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Federal Register / Vol. 86, No. 117 / Tuesday, June 22, 2021 / Notices
requirement under the tenth proviso following the Community Development Fund heading of Public Law 115123
Declined Loans Provision and the requirements for its implementation in the 2019 DOB Notice. The Declined Loan Provision states: Provided further, That with respect to any such duplication of benefits, the Secretary and any grantee under this section shall not take into consideration or reduce the amount provided to any applicant for assistance from the grantee where such applicant applied for and was approved, but declined assistance related to such major disasters that occurred in 2014, 2015, 2016, and 2017 from the Small Business Administration under section 7b of the Small Business Act 15
U.S.C. 636b.
The 2019 DOB Notice also implements requirements regarding the treatment of loans resulting from recent amendments to section 312 of the Stafford Act that apply to CDBGDR
grants for electrical power system improvements under the Appropriations Act until those provisions sunset in 2023 as described in the 2019 DOB
notice. FEMA, the agency that administers the Stafford Act, has advised that pursuant to recent amendments to Section 312 of the Stafford Act in the Disaster Recovery Reform Act Pub. L. 115254, Division D, for disasters occurring between 2016
and 2021, a loan is not a duplication of other forms of financial assistance, provided that all Federal assistance is used toward a loss suffered as a result of a major disaster or emergency.
V.A.15. Use of CDBGDR funds as match for electrical power system improvements. Pursuant to the waiver and alternative requirement in section V.A.8. of this notice, CDBGDR funds for electrical power system improvements, may be used to meet a matching requirement, share, or contribution for any other Federal program when used to carry out an eligible CDBGDR activity permitted by this notice. This includes Public Assistance and other grants administered by FEMA as well as grants provided by the U.S. Army Corps of Engineers USACE by law, as codified in the HCDA as a note to 42 U.S.C. 5305, the maximum amount of CDBGDR
funds that may be contributed to a project funded by the USACE is $250,000.
Grantees may only use CDBGDR
funds allocated pursuant to this notice to meet the match requirement of an activity that meets the definition of an electrical power system improvement and other requirements of this notice. In considering the use of CDBGDR funds
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as match, grantees are further advised that the Appropriations Act prohibits the use of CDBGDR funds for any activity that is reimbursable by, or for which funds are also made available by FEMA or the USACE. The Department notes the substantial amount of FEMA
Public Assistance funding that has also been committed to electrical power system improvements. Accordingly, grantees are advised that when CDBG
DR funds for electrical power system improvements are used in combination with FEMA or USACE funds, the grantee must document that such CDBGDR funds were not used to pay for costs that could be charged to the FEMA or USACE award although CDBGDR funds may be used for CDBGDR eligible costs of the other Federal agency-funded award up to the amount required for the non-Federal match and for costs that cannot be charged to the FEMA or USACE award.
Statutory order of assistance provisions also prohibit the use of CDBGDR funds to front costs that will later be reimbursed with FEMA or USACE
funds. CDBGDR funds may be used for the costs of compliance with CDBGDR
requirements that cannot be charged to the FEMA or USACE grant. The grantee shall be required to record in DRGR the expenditure of funds for the activity for which the match is provided and to indicate that the funds were used to meet a non-Federal match share requirement.
V.A.16. Procurement. Grantees must adhere to the following procurement regulation and additional alternative requirement: Grantees must comply with the procurement requirements at 24 CFR 570.489g and evaluate the cost or price of the product or service.
Grantees shall establish requirements for procurement policies and procedures for subrecipients based on full and open competition consistent with the requirements of 24 CFR
570.489g, and shall require an evaluation of the cost or price of the product or service including professional services such as engineering.
Additionally, if the agency of the grantee that is designated as the administering agency chooses to provide funding to another agency of the grantee, the administering agency must specify in its procurement policies and procedures whether the agency implementing the program must follow the procurement policies and procedures that the administering agency is subject to, or whether the agency must follow the same policies and procedures to which other subrecipients are subject.

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V.A.17. Timely distribution of funds.
The Appropriations Act, as amended, requires that funds provided under the Act be expended within two years of the date that HUD obligates funds to a grantee and authorizes the Office of Management and Budget OMB to provide a waiver of this requirement.
OMB has provided HUD with a waiver of this two-year expenditure requirement. HUD is also waiving the provisions at 24 CFR 570.494 and 24
CFR 570.902 regarding timely distribution and expenditure of funds and establishing an alternative requirement, providing that each grantee must expend one hundred percent of its allocation within six years of HUDs execution of the grant agreement absent a waiver and alternative requirement as requested by the grantee and approved by HUD. A
grantee request for a waiver of an expenditure deadline must document the grantees progress in the implementation of the grant; outline the long-term nature and complexity of the electrical power system improvement programs and projects that have yet to be fully implemented; and propose an alternative deadline for the expenditure of the funds.
V.A.18. Program income waiver and alternative requirement. The Department is waiving applicable program income rules at 42 U.S.C.
5304j and 24 CFR 570.489e, only to the extent necessary to provide additional flexibility to grantees described below. The alternative requirements include requirements regarding the use of program income received before and after grant close out and address revolving loan funds.
V.A.18.a. Definition of program income. For purposes of this notice, program income is defined as gross income generated from the use of CDBGDR funds, except as provided in V.A.18.aiv and V.A.18.b. and received by a grantee or a subrecipient including Indian tribes. When income is generated by an activity that is only partially assisted with CDBGDR funds, the income shall be prorated to reflect the percentage of CDBGDR funds used e.g., a single loan supported by CDBG
DR funds and other funds; a single parcel of land purchased with CDBG
funds and other funds. Program income includes, but is not limited to, the following:
i Proceeds from the disposition by sale or long-term lease of real property purchased or improved with CDBGDR
funds.
ii Proceeds from the disposition of equipment purchased with CDBGDR
funds.

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