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Notice of Program Requirements for Community Development Block Grant Program Funding Under the American Recovery and Reinvestment Act of 2009: Reallocations

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




On May 5, 2009, HUD posted on its Web site its “Notice of Program Requirements for Community Development Block Grant Program Funding Under the American Recovery and Reinvestment Act of 2009.” The Notice advised the public of statutory and regulatory waivers granted to grantees under the American Recovery and Reinvestment Act of 2009 (Recovery Act), which made $1 billion in Community Development Block Grant (CDBG) funds available to states and local governments to carry out, on an expedited basis, eligible activities under the CDBG program. The May 5, 2009, Notice also indicated that HUD would establish and publish in the Federal Register criteria for reallocating and awarding CDBG-R funds that are not awarded to any eligible jurisdiction. Only one jurisdiction did not apply to receive its Recovery Act allocation. Today's Notice announces the process HUD will use to reallocate this assistance.

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Stanley Gimont, Director, Office of Block Grant Assistance, Office of Community Planning and Development, Department of Housing and Urban Development, 451 7th Street, SW., Room 7286, Washington, DC 20410; telephone number 202-708-3587 (this is not a toll-free number). Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Information Relay Service at 800-877-8339. Interested parties may also visit the CDBG-R Web page on HUD's Recovery Act Web site,​recovery/​, for updated information and resources.

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Authority To Provide Alternative Requirements and Grant Regulatory Waivers

Title XII of Division A of the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-005, approved February 17, 2009) appropriates $1 billion to carry out the CDBG program under Title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301, et seq.) on an expedited basis. These funds will be distributed to grantees that received CDBG funding in Fiscal Year (FY) 2008, in accordance with the provisions of 42 U.S.C. 5306. The grant program under Title XII is commonly referred to as the CDBG-R program. When referring to a provision of the appropriations statute itself, this notice will refer to the Recovery Act; when referring to the grants, grantees, assisted activities, and implementation rules, this notice will use the term CDBG-R.

Under the authority of the Recovery Act, the Secretary may waive or specify alternative requirements for any provision of any statute or regulation in connection with the obligation by the Secretary or the use by the recipient of these funds, except for requirements related to fair housing, nondiscrimination, labor standards, and the environment, upon a finding that such waiver is necessary to expedite or facilitate the timely use of such funds Start Printed Page 58307and would not be inconsistent with the overall purpose of the statute. The Secretary finds that the additional alternative requirement outlined below is necessary to expedite the use of these funds for their required purposes.

Formula: Reallocation

Section I.B of the May 5, 2009, Notice stated that if a unit of general local government, State, or Insular Area receiving an allocation of CDBG-R funds under that notice fails to submit a substantial amendment to its program year 2008 action plan for its grant allocation by the deadlines specified in Section II.A.4. of the Notice, or submits an application for less than the total allocation amount, or if HUD is unable to approve any entity's submission, HUD may notify the jurisdiction of the cancellation of all or part of its allocation amount. The Notice further states that once HUD determines the amount of funds (if any) that are not awarded to any jurisdictions, the Secretary will establish criteria by which to award such funds to other entities, and the criteria will be published in the Federal Register. The Notice indicated that these criteria will be established only if funds become available for reallocation.

Fairbanks, Alaska is the only grantee that declined to apply for its CDBG-R funding. Every other grantee submitted a substantial amendment to its action plan for its full allocation amount, and each is likely to be awarded its funds. Fairbanks was a grantee under the regular annual CDBG Entitlement program through Federal Fiscal Year (FFY) 2008, but starting in FY 2009, Fairbanks relinquished its status as an entitlement community in order to participate in the State of Alaska CDBG program. The City declined to apply for its CDBG-R funds in part because of the small amount of funds involved and in part because it is discontinuing its participation in the CDBG Entitlement program.

Fairbanks' formula allocation of CDBG-R funds was one of the 50 smallest allocations in the program (out of nearly 1,200). Its allocation amount was $67,436. The amount of CDBG-R funds that are available for reallocation is a tiny fraction of the CDBG-R funds distributed to states and local governments (less than .007 percent of the appropriation).

The Department has determined that it is necessary to employ an alternative reallocation process in order to expedite the timely use of these reallocated funds. Under 42 U.S.C. 5306(c), any unawarded CDBG Entitlement funds are to be reallocated in the next fiscal year to other metropolitan cities or counties in the same metropolitan area that would be adversely affected by the loss of the funds. If there is no such other city or county in that metropolitan area, as is the case with Fairbanks, the funds are to be reallocated in the next fiscal year among all Entitlement grantees nationwide. Under the existing provisions of 42 U.S.C. 5306(c), this money would be reallocated as part of the process for allocating the next fiscal year's appropriation of regular CDBG funding, sometime in FFY 2010.

Reallocating the small amount of funds involved to almost 1,200 Entitlement grantees according to the regular CDBG reallocation method would impose a substantial administrative burden on both HUD and grantees. Delaying the reallocation of these funds until the next FFY would also cut into the time the eventual recipient has to expend funds before the September 30, 2012, expenditure deadline. The Department has further determined that it would not be time- or cost-effective to develop a formal process and set of selection criteria for awarding these funds to other grantees on a competitive basis. Most CDBG-R grantees have just begun to implement their programs, and no meaningful data are yet available on which to judge the relative performance of grantees. HUD believes it would be inconsistent with the purposes and requirements of the Recovery Act to wait for performance data to become available before establishing a reallocation process. Such a delay would be counter to the Recovery Act's intent to produce an immediate economic stimulus.

Weighing the fact that the reallocated funds were designated for Fairbanks, Alaska, which has now ceased its participation in the Entitlement CDBG program to instead participate in the State program, the need for economic stimulus in Alaska, and the governmental interest in putting these funds to expeditious use, the Secretary finds good cause to waive the existing requirements in order to reallocate $67,436 in unawarded CDBG-R funds to the State of Alaska. This additional increment of funding equals less than 10 percent of the State of Alaska's initial allocation of CDBG-R funds.

Paperwork Reduction Act

The information collection requirements in this Notice have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB Control Number 2506-0184. In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number.

Environmental Impact

A Finding of No Significant Impact (FONSI) with respect to the environment has been made for this issuance 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 for public inspection between the hours of 8 a.m. and 5 p.m. weekdays in the Regulations Division, Office of General Counsel, Room 10276, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the FONSI by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the toll-free Federal Information Relay Service at 800-877-8339.

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Dated: October 13, 2009.

Mercedes Márquez,

Assistant Secretary for Community Planning and Development.

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[FR Doc. E9-27093 Filed 11-10-09; 8:45 am]