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Reconstruction Watch memo on CDBG waivers:

March 3, 2002

REPORTING WAIVERS: What Does the LMDC Have to Tell the Government and the Public?

The US Department of Housing and Urban Development (HUD) was chosen as the agency through which Federal money being allocated for post September 11^th relief in New York State would pass.  The funds, which originated in the Department of Defense, were designated part of HUD’s Community Development Block Grant (CDBG) program for disaster related relief.  However, because of the unusual circumstances surrounding this particular disaster, several of the reporting requirements attached to CDBG funds were waived.  Notice of the waivers was published in the Federal Register on January 28, 2002 and February 7, 2002. (Click on dates to read notices in PDF format.)

A brief summary analysis of the waivers is given below.

1.     Normally, 70% CDBG funds must be used for activities that benefit persons of low and moderate income. “Low-income” is less than 80% of area median family income (AMI) and “moderate” is up to 100% of AMI.  The HUD median family income for the New York Primary Metropolitan Statistical Area is $37,514. This requirement – that 70% of CDBG funds go to low and moderate income people – has been waived, although the state is expected to "make a good faith effort to maximize benefits to low- and moderate income and maintain documentation of such efforts" (emphasis added).

2.     Citizen participation requirements have been “streamlined,” meaning that they do not require public hearings. However, New York State must submit a summary of all comments sent in during a designated “comment period” as well as the State's response to HUD.

3.     New York State is required to "consult" with New York City regarding the use of the funds. No specifics in the language flesh out what this will mean in practice.

4.     Normally, grantees (states & cities) "are limited in the amount of CDBG assistance per job retained or created, or amount of CDBG assistance per low- and moderate income person." This requirement has been waived.

5. Some requirements of the so-called "public benefit" standards include:

Covered activities must "create or retain at least one FTE” [full time or equivalent] “permanent job per $35,000 of CDBG funds used." This will be particularly relevant to the Job Creation & Retention program, which has $170 million and very loose eligibility criteria for new jobs.

6.      Normal reporting requirements are waived but the state must submit a quarterly report to HUD      with information on funds expended, numbers and NAICS (North American Industry Classification System) codes of businesses assisted, total jobs created and retained, number of such jobs by salary range, numbers of housing units assisted, and, where applicable, the number of jobs taken by low and moderate income persons.