook and applicable CPD 
Notice Implementing Risk Analyses for CPD programs).

III.B. Grant Administration

    III.B.1. Overall benefit. Consistent with the HCDA, 24 CFR 570.484 
and 24 CFR 570.200(a)(3), the Universal Notice requires grantees to 
comply with the overall benefit requirement that 70 percent of funds be 
used for activities that benefit LMI persons. For purposes of a CDBG-DR 
grant, HUD is establishing an alternative requirement that the overall 
benefit test shall apply only to the grant of CDBG-DR funds described 
in the AAN and related program income.
    A grantee may request a waiver of the overall benefit requirement 
to reduce the LMI benefit requirement below 70 percent of the total 
grant. To request a waiver, the grantee must submit a substantial 
amendment, and provide a justification that, at a minimum: (a) 
identifies the planned activities that meet the needs of its LMI 
population; (b) describes proposed activities and programs that will be 
affected by the alternative requirement, including their proposed 
location(s) and role(s) in the grantee's long-term disaster recovery 
plan; (c) describes how the activities/programs identified in (b) 
prevent the grantee from meeting the 70 percent requirement; (d) 
demonstrates that LMI persons' disaster-related needs have been 
sufficiently met and that the needs of non-LMI persons or areas are 
disproportionately greater, and that the jurisdiction lacks other 
resources to serve non-LMI persons; and (e) demonstrates a compelling 
need for HUD to lower the percentage of the grant that must benefit LMI 
persons.
    III.B.1.a. Use of the ``upper quartile'' or ``exception criteria.'' 
The LMA benefit requirement is modified when communities have few, if 
any, areas within their jurisdiction that have 51 percent or more LMI 
residents. In such a community, activities must serve an area that 
contains a percentage of LMI residents that is within the upper 
quartile of all census-block groups within its jurisdiction in terms of 
the degree of concentration of LMI residents. HUD determines the lowest 
proportion a grantee may use to qualify an area for this purpose and 
advises the grantee, accordingly. The ``exception criteria'' (i.e., 
upper quartile) applies to CDBG-DR funded activities in entitlement 
communities covered by such criteria, including entitlement communities 
that receive disaster recovery funds from a State. Each year, HUD 
publishes the most recent data here: https://www.hudexchange.info/programs/acs-low-mod-summary-data/acs-low-mod-summary-data-exception-grantees/.
    III.B.1.b. Clarification of the use of ``uncapped'' income limits. 
The Quality Housing and Work Responsibility Act of 1998 (Title V of 
Pub. L. 105-276) enacted a provision that directs the Department to 
grant exceptions to at least 10 jurisdictions that are currently 
``capped' under HUD's low and moderate-income limits. Under this 
exception, several CDBG entitlement grantees may use ``uncapped'' 
income limits that reflect 80 percent of the actual median income for 
the area. Each year, HUD publishes guidance on its website identifying 
which grantees may use uncapped limits: https://www.huduser.gov/portal/datasets/cdbg-income-limits.html.
    Accordingly, HUD clarifies that the annual uncapped income limits 
published by HUD apply to CDBG-DR funded activities in jurisdictions 
covered by the uncapped limits, including jurisdictions that receive 
disaster recovery funds from a State CDBG-DR grantee.
    III.B.2. Use of the urgent need national objective. Because HUD 
provides CDBG-DR funds only to grantees with documented disaster-
related impacts and each grantee is limited to spending funds only for 
the benefit of areas that received a Presidential disaster declaration, 
the Secretary finds good cause to waive the urgent need national 
objective criteria in section 104(b)(3) of the HCDA (42 U.S.C. 
5304(b)(3)) and to establish the following alternative requirement for 
any CDBG-DR grantee using the urgent need national objective for a 
period of 36 months after the applicability date of the grantee's AAN.
    Pursuant to this alternative requirement, grantees that use the 
urgent need national objective must address the following three 
criteria in their Action Plan: (i) describe in the unmet needs 
assessment why specific needs have a particular urgency, including how 
the existing conditions pose a serious and immediate threat to the 
health or welfare of the community; (ii) identify each program or 
activity that will use the urgent need national objective--either 
through its initial submission or through a substantial amendment to 
the Action Plan submitted by the grantee within 36 months of the 
applicability date of the grantee's initial AAN; and (iii) document how 
each program and/or activity funded under the urgent need national 
objective responds to the urgency, type, scale, and location of the 
disaster-related impact as described in the grantee's unmet needs 
assessment.
    This alternative urgent need national objective is in effect for a 
period of 36 months following the applicability date of the grantee's 
initial AAN. After 36 months, the grantee will be required to follow 
the criteria established in section 104(b)(3) of the HCDA (42 U.S.C. 
5304(b)(3)) and its implementing regulations in 24 CFR part 570 when 
using the urgent need national objective for any new programs and/or 
activities added to an action plan.
    III.B.3. Administration cap. Historically, the appropriations acts 
authorize up to five percent of the grant (plus five percent of program 
income generated by the grant) to be used for administrative costs 
(i.e., program administrative costs) by the grantee or its 
subrecipients. The Secretary does not

[[Page 1770]]

have the authority to waive or specify an alternative requirement to 
increase the grant administration cap. Thus, the total of all costs 
classified as administrative for a CDBG-DR grant must be less than or 
equal to the five percent cap (plus five percent of program income 
generated by the grant). The cap for administrative costs is subject to 
the combined technical assistance and administrative cap for State 
grantees as discussed in section III.C.1. For example, administrative 
activities include the grantee's overall grant management, internal 
auditor activities, and DRGR recordkeeping.\15\
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    \15\ View HUD's guidance on allocating costs between program 
administrative costs, activity delivery costs, and planning costs 
for CDBG-DR Grantees published in CPD Notice 23-06 here: https://www.hud.gov/sites/dfiles/OA/images/2023-06cpdn.pdf.
---------------------------------------------------------------------------

    III.B.3.a. Use of funds for administrative costs across multiple 
grants. The appropriations acts may authorize special treatment of 
grant administrative funds. Grantees receiving funds under the 
Universal Notice, and that have received CDBG-DR or CDBG-MIT grants in 
the past or in any future acts, may use eligible administrative funds 
(up to five percent of each grant award plus up to five percent of 
program income generated by the grant) appropriated by these acts for 
the cost of administering any CDBG-DR or CDBG-MIT grant without regard 
to the particular disaster appropriation from which such funds 
originated. If the grantee chooses to exercise this authority, the 
grantee must (i) have appropriate financial controls to comply with the 
requirement that the amount of grant administration expenditures for 
each CDBG-DR or CDBG-MIT grant will not exceed five percent of the 
total grant award for each grant (plus five percent of program income 
generated by the grant); (ii) review and modify its financial 
management policies and procedures regarding the tracking and 
accounting of administration costs, as necessary; and (iii) address the 
adoption of this treatment of administrative costs in the applicable 
portions of its Financial Management and Grant Compliance submissions 
as referenced in section II.A. Grantees are reminded that all uses of 
funds for program administrative activities must qualify as an eligible 
administration cost.
    III.B.4. Planning cap. Both State and local government grantees are 
limited to spending a maximum of 15 percent of their total grant amount 
on planning costs. Planning costs subject to the 15 percent cap are 
those defined in 42 U.S.C. 5305(a)(12) and more broadly in 24 CFR 
570.205. For example, planning activities can include grantees 
conducting feasibility studies, marketing studies, local mitigation 
plans, and long-term disaster recovery plans.\16\
---------------------------------------------------------------------------

    \16\ View HUD's guidance on allocating costs between program 
administrative costs, activity delivery costs, and planning costs 
for CDBG-DR Grantees published in CPD Notice 23-06 here: https://www.hud.gov/sites/dfiles/OA/images/2023-06cpdn.pdf.
---------------------------------------------------------------------------

    III.B.5. Public service cap. Both State and local government 
grantees are limited to spending a maximum of 15 percent of their total 
grant amount on public services. Public service costs subject to the 15 
percent cap are those defined in 42 U.S.C. 5305(a)(8) and more broadly 
in 24 CFR 570.201(e). For example, public service activities can 
include mental health services and counseling, and legal services for 
disaster impacted individuals. The Universal Notice identifies specific 
activities in III.D. that are exempt from this cap with the waiver and 
alternate requirements established for each activity.
    III.B.6. Consolidated Plan. The requirements for consistency with 
the consolidated plan in Section 106 of the Cranston-Gonzalez National 
Affordable Housing Act (42 U.S.C. 12706), and regulations at 24 CFR 
91.225(a)(5), and 24 CFR 91.325(a)(5)) are temporarily waived because 
the effects of a major disaster alter a grantee's priorities for 
meeting housing, employment, and infrastructure needs. In conjunction, 
42 U.S.C. 5304(e) is also waived, to the extent that it would require 
HUD to annually review grantee performance under the consistency 
criteria. These waivers apply only for 24 months after the 
applicability date of the grantee's AAN. If the grantee is not 
scheduled to submit a new three-to five-year consolidated plan within 
the next two years, the grantee must update its existing three-to five-
year consolidated plan to reflect disaster-related needs no later than 
24 months after the applicability date of the grantee's AAN.
    III.B.7. Procurement. To have a proficient procurement process, the 
grantee must submit the policies and procedures to HUD as required by 
section II.A.1.b.; and post the required documentation to the official 
website as described in section III.B.8. below. Additionally, the 
grantee must include the following alternative requirements in this 
section in its submitted procurement policies and procedures, as 
appropriate.
    III.B.7.a. Procurement alternative requirements. HUD is 
establishing an additional alternative requirement for all procurement 
actions to provide goods and services, as follows:
    1. The grantee (or procuring entity) is required to clearly state 
the period of performance or date of completion in all contracts;
    2. The grantee (or procuring entity) must incorporate performance 
requirements and liquidated damages into each procured contract. 
Contracts that describe work performed by general management consulting 
services need not adhere to the requirement on liquidated damages but 
must incorporate performance requirements; and
    3. The grantee (or procuring entity) may contract for 
administrative support, in compliance with 2 CFR 200.459, but may not 
delegate or contract to any other party any inherently governmental 
responsibilities related to oversight of the grant, including policy 
development, fair housing and civil rights compliance, and financial 
management.
    III.B.7.b. Procurement when using CDBG-DR as non-Federal match. 
When using CDBG-DR grant funds as the non-Federal match as explained in 
section III.D.6.d., grantees can adopt the procurement policies and 
procedures that satisfy the other Federal agency's requirements to 
promote consistency and seamlessly leverage their funding, so long as 
they meet other cross-cutting requirements that apply to the CDBG-DR 
funds (e.g., Section 3 requirements, Davis Bacon Act, etc.). Grantees 
must identify which procurement policies and procedures will apply and 
keep any decision document in its files. For example, CDBG-DR grants to 
local governments are subject to the same procurement requirements that 
apply to procurements by local governments using FEMA Public Assistance 
(PA) funds. State CDBG-DR grantees (and other CDBG-DR grantees subject 
to State CDBG rules under a waiver and alternative requirement) should 
consider including a provision in their procurement requirements that 
adopts FEMA procurement requirements for activities that will be used 
to satisfy the non-Federal match. This will eliminate confusion about 
which procurement rules apply.
    Additionally, when CDBG-DR funds are used as the non-Federal match 
in another Federal program, grantees are not required to comply with 
the alternative requirements in section III.B.7.a. above.
    III.B.8. Public disaster recovery website. The grantee must 
maintain a public website that permits individuals and entities 
awaiting assistance and the general public to see how all grant funds

[[Page 1771]]

are used and administered. The public website must be accessible to 
persons with disabilities and individuals with LEP in compliance with 
Section 504, Title II of the ADA,\17\ Title VI, and Executive Order 
13166.
---------------------------------------------------------------------------

    \17\ Note: the technical standards of Section 508 provide a 
practical benchmark when seeking to comply with nondiscrimination 
and effective communication obligations under Section 504 and the 
ADA.
---------------------------------------------------------------------------

    III.B.8.a. Publication and accessibility of required documents. The 
website must include copies of all relevant procurement documents and, 
except as noted in the next paragraph, all grantee administrative 
contracts, details of ongoing procurement processes, and action plans 
and amendments. To meet this requirement, each grantee must make the 
following items available on its website: the Admin Action Plan (if 
applicable) and the Action Plan (including all amendments); each 
performance report (as created using the DRGR system); citizen 
participation plan; procurement policies and procedures; program-
specific policies and procedures including a projection of expenditures 
and outcomes (III.A.6.b.); all contracts, as defined in 2 CFR 200.22, 
that will be paid with CDBG-DR funds (including, but not limited to, 
subrecipients' contracts); and a summary including the description and 
status of services or goods currently being procured by the grantee or 
the subrecipient (e.g., phase of the procurement, requirements for 
proposals, etc.). Contracts and procurement actions that do not exceed 
the micro-purchase threshold, as defined in 2 CFR 200.1, are not 
required to be posted to a grantee's website.
    The grantee must make the required documents available on the 
grantee's website in a form accessible to persons with disabilities and 
those with LEP.\18\ Grantees must take reasonable steps to ensure 
meaningful access to their programs and activities by LEP persons, 
members of protected classes, vulnerable populations, and individuals 
from other underserved communities, and address any possible digital 
inequities and related barriers. In their citizen participation plan, 
State and local government grantees shall describe their procedures for 
assessing their language needs and identify any need for translation of 
notices and other vital documents. At a minimum, the citizen 
participation plan shall require that the grantee take reasonable steps 
to provide language assistance to ensure meaningful access to 
participation by non-English-speaking residents of the grantee's 
jurisdiction.
---------------------------------------------------------------------------

    \18\ View HUD's guidance on LEP for more information on vital 
documents here: https://www.lep.gov/guidance/HUD_guidance_Jan07.pdf.
---------------------------------------------------------------------------

    III.B.9. Application status. The grantee must provide multiple 
methods of communication, such as websites, dashboards, social media, 
toll-free numbers, TTY and relay services, email address, fax number, 
or other means to provide applicants for recovery assistance with 
timely information to determine the status of their application and 
when the application period begins. While grantees must identify 
multiple methods, one of the methods identified must be to include this 
information on the grantee's disaster recovery website. This must 
include specific information on application status, including what 
quarter the grantee projects it will open application intake for each 
program, and then on a monthly basis, the grantee must include 
information on which specific applications are under review, any other 
relevant status update determined by the grantee, and which 
applications are approved/disapproved. Grantees must use unique 
application number identifiers to ensure personally identifiable 
information (PII) is protected. Grantees must also describe how they 
will use social media in their policies and procedures to announce when 
applications are open as required by sections III.A.3. and III.A.5. HUD 
strongly encourages grantees to consider how their application process 
can be inclusive of persons who are home-bound or unable to move 
freely.
    III.B.10. Environmental requirements.
    III.B.10.a. Process for environmental release of funds when a State 
carries out activities directly. For CDBG-DR grants, HUD allows State 
grantees to carry out activities directly and to distribute funds to 
subrecipients. Per 24 CFR 58.4(b)(1), when a State carries out 
activities directly (including through subrecipients that are not local 
governments), the State must submit the RROF and Certification to HUD 
for approval.
    III.B.10.b. Responsibilities of States assuming HUD environmental 
responsibilities. When a State grantee distributes funds to 
subrecipients that have Responsible Entity authority under 24 CFR part 
58 (i.e., units of general local government), the State must exercise 
HUD's responsibilities in accordance with 24 CFR 58.18. In its policies 
and procedures, a State must designate the agency or agencies that will 
be responsible for carrying out the requirements and administrative 
responsibilities set forth in 24 CFR part 58, subpart H. The designated 
State agency must develop a monitoring and enforcement program for 
post-review actions on environmental reviews and monitor compliance 
with any environmental conditions included in the award.
    III.B.10.c. Adoption of another Federal agency's environmental 
review. Recipients of CDBG-DR funds that supplement other Federal 
assistance may adopt, without review or public comment, any 
environmental review, approval, or permit performed by a Federal 
agency, so long as the actions covered by the existing environmental 
review, approval, or permit and the actions proposed for the CDBG-DR 
supplemental funds are substantially the same. Such adoption shall 
satisfy the responsibilities of the recipient with respect to such 
environmental review, approval, or permit.
    Projects originally funded by another agency that are later 
supplemented with CDBG-DR do not have to supplement the other agency's 
environmental review with any HUD environmental requirements that 
differ from the originating agency (e.g., Federal Flood Risk Management 
Standard (FFRMS) floodplain and elevation, noise, etc.). However, if 
the activity is modified so the other agency's environmental review no 
longer covers the activity, the grantee is required to reevaluate and 
supplement the other agency's environmental review to comply with all 
applicable HUD environmental regulations in 24 CFR part58. The 
grantee's environmental review obligations are considered complete when 
adopting another agency's environmental review as outlined in this 
section. To be adequate:
    1. The grantee must obtain a completed electronic or paper copy of 
the Federal agency's review and retain a copy of the full file in its 
environmental review record.
    2. The grantee must review the scope of work completed by the 
Federal agency's review and verify that the scope of work is 
substantially the same with a memo to file in its environmental review 
record.
    3. The grantee must notify HUD on the RROF (HUD-Form 7015.15) (or 
the State, if the State is acting as HUD under 24 CFR 58.18) that 
another agency review is being used. The grantee must include the name 
of the other Federal agency, the name of the project, and the date of 
the project's review as prepared by the other Federal agency.
    When permitted by the applicable appropriations acts, and 
notwithstanding 42 U.S.C. 5304(g)(2), the Secretary or a State may, 
upon receipt of a RROF and Certification, immediately approve the 
release of funds for an activity or project assisted with CDBG-DR funds 
if the recipient

[[Page 1772]]

has adopted an environmental review, approval, or permit under this 
section, or if the activity or project is categorically excluded from 
review under the National Environmental Policy Act of 1969 (42 U.S.C. 
4321 et seq.) (NEPA).
    III.B.10.d. Historic preservation reviews. The responsible entity 
must comply with section 106 of the National Historic Preservation Act 
of 1966 (54 U.S.C. 306108). Early coordination under section 106 is 
important to the recovery process and required by 24 CFR 58.5(a).
    III.B.10.e. Tiered environmental reviews. Tiering, as described at 
40 CFR 1508.1(oo), 40 CFR 1501.11, and 24 CFR 58.15, is a means of 
making the environmental review process more efficient by allowing 
parties to ``eliminate repetitive discussions of the same issues, focus 
on the actual issues ripe for decision, and exclude from consideration 
issues already decided'' (40 CFR 1501.11(b)). Tiering is appropriate 
when a responsible entity is evaluating a single-family housing program 
with similar activities within a defined local geographic area and 
timeframe (e.g., rehabilitating single-family homes within a city 
district or county over the course of one to five years) but where the 
specific sites and activities are not yet known. Public notice and the 
RROF are processed at a broad level, eliminating the need for 
publication at the site-specific level. However, funds cannot be spent 
or committed on a specific site or activity until both the broad level 
and the site-specific review have been completed and approved.
    III.B.10.f. FFRMS floodplain and elevation. HUD published the FFRMS 
Final Rule on April 23, 2024, the rule became effective on May 23, 
2024, and the compliance date for CDBG-DR funds was on June 24, 
2024.\19\ CDBG-DR grantees must update their construction standards and 
any related policies and procedures to comply with the requirements 
outlined in the FFRMS final rule. While this section in the notice 
summarizes the new rule, grantees should reference the new requirements 
in Part 55 to ensure compliance.
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    \19\ Visit HUD's Office of Environment and Energy's website for 
additional information on FFRMS here: https://www.hud.gov/program_offices/comm_planning/environment_energy/ffrms.
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    The floodplain area is determined by the FFRMS based on available 
data in the project area and whether the project scope contains a 
Critical Action (as defined in 24 CFR 55.2(b)(3)). Residential 
buildings (as defined in 44 CFR 59.1) and nonresidential buildings (as 
defined in 44 CFR 59.1) that are located in the floodplain and receive 
assistance for new construction, reconstruction, rehabilitation of 
substantial damage, or rehabilitation that results in substantial 
improvement, must be elevated to those floodplain standards. HUD 
requires grantees to follow a three-tiered data standard to determine 
the FFRMS floodplain, as follows:
     Non-critical Actions: (1) use the climate-informed science 
approach (CISA), if available and actionable and formally adopted by 
HUD; (2) if CISA is not available, then use the 0.2-percent-annual-
chance-floodplain (500-year floodplain), determined by FEMA; or (3) if 
neither of these options are available, then use the freeboard value 
approach (FVA) by adding two feet to the base flood elevation (BFE).
     Critical Actions: (1) use the CISA, if available and 
actionable and formally adopted by HUD; (2) if CISA is not available, 
then use the 500-year floodplain or the FVA by adding three feet to the 
BFE, whichever results in the larger floodplain and higher elevation; 
or (3) if the 500-year floodplain is not available, then use the FVA by 
adding three feet to the BFE.
    For residential buildings undergoing new construction or 
substantial improvement located in the FFRMS floodplain, the lowest 
floor (or FEMA-approved equivalent) must be designed using the 
elevation of the FFRMS floodplain as the baseline standard for 
elevation (except where higher elevations are required by Tribal, 
State, or locally adopted code or standards, in which case those higher 
elevations apply). Residential buildings (including multi-family) that 
have no dwelling units below the FFRMS floodplain that are not critical 
actions, and nonresidential buildings, undergoing new construction or 
substantial improvement shall be designed, either with the lowest floor 
(including basement) elevated to or above the elevation of the FFRMS 
floodplain or with the structure floodproofed at least up to the 
elevation of the FFRMS floodplain (using floodproofing standards as 
outlined in FEMA regulations found in 44 CFR 60.3(c)(3)(ii) and 
(c)(4)(i), or successor standard.
    In addition to the requirements described in the FFRMS final rule, 
grantees must comply with (1) all applicable environmental review 
requirements found in 24 CFR part 55; and (2) all applicable State, 
local, and Tribal codes and standards for floodplain management, 
including elevation, setbacks, and cumulative substantial damage 
requirements. Grantees should note that structures that are elevated 
must meet Federal accessibility standards.
    III.B.11. Flood insurance requirements. Grantees, recipients, and 
subrecipients must implement procedures and mechanisms to ensure that 
assisted property owners comply with all flood insurance requirements, 
including the purchase and notification requirements described below, 
before providing assistance. Grantees are encouraged to work with State 
insurance regulators and industry to assess availability and 
affordability of insurance.
    III.B.11.a. Flood insurance purchase requirements. When grantees 
use CDBG-DR funds to rehabilitate or reconstruct existing residential 
buildings in a Special Flood Hazard Area (SFHA), the grantee must 
comply with applicable Federal, State, local, and Tribal laws and 
regulations related to both flood insurance and floodplain management. 
SFHA is defined by FEMA as the area that will be inundated by the flood 
event having a one-percent chance of being equaled or exceeded in any 
given year. The one-percent annual chance flood is also referred to as 
the base flood or 100-year flood. The grantee must comply with section 
102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a) 
which mandates the purchase of flood insurance protection for any 
property receiving HUD assistance for acquisition or construction 
(including rehabilitation) within a Special Flood Hazard Area and with 
24 CFR 58.6(a)(2), which requires that flood insurance under the 
National Flood Insurance Program be obtained. Therefore, a HUD-assisted 
homeowner for a property located in a Special Flood Hazard Area must 
obtain and maintain flood insurance in the amount and duration 
prescribed by FEMA's National Flood Insurance Program.
    III.B.11.b. Federal assistance to owners remaining in a floodplain.
    III.B.11.b.(i) Prohibition on flood disaster assistance for failure 
to obtain and maintain flood insurance. Grantees must comply with 
section 582 of the National Flood Insurance Reform Act of 1994, as 
amended, (42 U.S.C. 5154a), which prohibits flood disaster assistance 
in certain circumstances. 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 Federal 
flood

[[Page 1773]]

disaster assistance that was (1) conditioned on the person first having 
obtained flood insurance under applicable Federal law, and (2) the 
person has subsequently failed to obtain and maintain flood insurance 
as required on such property.
    The grantee must implement a process to verify and monitor for 
compliance with section 582 and the requirement to obtain and maintain 
flood insurance.
    III.B.11.b.(ii) Prohibition on flood disaster assistance for 
households above 120 percent of AMI for failure to obtain flood 
insurance. When a homeowner located in the floodplain allows their 
flood insurance policy to lapse, it is assumed that the homeowner is 
unable to afford insurance and/or is accepting responsibility for 
future flood damage to the home. Higher income homeowners who reside in 
a floodplain, but who failed to secure or decided to not maintain their 
flood insurance, should not be assisted at the expense of lower income 
households. To ensure that adequate recovery resources are available to 
assist lower income homeowners who reside in a floodplain but who are 
unlikely to be able to afford flood insurance, the Secretary finds good 
cause to establish an alternative requirement.
    The alternative requirement to 42 U.S.C. 5305(a)(4) is as follows: 
Grantees receiving CDBG-DR funds are prohibited from providing CDBG-DR 
assistance for the rehabilitation/reconstruction of a house, if (1) the 
combined household income is greater than either 120 percent of AMI or 
the national median, (2) the property was located in a SFHA at the time 
of the disaster, and (3) the property owner did not obtain or maintain 
flood insurance on the damaged property, even when the property owner 
was not required to obtain and maintain such insurance.
    III.B.11.b.(iii) Responsibility to inform property owners to obtain 
and maintain flood insurance. Section 582 of the National Flood 
Insurance Reform Act of 1994, as amended, (42 U.S.C. 5154a) is a 
statutory requirement that property owners receiving disaster 
assistance that triggers the flood insurance purchase requirement have 
a statutory responsibility to notify any transferee of the requirement 
to obtain and maintain flood insurance and to maintain such written 
notification in the documents evidencing the transfer of the property, 
and that the transferring owner may be liable if he or she fails to do 
so. A grantee or subrecipient receiving CDBG-DR funds must notify 
property owners of their responsibilities under section 582.
    III.B.12. Program income. For State or local government grantees, 
HUD is waiving all applicable program income rules at 42 U.S.C. 
5304(j), 24 CFR 570.489(e) and (f), 24 CFR 570.500, 24 CFR 570.504, and 
24 CFR 570.509(a)(4) and providing the alternative requirement 
described below.\20\ Program income earned by Indian Tribes that are 
subrecipients of State or local government grantees will be subject to 
the program income requirements for subrecipients of those grantees.
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    \20\ View HUD's instructions and templates on how to handle 
CDBG-DR program income here: https://www.hud.gov/program_offices/comm_planning/cdbg-dr/program_income.
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    III.B.12.a. Definition of program income. ``Program income'' is 
defined as gross income generated from the use of CDBG-DR funds, except 
as provided in III.B.12.b. below, and received by State or local 
government grantees, including subrecipients. When program income is 
generated by an activity that is only partially assisted with CDBG-DR 
funds, the income shall be prorated to reflect the percentage of CDBG-
DR funds used (e.g., a single loan supported by CDBG-DR funds and other 
funds, or a single parcel of land purchased with CDBG-DR funds and 
other funds). If CDBG funds are used with CDBG-DR funds on an activity, 
any income earned on the CDBG portion would not be subject to the 
waiver and alternative requirement in the Universal Notice.
    Program income includes, but is not limited to, the following:
    (i) Proceeds from the disposition by sale or long-term lease of 
real property purchased or improved with CDBG-DR funds.
    (ii) Proceeds from the disposition of equipment purchased with 
CDBG-DR funds.
    (iii) Gross income from the use or rental of real or personal 
property acquired by State or unit of general local government 
grantees, including subrecipients, with CDBG-DR funds less costs 
incidental to generation of the income.
    (iv) Gross income from the use or rental of real property owned by 
State or local government grantees, including subrecipient, that was 
constructed or improved with CDBG-DR funds, less costs incidental to 
generation of the income.
    (v) Payments of principal and interest on loans made using CDBG-DR 
funds, including interest paid by borrowers on loans made from a 
revolving fund, as defined in section III.B.13.
    (vi) Proceeds from the sale of loans made with CDBG-DR funds.
    (vii) Proceeds from the sale of obligations secured by loans made 
with CDBG-DR funds.
    (viii) Interest earned on program income pending disposition of the 
income, including interest earned on funds held in a revolving fund, as 
defined in section III.B.13.
    (ix) Interest earned on lump sum drawdowns for financing of 
property rehabilitation activities as described in 24 CFR 570.513;
    (x) Funds collected through special assessments made against non-
residential properties and properties owned and occupied by non-LMI 
households, where the special assessments are used to recover all or 
part of the CDBG-DR portion of a public improvement.
    (xi) Gross income paid to a State or local government grantees, 
including subrecipients, from the ownership interest in a for-profit 
entity in which the income is in return for the provision of CDBG-DR 
assistance.
    (xii) Any income received by State or local government grantees 
related to the CDBG-DR grant after closeout, including income received 
by subrecipients after closeout (see section II.D.12.e.).
    III.B.12.b. Program income--does not include. Program income does 
not include the following:
    (i) The total amount of funds that is less than $35,000 received 
over the life of the grant and retained by State or local government 
grantees, including subrecipients. Once a grantee, including 
subrecipients, meets or exceeds the $35,000 threshold, only funds over 
the threshold are considered program income and are subject to the 
requirements of the Universal Notice.
    (ii) Amounts generated by activities eligible under section 
105(a)(15) of the HCDA (42 U.S.C. 5305(a)(15) and carried out by an 
entity under the authority of section 105(a)(15) of the HCDA.
    (iii) Income (except for interest described in 24 CFR 570.513) 
earned on grant advances from the U.S. Treasury; this income must be 
remitted to HUD for transmittal to the U.S. Treasury.
    III.B.12.c. Recording program income. For State or local government 
grantees, including their subrecipients, the receipt and expenditure of 
program income shall be recorded using both DRGR and internal financial 
records as part of the financial transactions of the CDBG-DR grant.
    III.B.12.d. Retention of program income. State grantees may permit 
local governments that receive or will receive program income to retain 
the program income but are not required to do so.

[[Page 1774]]

Additionally, State or local government grantees may permit 
subrecipients that receive or will receive program income to retain the 
program income but are not required to do so. In all cases, program 
income retained by local governments or subrecipients is treated as 
additional CDBG-DR funds subject to the requirements of the Universal 
Notice.
    The written agreement between the grantee and the subrecipient, 
shall specify whether program income received is to be returned to the 
grantee or retained by the subrecipient. When program income is to be 
retained by the subrecipient, the agreement shall specify the 
activities that will be undertaken with program income and that all 
provisions of the written agreement shall apply to the specified 
activities. When the subrecipient retains program income, transfers of 
grant funds by the grantee to the subrecipient shall be adjusted 
according to the disbursement principles described in section 
III.B.12.e. Any program income on hand when the agreement expires, or 
received after the agreement's expiration, shall be paid to the 
grantee.
    III.B.12.e. Program income--use, close out, and transfer. Program 
income received (and retained, if applicable) before or after closeout 
of the grant that generated the program income, and used to continue 
disaster recovery activities, is treated as additional CDBG-DR funds 
subject to the requirements of the Universal Notice and must be used in 
accordance with the grantee's Action Plan for disaster recovery. 
Grantees must substantially disburse program income before making 
additional withdrawals from the United States Treasury, except as 
provided in section III.B.13. State grantees may meet this requirement 
by carrying out activities directly or by distributing program income 
to local governments in accordance with the State's approved method of 
distribution, as provided in section I.C.1.f. Local government grantees 
may meet this requirement by carrying out activities directly as 
provided in section I.C.1.f.
    Any income received by State or local government grantees related 
to the CDBG-DR grant after closeout, including income received by 
subrecipients after closeout, shall be treated as program income and 
shall be subject to the requirements of the Universal Notice, unless 
transferred to an annual CDBG program. If transferred to an annual CDBG 
program, the following rules apply:
    (1) Program income received by State or local government grantees 
before or after closeout, including program income received by 
subrecipients, may be transferred by the State or local government 
grantees to the annual CDBG program before or after closeout of the 
grant that generated the program income. In all cases, the grantee must 
first seek and then receive HUD's approval;
    (2) Any program income transferred will not be subject to the 
waivers and alternative requirements of the Universal Notice. Rather, 
those funds will be subject to the applicable regular CDBG program 
rules. Any other transfer of program income not specifically addressed 
in the Universal Notice may be carried out if the grantee first seeks 
and then receives HUD's approval; and
    (3) CDBG-DR grantees must continue to report annually in DRGR on 
any program income received following closeout of the grant.
    III.B.13. Revolving funds. State or local government grantees may 
establish revolving funds to carry out specific, identified activities. 
State grantees may also establish a revolving fund to distribute funds 
to a local government, including subrecipients, to carry out specific 
identified activities. A revolving fund, for these purposes, is a 
separate fund (with a set of accounts that are independent of other 
program accounts) established to carry out specific activities. These 
activities must generate payments used to support similar activities 
going forward. These payments to the revolving fund are program income 
and must be substantially disbursed from the revolving fund before 
additional grant funds are drawn from the U.S. Treasury for payments 
that could be funded from the revolving fund. Such program income is 
not required to be used or disbursed for nonrevolving fund activities. 
A revolving fund established by a CDBG-DR grantee shall not be directly 
funded or capitalized with CDBG-DR grant funds. Given that funds in a 
revolving loan fund, including interest earned on funds held in the 
revolving loan fund as well as interest paid by borrowers on loans made 
from the fund, are considered program income, grantees may transfer 
revolving loan funds before or after closeout, pursuant to section 
III.B.12.e.
    III.B.14. Reimbursement of disaster recovery expenses. A grantee 
may not charge such pre-award or pre-application costs to grants if the 
grantee cannot meet all requirements at 24 CFR part 58. Pre-award costs 
are defined in 2 CFR 200.458 and are allowed in instances in which the 
CDBG-DR grantee anticipated an allocation and incurred an eligible cost 
prior to the award. For all pre-award costs, compliance with 24 CFR 
part 58 must be completed before the start of the activity. Pre-
application costs are costs incurred by an applicant to CDBG-DR funded 
programs on or after the incident date of the qualifying disaster but 
before the time of application to a grantee or subrecipient (this may 
be before or after the grantee signs its CDBG-DR grant agreement). For 
all pre-application costs, compliance with 24 CFR part 58 must be 
completed prior to the commitment of funds (i.e., prior to the grantee 
or subrecipient committing to reimburse the qualifying entity for costs 
incurred). Under CDBG-DR appropriations acts and HUD's environmental 
regulations in 24 CFR part 58, the CDBG-DR ``recipient'' (as defined in 
24 CFR 58.2(a)(5), which differs from the definition in 2 CFR part 200) 
is the responsible entity that assumes the responsibility for 
completing environmental reviews under all applicable Federal laws and 
authorities. The responsible entity assumes all legal liability for the 
application, compliance, and enforcement of these requirements.
    Grantees are also required to consult with the State Historic 
Preservation Officer, Fish and Wildlife Service, and National Marine 
Fisheries Service, to obtain formal agreements for compliance with 
section 106 of the National Historic Preservation Act (54 U.S.C. 
306108) and section 7 of the Endangered Species Act of 1973 (16 U.S.C. 
1536) when designing a reimbursement program.
    III.B.14.a. Reimbursement of pre-award costs by a grantee or 
subrecipient. The provisions at 24 CFR 570.200(h)(1)(i), (v), and (vi) 
are waived; however, the rest of the provisions at 24 CFR 570.200(h) 
will continue to apply to State and local governments to permit 
grantees to incur pre-award costs. Additionally, HUD is establishing 
the following alternative requirement: the provisions at 24 CFR 
570.489(b) are applied to all CDBG-DR grantees to permit States and 
local governments to allow subrecipients to incur costs before the 
establishment of a formal grant relationship between the grantee and 
the subrecipient. Grantees may reimburse themselves or their 
subrecipients for otherwise allowable costs incurred on or after the 
incident date of the qualifying disaster, if the environmental review 
and all other cross-cutting requirements are met before the underlying 
activity (e.g., rehabilitation of a government building) begins. As an 
alternative requirement, grantees must include any pre-award activities 
in their Action Plan, including eligible activities that were funded 
with short-term subsidized loans (e.g., bridge

[[Page 1775]]

loans) that the grantee intends to reimburse or otherwise charge to the 
grant, consistent with applicable program requirements.
    III.B.14.b. Reimbursement of pre-application costs of homeowners, 
renters, businesses, and other qualifying entities. Grantees are 
permitted to charge to grants the pre-application costs of homeowners, 
renters, businesses, and other qualifying entities for otherwise 
allowable costs incurred on or after the incident date of the 
qualifying disaster as identified in a grantees' applicable AAN. In 
addition to the terms described in the remainder of the Universal 
Notice, grantees may only charge costs to the grant that meet the 
following requirements:
     Grantees may only charge the costs incurred for disaster 
relief payments (see section III.D.5.h.) and rehabilitation, 
demolition, and reconstruction of single family, multifamily, and 
nonresidential buildings, including commercial properties, owned by 
private individuals and entities, before the owner or renter applies to 
a CDBG-DR grantee, recipient, or subrecipient for CDBG-DR assistance;
     For rehabilitation and reconstruction costs, grantees may 
only charge costs for activities completed within the same footprint of 
the damaged structure, sidewalk, driveway, parking lot, or other 
developed area;
     As required by 2 CFR 200.403(g), costs must be adequately 
documented; and
     Grantees must complete a DOB check before providing 
assistance pursuant to Appendix C.
    Grantees are required to ensure that all costs charged to a CDBG-DR 
grant are necessary expenses related to authorized recovery purposes. 
Grantees may charge to CDBG-DR grants the eligible pre-application 
costs of individuals and private entities related to single family, 
multifamily, and nonresidential buildings, only if: (1) the person or 
private entity incurred the expenses within two years after the 
applicability date of the grantee's initial AAN for that disaster; and 
(2) the person or entity incurs the cost before the date on which the 
person or entity applies for CDBG-DR assistance. Exempt activities as 
defined at 24 CFR 58.34, but not including 24 CFR 58.34(a)(12), and 
categorical exclusions as defined at 24 CFR 58.35(b) are not subject to 
the time limit on pre-application costs outlined above. Actions that 
convert or potentially convert to exempt under 24 CFR 58.34(a)(12) 
remain subject to the reimbursement requirements provided herein. If a 
grantee cannot meet all requirements at 24 CFR part 58, the pre-
application costs cannot be reimbursed with CDBG-DR.
    Grantees must comply with the necessary and reasonable cost 
principles for State, local, and Indian Tribal governments (described 
at 2 CFR 200.403). Grantees must incorporate into their policies and 
procedures the basis for determining that the assistance provided is 
necessary and reasonable.
    III.B.15. URA, Section 104(d), and related CDBG program 
requirements. Certain activities and projects undertaken with CDBG-DR 
funds are subject to the URA (49 CFR part 24), section 104(d) of the 
HCDA (42 U.S.C. 5304(d)), and CDBG program requirements related to 
displacement, relocation, acquisition, and replacement of housing (24 
CFR 570.606), except as modified by these waivers and alternative 
requirements:
    1. Process for updating existing RARAP or establishing a CDBG-DR 
specific RARAP (review section III.B.15.a.).
    2. Optional relocation assistance policies (review section 
III.B.15.b.).
    3. Relocation assistance requirements under Section 104(d) (review 
section III.B.15.c.).
    4. One-for-one replacement waiver process (review section 
III.B.15.d.).
    5. Lump-sum relocation assistance to displaced residential tenants 
(review section III.B.15.e.).
    6. Voluntary acquisition--homebuyer primary residence purchase 
(review section III.B.15.f.).
    7. Applicability of Section 414 of the Stafford Act for projects 
that begin one year after the applicable presidential disaster (review 
section III.B.15.g.).
    The implementing regulations for the URA are at 49 CFR part 24. The 
regulations implementing section 104(d) are at 24 CFR part 42. The 
regulations for applicable CDBG program requirements are at 24 CFR 
570.488 and 24 CFR 570.606. HUD is waiving and/or providing alternative 
requirements in this section for the purpose of providing enough 
flexibility while preserving minimum standards of tenant and property 
owner protections, and promoting the stable supply of decent, safe, and 
sanitary affordable housing.
    III.B.15.a. Section 104(d) RARAP. CDBG-DR grantees must certify 
that they have in effect and are following a RARAP as required by 
section 104(d)(1) and (2) of the HCDA and 24 CFR 42.325 and covered 
under section III.A.2.b. In addition to the requirements in 24 CFR 
42.325 and 24 CFR 570.488 or 24 CFR 570.606(c), as applicable, HUD is 
specifying the following alternative requirements:
    Grantees who are following an existing RARAP for CDBG purposes must 
either: (1) amend their existing RARAP; or (2) create a separate RARAP 
for CDBG-DR purposes, to reflect the requirements listed in this 
section and applicable waivers and alternative requirements.
    Grantees who do not have an existing RARAP in place because they do 
not manage CDBG programs must create a separate RARAP for CDBG-DR 
purposes.
    As each grantee establishes and supports feasible and cost-
effective recovery efforts to make communities more resilient against 
future disasters, the RARAP must describe how the grantee plans to 
minimize displacement of families and individuals from their homes and 
neighborhoods as a result of any CDBG-DR assisted activities, 
potentially through non-displacing disaster recovery activities (e.g., 
housing rehabilitation programs). Across disaster recovery activities--
such as buyouts and other eligible acquisition activities, where 
minimizing displacement is not reasonable, feasible, or cost-efficient 
or would not help prevent future or repetitive loss--the grantee must 
describe how it plans to minimize the adverse impacts of displacement.
    The description shall focus on proposed disaster recovery 
activities that may directly or indirectly result in displacement and 
the assistance that would be required for those displaced. This 
description must also focus on relocation assistance under the URA and 
its implementing regulations at 49 CFR part 24, section 104(d) and its 
implementing regulations at 24 CFR part 42, 24 CFR 570.488, and/or 24 
CFR 570.606, and relocation assistance pursuant to this section of the 
Universal Notice, as well as any other assistance being made available 
to displaced persons. The RARAP must include a description of how the 
grantee will plan CDBG-DR programs or projects in such a manner that 
recognizes the substantial challenges experienced by displaced 
individuals, families, businesses, farms, and nonprofit organizations 
and develop solutions to minimize displacement or the adverse impacts 
of displacement especially among vulnerable populations. Any solutions 
to minimize permanent displacement, such as the implementation of 
temporary relocations or construction in phases, are strongly 
encouraged. The description must be scoped to the complexity and nature 
of the anticipated displacing activities, including the evaluation of 
the grantee's available resources to carry out timely and orderly 
relocations in compliance

[[Page 1776]]

with all applicable relocation requirements.
    Grantees must include in their RARAP, their plans to replace, on a 
one-for-one basis, all occupied and vacant occupiable low-income 
dwelling units that are demolished or converted with CDBG-DR funds to 
another use according to 24 CFR 42.325(b) and 24 CFR 49.375, unless a 
waiver is pursued by the grantee and granted by HUD, as described in 
III.B.15.d.
    The RARAP, including section 104(d) one-for-one housing replacement 
plans and protocols (if not waived), must be included in the grantee's 
program-specific policies and procedures as required in III.A.2.b.(ii).
    III.B.15.b. Optional relocation. The regulations at 24 CFR 
570.606(d) are waived to the extent that they require optional 
relocation policies to be established at the grantee level. Unlike the 
regular CDBG program, States may carry out disaster recovery activities 
directly or through subrecipients, but 24 CFR 570.606(d) does not 
account for this distinction. This waiver makes clear that grantees 
receiving CDBG-DR funds may establish optional relocation policies or 
permit their subrecipients to establish separate optional relocation 
policies. The written policy must: be available to the public, describe 
the relocation assistance that the grantee or subrecipient (as 
applicable) has elected to provide, and provide for equal relocation 
assistance within each class of displaced persons according to 24 CFR 
570.606(d). This waiver is intended to provide States with maximum 
flexibility in developing optional relocation policies for CDBG-DR 
funds.
    III.B.15.c. Section 104(d) relocation assistance. The relocation 
assistance requirements at section 104(d)(2)(A)(iii) and 104(d)(2)(B) 
of the HCDA and 24 CFR 42.350, are waived. This waiver limits the types 
and amount of relocation assistance a section 104(d) displaced person, 
as defined under 24 CFR 42.305, is eligible to receive. The relocation 
assistance will now align with the types and amounts provided under the 
URA and implementing regulations at 49 CFR part 24. This waiver does 
not impact a person's eligibility as a displaced person under section 
104(d), rather it limits the amounts and types of relocation assistance 
under section 104(d) to the amounts and types of assistance for 
displaced persons under the URA, as amended. Without this waiver, 
disparities exist in relocation assistance associated with activities 
typically funded by HUD and FEMA (e.g., buyouts and relocation). Both 
FEMA and CDBG-DR funds are subject to the requirements of the URA; 
however, only CDBG-DR funds are subject to section 104(d), while FEMA 
funds are not. This limited waiver of the section 104(d) relocation 
assistance requirements ensures uniform and equitable treatment of 
individuals eligible to receive benefits under section 104(d) by 
establishing that all forms of relocation assistance provided to those 
individuals must comply with URA requirements.
    III.B.15.d. One-for-one replacement requirement. All occupied and 
vacant occupiable lower-income dwelling units that are demolished or 
converted to a use other than lower-income dwelling units in connection 
with a CDBG-DR assisted activity must be replaced with comparable 
lower-income dwelling units in compliance with 24 CFR 42.375. CDBG-DR 
grantees must follow the requirements at 24 CFR 42.375 and HUD will 
follow up the publication of the Universal Notice with guidance on how 
to meet these requirements in communities impacted by a disaster.
    A grantee may request a waiver of section 104(d) one-for-one 
replacement requirement and its regulations at section 104(d)(2)(A)(i) 
and (ii) and 104(d)(3) of the HCDA and 24 CFR 42.375. To request a 
waiver, a grantee must submit a good cause justification that includes 
a data-driven analysis that indicates that there is an adequate supply 
of vacant lower-income dwelling units in standard condition that will 
be available to meet the housing needs of LMI owners and tenants in the 
MID areas or surrounding communities in alignment with the requirement 
to affirmatively further fair housing.
    III.B.15.e. Lump sum rental assistance payments for residential 
tenants. The requirements of 42 U.S.C. 3537(c) are waived to the extent 
necessary to permit a grantee to make lump-sum relocation rental 
assistance payments to displaced residential tenants. Waiving this 
requirement allows grantees to provide lump sum rental assistance 
payments to displaced residential tenants, thereby reducing grantees' 
administrative burden of disbursing installment payments, in addition 
to accelerating the availability of the rental assistance, to displaced 
disaster survivors.
    III.B.15.f. Voluntary acquisition--homebuyer primary residence 
purchase. Grantees may implement disaster recovery program activities 
that provide financial assistance to eligible homebuyers to purchase 
and occupy residential properties as their primary residence. Such 
purchases are generally considered voluntary acquisitions under the URA 
and subject to the URA regulatory requirements at 49 CFR 24.101(b)(2). 
For CDBG-DR, 49 CFR 24.101(b)(2), as it may be amended, is waived to 
the extent that it applies to a homebuyer, who does not have the power 
of eminent domain, and uses CDBG-DR funds in connection with the 
voluntary purchase and occupancy of a home the homebuyer intends to 
make their primary residence. This waiver is necessary to reduce 
burdensome administrative requirements for homebuyers following a 
disaster. Tenants displaced by these voluntary acquisitions may be 
eligible for relocation assistance.
    III.B.15.g. Waiver of Section 414 of the Stafford Act. Section 414 
of the Stafford Act (42 U.S.C. 5181) provides that ``Notwithstanding 
any other provision of law, no person otherwise eligible for any kind 
of replacement housing payment under the under the Uniform Relocation 
Assistance and Real Property Acquisition Policies Act of 1970 . . . 
shall be denied such eligibility as a result of [their] being unable, 
because of a major disaster as determined by the President, to meet the 
occupancy requirements set by such Act.'' Accordingly, homeowner 
occupants and tenants displaced from their homes as a result of the 
identified disasters who would have otherwise not have been displaced 
as a direct result of any acquisition, rehabilitation, or demolition of 
real property for a federally funded program or project may become 
eligible for a replacement housing payment notwithstanding their 
inability to meet occupancy requirements prescribed in the URA. Section 
414 of the Stafford Act and its implementing regulation at 49 CFR 
24.403(d)(1) are waived to the extent that they would apply to real 
property acquisition, rehabilitation, or demolition of real property 
undertaken by a grantee or subrecipient for a CDBG-DR funded project 
commencing more than one year after the date of the latest applicable 
Presidentially declared disaster, provided that the project was not 
planned, approved, or otherwise underway before the disaster.
    For purposes of this waiver, a CDBG-DR funded project shall be 
determined to have commenced on the earliest of: (1) the date of an 
approved RROF and certification; (2) the date of completion of the 
site-specific review when a program utilizes tiering; or (3) the date 
of sign-off by the approving official when a project converts to exempt 
under 24 CFR 58.34(a)(12).
    This waiver will simplify the administration of the disaster 
recovery process and reduce the administrative burden associated with 
the implementation of Stafford Act Section 414 requirements for 
projects

[[Page 1777]]

commencing more than one year after the date of the Presidentially 
declared disaster considering most of such persons displaced by the 
disaster will have returned to their dwellings or found another place 
of permanent residence. Notwithstanding the flexibility provided by 
this waiver, grantees are encouraged to carefully assess housing needs 
and provide programmatic relocation assistance or other benefits to 
eligible homeowner occupants and tenants displaced by the disaster that 
may not have returned to their dwellings or found another place of 
permanent residence one year after the disaster.
    This waiver does not apply to persons that meet the occupancy 
requirements to receive a replacement housing payment under the URA nor 
does it apply to persons displaced or relocated temporarily by other 
HUD-funded programs or projects. Such persons' eligibility for 
relocation assistance and payments under the URA is not impacted by 
this waiver.
    III.B.16. DOB. CDBG-DR grants are one of multiple Federal sources 
that assist disaster recovery. These Federal funding sources are often 
made available for the same purposes to grantees and disaster 
survivors. For this reason, the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (42 U.S.C. 5121-5207) (Stafford Act) and CDBG-
DR appropriations acts require HUD and its grantees to coordinate with 
other Federal agencies that provide disaster assistance to prevent the 
DOB. The Stafford Act's prohibition on DOB aims to ensure that Federal 
assistance serves only to ``supplement insurance and other forms of 
disaster assistance'' (42 U.S.C. 5170).
    CDBG-DR grantees must prevent DOB when carrying out eligible 
activities. A duplication occurs when a person, household, business, or 
other entity receives disaster assistance from multiple sources for the 
same recovery purpose, and the total assistance received for that 
purpose is more than the total need. Total assistance can include cash 
awards; insurance proceeds; grants and loans, including awards under 
local, State, or Federal programs; and assistance from private or 
nonprofit charity organizations. The amount of the DOB is the amount 
received in excess of the total need for the same purpose. When total 
need for eligible activities is more than total assistance for the same 
purpose, the difference between these amounts is an ``unmet need.'' 
Grantees must limit their assistance to unmet needs for eligible 
activities to prevent a DOB. Additionally, when reimbursement is 
permitted, unmet needs can include amounts needed for reimbursement. 
Grantees must follow the detailed DOB requirements listed in Appendix 
C.
    III.B.17. Citizen complaints. The grantee will provide a timely 
written response to every citizen complaint. The grantee response must 
be provided within 15 calendar days of the receipt of the complaint, or 
the grantee must document why additional time for the response was 
required. Complaints regarding fraud, waste, or abuse of government 
funds should be forwarded to the HUD OIG Fraud Hotline (phone: 1-800-
347-3735 or email: [email protected]).

III.C. State Grantee Only Requirements

    III.C.1. Combined technical assistance and administrative cap 
(state grantees only). The provisions of 42 U.S.C. 5306(d) and 24 CFR 
570.489(a)(1)(i) and (iii), and 24 CFR 570.489(a)(2) shall not apply to 
the extent that they cap administration and technical assistance 
expenditures, limit a State's ability to charge a nominal application 
fee for grant applications for activities the State carries out 
directly, and require a dollar-for-dollar match of State funds for 
administrative costs exceeding $100,000. 42 U.S.C. 5306(d)(5) and (6) 
are waived and replaced with the alternative requirement that the 
aggregate total for administrative and technical assistance 
expenditures must not exceed five percent of the grant, plus five 
percent of program income generated by the grant.
    III.C.2. Planning-only activities (state grantees only). The State 
CDBG Program requires that, for planning-only grants, local government 
grant recipients must document that the use of funds meets a national 
objective. In the CDBG Entitlement Program, these more general planning 
activities are presumed to meet a national objective under the 
requirements at 24 CFR 570.208(d)(4). HUD notes that almost all 
effective recoveries in the past have relied on some form of area-wide 
or comprehensive planning activity to guide overall redevelopment 
independent of the ultimate source of implementation funds. To assist 
State grantees, HUD is waiving the requirements at 24 CFR 570.483(b)(5) 
and (c)(3), which limit the circumstances under which the planning 
activity can meet a low- and moderate-income or slum-and-blight 
national objective. Instead, as an alternative requirement, 24 CFR 
570.208(d)(4) applies to States when funding disaster recovery, 
planning-only grants, or when directly administering planning 
activities that guide disaster recovery. In addition, 42 U.S.C. 
5305(a)(12) is waived to the extent necessary so the types of planning 
activities that States may fund or undertake are expanded to be 
consistent with those of CDBG Entitlement grantees identified at 24 CFR 
570.205.
    III.C.3. Direct grant administration and means of carrying out 
eligible activities (state grantees only). Requirements at 42 U.S.C. 
5306(d) are waived to allow a State to use its disaster recovery grant 
allocation directly to carry out State-administered activities eligible 
under the Universal Notice, rather than distribute all funds to local 
governments. Pursuant to this waiver and alternative requirement, the 
standard at 24 CFR 570.480(c) and the provisions at 42 U.S.C. 
5304(e)(2) will also include activities that the State carries out 
directly. Activities eligible under the Universal Notice may be carried 
out by a State, subject to State law and consistent with the 
requirement of 24 CFR 570.200(f), through its employees, through 
procured contracts, or through assistance provided under agreements 
with subrecipients. State grantees continue to be responsible for civil 
rights, labor standards, and environmental protection requirements, for 
compliance with 24 CFR 570.489(g), (h) and (l), and subparagraph 
II.A.1.d. of the Universal Notice relating to conflicts of interest, 
and for compliance with 24 CFR 570.489(m) relating to monitoring and 
management of subrecipients.
    A State grantee may also carry out activities in Tribal areas. A 
State must coordinate with the Indian Tribe with jurisdiction over the 
Tribal area when providing CDBG-DR assistance to beneficiaries in 
tribal areas. State grantees carrying out projects in Tribal areas, 
either directly or through its employees, through procurement 
contracts, or through assistance provided under agreements with 
subrecipients, must obtain the consent of and coordinate with the 
Indian Tribe with jurisdiction over the Tribal area to carry out or to 
fund CDBG-DR projects in the Tribal area.
    III.C.4. Waiver and alternative requirement for distribution to 
CDBG metropolitan cities and urban counties (state grantees only). 42 
U.S.C. 5302(a)(7) (definition of ``nonentitlement area'') and related 
provisions of 24 CFR part 570, including 24 CFR 570.480, are waived to 
permit State grantees to distribute CDBG-DR funds to CDBG metropolitan 
cities and urban counties and Indian Tribes. When a State distributes 
funds through a method of distribution or by other means, the 
requirements applying to

[[Page 1778]]

State grantees may apply to the grant funds unless otherwise amended by 
the Universal Notice, or by subrecipient agreements.
    III.C.5. Use of subrecipients (state grantees only). Section 
III.C.3. provides a waiver and alternative requirement that a State may 
carry out activities directly, including through assistance provided 
under agreements with subrecipients. Therefore, when States carry out 
activities directly through subrecipients, the following alternative 
requirements apply: the State is subject to the definition of 
subrecipients at 24 CFR 570.500(c) and must adhere to the requirements 
for agreements with subrecipients at 24 CFR 570.503. Additionally, 24 
CFR 570.503(b)(4) is modified to require the subrecipient to comply 
with applicable uniform requirements, as described in 24 CFR 570.502, 
except that the subrecipient shall follow procurement requirements 
imposed by the State in accordance with section II.A.1.(b) of the 
Universal Notice. When 24 CFR 570.503 applies, notwithstanding 24 CFR 
570.503(b)(5)(i), local governments that are subrecipients are defined 
as recipients under 24 CFR part 58 and are therefore responsible 
entities that assume environmental review responsibilities. Grantees 
are reminded that they are responsible for providing on-going oversight 
and monitoring of subrecipients and are ultimately responsible for 
subrecipient compliance with all CDBG-DR requirements as stated in 24 
CFR 58.18.
    III.C.6. Recordkeeping (state grantees only). When a State carries 
out activities directly, 24 CFR 570.490(b) is waived and the following 
alternative provision shall apply: a State grantee shall establish and 
maintain such records as may be necessary to facilitate review and 
audit by HUD and HUD OIG of the State's administration of CDBG-DR 
funds, under 24 CFR 570.493 and reviews and audits by the State as 
described in section III.C.8. below. Consistent with applicable 
statutes, regulations, waivers and alternative requirements, and other 
Federal requirements, the content of records maintained by the State 
shall be sufficient to: (a) enable HUD to make the applicable 
determinations described at 24 CFR 570.493; (b) make compliance 
determinations for activities carried out directly by the State; and 
(c) show how activities funded are consistent with the descriptions of 
activities proposed for funding in the Action Plan and/or DRGR system.
    III.C.7. Change of use of real property (state grantees only). This 
alternative requirement conforms the change of use of real property 
rule to the waiver allowing a State to carry out activities directly. 
For purposes of these grants, all references to ``unit of general local 
government'' in 24 CFR 570.489(j), shall be read as ``state, local 
governments, or Indian tribes (either as subrecipients or through a 
method of distribution), or other state subrecipient.''
    III.C.8. Responsibility for review and handling of noncompliance 
(state grantees only). This change is in conformance with the waiver 
allowing a State to carry out activities directly. 24 CFR 570.492 is 
waived, and the following alternative requirement applies for any State 
receiving a direct award: the State shall make reviews and audits, 
including on-site reviews of any local governments or Indian Tribes 
(either as subrecipients or through a method of distribution), 
designated public agencies, and other subrecipients, as may be 
necessary or appropriate to meet the requirements of section 104(e)(2) 
of the HCDA (42 U.S.C. 5304(e)(2), as amended, and as modified by the 
Universal Notice. In the case of noncompliance with these requirements, 
the State shall take such actions as may be appropriate to prevent a 
continuance of the deficiency, mitigate any adverse effects or 
consequences, and prevent a recurrence. The State shall establish 
remedies for noncompliance by any subrecipients, designated public 
agencies, or local governments.
    III.C.9. Consultation (state grantees only). Currently, the HCDA 
and regulations require a State grantee to consult with affected local 
governments in nonentitlement areas of the State in determining the 
State's proposed method of distribution. HUD is waiving 42 U.S.C. 
5306(d)(2)(C)(iv), 42 U.S.C. 5306(d)(2)(D), 24 CFR 91.325(b)(2), and 24 
CFR 91.110, and imposing an alternative requirement that States consult 
with all disaster-affected local governments (including any CDBG-
entitlement grantees), Indian Tribes, and any public housing 
authorities in determining the use of funds. This approach ensures that 
a State grantee will assess the recovery needs of all areas affected by 
the disaster. Requirements related to consultation for all CDBG-DR 
grantees are described in detail in sections I.C.2.a. and III.A.6. of 
the Universal Notice.

III.D. Waivers and Alternative Requirements Related to Eligible 
Activities

    This section provides an overview of the waivers and alternative 
requirements HUD has established for CDBG-DR grant funds as it relates 
to eligible activities listed at 24 CFR 570.201 and section 105(a) of 
the HCDA. Projects funded with CDBG-DR must be classified as an 
eligible activity either through the program regulations cited in the 
previous sentence or through a waiver and alternative requirement 
issued in the Universal Notice or applicable AAN.
    III.D.1. Connection to the disaster. CDBG-DR funds are provided for 
necessary expenses for activities authorized under title I of the HCDA 
related to disaster relief, long-term recovery, restoration of 
infrastructure and housing, economic revitalization, and mitigation of 
risk associated with activities carried out for these purposes, in the 
``most impacted and distressed'' (MID) areas (identified by HUD or the 
grantee) resulting from a major disaster. All CDBG-DR funded activities 
must address an impact of the disaster for which funding was allocated 
(i.e., tie-back to the disaster). Accordingly, each activity must: (1) 
address a direct or indirect impact from the disaster in a MID area; 
(2) be a CDBG-eligible activity (or be eligible under a waiver or 
alternative requirement); and (3) meet a national objective. This is 
true for all activities except for mitigation activities funded by an 
additional mitigation set-aside in the appropriations acts that do not 
require a connection to the qualifying major disaster as described 
below in section III.D.1.a. Requirements for the use of these 
mitigation set aside funds are covered in section III.D.4.
    III.D.1.a. Documenting a connection to the disaster. Grantees must 
maintain records that document how each funded activity addresses a 
direct or indirect impact from the disaster. Grantees may do this by 
linking activities to a disaster recovery need that is described in the 
unmet needs assessment in the Action Plan (requirements for the 
assessment are addressed in section I.C.1.a.). Sufficient documentation 
of physical loss must include damage or rebuilding estimates, insurance 
loss reports, images, or similar information that documents damage 
caused by the disaster. Sufficient documentation for non-physical 
disaster-related impacts must clearly show how the activity addresses 
the disaster impact (e.g., for economic development activities, data 
about job loss or businesses closing after the disaster or data showing 
how pre-disaster economic stressors were aggravated by the disaster; or 
for housing activities, a post-disaster housing analysis that describes 
the activities that are necessary to address the post-disaster housing 
needs).
    III.D.2. MID areas. Funds must be used for costs related to unmet 
needs in

[[Page 1779]]

the MID areas resulting from qualifying disasters. HUD allocates funds 
using the best available data that covers the eligible affected areas 
and identifies MID areas. The HUD-identified MID areas and the minimum 
dollar amount that must be spent to benefit those areas will be 
identified for each grantee in the applicable AAN. Grantees can request 
that an additional area(s) be classified as a HUD-identified MID area 
by contacting their assigned HUD staff member. To be eligible, the 
area(s) must have received a presidential major disaster declaration 
identified by the disaster numbers listed in the applicable AAN. 
Grantees must submit the request with a data-driven analysis that 
illustrates the basis for designating the additional area(s) as most 
impacted and distressed as a result of the qualifying disaster. An 
additional area(s) being classified as a HUD-identified MID area would 
only result in a substantial amendment to the grantees' Action Plan, if 
it was not already included as a grantee-identified MID area (see 
section I.C.1.g.).
    Grantees may use up to five percent of the total grant award for 
grant administration and up to 15 percent of the total grant award for 
planning costs. Therefore, HUD will include 80 percent of a grantee's 
expenditures for grant administration in its determination that 80 
percent of the total award has benefited the HUD-identified MID area. 
Expenditures for planning activities may also be counted towards the 
HUD-identified MID area requirement, only if the grantee describes in 
its Action Plan how those planning activities benefit those areas.
    HUD may identify an entire jurisdiction or a ZIP code as a MID 
area. If HUD designates a ZIP code as a MID area for the purposes of 
allocating funds, the grantee may expand program operations to the 
whole county(ies), borough(s), parish(es), municipo/municipios, or 
equivalent jurisdictions that overlap with the HUD designated ZIP code. 
A grantee must indicate the decision to expand eligibility in its 
action plan.
    Grantee expenditures for eligible unmet needs outside of the HUD-
identified or grantee-identified MID areas are allowable, provided that 
the grantee can demonstrate how the expenditure of CDBG-DR funds 
outside of the MID areas will address unmet needs identified within the 
HUD-identified or grantee-identified MID area (e.g., upstream water 
retention projects to reduce downstream flooding in the HUD-identified 
MID area).
    III.D.3. Mitigation measures. Additionally, HUD is adopting the 
following alternative requirement to section 105(a) of the HCDA (42 
U.S.C. 5305(a)): Grantees may carry out the activities described in 
section 105(a) of the HCDA, as modified by waivers and alternative 
requirements, to the extent that the activities comply with the 
following:
    Grantees must incorporate mitigation measures when carrying out 
activities to construct, reconstruct, or rehabilitate residential or 
non-residential buildings with CDBG-DR funds as part of activities 
eligible under 42 U.S.C. 5305(a) (including activities authorized by 
waiver and alternative requirement). To meet this alternative 
requirement, grantees must demonstrate that they have incorporated 
mitigation measures into CDBG-DR activities as a construction standard 
to create communities that are more resilient to the impacts of 
recurring natural disasters and the impacts of a changing climate. When 
determining which mitigation measures to incorporate, grantees should 
design and construct structures to withstand existing and future 
climate impacts expected to occur over the life of the project. For all 
mitigation measures adopted, grantees must report resilience 
performance measures available in DRGR. For example, when building or 
reconstructing homes in a floodplain, a grantee must follow HUD's 
elevation requirements and will report the number of structures to be 
elevated as a performance measure in DRGR.
    III.D.4. Mitigation activities--CDBG-DR mitigation set-aside. 
Unlike recovery activities where grantees must demonstrate that their 
activities ``tie-back'' to the specific disaster and address a specific 
unmet recovery need for which the CDBG-DR funds were appropriated, 
activities funded by additional mitigation funds do not require such a 
``tie-back'' to the specific qualified disaster that has served as the 
basis for the grantee's allocation. Instead, grantees must demonstrate 
that activities funded by the additional mitigation funds will (1) meet 
the definition of mitigation activities; (2) address the current and 
future risks as identified in the grantee's mitigation needs assessment 
in the MID areas; (3) be CDBG-eligible activities under title I of the 
HCDA or otherwise eligible pursuant to a waiver or alternative 
requirement; and (4) meet a national objective. For purposes of grants 
subject to the Universal Notice, mitigation activities are defined as 
those activities that increase resilience to disasters and reduce or 
eliminate the long-term risk of loss of life, injury, damage to and 
loss of property, and suffering and hardship, by lessening the impact 
of future disasters. Grantees must report activities as a ``MIT'' 
activity type in DRGR so that HUD and the public can determine that the 
grantee has fulfilled the requirement for the additional mitigation 
funds.
    Grantees may also meet the requirement of the additional mitigation 
funds by including eligible recovery activities that both address the 
impacts of the disaster (i.e., have ``tie-back'' to the specific 
qualified disaster) and incorporate mitigation measures. In section 
III.D.3., grantees are instructed to incorporate mitigation measures 
when carrying out activities to construct, reconstruct, or rehabilitate 
residential or non-residential buildings. If grantees wish to count 
those activities towards the grantee's additional mitigation funds, 
grantees must: (1) document how those activities and the incorporated 
mitigation measures will meet the definition of mitigation, as provided 
above; and (2) report those activities as a ``MIT'' activity type in 
DRGR so they are easily tracked.
    III.D.4.a. Alignment with mitigation plans. Grantees must ensure 
that activities funded with the CDBG-DR mitigation set-aside identified 
in their Action Plan will align with existing hazard mitigation plans 
submitted to the Federal Emergency Management Agency (FEMA) under 
section 322 of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5165) or other State, local, or Tribal hazard 
mitigation or long-term recovery plans.
    III.D.5. Housing activities and standards. Grantees may use CDBG-DR 
funds for activities that may include, but are not limited to, new 
construction, reconstruction, and rehabilitation of single-family or 
multifamily housing, homeownership assistance, buyouts, and rental 
assistance. The broadening of eligible CDBG-DR activities related to 
housing under the HCDA is necessary following major disasters in which 
housing, including large numbers of affordable housing units, have been 
damaged or destroyed. Note, CDBG-DR does not have a requirement of 
``proof of ownership'' when grantees are carrying out housing recovery 
programs. Any decisions about requiring applicants to submit proof of 
ownership is up to the grantee and its chosen program design. However, 
grantees may choose to obtain documentation to protect the CDBG-DR 
investment. In doing so, grantees must include in their program-
specific policies and procedures alternative methods for documenting 
ownership. While grantees have flexibility on what type of 
documentation they will require to

[[Page 1780]]

prove ownership, HUD strongly recommends that grantees consider the 
following documentation options in their required policies and 
procedures: deed, title, mortgage documentation, tax receipts or bills, 
home insurance, home purchase contracts, will or affidavit or heirship 
naming them as heir, receipts of major repairs completed prior to the 
disaster, court documents, letter from a manufactured housing community 
owner or public official, self-certification, or utility bills.
    As grantees consider different eligible housing activities, States 
and local governments are encouraged to adopt the latest edition or 
editions of the International Residential Code (IRC) for single family 
new construction and International Building Code (IBC) for multi-family 
construction, and respective subcodes (e.g., plumbing, electrical, 
fire). HUD encourages grantees to adopt the recent edition or editions 
of the International Existing Building Code (IEBC) when using CDBG-DR 
funds for rehabilitation. If a grantee chooses to adopt these codes, 
HUD encourages the adoption without the removal of any provisions. 
Grantees can find required building and energy standards in section 
III.D.5.b.(i).
    The following waivers and alternative requirements will assist 
grantees in addressing the full range of unmet housing needs arising 
from a disaster.
    III.D.5.a. New housing construction waiver. 42 U.S.C. 5305(a) and 
24 CFR 570.207(b)(3) are waived to the extent necessary to permit new 
housing construction, subject to the following alternative requirement. 
When a CDBG-DR grantee funds a new housing construction activity, 24 
CFR 570.202 shall apply and shall be read to extend to new construction 
in addition to rehabilitation assistance. Private individuals and 
entities must remain compliant with Federal accessibility requirements 
as well as with the applicable site selection requirements of 24 CFR 
1.4(b)(3) and 8.4(b)(5).
    III.D.5.b. Standards for new construction, reconstruction, and 
rehabilitation. HUD is adopting an alternative requirement to require 
grantees to adhere to the applicable standards in III.D.5.b.(i). 
through III.D.5.b.(ii) when carrying out activities to construct, 
reconstruct, or rehabilitate residential buildings. For purposes of the 
Universal Notice, the terms ``substantial damage'' and ``substantial 
improvement'' shall be as defined in 44 CFR 59.1.
    III.D.5.b.(i). Standards for new construction and reconstruction of 
residential buildings. Grantees must meet at least one Green and 
Resilient Building Standard and at least one minimum energy efficiency 
standard, as defined in this subparagraph, for: (i) all new 
construction and reconstruction (i.e., demolishing a housing unit and 
rebuilding it on the same lot in substantially the same manner) of 
residential buildings and (ii) all rehabilitation activities of 
substantially damaged residential buildings, including changes to 
structural elements such as flooring systems, columns, or load-bearing 
interior or exterior walls. As described in 44 CFR 59.1, substantial 
damage means damage of any origin sustained by a structure whereby the 
cost of restoring the structure to its before damaged condition would 
equal or exceed 50 percent of the market value of the structure before 
the damage occurred.
    (1) The Green and Resilient Building Standard requires that all 
construction covered by the paragraph above also meet an industry-
recognized standard or rating system that has achieved certification 
under:
    (i) Enterprise Green Communities;
    (ii) LEED (New Construction, Homes, Midrise, Existing Buildings 
Operations and Maintenance, or Neighborhood Development);
    (iii) ICC-700 National Green Building Standard (NGBS) Green or NGBS 
Green+ Resilience;
    (iv) International Living Future Institute, Living Building 
Challenge;
    (v) Greenpoint Rated New Home, Greenpoint Rated Existing Home 
(Whole House or Whole Building label);
    (vi) Earth Advantage New Homes;
    (vii) IBHS FORTIFIED Home (Roof, Silver, Gold); IBHS FORTIFIED 
Commercial (Roof, Silver, Gold); IBHS FORTIFIED Multifamily (Roof, 
Silver, Gold); \21\
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    \21\ View Institute for Business and Home Safety (IBHS) 
FORTIFIED programs here: https://fortifiedhome.org/fortified-multifamily/ or https://fortifiedhome.org/about/.
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    (viii) NFPA 1140, Standard for Wildland Fire Protection;
    (ix) 2024 Wildland Urban Interface (WUI) Code; \22\
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    \22\ View 2021 Wildland Urban Interface (WUI) code here: https://planningforhazards.com/wildland-urban-interface-code-wui-code.
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    (x) NFPA Firewise USA; \23\ or
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    \23\ View NFPA Firewise USA here: https://www.nfpa.org/education-and-research/wildfire/firewise-usa.
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    (xi) Any other equivalent comprehensive green and/or resilient 
building standard acceptable to HUD.
    (2) The minimum energy efficiency standard, as defined by the IECC 
as referenced by the building code, requires that all construction 
covered by the paragraph above achieve certification under one of the 
following programs:
    (i) EPA ENERGY STAR[supreg] V 3.2 or ENERGY STAR[supreg] NextGen 
certification or ENERGY STAR (Certified Homes or Multifamily High-Rise 
High Performance);
    (ii) DOE Zero Energy Ready Home;
    (iii) EarthCraft House, EarthCraft Multifamily;
    (iv) Passive House Institute Passive Building or EnerPHit 
certification from the Passive House Institute US (PHIUS), 
International Passive House Association;
    (v) Greenpoint Rated New Home, Greenpoint Rated Existing Home 
(Whole House or Whole Building label);
    (vi) Earth Advantage New Homes; or
    (vii) Any other equivalent energy efficiency standard acceptable to 
HUD.
    Grantees must identify, in each project file, which of these (1) 
Green and Resilient Building Standards and (2) minimum energy standard 
will be used for any building subject to this paragraph. However, 
grantees are not required to use the same standards for each project or 
building (i.e., grantees may allow the use of any of the specified 
standards either at the discretion of the grantee or the builder-
developer as long as it is documented in the project file).
    III.D.5.b.(ii). Standards for rehabilitation of non-substantially 
damaged residential buildings. For rehabilitation other than the 
rehabilitation of substantially damaged residential buildings, grantees 
must follow the HUD CPD Green Building Retrofit Checklist guidelines as 
posted and updated on HUD's website.\24\
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    \24\ View HUD's CPD Green Building Retrofit Checklist here: 
https://www.hud.gov/sites/dfiles/CPD/documents/CPD-Green-Building-Retrofit-Checklist.pdf.
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    Grantees must apply these guidelines to the extent applicable for 
the rehabilitation work undertaken, for example, the use of mold 
resistant products when replacing surfaces such as drywall. Products 
and appliances replaced as part of the rehabilitation work, must be 
ENERGY STAR-labeled, WaterSense-labeled, or Federal Energy Management 
Program (FEMP)-designated products or appliances.
    III.D.5.c. Broadband infrastructure or technology to support 
housing. Any substantial rehabilitation, as defined by 24 CFR 5.100, 
reconstruction, or new construction of a building with five or more 
rental units must include installation of broadband infrastructure or 
technology, except where the grantee documents that: (i) the location 
of the new construction or substantial

[[Page 1781]]

rehabilitation makes installation of broadband infeasible; (ii) the 
cost of installing broadband would result in a fundamental alteration 
in the nature of its program or activity, or in an undue financial 
burden; or (iii) the structure of the housing to be substantially 
rehabilitated makes installation of broadband infeasible.
    III.D.5.d. Periods of affordability for new construction of 
affordable rental housing. To meet the low- and moderate-income housing 
national objective, rental housing assisted with CDBG-DR funds must be 
rented to LMI households at affordable rents. Because the waiver and 
alternative requirement in III.D.5.a. authorizes the use of grant funds 
for new housing construction, HUD is imposing the following alternative 
requirement to modify the low- and moderate-income housing national 
objective criteria in 24 CFR 570.208(a)(3) and 570.483(b)(3) for 
activities involving the new construction of affordable rental housing 
of five or more units. For activities that will construct five or more 
units, in addition to other applicable criteria in 24 CFR 570.208(a)(3) 
and 570.483(b)(3), a grantee must define in its program-specific 
policies and procedures the affordability standards, including 
``affordable rents,'' the enforcement mechanisms, and applicable 
timeframes, that will apply to the new construction of affordable 
rental housing. The minimum timeframe and other related requirements 
acceptable for compliance with this alternative requirement are the 
HOME Investment Partnerships Program (HOME) requirements. Specifically, 
the affordability requirements must last for 20 years and must:
    (i) Apply without regard to the term of any loan or mortgage, 
repayment of the CDBG-DR investment, or the transfer of ownership;
    (ii) Must be imposed by a deed restriction, a covenant running with 
the land, an agreement restricting the use of the property, or other 
mechanisms approved by HUD and must give the grantee or recipient the 
right to require specific performance (except that the grantee may 
provide that the affordability restrictions may terminate upon 
foreclosure or transfer in lieu of foreclosure); and
    (iii) Must be recorded in accordance with State recordation laws.
    III.D.5.e. Homeownership assistance. 42 U.S.C. 5305(a)(24) is 
waived and replaced with the following alternative requirement. 
Provision of direct assistance to facilitate and expand homeownership 
among persons at or below 120 percent of area median income (except 
that such assistance shall not be considered a public service for 
purposes of 42 U.S.C. 5305(a)(8)) by using such assistance to:
    (i) subsidize interest rates and mortgage principal amounts for 
homebuyers with incomes at or below 120 percent of area median income;
    (ii) finance the acquisition of housing by homebuyers with incomes 
at or below 120 percent of area median income that is occupied by the 
homebuyers;
    (iii) acquire guarantees for mortgage financing obtained by 
homebuyers with incomes at or below 120 percent of area median income 
from private lenders, meaning that if a private lender selected by the 
homebuyer offers a guarantee of the mortgage financing, the grantee may 
purchase the guarantee to ensure repayment in case of default by the 
homebuyer. This subparagraph allows the purchase of mortgage insurance 
by the household but not the direct issuance of mortgage insurance by 
the grantee;
    (iv) provide up to 100 percent of any down payment required from 
homebuyers with incomes at or below 120 percent of area median income; 
or
    (v) pay reasonable closing costs (normally associated with the 
purchase of a home) incurred by homebuyers with incomes at or below 120 
percent of area median income.
    While homeownership assistance, as described above, may be provided 
to households with incomes at or below 120 percent of the area median 
income, HUD will only consider those funds used for households with 
incomes at or below 80 percent of the area median income to qualify as 
meeting the LMI person benefit national objective.
    III.D.5.f. Interim mortgage assistance. 42 U.S.C. 5305(a)(8), 24 
CFR 570.201(e), 24 CFR 570.207(b)(4), and 24 CFR 1003.207(b)(4) are 
modified to allow grantees to extend interim mortgage assistance (IMA) 
to qualified individuals from three months to up to 20 months. IMA must 
be used in conjunction with a buyout program, or the rehabilitation or 
reconstruction of single-family housing, during which mortgage payments 
may be due but the home is not habitable. A grantee using this 
alternative requirement must document, in its policies and procedures, 
how it will determine that the amount of assistance to be provided is 
necessary and reasonable. This public services activity shall be exempt 
from the cap on public service expenditures found in section 105(a)(8) 
of the HCDA (42 U.S.C. 5305(a)(8)), as amended.
    III.D.5.g. Rental assistance. 42 U.S.C. 5305(a)(8), 24 CFR 
570.201(e), 24 CFR 570.207(b)(4), and 24 CFR 1003.207(b)(4) are 
modified to allow grantees to provide rental assistance (e.g., rent, 
security deposits, and utility deposits) and utility payments for up to 
24 months. This rental assistance can only be used in conjunction with 
the development of affordable rental housing or other forms of housing 
assistance, such as rehabilitation, reconstruction, new construction of 
affordable housing, and homeownership assistance, for persons displaced 
by the qualifying disaster.
    This public service activity shall be exempt from the cap on public 
service expenditures found in section 105(a)(8) of the HCDA (42 U.S.C. 
5305(a)(8)), as amended. If, despite concerted efforts to permanently 
rehouse survivors, a grantee identifies the need for continued rental 
assistance, a grantee may submit a request to HUD to extend the 24-
month limit on rental assistance. Such a request should include a 
justification for the continued need for rental assistance and how the 
extension will enable the grantee to stabilize persons or households in 
permanent housing. HUD may provide this extension administratively upon 
a determination that good cause for such an extension exists. A 
homeowner receiving any form of interim mortgage assistance is not 
eligible for CDBG-DR rental assistance or utility payments for the same 
period.
    Grantees must determine that the rental assistance and utility 
payments are needed because the household moved from their primary 
residence due to rehabilitation or reconstruction to repair damage from 
a qualified disaster or because the household is experiencing or is at 
risk of experiencing homelessness and the assistance is part of a 
homelessness prevention or rapid rehousing program or activity. While 
this waiver and alternative requirement will allow these grantees to 
provide rental assistance and utility payments to households impacted 
by a qualifying major disaster, this does not relieve grantees of the 
duty to comply with other applicable requirements relating to the 
temporary relocation or permanent displacement of persons. If a person 
meets the definition of a ``displaced person'' under the URA, (42 
U.S.C. 4601 et seq.) or section 104(d) of the HCDA (42 U.S.C. 5304(d)) 
(``section 104(d)'') and their implementing regulations, grantees must 
provide the displaced person with any relocation assistance to which 
they are entitled under law, including but not limited to assistance 
authorized under the URA or section 104(d) and

[[Page 1782]]

their implementing regulations, as those requirements may be modified 
by applicable current or future waivers and alternative requirements.
    III.D.5.h. Disaster relief assistance for LMI persons. HUD is 
providing an alternative requirement to extend the period that grantees 
can make disaster relief payments on behalf of individuals and families 
impacted by a disaster event. Normally, CDBG funds may not be used for 
income payments, which are not included among eligible activities in 
section 105(a) of the HCDA for States, and which are expressly 
prohibited by 24 CFR 570.207(b)(4) in the Entitlement CDBG regulations. 
The phrase ``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 
disaster relief 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.
    Because disasters qualifying for CDBG-DR awards represent the worst 
levels of destruction and hardship, those recovering often struggle to 
maintain employment, make rent or mortgage payments, access or pay for 
food, clothing, and basic utilities, and access many other essential 
items and services while also trying to fully recover from the disaster 
months and years after the event. To allow grantees to help individuals 
and families address these challenges, HUD is waiving 42 U.S.C. 5305(a) 
only to the extent necessary to establish the following alternative 
requirement:
    CDBG-DR funds may be used to provide disaster relief assistance for 
low- and moderate-income persons only for items such as food, clothing, 
housing (rent or mortgage), utilities or medical care related to the 
qualifying disaster for a period of up to six consecutive months. To be 
eligible, the beneficiary must use all Federal assistance for losses 
suffered as a result of the major disaster that qualified for CDBG-DR 
assistance. Disaster relief payments must be made to the provider of 
such items or services on behalf of an individual or family, and not 
directly to an individual or family in the form of income payments, 
debit cards, or similar direct income payments.
    Grantees must maintain documentation, at least at a programmatic 
level, describing how the grantee determined the amount of assistance 
for the disaster relief payment was necessary and reasonable, proof of 
the DOB analysis as outlined in Appendix C, how the payment meets a 
national objective, and that the payments are in accordance with the 
grantee's approved Action Plan and published program design(s). This 
public service activity shall be subject to the cap on public service 
expenditures found in section 105(a)(8) of the HCDA (42 U.S.C. 
5305(a)(8)), as amended. A homeowner receiving any form of IMA as 
described in section III.D.5.f., is not eligible for CDBG-DR disaster 
relief assistance to cover their mortgage or utilities for the same 
period and anyone receiving rental assistance is not eligible for CDBG-
DR disaster relief assistance to cover their rent or utilities for the 
same period.
    III.D.5.i. Buyouts. CDBG-DR grantees may carry out property 
acquisition for a variety of purposes, but buyouts are a type of 
acquisition for the specific purpose of reducing the risk of property 
damage. HUD has determined that creating a new activity and alternative 
requirement for buyouts is necessary for consistency with the 
application of other Federal resources commonly used for this type of 
activity. Therefore, HUD is waiving 42 U.S.C. 5305(a) and establishing 
an alternative requirement only to the extent necessary to create a new 
eligible activity for voluntary buyouts. The term ``buyouts'' for CDBG-
DR purposes means the voluntary acquisition of properties located in a 
floodway, FFRMS floodplain, or other Disaster Risk Reduction Area that 
is intended to reduce risk from future hazards. Requiring buyouts to be 
voluntary acquisitions will focus the buyout activities on areas where 
relocation plans are community driven. Grantees may designate a 
Disaster Risk Reduction Area, as defined below.
    Grantees carrying out buyout activities must establish an open 
space management plan or equivalent, if one has not already been 
established, before implementation. The open space management plan or 
equivalent must establish full transparency about the planned use of 
acquired properties post-buyout, or the process by which the planned 
use will be determined and enforced.
    Buyout activities are subject to all requirements that apply to 
acquisition activities generally including but not limited to, the URA 
(42 U.S.C. 4601 et seq.) and its implementing regulations at 49 CFR 
part 24, subpart B, unless waived or modified by alternative 
requirements. Only acquisitions that meet the definition of a 
``buyout'' are subject to the post-acquisition land use restrictions 
imposed by the alternative requirement (III.D.5.i.(i). below). The key 
factor in determining whether the acquisition is a buyout is whether 
the intent of the purchase is to reduce the risk of property damage 
from future flooding or other hazards in a floodway, FFRMS floodplain, 
or a Disaster Risk Reduction Area. A grantee that will acquire property 
for purposes of a buyout in a Disaster Risk Reduction Area must 
establish criteria in its policies and procedures to designate an area 
as a Disaster Risk Reduction Area for the buyout, pursuant to the 
following requirements:
    (1) the area has been impacted by the hazard that has been caused 
or exacerbated by the disaster for which the grantee received its CDBG-
DR allocation or address the current and future risks as identified in 
the grantee's mitigation needs assessment;
    (2) the hazard identified must be a predictable environmental 
threat to the safety and well-being of program beneficiaries, including 
members of protected classes, vulnerable populations, and underserved 
communities, as evidenced by the best available data (e.g., FEMA 
Repetitive Loss Data, EPA's Environmental Justice Screening and Mapping 
Tool, National Risk Index, etc.) and science (such as engineering and 
structural solutions propounded by FEMA, USACE, other Federal agencies, 
etc.); and
    (3) the area must be clearly delineated so that HUD and the public 
may easily determine which properties are located within the designated 
area.
    III.D.5.i.(i). Buyout requirements:
    1. Property to be acquired or accepted must be located within a 
floodway, FFRMS floodplain, or Disaster Risk Reduction Area.
    2. Any property acquired or accepted must be dedicated and 
maintained in perpetuity for a use that is compatible with open space, 
recreational, floodplain and wetlands management practices, or other 
disaster-risk reduction practices.
    3. No new structure will be erected on property acquired or 
accepted under the buyout program other than:
    (a) a public facility that is open on all sides and functionally 
related to a designated open space (e.g., a park, campground, or 
outdoor recreation area);
    (b) a restroom; or
    (c) a flood control structure, provided that:
    (i) the structure does not reduce valley storage, increase erosive 
velocities, or increase flood heights on the opposite bank, upstream, 
or downstream; and
    (ii) the local floodplain manager approves the structure, in 
writing, before commencement of construction of the structure.

[[Page 1783]]

    4. After the purchase of a buyout property with CDBG-DR funds, the 
owner of the buyout property (including subsequent owners) is 
prohibited from making any applications to any Federal entity in 
perpetuity for additional disaster assistance for any purpose related 
to the property acquired through the CDBG-DR funded buyout, unless the 
assistance is for an allowed use as described in paragraph (2) above. 
The entity acquiring the property may lease or sell it to adjacent 
property owners or other parties for compatible uses that comply with 
buyout requirements in return for a maintenance agreement.
    5. A deed restriction or covenant running with the property must 
require that the buyout property be dedicated and maintained for 
compatible uses that comply with buyout requirements in perpetuity.
    6. Grantees must choose from one of two valuation methods (pre-
disaster value or post-disaster value) for a buyout program (or a 
single buyout activity). The grantee must apply its valuation method 
for all buyouts carried out under the program. However, a grantee may 
provide exceptions to its established valuation method on a case-by-
case basis (e.g., if the grantee determines the post-disaster value of 
a property is higher than the pre-disaster value). The grantee must 
describe the process for such exceptions and how it will analyze the 
circumstances to permit an exception in its buyout policies and 
procedures. Each grantee must adopt policies and procedures on how it 
will demonstrate that the amount of assistance for a buyout is 
necessary and reasonable.
    7. All buyout activities must be classified using the ``buyout'' 
activity type in the DRGR system.
    8. Any State grantee implementing a buyout program or activity must 
consult with local or Tribal governments within the areas in which 
buyouts will occur.
    9. All buyouts must be voluntary. Grantees are prohibited from 
using eminent domain to buyout properties. However, a grantee may 
request and HUD may approve a waiver of this limitation, if good cause 
for such a waiver exists.
    III.D.5.i.(ii). National objectives for buyouts. Activities that 
assist LMI persons and meet the criteria for the national objectives 
will be considered to benefit LMI persons, unless there is substantial 
evidence to the contrary, and will count towards the calculation of a 
grantee's overall LMI benefit requirement as described in section 
III.B.1. The grantee shall appropriately ensure that activities that 
meet the criteria for any of the national objectives below do not 
benefit moderate-income persons to the exclusion of low-income persons.
    When undertaking buyout activities, to demonstrate that a buyout 
meets the low- and moderate-income housing (LMH) national objective, 
grantees must meet all requirements of the HCDA, and the applicable 
regulatory criteria described below. 42 U.S.C. 5305(c)(3) provides that 
any assisted activity that involves the acquisition of property to 
provide housing shall be considered to benefit LMI persons only to the 
extent such housing will, upon completion, be occupied by such persons. 
In addition, 24 CFR 570.483(b)(3), 24 CFR 570.208(a)(3), and 24 CFR 
1003.208(c) apply the LMH national objective to an eligible activity 
carried out for the purpose of providing or improving permanent 
residential buildings that, upon completion, will be occupied by LMI 
households.
    A buyout program that merely pays homeowners to leave their 
existing homes does not guarantee that those homeowners will occupy a 
new residential building. Therefore, acquisition-only buyout programs 
cannot satisfy the LMH national objective criteria.
    To meet a national objective that benefits a LMI person, buyout 
programs may be structured in one of the following ways:
    1. The buyout activity combines the acquisition of properties with 
another direct benefit--LMI housing activity, such as down payment 
assistance--that results in occupancy and otherwise meets the 
applicable LMH national objective criteria;
    2. The activity meets the low- and moderate-income area (LMA) 
benefit criteria and documents that the acquired properties will have a 
use that benefits all the residents in a particular area that is 
primarily residential, where at least 51 percent of the residents are 
LMI persons. Grantees covered by the ``exception criteria'' as 
described in section III.B.10.a. of the Universal Notice may apply it 
to these activities. To satisfy LMA criteria, grantees must define the 
service area based on the end use of the buyout properties; or
    3. The program meets the criteria for the low- and moderate-income 
limited clientele (LMC) national objective by restricting buyout 
program eligibility exclusively to LMI persons and benefiting LMI 
sellers by acquiring their properties for more than current fair market 
value (in accordance with the valuation requirements in section 
III.D.5.i.(i)(6).).
    III.D.5.j. Safe housing incentives. The limitation on eligible 
activities in section 42 U.S.C. 5305(a) is waived and HUD is 
establishing the following alternative requirement to establish safe 
housing incentives as an eligible activity. A ``safe housing 
incentive'' is defined as any incentive provided to encourage 
households to relocate to suitable housing in a lower risk area or in 
an area promoted by the community's comprehensive recovery plan. 
Displaced persons must receive any relocation assistance to which they 
are entitled under other legal authorities, such as the URA, section 
104(d) of the HCDA, the respective implementing regulations, or the 
requirements described in the Universal Notice. The grantee may offer 
safe housing incentives in addition to the relocation assistance that 
is legally required. Grantees will want to consider how these efforts 
to incentivize households to relocate outside disaster prone areas tie-
back to their strategies to minimize displacement across all their 
disaster recovery activities as required in section III.A.2.b.
    Grantees must maintain documentation, at least at a programmatic 
level, describing how the grantee determined the amount of assistance 
for the incentive was necessary and reasonable, how the incentive meets 
a national objective, and that the incentives are in accordance with 
the grantee's approved Action Plan and published program design(s). A 
grantee may require the safe housing incentive to be used for a 
particular purpose by the household receiving the assistance. However, 
this waiver does not permit a compensation program meaning that funds 
may not be provided to a beneficiary to compensate the beneficiary for 
an estimated or actual amount of loss from the declared disaster. 
Grantees are prohibited from offering housing incentives to a homeowner 
as an incentive to induce the homeowner to sell a second home, 
consistent with the prohibition and definition of second home in 
section III.D.5.l.
    III.D.5.j.(i). National objectives for safe housing incentives. The 
following alternative requirement establishes the new LMI national 
objective criteria for low- and moderate-income safe housing incentive 
(LMHI) which applies when safe housing incentive activities benefit LMI 
households. HUD has determined that providing CDBG-DR grantees with an 
additional method to demonstrate how safe housing incentive activities 
benefit LMI households will ensure that grantees and HUD can account 
for and assess the benefit that CDBG-DR assistance for these activities 
has on LMI households.

[[Page 1784]]

    The LMHI national objective may be used when a grantee uses CDBG-DR 
funds to carry out a safe housing incentive activity that benefits one 
or more LMI persons. To meet a LMHI national objective, the incentive 
must be structured in one of the following ways:
    1. Be tied to the voluntary acquisition of housing (including 
buyouts) owned by a qualifying LMI household and made to induce a move 
outside of the affected floodplain or disaster risk reduction area to a 
lower-risk area or structure; or
    2. Be for the purpose of providing or improving residential 
buildings that, upon completion, will be occupied by a qualifying LMI 
household and will be in a lower risk area; or
    3. Be for the purpose of providing rent, security deposits, and 
utility deposits for a qualifying LMI tenant-occupant household, 
including those displaced, to live in a lower risk area.
    Alternatively, safe housing incentives may also meet the urgent 
need national objective when incentive activities are designed to meet 
the criteria outlined in section III.B.2. of the Universal Notice.
    III.D.5.k. Redevelopment of acquired properties. Although 
properties acquired through a buyout program cannot be redeveloped, 
grantees may redevelop other acquired properties. For non-buyout 
acquisitions, HUD has not previously permitted the grantee to base 
acquisition cost on pre-disaster fair market value. The acquisition 
cost must comply with applicable cost principles and with the 
acquisition requirements at 49 CFR part 24, subpart B, as revised by 
the Universal Notice waivers and alternative requirements. In addition 
to the purchase price, grantees may opt to provide optional relocation 
assistance, as allowable under Section 104 and 105 of the HCDA (42 
U.S.C. 5304 and 42 U.S.C. 5305) and 24 CFR 570.606(d), and as expanded 
in section III.B.15.b., to the owner of a property that will be 
redeveloped if: i.) the property is purchased by the grantee or 
subrecipient through voluntary acquisition; and ii.) the owner's need 
for additional assistance is documented. Any optional relocation 
assistance must provide equal relocation assistance within each class 
of displaced persons, including but not limited to providing reasonable 
accommodation exceptions to persons with disabilities. See 24 CFR 
570.606(d) for more information on optional relocation assistance. In 
addition, tenants displaced by these voluntary acquisitions may be 
eligible for URA relocation assistance. In carrying out acquisition 
activities, grantees must ensure they are in compliance with the long-
term redevelopment plans of the community in which the acquisition and 
redevelopment is to occur. Grantees are also reminded that the 
acquisition of second homes at post-disaster fair market value is not 
prohibited, as long as the home is being redeveloped through an 
eligible activity and will meet a national objective.
    III.D.5.l. Alternative requirement for housing rehabilitation and 
buyout--assistance for second homes. HUD is instituting an alternative 
requirement to the rehabilitation provisions at 42 U.S.C. 5305(a)(4) as 
follows: properties that served as second homes at the time of the 
disaster, or following the disaster, are not eligible for 
rehabilitation assistance or safe housing incentives. This prohibition 
does not apply to acquisitions that meet the definition of a buyout 
(when that buyout is at post-disaster fair market value), however, as 
indicated in section III.D.5.j. above, no safe housing incentives can 
be provided for second homes. A second home is defined for purposes of 
the Universal Notice as a home that is not the primary residence of the 
owner, a tenant, or any occupant at the time of the disaster or at the 
time of application for CDBG-DR assistance. Grantees can verify a 
primary residence using a variety of documentation including, but not 
limited to, voter registration cards, tax returns, homestead 
exemptions, driver's licenses, and rental agreements. Additionally, 
acquisition or buyouts of second homes at post-disaster fair market 
value is not prohibited, as described in section III.D.5.k.
    III.D.6. Infrastructure activities and standards. As grantees 
consider different eligible infrastructure activities including public 
facilities, States and local governments are encouraged to adopt the 
recent edition or editions of IBC for public facility construction, 
particularly when using the CDBG-DR funds as the non-Federal match in 
FEMA PA projects.
    HUD requires grantees to adhere to the applicable standards and 
requirements in this section, sections III.B.10.f. and III.D.6.e., 
which apply only to those eligible activities described in those 
paragraphs.
    All newly constructed infrastructure that is assisted with CDBG-DR 
funds must be designed and constructed to withstand extreme weather 
events and the impacts of a changing climate. To satisfy this 
requirement, the grantee must identify and implement resilience 
performance measures as described in section III.D.3.
    For purposes of this requirement, an infrastructure activity 
includes any activity or group of activities (including acquisition or 
site or other improvements), whether carried out on public or private 
land, that assists the development of the physical assets that are 
designed to provide or support services to the general public in the 
following sectors: surface transportation, including roadways, bridges, 
railroads, and transit; aviation; ports, including navigational 
channels; water resources projects; energy production and generation, 
including from renewable, nuclear, and hydro sources; electricity 
transmission; broadband; pipelines; stormwater and sewer 
infrastructure; drinking water infrastructure; schools, hospitals, and 
housing shelters; and other sectors as may be determined by the Federal 
Permitting Improvement Steering Council (Permitting Council). For 
purposes of this requirement, an activity that falls within this 
definition is an infrastructure activity regardless of whether it is 
carried out under sections 105(a)(2), 105(a)(4), 105(a)(14), or another 
section of the HCDA (42 U.S.C. 5305(a)(2), 5305(a)(4), 5305(a)(14)), or 
pursuant to a waiver or alternative requirement established by HUD. 
Required policies and procedures related to infrastructure activities 
are found in section III.A.4. of the Universal Notice.
    III.D.6.a. Privately owned shelters. Section 105(a)(2) of the HCDA 
allows CDBG funds to be used for acquiring, constructing, 
reconstructing, rehabilitating, or installing public improvements or 
facilities. Typically, eligible facilities are limited to those that 
are: (i) publicly owned or traditionally provided by the government, or 
(ii) owned by a non-profit organization, and (iii) open to the general 
public. However, restricting ownership to these categories can limit 
disaster survivors' access to shelters, especially when public shelters 
are at capacity. To address this challenge and increase the supply of 
emergency shelters, the Department finds good cause to waive the 
ownership requirements outlined in Section 105(a)(2) of the HCDA and 24 
CFR 570.200(b). This waiver allows assistance to be provided to 
qualified privately owned facilities used as shelters. Under this 
waiver and alternative requirement, grantees must fund facilities that 
would be consistent with the purpose of title I of the HCDA and are 
prohibited from assisting casinos, sports arenas, or concert venues.
    III.D.6.b. Assistance to buildings for the general conduct of 
government when using CDBG-DR funds as the non-Federal match. The 
prohibition on

[[Page 1785]]

assisting buildings for the general conduct of government at 42 U.S.C. 
5305(a)(2) and associated regulations at 24 CFR 570.207(a) are waived 
for non-Federal match. This waiver allows grantees to use CDBG-DR funds 
as the non-Federal match on any other Federal program providing funds 
for the construction, reconstruction, and rehabilitation of public 
improvements or facilities for the general conduct of government. This 
waiver is subject to the following alternative requirements: grantees 
are prohibited from using CDBG-DR funds for buildings that do not 
provide services all year around and for buildings that are used 
exclusively as emergency operations centers.
    III.D.6.c. FAST-41 project requirements. The Permitting Council 
administers Title 41 of the Fixing America's Surface Transportation 
Act, referred to as ``FAST-41,'' which establishes a new governance 
structure, set of procedures, and funding authorities to improve and 
make transparent the Federal review and permitting process for FAST-41 
covered infrastructure projects on the Federal Infrastructure 
Permitting Dashboard. A FAST-41 covered project must first be in one of 
the following sectors: (1) Renewable energy production, (2) 
Conventional energy production, (3) Electricity transmission, (4) 
Surface transportation, (5) Aviation, (6) Ports and waterways, (7) 
Water resource projects, (8) Broadband, (9) Pipelines, (10) 
Manufacturing, (11) Mining, (12) Carbon capture, (13) Semiconductors, 
(14) Artificial intelligence and machine learning, (15) High-
performance computing and advanced computer hardware and software, (16) 
Quantum information science and technology, (17) Data storage and data 
management, (18) Cybersecurity, and/or (19) any additional 
infrastructure sectors established by Permitting Council.
    In addition, a FAST-41 project must meet one of the following four 
criteria, as amended: (1) Objective Criteria: A project must be subject 
to the NEPA; be likely to require a total investment of more than 
$200,000,000; and not qualify for an abbreviated authorization or 
environmental review process under any applicable law. (2) 
Discretionary Criteria: A project must be subject to NEPA; and the 
project is of a size and complexity that make it, in the opinion of the 
Permitting Council, likely to benefit from enhanced oversight and 
coordination, including (but not limited to) a project likely to 
require authorization from or environmental review involving more than 
two Federal agencies or the preparation of an environmental impact 
statement (EIS) under NEPA. (3) Tribal Sponsored Criteria: A project 
must be subject to NEPA; sponsored by an Indian Tribe, an Alaska Native 
Corporation, a Native Hawaiian, the Department of Hawaiian Homelands, 
or the Office of Hawaiian Affairs; and located on land owned or under 
jurisdiction of the entity that sponsors the activity. (4) Carbon 
Capture Sector: A project that includes any facility, technology, or 
system that captures, utilizes, or sequesters carbon dioxide emissions, 
including projects for direct air capture, and carbon dioxide 
pipelines; is covered by a programmatic plan or environmental review 
developed for the primary purpose of facilitating development of carbon 
dioxide pipelines; and is not subject to NEPA requirements.
    Any project with the potential for FAST-41 eligibility will require 
the grantee to notify HUD and coordinate efforts to submit a FAST-41 
Initiation Notice (FIN) to the Permitting Council Executive Director 
and the appropriate facilitating agencies. Within 14 calendar days of 
the FIN receipt, the Permitting Council Executive Director will 
determine the eligibility and if the FAST-41 process will be required 
for the project.
    III.D.6.d. CDBG-DR funds as non-Federal match. As provided by the 
HCDA, CDBG-DR funds may be used to satisfy a match requirement, share, 
or contribution for any other Federal program when used to carry out an 
eligible CDBG-DR activity (e.g., programs or activities administered by 
FEMA, USACE, United States Department of Agriculture (USDA), and the 
Federal Highway Administration (FHWA)). By law, (codified in the HCDA 
as a note to section 105(a)) only $250,000 or less of CDBG-DR funds may 
be used for the non-Federal cost-share of any project funded by USACE. 
Appropriations acts prohibit the use of CDBG-DR funds for any activity 
reimbursable by, or for which funds are also made available by FEMA or 
USACE.
    In response to a disaster, FEMA may implement, and grantees may 
elect to follow, alternative procedures for FEMA's PA Program, as 
authorized pursuant to Section 428 of the Stafford Act (42 U.S.C. 
5189(f)). Like other projects, grantees may use CDBG-DR funds as a 
matching requirement, share, or contribution for Section 428 PA 
Projects. For all activities funding the non-Federal match, grantees 
must document that CDBG-DR funds have been used for the actual costs 
incurred for the assisted project and for costs that are eligible, meet 
a national objective, and meet other applicable CDBG-DR requirements.
    III.D.6.d.(i). Alternative requirement when using CDBG-DR funds as 
the non-Federal match in a FEMA-funded project (building codes and 
standards). Currently, CDBG-DR grantees using FEMA and CDBG-DR funds on 
the same activity have encountered challenges in certain circumstances 
in reconciling CDBG-DR building standards with those established by 
FEMA. FEMA funded projects generally commence well in advance of the 
availability of CDBG-DR funds and when CDBG-DR funds are used as match 
for a FEMA project that is underway, the alignment of HUD's building 
standards may not be feasible. For these reasons, the Secretary finds 
good cause to establish an alternative requirement to allow grantees to 
use FEMA-approved building codes instead of the requirements in section 
III.D.5.b.(i). when CDBG-DR funds are used as the non-Federal match for 
FEMA assistance.
    III.D.6.e. Flood control structure requirements. Grantees that use 
CDBG-DR funds to assist flood control structures (i.e., dams and 
levees) are prohibited from using CDBG-DR funds to enlarge a dam or 
levee beyond the original footprint of the structure that existed 
before the disaster event, without obtaining pre-approval from HUD and 
any Federal agencies that HUD determines are necessary based on their 
involvement or potential involvement with the levee or dam. In 
addition, a grantee must comply with the requirements outlined above in 
section III.D.6.c. if the project meets one of the following four 
criteria for FAST-41 projects, as amended. Grantees that use CDBG-DR 
funds for levees and dams are required to: (1) register and maintain 
entries regarding such structures with the USACE National Levee 
Database or National Inventory of Dams; (2) ensure that the structure 
is admitted in the USACE's PL 84-99 Rehabilitation Program (Levee 
Rehabilitation and Inspection Program); (3) ensure the structure is 
accredited under the FEMA National Flood Insurance Program (NFIP); (4) 
enter the exact location of the structure and the area served and 
protected by the structure into the DRGR system; and (5) maintain file 
documentation demonstrating that the grantee has conducted a risk 
assessment before funding the flood control structure and documentation 
that the investment includes risk reduction measures.
    III.D.6.f. LMI benefit for infrastructure activities. CDBG-DR funds 
represent a significant opportunity for grantees to carry out 
strategic, high-impact, and

[[Page 1786]]

innovative infrastructure activities to recover from the applicable 
disaster, mitigate disaster risks, and reduce future losses. 
Infrastructure activities assist in the development of physical assets 
that are designed to provide or support services to the general public. 
These infrastructure activities often offer unique benefits for the 
general public and underserved communities following a disaster due to 
the activities' scale and intersection with other key recovery and 
mitigation outcomes. For example, an infrastructure activity located 
alongside an underserved community that repairs damaged roadways 
connected to the community may facilitate the redevelopment of housing 
and expedite economic recovery by making the underserved community 
accessible and more attractive to local businesses.
    The far-reaching nature of infrastructure activities' service areas 
presents challenges for meeting the low- and moderate-income area 
benefit (LMA) national objective criteria at 24 CFR 570.208(a)(1) and 
24 CFR 570.483(b)(1). Large infrastructure activities with a broad 
service area may benefit a large population of LMI persons, but because 
the area that benefits is so large the LMI population may be less than 
51 percent. When this is the case, a grantee may not pursue the 
implementation of those innovative infrastructure activities that would 
otherwise have positive, compounding effects on underserved communities 
and LMI persons in the MID areas because the activity would not meet 
the standard LMA national objective criteria. Since grantees' 
infrastructure needs and investments may represent a significant 
portion of their total CDBG-DR allocations, grantees may not be able to 
meet the 70 percent overall benefit requirement if their infrastructure 
activities can only meet the urgent need national objective.
    Based on these reasons, HUD is waiving 24 CFR 570.484 and 24 CFR 
570.200(a)(3) only to the extent necessary to add this alternative 
requirement: CDBG-DR grantees funding infrastructure projects may count 
funds expended for infrastructure activities towards benefitting LMI 
persons and meeting the overall benefit requirement by multiplying the 
total cost (including CDBG-DR and non-CDBG-DR costs) of the 
infrastructure activity by the percent of LMI persons in the service 
area, except that the amount counted shall not exceed the amount of 
CDBG-DR funds provided.
    As an example, if the total cost of an infrastructure activity is 
$1,000,000, and the percent of LMI persons in the activity's service 
area is 40 percent, then $400,000 would count towards benefiting LMI 
persons when calculating a grantee's overall benefit (assuming this 
projects is only funded with CDBG-DR). Generally, grantees should not 
pursue this alternative requirement if doing so comes at the expense of 
pursuing an infrastructure project that can meet the original LMA 
national objective criteria and thus be counted towards the overall 
benefit requirement.
    III.D.6.g. Assistance to private utilities. A CDBG-DR grantee may 
assist utilities as part of a disaster-related eligible activity under 
section 105(a) of the HCDA of 1974 (42 U.S.C. 5305(a)). While it is 
possible that not every CDBG-DR assisted utility will serve 
predominantly LMI populations, HUD recognizes that LMI populations 
would benefit especially from the increased resilience and recovery of 
private utilities. HUD also recognizes that privately-owned, for-profit 
utilities have a means of obtaining private investment or otherwise 
recapturing costs from ratepayers. Accordingly, HUD is adding 
alternative requirements that include basic safeguards that HUD has 
determined are necessary to ensure that costs comply with the 
certification to give maximum feasible priority to activities that 
benefit LMI persons and that costs are necessary and reasonable and do 
not duplicate other financial assistance.
    HUD is imposing the following alternative requirements: A grantee 
may assist private for-profit, non-profit, or publicly owned utilities 
as part of disaster-related activities that are eligible under section 
105(a) of the HCDA, or otherwise made eligible through a waiver or 
alternative requirement, provided that the grantee complies with the 
following:
    (1) The funded activity must comply with applicable CDBG-DR 
requirements, including the requirements that the assisted activity 
will meet a national objective, the activity will address an unmet 
recovery need or a risk identified in the grantee's mitigation needs 
assessment, and if the assistance is provided to a for-profit entity 
for an economic development project under section 105(a)(17), the 
grantee must first comply with any applicable underwriting 
requirements.
    (2) Each grantee must carry out the grant consistent with the 
grantee's certification that: ``With respect to activities expected to 
be assisted with CDBG-DR funds, the action plan has been developed so 
as to give the maximum feasible priority to activities that will 
benefit low- and moderate-income families.'' To fortify compliance with 
the existing certification, if the grantee carries out activities that 
assist privately-owned, for-profit utilities, the grantee must 
prioritize assistance to for-profit utilities that will benefit areas 
where at least 51 percent of the residents are LMI persons and 
demonstrate how assisting the private, for-profit utility will benefit 
those areas.
    (3) The grantee must determine that the costs of the activity to 
assist a utility are necessary and reasonable and that they do not 
duplicate other financial assistance. To fortify these requirements and 
achieve a targeted use of funds and to safeguard against the potential 
over-subsidization when assistance is used to carry out activities that 
benefit private, for-profit utilities, the grantee must document that 
the level of assistance provided to a private, for-profit utility 
addresses only the actual identified needs of the utility.
    (4) The grantee must establish policies and procedures to ensure 
that the CDBG-DR funds that assist private, for-profit utilities 
reflect the actual identified financing needs of the assisted 
businesses by establishing a mix of financing terms (loan, forgivable 
loan, and/or grant) for each assisted private, for-profit utility, 
based on the business's financial capacity, in order to ensure that 
assistance is based on actual identified need.
    III.D.7. Economic revitalization and Section 3 activities and 
standards. CDBG-DR funds may be used for CDBG-DR eligible activities 
related to economic revitalization. The attraction, retention, and 
return of businesses and jobs to a disaster-impacted area is critical 
to long-term recovery. Accordingly, for CDBG-DR purposes, economic 
revitalization may include any CDBG-DR eligible activity that 
demonstrably restores and improves the local economy through job 
creation and retention or by expanding access to goods and services. 
The most common CDBG-DR eligible activities to support economic 
revitalization are outlined in 24 CFR 570.203 and 570.204 and sections 
105(a)(14), (15), and (17) of the HCDA (42 U.S.C. 5305(a)(14), (15), 
and (17).
    III.D.7.a. Economic revitalization assistance. Climate-related 
natural hazards, extreme events, and natural disasters 
disproportionately affect LMI persons who belong to underserved 
communities because they are less able to prepare for, respond to, and 
recover from the impacts of extreme events and natural hazards, or are 
members of communities that have experienced significant disinvestment 
and historic discrimination. Therefore, HUD is

[[Page 1787]]

imposing the following alternative requirement: When funding activities 
outlined in 24 CFR 570.203 and 570.204 and sections 105(a)(14), (15), 
and (17) of the HCDA (42 U.S.C. 5305(a)(14), (15), and (17)), HUD is 
instituting an alternative requirement in addition to the other 
requirements in these provisions to require grantees to prioritize 
assistance to disaster-impacted businesses that serve underserved 
communities and spur economic opportunity for underserved communities 
that were economically distressed before the disaster. Grantees 
undertaking an economic revitalization activity must maintain 
supporting documentation to demonstrate how the grantee prioritized 
underserved communities. In section I.C.1.c., HUD describes the minimum 
standard for underserved communities. Grantees may further define areas 
that are considered ``underserved communities'' either in the Action 
Plan or program-specific policies and procedures.
    III.D.7.b. National objective documentation for activities that 
support economic revitalization. 24 CFR 570.208(a)(4)(i) and (ii), 24 
CFR 570.483(b)(4)(i) and (ii), 24 CFR 570.506(b)(5) and (6), and 24 CFR 
1003.208(d) are waived to allow grantees to meet the LMI jobs national 
objective criteria by documenting, for each person employed, the name 
of the business, type of job, and the annual wages or salary of the 
job. HUD will consider the person income-qualified if the annual wages 
or salary of the job is at or under the HUD-established income limit 
for a two-person family. This method offers an optional alternative to 
the standard CDBG-DR requirement--in which grantees must review the 
annual wages or salary of a job in comparison to the person's total 
household income and size (i.e., the number of persons). This optional 
method streamlines the documentation process by allowing the collection 
of wage data for each position created or retained from the assisted 
businesses, rather than from each individual household.
    III.D.7.c. Public benefit for activities that support economic 
revitalization. When applicable, the public benefit provisions set 
standards for individual economic development activities (such as a 
single loan to a business) and for the aggregate of all economic 
development activities. Economic development activities support 
economic revitalization. Currently, public benefit standards limit the 
amount of assistance per job retained or created, or the amount of 
assistance per LMI person to whom goods or services are provided by the 
activity. These dollar thresholds can impede recovery by limiting the 
amount of assistance the grantee may provide to a critical activity.
    HUD waives the public benefit standards at 42 U.S.C. 5305(e)(3), 24 
CFR 570.482(f)(1), (2), (3), (4)(i), (5), and (6), and 570.209(b)(1), 
(2), (3)(i), (4), and 24 CFR 1003.302(c) for all economic development 
activities. Paragraph (g) of 24 CFR 570.482 and paragraph (c) and (d) 
under 570.209 are also waived to the extent these provisions are 
related to public benefit. However, grantees that choose to take 
advantage of this optional waiver in lieu of complying with public 
benefit standards under the existing regulatory requirements shall be 
subject to the following condition: grantees shall collect and maintain 
documentation in the project file on the creation and retention of 
total jobs; the number of jobs within appropriate salary ranges, as 
determined by the grantee; the average amount of assistance provided 
per job, by activity or program; and the types of jobs. Additionally, 
grantees shall report the total number of jobs created and retained and 
the applicable national objective in the DRGR system.
    III.D.7.d. Section 3 worker eligibility and documentation 
requirements. Section 3 of the Housing and Urban Development Act of 
1968 (12 U.S.C. 1701u) (Section 3) applies to CDBG-DR activities that 
are Section 3 projects, as defined at 24 CFR 75.3(a)(2). The purpose of 
Section 3 is to ensure that economic opportunities, most importantly 
employment, generated by certain HUD financial assistance shall be 
directed to low- and very low-income persons, particularly those who 
are recipients of government assistance for housing or residents of the 
community in which the Federal assistance is spent \25\ All direct 
recipients of CDBG-DR funding must report Section 3 information through 
the DRGR system.
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    \25\ View HUD's guidance published in CPD Notice 2021-09, 
``Section 3 of the Housing and Urban Development Act of 1968, as 
amended by the Housing and Community Development Act of 1992, final 
rule requirements for CDBG, CDBG-CV, CDBG-DR, CDBG-MIT, NSP, Section 
108, and RHP projects,'' as amended here https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-09cpdn.pdf.
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    III.D.7.e. Business relocation assistance. Current requirements 
prevent program participants from providing assistance to a business to 
relocate from one labor market area to another if the relocation is 
likely to result in a significant loss of jobs in the labor market from 
which the business moved. This prohibition can be a critical barrier to 
reestablishing and rebuilding a displaced employment base after a major 
disaster. Therefore, 42 U.S.C. 5305(h), 24 CFR 570.210, 24 CFR 
570.482(h), and 24 CFR 1003.209, are waived to allow a grantee to 
provide assistance to any business that was operating in the disaster-
declared labor market area before the incident date of the applicable 
disaster and has since moved, in whole or in part, from the affected 
area to another State or to another labor market area within the same 
State to continue business.
    III.D.7.f. Underwriting. Notwithstanding section 105(e)(1) of the 
HCDA (U.S.C. 5305(e)(1)), no CDBG-DR funds may be provided to a for-
profit entity for an economic development project under section 
105(a)(17) of the HCDA (U.S.C. 5305(a)(17)) unless such project has 
been evaluated and selected in accordance with guidelines developed by 
HUD pursuant to section 105(e)(2) of the HCDA (U.S.C. 5305(e)(2)) for 
evaluating and selecting economic development projects. Grantees and 
their subrecipients are required to comply with the underwriting 
guidelines in Appendix A of 24 CFR part 570 \26\ if they are using 
grant funds to provide assistance to a for-profit entity for an 
economic development project under section 105(a)(17) of the HCDA 
(U.S.C. 5305(a)(17)).
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    \26\ View the underwriting guidelines are found at Appendix A of 
24 CFR part 570 here: https://www.ecfr.gov/current/title-24/part-570/appendix-Appendix A to Part 570.
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    III.D.7.g. Limitation on use of funds for eminent domain. CDBG-DR 
funds may not be used to support any Federal, State, or local projects 
that seek to use the power of eminent domain, unless eminent domain is 
employed only for a public use, or a waiver has been provided. For 
purposes of this paragraph, public use does not include economic 
development that primarily benefits private entities or CDBG-DR funded 
buyouts. The following is a public use for the purposes of eminent 
domain: any use of funds for (1) mass transit, railroad, airport, 
seaport, or highway projects; (2) utility projects that benefit or 
serve the general public, including energy related, communication-
related, water related, and wastewater-related infrastructure; (3) 
other structures designated for use by the general public or which have 
other common-carrier or public-utility functions that serve the general 
public and are subject to regulation and oversight by the government; 
and (4) projects for the removal of an immediate threat to public 
health and safety, including the removal of a brownfield as defined in 
the Small Business Liability

[[Page 1788]]

Relief and Brownfields Revitalization Act (Pub. L. 107-118). HUD has 
also determined that the development of housing for LMI persons is a 
public use for the purposes of eminent domain.

III.E. Ineligible Activities in CDBG-DR

    Any activity that is not authorized under Section 105(a) of the 
HCDA (24 U.S.C. 5305(a)) is ineligible to be assisted with CDBG-DR 
funds, unless explicitly allowed by waiver and alternative requirement 
in the Universal Notice. Additionally, the uses described below are 
explicitly prohibited:
    1. CDBG-DR funds cannot be used as compensation to beneficiaries 
(see section III.E.1.).
    2. CDBG-DR funds cannot be used to force homeowners to pay off 
their remaining mortgage (see section III.E.2.).
    III.E.1. Prohibition on compensation. Grantees may not use CDBG-DR 
funds to provide compensation to beneficiaries meaning that funds may 
not be provided to a beneficiary based on the estimated amount of loss 
from the declared disaster. However, grantees may reimburse disaster-
impacted beneficiaries based on the pre-application costs incurred by 
the beneficiary for completing an activity that is eligible for 
reimbursement. Reimbursement of beneficiaries for eligible activity 
costs are subject to the requirements established in section 
III.B.14.a.
    III.E.2. Prohibition on forced mortgage payoff. A forced mortgage 
payoff occurs when homeowners with an outstanding mortgage balance are 
required, under the terms of their loan agreement, to repay the balance 
of the mortgage loan before using assistance to rehabilitate or 
reconstruct their homes. CDBG-DR funds, however, shall not be used for 
a forced mortgage payoff. The ineligibility of a forced mortgage payoff 
with CDBG-DR funds does not affect HUD's longstanding guidance that 
when other non-CDBG disaster assistance is taken by lenders for a 
forced mortgage payoff, those funds are not considered to be available 
to the homeowner and do not constitute a DOB for the purpose of housing 
rehabilitation or reconstruction.

III.F. Performance Reviews

    Under 42 U.S.C. 5304(e), the Secretary shall, at least on an annual 
basis, make such reviews and audits as may be necessary or appropriate 
to determine whether the grantee has carried out its activities in a 
timely manner (i.e., meeting its expenditure deadline), whether the 
grantee's activities and certifications are carried out in accordance 
with the requirements and the primary objectives of the HCDA and other 
applicable laws, and whether the grantee has the continuing capacity to 
carry out those activities in a timely manner.
    III.F.1. Timely distribution and expenditure of funds. HUD waives 
the provisions at 24 CFR 570.494 and 24 CFR 570.902 regarding timely 
distribution and expenditure of funds and establishes an alternative 
requirement providing that each grantee must expend 100 percent of its 
allocation within six years of the date HUD signs the grant agreement. 
HUD may extend the period of performance administratively, if good 
cause for such an extension is provided by the grantee and approved by 
HUD.\27\ When the period of performance has ended, HUD will close out 
the grant and any remaining funds not expended by the grantee on 
appropriate programmatic purposes will be recaptured by HUD.
---------------------------------------------------------------------------

    \27\ View HUD's Policy Bulletin provides additional guidance for 
grantees that request an extension to the period of performance 
here: https://www.hud.gov/sites/dfiles/CPD/documents/Policy-Bulletin-Periods-of-Performance-2023-09-14-Final.pdf.
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    III.F.2. Review of continuing capacity. Upon a determination by HUD 
that the grantee has not carried out its CDBG-DR activities and 
certifications in accordance with the requirements in the Universal 
Notice, HUD will undertake a further review to determine if the grantee 
has the continuing capacity to carry out its activities in a timely 
manner. In making this determination, HUD will consider the nature and 
extent of the recipient's performance deficiencies, the actions taken 
by the recipient to address the deficiencies, and the success or likely 
success of such actions. HUD may then apply the following corrective 
and remedial actions as appropriate:
    III.F.2.a. Corrective and remedial actions. To effectively 
administer the CDBG-DR program in a manner that facilitates recovery, 
particularly the alternative requirements permitting States to act 
directly to carry out eligible activities, HUD is waiving 42 U.S.C. 
5304(e) to the extent necessary to establish the following alternative 
requirement: HUD may undertake corrective and remedial actions for 
States in accordance with the authorities for CDBG Entitlement grantees 
in subpart O (including corrective and remedial actions in 24 CFR 
570.910, 570.911, and 570.913) or 24 CFR part 570, subpart I. In 
response to a deficiency, HUD may issue a warning letter followed by a 
recommended corrective action that may include a management plan which 
assigns responsibility for further administration of the grant to 
specific entities or persons. Failure to comply with a corrective 
action may result in the termination, reduction, or limitation of 
payments to grantees receiving CDBG-DR funds.
    III.F.2.b. Additional criteria and specific conditions to mitigate 
risk. To ensure effective grantee implementation of the financial 
controls, procurement processes, and other procedures that are the 
subject of the certification by the Secretary, HUD has and may continue 
to establish specific criteria and conditions for each grant award as 
provided for at 2 CFR 200.206 and 200.208, respectively, to mitigate 
the risk of the grant. The Secretary shall specify any such criteria 
and the resulting conditions in the grant conditions governing the 
award. These criteria may include, but need not be limited to, a 
consideration of the internal control framework established by the 
grantee to ensure compliant implementation of its financial controls, 
procurement processes and payment of funds to eligible entities, as 
well as the grantee's risk management strategy for information 
technology systems established to implement CDBG-DR funded programs. 
Additionally, the Secretary may amend the grant conditions to mitigate 
risk of a grant award at any point at which the Secretary determines a 
condition to be required to protect the Federal financial interest or 
to advance recovery.

III.G. Grantee Reporting Requirements in the Disaster Recovery Grant 
Reporting (DRGR) System

    The DRGR System is used to support HUDs oversight of grantees 
throughout the lifecycle of the grant through grantee submission of the 
public action plan, DRGR Action Plan, grantee reporting requirements, 
and drawing grant funds.
    III.G.1. Submitting the DRGR Action Plan. The DRGR Action Plan is 
populated after the submission of both the optional Admin Action Plan 
and the required Action Plan (the submission process will be described 
in the applicable AAN). Both the Admin Action Plan and Action Plan are 
defined in section I.A. The DRGR Action Plan is the process a grantee 
undergoes to set up its detailed projects and activities within the 
DRGR system for HUD to track progress and compliance throughout the 
grant lifecycle and to facilitate the draw of CDBG-DR funds.
    III.G.2. Grantee reporting requirements in DRGR. HUD waives the 
requirements for submission of a performance report pursuant to 42 
U.S.C. 12708(a), 24 CFR 91.520, and annual status and evaluation 
reports

[[Page 1789]]

that are due each fiscal year under 24 CFR 1003.506(a). Alternatively, 
HUD establishes an alternative requirement that grantees enter 
information in the DRGR system on a quarterly basis, which is referred 
to as a performance report within the DRGR system (commonly referred to 
as the quarterly performance report (QPR)). Performance reports must be 
submitted on a quarterly basis until all funds have been expended and 
the grantee has reported on accomplishments and submitted all required 
materials for closeout. Once a grant is closed, grantees will shift to 
annual reporting as described in section III.B.12.e.(3).
    III.G.2.a. Maintain grantee records within DRGR. The information in 
the DRGR system must contain sufficient detail to permit HUD's review 
of grantee performance and to enable remote review of grantee data to 
allow HUD to assess compliance and risk. Grantees must use the DRGR 
system to:
    i. Enter projects into the DRGR Action Plan at a level of detail 
sufficient to allow HUD to determine grantee compliance: (1) 
appropriate activity type, (2) national objective, and (3) responsible 
entity;
    ii. Document grantee's oversight of its disaster recovery projects 
through project level reporting (e.g., summary information on grantees' 
monitoring visits and reports, audits, technical assistance);
    iii. For direct benefit activities only, enter summary data on 
completed applications for assistance and the number of beneficiaries 
assisted for each activity each quarter in total and for the following 
subcategories: (1) persons with disabilities, (2) age, (3) familial 
status, (4) LEP persons, (5) LMI persons, (6) race, and (7) ethnicity; 
and
    iv. If applicable, track program income receipts, disbursements, 
revolving loan funds, and leveraged funds.
    III.G.2.b. Timeline for submitting grantee's initial performance 
report. The grantee's first performance report is due 30 calendar days 
after the first full calendar quarter after HUD signs the grant 
agreement.
    III.G.2.c. Quarterly submission of performance report in DRGR. 
Grantees must submit a performance report through the DRGR system no 
later than 30 calendar days following the end of each calendar quarter. 
To submit a performance report, the DRGR Action Plan must be in 
``Reviewed and Approved'' status in the DRGR system. Therefore, a 
grantee must submit any amendments (substantial or nonsubstantial) to 
the DRGR Action Plan at least 45 calendar days prior to the performance 
report deadline (i.e., QPR deadline). For all activities, the address 
of each CDBG-DR assisted property must be recorded in the performance 
report. Once the grantee submits the performance report into DRGR, they 
should email their assigned HUD CPD staff member to confirm submission. 
HUD will review the submitted performance report with the HUD 
Performance Report Review Guide.
    III.G.2.c.(i). Reviewed and approved performance report. Once the 
assigned HUD CPD staff member approves the performance report, the 
grantee must publish a version of the performance report that omits PII 
on the grantee's official disaster recovery website within three 
calendar days of HUD's approval.
    III.G.2.c.(ii). Rejected performance report. If the grantee's 
assigned HUD CPD staff member identifies errors or gaps through the HUD 
Performance Report Review Guide, HUD may reject the performance review 
and indicate the areas that need to be corrected. The grantee must make 
the revisions within 30 calendar days and resubmit the performance 
review in DRGR. If the assigned HUD CPD staff member finds the updated 
performance review to be satisfactory, the grantee must publish a 
version of the performance review that omits PII reported in the 
performance review, as approved by HUD, within three calendar days of 
HUD approval. If a satisfactory performance report is not submitted in 
30 calendar days, HUD may block access to CDBG-DR funds until a 
satisfactory performance report is submitted, or may withdraw and 
reallocate funding if HUD determines, after notice and opportunity for 
a hearing, that the jurisdiction did not submit a satisfactory 
performance report.
    III.G.3. Using DRGR to draw grant funds. After the grantee's DRGR 
Action Plan is approved, the grantee can create and approve vouchers, 
also called drawdowns in DRGR at the activity level. DRGR is directly 
linked to the Line of Credit Control System (LOCCS), a Federal web-
based system administered by the U.S. Treasury that allows grantees to 
request and receive funds obligated by HUD under a grant agreement as 
permitted by 2 CFR part 200, subpart E.

IV. Assistance Listing Numbers

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

V. Finding of No Significant Impact

    A Finding of No Significant Impact (FONSI) with respect to the 
environment has been made in accordance with HUD regulations at 24 CFR 
part 50, which implement section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is 
available online on HUD's CDBG-DR website at https://www.hud.gov/program_offices/comm_planning/cdbg-dr and for public inspection between 
8 a.m. and 5 p.m. weekdays in the Regulations Division, Office of 
General Counsel, Department of Housing and Urban Development, 451 7th 
Street SW, Room 10276, Washington, DC, 20410-0500. Due to security 
measures at the HUD Headquarters building, an advance appointment to 
review the docket file must be scheduled by calling the Regulations 
Division at 202-708-3055 (this is not a toll-free number). HUD welcomes 
and is prepared to receive calls from individuals who are deaf or hard 
of hearing, as well as individuals with speech or communication 
disabilities. To learn more about how to make an accessible telephone 
call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

Adrianne R. Todman,
Deputy Secretary Performing the Duties of the Secretary of HUD.

Appendix A. Certifications Waiver and Alternative Requirement for Admin 
Action Plan Submission

    Each grantee choosing to submit an Admin Action Plan must 
complete the certifications listed within this appendix and submit 
it with the Admin Action Plan.
    Sections 104(b)(4), (c), and (m) of the HCDA (42 U.S.C. 
5304(b)(4), (c), and (m)), sections 106(d)(2)(C) and (D) of the HCDA 
(42 U.S.C. 5306(d)(2)(C) and (D)), and section 106 of the Cranston-
Gonzalez National Affordable Housing Act (42 U.S.C. 12706), and 
regulations at 24 CFR 91.225 and 91.325 are waived and replaced with 
the alternative requirement in section I.B.5.
    Additionally, HUD is waiving section 104(a)-(c) and (d)(1) of 
the HCDA (42 U.S.C. 5304), section 106(c)(1) and (d) of the HCDA (42 
U.S.C. 5306), section 210 of the Uniform Relocation Assistance and 
Real Property Acquisition Policies Act of 1970, as amended (``the 
Uniform Act'') (42 U.S.C. 4630), section 305 of the Uniform Act (42 
U.S.C. 4655), and regulations at 24 CFR 91.225(a)(2), (6), and (7), 
91.225(b)(7), 91.325(a)(2), (6), and (7), 49 CFR 24.4(a), and 24 CFR 
42.325 only to the extent necessary to allow grantees to receive a 
portion of their allocation for program administrative costs before 
submitting other statutorily required certifications. Each grantee 
receiving an allocation under an AAN must make the following 
certifications with its Admin Action Plan:

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    a. Compliance with Anti-discrimination Laws--The grantee 
certifies that the grant will be conducted and administered in 
conformity with title VI of the Civil Rights Act of 1964 (42 U.S.C. 
2000d), the Fair Housing Act (42 U.S.C. 3601-3619), and implementing 
regulations.
    b. Affirmatively Further Fair Housing: The grantee certifies 
that it will affirmatively further fair housing.
    c. Anti-Lobbying: The grantee certifies its compliance with the 
restrictions on lobbying required by 24 CFR part 87, together with 
disclosure forms, if required by part 87.
    d. Authority of Grantee: The grantee certifies that the Admin 
Action Plan for disaster recovery is authorized under State and 
local law (as applicable) and that the grantee, and any entity or 
entities designated by the grantee, and any contractor, 
subrecipient, or designated public agency carrying out an activity 
with CDBG-DR funds, possess(es) the legal authority to carry out the 
program for which it is seeking funding, in accordance with 
applicable HUD regulations as modified by waivers and alternative 
requirements.
    e. Consistency with the Action Plan: The grantee certifies that 
activities to be undertaken with CDBG-DR funds are consistent with 
its Admin Action Plan.
    f. Citizen Participation: The grantee certifies that it is 
following a detailed citizen participation plan that satisfies the 
requirements of 24 CFR 91.115 or 91.105 (except as provided for in 
waivers and alternative requirements). Also, each local government 
receiving assistance from a State grantee must follow a detailed 
citizen participation plan that satisfies the requirements of 24 CFR 
570.486 (except as provided for in waivers and alternative 
requirements).
    g. Use of Funds: The grantee certifies that it is complying with 
each of the following criteria:
    (1) Purpose of the Funds. Funds will be used solely for 
necessary expenses related to disaster relief, long-term recovery, 
restoration of infrastructure and housing, economic revitalization, 
and mitigation in the most impacted and distressed areas for which 
the President declared a major disaster pursuant to the Stafford Act 
(42 U.S.C. 5121 et seq.).
    (2) Maximum Feasibility Priority. With respect to activities 
expected to be assisted with CDBG-DR funds, the Admin Action Plan 
has been developed so as to give the maximum feasible priority to 
activities that will benefit low- and moderate-income families.
    (3) Overall benefit. The aggregate use of CDBG-DR funds shall 
principally benefit low- and moderate-income families in a manner 
that ensures that at least 70 percent (or another percentage 
permitted by HUD in a waiver) of the grant amount is expended for 
activities that benefit such persons.
    (4) Special Assessment. The grantee will not attempt to recover 
any capital costs of public improvements assisted with CDBG-DR grant 
funds, by assessing any amount against properties owned and occupied 
by persons of low- and moderate-income, including any fee charged or 
assessment made as a condition of obtaining access to such public 
improvements, unless: (a) the grant funds are used to pay the 
proportion of such fee or assessment that relates to the capital 
costs of such public improvements that are financed from revenue 
sources other than under this title; or (b) for purposes of 
assessing any amount against properties owned and occupied by 
persons of moderate income, the grantee certifies to the Secretary 
that it lacks sufficient CDBG funds (in any form) to comply with the 
requirements of clause (a).
    h. Excessive Force: The grantee certifies that it has adopted 
and is enforcing the following policies, and, in addition, State 
grantees must certify that they will require local governments that 
receive their grant funds to certify that they have adopted and are 
enforcing:
    (1) A policy prohibiting the use of excessive force by law 
enforcement agencies within its jurisdiction against any individuals 
engaged in nonviolent civil rights demonstrations; and
    (2) A policy of enforcing applicable State and local laws 
against physically barring entrance to or exit from a facility or 
location that is the subject of such nonviolent civil rights 
demonstrations within its jurisdiction.
    i. Grant Timeliness: The grantee certifies that it (and any 
subrecipient or administering entity) currently has or will develop 
and maintain the capacity to carry out disaster recovery activities 
in a timely manner and that the grantee has reviewed the 
requirements applicable to the use of grant funds.
    j. Environmental Requirements: The grantee certifies that it 
will comply with environmental requirements at 24 CFR part 55 (as 
applicable) and 24 CFR part 58.
    k. Compliance with Laws: The grantee certifies that it will 
comply with the provisions of title I of the HCDA and with other 
applicable laws.

Appendix B. Certifications Waiver and Alternative Requirement for 
Action Plan Submission.

    Sections 104(b)(4), (c), and (m) of the HCDA (42 U.S.C. 
5304(b)(4), (c) and (m)), sections 106(d)(2)(C) and (D) of the HCDA 
(42 U.S.C. 5306(d)(2)(C) and (D)), and section 106 of the Cranston-
Gonzalez National Affordable Housing Act (42 U.S.C. 12706), and 
regulations at 24 CFR 91.225 and 91.325 are waived and replaced with 
the following alternative. Each grantee receiving an allocation 
under an AAN must make the following certifications with its action 
plan:
    a. Compliance with Anti-discrimination Laws--The grantee 
certifies that the grant will be conducted and administered in 
conformity with title VI of the Civil Rights Act of 1964 (42 U.S.C. 
2000d), the Fair Housing Act (42 U.S.C. 3601-3619), and implementing 
regulations.
    b. Affirmatively Further Fair Housing--The grantee certifies it 
will affirmatively further fair housing.
    c. Uniform Relocation Act and Residential Anti-displacement and 
Relocation Plan--The grantee certifies that it:
    (1) will comply with the acquisition and relocation requirements 
of the Uniform Act, and implementing regulations at 49 CFR part 24, 
as such requirements may be modified by waivers or alternative 
requirements;
    (2) has in effect and is following a RARAP in connection with 
any activity assisted with CDBG-DR grant funds that fulfills the 
requirements of Section 104(d), 24 CFR part 42, and 24 CFR part 570, 
as amended by waivers and alternative requirements.
    d. Anti-Lobbying--The grantee certifies its compliance with the 
restrictions on lobbying required by 24 CFR part 87, together with 
disclosure forms, if required by part 87.
    e. Authority of Grantee--The grantee certifies that the Action 
Plan for disaster recovery is authorized under State and local law 
(as applicable) and that the grantee, and any entity or entities 
designated by the grantee, and any contractor, subrecipient, or 
designated public agency carrying out an activity with CDBG-DR 
funds, possess(es) the legal authority to carry out the program for 
which it is seeking funding, in accordance with applicable HUD 
regulations as modified by waivers and alternative requirements.
    f. Consistency with the Action Plan--The grantee certifies that 
activities to be undertaken with CDBG-DR funds are consistent with 
its action plan.
    g. Section 3--The grantee certifies that it will comply with 
section 3 of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701u) and implementing regulations at 24 CFR part 75.
    h. Citizen Participation--The grantee certifies that it is 
following a detailed citizen participation plan that satisfies the 
requirements of 24 CFR 91.115 or 91.105 (except as provided for in 
waivers and alternative requirements). Also, each local government 
receiving assistance from a State grantee must follow a detailed 
citizen participation plan that satisfies the requirements of 24 CFR 
570.486 (except as provided for in waivers and alternative 
requirements).
    i. Consultation with Local Governments (STATE ONLY)--State 
grantee certifies that it has consulted with all disaster-affected 
local governments (including any CDBG entitlement grantees), Indian 
Tribes, and any local public housing authorities in determining the 
use of funds, including the method of distribution of funding, or 
activities carried out directly by the State.
    j. Use of Funds--The grantee certifies that it is complying with 
each of the following criteria:
    (1) Purpose of the funding. Funds will be used solely for 
necessary expenses related to disaster relief, long-term recovery, 
restoration of infrastructure and housing, economic revitalization, 
and mitigation in the most impacted and distressed areas for which 
the President declared a major disaster pursuant to the Stafford Act 
(42 U.S.C. 5121 et seq.).
    (2) Maximum Feasibility Priority. With respect to activities 
expected to be assisted with CDBG-DR funds, the Action Plan has been 
developed so as to give the maximum feasible priority to activities 
that will benefit low- and moderate-income families.
    (3) Overall benefit. The aggregate use of CDBG-DR funds shall 
principally benefit low- and moderate-income families in a manner 
that ensures that at least 70 percent

[[Page 1791]]

(or another percentage permitted by HUD in a waiver) of the grant 
amount is expended for activities that benefit such persons.
    (4) Special Assessment. The grantee will not attempt to recover 
any capital costs of public improvements assisted with CDBG-DR grant 
funds, by assessing any amount against properties owned and occupied 
by persons of low- and moderate-income, including any fee charged or 
assessment made as a condition of obtaining access to such public 
improvements, unless: (a) disaster recovery grant funds are used to 
pay the proportion of such fee or assessment that relates to the 
capital costs of such public improvements that are financed from 
revenue sources other than under this title; or (b) for purposes of 
assessing any amount against properties owned and occupied by 
persons of moderate income, the grantee certifies to the Secretary 
that it lacks sufficient CDBG funds (in any form) to comply with the 
requirements of clause (a).
    k. Excessive Force--The grantee certifies that it has adopted 
and is enforcing the following policies, and, in addition, State 
grantees must certify that they will require local governments that 
receive their grant funds to certify that they have adopted and are 
enforcing:
    (1) A policy prohibiting the use of excessive force by law 
enforcement agencies within its jurisdiction against any individuals 
engaged in nonviolent civil rights demonstrations; and
    (2) A policy of enforcing applicable State and local laws 
against physically barring entrance to or exit from a facility or 
location that is the subject of such nonviolent civil rights 
demonstrations within its jurisdiction.
    l. Grant Timeliness--The grantee certifies that it (and any 
subrecipient or administering entity) currently has or will develop 
and maintain the capacity to carry out disaster recovery activities 
in a timely manner and that the grantee has reviewed the 
requirements applicable to the use of grant funds.
    m. Lead-Based Paint--The grantee certifies that its activities 
concerning lead-based paint will comply with the requirements of 24 
CFR part 35, subparts A, B, J, K, and R.
    n. Environmental Requirements--The grantee certifies that it 
will comply with environmental requirements at 24 CFR part 55 (as 
applicable) and 24 CFR part 58.
    o. Compliance with Laws--The grantee certifies that it will 
comply with the provisions of title I of the HCDA and with other 
applicable laws.
    p. Order of Assistance--The grantee certifies that it will 
comply with the statutory order of assistance listed in Appendix C 
paragraph 9 and will verify if FEMA or USACE funds are available for 
an activity, or the costs are reimbursable by FEMA or USACE before 
awarding CDBG-DR assistance for the costs of carrying out the same 
activity.

Appendix C. Duplication of Benefits (DOB)

Appendix C Outline
1. Introduction.
2. The Stafford Act.
3. CDBG-DR Appropriations Acts and Federal Register Notices.
4. Basic DOB calculation framework.
    4.a. Assess applicant's total need.
    4.b. Identify total assistance.
    4.c. Exclude non-duplicative amounts.
    4.c.(i). Funds for a different purpose.
    4.c.(ii). Funds for the same purpose, different allowable use.
    4.d. Identify DOB amount and calculate the CDBG-DR award.
    4.e. Reassess unmet need when necessary.
5. Necessary and reasonable requirements.
6. Special considerations.
7. Subsidized loans.
8. Exceptions when subsidized loans are not a duplication.
    8.a. Short-term subsidized loans for pre-award costs incurred by 
grantees or subrecipients that are later reimbursed with CDBG-DR.
    8.b. Declined or cancelled subsidized loans.
9. Order of assistance.
10. Multiple disasters.
11. DOB recordkeeping.
12. Agreement to repay.
13. Collecting a duplication.
    13.a. Not in the best interest of the Federal government to 
collect.

Appendix C. Duplication of Benefits (DOB)

    1. Introduction. CDBG-DR grants are one of multiple Federal 
sources which assist disaster recovery. These sources of Federal 
assistance often can be used for the same purposes by grantees and 
disaster survivors. For this reason, the Stafford Act (42 U.S.C. 
5121-5207) and CDBG-DR appropriations acts require HUD and its 
grantees to coordinate with other Federal agencies that provide 
disaster assistance to prevent the DOB. The Stafford Act's 
prohibition on DOB aims to ensure that Federal assistance serves 
only to ``supplement insurance and other forms of disaster 
assistance'' (42 U.S.C. 5170).
    CDBG-DR grantees must prevent DOB when carrying out eligible 
activities. A duplication occurs when a person, household, business, 
or other entity receives disaster assistance from multiple sources 
for the same recovery purpose, and the total assistance received for 
that purpose is more than the total need. The amount of the DOB is 
the amount received in excess of the total need for the same 
purpose. When the total need for eligible activities is more than 
total assistance for the same purpose, the difference between these 
amounts is an ``unmet need.'' Grantees must limit the awarding of 
CDBG-DR assistance to unmet needs for eligible activities to prevent 
a DOB. Because the Universal Notice permits reimbursement, as 
described in section III.B.14., unmet needs can include amounts 
needed for reimbursement.
    2. The Stafford Act. The Stafford Act is the primary legal 
authority establishing the framework for the Federal government to 
provide disaster and emergency assistance.
    Section 312 of the Stafford Act directs Federal agencies that 
provide disaster assistance to assure that people, businesses, or 
other entities do not receive financial assistance that duplicates 
any part of their disaster loss covered by insurance or another 
source (42 U.S.C. 5155(a)). Section 312 also makes recipients of 
Federal disaster assistance liable for repayment of the amount of 
Federal disaster assistance that duplicates benefits available for 
the same purpose from another source (42 U.S.C. 5155(c)).
    The Stafford Act also provides that when assistance covers only 
a part of the recipient's disaster needs, additional assistance to 
cover needs not met by other sources will not cause a DOB (42 U.S.C. 
5155(b)(3)). Therefore, CDBG-DR assistance may only pay for eligible 
activities to address unmet needs. This section advises grantees on 
the calculation of unmet needs through a DOB analysis.
    3. CDBG-DR Appropriations Acts and Federal Register Notices. 
CDBG-DR funds are made available for ``necessary expenses'' by 
appropriations acts that contain statutory requirements on the use 
of the grant funds. Grantees are subject to the requirements of the 
appropriations acts, the applicable AAN, and the Universal Notice.
    4. Basic DOB calculation framework. The Stafford Act requires a 
fact specific inquiry into assistance received by each applicant. 
The Universal Notice refers to the subject of a DOB review as an 
``applicant'' or ``CDBG-DR applicant'' and uses the term 
``applicant'' to include individuals, businesses, households, or 
other entities that apply to the grantee or a subrecipient for CDBG-
DR assistance, as well as entities that use CDBG-DR assistance for 
an activity without submitting an application (e.g., the department 
or agency of the grantee administering the grant, other State or 
local departments or agencies, or local governments).
    A grantee is prohibited from making a blanket determination that 
CDBG-DR assistance under one of its programs or activities does not 
duplicate another category or source of assistance. The grantee must 
conduct an individualized review (i.e., a DOB analysis) for each 
applicant to determine that the amount of assistance will not cause 
a DOB by exceeding the unmet needs of that applicant. A review 
specific to each applicant is necessary because assistance available 
to each applicant varies widely based on individual insurance 
coverage, eligibility for various sources of assistance, and other 
factors.
    This section establishes the primary considerations that must be 
part of a DOB analysis when providing CDBG-DR assistance, and a 
framework for analyzing need and avoiding DOB when calculating 
awards. CDBG-DR grantees have discretion to develop policies and 
procedures that tailor their DOB analyses to their own programs and 
activities so long as the grantee's policies and procedures are 
consistent with the requirements of the Universal Notice. If the 
grantee modifies its DOB procedures after the Secretary certifies 
that the grantee's DOB procedures are adequate, the grantee's 
modified procedures must meet the standards identified here in 
Appendix C. and section II.A.1.e. of the Universal Notice.
    4.a. Assess applicant's total need. A grantee must determine an 
applicant's total need. A grantee's DOB analysis must reflect the 
applicant's current need (i.e., total need) at the time the grantee 
is conducting the DOB

[[Page 1792]]

analysis and calculating the amount of CDBG-DR assistance the 
applicant is eligible to receive. However, if the grantee's Action 
Plan permits CDBG-DR assistance to reimburse costs of CDBG-DR 
eligible activities undertaken by the applicant before submitting an 
application, the total need also includes these costs. Generally, 
total need is calculated without regard to the grantee's program-
specific caps on the amount of assistance.
    For rehabilitation, reconstruction, or new construction 
activities, the need can be reasonably documented using construction 
cost estimates.
    For recovery programs of the grantee that do not entail physical 
rebuilding, such as special economic development activities to 
provide an affected business with working capital, the total need 
will be determined by the requirements or parameters of the program 
or activity. For special economic development activities, total need 
should be guided by standard underwriting guidelines (when required 
by section III.D.7.f.). CDBG-DR grantees and subrecipients must 
comply with the underwriting guidelines in Appendix A of 24 CFR part 
570 when assisting a for-profit entity as part of a special economic 
development project.
    The grantee's assessment of total need must consider in-kind 
donations of materials or services that are known to the grantee at 
the time it conducts an applicant's DOB analysis and makes the CDBG-
DR award. In-kind donations are non-cash contributions, such as 
donations of professional services, use of construction equipment, 
or contributions of building materials. In-kind donations are not 
``financial assistance'' that creates a DOB under the Stafford Act, 
but they can reduce the applicant's total need by reducing projected 
CDBG-DR activity costs. When applicable, grantees must determine the 
value of any in-kind donations that would reduce the CDBG-DR 
activity costs and adjust the applicant's total need accordingly.
    4.b. Identify total assistance. To calculate DOB, grantees are 
required to identify ``total assistance.'' For the Universal Notice, 
total assistance includes all reasonably identifiable financial 
assistance available to an applicant.
    Total assistance includes resources such as cash awards, 
insurance proceeds, grants, and subsidized loans received by or 
available to each CDBG-DR applicant, including awards under local, 
State, or Federal programs, and from private or nonprofit charity 
organizations. At a minimum, the grantee's efforts to identify total 
assistance must include a review to determine whether the applicant 
received FEMA, SBA, insurance, and any other major forms of 
assistance (e.g., State disaster assistance programs) generally 
available to applicants.
    Total assistance does not include personal assets such as money 
in a checking or savings account (excluding insurance proceeds or 
disaster assistance deposited into the applicant's account), 
retirement accounts, credit cards and lines of credit, in-kind 
donations (although these non-cash contributions can reduce the 
total need when known to the grantee), and private loans.
    For the Universal Notice, a private loan is a loan that is not 
provided by or guaranteed by a governmental entity, and that 
requires the CDBG-DR applicant (the borrower) to repay the full 
amount of the loan (principal and interest) under typical commercial 
lending terms, e.g., the loan is not forgivable. For DOB analyses, 
private loans are not financial assistance and need not be 
considered in the DOB calculation, regardless of whether the 
borrower is a person or entity.
    By contrast, subsidized loans are considered financial 
assistance unless an exception applies (see paragraph 8.a. or 8.b.).
    Total assistance includes available assistance. Assistance is 
available if an applicant: (1) would have received it by acting in a 
reasonable manner, or in other words, by taking the same practical 
steps toward funding recovery as would disaster survivors faced with 
the same situation but not eligible to receive CDBG-DR assistance; 
(2) has received the assistance and has legal control over it, or 
(3) anticipates receiving assistance that has been awarded and 
accepted, but has not received it yet. For example, if a local 
government seeks CDBG-DR assistance to fund part of a project that 
also has been awarded FEMA Hazard Mitigation Grant Program (HMGP) 
assistance, the entire HMGP award must be included in the 
calculation of total assistance even if FEMA obligates the first 
award increment for the project, but subsequent increments remain 
unfunded until certain project milestones are met.
    Applicants for CDBG-DR assistance are expected to seek insurance 
or other assistance to which they are legally entitled under 
existing policies and contracts, and to behave reasonably when 
negotiating payments to which they may be entitled. For example, it 
may be reasonable for an applicant to elect to receive an immediate 
lump sum insurance settlement based on the estimated cost of 
rehabilitation instead of waiting for a longer period of time for 
the insurance company to calculate reimbursement based on actual 
replacement costs, even if the reimbursement based on actual costs 
would exceed the lump sum insurance settlement.
    HUD generally considers assistance to be available if it is 
awarded to the applicant but is administered by another party 
instead of being directly deposited with the applicant. For example, 
if an entity administering homeowner rehabilitation assistance pays 
a contractor directly to complete the rehabilitation, the assistance 
is still considered available to the applicant.
    By contrast, funds that are not available to an applicant must 
be excluded from the DOB analysis when identifying total assistance. 
For example, insurance or rehabilitation assistance received by a 
previous owner of a disaster damaged housing unit is not available 
to a current owner that acquired the unit by sale or transfer 
(including a current owner that inherited the unit as a result of 
the death of the previous owner) unless the current owner is a co-
recipient of that assistance.
    Funds are not available to an applicant if the applicant does 
not have legal control of the funds when they are received. For 
example, if a homeowner's mortgage requires insurance proceeds to be 
applied to reduce the unpaid mortgage principal, then the lender/
mortgage holder (not the homeowner) has legal control over those 
funds. The homeowner is legally obligated to use insurance proceeds 
for the purpose of reducing the unpaid mortgage principal and does 
not have a choice in using them for any other purpose, such as to 
rehabilitate the house. Under these circumstances, insurance 
proceeds do not reduce CDBG-DR rehabilitation assistance 
eligibility.
    Alternatively, if a lender requires use of insurance for 
rehabilitation, or a disaster-affected homeowner chooses to apply 
insurance proceeds received for damage to the building to reduce an 
unpaid mortgage principal, these insurance proceeds are considered 
available assistance to the applicant and may reduce the amount of 
CDBG-DR funds the grantee can provide for rehabilitation.
    4.c. Exclude non-duplicative amounts. Once a grantee has 
determined the total need and the total assistance, the grantee then 
determines if it must exclude non-duplicative amounts of financial 
assistance (known as ``exclusions'') from the applicant's total 
assistance to calculate the DOB amount. Grantees must exclude 
amounts that are: (1) provided for a different purpose than the 
CDBG-DR assistance; or (2) provided for the same purpose as the 
CDBG-DR assistance, but for a different, allowable use (cost). The 
``purpose'' of the assistance is the purpose for which the funds 
were provided by the entity that offered the financial assistance. 
Below, each of these categories is explained in greater detail.
    4.c.(i). Funds for a different purpose. Any assistance provided 
for a different purpose than the CDBG-DR assistance (i.e., the CDBG-
DR eligible activity) or a general, non-specific purpose (e.g., 
``disaster relief/recovery'') must be excluded from the total 
assistance when calculating the DOB amount.
    Insurance proceeds for damage or destruction of a building are 
funds for the same purpose as CDBG-DR assistance to rehabilitate or 
reconstruct that building. On the other hand, grantees may exclude, 
as non-duplicative, insurance proceeds provided for a different 
purpose (e.g., insurance proceeds for loss of contents and personal 
property, or insurance proceeds for loss of buildings (such as a 
detached garage) that the grantee has determined it will not assist 
with CDBG-DR funds). However, a grantee may treat all insurance 
proceeds as duplicative assistance if it is impractical to identify 
the portion of insurance proceeds that are for a different purpose 
than the CDBG-DR assistance.
    Similarly, CDBG-DR assistance paid to a homeowner as a housing 
incentive for the purpose of inducing the homeowner to sell the home 
to the grantee (e.g., in conjunction with a buyout) are for a 
different purpose than funds provided for interim housing (e.g., 
temporary assistance for rental housing during a period when a 
household is unable to reside in its home). In such a case, interim 
housing assistance may be excluded from the final DOB calculation as 
non-duplicative of funds paid for the housing incentive.

[[Page 1793]]

    4.c.(ii). Funds for the same purpose, different allowable use. 
Assistance provided for the same purpose as the CDBG-DR assistance 
(i.e., the CDBG-DR eligible activity) must be excluded when 
calculating the DOB amount if the applicant can document that the 
actual specific use of the assistance was allowable and for a 
different use (cost) than the CDBG-DR assistance. For example, an 
applicant uses financial assistance provided for housing 
rehabilitation to replace the roof and the CDBG-DR assistance is 
used to rehabilitate the house's interior. The financial assistance 
to replace the roof can be excluded from the DOB analyses as funds 
for a ``different allowable use'' even though the CDBG-DR assistance 
is provided for the same purpose (rehabilitation).
    When excluding this type of non-duplicative assistance, grantees 
must identify and document the purpose of the assistance for which 
the funds were provided and how the funds were used by the 
applicant. Grantees are advised to consult with HUD to determine 
what documentation is appropriate in this circumstance. As a 
starting point, grantees should consider whether the source of the 
assistance requires beneficiaries to maintain documentation of how 
the assistance was used.
    Whether the use of the non-CDBG-DR assistance is an allowable 
use depends on the rules imposed by the source that provided the 
assistance. For example, assume that a CDBG-DR grantee is 
administering a homeowner rehabilitation program and an applicant to 
the program can document that he/she previously received and used 
FEMA funds for interim housing costs (i.e., rent). If the grantee 
can document that FEMA permitted the applicant to use its assistance 
for the general purpose of meeting any housing need, the CDBG-DR 
grantee can exclude the FEMA assistance used for interim housing 
(e.g., a different allowable use) as non-duplicative of the CDBG-DR 
assistance for rehabilitation.
    If, on the other hand, the grantee has documentation that FEMA 
limited the use of FEMA funds to housing rehabilitation, then the 
full amount of the FEMA assistance must be considered for the 
specific purpose of housing rehabilitation and cannot be excluded if 
the applicant used those funds for interim housing. If interim 
housing is not an allowable use, the amount of the FEMA housing 
rehabilitation assistance used for interim housing is considered a 
DOB. If the grantee thinks the actual use of the FEMA assistance may 
be allowable, the CDBG-DR grantee should contact FEMA for 
clarification.
    Assistance provided for the purpose of housing rehabilitation 
are funds for the same purpose as CDBG-DR rehabilitation assistance. 
However, the grantee can exclude assistance used for different costs 
of the rehabilitation, which are a different allowable use 
(rehabilitation costs not assisted with CDBG-DR).
    Assistance provided for temporary or minor rehabilitation are 
funds for the same purpose as CDBG-DR rehabilitation assistance but 
may or may not constitute a DOB. If the assistance is used for minor 
or temporary rehabilitation to enable the applicant to live in their 
home instead of moving to temporary housing until rehabilitation can 
be completed, the grantee can undertake the remaining work necessary 
to complete rehabilitation. Further, the grantee's assessment of 
total need at the time of application may include the costs of 
replacing temporary materials with permanent construction and of 
completing mold remediation by removing drywall installed with other 
assistance. These types of costs to modify partially completed 
rehabilitation that the grantee determines are necessary to comply 
with the requirements of CDBG-DR assistance do not duplicate other 
assistance used for the partial rehabilitation.
    Grantees are encouraged to contact HUD for further guidance in 
cases when it is unclear whether non-CDBG-DR assistance for the same 
general purpose can be excluded from the DOB calculation because it 
was used for a different allowable use.
    4.d. Identify DOB amount and calculate the CDBG-DR award. The 
total DOB amount (i.e., the duplicative assistance) is calculated by 
subtracting the exclusions from the applicant's total assistance. 
Therefore, to calculate the maximum CDBG-DR award amount, the 
grantee must: (1) identify total need; (2) identify total 
assistance; (3) subtract exclusions from total assistance to 
determine the DOB amount; and (4) subtract the DOB amount from the 
applicant's total need to determine the maximum CDBG-DR award 
amount, which is normally equivalent to the applicant's unmet need.
    Note, there are several considerations that may change the 
maximum CDBG-DR award amount.
    First, the grantee is required to impose an award cap that 
limits the amount of assistance an applicant is eligible to receive, 
this may reduce the potential CDBG-DR assistance available to the 
applicant.
    Second, the grantee may increase the amount of an award if the 
applicant agrees to repay duplicative assistance it receives in the 
future (unless prohibited by a statutory order of assistance, as in 
the requirement to use FEMA or USACE assistance before CDBG-DR 
assistance discussed in section III.D. and here in Appendix C 
paragraph 9). Section 312(b) of the Stafford Act permits a grantee 
to provide CDBG-DR assistance to an applicant who is or may be 
entitled to receive assistance that would be duplicative if: (1) the 
applicant has not received the other assistance at the time the 
CDBG-DR grantee makes its award; and (2) the applicant agrees to 
repay the CDBG-DR grantee for any duplicative assistance once it is 
received. The agreement to repay from future funds may enable a 
faster recovery in cases when other sources of assistance are 
delayed (e.g., due to insurance litigation). HUD requires all 
grantees to enter into agreements with applicants before the 
applicant receives CDBG-DR assistance.
    Third, the applicant's CDBG-DR award may increase if a 
reassessment shows that the applicant has additional unmet need.
    4.e. Reassess unmet need when necessary. Long-term disaster 
recovery is a process, and applicants' recovery needs can change 
over time. An applicant's total need is calculated based on need 
estimates at a point in time and often represents the applicant's 
need at the time the DOB analysis is conducted by the grantee. As a 
result, a subsequent change in an applicant's circumstances can 
affect the applicant's total need and lead to additional unmet need 
or needs that were not met by CDBG-DR and other sources of 
assistance. Oftentimes, additional unmet need does not become 
apparent until after CDBG-DR assistance has been provided. Examples 
may include: a subsequent disaster that causes further damage to a 
partially rehabilitated home or business; an increase in the cost of 
construction materials; vandalism; contractor fraud; or theft of 
materials. Unmet need may also change if other resources become 
available to pay for costs of the activity (such as FEMA or USACE) 
and reduce the need for CDBG-DR assistance.
    To the extent that the applicant's total need was not fully met 
or was exacerbated by factors beyond the control of the applicant, 
the grantee may provide additional CDBG-DR funds to meet the 
increased unmet need.
    Grantees must be able to identify and document additional unmet 
needs, for example, by completing a professional inspection to 
verify the revised estimate of costs to rehabilitate or reconstruct 
damaged property.
    5. Necessary and reasonable requirements. The Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards in subpart E of 2 CFR part 200 (the Cost 
Principles) applicable to all CDBG-DR grantees and their 
subrecipients require that costs are necessary and reasonable. The 
Cost Principles are made applicable to States by 24 CFR 570.489(p) 
and to local governments through 24 CFR 570.502. State grantees are 
also subject to 24 CFR 570.489(d), which requires that States shall 
have fiscal and administrative requirements to ensure that grant 
funds are used ``for reasonable and necessary costs of operating 
programs.''
    Under the Cost Principles, a cost assigned to a grant ``is 
reasonable if, in its nature and amount, it does not exceed that 
which would be incurred by a prudent person under the circumstances 
prevailing at the time the decision was made to incur the cost'' (2 
CFR 200.404).
    Grantees must consider factors described at 2 CFR 200.404(a) 
through (e) when determining which types and amounts of cost items 
are necessary and reasonable. Based on these factors, HUD generally 
presumes that if a cost has been paid by another source, charging it 
to the Federal award violates the necessary and reasonable standard 
unless grant requirements permit reimbursement.
    6. Special considerations. The potential for DOB arises most 
frequently under homeowner rehabilitation programs but is not 
limited solely to that type of activity. The following examples do 
not form an exhaustive list of all CDBG-DR funded programs or 
activities. They are included to illustrate instances when 
duplicative assistance can occur when assisting other recovery 
activities:
    a. Assistance to businesses. Many grantees carry out economic 
revitalization programs that provide working capital assistance to

[[Page 1794]]

businesses. Generally, working capital assistance is calculated 
after assessing a business's ability to use its current assets to 
pay its current liabilities. The grantee's DOB analysis must 
consider total assistance, which includes all sources of financial 
assistance available to the applicant to pay a portion of 
liabilities that will become due. For example, a downtown business 
alliance might award business recovery grants from its funds to 
cover some of the same liabilities. Even if the downtown business 
alliance does not call its assistance ``working capital'' 
assistance, the amount the business received from the downtown 
business alliance to pay the same costs as the CDBG-DR funds is a 
DOB. Therefore, a grantee's basis for calculating CDBG-DR economic 
development assistance and the purposes for which the applicant can 
use the assistance should be clearly identified so that grantees can 
prevent a DOB. As discussed above, assets such as cash and cash 
equivalents (excluding deposits of insurance proceeds or other 
disaster assistance), inventories, short-term investments and 
securities, accounts receivable, and other assets of the business 
are not financial assistance, although those assets may be relevant 
to underwriting.
    b. Assistance for infrastructure. State grantees may assist 
State or local government entities by providing funding to restore 
infrastructure (public facilities and improvements) after a 
disaster. CDBG-DR funds used directly by State and local governments 
for public facilities and improvements, or other purposes are also 
subject to the DOB requirements of the Stafford Act. For example, a 
wastewater treatment facility owned by a local government may need 
to be rehabilitated. In this instance, total assistance, for a DOB 
analysis, would not only include any other Federal assistance 
available to rehabilitate the facility, but it must also include any 
local funds that are available for this activity. And if local funds 
were previously designated or planned for the activity, but are no 
longer available, the grantee should document that the local 
government recipient does not have funds set aside for the activity 
in any capital improvement plan (or similar document showing planned 
use of funds).
    c. Payments made under the Uniform Act. A displaced person (as 
defined under 49 CFR 24.2(a) is eligible for rental assistance 
payments under the Uniform Act. Relocation payments made under the 
URA, as well as under CDBG's optional relocation assistance 
provisions of 24 CFR 570.606(d), are subject to DOB requirements in 
the Universal Notice, as well as DOB requirements under the URA that 
prohibit payments for the same ``purpose and effect'' as another 
payment to a displaced person (49 CFR 24.3). To comply with CDBG-DR 
DOB requirements, before issuance of rental assistance payments 
required by the URA, grantees must complete a DOB analysis. For 
example, a CDBG-DR grantee must check FEMA assistance data to 
determine that FEMA did not provide rental assistance payments 
during the same time period (under the Uniform Act or as part of a 
FEMA Individual Assistance Award). Please note that while CDBG-DR 
funds cannot duplicate other assistance for the same purpose, 
advisory services and the provision of notices required under the 
Uniform Act are not subject to this analysis because they are not 
financial assistance to the person, and therefore must be provided 
in accordance with the Uniform Act.
    7. Subsidized Loans. For the Universal Notice, subsidized loans 
(including forgivable loans) are loans other than private loans. 
Subsidized loans are assistance that must be included in the DOB 
analysis, unless an exception applies. Paragraph 8 discusses these 
exceptions and related requirements for the treatment of subsidized 
loans in a DOB analysis. The full amount of a subsidized loan 
available to the applicant for the same purpose as CDBG-DR 
assistance is assistance that must be included in the DOB 
calculation unless one of the exceptions in paragraph 8 applies. A 
subsidized loan is available when it is accepted, meaning that the 
borrower has signed a note or other loan document that allows the 
lender to advance loan proceeds. Both SBA and FEMA provide 
subsidized loans for disaster recovery. Note that the statutory 
order of assistance provision pertaining to assistance from FEMA and 
USACE applies to grants and subsidized loans made by these agencies. 
Subsidized loans may also be available from other sources.
    Subsidized loans are financial assistance and therefore can 
duplicate financial assistance provided from another source unless 
an exception in paragraph 8 applies.
    8. Exceptions when subsidized loans are not a duplication. When 
an exception described in 8.a. or 8.b. applies, documentation 
required by those paragraphs must be maintained by the grantee.\28\ 
Without this documentation, any approved but undisbursed portion of 
a subsidized loan must be included in the grantee's calculation of 
the total assistance amount unless another exception applies.
---------------------------------------------------------------------------

    \28\ View HUD's closeout instructions for CDBG Programs, as may 
be amended, for additional guidance related to recordkeeping 
requirements published in CPD-22-14 here: https://www.hud.gov/sites/dfiles/OCHCO/documents/2022-14cpdn.pdf.
---------------------------------------------------------------------------

    8.a. Short-term subsidized loans for pre-award costs incurred by 
grantees or subrecipients that are later reimbursed with CDBG-DR. 
CDBG-DR funds may be used to reimburse pre-award costs of the 
grantee or subrecipient for eligible activities on or after the date 
of the disaster. If the grantee or subrecipient obtained a 
subsidized short-term loan (e.g., bridge loans) to pay for eligible 
costs before CDBG-DR funds became available (e.g., a low-interest 
loan from a local tax increment financing fund), the reimbursement 
of the costs paid by the loan does not create a duplication.
    8.b. Declined or cancelled subsidized loans. The amount of a 
subsidized loan that is declined or cancelled is not a DOB. To 
exclude declined or cancelled loan amounts from the DOB calculation, 
the grantee must document that all or a portion of the subsidized 
loan is cancelled or declined.
    (1) Declined SBA Loans: Declined loan amounts are loan amounts 
that were approved or offered by a lender in response to a loan 
application, but were turned down by the applicant, meaning the 
applicant never signed loan documents to receive the loan proceeds.
    CDBG-DR grantees shall not treat declined subsidized loans, 
including declined SBA loans, as a DOB (but are not prohibited from 
considering declined subsidized loans for other reasons, such as 
underwriting). A grantee is only required to document declined loans 
if information available to the grantee (e.g., the data the grantee 
receives from FEMA, SBA, or other sources) indicates that the 
applicant received an offer for subsidized loan assistance, and the 
grantee is unable to determine from that available information that 
the applicant declined the loan. If the grantee is aware that the 
applicant received an offer of loan assistance and cannot ascertain 
from available data that the applicant declined the loan, the 
grantee must obtain a written certification from the applicant that 
the applicant did not accept the subsidized loan by signing loan 
documents and did not receive the loan.
    (2) Cancelled Loans: Cancelled loans are loans (or portions of 
loans) that were initially accepted, but for a variety of reasons, 
all or a portion of the loan amount was not disbursed and is no 
longer available to the applicant.
    The cancelled loan amount is the amount that is no longer 
available. The loan cancellation may be due to default of the 
borrower, agreement by both parties to cancel the undisbursed 
portion of the loan, or expiration of the term for which the loan 
was available for disbursement. The following documentation is 
sufficient to demonstrate that any undisbursed portion of an 
accepted subsidized loan is cancelled and no longer available: (a) a 
written communication from the lender confirming that the loan has 
been cancelled and undisbursed amounts are no longer available to 
the applicant; or (b) a legally binding agreement between the CDBG-
DR grantee (or local government, Indian Tribe, or subrecipient 
administering the CDBG-DR assistance) and the applicant that 
indicates that the period of availability of the loan has passed and 
the applicant agrees not to take actions to reinstate the loan or 
draw any additional undisbursed loan amounts. For cancelled SBA 
loans, the grantee must notify the SBA that the applicant has agreed 
to not take any actions to reinstate the cancelled loan or draw any 
additional undisbursed loan amounts.
    9. Order of assistance. CDBG-DR appropriations acts generally 
include a statutory order of assistance for Federal agencies. 
Although the language may vary among appropriations, the statutory 
order of assistance typically provides that CDBG-DR funds may not be 
used for activities reimbursable by or for which funds are made 
available by FEMA or USACE. This means that grantees must verify 
whether FEMA or USACE funds are available for an activity (i.e., the 
application period is open) or the costs are reimbursable by FEMA or 
USACE (i.e., the grantee may receive FEMA or USACE assistance to 
reimburse the costs of the activity) before awarding CDBG-DR 
assistance for costs of carrying out the same activity. If FEMA or 
USACE are accepting applications for the activity, the applicant

[[Page 1795]]

must seek assistance from those sources before receiving CDBG-DR 
assistance. If the applicant's costs for the activity will be 
reimbursed by FEMA or USACE, the grantee cannot provide the CDBG-DR 
assistance for those costs. In the event that FEMA or USACE 
assistance is awarded after CDBG-DR to pay the same costs, it is the 
CDBG-DR grantee's responsibility to recapture CDBG-DR assistance 
that duplicates assistance from FEMA or USACE.
    Under the Stafford Act, a Federal agency that provides 
duplicative assistance must collect that assistance. For CDBG-DR 
grants, the grantee is required to collect duplicative assistance it 
provides. A grantee that does not collect duplicative CDBG-DR 
assistance that it provides may resolve this noncompliance by 
reimbursing its program account with non-Federal funds in the amount 
of the duplication and reprograming the use of the funds in 
accordance with applicable requirements to avoid other corrective or 
remedial actions.
    FEMA regulations at 44 CFR 206.191 set forth a delivery sequence 
that establishes which source of assistance is duplicative for 
certain programs. CDBG-DR assistance is not listed in FEMA's 
sequence, but as a practical matter, CDBG-DR assistance duplicates 
other sources received before CDBG-DR assistance for the same 
purpose and portion of need. As such, any CDBG-DR assistance that 
duplicates another source must be collected by the grantee. The 
mandatory agreement to repay (discussed in paragraph 12 below) can 
be used to prevent duplication by assistance that is available, but 
not yet received. If the duplicative assistance is received after 
CDBG-DR, the agreement will give the grantee the ability to collect 
the DOB.
    10. Multiple disasters. When multiple disasters occur in the 
same location, and the applicant has not recovered from the first 
disaster at the time of a second disaster, the assistance provided 
in response to the second disaster may duplicate assistance for the 
same purpose and need as assistance provided after the first 
disaster. HUD recognizes that in this scenario, DOB calculations can 
be complicated. Damage from a second disaster, for example, may 
destroy work funded and completed in response to the first disaster. 
The second disaster may also damage or destroy receipts and other 
documentation of how applicants expended assistance provided after 
the first disaster.
    Therefore, HUD is adopting the following policy that is 
applicable to circumstances when two disasters occur in the same 
area, and the applicant has not fully recovered from the first 
disaster before the second disaster occurs:
    Applicants are not required to maintain documentation related to 
the use of public disaster assistance (Federal, State, and local) 
beyond the period required by the agency that provided the 
assistance. If documentation cannot be provided, the grantee may 
accept a self-certification regarding how the applicant used the 
other agency's assistance, provided that the applicant is advised of 
the criminal and civil penalties that apply in cases of false claims 
and fraud, and the grantee determines that the applicant's total 
need is consistent with data the grantee has about the nature of 
damage caused by the disasters (e.g., flood inundation levels). For 
example, a second disaster strikes three years after an agency 
provided assistance in response to the first disaster, and that 
agency required applicants to maintain documentation for two years, 
the grantee may accept a self-certification regarding how the 
applicant used the other agency's assistance. Additionally, if a 
second disaster strikes and destroys an applicant's paperwork, the 
grantee may make a determination to accept a self-certification 
regarding how the applicant used the other assistance.
    11. DOB recordkeeping. The grantee must document compliance with 
DOB requirements. Policies and procedures for DOB must be specific 
for each program funded by the CDBG-DR grantee and should be 
commensurate with risk. Grantees should be especially careful to 
sufficiently document the DOB analysis for activities they are 
carrying out directly. Insufficient documentation on DOB can lead to 
findings, which can be difficult to resolve if records are missing, 
inadequate, or inaccurate to demonstrate compliance with DOB 
requirements.
    When documenting its DOB analysis, grantees cannot rely on self-
certification from the applicant alone for proof of other sources of 
funds for the same purpose (unless authorized by the Universal 
Notice, see paragraph 10 above). Any self-certification by an 
applicant must be based on supporting evidence that will be kept 
available for inspection by HUD and oversight agency such as HUD 
Office of Inspector General (HUD OIG). For example, if an applicant 
self-certifies that other sources of funds were received and 
expended for a different purpose than the CDBG-DR funds, grantees 
must substantiate this assertion with an additional source of 
information (e.g., physical inspections, credit card statements, 
work estimates, contractor invoices, flood inundation records, or 
receipts). For these reasons, HUD recommends that as soon as 
possible after a disaster, grantees advise the public and potential 
applicants to retain all receipts that document expenditures for 
recovery needs. Grantees should consult their assigned HUD CPD staff 
member with questions about the sufficiency of documentation.
    12. Agreement to repay. The Stafford Act requires grantees to 
ensure that applicants agree to repay all duplicative assistance to 
the agency providing that Federal assistance. As described in this 
section, each applicant must also enter into an agreement with the 
CDBG-DR grantee to repay any assistance later received for the same 
purpose for which the CDBG-DR funds were provided. This agreement 
can be in the form of a subrogation agreement or similar document 
and must be signed by every applicant before the grantee disburses 
any CDBG-DR assistance to the applicant.
    In its policies and procedures, the grantee must establish a 
method to monitor each applicant's compliance with the agreement for 
a reasonable period after project completion (i.e., a time period 
commensurate with risk). Additionally, section II.A.1. of the 
Universal Notice requires a grantee's agreement to also include the 
following language: ``Warning: Any person who knowingly makes a 
false claim or statement to HUD or causes another to do so may be 
subject to civil or criminal penalties under 18 U.S.C. 2, 287, 1001 
and 31 U.S.C. 3729.''
    13. Collecting a DOB. If a potential DOB is discovered after 
CDBG-DR assistance has been provided, the grantee must reassess the 
applicant's need at that time (see 4.e. above). If additional need 
is not demonstrated, CDBG-DR funds shall be recaptured to the extent 
they are in excess of the remaining need and duplicate other 
assistance received by the applicant for the same purpose. However, 
this determination may depend on what sources of assistance were 
last received by the applicant.
    If a grantee fails to recapture funds from an applicant, HUD may 
impose corrective actions pursuant to 24 CFR 570.495, 24 CFR 
570.910, and Federal Register notices, as applicable. However, as 
described above in paragraph 9, a grantee that does not collect 
duplicative CDBG-DR assistance that it provides may resolve this 
noncompliance by reimbursing its program account with non-Federal 
funds in the amount of the duplication and reprograming the use of 
the funds in accordance with applicable requirements to avoid other 
corrective or remedial actions.
    HUD reminds grantees that the Stafford Act states that ``A 
person receiving Federal assistance for a major disaster or 
emergency shall be liable to the United States to the extent that 
such assistance duplicates benefits available to the person for the 
same purpose from another source.'' A grantee's failure to collect a 
DOB does not remove an applicant's potential liability to the United 
States.
    13.a. Not in the best interest of the Federal government to 
collect. Section 312(c) of the Stafford Act states that ``the agency 
which provided the duplicative assistance shall collect it from the 
recipient . . . when the head of such agency considers it to be in 
the best interest of the Federal government'' 42 U.S.C. 5155(c). 
There are extraordinary situations where the Secretary may determine 
that collecting a DOB is not in the best interest of the Federal 
government. For grants subject to the Universal Notice, HUD is 
establishing these specific circumstances as situations when 
collection is not necessary. HUD's secretary has determined that it 
is not in the best interest of the Federal government to collect a 
DOB in the following circumstances:
    (1). The duplicative assistance was received by low- and 
moderate-income beneficiaries that, after the receipt of the CDBG-DR 
assistance, are:
    i. Deceased;
    ii. Subject to a foreclosure action on a property rehabilitated, 
constructed, or reconstructed with CDBG-DR funds; or
    iii. A debtor in a bankruptcy proceeding or who recently exited 
a bankruptcy proceeding (or similar proceeding for insolvent debtors 
under State law, such as an assignment for the benefit of 
creditors).
    Additionally, the grantee may refer to any relevant guidance or 
the debt collection

[[Page 1796]]

procedures in place for the State or local government. HUD is 
available to provide guidance to grantees in establishing or 
revising the grantee's DOB policies and procedures.

Appendix D. Detailed Table of Contents to the Universal Notice

Preamble

Community Development Block Grant Disaster Recovery Universal Notice: 
Waivers and Alternative Requirements (The ``Universal Notice'')

I. Phase One: The Action Plan.
    I.A. CDBG-DR Action Plans Defined.
    I.B. Admin Action Plan.
    I.B.1. Developing the Admin Action Plan.
    I.B.2. Submission and publication of the Admin Action Plan.
    I.B.3. Entering administrative activities into DRGR.
    I.B.4. Applicability of the Admin Action Plan.
    I.B.5. Admin Action Plan certifications waiver and alternative 
requirement.
    I.C. Action Plan.
    I.C.1. Developing the Action Plan.
    I.C.1.a. Unmet needs assessment.
    I.C.1.a.(i). Unmet needs in the MID areas.
    I.C.1.a.(ii). Unmet needs requirements.
    I.C.1.b. Mitigation needs assessment.
    I.C.1.c. Fair housing and civil rights assessment.
    I.C.1.c.(i). Fair housing and civil rights laws and terminology 
defined.
    I.C.1.c.(ii). Fair housing and civil rights data collection.
    I.C.1.d. Connection of proposed programs and projects to unmet 
needs, mitigation needs, and fair housing and civil rights 
assessments.
    I.C.1.e. Allocation and award caps.
    I.C.1.e.(i). Prioritization for allocations less than $20 
million.
    I.C.1.f. Funding criteria.
    I.C.1.g. Protocols for substantial amendments.
    I.C.2. Citizen participation requirements.
    I.C.2.a. Consultation during Action Plan preparation.
    I.C.2.b. Public comment period and minimum public hearing 
requirement.
    I.C.2.c. Consideration of public comments.
    I.C.3. Submission of the Action Plan.
    I.C.4. Action Plan certifications waiver and alternative 
requirement.
    I.C.5. HUD Action Plan review process.
    I.C.5.a. General HUD review of an Action Plan.
    I.C.5.b. Standard of review of an Action Plan.
    I.C.5.c. Written notice of return of an Action Plan.
    I.C.5.d. Written notice of disapproval of an Action Plan.
    I.C.5.e. Revisions and resubmission of an Action Plan.
    I.C.6. Amendments to the Action Plan.
    I.C.6.a. Substantial amendment.
    I.C.6.a.(i). General HUD review of a substantial amendment to an 
Action Plan.
    I.C.6.a.(ii). Standard of review of a substantial amendment to 
an Action Plan.
    I.C.6.a.(iii). Revisions and resubmission of a substantial 
amendment to an Action Plan.
    I.C.6.b. Nonsubstantial amendment.
II. Phase Two: Financial Certification and Oversight of Funds.
    II.A. Certification of Adequate Financial Controls and 
Procurement Processes, and Procedures for Proper Grant Management.
    II.A.1. Documentation requirements.
    II.A.1.a. Proficient financial management controls.
    II.A.1.b. Procedures for procurement.
    II.A.1.c. Policies and procedures to maintain a comprehensive 
disaster recovery website.
    II.A.1.d. Procedures to detect and prevent fraud, waste, and 
abuse.
    II.A.1.e. Policies and procedures to prevent DOB.
    II.A.1.f. Policies and procedures for timely expenditures of 
grant funds.
    II.A.1.g. Capacity assessment and staffing analysis.
    II.A.1.g.(i). Capacity assessment.
    II.A.1.g.(ii). Staffing analysis.
    II.B. Relying on Prior Financial Certification Submissions.
    II.C. Obligation and Expenditure of Funds.
III. Phase Three: Implementation of Universal Notice Requirements.
    III.A. Policies and Procedures--Universal Notice Requirements.
    III.A.1. Development of program-specific policies and 
procedures.
    III.A.2. Required policies and procedures for all CDBG-DR funded 
programs.
    III.A.2.a. Fair housing and civil rights policies and 
procedures.
    III.A.2.b. Minimizing displacement and relocation policies and 
procedures.
    III.A.2.c. Mitigation policies and procedures.
    III.A.2.d. Timeliness policies and procedures.
    III.A.3. Required policies and procedures for housing programs.
    III.A.4. Required policies and procedures for infrastructure 
programs.
    III.A.5. Required policies and procedures for economic 
revitalization programs.
    III.A.6. Consultation and website requirements for program 
implementation policies.
    III.A.6.a. Consultation with citizen advisory groups.
    III.A.6.b. Publication of program-specific policies and 
procedures.
    III.A.7. HUD program-specific policies and procedures review 
process.
    III.B. Grant Administration
    III.B.1. Overall benefit.
    III.B.1.a. Use of the ``upper quartile'' or ``exception 
criteria.
    III.B.1.b. Clarification of the use of ``uncapped'' income 
limits.
    III.B.2. Use of the urgent need national objective.
    III.B.3. Grant administration cap.
    III.B.3.a. Use of funds for administrative costs across multiple 
grants.
    III.B.4. Planning cap.
    III.B.5. Public service cap.
    III.B.6. Consolidated Plan.
    III.B.7. Procurement.
    III.B.8. Public disaster recovery website.
    III.B.8.a. Publication and accessibility of documents.
    III.B.9. Application status.
    III.B.10. Environmental requirements.
    II.B.10.a. Process for environmental release of funds when a 
State carries out activities directly.
    III.B.10.b. Responsibilities of States assuming HUD 
environmental responsibilities.
    III.B.10.c. Adoption of another agency's environmental review 
under the Stafford Act.
    III.B.10.d. Historic preservation reviews.
    III.B.10.e. Tiered environmental reviews.
    III.B.10.f. FFRMS floodplain and elevation.
    III.B.11. Flood insurance requirements.
    III.B.11.a. Flood insurance purchase requirements.
    III.B.11.b. Federal assistance to owners remaining in a 
floodplain.
    III.B.11.b.(i) Prohibition on flood disaster assistance for 
failure to obtain and maintain flood insurance.
    III.B.11.b.(ii) Prohibition on flood disaster assistance for 
households above 120 percent of AMI for failure to obtain flood 
insurance.
    III.B.11.b.(iii) Responsibility to inform property owners to 
obtain and maintain flood insurance.
    III.B.12. Program income.
    III.B.12.a. Definition of program income.
    III.B.12.b. Program income-does not include.
    III.B.12.c. Recording program income.
    III.B.12.d. Retention of program income.
    III.B.12.e. Program income--use, close out, and transfer.
    III.B.13. Revolving funds.
    III.B.14. Reimbursement of disaster recovery expenses.
    III.B.14.a. Reimbursement of pre-award costs by a grantee or 
subrecipient.
    III.B.14.b. Reimbursement of pre-application costs of 
homeowners, renters, businesses, and other qualifying entities.
    III.B.15. URA, Section 104(d), and related CDBG program 
requirements.
    III.B.15.a. Section 104(d) RARAP.
    III.B.15.b. Optional relocation.
    III.B.15.c. Section 104(d) relocation assistance.
    III.B.15.d. One-for-one replacement requirement.
    III.B.15.e. Lump sum rental assistance payments for residential 
tenants.
    III.B.15.f. Voluntary acquisition--homebuyer primary residence 
purchase.
    III.B.15.g. Waiver of Section 414 of the Stafford Act.
    III.B.16. DOB.
    III.B.17. Citizen complaints.
    III.C. State Grantee Only Requirements.
    III.C.1. Combined technical assistance and administrative cap 
(state grantees only).
    III.C.2. Planning-only activities (state grantees only).
    III.C.3. Direct grant administration and means of carrying out 
eligible activities (state grantees only).
    III.C.4. Waiver and alternative requirement for distribution to 
CDBG metropolitan cities and urban counties (state grantees only).

[[Page 1797]]

    III.C.5. Use of subrecipients (state grantees only).
    III.C.6. Recordkeeping (state grantees only).
    III.C.7. Change of use of real property (state grantees only).
    III.C.8. Responsibility for review and handling of noncompliance 
(state grantees only).
    III.C.9. Consultation (state grantees only).
    III.D. Waivers and Alternative Requirements Related to Eligible 
Activities.
    III.D.1. Connection to the disaster.
    III.D.1.a. Documenting a connection to the disaster.
    III.D.2. MID areas.
    III.D.3. Mitigation measures.
    III.D.4. Mitigation activities--CDBG-DR mitigation set-aside.
    III.D.4.a. Alignment with mitigation plans.
    III.D.5. Housing activities and standards.
    III.D.5.a. New housing construction waiver.
    III.D.5.b. Standards for new construction, reconstruction, and 
rehabilitation.
    III.D.5.b.(i). Standards for new construction and reconstruction 
of residential buildings.
    III.D.5.b.(ii). Standards for rehabilitation of non-
substantially damaged residential buildings.
    III.D.5.c. Broadband infrastructure or technology to support 
housing.
    III.D.5.d. Periods of affordability for new construction of 
affordable rental housing.
    III.D.5.e. Homeownership assistance.
    III.D.5.f. Interim mortgage assistance.
    III.D.5.g. Rental assistance.
    III.D.5.h. Disaster relief assistance for LMI persons.
    III.D.5.i. Buyouts.
    III.D.5.i.(i). Buyout requirements:
    III.D.5.i.(ii). National objectives for buyouts.
    III.D.5.j. Safe housing incentives.
    III.D.5.j.(i). National objectives for safe housing incentives.
    III.D.5.k. Redevelopment of acquired properties.
    III.D.5.l. Alternative requirement for housing rehabilitation 
and buyout--assistance for second homes.
    III.D.6. Infrastructure activities and standards.
    III.D.6.a. Privately owned shelters.
    III.D.6.b. Assistance to buildings for the general conduct of 
government when using CDBG-DR funds as the non-Federal match.
    III.D.6.c. FAST-41 projects requirements.
    III.D.6.d. CDBG-DR funds as non-Federal match.
    III.D.6.d.(i). Alternative requirement when using CDBG-DR funds 
as the non-Federal match in a FEMA-funded project (building codes 
and standards).
    III.D.6.e. Flood control structure requirements.
    III.D.6.f. LMI benefit for infrastructure activities.
    III.D.6.g. Assistance to private utilities.
    III.D.7. Economic revitalization and Section 3 activities and 
standards.
    III.D.7.a. Economic revitalization assistance.
    III.D.7.b. National objective documentation for activities that 
support economic revitalization.
    III.D.7.c. Public benefit for activities that support economic 
revitalization.
    III.D.7.d. Section 3 worker eligibility and documentation 
requirements.
    III.D.7.e. Business relocation assistance.
    III.D.7.f. Underwriting.
    III.D.7.g. Limitation on use of funds for eminent domain.
    III.E. Ineligible Activities in CDBG-DR.
    III.E.1. Prohibition on compensation.
    III.E.2. Prohibition on forced mortgage payoff.
    III.F. Performance Reviews.
    III.F.1. Timely distribution and expenditure of funds.
    III.F.2. Review of continuing capacity.
    III.F.2.a. Corrective and remedial actions.
    III.F.2.b. Additional criteria and specific conditions to 
mitigate risk.
    III.G. Grantee Reporting Requirements in the Disaster Recovery 
Grant Reporting (DRGR) System.
    III.G.1. Submitting the DRGR Action Plan.
    III.G.2. Grantee reporting requirements in DRGR.
    III.G.2.a. Maintain grantee records within DRGR.
    III.G.2.b. Timeline for submitting grantee's initial performance 
report.
    III.G.2.c. Quarterly submission of performance report in DRGR.
    III.G.2.c.(i). Reviewed and approved performance report.
    III.G.2.c.(ii). Rejected performance report.
    III.G.3. Using DRGR to draw grant funds.
IV. Assistance Listing Numbers.
V. Finding of No Significant Impact.
Appendix A. Certifications Waiver and Alternative Requirement for 
Admin Action Plan Submission.
Appendix B. Certifications Waiver and Alternative Requirement for 
Action Plan Submission.
Appendix C. Duplication of Benefits (DOB).

[FR Doc. 2024-31621 Filed 1-7-25; 8:45 am]
BILLING CODE 4210-67-P`