Waivers and Alternative Requirements for Community Development Block Grant Disaster Recovery (CDBG-DR) and Community Development Block Grant Mitigation (CDBG-MIT) Grantees

AGENCY:

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

ACTION:

Notice.

SUMMARY:

This notice governs Community Development Block Grant disaster recovery (CDBG-DR) and Community Development Block Grant mitigation (CDBG-MIT) funds awarded under several appropriations acts identified in the Table of Contents. Specifically, this notice includes waivers and alternative requirements for the States of North Carolina and Alaska in response to their submitted requests for waivers and alternative requirements for grants provided under the public laws cited in this notice. As further outlined below, this notice provides a waiver and alternative requirement to the State of North Carolina to align buyout requirements across the State's various CDBG-DR and CDBG-MIT grants and a waiver and alternative requirement to the State of Alaska to increase the limit on planning costs for the State's CDBG-MIT funds. The Department has waived and established similar alternative requirements for other grantees in the past, so the waivers and alternative requirements described in this notice are not unique or precedent setting.

DATES:

Applicability Date: July 15, 2024.

FOR FURTHER INFORMATION CONTACT:

Tennille Parker, Director, Office of Disaster Recovery, U.S. Department of Housing and Urban Development, 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 disaster_recovery@hud.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Authority To Grant Waivers

II. Public Law 114-254, 115-31, 115-123, 115-254, and 116-20 Waivers and Alternative Requirements

III. Public Law 116-20 Waiver and Alternative Requirement

IV. Finding of No Significant Impact (FONSI)

I. Authority To Grant Waivers

Each of the appropriations acts cited in the Table of Contents authorize the Secretary to waive, or specify alternative requirements for, any provision of any statute or regulation that the Secretary administers in connection with the obligation by the Secretary, or use by the recipient, of grant funds, except for requirements related to fair housing, nondiscrimination, labor standards, and the environment. HUD may also exercise its regulatory waiver authority under 24 CFR 5.110, 91.600, and 570.5.

All waivers and alternative requirements authorized in this notice are based upon a determination by the Secretary that good cause exists, and that the waiver or alternative requirement is not inconsistent with the overall purposes of Title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.) (HCDA). The good cause for each waiver and alternative requirement is summarized in this notice.

II. Public Law 114-254, 115-31, 115-123, 115-254, and 116-20 Waivers and Alternative Requirements

Waiver and Alternative Requirement for North Carolina's CDBG-DR and CDBG-MIT Buyout Programs (State of North Carolina only).

The Department received a request and justification of good cause from the State of North Carolina to waive the requirement that only real property is eligible for acquisition in buyout activities, which limits the acquisition of manufactured, modular, or mobile housing units (MHUs). Given that the Department has already updated this provision for newer grants, allowing this waiver for North Carolina's older grants would merely align requirements across their grant portfolio. These newer, more flexible requirements published in the Federal Register on January 18, 2023 (88 FR 3212) and May 24, 2022 (87 FR 31648) as Appendix B (“the Consolidated Notice”) allow CDBG-DR funds to be used to acquire homes that are MHUs, regardless of whether MHUs are considered real property under state law, as part of the acquisition of an MHU's underlying real property in a buyout activity.

This waiver and alternative requirement, as further described below, applies to the State's CDBG-DR and CDBG-MIT funds allocated to the State under Public Law 114-254, 115-31, 115-123, 115-254, and 116-20. These CDBG-DR and CDBG-MIT funds are subject to the requirements in the Federal Register notices published on January 18, 2017 (82 FR 5591), November 21, 2016 (81 FR 83254) (the “November 2016 Notice”), August 7, 2017 (82 FR 36812), January 27, 2020 (85 FR 4681), February 9, 2018 (83 FR 5844) (the “February 2018 Notice”), August 14, 2018 (83 FR 40314), February 19, 2019 (84 FR 4836), June 20, 2019 (84 FR 28848), August 30, 2019 (84 FR 45838) (the “August 2019 Notice”), and January 6, 2021 (86 FR 561) (collectively, the “Prior Notices”).

The Prior Notices require the State to adhere to more stringent requirements for buyout activities undertaken with CDBG-DR and CDBG-MIT funds. Per these requirements, CDBG-DR and CDBG-MIT grantees undertaking buyout activities are required to adhere to the housing acquisition activity requirements at 42 U.S.C. 5305(a)(1) and the associated regulations at 24 CFR 570.201(a), which limit housing acquisition to real property. Further, the Prior Notices define the term “buyout” as the acquisition of property located in a floodway or floodplain that is intended to reduce risk from future flooding or the acquisition of properties in Disaster Risk Reduction Areas (DRRA), as designated by the grantee. Because the Prior Notices do not waive requirements at 42 U.S.C. 5305(a)(1) and the associated regulations at 24 CFR 570.201(a), any buyout program is limited to the acquisition of real property or property considered to be part of a community's permanent housing stock when it includes acquisition of the underlying real property ( i.e., land). However, 42 U.S.C. 5305(a)(1) and the associated regulations only permit the use of funds for MHUs under HUD's regulatory oversight, including HUD's Manufactured Home Construction and Safety Standards (“HUD Code”, 24 CFR part 3280) and therefore, exclude MHU's only built to state and local standards.

Beginning with the application of the Consolidated Notice to CDBG-DR funds, HUD waived the requirements at 42 U.S.C. 5305(a) to the extent necessary for the creation of a new eligible activity termed “buyouts.” CDBG-DR grant funds subject to the requirements in the Consolidated Notice may be used for buyout activities defined as the acquisition of properties located in a floodway, floodplain, or other DRRA that is intended to reduce risk from future hazards. This means that CDBG-DR funds, subject to the requirements of the Consolidated Notice, may be used to acquire MHUs, that can sometimes be treated as personal property or do not meet the HUD Code, as part of the acquisition of an MHU's underlying real property in a buyout activity.

The State of North Carolina has requested a waiver of the requirement that buyouts are limited to the acquisition of real property to allow the State to align its buyout activities with the flexibilities provided in the Consolidated Notice. The waiver and alternative requirement are necessary to allow the State to undertake buyout activities for MHUs that do not qualify as real property or meet the HUD Code to reduce the risk of future flooding to the State's housing stock and the administrative burden of managing different requirements for other buyout activities across its grant portfolio. The waiver and alternative requirement provided herein will help the State promote recovery and mitigation following Hurricanes Matthew and Florence by expanding its buyout programs to include MHUs in a DRRA and enable the State to move more homes and households out of harm's way.

The State's waiver request notes that it is currently implementing its Strategic Buyout Program (SBP) with CDBG-DR and CDBG-MIT funds and that MHUs constitute a significant portion of the housing stock in the State, making up 25 percent of all housing stock in disaster-impacted areas. The State's request also points out the need to include the value of MHUs in buyout offers to equitably serve this population and reduce the risk of future damage to the State's MHU-housing stock, which also tends to be among the most vulnerable.

The State plans to use its CDBG-DR and CDBG-MIT funding under Public Law 114-254, 115-31, 115-123, 115-254, and 116-20 for the implementation of its SBP, which began accepting applications in January 2020. The SBP is a voluntary buyout program that beneficiaries may apply for that provides funding for the purchase of eligible properties in a DRRA, resulting in a deed restriction that limits future development on the acquired parcel. Applicants and properties must meet the eligibility criteria set forth in the State's SBP Manual.

After reviewing the State's request and based on the good cause provided herein, the Department is waiving 42 U.S.C. 5305(a)(1) and the buyout requirements established in the Prior Notices under section VI.B.35 of the November 2016 Notice (81 FR 83271), section VI.B.37 of the February 2018 Notice (83 FR 5863), and section V.B.4 of the August 2019 Notice (84 FR 45864) for the State of North Carolina's Public Law 114-254, 115-31, 115-123, 115-254, and 116-20 CDBG-DR and CDBG-MIT funds and establishing as an alternative requirement the requirements in section II.B.7. (including II.B.7.a.) of the January 18, 2023, Notice (88 FR 3212). Any buyouts of MHUs under this alternative requirement must include acquisition of the underlying real property.

III. Public Law 116-20 Waiver and Alternative Requirement

Waiver and Alternative Requirement on Limitation of CDBG-MIT Planning Costs (State of Alaska only).

The Department received a request and justification of good cause from the State of Alaska to increase the limit on planning costs from 15 to 48 percent of its CDBG-MIT grant to implement a planning activity in the State's approved Action Plan. This request applies to the State's CDBG-MIT funds under Public Law 116-20 announced in the Federal Register notice published on January 6, 2021 (86 FR 561) (the “January 2021 Notice”) for a disaster occurring in 2018. The January 2021 Notice included waivers and alternative requirements for grantees that received a CDBG-MIT allocation under Public Law 115-123 or 116-20 and required grantees to adhere to the relevant requirements of the Federal Register notices published on August 30, 2019 (84 FR 45838) (the “August 2019 Notice”) and on September 28, 2020 (85 FR 60821).

The State is requesting that the Department modify paragraph V.A.8.b.(1) of the August 2019 Notice to accommodate its proposed planning activity. Specifically, the State is requesting the ability to use $1,086,800, or approximately 48 percent, of its CDBG-MIT grant amount to upgrade the Municipality of Anchorage's local vertical datum reference system to the National Spatial Reference System (NSRS). However, paragraph V.A.8.b.(1) of the August 2019 Notice and Section II.B. of the January 2021 Notice provide an alternative requirement that limits CDBG-MIT grantees to spending a maximum of 15 percent of their total grant amount or $750 million, whichever is less, on planning costs.

The National Oceanic and Atmospheric Administration (NOAA) defines and manages the NSRS through its National Geodetic Survey. The NSRS serves as a consistent coordinate system that defines latitude, longitude, height, scale, gravity, and orientation throughout the United States. The NSRS includes a network of permanently marked points; a consistent, accurate, and up-to-date national shoreline; a network of Continuously Operating Reference Stations (CORS) which supports three-dimensional positioning activities; and a set of accurate models describing dynamic, geophysical processes that affect spatial measurements.

The Municipality of Anchorage's existing network of vertical datum monuments (benchmarks) is not tied to the NSRS, references a superseded local mean sea level, has minimal compatibility with modern survey techniques that rely heavily on the use of GPS equipment, and is generally outdated and in poor condition. For the Municipality to adopt the NSRS datum, additional funding is needed to create an inventory of existing benchmarks, identify existing benchmarks that may be used in conjunction with the NSRS, establish new benchmarks in areas where few monuments exist, and conduct a project to establish NSRS positions on new and existing benchmarks referencing the Municipality of Anchorage datum. The State's planning activity will verify and update the GPS coordinates of all benchmarks within the Municipality of Anchorage, which is a National Geodetic Survey requirement for communities to participate in the modernized NSRS.

After consulting with the Municipality of Anchorage, the Office of Emergency Management, the Office of Economic and Community Development (MOA/OECD), and other Federal partners, and reviewing its Mitigation Needs Assessment, the State determined it is critical to allocate funds to upgrade the local vertical datum reference system to the NSRS in order to support FEMA in remapping the Municipality's Special Flood Hazard Areas (SFHAs). Local and State Hazard Mitigation Plans identify flood risk as one of the most urgent potential hazards in the Municipality. However, existing flood hazard maps are inaccurate, which limits the Municipality's ability to mitigate risk through land-use planning, infrastructure, building codes, and other measures. Flood hazard and other spatial mapping currently rely on the local vertical datum reference system, which the November 30, 2018, earthquake made more inaccurate. Upgrading the local vertical datum reference system to the NSRS will enable coordination with FEMA to update the Municipality's SFHAs to accurately convey flood risks within the community, making it a strategic and high-impact project to mitigate disaster risks and reduce future losses.

Further, FEMA has adopted the NSRS as the official datum of the National Flood Insurance Program and is moving to transition all Flood Insurance Studies and Flood Insurance Rate Maps (FIRMs) to the NSRS. The Municipality's adoption of the NSRS will conform to FEMA standards, increase the alignment of federally funded geospatial data sets with local projects, enable the use of GPS technology in local surveying, and provide specifications for not only updating flood maps, but also tsunami warning systems and other disaster resources.

To reduce the risks and prioritize the protection of low- and moderate-income (LMI) persons, the State of Alaska also verified that at least 50 percent of its CDBG-MIT award will continue to be used exclusively for activities that benefit LMI persons through its Tsunami Alert System and Home Flood Mitigation Program.

The August 2019 Notice and the January 2021 Notice waive section 106(d) of the HCDA (42 U.S.C. 5306(d)) and 24 CFR 570.489(a)(1)(i) and (iii) and create an alternative requirement that limits CDBG-MIT grantees to spending a maximum of 15 percent of their total grant amount or $750 million, whichever is less, on planning costs.

Based on the reasons stated above, HUD has determined that good cause exists to modify the alternative requirement in paragraph V.A.8.b.(1) of the August 2019 Notice and the third paragraph of Section II.B. of the January 2021 Notice to the extent necessary to permit eligible planning expenses up to 48 percent of the State's CDBG-MIT grant amount. Additionally, to ensure that the State prioritizes activities benefitting LMI persons as described in its approved CDBG-MIT Action Plan, the Department will continue to require that at least 50 percent of the State's CDBG-MIT funds be expended on programs and projects that will benefit LMI persons.

As a reminder, the State must continue to limit its administrative costs for the CDBG-MIT grant to 5 percent of its total grant award and 5 percent of program income generated by the grant, as provided in Public Law 116-20, the August 2019 Notice, and the January 2021 Notice.

IV. 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.