2010-26777. Additional Waivers Granted to and Alternative Requirements for the State of Illinois' CDBG Disaster Recovery Grant Under Public Law 110-329

AGENCY:

Office of the Secretary, HUD.

ACTION:

Notice of additional waivers and alternative requirements.

SUMMARY:

This notice describes additional waivers and alternative requirements applicable to the Community Development Block Grant (CDBG) disaster recovery grant provided to the State of Illinois for the purpose of assisting in the recovery related to the consequences of the State's 2008 disasters. HUD previously published allocation and application notices applicable to this grant on February 13, 2009 (74 FR 7244), and August 14, 2009 (74 FR 41146).

DATES:

Effective Date: October 27, 2010 .

FOR FURTHER INFORMATION CONTACT:

Scott Davis, Director, Disaster Recovery and Special Issues Division, Office of Block Grant Assistance, Department of Housing and Urban Development, 451 7th Street, SW., Room 7286, Washington, DC 20410, telephone number 202-708-3587. Persons with hearing or speech impairments may access this number via TTY by calling the Federal Information Relay Service at telephone number 800-877-8339. Facsimile inquiries may be sent to Mr. Davis at facsimile number 202-401-2044. (Except for the “800” number, these telephone numbers are not toll free.)

SUPPLEMENTARY INFORMATION:

Authority To Grant Waivers

The Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 (Pub. L. 110-329, approved September 30, 2008) (hereinafter, “Second 2008 Act” to differentiate it from the earlier 2008 Supplemental Appropriations Act, Public Law 110-252, approved June 30, 2008) appropriated $6.5 billion, to remain available until expended, in CDBG funds for necessary expenses related to disaster relief, long-term recovery, and restoration of infrastructure, housing and economic revitalization in areas affected by hurricanes, flooding, and other natural disasters occurring during 2008 for which the President declared a major disaster under title IV of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.).

The Second 2008 Act authorizes the Secretary to waive, or specify alternative requirements for, any provision of any statute or regulation that the Secretary administers in connection with the obligation by the Secretary or use by the recipient of these funds and guarantees, except for requirements related to fair housing, nondiscrimination, labor standards, and the environment (including requirements concerning lead based paint), upon a request by a state grantee explaining why such waiver is required to facilitate the use of such funds or guarantees and a finding by the Secretary that such a waiver would not be inconsistent with the overall purpose of Title I of the Housing and Community Development Act of 1974 (HCD Act). Additionally, regulatory waiver authority is provided by 24 CFR 5.110, 91.600, and 570.5. The following application and reporting waivers and alternative requirements are in response to a request received from the State of Illinois regarding its use of funds under the Second 2008 Act.

The Secretary finds that the following waivers and alternative requirements, as described below, are necessary to facilitate use of the funds for the statutory purposes and are not inconsistent with the overall purpose of Title I of the HCD Act or the Cranston-Gonzalez National Affordable Housing Act, as amended.

Under the requirements of the Second 2008 Act and the Department of Housing and Urban Development Reform Act of 1989 (the HUD Reform Act), regulatory waivers must be justified and published in the Federal Register. Except as described in this Notice, statutory and regulatory provisions governing the CDBG program for states, including those at 24 CFR part 570, shall apply to the use of these funds. In accordance with the Second 2008 Act, HUD will reconsider every waiver in this Notice on the two-year anniversary of the day this Notice is published.

Waiver Justification

Except as described below, the waivers, alternative requirements, and statutory changes published in notices on February 13, 2009 (74 FR 7244) and August 14, 2009 (74 FR 41146) will continue to apply to the State's CDBG disaster recovery funds appropriated under the Second 2008 Act (Pub. L. 110-329). The actions below provide additional flexibility in program design and implementation and implement statutory requirements unique to this appropriation. The provisions of this Notice do not apply to funds provided under the annual CDBG program.

National Objective Documentation for Economic Development Activities. For the national objective documentation for business assistance activities, Illinois has asked to apply individual salaries or wages per job and the income limits for a household of one, rather than the usual CDBG standard of total household income and the limits-by-total household size. Illinois has asserted that this proposed documentation would be simpler and quicker for participating lenders to administer, easier to verify, and would not misrepresent the amount of low- and moderate-income benefit provided. Upon consideration, HUD is granting this waiver, which has also been granted to a number of other state grantees under the Second 2008 Act. It will play a key role in streamlining the State's documentation process because it allows collection of wage data for each position created or retained from the assisted businesses, rather than from each individual household.

Eligibility—buildings for the general conduct of government. Illinois has requested a limited waiver of the prohibition on funding buildings for the general conduct of government as many of these buildings were damaged by the 2008 disasters. HUD has considered this request and agrees that it is consistent with the overall purposes of the 1974 Act. Therefore, Illinois may use funds provided under the Second 2008 Act to repair or reconstruct buildings used for the general conduct of government so long as (1) the buildings are selected in accordance with a method described in the State's Action Plan for Disaster Recovery, and (2) the State determines that the selected buildings have substantial value in promoting disaster recovery. However, as stipulated by the Second 2008 Act, funds may not be used for activities reimbursable by, or for which funds are made available by, the Federal Emergency Management Agency or the Army Corps of Engineers.

Public benefit for certain economic development activities. Illinois has requested a waiver of the public benefit standards for certain economic development activities. The public benefit provisions set standards for individual economic development activities (such as a single loan to a business) and for economic development activities in the annual aggregate. Currently, public benefit standards limit the amount of CDBG assistance per job retained or created, or the amount of CDBG assistance per low and moderate-income person to which goods or services are provided by the activity. Essentially, the public benefit standards are a proxy for all the other possible public benefits provided by an assisted activity. These dollar thresholds were set more than a decade ago and under disaster recovery conditions (which often require a larger investment to achieve a given result), can be too low and thus impede recovery by limiting the amount of assistance the grantee may provide to a critical activity.

After consideration, this Notice waives the public benefit standards for the cited activities, except that the State shall report and maintain documentation on the creation and retention of (a) Total jobs, (b) number of jobs within certain salary ranges, (c) the average amount of assistance per job and activity or program, and (d) the types of jobs. As a conforming change for the same activities or programs, HUD is also waiving paragraph (g) of 24 CFR 570.482 to the extent its provisions are related to public benefit. Illinois has made public in its Action Plan the disaster recovery needs each activity is addressing.

Housing incentives to resettle in disaster-affected communities. The State believes that incentives are vital to encourage its citizens to move out of harms' way to safer areas outside the 100 year floodplain. Upon consideration, the Department is waiving 42 U.S.C 5305(a) of the 1974 Act and associated regulations to permit the State to offer disaster recovery or mitigation housing incentives to promote housing development or resettlement in particular geographic areas.

Limitation on emergency grant payments. HUD is waiving 42 U.S.C. 5305(a) to allow the State to extend interim mortgage assistance to qualified individuals for up to 20 months. The State plans to create an Interim Mortgage Assistance Program to assist homeowners (likely to be applicants in the State's future buyout program) with mortgage payments and other eligible property carrying costs while they may be living in temporary housing. As it takes more than three months for buyout decisions to be made and implemented, this will provide key assistance to qualified homeowners during this interim period.

Applicable Rules, Statutes, Waivers, and Alternative Requirements

1. Except as described in this Notice, statutory and regulatory provisions governing the Community Development Block Grant program for states, including those at 42 U.S.C. 5301 et seq. and 24 CFR part 570, and those described in Federal Register notices 74 FR 7244 and 74 FR 41146, shall apply to the use of these funds. Also, please note that any program changes implemented as a result of the waivers published in today's Notice must be in accordance with the State's approved Action Plan for Disaster Recovery.

2. National Objective Documentation for Economic Development Activities. 24 CFR 570.483(b)(4)(i) is waived to allow the State to establish low- and moderate-income jobs benefit 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 one-person family.

3. Buildings for the general conduct of government. 42 U.S.C. 5305(a) and associated regulations are waived to the extent necessary to allow Illinois to fund the rehabilitation or reconstruction of public buildings that are otherwise ineligible and that the State selects in accordance with its approved Action Plan for Disaster Recovery and that the State has determined have substantial value in promoting disaster recovery.

4. Public benefit for certain economic development activities. For economic development activities designed to create or retain jobs or businesses (including but not limited to long-term, short-term, and infrastructure projects), the public benefit standards at 42 U.S.C. 5305(e)(3) and 24 CFR 570.482(f)(1), (2), (3), (4)(i), (5), and (6) are waived, except that the State shall report and maintain documentation on the creation and retention of total jobs, the number of jobs within certain salary ranges, the average amount of assistance provided per job by activity or program, and the types of jobs. Paragraph (g) of 24 CFR 570.482 is also waived to the extent its provisions are related to public benefit.

5. Housing incentives to resettle in disaster-affected communities. 42 U.S.C 5305(a) of the 1974 Act and associated regulations are waived to permit the State to offer disaster recovery or mitigation housing incentives to promote housing development or resettlement in particular geographic areas. The incentives must be in accordance with State's approved Action Plan and published program design(s), and the State must maintain documentation that the costs are necessary and reasonable.

6. Limitation on emergency grant payments. 42 U.S.C. 5305(a) is waived so that Illinois can use funds under the Second 2008 Act to extend interim mortgage assistance to qualified individuals for up to 20 months.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic Assistance numbers for the disaster recovery grant under this Notice are as follows: 14.218 and 14.228.

Finding of No Significant Impact

A Finding of No Significant Impact (FONSI) with respect to the environment has been made in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332). The FONSI is available for public inspection between 8 a.m. and 5 p.m. weekdays in the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, Room 10276, 451 7th Street, SW., 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). Hearing or speech-impaired individuals may access this number through TTY by calling the toll-free Federal Information Relay Service at 800-877-8339.

Dated: October 4, 2010.

Mercedes M. Márquez,

Assistant Secretary for Community Planning and Development.