New Jersey has published its action plan for the $1.8 billion CDBG grant allocated by HUD to assist the State’s Hurricane Sandy recovery efforts. The public comment period for the action plan will end at 5:00 pm on March 19. Additional allocations are expected to be made at subsequent dates to be determined by HUD. Funds must be spent within two years unless HUD provides an extension. Governor Christie has designated the New Jersey Department of Community Affairs as the entity responsible to HUD for administering the distribution of CDBG funds for New Jersey. The action plan provides for the distribution of the $1.8 billion of CDBG funds in the following areas: homeowner assistance; rental housing; economic revitalization; and support for state and local agencies. Within each category are a variety of programs to address specific recovery needs. As an example, with respect to rental housing, $100,000,000 is designated to facilitate the creation of quality, affordable housing units to help New Jersey recover from the loss of multi-family housing. CDBG funds will be provided as zero- and low-interest loans to qualified developers to leverage 9% and 4% low income housing tax credits, tax-exempt bonds and stand-alone financing to support development. Awards will be limited to $120,000 per unit. Similarly $75,000,000 will be awarded through NJEDA in amounts up to $10,000,000 to redevelopment agencies, municipalities, businesses and nonprofits, including CDFIs and CBDOs for community revitalization. These funds may be used for property acquisition, demolition, site preparation and infrastructure repair and installation as well as physical improvement and expansion of existing facilities.
The Federal Register recently provided notice on the initial $5.4B of HUD CDBG Disaster Recovery Funds allocated to NYC, NY, NJ, MD, CT and RI. These grants were made by HUD based on unmet housing and economic revitalization needs, but not for infrastructure restoration needs because FEMA damage estimates have not been completed. The Notice specifies the eligible counties in each state, the most impacted counties in each state, and the minimum percentage of the grants which must be used in the most impacted counties. The Notice requires each grantee to provide to HUD an initial action plan for disaster recovery within 90 days, and this action plan must describe how the grant will be expended within 2 years. All action plans must be published for a 7 day public comment period. Highlights of the requirements of an action plan include leveraging of CDBG monies with other government funds; green building standards; sustainable rebuilding; economic revitalization which that restores or improves local or regional economies; and 50% of each grant must benefit low and moderate income persons. Standard CDBG procurement regulations apply, althought there is no limit on grant amount per job created. The action plans of the grantees should be available soon for review and comment.
In the wake of Hurricane Sandy many businesses have been negatively impacted financially throughout regions from Connecticut, New York, New Jersey, Pennsylvania and Delaware. Hardest hit are businesses located not only along the New Jersey, Staten Island and Long Island NY coasts but in areas that have never experienced such a devastating disaster. Areas such as Hoboken NJ, lower Manhattan and the NYC East Side. Even businesses located in inland communities.
As New York, New Jersey and the City of New York begin to administer HUD CDBG monies for Super Storm Sandy recovery efforts, recipients of CDBG grants must comply with the HUD CDBG procurement requirements. When a grantee elects to hire a contractor, whether to administer a program, complete a task or do construction, those contractors must be procured competitively. Both grantees and sub recipients must follow federal procurement rules when purchasing services, supplies, materials, or equipment. Small purchase procedures allow recipients to acquire goods and services totaling no more than $100,000 without publishing a formal request for proposals or invitation for bids. The small purchases method can also be used to acquire eligible types of services, such as professional consulting, environmental review, or planning. However, if the services contract will exceed $100,000 in value, the grantee must issue a RFP under the competitive proposals requirements. The use of CDBG grants will also trigger compliance with the Davis-Bacon Act. In addition to federal regulations, most states and many local governments have laws and regulations regarding procurement.
New Jersey has received $1.82 billion allocation of Federal Sandy aid from the U.S. Department for Housing and Urban Development. This initial allocation of Federal Sandy assistance will be distributed as Community Development Block Grants. The grants will be administered by the New Jersey Economic Development Authority in conjunction with the Department of Community Affairs. Governor Christie is required to provide a proposal to HUD for the use of the aid which will explain how New Jersey agencies will meet HUD’s guidelines for allocating federal funds. The $1.82 billion represents New Jersey’s first share of a total $16 billion in anticipated block grants that will be shared among storm-hit areas of New Jersey, New York City and New York State and Connecticut.
Mayor Bloomberg of New York City has announced that the City plans to spend its initial allocation from HUD of $1.77 billion from the Hurricane Sandy Recovery Act in Community Development Block Grants for housing recovery, business recovery, and infrastructure resiliency. The housing recovery initiatives include rehabilitation grants for housing and grants for resiliency efforts for public housing. The City of New York will provide grants to businesses for resiliency measures including grants for innovations in resiliency technology. The infrastructure grants will be for resiliency innovations for neighborhoods and utilities. The City of New York is working with HUD for an additional $600 million for Hurricane Sandy recovery efforts.
Yesterday the Senate voted 62-36 to approve the House version of the Hurricane Sandy Bill. The $51 billion aid package for Hurricane Sandy victims is expected to be signed into law by President Barack Obama. The Act will provide $16 billion for Housing and Urban Development Department community development block grants. Of the $16 billion, approximately $12 billion will be shared among Hurricane Sandy victims as well as those from other federally declared disasters in 2011-2013. The remaining $4 billion is solely for Hurricane Sandy-related projects. The Act will also provide $11 billion to the Federal Emergency Management Agency’s disaster relief aid fund for providing shelter, restoring power and other storm-interrupted utility services and meeting other immediate needs arising from Super Storm Sandy and other disasters. The Act will also provide $10 billion to repair the New York and New Jersey transit systems as well as make the systems more resistant to future storms.
Voting 91 to 1, Senate Democrats and Republicans joined to move for a vote this week on the Hurricane Sandy and National Relief Act of 2012. This $60.4 billion Bill would fund recovery efforts in states affected by Hurricane Sandy. If passed by the Senate, the Bill would still need passage by the Republican controlled House. Although the Bill is less than the $82 billion requested by the governors of New York, New Jersey and Connecticut, the Bill would provide much needed funds for affected states to clean up storm damage and undertake long-term projects to protect against the effects of future storms. The Bill would authorize an increase of allocation of Federal low-income housing tax credits, Historic Tax Credits, and New Markets Tax Credits as well as Recovery Zone Bonds in those areas affected by Hurricane Sandy.
The Senate introduced a summary of the proposed Hurricane Sandy and National Relief Act of 2012. The major provisions of the Act include special allocations of Federal New Markets Tax Credit authority, Federal Low-Income Housing tax credit allocation; and Recovery Zone Bond authority. The proposed Act provides for an allocation of Federal New Markets Tax Credit authority of $500 million a year for three years to be used in federally declared major disaster areas. For the years 2013, 2014, and 2015, the Act permits States affected by Hurricane Sandy to allocate additional amounts of Federal Low-Income Housing tax credits for use in the disaster area of up to $8.00 multiplied by the State’s disaster area population. The Act will also permit affected States to issue tax-exempt Sandy bonds to finance qualified activities including residential rental projects, nonresidential real property and public utility property located in the disaster area.
In anticipation of the Federal programs which will be enacted to assist in the redevelopment of areas affecting by Hurricane Sandy, Duane Morris has formed the Hurricane Sandy Housing and Community Development Sub-Practice Group. In the aftermath of Hurricane Katrina Congress passed legislation which provided Federal low-income housing tax credit allocation, Federal New Markets Tax Credit Authority and special tax subsidized bond financing designated for effected areas. The Hurricane Sandy Housing and Community Development Sub-Practice Group is an interdisciplinary group including attorneys with the following specialties: Art Momjian, Federal tax credit programs, Harvey Johnson (NJ) and Jon Popin (NY), affordable housing; Bob Archie, Nat Abramowitz, and Bruce Jurist tax exempt bond finance; Marty Monaco (NJ), tax-exempt entities; and Chester Lee (NY) and Chris Winter, real estate and commercial financing. Members of the Hurricane Sandy Housing and Community Development Sub-Practice Group will provide a unique value to clients as a result of their experience with the Katrina programs, and their extensive knowledge and experience with state and local affordable housing and community development programs in New Jersey and New York. Members of the group can assist clients combine state and local programs with the Federal Hurricane Sandy relief legislation.