An Update on HUD’s Next Round of CDBG-DR Grants

The Continuing Resolution (Public Law 117-43) signed by President Biden on September 30, 2021 included the Disaster Relief Supplemental Appropriations Act of 2022, which provided $28 billion in disaster relief spending to a range of federal agencies. One of the most significant line items is $5 billion for HUD’s Community Development Block Grant Disaster Recovery program. This is the first CDBG-DR appropriation in more than two years; therefore, the funding will be directed toward major declared disasters that occurred in both 2020 and 2021.

Given the lag between previous disasters and this appropriation, Congress directed HUD to quickly allocate—no later than October 30, 2021—at least $1.6 billion of that amount to areas where major disasters that occurred last year. HUD may also opt to make a “down payment” on major disasters that have occurred already this year, like Hurricane Ida, while reserving the balance for later allocation once unmet need data is developed and address any events for which there is a disaster declaration between today and December 31.

Many aspects of the recent appropriation language are familiar to the CDBG-DR program:

• Uses of funds encompass disaster relief, long-term recovery, housing, infrastructure, economic revitalization and mitigation.
• HUD will issue a Federal Register notice to govern the funds with the authority to waive and establish alternative requirements to statutory and regulatory requirements administered by HUD.
• Grantees will have to prepare a disaster recovery action plan for approval by HUD in order to access the allocated funds.
• Grantees will have to demonstrate that they have proficient financial controls, procurement processes, and procedures to ensure duplication of benefits (i.e., using multiple federal funding sources for the same purpose or activity) does not occur.
• Limited relief is provided for grantees to use environmental reviews done by other federal agencies, most notably in conjunction with projects funded by FEMA’s Public Assistance program.

However, there are also several unique provisions within the language. One key nuance is the directive for HUD to include in a grantee’s allocation an amount equal to 15% of calculated unmet need for hazard mitigation—investments to reduce the long-term risks posed by disasters. HUD has occasionally added mitigation funding as an administrative “plus up” to unmet needs. This was the case after Hurricane Sandy in 2012; however, in 2018, Congress specified a mitigation formula that accrued significant benefit to jurisdictions struck by Hurricanes Harvey, Irma, and Maria in 2017.

To counter the primary criticisms of CDBG-DR, namely that it takes too long for the funding to reach disaster-impacted populations, Congress included a provision that enables CDBG-DR grantees who received funds in response to qualifying events between 2017 and 2019 to amend their existing action plans and programs to encompass “those impacted by disasters in 2020 and 2021.” However, the window to use this authority may be short lived as it is open only until such time as HUD issues a Federal Register notice to govern the newly appropriated funds.

Congress also tackled difficulties jurisdictions often experience when using different CDBG-DR appropriations to address repetitive disasters with the same geographic area. They did so by including language permitting past, present, and future CDBG-DR funding to be used “interchangeably and without limitation” if disaster areas overlap or if the use of funds address the unmet recovery needs of the multiple disasters. An evaluation of the utility of this provision will be possible once HUD announces grantees for the newly appropriated funds.

A final consideration on administration of this and future CDBG-DR appropriations emerged on October 7, 2021, when HUD issued its Climate Adaptation Plan along with almost 20 other federal agencies. Within the HUD plan, Objective 3.1 indicates that HUD will issue a “universal notice” for CDBG-DR that will describe policies and requirements for future grant funding that can foster resilient projects and promote environmental justice.

In lieu of a permanent statutory authorization of the CDBG-DR program, HUD has considered issuing this type of guidance for several years to escape the endless cycle of Federal Register notices that have been a drain on the resources of HUD and its grantees, as well as a source of programmatic delay and confusion. While the Climate Adaptation Plan anticipates release of a universal notice at some point in the first half of fiscal year 2022 (i.e., by March 31, 2022), HUD may expedite the issuance date within that window so that it will be the governing document for this new appropriation.

Stan Gimont is a Senior Advisor for Community Recovery with Hagerty Consulting. Stan joined Hagerty after 32 years of service with HUD and is a member of BPC’s task force on disaster response reform.