HUD CLARIFIES DISASTER RULES ON ‘DUPLICATION OF BENEFITS’

HUD CLARIFIES DISASTER RULES ON ‘DUPLICATION OF BENEFITS’

Guidance designed to ease regulatory burden on state and local disaster recovery efforts

WASHINGTON? DC – November 17, 2011 – (RealEstateRama) — The U.S. Department of Housing and Urban Development today issued guidance to help state and local governments streamline their HUD-funded disaster recovery programs and ease the burden of complying with federal law prohibiting so-called ‘duplication of benefits.’  HUD’s new guidanceclarifies existing rules and offers states consistent direction on this issue.

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) requires that recipients of Federal disaster recovery funding make certain that no “person, business concern or other entity” will receive duplicative assistance.  Because disaster assistance to each person varies widely based on their insurance coverage and eligibility for Federal funding, grantees cannot comply with the Stafford Act without first completing a duplication of benefits analysis specific to each applicant.

As a result, a common struggle for state and local jurisdictions, as well as individuals and businesses, is accounting for the multitude of sources providing assistance following a disaster, such as private insurance, Federal Emergency Management Agency (FEMA) grants, and Small Business Administration (SBA) loans.  States have been asking for guidance to help improve their grant management and avoid the potential of having to repay federal funds for failure to comply with the Stafford Act’s requirements.

Following major disasters, Congress may elect to provide supplemental disaster recovery assistance through HUD’s Community Development Block Grant (CDBG) Program. This assistance is intended to supplement, not replace, other public, private, and nonprofit sector resources that have already been provided for the same need or loss.  For example, if a family’s damaged home costs $100,000 to repair and the homeowner received $100,000 in insurance proceeds, the homeowner could not also receive federal disaster recovery funds to repair the home. Any additional federal assistance would duplicate the assistance already provided which fully addressed the recovery need.

HUD’s guidance responds to that challenge by providing basic frameworks by which state and local grantees can streamline and simplify their duplication of benefit analysis when processing an application for assistance using CDBG disaster recovery funds. It also provides a consistent basis upon which each grantee can develop its own policies and procedures unique to its own disaster recovery programs.

This guidance will also help grantees avoid cases of over-compensation which may result in the recapture and repayment of Federal funds. It also serves as a tool to help ease the administrative burden of administering disaster recovery funds so it can get to where it is needed as quickly as possible while reducing the risk of noncompliance.

HUD is working with its federal partners and developed the guidance in coordination with FEMA and SBA.  In connection with today’s issuance of this guidance, HUD is also signing a Memorandum of Agreement with the SBA to help ensure that staff and grantees from both agencies understand how CDBG disaster recovery funds may be used to meet disaster needs so that it does not supplant, replace, or duplicate SBA loan proceeds.

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HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.
HUD is working to
strengthen the housing market to bolster the economy and protect consumers; meet the
need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build
inclusive and sustainable communities free from discrimination; and transform the way HUD does business.
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Contact:
Brian Sullivan
(202) 708-0685

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U.S. Department of Housing and Urban Development (HUD) is the nation’s housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development, and enforces the nation’s fair housing laws.

Contact:

Brian Sullivan
(202) 708-0685

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