Grantees are permitted to charge to grants the pre-award and preapplication costs of homeowners, businesses, and other qualifying entities (the “applicants”) for eligible costs incurred in response to an eligible disaster. Grantees may only charge the costs for rehabilitation, demolition, and reconstruction of single family, multifamily, and nonresidential buildings, including commercial properties, owned by private individuals and entities, incurred before the applicant applies for CDBG-DR assistance. Entities providing CDBG-DR assistance must comply with cross-cutting requirements (i.e., Davis Bacon, Civil Rights, Lead-Based Paint, URA, etc.) and requirements in the Consolidated Notice, including the requirement to complete an environmental review before committing funds or beginning recovery activities. If a grantee cannot meet all requirements at 24 CFR part 58 and cannot demonstrate there was no environmental harm committed, the pre-application costs cannot be reimbursed with CDBG-DR funds.
It is important for a grantee to keep in mind that previous Appropriations Acts have generally provided funds for eligible CDBG activities that are “necessary expenses” of relief and recovery from major disasters. Therefore, grantees are required to ensure that all costs charged to a CDBG-DR grant are necessary expenses related to recovery. Response and recovery efforts begin the date of a disaster, before CDBG-DR assistance becomes available.
As such, the reimbursement provision allows grantees to make funds available for necessary recovery assistance for private owners who used their own limited resources for short-term recovery-related costs after a disaster with no assurance of receiving CDBG-DR assistance. The terms of this provision are designed to ensure that short-term outlays do not impede long-term recovery. However, the terms are time-limited to ensure that CDBG-DR funds are expended only for necessary expenses of recovery.