Housing and Insurance Subcommittee Reviews HUD’s Disaster Recovery Programs

Yesterday, the House Financial Services Subcommittee on Housing and Insurance, led by Subcommittee Chairman Mike Flood (NE-01), held a hearing to examine the effectiveness of HUD's Community Development Block Grant Disaster Recovery (CDBG-DR) program and explore opportunities to improve federal disaster recovery assistance.

On Structural Challenges Within CDBG-DR:

Subcommittee Chairman Flood said, "Because these funds are directed through the CDBG program and not any standing program with a direct disaster recovery nexus, HUD must effectively rewrite the rules around how an affected area can utilize CDBG-DR dollars for each disaster. This lack of structure makes this unauthorized program a nightmare for both its administrators at HUD and the local governments that need disaster funds."

Full Committee Chairman French Hill (AR-02) said, “When disaster strikes, federal assistance programs should deliver timely, transparent, and effective support. Unfortunately, in my view, HUD’s CDBG-DR program has fallen short of that high standard. It lacks permanent authorization, clear objectives, and consistent program rules, and GAO has repeatedly cited inconsistent program requirements as a key driver of delays, and HUD’s own Inspector General has documented more than $690 million in spending that lacked adequate documentation.”

Rep. Monica De La Cruz (TX-15) said, “The Senate's version of the 21st Century ROAD to Housing Act included a proposal to codify the CDBG-DR program. I've had extensive outreach on this proposal, including from my largest county, Hidalgo County, and the judge in Hidalgo County, who highlighted concerns with how that section is currently written. One of the specific concerns highlighted is [that] the current formula does not treat rural counties fairly.” To which Ms. Heather Lagrone, Senior Deputy Director, Texas General Land Office, replied, “Yes, ma’am, I agree.”

On Delays and Inefficiencies in Disaster Recovery Assistance:

Rep. John Rose (TN-06) said, “The Community Development Block Grant Disaster Recovery … program is slow, duplicative, and routinely fails the very people it is supposed to help. Communities don't need a second clunkier system layered on top of the first. They need help that actually shows up on time. That is why it is so baffling to watch our colleagues in the Senate look at this track record and conclude that the answer is more of it. Disaster recovery should be handled in one place by one agency that is built for it. Instead, we have drifted into a fragmented approach that slows everything down. It is time to end the experiment, consolidate recovery where it belongs at FEMA, and let housing officials focus on housing again.”

Rep. William Timmons (SC-04) said, “Over the last three decades, Congress has appropriated more than $100 billion through CDBG-DR, yet concerns persist about delays, administrative complexity, overlapping responsibility, and oversight challenges. While CDBG-DR is often described as a flexible tool for addressing unmet recovery needs after FEMA, SBA, insurance, and other assistance have been exhausted, that flexibility comes with tradeoffs. Because the program lacks a standing authorization and permanent regulations, each supplemental appropriation can bring a different set of requirements, waivers, timelines, and reporting obligations. The question before us is whether that approach is producing better outcomes for disaster victims or creating additional barriers to recovery.”

Witnesses Echoed the Work of the Committee:

Mr. Joseph V. Jaroscak, Analyst in Economic Development Policy, Congressional Research Service, said, “The U.S. Government Accountability Office (GAO) has reported instances of protracted CDBG-DR rulemaking periods, inconsistent administrative processes, and funding delays. Some grantees have also expressed concern to GAO regarding the administrative burden of simultaneously managing multiple CDBG-DR grants with differing sets of requirements. Additionally, GAO has highlighted ongoing fraud risk associated with CDBG-DR funds. Some HUD Office of Inspector General (HUD-OIG) audits have identified potential deficiencies in HUD’s grantee guidance, monitoring processes, and grantee data collection, which may pose risks related to improper payments and challenges with preventing or identifying waste, fraud, and abuse. Both GAO and HUD-OIG have recommended broad structural reform to CDBG-DR (or similar federal investments) as a means to provide long-term disaster recovery assistance for unmet needs.”

Mr. J. Patrick Cave, Senior Vice President of Policy, Enterprise Community Partners, said, “By strengthening coordination across federal agencies, expanding flexible financing tools, investing in state and local capacity, supporting the development and preservation of resilient housing, and advancing needed reforms and permanent authorization of key programs— Congress can help ensure recovery efforts are faster, more efficient, and more durable.”

Ms. Lagrone said, “Disaster Recovery should most definitely be codified into its own program at HUD, but the new program should not simply direct what is happening today with more time-consuming regulations as has been proposed. A new program should consider lessons learned and acknowledge that disaster recovery is not one size fits all, with a great need toward flexibility. Disaster recovery must remain wholly focused on disaster recovery, and mitigation needs with an emphasis toward needs as they apply per capita, as well as in total damage numbers. We should look for ways to make disaster recovery better, not codify a program that has come together over the past 20 years in starts and stops that simply does not work well.”

###