Gulf Coast Disaster Recovery: Community Development Block Grant Program Guidance to States Needs to Be Improved

GAO-09-541 Published: Jun 19, 2009. Publicly Released: Jul 20, 2009.
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Almost 4 years after the 2005 Gulf Coast hurricanes, the region continues to face daunting rebuilding challenges. To date, $19.7 billion in Community Development Block Grant (CDBG) funds have been appropriated for Gulf Coast rebuilding assistance--the largest amount in the history of the program. GAO was asked to report on (1) how Louisiana and Mississippi allocated their shares of CDBG funds, (2) what difficulties Louisiana faced in administering its housing recovery program, and (3) what human capital challenges Louisiana and Mississippi encountered and the efforts taken to address those challenges. GAO interviewed federal and state officials and reviewed budget data, federal regulations, and state policies and planning documents.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Housing and Urban Development The Secretary of Housing and Urban Development (HUD) should coordinate with FEMA to ensure that the new guidance clarifies the potential options, and limitations, available to states when using CDBG disaster assistance funds alongside other disaster-related federal funding streams.
Closed - Implemented
Effective 11/21/11, the Office of the Assistant Secretary for Community Planning and Development (CPD) at HUD issued guidance clarifying the potential options and limitations of using CDBG disaster recovery funds alongside other types of disaster-related federal funding such as FEMA assistance. While CDBG disaster recovery funds may not duplicate the ultimate use of FEMA funds received, the guidance clarifies that "in some instances, funds provided for the same general purpose as the CDBG disaster recovery funds will have been used by the applicant for a different specific eligible purpose." In such cases, the funds are not considered to be duplicative provided that "the applicant can document that the funds received were used for a different eligible purpose." For example, the guidance states that if "a grantee is administering a homeowner rehabilitation program and an applicant to the program previously received housing assistance from FEMA," the applicant must "document that the FEMA funds were used for eligible interim housing costs (such as rent, in accordance with FEMA program eligibility), and not housing replacement or rehabilitation (which may also be an eligible use of the funds)." The guidance applies to all CDBG disaster recovery expenditures, programs, and activities and was developed in consultation with the Federal Emergency Management Agency (FEMA), among others. The guidance also encourages grantees to (1) work with HUD to determine what documentation is appropriate, (2) remind applicants of this requirement when applying for CDBG assistance that supplements FEMA assistance already received, and (3) contact their assigned HUD CPD representative for further guidance if needed.
Department of Housing and Urban Development The Secretary of the HUD should develop and issue written CDBG disaster assistance program guidance for state and local governments to use as they begin to develop plans for housing recovery efforts and disbursing federal assistance to residents after natural and man-made disasters. Specifically, this guidance should clearly articulate what constitutes an acceptable rehabilitation program versus a compensation program, including an explanation of the implications of each program design; clarification of the legal and financial requirements with which states must comply; and an explanation of the types of program elements that may trigger federal environmental and other requirements.
Closed - Implemented
In August 2011, HUD issued its research study comparing rehabilitation versus compensation program models based on Gulf Coast housing recovery efforts after Hurricanes Katrina and Rita. According to HUD officials, since the issuance of that study, the agency is no longer bringing attention to the compensation program model because the agency believes it has limited effective applications. Instead HUD has taken a broader multi-faceted approach by first helping grantees identify their own unmet housing needs and then providing them with the tools to implement their chosen program type. First, in March 2013, HUD issued guidance in the form of "Disaster Recovery Toolkits," for grantees to use when identifying their housing needs and launching housing recovery programs after a disaster. The toolkits detail program design considerations and implementation strategies for both rehabilitation and buyout program models, including some of the legal matters grantees should consider. For each stage of program implementation the toolkits describe critical success factors, potential obstacles and corresponding strategies, resources, and tools to overcome those obstacles. In addition, each toolkit includes a set of sample policies and procedures that grantees can adopt or adapt for their purposes. Second, multi-disciplinary teams review action plans of the highest risk grantees to identify concerns with proposed activities. The teams also participate in weekly technical assistance calls with the grantees to provide guidance on legal, environmental, and other requirements. Finally, HUD published training materials highlighting best practices and cross-cutting requirements.

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