Office of Block Grant Assistance, Washington, DC Community Development Block Grant Disaster Recovery Program Office of Audit, Region 6 Audit Report Number: 2018-FW-0002 Fort Worth, TX July 23, 2018 To: Jessie Handforth Kome, Acting Director, Office of Block Grant Assistance, DGB From: Kilah S. White, Regional Inspector General for Audit, 6AGA Subject: HUD’s Office of Block Grant Assistance Had Not Codified the Community Development Block Grant Disaster Recovery Program Attached is the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) final results of our review of whether the Office of Block Grant Assistance should codify the Community Development Block Grant Disaster Recovery program. HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on recommended corrective actions. For each recommendation without a management decision, please respond and provide status reports in accordance with the HUD Handbook. Please furnish us copies of any correspondence or directives issued because of the audit. The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its publicly available reports on the OIG website. Accordingly, this report will be posted at http://www.hudoig.gov. If you have any questions or comments about this report, please do not hesitate to call me at (817) 978-9309. Audit Report Number: 2018-FW-0002 Date: July 23, 2018 HUD’s Office of Block Grant Assistance Had Not Codified the Community Development Block Grant Disaster Recovery Program Highlights What We Audited and Why As part of our annual risk and internal planning process, we audited the U.S. Department of Housing and Urban Development (HUD), Office of Block Grant Assistance’s (OBGA) Community Development Block Grant (CDBG) Disaster Recovery program. Our analysis noted that Congress had historically provided disaster funding through supplemental appropriations, yet OBGA had not created a formal codified program. Instead, it had issued multiple requirements and waivers for each Disaster Recovery supplemental appropriation in Federal Register notices, many of which were repeated from disaster to disaster. Our objective was to determine whether OBGA should codify the CDBG Disaster Recovery funding as a program in the Code of Federal Regulations. What We Found Although OBGA had managed billions in Disaster Recovery funds since 2002, it had not codified the CDBG Disaster Recovery program. It had not codified the program because it believed it did not have the authority under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, and it had not determined whether it had the authority under the Housing and Community Development Act of 1974 as amended. It also believed a Presidential Executive Order presented a barrier to codification, as it required the Office of Community and Planning Development (CPD) to identify two rules to eliminate in order to create a new codified rule. We believe OBGA has the authority under the Housing Act of 1974 and it should codify the program. OBGA’s use of multiple Federal Register notices to operate the Disaster Recovery program presented challenges to the grantees. For example, 59 grantees with 112 active Disaster Recovery grants, which totaled more than $47.4 billion as of September 2017, had to follow requirements contained in 61 different Federal Register notices to manage the program. Further, codifying the CDBG Disaster Recovery program would (1) ensure that a permanent framework is in place for future disasters, (2) reduce the existing volume of Federal Register notices, (3) standardize the rules for all grantees, and (4) ensure that grants are closed in a timely manner. What We Recommend We recommend that the Acting Director of OBGA work with its Office of General Counsel to codify the CDBG Disaster Recovery program. Table of Contents Background and Objective......................................................................................3 Results of Audit ........................................................................................................6 Finding: OBGA Had Not Codified Its CDBG Disaster Recovery Program............... 6 Scope and Methodology .........................................................................................14 Internal Controls ....................................................................................................16 A. Auditee Comments and OIG’s Evaluation ............................................................. 17 B. Disaster Recovery Funding by State and Territory - 2001 Through 2016 .......... 21 C. Active Disaster Recovery Grants as of September 19, 2017 ................................. 22 D. HUD Federal Register Notices for Disaster Recovery Funding ........................... 25 E. Analysis of Federal Register Notices for Common Rules and Waivers ............... 27 F. HUD OIG CDBG Disaster Recovery Reports ........................................................ 29 2 Background and Objective The U.S. Department of Housing and Urban Development’s (HUD) mission is to create strong, sustainable, inclusive communities and quality, affordable homes for all. HUD’s Office of Community Planning and Development (CPD) seeks to accomplish this mission through a wide variety of housing and community development grants and loan programs. CPD’s Office of Block Grant Assistance (OBGA) has responsibility for administering Community Development Block Grant (CDBG) Disaster Recovery funding. As shown in figure 1, its funding and, thus, its role had significantly expanded over time. Figure 1: Congressional funding for the CDBG Disaster Recovery program CDBG Disaster Recovery appropriations (in millions) $15,181 $16,000 $14,000 $11,414 $12,000 $10,000 $7,400 $8,000 $6,408 $5,244 $6,000 $1,848 $3,000 $4,000 $2,783 $2,306 $2,000 $700 $0 $10 $400 $0 $0 $146 $0 $299 $0 Hurricanes Hurricane Hurricane Lousiana Hurricanes 9/11 Ike and Harvey, Katrina, Rita, Sandy and flooding terrorist midwest Irma, and and Wilma other and other attacks floods Maria events events From 2001 to 2016, Congress provided supplemental appropriations totaling $48 billion to HUD to help communities recover from disasters. In general, Congress required that the funds be used for necessary expenses for activities authorized under Title I of the Housing and Community Development Act of 1974 as amended, related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from a major disaster declared under the Robert T. Stafford Disaster Relief and 3 Emergency Assistance Act. Congress required HUD to publish in the Federal Register any waiver of any statute or regulation of Title I of the Housing Act of 1974. In addition to Federal Register notices guidance, OBGA used the CDBG program as a framework for disaster recovery because it was flexible and allowed grants to address a wide range of challenges. Between March 2001 and January 2017, 1 OBGA used the supplemental appropriations to address 131 Presidential disaster declarations in 36 States and a territory covering 240 events, which included hurricanes, tropical storms, floods, tornados, windstorms, snowstorms, landslides, mudslides, wildfires, and a terrorist attack. As shown in figure 2, eight States received grants that totaled more than 93 percent of the total Disaster Recovery funding. 2 Figure 2: Disaster Recovery funding by States and a territory from March 2001 through January 2017 2001-2017 Disaster Recovery funding awarded by State and a territory (in millions) Florida 28 States and 1 territory funded >$400 Indiana $431 $3,486 $440 Iowa $988 Texas $4,018 Louisiana $16,501 New Jersey $4,205 Mississippi $5,495 New York $12,419 According to OBGA’s Disaster Recovery Grants Reporting (DRGR) system, 3 the grantees with active grants budgeted and spent their funds on a wide variety of Disaster Recovery activities as shown in table 1. 1 Figure 2 did not include amounts awarded for Hurricanes Harvey, Irma, and Maria as OBGA had not awarded those funds as of January 2017. 2 See appendix B for a listing of all 36 States and a territory that received Disaster Recovery funds. 3 CPD’s DRGR system is primarily used by grantees to access grant funds and report performance accomplishments for grant-funded activities. OBGA staff used the DRGR system to review grant-funded activities, prepare reports to Congress and other interested parties, and monitor program compliance. The DRGR system included all Disaster Recovery funds awarded and spent since 2001. 4 Table 1: Activities funded by CDBG Disaster Recovery grants as of September 19, 2017 Percentage of grant Activity category Budgeted Disbursed disbursed Compensation $12,367,754,021 $12,309,391,139 99.53% Miscellaneous 1,088,998,239 946,589,323 86.92% Economic development 2,525,934,513 2,172,582,884 86.01% Buyout 871,947,608 712,820,227 81.75% Acquisition and disposition 722,555,981 561,554,616 77.72% Housing - rental 3,572,808,216 2,780,877,160 77.83% Infrastructure 5,447,610,327 4,265,032,948 78.29% Administration 1,545,275,605 1,107,106,079 71.64% Planning 692,151,456 477,645,011 69.01% Public facilities 4,671,705,828 3,165,991,386 67.77% Housing - other 10,721,682,262 7,083,330,578 66.07% Clearance and demolition 433,812,630 251,561,084 57.99% National disaster resiliency 46,574,236 0 0.00% Total 44,708,810,922 35,834,482,435 80.15% Our objective was to determine whether OBGA should codify the CDBG Disaster Recovery funding as a program in the Code of Federal Regulations. 5 Results of Audit Finding: OBGA Had Not Codified Its CDBG Disaster Recovery Program Although OBGA had managed billions in Disaster Recovery funds since 2002, it had not codified the CDBG Disaster Recovery program. OBGA had not codified the program because it believed it did not have authority under the Stafford Act. Further, it stated that it had not determined whether it had authority under the Housing Act of 1974 to create a codified Disaster Recovery program. It also believed an Executive Order presented barriers to codification. 4 We believe it has the authority under the Housing Act of 1974 and should exercise its authority to codify the program. OBGA’s use of multiple Federal Register notices to operate the Disaster Recovery program presented challenges to grantees. For example, 59 grantees with 112 active Disaster Recovery grants, which totaled more than $47.4 billion as of September 2017, had to follow requirements contained in 61 different Federal Register notices. Further, codifying the CDBG Disaster Recovery program would (1) ensure that a permanent framework is in place for future disasters, (2) reduce the existing volume of Federal Register notices, (3) standardize the rules for all grantees, and (4) ensure that grants are closed in a timely manner. OBGA Managed Billions in Disaster Recovery Grant Funds but Had Not Codified the Program From 2001 through 2016, OBGA awarded 138 Disaster Recovery program grants totaling almost $48 billion to various States, counties, parishes, cities, a territory, and a corporation. As of September 2017, the grantees had 112 active grants 5 open, or 81 percent, which totaled more than $47.4 billion. These grantees had not spent almost $11.6 billion, or almost 25 percent, of the amount awarded, as shown in table 2. 6 4 Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs, January 30, 2017 5 See appendix C for active grants, which had unspent funds and were open in DRGR as of September 19, 2017. 6 Table 1’s total budgeted was less than the total amount awarded in table 2 as grantees had not budgeted or disbursed funds for four grants as of September 19, 2017. 6 Table 2: Active CDBG Disaster Recovery grants as of September 19, 2017 No. of Year(s) No. of Unspent public Disaster event funded grants Grant amount amount law(s) Terrorist attacks of September 11, 2001 4 2001-2002 3 $ 3,483,000,000 $ 364,710,339 Hurricanes Katrina, Rita, and Wilma 2 2005-2007 6 19,319,892,908 560,248,936 Severe storms, tornados, and flooding 1 2008 6 278,416,318 14,911,943 Hurricanes Ike, Gustav, and Dolly. Severe storms and flooding 1 2008 13 6,004,684,356 874,151,229 Severe storms and flooding 1 2010 7 98,718,642 12,214,659 Hurricane Irene, severe storms, tornados, and flooding 1 2011 17 400,000,000 180,124,560 Hurricanes Irene, Isaac, and Sandy. Severe storms and flooding 1 2011-2013 47 15,180,999,750 7,070,958,622 Hurricanes Joaquin and Patricia. Severe storms, tornados, and flooding 1 2015 6 248,304,000 227,938,695 Hurricanes Hermine and Matthew. Severe storms, tornados, and flooding 3 2016 7 2,356,672,000 2,323,669,386 Total 15 112 47,370,687,974 11,628,928,369 Although OBGA had not codified the program, it continued to play a major role in providing Disaster Recovery assistance. On September 8, 2017, and February 9, 2018, Congress allocated HUD an additional $35.4 billion to provide additional disaster relief. 7 Based on the number of recent disasters, OBGA will be responsible for managing Disaster Recovery grants for years to come. Establishing a permanent standardized set of rules could help improve program effectiveness and assist in managing the grants by providing a permanent structure for the Disaster Recovery program. OBGA Had Not Fully Addressed Its Ability to Codify the Program OBGA stated that it did not have statutory authority to codify a Disaster Recovery program as each disaster supplemental appropriation was unique and the Stafford Act did not grant HUD the authority to create regulations. Further, OBGA stated that it had not determined whether it had authority under the Housing Act of 1974 to create a codified Disaster Recovery program. OBGA also stated that it would have to follow an Executive Order 8 on reducing regulation and controlling regulatory costs before it could issue new codified rules for a Disaster Recovery program. According to OBGA, the Executive Order required it to identify two existing regulations it would repeal before issuing a single new rule. 7 Supplemental Appropriations for Disaster Relief Requirements Act, 2017, and the Bipartisan Budget Act of 2018 8 See footnote 4. 7 Although the Stafford Act does not specifically grant HUD authority to issue regulations under the Stafford Act, HUD does have the ability to establish policy and issue regulations relating to the disaster programs that work in conjunction with the Stafford Act. In addition, the public laws required that the disaster funds be used for activities under Title I of the Housing Act of 1974, and HUD has statutory authority to issue regulations under the Housing Act of 1974. The public laws also allowed HUD to issue waivers or alternative requirements to disaster grantees when it believed the requirements were not consistent with the Housing Act of 1974. Thus, we believe that OBGA has the regulatory authority to codify the Disaster Recovery program under the Housing Act of 1974 and it should create specific Disaster Recovery regulations. In addition, if OBGA codified the program, it could reduce the number of existing Federal Register notices it uses to operate the program. In addition, other agencies had codified their Disaster Recovery programs. Two agencies that received Hurricane Sandy funding, 9 the Federal Emergency Management Agency (FEMA) and the Small Business Administration (SBA), had codified their disaster recovery programs. Under the Stafford Act, Congress specifically granted FEMA authority to issue regulations and implement the Stafford Act. Although FEMA is authorized to issue regulations under the Stafford Act, SBA used its own programmatic authority to codify its program. OBGA’s Use of Federal Register Notices Presented Challenges to the Grantees OBGA’s use of multiple Federal Register notices to administer the Disaster Recovery funding presented challenges to the grantees. Grantees • Had to refer to an increasing number of Federal Register notices to operate their programs. • Had to refer to notices that contained repetitive or similar requirements. • Had to navigate what could be confusing requirements, which varied depending on the type of grantee they were. • Continued to have issues with common weaknesses, including procurement requirements. • Could close their grants in a more timely manner. OBGA Issued Many Federal Register Notices To Operate the Disaster Recovery Program OBGA created and issued 63 Federal Register notices to address the funding Congress provided in 16 public laws from 2001 to 2016. As shown in table 3, OBGA’s Federal Register notices were voluminous and increased in number and size over time, and most remained in effect in 2017. In addition, OBGA’s Federal Register notices for disasters do not expire or close until all associated grants are closed. As of September 2017, its 112 active grants had 61 open Federal Register notices. 10 Further, OBGA issued an additional three Federal Register notices during our 9 For a listing of agencies and Sandy funding, see Audit Report 2016-FW-1007, Disaster Relief Appropriations Act, 2013: Financial Status, Observations, and Concerns, issued September 12, 2016. 10 Two Federal Register notices covering the 2003-2004 multiple disasters had closed because all grants issued from the appropriation (Public Law 108-324) were complete. See appendix C for a listing of all active grants. 8 audit, and it will continue to issue additional Federal Registers notices for funding provided in the 2017 and 2018 Acts. 11 Table 3: Federal Register notices covering Disaster Recovery funding from January 2002 to February 2017 No. of Federal No. of Register notices Disaster event(s) pages issued Terrorist attacks of September 11, 2001 8 22 Multiple disasters 2003-2004 12 2 11 Hurricanes Katrina, Rita, and Wilma 19 104 Severe storms, tornados, and flooding 2 16 Hurricanes Ike, Gustav, and Dolly; severe storms; and flooding 3 26 Severe storms and flooding 2 20 Hurricane Irene, severe storms, tornados, and flooding 2 21 Hurricanes Irene, Isaac, and Sandy; severe storms; and flooding 21 125 Hurricanes Joaquin and Patricia, severe storms, tornados, and flooding 1 24 Hurricanes Hermine and Matthew, severe storms, tornados, and flooding 2 27 All disasters - duplication of benefits (issued in 2011) 1 7 Total 63 403 OBGA’s Federal Register Notices Included 59 Core Requirements and Waivers That Could Be Codified OBGA’s 63 Federal Register notices contained more than 100 Disaster Recovery requirements and waivers, and our analyses showed that OBGA included at least 59 duplicative or similar items in most of the notices. 13 Codifying these 59 core requirements could reduce the number of current Federal Register notices by eliminating repetitive rules and waivers that applied to all disasters. For example, OBGA consistently repeated the following rules or waivers: • allowing States to directly administer grants and carry out eligible activities, • requiring grantees to submit an action plan, • requiring grantees to review for duplication of benefits, • allowing States to use subrecipients, and • allowing the acquisition of real property and flood buyouts. 14 If OBGA codified the core requirements, grantees would have a permanent framework in place, which would allow them to rapidly respond to a major disaster, including allowing them to create their action plan. Codifying requirements for action plans may allow grantees to provide disaster recovery assistance more quickly. For example, the State of Texas stated that it had drafted an action plan for its pending Hurricane Harvey allocation based on previous Federal Register notices. However, Texas was waiting to submit its action plan to OBGA for approval because 11 See footnote 7. 12 See footnote 10. 13 See appendix E for our analyses of the rules in common among the 63 Federal Register notices. 14 See appendix D, numbers 7, 11, 14, 20, and 48. 9 OBGA had not issued a Federal Register notice for the 2017 Act’s Disaster Recovery funds. Texas stated that OBGA should standardize and codify the Disaster Recovery requirements. OBGA’s Use of Many Federal Register Notices Could Be Confusing to Grantees OBGA’s use of multiple Federal Register notices for a specific disaster could confuse grantees. Generally, the Federal Register notices had to be taken in their entirety as early notices continued to apply even after later notices were issued. As shown in the notice excerpt below, Hurricane Sandy grantees had to refer to many prior Federal Register notices to administer their grants when this notice was issued. 15 This notice [82 FR 9753] modifies the waiver and alternative requirement initially published in the Federal Register notice on July 11, 2014 (79 FR 40133), and later modified in the Federal Register notice published on April 2, 2015 (80 FR 17772). All waivers and alternative requirements for Hurricane Sandy grantees in receipt of allocations under the Appropriations Act, are described within the Federal Register notices published by the Department on March 5, 2013 (78 FR 14329), April 19, 2013 (78 FR 23578), August 2, 2013 (78 FR 46999), November 18, 2013 (78 FR 69104), March 27, 2014 (79 FR 17173), July 11, 2014 (79 FR 40133), October 16, 2014 (79 FR 62182), April 2, 2015 (80 FR 17772), and May 11, 2015 (80 FR 26942), August 25, 2015 (80 FR 51589), November 18, 2015 (80 FR 72102), February 12, 2016 (81 FR 7567), and August 15, 2016 (81 FR 54114) (referred to collectively in this notice as the ‘‘prior notices’’). The requirements of the prior notices continue to apply, except as modified by this notice. 16 Also, OBGA could not provide a document showing which sections of the various Federal Register notices it had revised or eliminated in later notices for Sandy grantees. Some Federal Register notices had requirements that had been revised by one or more later notices, and in one case, a revision was revised again by an even later notice. Thus, grantees had to refer to all applicable Federal Register notices in their entirety and determine for themselves what rules applied. Further, grantees that received funding from multiple public laws for different disaster events had to follow all Federal Register notices related to each disaster. For example, as of February 2017, • Louisiana had 7 open grants and had to follow 45 Federal Register notices to administer its grants, and • Texas had 6 open grants and had to follow 48 Federal Register notices to administer its grants. 15 Grantees for the Disaster Relief Appropriation Act, 2013, had to follow 21 Federal Register notices specific to the Act and 1 general Federal Register notice that addressed duplication of benefits. 16 February 8, 2017, 82 FR 9753, Additional Clarifying Guidance, Waivers, and Alternative Requirements for Grantees in Receipt of Community Development Block Grant (CDBG) Disaster Recovery Grant Funds Under the Disaster Relief Appropriations Act, 2013 10 In another example of confusing requirements, OBGA issued a Federal Register notice related to Hurricane Sandy funding; however, the notice also applied to a previous disaster funded under a different public law (112-55), which had its own separate Federal Register notices. OBGA posted this notice on its website as applying to Hurricane Sandy and did not post it as applying to the multiple disasters in 2011. Thus, 2011 grantees affected by this notice may not have known that it applied when searching HUD’s web pages for guidance. Grantees also had to reference and follow different sections of the Federal Register notices depending what type of grantee they were – State or entitlement. State CDBG grantees were allowed to use maximum feasible deference, to create their own program definitions, and to follow their own procurement rules. Entitlement grantees did not have maximum feasible deference, had CDBG programmatic definitions, and were required to follow Federal procurement rules. 17 Further, States did not normally directly administer their regular State CDBG program funds but were allowed to directly administer the Disaster Recovery funds. In addition, OBGA often issued the Disaster Recovery program Federal Register notices on an expedited basis. The expedited basis limited the time for review and comments and occasionally resulted in technical errors. If OBGA codified the Disaster Recovery program, it could improve the effectiveness of the program by reducing the number and volume of Federal Register notices, which would reduce the number of items that needed to go through the departmental clearance process. Office of Inspector General’s (OIG) Reports Identified Common Weaknesses in the Disaster Recovery Program Based on our many audits and evaluations of the Disaster Recovery program, we believe that codification of the core program requirements and standardization of procurement rules could improve the program’s operations and could potentially address common weaknesses, such as procurement and monitoring. As of September 30, 2017, OIG had completed 111 audit and 7 evaluation reports relating to CDBG Disaster Recovery funding from 2002 to 2017. 18 Those reports included 130 findings, which identified $1.4 billion in questioned costs and $5.5 billion in funds to be put to better use. 19 17 Entitlement grantees were previously required to follow the procurements rules at 24 CFR (Code of Federal Regulations) 85.36(b), which have now been incorporated into 2 CFR 200.318 to 200.326. 18 See appendix F for a listing of OIG’s reports concerning OBGA’s CDBG Disaster Recovery funding. 19 The total of funds to put to better use in appendix F represents future cost savings or the avoidance of unnecessary expenditures if the specific audit recommendations in those reports are implemented. 11 Table 4: Common findings and weaknesses identified in OIG’s Disaster Recovery reports Reported Common grantee or subrecipient weaknesses instances Incurred ineligible or unsupported costs. Costs identified as (1) overpayments, (2) underpayments, or (3) duplicate payments. 40 Did not follow procurement requirements. 28 Could not support the eligibility of applicant or grant awards. 23 Program guidelines, procedures, policies, or internal controls (1) need improvement or (2) were not followed. 20 Monitoring or reviews (1) were not adequately documented, (2) were not performed, (3) needed improvement, or (4) lacked procedures. 19 Duplication of benefits existed with (1) insurance proceeds, (2) SBA loans or grants, or (3) other funding sources. 13 Program files and documents lacked adequate support to ensure that (1) grant activities were eligible or completed or (2) program goals and outcomes were accomplished. 13 Program administration, accounting, or management information system controls were not followed or need improvement. 11 Did not follow agency, State, local, or Federal Register requirements or subrecipient agreements and did not meet performance benchmarks. 10 Did not comply or was not familiar with Federal cost principles or administrative requirements. 9 Action plan requirements and amendments were not followed, had missing provisions, or needed improvements. 9 Our reports found that procurement issues presented significant challenges to Disaster Recovery program grantees, as shown in table 5. 20 Problem areas occurred due to (1) different procurement requirements applied depending on the type of grantee (State or entitlement entity), (2) questions over whether a State’s procurement processes were equivalent to Federal procurement requirements, and (3) a State’s inexperience in directly administering Disaster Recovery program funds and procuring program administrators and contractors. Table 5: Common procurement issues in OIG’s reports Reported Procurement issue instances No cost or price analysis was performed. Contract costs were not reasonable or best value was not obtained. A lack of competitive procedures existed or full and open competition was not performed. Evaluations process was not followed. Contract did not meet request for proposal requirements. 20 Federal and agency procurement requirements were not followed or implemented. 15 Unsupported payments were made, contract work was performed outside the scope or before the executed contract date, unbudgeted costs were paid, billing was not tied to deliverables, billings were missing deliverables, or excessive fees were paid. 13 Grantees or subrecipients were unfamiliar with Federal requirements. 6 Contracts included ineligible cost-plus-a-percentage-of-cost method or other ineligible payment types or provisions. 4 Services were procured without executed subrecipient agreements or contracts. 3 20 For detailed information on procurement issues, see Audit Report 2016-PH-0005, HUD Did Not Always Provide Accurate and Supported Certifications of State Disaster Grantee Procurement Processes, issued September 29, 2016. 12 A grantee stated that its greatest concern was that the potential subrecipients did not know or were not familiar with procurement requirements. 21 It noted that procurement training was needed before funds were awarded and procurements were made. We believe that OBGA could improve the effectiveness of the program by consolidating and standardizing the procurement requirements. It would help grantees and subrecipients become familiar with requirements before contracts were awarded. Codification Could Ensure That Grants Are Closed in a More Timely Manner Since Congress did not set deadlines for the funding used for 65 of the 112 grants, OBGA did not establish obligation and expenditure deadlines for these grants. Although OBGA stated that Disaster Recovery grants should largely be completed within 6 years, 7 grants totaling more than $12.2 million were more than 7 years old, and 28 of them totaling more than $1.8 billion were more than 9 years old. 22 OBGA must continue to monitor these aging grants until they close, and there is a risk that later activities may not meet the original intended goals of the program. Since Congress established obligation and expenditure deadlines for the remaining 47 grants funded by the Disaster Relief Appropriations Act, 2013, 23 OBGA included 2-year grantee expenditure deadlines in these grants. However, some grantees received extensions, which have allowed these grants to remain open until September 30, 2022. As of September 2017, 46 percent of the Hurricane Sandy funding had not been spent. However, all of the funds must be spent by September 30, 2022, 9 years after Congress allocated the funds. If OBGA codified and set obligation and expenditure deadlines, it could ensure that all Disaster Recovery activities would be completed and closed out in a more timely manner, including those that do not have statutory deadlines, and reduce the amount of open grants that OBGA would have to monitor. Conclusion OBGA could improve the Disaster Recovery program, with grants totaling $47.4 billion, by issuing a codified rule. If it codified the requirements, OBGA would be able to (1) ensure that a permanent framework is in place for future disasters; (2) reduce the number and volume of existing and future Federal Register notices that grantees have to follow; (3) issue standardized rules, including rules for procurement, for all grantees; and (4) set expenditure deadlines, which would ensure that grants would be closed in a timely manner. Recommendations We recommend that the Acting Director of OBGA 1A. Work with HUD’s Office of General Counsel to create a codified Disaster Recovery program. 21 2 CFR Part 200.318 to 200.326 22 See appendix C for a complete aging list of all active grants. 23 Section 904(c) of the Act required grantees to spend the funds within 24 months of obligation unless there was a waiver. 13 Scope and Methodology Our audit scope covered the period September 2001 through September 2017. We expanded the scope to include background information on Disaster Recovery funding from 1993 to 2001. We performed our audit from May through December 2017 at HUD OBGA’s offices in Washington, DC, and our offices located in Fort Worth and San Antonio, TX. To accomplish our objective, we obtained and reviewed • The 16 public laws related to HUD’s disaster supplemental appropriations from 2001 to 2016. • The Robert T. Stafford Disaster Relief and Emergency Assistance Act and the Housing and Community Development Acts of 1974 as amended. • HUD’s 63 Disaster Recovery Federal Register notices issued from January 2002 to January 2017, which awarded the funding to the grantees and provided applicable rules, waivers, and alternative requirements. We summarized the requirements and identified common rules among the disasters. • The CDBG State and entitlement programs’ regulations. • All presidentially declared disasters funded by HUD’s disaster supplemental appropriations. The Federal Register notices identified 131 FEMA disaster declarations. We obtained 131 FEMA disaster declarations from the FEMA website. We analyzed the disaster declarations and summarized the data by State and disaster event. • HUD’s additional 29 separate grantee resources and 8 Disaster Recovery toolkits that provide grantees with guidance and information related to the CDBG Disaster Recovery program. • HUD’s Disaster Recovery program website information to identify and verify the funding history of the disaster recovery program from 1993 to 2017. • OIG’s 118 audit and evaluation reports issued from May 2002 to September 2017 concerning the CDBG Disaster Recovery program. We summarized the funds reviewed, findings, and questioned costs. We also identified the common weaknesses related to the CDBG Disaster Recovery program. In addition, we obtained access to HUD’s DRGR system. We downloaded financial reports for 138 Disaster Recovery grants awarded from 2001 to 2016. The downloaded data included all funding transactions from when the first grant was awarded in 2001 to the date of report generation, which was September 19, 2017. We summarized the data by grantee, State, grant number, current grant status, grant amount, and funds spent for all active and inactive grants. We analyzed the data to identify the unspent amounts and the age of the grants for all 112 active grants. We conducted data validation and reliability testing of the DRGR system data by matching all the 138 grant amounts to the Federal Register notices’ award amounts and to related OIG reports. We concluded that the computer-processed data obtained from the DRGR system were sufficiently reliable to meet our audit objective. 14 We also interviewed various HUD employees, including staff from CPD, OBGA, the Office of the Chief Financial Officer, and the Office of General Counsel. In addition, we obtained a legal opinion from our Office of Legal Counsel regarding HUD’s authority to codify a disaster program under the Stafford Act or the Housing and Community Development Act of 1974 as amended. We conducted the audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective(s). We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective. 15 Internal Controls Internal control is a process adopted by those charged with governance and management, designed to provide reasonable assurance about the achievement of the organization’s mission, goals, and objectives with regard to • effectiveness and efficiency of operations, • reliability of financial reporting, and • compliance with applicable laws and regulations. Internal controls comprise the plans, policies, methods, and procedures used to meet the organization’s mission, goals, and objectives. Internal controls include the processes and procedures for planning, organizing, directing, and controlling program operations as well as the systems for measuring, reporting, and monitoring program performance. Relevant Internal Controls We determined that the following internal controls were relevant to our audit objective: • Public laws and Federal Register notices that contain the rules for grantees in carrying out the Disaster Recovery program. • Additional HUD policies and guidance for Disaster Recovery grantees. We assessed the relevant controls identified above. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, the reasonable opportunity to prevent, detect, or correct (1) impairments to effectiveness or efficiency of operations, (2) misstatements in financial or performance information, or (3) violations of laws and regulations on a timely basis. Significant Deficiency Based on our review, we believe that the following item is a significant deficiency: • OBGA had not established permanent codified rules for the CDBG Disaster Recovery program. It used requirements contained in many Federal Register notices to operate the Disaster Recovery program, which presented challenges to the grantees. 16 Appendix A Auditee Comments and OIG’s Evaluation Ref to OIG Auditee Comments Evaluation U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, DC 20410-7000 OFFICE OF COMMUNITY PLANNING AND DEVELOPMENT MEMORANDUM FOR: Kilah S. White, Regional Inspector General for Audit, 6AGA FROM: SUBJECT: Comments on May 17, 2018, Draft Report regarding Codification of the Community Development Block Grant Disaster Recovery Requirements Thank you for the opportunity to provide comments on the subject draft report. As the report notes, Congress has provided Community Development Block Grant disaster recovery (CDBG-DR) funding under supplemental appropriations since 1992, and the Department issues Federal Register Notices modifying the underlying CDBG program requirements (when determined necessary) by applying tailored regulatory and statutory waivers and alternative requirements. The Department has not amended the CDBG regulations to include requirements governing supplemental appropriations, and this is what your report recommends be done now. Further, the report states the Office of Inspector General (OIG) believes HUD has the authority Comment 1 to issue regulations despite the lack of statutory authorization for CDBG-DR. In making this recommendation, the report cites the intended purposes of ensuring a permanent framework is in place for future events, reducing the volume of Federal Register Notices, standardizing the rules for all grantees, and ensuring that grants are closed timely. HUD has two major concerns with the draft report. Comment 1 First, HUD issues regulations to guide programs. CDBG-DR is not a program; it is groups of grants made under a series of constantly changing appropriations statutes and explicitly supplements the CDBG program (which has regulations). If HUD has responded to this decade's barrage of supplemental funding by developing some waivers that are deployed with some consistency across two or more appropriations, this is because the waivers respond to issues or areas not adjusted by Congress in those statutes. HUD is allowed consistency to the extent that Congress creates consistency. Generally, such consistency is provided by Congress enacting authorizing legislation for a program, such as the Housing and Community Development Act of 1974 and through amendments to that law. Second, HUD does not understand how this can be a Finding as defined in AMS Comment 2 Handbook Appendix I: Audit Finding. A written explanation of: errors, weaknesses in internal controls, deficiencies, adverse conditions, noncompliance with contractual, statutory, regulatory, or other legal requirements, or the need for improvements or changes which are disclosed by the audit. An audit Finding usually includes a comparison of "what is" (criteria) with "what should be" (criteria) and an answer to the question "what does this mean?" or "so what?" www.hud.gov espanol.hud.gov 17 Ref to OIG Auditee Comments Evaluation 2 (adverse effect). In addition, an audit finding usually identifies and explains the reasons Comment 2 why (cause) there is a difference between "what is" and "what should be." The Finding will be the basis for conclusions and recommendations for corrective action. In this case, the audit appears to have examined whether HUD had issued regulations and Comment 2 concluded that HUD should issue regulations. The criteria are not laid out, and specific adverse effects cited are administrative and not linked to material issues, compliance related or operational. In other words, this audit recommendation is solidly in the realm of HUD's management discretion. Most of the issues cited can be resolved with more technical assistance for grantees. At this time, during the largest CDBG-DR grants launch to date, HUD program officials have the management and policy discretion to determine where and on what to apply limited program expert and legal resource - to the launch of $35 billion in grants or to drafting regulations for future appropriations that may never occur. After conferring with CDBG-DR program attorneys regarding this audit, a legal Comment 1 impediment, long present, was further defined. Although HUD could choose to issue regulations to implement any one appropriation, because the appropriations statutes state that any HUD waivers and alternative requirements for that appropriation must be published for five days before becoming effective, no pre-existing regulation relying on such waivers and applying such requirements can exist. Another way of looking at this is that HUD may not publish regulations for effect that rely on statutory waiver and alternative requirements authority HUD has not been permanently granted. Overall, HUD does appreciate the OIG's observation that the current process of constantly Comment 3 changing appropriations requirements echoed by changing waivers and alternative requirements can be unwieldy. After decades of HUD, the OIG, and the grantee community learning how to administer and implement CDBG-DR recoveries, the time may now demand a more standard, regulation-governed program, but that decision is up to Congress, not HUD. 18 OIG Evaluation of Auditee Comments Comment 1 HUD stated that it lacked statutory authority to create a CDBG Disaster Recovery program because the funds are provided under a series of constantly changing appropriation statutes, and it cannot publish regulations for effect that rely on statutory waivers and alternative requirements as it has not been permanently granted authority to do so. We believe HUD has the statutory authority to create a Disaster Recovery program under Title I of the Housing and Community Development Act of 1974 as amended. Although HUD raised the issue of the potential lack of statutory authority at our entrance conference, it noted at the exit conference that it had not obtained a formal legal opinion concerning the issue from its Office of General Counsel. Although it did not provide a legal opinion, HUD did state that it conferred with CDBG-DR program attorneys its response. Over the years, the various Disaster Recovery statutes have contained core requirements which provided the funding for necessary expenses related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from a major disaster declared pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act. Although we agree that there will occasionally be some unique requirements that will require waivers to be published in Federal Register notices, HUD has issued repeated alternative requirements that could be codified under its existing statutory authority, which would (1) ensure that a permanent framework is in place for future disasters, (2) reduce the existing volume of Federal Register notices, (3) standardize the rules for all grantees, and (4) ensure that grants are closed in a timely manner. Comment 2 HUD stated that it did not understand how this could be a finding as defined by HUD’s Audit Management System (AMS) Handbook Appendix I. 24 We contend that the AMS Handbook describes the type of finding that we developed in this report. The AMS Handbook definition of a finding refers to, among other things, a written explanation of the need for improvements or changes which are disclosed by the audit. As a result of the audit, we concluded that HUD could improve its Disaster Recovery efforts by codifying basic requirements. Comment 3 HUD said it appreciated OIG’s observation that the current process can be unwieldy. It further stated that time may now demand a more standard, 24 HUD Office of the Chief Financial Officer’s Handbook 2000.06, Rev-4, issued October 2011. The Handbook contains an appendix 1, Glossary of Terms, and not an appendix I. 19 regulation-governed program, but it stated the decision is up to Congress and not HUD. We acknowledge HUD’s comments. We maintain that HUD has authority to create codified regulations for the CDBG Disaster Recovery program. However, we encourage it to work with Congress, if it believes it lacks statutory authority, as it has an obligation to ensure the Disaster Recovery program is operated in an effective and efficient manner. 20 Appendix B Disaster Recovery Funding by State and Territory - 2001 Through 2016 Count State or territory Disaster grant(s) amount 1. Louisiana $ 16,500,852,389 2. New York 12,418,771,963 3. Mississippi 5,495,224,462 4. New Jersey 4,205,027,506 5. Texas 4,017,647,960 6. Iowa 987,756,643 7. Indiana 439,559,497 8. Florida 430,199,586 9. Illinois 399,658,438 10. Colorado 320,935,651 11. Tennessee 292,734,885 12. Missouri 287,743,696 13. Alabama 281,872,963 14. South Carolina 221,969,000 15. Connecticut 213,556,359 16. North Carolina 203,114,996 17. North Dakota 195,331,418 18. Oklahoma 147,693,876 19. Wisconsin 139,584,277 20. California 135,375,287 21. Virginia 125,786,572 22. West Virginia 109,440,001 23. Pennsylvania 99,122,991 24. Arkansas 94,855,600 25. Massachusetts 46,162,880 26. Vermont 39,592,211 27. Puerto Rico 37,847,867 28. Rhode Island 32,911,001 29. Maryland 30,702,131 30. Kentucky 13,000,000 31. Nebraska 5,557,736 32. Georgia 5,210,779 33. Maine 2,187,114 34. South Dakota 1,987,271 35. Ohio 1,392,319 36. Minnesota 925,926 37. Montana 666,666 Total funding 47,981,959,917 21 Appendix C Active Disaster Recovery Grants as of September 19, 2017 Grant Grant Unexpended Grantee Grant no. age in No. Awarded amount amount years Empire State Development 1. Corporation (New York State) B-01-DW-36-0001 2001 16 $ 700,000,000 $ 9,075,627 Empire State Development B-02-DW-36-0001 2. Corporation (New York State) 2002 15 2,000,000,000 174,640,611 Empire State Development B-02-DW-36-0002 3. Corporation (New York State) 2002 15 783,000,000 180,994,101 4. Louisiana B-06-DG-22-0001 2006 11 6,210,000,000 96,343,301 5. Louisiana B-06-DG-22-0002 2006 11 4,200,000,000 177,877,672 6. Mississippi B-06-DG-28-0001 2006 11 5,058,185,000 215,169,028 7. Mississippi B-06-DG-28-0002 2006 11 423,036,059 2,858,792 8. Texas B-06-DG-48-0002 2006 11 428,671,849 36,573 9. Illinois B-08-DF-17-0001 2008 9 17,341,434 798,089 10. Indiana B-08-DF-18-0001 2008 9 67,012,966 11,153,531 11. Iowa B-08-DF-19-0001 2008 9 156,690,815 2,887,383 12. Mississippi B-08-DF-28-0001 2008 9 2,281,287 21,804 13. Missouri B-08-DF-29-0001 2008 9 11,032,438 - 14. Wisconsin B-08-DF-55-0001 2008 9 24,057,378 51,136 15. Louisiana B-08-DG-22-0003 2008 9 3,000,000,000 67,963,570 16. Arkansas B-08-DI-05-0001 2008 9 90,475,898 7,945,927 17. California B-08-DI-06-0001 2008 9 54,531,784 14,520,968 18. Georgia B-08-DI-13-0001 2008 9 5,210,779 214,668 19. Illinois B-08-DI-17-0001 2008 9 193,700,004 18,703,496 20. Indiana B-08-DI-18-0001 2008 9 372,546,531 30,365,229 21. Iowa B-08-DI-19-0001 2008 9 734,178,651 27,530,066 22. Louisiana B-08-DI-22-0001 2008 9 1,093,212,571 200,476,907 23. Mississippi B-08-DI-28-0001 2008 9 11,722,116 1,159,070 24. Missouri B-08-DI-29-0001 2008 9 97,605,490 12,316,437 25. Tennessee B-08-DI-47-0001 2008 9 92,517,890 2,139,817 26. Texas B-08-DI-48-0001 2008 9 3,113,472,856 546,740,407 27. Wisconsin B-08-DI-55-0001 2008 9 115,526,899 1,574,673 28. Puerto Rico B-08-DI-72-0001 2008 9 29,982,887 10,463,564 29. Kentucky B-10-DF-21-0001 2010 7 13,000,000 - 30. Rhode Island B-10-DF-44-0001 2010 7 8,935,237 1,530,495 31. Tennessee B-10-DF-47-0001 2010 7 30,906,517 1,059,158 32. Warwick, RI B-10-MF-44-0002 2010 7 2,787,697 1,765,860 33. Memphis, TN B-10-MF-47-0001 2010 7 6,264,239 2,562,257 34. Nashville-Davidson, TN B-10-MF-47-0002 2010 7 33,089,813 5,296,889 35. Shelby County, TN B-10-UF-47-0001 2010 7 3,735,139 - 36. Alabama B-12-DT-01-0001 2012 5 24,697,966 828,783 37. Missouri B-12-DT-29-0001 2012 5 8,719,059 1,331,277 38. New Jersey B-12-DT-34-0001 2012 5 15,598,506 2,741,452 39. New York B-12-DT-36-0001 2012 5 71,654,116 67,631,816 40. North Dakota B-12-DT-38-0001 2012 5 11,782,684 60,707 41. Pennsylvania B-12-DT-42-0001 2012 5 27,142,501 19,822,280 42. Texas B-12-DT-48-0001 2012 5 31,319,686 12,439,217 43. Vermont B-12-DT-50-0001 2012 5 21,660,211 1,861,080 44. Birmingham, AL B-12-MT-01-0001 2012 5 6,386,326 2,748,827 45. Tuscaloosa, AL B-12-MT-01-0002 2012 5 16,634,702 9,178,701 46. Joplin, MO B-12-MT-29-0001 2012 5 45,266,709 21,646,887 22 Grant Grant Unexpended Grantee Grant no. age in No. Awarded amount amount years 47. Town of Union, NY B-12-MT-36-0001 2012 5 10,137,818 4,312,104 48. Minot, ND B-12-MT-38-0001 2012 5 67,575,964 8,947,917 49. Jefferson County, AL B-12-UT-01-0001 2012 5 7,847,084 6,059,288 50. Orange County, NY B-12-UT-36-0001 2012 5 11,422,029 11,390,705 51. Dauphin County, PA B-12-UT-42-0001 2012 5 6,415,833 2,103,268 52. Luzerne County, PA B-12-UT-42-0002 2012 5 15,738,806 7,020,251 53. Alabama B-13-DS-01-0001 2013 4 49,157,000 7,433,735 54. California B-13-DS-06-0001 2013 4 70,359,459 70,026,919 55. Colorado B-13-DS-08-0001 2013 4 320,346,000 176,020,036 56. Connecticut B-13-DS-09-0001 2013 4 159,279,000 66,547,407 57. Connecticut B-13-DS-09-0002 2013 4 54,277,359 54,005,844 58. Illinois B-13-DS-17-0001 2013 4 10,400,000 2,960,085 59. Iowa B-13-DS-19-0001 2013 4 96,887,177 92,337,674 60. Louisiana B-13-DS-22-0001 2013 4 64,379,084 31,644,963 61. Louisiana B-13-DS-22-0002 2013 4 92,629,249 90,901,434 62. Maryland B-13-DS-24-0001 2013 4 28,640,000 8,356,371 63. Massachusetts B-13-DS-25-0001 2013 4 7,210,000 1,244,704 64. Missouri B-13-DS-29-0001 2013 4 11,844,000 5,590,511 65. New Jersey B-13-DS-34-0001 2013 4 4,174,429,000 1,622,397,295 66. New Jersey B-13-DS-34-0002 2013 4 15,000,000 14,954,800 67. New York B-13-DS-36-0001 2013 4 4,416,882,000 1,598,736,590 68. New York B-13-DS-36-0002 2013 4 35,800,000 35,726,062 69. North Dakota B-13-DS-38-0001 2013 4 6,576,000 227,490 70. Oklahoma B-13-DS-40-0001 2013 4 93,700,000 24,700,872 71. Pennsylvania B-13-DS-42-0001 2013 4 29,986,000 29,259,992 72. Rhode Island B-13-DS-44-0001 2013 4 19,911,000 7,682,685 73. Tennessee B-13-DS-47-0001 2013 4 13,810,000 6,900,023 74. Tennessee B-13-DS-47-0002 2013 4 44,502,374 44,113,715 75. Texas B-13-DS-48-0001 2013 4 5,061,000 27,623 76. Vermont B-13-DS-50-0001 2013 4 17,932,000 2,126,107 77. Virginia B-13-DS-51-0001 2013 4 120,549,000 120,319,147 78. Birmingham, AL B-13-MS-01-0001 2013 4 17,497,000 10,521,824 79. Tuscaloosa, AL B-13-MS-01-0002 2013 4 43,932,000 9,089,212 80. Chicago, IL B-13-MS-17-0001 2013 4 63,075,000 19,166,773 81. New Orleans, LA B-13-MS-22-0001 2013 4 15,031,000 8,159,001 82. New Orleans, LA B-13-MS-22-0002 2013 4 141,260,569 140,905,377 83. Springfield, MA B-13-MS-25-0001 2013 4 21,896,000 11,627,580 84. Springfield, MA B-13-MS-25-0002 2013 4 17,056,880 16,664,945 85. Joplin, MO B-13-MS-29-0001 2013 4 113,276,000 63,501,400 86. New York City, NY B-13-MS-36-0001 2013 4 4,213,876,000 2,237,549,660 87. New York City, NY B-13-MS-36-0002 2013 4 176,000,000 174,750,030 88. Minot, ND B-13-MS-38-0001 2013 4 35,056,000 1,504,236 89. Minot, ND B-13-MS-38-0002 2013 4 74,340,770 69,907,327 90. Moore, OK B-13-MS-40-0001 2013 4 52,200,000 27,681,394 91. Jefferson County, AL B-13-US-01-0001 2013 4 9,142,000 4,500,416 92. Cook County, IL B-13-US-17-0001 2013 4 83,616,000 64,535,466 93. DuPage County, IL B-13-US-17-0002 2013 4 31,526,000 14,693,958 94. Jefferson Parish, LA B-13-US-22-0001 2013 4 16,453,000 13,522,291 95. St. Tammany Parish, LA B-13-US-22-0002 2013 4 10,914,916 6,909,176 96. Dauphin County, PA B-13-US-42-0001 2013 4 7,632,000 1,736,996 97. Luzerne County, PA B-13-US-42-0002 2013 4 9,763,000 15,437 98. Shelby County, TN B-13-US-47-0001 2013 4 7,463,750 (250) 99. Shelby County, TN B-13-US-47-0002 2013 4 60,445,163 59,774,289 23 Grant Grant Unexpended Grantee Grant no. age in No. Awarded amount amount years 100. South Carolina B-16-DH-45-0001 2016 1 96,827,000 78,232,209 101. Texas B-16-DH-48-0001 2016 1 50,696,000 50,573,874 102. Florida B-16-DL-12-0001 2016 1 58,602,000 58,602,000 103. Louisiana B-16-DL-22-0001 2016 1 1,656,972,000 1,624,292,793 104. North Carolina B-16-DL-37-0001 2016 1 198,553,000 198,553,000 105. South Carolina B-16-DL-45-0001 2016 1 65,305,000 65,103,719 106. Texas B-16-DL-48-0001 2016 1 222,264,000 222,264,000 107. West Virginia B-16-DL-54-0001 2016 1 104,280,000 104,280,000 108. Columbia, SC B-16-MH-45-0001 2016 1 19,989,000 19,902,765 109. Houston, TX B-16-MH-48-0001 2016 1 66,560,000 66,390,731 110. San Marcos, TX B-16-MH-48-0002 2016 1 25,080,000 24,238,764 111. Lexington County, SC B-16-UH-45-0001 2016 1 16,332,000 15,982,430 112. Richland County, SC B-16-UH-45-0002 2016 1 23,516,000 23,191,796 Total 47,370,687,974 11,628,928,369 24 Appendix D HUD Federal Register Notices for Disaster Recovery Funding Disaster event(s) Federal Register Date 67 FR 4164 1/28/2002 67 FR 5845 2/7/2002 67 FR 12042 3/18/2002 67 FR 36017 5/22/2002 Terrorist attacks of September 11, 2001 68 FR 26640 5/16/2003 68 FR 19211 4/12/2004 76 FR 52340 8/22/2011 82 FR 4911 1/27/2017 69 FR 72100 12/10/2004 Multiple disasters 2003-2004 25 70 FR 21437 4/26/2005 71 FR 7666 2/13/2006 71 FR 34451 6/14/2006 71 FR 34457 6/14/2006 71 FR 34448 6/14/2006 71 FR 43622 8/1/2006 71 FR 51678 8/30/2006 71 FR 62372 8/24/2006 71 FR 63337 10/30/2006 72 FR 10020 3/6/2007 Hurricanes Katrina, Rita, and Wilma 72 FR 10014 3/6/2007 72 FR 48808 8/24/2007 72 FR 48804 8/27/2007 72 FR 61788 10/31/2007 72 FR 70472 12/11/2007 73 FR 46312 8/8/2008 73 FR 58612 10/7/2008 73 FR 61148 10/15/2008 73 FR 75733 12/12/2008 74 FR 56206 10/30/2009 73 FR 52870 9/11/2008 Severe storms, tornados, and flooding 73 FR 77818 12/19/2008 74 FR 7244 2/13/2009 Hurricanes Ike, Gustav, and Dolly; severe storms; and flooding 74 FR 41146 8/14/2009 75 FR 65368 10/22/2010 75 FR 69087 11/10/2010 Severe storms and flooding 75 FR 20998 4/14/2011 77 FR 22583 4/16/2012 Hurricane Irene, severe storms, tornados, and flooding 77 FR 60708 10/7/2012 78 FR 14329 3/5/2013 78 FR 23578 4/19/2013 78 FR 32262 5/29/2013 Hurricanes Irene, Isaac, and Sandy; severe storms; and flooding 78 FR 45551 7/29/2013 78 FR 46999 8/2/2013 78 FR 52560 8/23/2013 78 FR 69104 11/18/2013 25 All grants issued for the multiple disasters in 2003 and 2004 were complete and these two associated Federal Register notices were closed. 25 Disaster event(s) Federal Register Date 78 FR 76154 12/16/2013 79 FR 17173 3/27/2014 79 FR 31964 6/3/2014 79 FR 40133 7/11/2014 79 FR 60490 10/7/2014 79 FR 62182 10/16/2014 80 FR 1039 1/8/2015 80 FR 17772 4/2/2015 80 FR 26942 5/11/2015 80 FR 51589 8/25/2015 80 FR 72102 11/18/2015 81 FR 7567 2/12/2016 81 FR 54114 8/15/2016 82 FR 9753 2/8/2017 Hurricanes Joaquin and Patricia, severe storms, tornados, and flooding 81 FR 39687 6/17/2016 81 FR 83254 11/21/2016 Hurricanes Hermine and Matthew, severe storms, tornados, and flooding 82 FR 5591 1/18/2017 All disasters - duplication of benefits 76-FR 71060 11/16/2011 Total 63 26 Appendix E Analysis of Federal Register Notices for Common Rules and Waivers Common rule in Federal Register notices by year(s) the disaster occurred 2005- 2011- No. Common rule description 2001 2004 2007 2008 2008 2010 2011 2013 2015 2016 Total Title 1 of the Community Development Act of 1. 1974 and 24 CFR (Code of Federal Regulations) Part 570 applied X X X X X X X X X 9 2. Applicability of State CDBG requirements X X X X X X 6 3. Necessary and reasonable cost principles X X X X X X X X X X 10 Waiver of the requirement that 70 percent of the CDBG funds received by the State over a 4. 1- to 3-year period be for activities that benefit persons of low and moderate income X X X X X X X X X X 10 Low- to moderate-income area benefit national 5. objective waiver and alternative requirement (certain localities and targeted areas) X X X 3 Use of the “upper quartile”’ or “exception criteria” for low- and moderate-income area 6. benefit activities - not applicable to all grantees X X X X 4 Direct grant administration and means to carry 7. out eligible activities (States) X X X X X X X X X 9 8. Consolidated plan waiver X X X X X X X X X X 10 9. Citizen participation waiver and requirements X X X X X X X X X X 10 Modify requirement for consultation with local 10. governments X X X X X X X X X 9 Action plan waiver of additional elements and 11. alternative requirements X X X X X X X X X X 10 12. Allow reimbursement for preagreement costs X X X X X X X X X 9 Environmental requirements and release of 13. funds X X X X X X X X X 9 14. Duplication of benefits X X X X X X X X X X 10 Waiver and alternative requirement for 15. distribution to CDBG metropolitan cities and urban counties X X X X X X X X X X 10 16. Program income alternative requirement X X X X X X X X X X 10 Note that use of grant funds must relate to the 17. covered disaster(s) (eligible activities and use of funds) X X X X X X X 7 Grant administration responsibilities; planning 18. and administration cost limitations and caps X X X X X X X X X 9 Waiver of grantee performance reports and 19. grantee reporting requirements in the DRGR system X X X X X X X X X X 10 20. Use of subrecipients (States) X X X X X X X X 8 21. Recordkeeping X X X X X X X X X 9 22. Change of use of real property X X X X X X X X X X 10 Responsibility for State review and handling 23. of noncompliance X X X X X X X X X X 10 24. Information collection approval note X X X X X X X 7 Certifications waivers and alternative 25. requirement (States and Indian tribes) X X X X X X X X X 9 26. Housing-related eligibility waivers X X X X X X X X X 9 Waiver and modification of the antipirating 27. clause to permit assistance to help a business return X X X X X 5 Waiver and modification of the job relocation 28. clause to permit assistance to help a business return X X X X X X 6 27 Common rule in Federal Register notices by year(s) the disaster occurred 2005- 2011- No. Common rule description 2001 2004 2007 2008 2008 2010 2011 2013 2015 2016 Total General planning activities (planning only 29. activities for State grantees) X X X X X X X 7 National objective documentation for 30. economic development and revitalization activities X X X X X X X 7 Waiver and alternative requirements and documentation for public benefit for certain 31. economic development activities (bridge loans, etc.) X X X X X X X X 8 Waiver to permit some activities in support of 32. the tourism industry (certain States) X X X 3 33. Prohibiting assistance to private utilities X X 2 Waiver of Section 414 of the Stafford Act 34. (specific cities) X X X 3 Buildings for the general conduct of 35. government X X X X X X X 7 36. Use of CDBG as match X X X 3 Clarifying note on Section 3 income 37. documentation requirements X X X 3 Compensation to an individual, nonprofit, or 38. small business for economic losses related to disasters X X X 3 39. Prioritizing small businesses X X 2 40. Limitation on emergency grant payments X X X X X 5 41. Procurement X X X X X 5 Public website, including use of funds and 42. contracts X X X 3 Waiver of timely distribution (expenditure) of 43. funds X X X X X X 6 44. Duration of funding X X X X X X X X 8 Review of continuing capacity to carry out 45. CDBG-funded activities in a timely manner X X X 3 Housing incentives (compensation) to encourage housing resettlement consistent 46. with local recovery plans (certain States and localities) X X X X X X X 7 Uniform Relocation Act waiver of one-for-one 47. replacement of units damaged by disaster X X X X X X X X X 9 Acquisition of real property, flood buyouts, 48. and flood insurance X X X X X X X X X 9 49. Flood insurance purchase requirements X X 2 Alternative requirement for housing 50. rehabilitation, assistance for second homes X X X 3 51. Corrective and remedial actions X X X X 4 Reduction, withdrawal, or adjustment of a 52. grant or other appropriate action X X X X 4 Documentation of low- and moderate-income 53. national objective for multiunit housing projects (certain cities and States) X X 2 54. Calculating unmet public housing needs X X X 3 55. Calculating unmet infrastructure needs X X X 3 Calculating economic revitalization (small 56. business) needs X X X 3 57. Elevation of nonresidential structures X X 2 Urgent need national objective certification 58. requirements (certain States) X X X 3 Alternative requirement to permit extended 59. time for the provision of interim mortgage assistance (certain States) X X X 3 28 Appendix F HUD OIG CDBG Disaster Recovery Reports Funds to Issue Questioned be put to Count Report no. date Entity audited or evaluated costs better use 1. 2002-NY-1802 5/22/2002 Empire State Development Corporation - - 2. 2003-NY-1003 3/25/2003 Empire State Development Corporation $ 354,691 - 3. 2003-NY-1005 9/30/2003 Empire State Development Corporation 270,948 - Lower Manhattan Development 4. 2003-NY-1006 9/30/2003 Corporation 82,342 $ 93,214 5. 2004-NY-1001 3/25/2004 Empire State Development Corporation 49,000 - Lower Manhattan Development 6. 2004-NY-1002 3/25/2004 Corporation 102,900 - Lower Manhattan Development 7. 2004-NY-1004 9/15/2004 Corporation 87,394 - Lower Manhattan Development 8. 2005-NY-1003 3/23/2005 Corporation 141,347 - Lower Manhattan Development 9. 2005-NY-1008 9/27/2005 Corporation 2,028,282 6,441,103 Lower Manhattan Development 10. 2006-NY-1006 3/31/2006 Corporation 266,802 - 11. 2006-AT-1014 7/26/2006 State of Florida - - 12. 2006-AT-0001 8/29/2006 HUD’s Procurement Office - - Lower Manhattan Development 13. 2006-NY-1013 9/27/2006 Corporation 3,053 186,749 Lower Manhattan Development 14. 2007-NY-0802 4/3/2007 Corporation - - Lower Manhattan Development 15. 2007-NY-1005 4/17/2007 Corporation 6,000 - 16. 2007-AO-1001 5/7/2007 State of Mississippi - 159,172 Lower Manhattan Development 17. 2007-NY-1013 9/28/2007 Corporation - - Lower Manhattan Development 18. 2008-NY-0801 10/23/2007 Corporation - - 19. 2008-AO-1001 12/19/2007 State of Louisiana - - 20. 2008-AO-1002 1/30/2008 State of Louisiana 15,528,378 - 21. 2008-AO-1801 3/6/2008 State of Mississippi 20,571 - Lower Manhattan Development 22. 2008-NY-1004 3/31/2008 Corporation - 6,782 23. 2008-AO-1003 4/25/2008 Mississippi Development Authority 3,907,378 243,210 24. 2008-AO-1005 8/7/2008 State of Louisiana 263,959 - Lower Manhattan Development 25. 2009-NY-0801 11/9/2008 Corporation - 868,000 Lower Manhattan Development 26. 2009-NY-1003 12/4/2008 Corporation 468,649 3,031,351 Texas Department of Housing and 27. 2009-FW-1004 1/14/2009 Community Affairs - - 28. 2009-AO-1001 5/5/2009 State of Louisiana 228,930 - 29. 2009-AO-1002 5/5/2009 State of Louisiana 735,087 - 30. 2009-NY-1013 5/27/2009 Lower Manhattan Development Corporation 508,361 19,643 31. 2009-AO-1801 6/12/2009 State of Mississippi 1,877,806 - 32. 2009-AO-1802 7/31/2009 State of Mississippi - - 29 Funds to Issue Questioned be put to Count Report no. date Entity audited or evaluated costs better use HUD’s Office of Community Planning and - - 33. IED-08-005 9/1/2009 Development 34. 2009-AO-1003 9/23/2009 Louisiana Land Trust - - Texas Department of Housing and 35. 2009-FW-1016 9/30/2009 Community Affairs - 60,235,000 Lower Manhattan Development 36. 2010-NY-1001 10/6/2009 Corporation - - 37. 2010-AO-1001 12/15/2009 Mississippi Development Authority - - 38. 2010-AO-1002 1/4/2010 State of Louisiana 147,681 - 39. 2010-KC-1001 3/10/2010 State of Iowa 10,532,871 - Lower Manhattan Development 40. 2010-NY-1008 3/22/2010 Corporation - - 41. 2010-AO-1003 4/30/2010 State of Louisiana 82,752 - 42. 2010-KC-1004 5/26/2010 State of Iowa - - 43. 2010-AO-1004 6/22/2010 Mississippi Development Authority 21,964 - Texas Department of Housing and 44. 2010-FW-1005 7/20/2010 Community Affairs 18,763,330 - 45. 2010-AO-1005 8/4/2010 State of Louisiana - 28,125,000 46. IED-09-002 9/1/2010 State of Louisiana 3,800,000 - 47. 2010-AO-1006 9/30/2010 State of Alabama - - 48. 2010-AO-1007 9/30/2010 State of Alabama - - 49. 2011-AO-1001 10/28/2010 State of Louisiana - - 50. 2011-AO-1002 10/29/2010 State of Louisiana 2,817,530 - Texas Department of Housing and 51. 2011-FW-1006 1/26/2011 Community Affairs 71,691 - Lower Manhattan Development 52. 2011-NY-1005 2/7/2011 Corporation - - 53. 2011-AO-1005 4/18/2011 State of Mississippi 90,000 75,000 54. 2012-FW-1005 3/7/2012 State of Texas 9,061,794 75,009,910 55. 2012-FW-1011 7/19/2012 City of Houston, TX - - Lower Manhattan Development 56. 2012-NY-1010 7/27/2012 Corporation 159,261 2,258 57. 2013-KC-1001 10/23/2012 City of Cedar Rapids, IA 12,210,247 - 58. 2013-NY-1801 1/11/2013 Deutsche Bank of New York - - 59. 2013-FW-0001 3/28/2013 HUD’s Office of Block Grant Assistance - - 60. 2013-IE-0803 3/29/2013 State of Louisiana 698,343,830 - 61. 2013-KC-1002 5/6/2013 State of Iowa - - Lower Manhattan Development 62. 2013-NY-1008 7/18/2013 Corporation - - 63. 2014-AT-1004 12/30/2013 State of Mississippi 2,165,915 - 64. 2014-KC-1002 1/29/2014 City of Joplin, MO - - 65. 2014-FW-1004 7/15/2014 State of Texas 1,609,580 8,624,700 66. 2014-PH-1008 8/29/2014 State of New Jersey 22,986,481 - 67. 2014-PH-1009 9/5/2014 State of New Jersey - - Vermont Department of Housing and 68. 2014-BO-1004 9/29/2014 Community Development - 13,232,000 Lower Manhattan Development 69. 2014-NY-1011 9/30/2014 Corporation - - City of New York, Office of Management 70. 2015-NY-1001 11/24/2014 and Budget 183,000,000 40,000,000 71. 2015-KC-1002 3/13/2015 City of Minot, ND 11,671,037 - City of New York, Office of Management 72. 2015-NY-1004 4/23/2015 and Budget - - 30 Funds to Issue Questioned be put to Count Report no. date Entity audited or evaluated costs better use 73. 2015-PH-1003 6/4/2015 State of New Jersey 38,512,267 9,061,780 City of New York, Office of Management 74. 2015-NY-1007 6/12/2015 and Budget 241,000 - 75. 2015-FW-1002 6/26/2015 City of New Orleans, LA 2,556,409 4,539,286 Lower Manhattan Development 76. 2015-NY-1008 6/26/2015 Corporation - - 77. 2015-PH-1004 7/20/2015 State of New Jersey - - 78. 2015-AT-1006 7/27/2015 State of Florida 2,324,058 - 79. 2015-FW-1003 8/7/2015 City of Moore, OK - - State of New York Governor’s Office of 80. 2015-NY-1010 9/17/2015 Storm Recovery 18,289,388 18,763,894 State of New York Governor’s Office of 81. 2015-NY-1011 9/17/2015 Storm Recovery 185,221,340 274,035,899 82. 2015-PH-1005 9/25/2015 State of Maryland 1,928,646 292,910 Alabama Department of Economic and 83 2015-AT-1010 9/28/2015 Community Affairs - - 84. 2015-CH-1009 9/30/2015 State of Illinois 1,461,842 4,346,358 Lower Manhattan Development 85. 2016-NY-1004 2/19/2016 Corporation - - 86. 2016-KC-1001 2/22/2016 State of Missouri 1,551,656 - 87. 2016-BO-1001 3/9/2016 State of Rhode Island 127,750 - 88. 2016-NY-1005 3/11/2016 City of New York, Office of Management and Budget - - State of New York Governor’s Office of 89. 2016-NY-1006 3/29/2016 Storm Recovery 425,162 300,000 90. 2016-PH-1004 6/18/2016 Luzerne County, PA - - 91. 2016-CH-1003 6/30/2016 State of Indiana 372,783 - State of New York Governor’s Office of 92. 2016-NY-1009 8/12/2016 Storm Recovery 21,958,549 - 93. 2016-FW-1006 8/31/2016 St. John the Baptist Parish, LA 1,572,079 5,365,327 94. 2016-FW-1007 9/12/2016 HUD’s Office of Block Grant Assistance - - 95. 2016-OE-0009S 9/23/2016 HUD’s Office of Community Planning and Development - - 96. 2016-DE-1003 9/28/2016 Boulder County, CO - - 97. 2016-KC-1006 9/28/2016 City of Joplin, MO - 2,275,177 HUD’s Office of Community Planning and 98. 2016-PH-0005 9/29/2016 Development - 4,872,056,594 99. 2016-FW-1010 9/30/2016 State of Oklahoma 11,717,288 81,982,712 100. 2016-PH-1009 9/30/2016 State of New Jersey 43,080,932 - 101. 2017-BO-1001 10/12/2016 State of Connecticut 16,053,062 - 102. 2017-BO-1002 10/17/2016 City of Springfield, MA 1,448,663 472,246 City of New York, Mayor’s Office of 103. 2017-NY-1001 11/2/2016 Housing Recovery Operations 5,544,284 1,415,466 City of New York Office of Management 104. 2017-NY-1004 12/21/2016 and Budget 18,274,054 - 105. 2017-AT-1001 1/18/2017 City of Tuscaloosa, AL - - 106. 2017-AT-1002 1/18/2017 Shelby County, TN - - HUD’s Office of Community Planning and 107. 2016-OE-0004S 3/29/2017 Development - - HUD’s Office of Community Planning and 108. 2017-OE-0002S 4/10/2017 Development - - 109. 2017-FW-1004 4/16/2017 St. Tammany Parish, LA 451,894 8,679,994 31 Funds to Issue Questioned be put to Count Report no. date Entity audited or evaluated costs better use HUD’s Office of Community Planning and 110. 2016-OE-0011S 5/3/2017 Development - - HUD’s Office of Community Planning and 111 2017-KC-0004 6/2/2017 Development - - Lower Manhattan Development 112. 2017-NY-1009 6/13/2017 Corporation - - City of Birmingham, Department of 113. 2017-AT-1008 7/21/2017 Community Development - - 114. 2017-PH-1005 8/14/2017 State of New Jersey 987,500 - 115. 2017-NY-1010 9/15/2017 State of New York 18,782,054 8,932,630 116. 2017-NY-1012 9/21/2017 City of New York, NY - - HUD’s Office of Community Planning and 117. 2017-PH-0002 9/22/2017 Development - - 118. 2017-CH-1010 9/30/2017 DuPage County, IL 98,507 569,391 Totals 1,397,449,009 5,529,442,756 32
Final Audit Report - HUD's Office of Block Grant Assistance Had Not Codified the Community Development Block Grant Disaster Recovery Program
Published by the Department of Housing and Urban Development, Office of Inspector General on 2018-07-23.
Below is a raw (and likely hideous) rendition of the original report. (PDF)