HUD issued a clarification of the duplication of benefit requirements under the Stafford Act for all current and future Community Development Block Grant (CDBG) disaster recovery grants on November 15.
The Stafford Act prohibits the issuance of duplicative federal assistance for the same disaster recovery purpose. If duplicative assistance is received by a person or entity, they are liable for the assistance that exceeds the recovery need. The Katrina Housing Group, coordinated by NLIHC, has sought formal guidance on duplication of benefits because unfair and uneven application of informal rules could harm the lowest income households, many of whom have not fully recovered from the 2005 Gulf Coast hurricanes.
In its September 2010 report, Hurricane Katrina: How Will Mississippi Turn the Corner, the Mississippi Center for Justice notes that duplication of benefits questions have resulted in numerous controversies over whether the Stafford Act requires exclusion of various types of private resources, temporary benefits, and general disaster relief assistance.
The notice clarifies that HUD considers counted assistance, when determining duplication of benefits, to include “all benefits available to the person, including cash and other resources such as insurance proceeds, grants, and Small Business Administration (SBA) loans.” Private loans that are not backed by the SBA do not count towards total assistance.
According to HUD’s clarification, assistance is considered not to be duplicative if it was “(1) provided for a different purpose; (2) used for a different, eligible purpose; (3) not available to the applicant; (4) a private loan not guaranteed by SBA; or (5) any other asset or line of credit available to the applicant.”
The notice says that funds for interim housing are viewed as having a different purpose than funds for replacement housing or for housing rehabilitation. The notice also clarifies that the amount of need may be revised after the initial evaluation to account for circumstances such as “vandalism, contractor fraud, an increase in the cost of materials and/or labor, a change in local zoning law or building code, or subsequent damage to a home or business that was partially repaired.”
Members of the Katrina Housing Group welcomed the notice and the clarification it provides, particularly with respect to the differentiation between assistance for interim and permanent replacement housing. The provisions that clarify that fund recipients will receive assistance meeting their total need, even if they are victims of fraud, should help ensure that the needs of low income people are fully met.
The notice is available at http://www.ofr.gov/OFRUpload/OFRData/2011-29634_PI.pdf