Navigating Disaster Recovery and the Subrecipient Process

Disaster recovery can be a long, drawn-out process that takes a toll on not only the community members but also on local governments that have to provide routine services while also working to rebuild and restore the community. When disaster recovery exceeds the capacity of a local government’s staffing capabilities and skills, consulting with a small, specialty recovery firm can be an invaluable asset in not only accelerating the recovery process but also in ensuring that all regulations are met.

Cleveland County, Oklahoma, sustained significant damages from the various tornadoes, wildfires, flooding, straight-line winds, and winter storms that occurred from 2011 to 2013. To assist in their recovery process, the Department of Housing and Urban Development (HUD) awarded the County with Community Development and Block Grant – Disaster Recovery (CDBG-DR) funding, which was signed under the Disaster Relief Appropriations Act.

During active recovery, localities hire contractors to perform construction, administration, and other tasks. However, CDBG-DR fund recipients must follow very specific, yet complicated federal procurement rules, as well as state and local government laws and regulations. Grantees must also verify this compliance through accurate reporting and record keeping. As each program has its own set of regulations, it is critical to have adequate staffing that is prepared to ensure compliance at each step and keep accurate records for HUD’s periodic reviews and audits.

Disaster Recovery Tips

To assist in this process, case managers from the Institute for Building Technology and Safety (IBTS) have put together the following tips:

  • Be aware that each program has its own set of regulations. Even if your locality has received disaster funding before, some requirements for a new program may be different.
  • Dedicate enough staff to ensure compliance at each step. Identify who will work on compliance during the disaster planning process.
  • If you are unable to dedicate enough staff to these processes or have not been through the process before, consider working with a consultant.
  • Provide training and time for staff to learn and maintain knowledge of regulations during disaster preparation.
  • Be aware that HUD will conduct audits on CDBG-DR funding. Never assume an audit does not apply to your funding.
  • Ensure that all staff know the importance of documentation and proper record-keeping from the onset of a disaster. Staff members should know that having documents properly organized to meet CDBG-DR guidelines is critical to ensuring that funds are not withdrawn.

Cleveland County initially tried implementing HUD CDBG-DR programs without a program administrator, but quickly realized that they needed assistance. IBTS was brought on as a subrecipient in May of 2016 to help the County remain in compliance and carry out projects under this funding. The subrecipient agreement was the first of its kind signed in the United States and made IBTS responsible for carrying out permitted activities in conformance with applicable CDBG-DR requirements. The underlying principle of this agreement is that the burden of compliance is imposed upon IBTS, as the subrecipient.

“[Disaster recovery] is much too detailed and much too complex for one group or a small group to really wrap their head around and execute efficiently and correctly,” says Cleveland County Subrecipient Leader Todd Gibson.

The sub-recipient partnership is permitted under the CDBG-DR program only if the sub-recipient is a non-profit organization. IBTS, for example, cannot make profit or gain assets, but may only charge for direct costs. “One of the biggest advantages is that in lieu of a typical relationship between a vendor and a client, or a vendor and a community, this is truly a partnership,” says Steve Traina, Economic Development and Disaster Recovery Program Manager at IBTS.

Through this agreement, the sub-recipient handles complete oversight of compliance and eligibility activities. This includes program oversight for engineering and construction activities such as:

  • Contractor change orders
  • Monthly Davis-Bacon compliance monitoring
  • Contractor payment application approvals
  • Review of environmental studies
  • HUD approvals for identified projects

By contracting a subrecipient, Cleveland County was able to navigate the complexity of regulations associated with the program objectives, in addition to managing the budget more efficiently. Over the course of just one year of partnership, the County realized a surplus of $305,000 CDBG-DR funds that can be of use in the remaining six projects.

Specialized consultants can help localities continue to take progressive measures even after long-term recovery is complete, improving on problem areas and incorporating successful strategies into the County’s disaster response and recovery procedures.

As published on the Alliance for Innovation’s website: http://transformgov.org/en/Article/108282/Navigating_Disaster_Recovery_and_the_SubRecipient_Process