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CDBG-DR Program’s Lack of a Permanent Authorization Has Unintended Consequences for Recent Allocations

The Brief 

  • HUD has allocated all of the $5 billion that Congress appropriated for the Community Development Block Grant Disaster Recovery Program last September to assist communities affected by disasters in 2020 and 2021 with their long-term recoveries.  
  • While HUD announced recent CDBG-DR grant allocations, on average, 318 days after a disaster was officially declared, these allocations came as quickly as 76 days after a disaster declaration and long as 655 days.  
  • This unevenness has real consequences for disaster recovery efforts but can be addressed through legislative action. 
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Background on Recent Allocations

Congress appropriated $5 billion for the Community Development Block Grant Disaster Recovery (CDBG-DR) program on September 30, 2021 (Public Law 117-43), to address long-term recovery needs arising from major disasters that occurred in 2020 and 2021. This appropriation brought total CDBG-DR funding since 2001 to $95 billion, a significant contribution to recovery from myriad disasters—the September 11 attacks; Hurricanes Katrina, Ike, Sandy, Harvey, and Maria; as well as wildfires, tornadoes, and riverine flooding.

Of the $5 billion appropriated in September, HUD announced in November that $2 billion would be allocated for disasters that occurred in 2020. However, that allocation occurred more than a year after the qualifying disasters were declared and HUD only issued guidance to govern those funds on February 3, 2022. HUD has since announced its allocations for the remaining $3 billion—$2.214 billion to 10 local governments and 13 state governments for 16 major disasters in 2021 and an additional $722.7 million to five of the previously announced 2020 disaster recovery grants. 

Timeliness of Funding

For those affected by disasters in 2020, the reality is that this CDBG-DR funding did not become available for 15 to 18 months after the qualifying disasters. This set of circumstances defines the most common criticism of CDBG-DR—namely, that it takes too long to get on the ground and begin addressing post-disaster recovery needs.   

The delay grows out of the fact that CDBG-DR is not a permanently authorized program and exists only when Congress appropriates funding, typically in supplemental appropriation after devastating disasters. This situation contrasts with the standing disaster response authorities that fund Federal Emergency Management Agency programs pursuant to the Stafford Act and the disaster loan programs administered by the Small Business Administration. 

The lack of predictability surrounding CDBG-DR funding produces a curious equity consideration for disaster survivors from state to state and even within states. Both Michigan and Oregon only recently received allocations for disasters that occurred in the summer of 2020 with a resulting drawn-out recovery timeline. Yet Kentucky and Colorado experienced disaster events in December 2021 and, with HUD’s most recent allocation announcement, have CDBG-DR allocations just three months later.  Bottom line—a broader range of recovery resources will be available more rapidly for survivors in one set of states versus others simply because CDBG-DR is not permanently authorized. 

This outcome is even more curious in a state such as Louisiana, where survivors of Hurricane Ida in August-September 2021 will see the benefit of CDBG-DR assistance far sooner than their fellow Louisianans who were impacted by Hurricanes Laura and Delta in the summer of 2020.   

Consequences of Varied Timelines

Turning to programmatic consequences, the long wait for CDBG-DR funding reduces its effectiveness and delays community recovery. The impact is most pronounced with respect to housing recovery as it is historically the largest use of CDBG-DR funding. During my years with HUD, I met with many state and local officials who struggled to address post-disaster housing needs in their communities. They made the point that you can’t have a recovery without residents and, when a significant amount of housing is severely impacted, the inability to meet housing needs represents a drag on the overall recovery.  

FEMA has multiple options under its Individual and Household Program to assist a household post-disaster, but, in reality, home repair assistance is limited. For example, assistance was capped in FY 2022 to $37,900, a fraction of the funds necessary for the repair or reconstruction of a home that has suffered major damage in a disaster. SBA loan funds may be available if the homeowner can qualify for the loan (on top of any existing house-related indebtedness). These conditions, when combined with chronic underinsurance and post-disaster construction cost increases, make it difficult for many jurisdictions to assist in producing a timely post-disaster rebuild of their housing stock.   

When jurisdictions fund housing rehabilitation and construction programs with CDBG-DR, it provides a tremendous financial resource targeted to low- and moderate-income populations that have been shown to have the fewest resources for recovery. To the extent that this segment of the population is unable to fund their own recovery, delays in accessing CDBG-DR funds for housing purposes present a distinct drag on economic recovery as it is dependent upon the ability of the workforce to have affordable housing close to their place of employment.

One of the blind spots in the federal post-disaster assistance net is an aid for the repair, reconstruction, or new construction of rental housing. CDBG-DR can and often does fill that gap but, again, the inability to access those funds in a timely manner delays that aspect of recovery. Given the predictable shortage of affordable rental housing in disaster-impacted communities, it is critical that damaged rental housing quickly be returned to service and to take advantage of the opportunity to construct additional affordable units by teaming CDBG-DR funds with other resources such as low-income housing tax credits.

On the infrastructure front, delays in the availability of CDBG-DR often have an impact on the use of the funds as non-federal match for other federal programs, particularly permanent repairs under FEMA’s Public Assistance program.   

By the time many CDBG-DR grantees can access their funds, a substantial proportion of PA projects have already been initiated and some even completed. To introduce CDBG-DR to these projects as a non-federal match, various hurdles need to be overcome, most notably the retroactive application of federal labor wage rate requirements to construction activities. This approach is less than ideal and could be avoided if the CDBG-DR funds were available earlier and in coordination with FEMA’s PA assistance.   

Simply put, the longer it takes to deliver CDBG-DR to jurisdictions, the slower overall recovery will be. While permanent authorization of CDBG-DR would not resolve all timing concerns that affect the program’s utility, a more predictable funding mechanism accompanied by permanent regulations would go a long way toward improving performance.

Reform Developments

Over the past several months, both House and Senate committees have held hearings on legislation to permanently authorize CDBG-DR (S. 2471 and H.R. 4707). The attention to this issue has been welcome but there needs to be a clearer consensus on the next steps. Given the discussion during the hearings, key issues for resolution focus on: 

  • The nature and scope of a forward funding mechanism 
  • Accelerating access to funding 
  • Holding grantees more accountable for performance 
  • Ensuring that grantees continue to effectively administer CDBG-DR in a manner that minimizes opportunities for mismanagement 

 It is an understatement to say that the legislative calendar for 2022 is tight and opportunities for consideration of program legislation such as CDBG-DR authorization are limited. However, the developments of the past few months ($5 billion appropriation and two hearings) are encouraging signs that the CDBG-DR authorization discussion has bipartisan momentum and could still result in a positive outcome during the 117th Congress.      

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 disaster response reform task force. 

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