PD&R and Community Development Grants for Disaster Recovery

PD&R and Community Development Grants for Disaster Recovery

Elizabeth Rudd, PhD (PD&R 2010 – present)

Introduction

It was 1997, and Todd Richardson was caught between a baseball game and a formula. The lanky young man, a social science analyst in the Office of Policy Development and Research (PD&R), was headed out of the office to meet friends for a baseball-themed bachelor party, when Jan Opper called him back to work. Richardson, feeling awkward in shorts, reluctantly agreed to meet with Opper, then Senior Program Officer in HUD's Office of Block Grant Assistance, and HUD Secretary Andrew Cuomo to discuss a formula for allocating $500 million in Community Development Block Grant–Disaster Recovery (CDBG-DR) funds to address flooding in the upper Midwest and other disasters (PL 105-18). Today, CDBG-DR is a standard component of federal disaster recovery, receiving special appropriations for this purpose nearly every year since 1993. It funds long-term recovery, and HUD bases allocations on a formula that estimates unmet recovery needs. Determining those formulas, which are used to identify grantees and calculate award amounts, is PD&R's task — but that wasn't always the case.

To understand how PD&R assumed this role, we need to examine the history of PD&R's involvement with CDBG-DR — in particular, HUD's role in federal disaster response, the origins of the CDBG program, how CDBG came to be used for disaster recovery, and how PD&R's role as the keeper of the allocation formulas has changed over time.

Before FEMA, There Was HUD

In Disaster Hits Home, a book about the housing crises that follow disasters, Mary Comerio referred to HUD as a "nondisaster agency" (1998, p. 224), but HUD’s role in federal disaster assistance long precedes the founding of the Federal Emergency Management Agency (FEMA) and even HUD itself. The Disaster Relief Act of 1950 (PL 81-875) established permanent authority for federal action to respond to disasters and put the president in charge of when and how the federal government would assist after a disaster. President Truman assigned implementation of the Act to HUD’s predecessor agency, the Housing and Home Finance Agency (HHFA) (Bea, 2020, pp. 83–4). In 1952, Truman reported to Congress that he had allocated $18.3 million to HHFA to assist flood-damaged areas of Oklahoma, Missouri, and Kansas, noting that HHFA provided 1,515 trailers for victims in Kansas. The Public Housing Administration, which was part of HHFA at the time, arranged to buy the trailers (Bea, 2020, p. 87; 98 Cong Rec. 4226–8, 1952).

HHFA was superseded by the U.S. Department of Housing and Urban Development in 1965, and disaster assistance remained an important function of the new agency. One of the first things Robert Weaver did upon his appointment as the first HUD Secretary was a study on flood insurance, as directed by Congress. In 1966, Secretary Weaver submitted to President Johnson "Insurance and other programs for financial assistance to flood victims: A Report by the Secretary of HUD to Congress," which formed the basis for the National Flood Insurance Program, created by the National Flood Insurance Act of 1968 (PL 90-448) (American Institutes for Research et al., 2005).

The Disaster Relief Act of 1950 (PL 81-875) led to an executive order establishing a disaster relief coordination and program office in the Executive Office of the President. In 1973 — the year that PD&R was established — President Nixon's Reorganization Plan No. 1 abolished that office and moved its functions into the new Federal Disaster Assistance Administration (FDAA) at HUD. FDAA remained at HUD until 1979, when President Carter established the Federal Emergency Management Agency (FEMA) to coordinate the federal response to disasters. HUD continued to play a much smaller role in disaster assistance but had not yet created CDBG-DR, the only federal funding intended for long-term housing and community recovery after a disaster.

The roots of today's CDBG-DR lie in the federal government's response to the damage wrought by Hurricanes Andrew and Iniki and Typhoon Omar in 1992.

But how did CDBG become available for disaster recovery in the first place?

The Nixon administration's "New Federalism" aimed to change the federal government's relationship to states and localities by providing "federal spending ... with little or no federal control" (Orlebeke and Weicher, 2014, p. 22). The idea behind New Federalism was to abolish "categorical programs" — programs that targeted funds to predefined goals such as sewer systems or urban beautification — and replace them with "special revenue sharing" that gave states and localities flexibility to allocate federal funds to local priorities. CDBG grew out of a Nixon administration proposal for special revenue sharing for urban community development that consolidated seven programs, including Model Cities and Urban Renewal. HUD Secretary James Lynn (1973–1975) negotiated reconciliation of House and Senate versions of the community development bill, leading to the passage of the Housing and Community Development Act of 1974 (PL 93-383), a law that created a community development block grant program with national objectives and funds allocated by formula (Orlebeke and Weicher, 2014). Nearly two decades later, in 1993, HUD Secretary Henry Cisneros was the first to use a special CDBG appropriation for disaster recovery. In a recent interview, Cisneros recalled how revenue sharing was a hot policy topic in the 1970s, when he was a White House intern. After CDBG was created, Cisneros continued, it became the "one proven and viable revenue sharing program," and "cities loved it."

The Housing and Community Development Act of 1974 that created CDBG also planted the seeds for CDBG-DR. Section 107(a) of the act set aside 2 percent of CDBG appropriations as a discretionary fund that the secretary of HUD could use to make grants for six specified purposes, the fifth of which was "to States and units of general local government for the purpose of meeting emergency community development needs caused by federally recognized disasters…" (PL 93-383). In 1993, when Congress appropriated supplemental CDBG funds for disaster recovery for the first time (designated for areas damaged by Hurricanes Andrew and Iniki and Typhoon Omar), the law moved funds out of Section 107 and other sources and added funds to community development grants (PL 103-50).

In enacting Section 107(a)(5), Congress foresaw the use of CDBG funds for emergency community development needs at the secretary's discretion, and in the same year lawmakers reaffirmed and expanded the federal role in disaster assistance by amending the Disaster Relief Act of 1970. The 1970 act, passed largely in response to criticisms of the federal response to Hurricane Camille in 1969, had "solidified a federal disaster safety net … [and] accelerated the transformation of federal disaster relief into something closer to a right" (Morris, 2014, p. 407). The Disaster Relief Act of 1974 continued this approach and widened the range of federal disaster assistance and preparedness authority (Bea, 2020, pp. 100–1). The Stafford Act of 1988, which amended the Disaster Relief Act of 1974, governs federal disaster assistance today; it made FEMA responsible for coordinating federal disaster relief and expanded assistance for mitigation. (FEMA, n.d.)

The First CDBG-DR Appropriation

CDBG was first used for disaster recovery following the 1992 storm season, when Hurricane Andrew devastated south Dade County in Florida and parts of Louisiana, Hurricane Iniki brought destruction to the islands of Kaua'i and O'ahu in Hawai'i, and Typhoon Omar damaged Guam. Of the three storms, Andrew is the focus for our story.

Hurricane Andrew hit the Bahamas, Florida, and Louisiana in August 1992 during the campaign pitting President George H.W. Bush against Governor Bill Clinton. At the time, Andrew was the costliest hurricane to hit the United States, with losses estimated at $25 billion or more (in 1992 dollars) (Comerio, 1998, p. 84; Hebert, Jarrell, and Mayfield, 1996, Table 3). In Florida, Andrew destroyed more than 60,000 homes, displaced 175,000 residents, and damaged or destroyed 82,000 businesses, 32,900 acres of farmland (used to grow limes, avocados, and mangoes), 31 public schools, 59 health facilities, 3,300 miles of power lines, and 3,000 water mains. Most of the damage was concentrated in Dade County (now known as Miami-Dade County), just south of the city of Miami, where the hurricane leveled the Homestead Air Force Base, destroyed or caused major damage to approximately 49,000 homes, and displaced 100,000 residents (Comerio, pp. 164–73). It is not surprising that Congress appropriated emergency supplemental funds to help the disaster victims, but why did Congress turn to CDBG?

Under President Bush, Congress assisted victims of Andrew, Iniki, and Omar through a special appropriation (PL 102-368) that included the following sources of housing assistance:

• $183 million from FEMA's Disaster Relief Fund for housing choice vouchers.

• $100 million for the acquisition and rehabilitation of public housing.

• $60 million in HOME Investment Partnerships (HOME) funds.

The public housing funds were transferred into HOME and CDBG in 1993 through the second supplemental appropriation for Andrew, Iniki, and Omar (PL 103-50).

Bush lost the presidential election on November 3, 1992. President Clinton was inaugurated on January 20, 1993, and Henry Cisneros was sworn in as HUD Secretary 2 days later. In separate interviews, both Cisneros and his former chief of staff, Bruce Katz, recalled Cisneros visiting the White House shortly after Clinton's inauguration to request a supplemental appropriation for victims of Hurricane Andrew. Katz noted, "I remember because it was so extraordinary to go to the White House to get the president to sign the supplemental appropriations request. That was my first week on the job." Clinton then appointed Cisneros to coordinate the federal response to Hurricane Andrew. Before the end of February, as reported in the Tampa Bay Times, Cisneros was in Florida to see the damage for himself (Reyna, 1993). On March 13, President Clinton announced the planned federal role in Dade County's recovery, which was based on Secretary Cisneros' recommendations and specifically called out CDBG:

"[H]ousing continues to be the single largest need in south Dade….The Department of Housing and Urban Development will put $100 million in reprogrammed funds in the most flexible programs available, such as the home and community development block grants…."

In a recent interview, Cisneros recalled that after seeing the massive damage caused by Hurricane Andrew in Florida, "[w]e began to look for flexible federal resources that could be used on short notice in discretionary ways, and CDBG is the classic." In 1993, the second supplemental appropriation with aid to areas damaged by Andrew, Iniki, and Omar included the first special appropriation of CDBG funds for disaster recovery (PL 103-50). The bill appropriated $45 million for community development grants and transferred funds out of the 1992 special appropriation for public housing into HOME ($60 million) and community development grants ($40 million). Consistent with Cisneros' recollection that he and his staff identified CDBG as the appropriate vehicle for disaster recovery assistance at the time, Representative Louis Stokes, chair of the Subcommittee on VA, HUD, and Independent Agencies of the Committee on Appropriations, spoke on the House floor in support of disaster recovery funds going into CDBG, stating that "HUD has suggested that making these transfers will provide more flexibility in administering and making available moneys to disaster areas" (139 Cong Rec, 1993, p. 11268).

After its first use in 1993, special appropriations of CDBG for disaster recovery became a standard part of the federal response to presidentially declared disasters, administered nearly every year since 1993. As of November 2023, HUD had awarded nearly $100 billion (unadjusted dollars) to states and other local entities for recovery from damages caused by natural hazards such as floods, storms, tornadoes, earthquakes, and wildfires as well as manmade hazards such as terrorist attacks. Today, CDBG-DR funds are intended to support long-term recovery needs in communities that suffered large losses and have large unmet recovery needs, so they are not provided for every disaster.

PD&R and the Allocation of CDBG-DR Funds

At the start of this essay, it was 1997 and Todd Richardson was headed to a party, but was forced to detour through Secretary Cuomo's office. Why? HUD had received a half-billion dollars in CDBG-DR funds to address damage from floods in the upper Midwest and other disasters (PL 105-18). Jan Opper, Director of the Disaster Recovery and Special Issues Division, needed a way to allocate CDBG-DR funds that was objective, used commonly available data, and could be documented. By 1997, HUD had awarded $1.16 billion (unadjusted dollars) in DR funds without a such a method. Opper and Cuomo tapped Richardson, who had coauthored a report on how to improve the formula for the standard CDBG program, to develop a formula for allocating CDBG-DR funds. As Richardson's friends waited for him in front of the Weaver building, the discussion in Cuomo's office centered on what the formula should include. Should grantees be states or local governments? What type of disaster damage should the formula prioritize: housing, economic loss, or infrastructure? And so on.

Richardson recalls puzzling over the question of what data might exist shortly after a disaster that he could use to create an allocation formula. He got answers as Opper walked him through FEMA's disaster and recovery process. Richardson saw that FEMA's response programs produced useful data: individuals register for assistance, FEMA inspects housing units and documents damage, homeowners and business owners apply to the U.S. Small Business Administration for disaster loans, and FEMA estimates public infrastructure repair needs. PD&R could use these data to estimate the unmet needs the CDBG-DR funds were intended to address. The Federal Register Notice capturing this first effort states with impressive vagueness that HUD will "generally allocate funds to grantees based on a formula that reflects disaster recovery needs that are not met by other Federal programs…." (FR 4254-N-01, 8 September 1997). Later, PD&R began publishing detailed descriptions of the allocation methodology.

Thus began PD&R's role as keeper of the formula, ensuring the objective and documentable basis for the allocation of supplemental CDBG-DR funds appropriated in the wake of presidentially declared disasters. As of this writing, Richardson is PD&R's general deputy assistant secretary and still directs the development of the allocation formula for each CDBG-DR appropriation. For this essay, Richardson offered his insider's observations on the formula's changes since 1997, noting three eras of formula evolution: the early years (from 1997 to 2004); the Hurricanes Katrina and Ike years (from 2005 to 2010), during which appropriations ballooned to billions of dollars and PD&R shifted from a reactive to an advisory role; and the contemporary era (from 2011 to the present day), which has been marked by limiting CDBG-DR awards to areas with the greatest need and adding funds for mitigation (that is, building back in a way intended to reduce the negative impact of future events).

Between 1997 and 2004, Congress provided substantially lower levels of CDBG-DR funding than PD&R's formula-based estimate of unmet needs dictated, and PD&R would then calculate allocations in proportion to the estimate. This approach changed in 2005, when the White House and Congress sought out PD&R's preliminary estimates of unmet need to support discussion about funding amounts for the second and third appropriations for recovery from Hurricane Katrina. The first CDBG-DR appropriation of $11.5 billion for recovery from Hurricanes Katrina, Rita, and Wilma specified that no state should get more than 54 percent of the appropriation (PL 109-48), providing Louisiana with $6.2 billion. To help homeowners rebuild, Louisiana created the Road Home program, but, as PD&R's analysis showed, homeowner demand exceeded the appropriation. PD&R analyzed the usual unmet need data and data from the Road Home program, which showed that Louisiana's share of unmet need from Katrina, Rita, and Wilma was much greater than $6.2 billion. Louisiana eventually received $13.4 billion (out of nearly $19.7 billion) in CDBG-DR funds for recovery after Hurricane Katrina. In most years since Hurricane Sandy (2012), Congress has appropriated at least as much as HUD's estimate of unmet needs for most impacted and distressed areas — a reflection of the enhanced value of PD&R's analyses to Congress.

In 2011, the supplemental appropriation of $400 million for multiple disasters was not adequate to cover PD&R's estimate of total unmet needs. To target these limited funds to areas with the greatest need, the appropriations law specified, based on PD&R's recommendation, that CDBG-DR funds go to the "most impacted and distressed areas" (PL 112-55). Although this factor had been used previously in the CDBG-DR allocation formula, its routine inclusion in the formula began with the 2011 appropriation. This language allows HUD to reserve CDBG-DR funds for presidentially declared disasters with the most serious and most concentrated losses and to ensure that most CDBG-DR funding goes to the most damaged areas.

Investments in mitigation and resilience were a major component of CDBG-DR funding for the first time following Hurricane Sandy, which hit New York City on October 29, 2012, and caused massive damage. Congress appropriated $16 billion in CDBG-DR funds for recovery (PL 113-2). The first tranche ($5.4 billion) was allocated in the usual way, based on unmet needs for recovery in housing, business, and infrastructure. The formula for the second and third tranches ($5.1 billion and $2.5 billion, respectively) included an additional component to account for the extra costs of building back with increased resilience. PD&R calculated the resilience component as 30 percent of the cost to restore the city's most impacted and distressed homes, businesses, and infrastructure to predisaster conditions. HUD used $930 million in Hurricane Sandy CDBG-DR allocations to fund its Rebuild by Design competition, a mitigation and resilience initiative (FR-5696-N-01, 5 March 2013; FR-5696-N-06, 18 November 2013; FR-5696-N-11, 16 October 2014). Later, HUD used $999 million in CDBG-DR funds to launch the National Disaster Resilience Competition (FR-5936-N-01, 7 June 2016). The current mitigation practice, which has been in place since the 2020 disasters and is directed by Congress, is to calculate mitigation funding at 15 percent of PD&R's formula estimate of unmet needs for the most impacted and distressed housing, businesses, and public infrastructure (PL 117-43).

The supplemental appropriations of CDBG for disaster recovery and mitigation contribute a unique element to the federal disaster response. The allocation formula is a critical part of HUD's disaster recovery work — so critical that in 2022 HUD issued a Request for Information seeking public comment on the allocation methodology and is currently considering the implications of the received comments. Despite its 30-year history and its taken-for-granted nature as part of federal disaster response, CDBG-DR is not a program; rather, it is funded through supplemental appropriations. If, as has been suggested, Congress provides authorizing language and advance (predisaster) funding (similar to FEMA's Disaster Relief Fund), PD&R will work with HUD's Office of Disaster Recovery to develop a formula that supports long-term disaster recovery based on a more predictable funding stream. Regardless of program changes, PD&R will continue the work it started in 1997: to nurture and develop the deep knowledge of available data and analysis methods to build the foundation for transparent, objective, and effective allocation of CDBG-DR funds to support American communities recovering from disasters and building resilience to future hazards.

 

 

Acknowledgments

With great appreciation, I acknowledge Henry Cisneros, Bruce Katz, Jan Opper, and Todd Richardson for sharing their recollections and experiences with CDBG-DR for this essay. Eric Erickson, HUD's librarian, was very helpful from the start. I also thank Dana Bres, David Fathi, Jessie Handforth Kome, Ann Hemmens, Bryce Knolhoff, Clay Lloyd, Anna Rudd, and Sarah Young.

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