For decades, the federal government has approached long-term disaster recovery in somewhat of a peculiar way. The process was this: wait for catastrophe, appropriate billions of dollars, and then begin figuring out how the money will be administered.
Congress has now announced big changes.
Buried inside the newly enacted 21st Century ROAD to Housing Act is legislation that will fundamentally alter how states and communities recover from hurricanes, floods, wildfires and other major disasters. The Reforming Disaster Recovery Act, contained in Section 504 of the new law, puts the Community Development Block Grant Disaster Recovery program, or CDBG-DR, into statute and establishes something Washington has never really had before – a standing framework for long-term disaster recovery.
For public officials, the message is especially important. Recovery work for the next disaster recovery should begin before the disaster occurs. And for government contractors, the implications are equally significant.
CDBG-DR has become one of the federal government’s most important tools for rebuilding communities after major disasters. Since 2001, the U.S. Department of Housing and Urban Development (HUD) has received more than $100 billion in congressional appropriations for disaster recovery and mitigation. Yet CDBG-DR historically has not operated like a conventional federal program.
In the past, Congress would appropriate funding following disasters, and HUD would then establish rules governing that particular round of funding through Federal Register notices. After a disaster, states and local governments would often wait months to learn how much money they would receive and under what conditions. The results were often painfully slow.
The Government Accountability Office found that the time between congressional appropriation and HUD’s allocation of CDBG-DR funding could range from months to more than three years. That’s an extraordinary amount of time when communities are trying to rebuild housing, restore infrastructure and revive local economies.
The ROAD to Housing Act attempts to replace some of that improvisation with a more predictable system. It creates a Long-Term Disaster Recovery Fund within the Treasury and a dedicated Office of Disaster Management and Resiliency within HUD. It establishes procedures and deadlines for determining catastrophic disaster needs, allocating funding and administering grants. That distinction matters.
Instead of inventing much of the administrative machinery after every disaster, Washington can have more of that machinery standing by before a storm arrives.
Generally, within 90 days of a presidential major disaster declaration, HUD must now determine whether the event qualifies as a catastrophic disaster. If sufficient information is not available to make that determination, the reporting deadline may be extended, but generally no longer than 120 days after the disaster declaration.
When money is already available in the Long-Term Disaster Recovery Fund, HUD will announce an allocation following the determination. If and when Congress subsequently provides additional money, HUD generally has 15 days to announce that news.
The law also permits preliminary grants of up to $5 million before a final catastrophic disaster determination. That funding can be used for work such as needs assessments, program design, fraud prevention and housing analysis.
Public officials know all too well what must happen when a large disaster recovery request is made. Programs must be designed. Damage and unmet needs must be quantified. Procurement systems must be established. Financial controls must be tested. Data systems must be configured. Duplication-of-benefits procedures must be developed.
Perhaps now, governments will be able to prepare more of that infrastructure in advance. One of the most interesting features of the law is its emphasis on pre-disaster readiness. States, local governments and tribes will be able to demonstrate before disasters that they have adequate financial controls, procurement processes and safeguards against fraud, waste, abuse and duplication of benefits.
Public officials should begin now to question whether they are prepared to administer a multibillion-dollar recovery if a catastrophic disaster occurred tomorrow. Do they have procurement vehicles ready? Are financial controls already designed for federal disaster requirements? Can their systems exchange information with federal agencies? Can they meet new federal standards?
The same shift has major implications for government contractors. Currently, there is a substantial ecosystem of program managers, engineers, technology providers, housing specialists, financial advisers, construction firms, compliance experts and grant administrators. This new law will likely call for quicker involvement when disasters occur.
Instead of simply assembling armies of consultants after a hurricane makes landfall, states and communities may begin to procure capabilities in advance. But contractors should not interpret the legislation simply as a new source of business. It is also a signal that expectations are likely to rise.
One of the least glamorous provisions of this new legislation will ultimately be among the most important. The law directs HUD, FEMA and the Small Business Administration to focus on greater data sharing. That matters because one of the recurring difficulties in disaster recovery is determining who received what assistance, for which loss and from which federal program. This means that the future of disaster recovery increasingly will depend on technology.
Interoperability, identity matching, benefits calculations, case management, cybersecurity, privacy and analytics will become as important to recovery operations as traditional grant administration. Technology contractors should see this as a market worth watching closely.
The legislation also strengthens the connection between disaster recovery and resilience. Funding allocations may include amounts for mitigation activities designed to reduce future losses and protect critical infrastructure. It appears that the rebuilding focus will no longer be based solely on what existed yesterday. Instead, it will consider whether what is rebuilt can survive tomorrow. That debate will become particularly difficult in communities facing repetitive losses, rising insurance costs and severe housing shortages.
The legislation makes significant adjustments related to housing. Recovery planning may take into consideration housing needs that existed before a disaster as well as needs created by the disaster itself. That is significant.
Congress has built a new machine, but it still must provide the fuel. That leads to an important limitation that must be recognized. Creating the Long-Term Disaster Recovery Fund is a good thing but it does not mean that billions of dollars will automatically be waiting for the next catastrophe. The ROAD to Housing Act does not itself authorize additional appropriations for the program. That job falls to the Congress.
So far, lawmakers have solved only part of the problem. They have created a more predictable administrative structure through which long-term recovery assistance can flow. Whether sufficient money is available when disasters strike remains a political and budgetary decision. A beautifully designed recovery system cannot rebuild anything at all if there is no money in it.
There is another reason public officials and contractors should pay attention immediately rather than wait for the next disaster. The rules are being written now and implementation is underway.
HUD is beginning the process of establishing formulas and regulations that will determine how this new system works, including how catastrophic disasters are defined, how unmet housing needs are calculated, how communities will be rebuilt, and how the funding will flow to governmental entities.
Those decisions will eventually help determine how billions of dollars in future federal disaster assistance are allocated. State and local governments, industry associations and contractors with disaster-recovery experience have an unusual opportunity to influence the architecture of the program while it is still being built. They should use it aggressively.
There is one final twist to note. The statutory CDBG-DR framework created by the legislation sunsets three years after enactment. That effectively provides for a large-scale experiment.
By the time Congress revisits the program, there should be better data and insight. For now, however, one conclusion seems clear. The most important change in the ROAD to Housing Act may not be what Washington does after the next disaster. It may be what public officials and their private-sector partners do before it.
