This blog post explains the steps the NC Department of Commerce’s new Division of Community Revitalization will take to determine how to allocate the state’s share of Community Development Disaster Recovery funds (CDBG-DR) to aid Hurricane Helene recovery efforts. Local governments and private citizens in disaster-impacted areas will have an opportunity to weigh on how these funds should be expended. For more information, including the dates and locations for public hearings (which begin next week), see the below blog post section: A Call for Local Government and Citizen Participation.

Disaster Relief Supplemental Appropriations Act

On December 21, 2024, the federal government passed The Disaster Relief Supplemental Appropriations Act, 2025 (Pub. L. 118-158) (“the 2025 Appropriations Act”), which authorized new federal funding to support disaster recovery efforts in states impacted by recent natural disasters. The relief package included an appropriation of $12 billion to the Community Development Block Grant Disaster Recovery program. The U.S. Department of Housing and Urban Development (HUD) administers the CDBG-DR program, which is modeled after the CDBG block grant, but operates as a separate program with some important distinctions. Importantly, the CDBG-DR funding is intended to supplement other disaster funding, not supplant (or replace) other sources of funding. Accordingly, other federal, state, and private resources must be exhausted before CDBG-DR funds may be used to finance a disaster recovery project.

North Carolina’s Allocation of CDBG-DR for the Helene Disaster

On January 16, 2025, HUD published in the Federal Register the Allocation Announcement Notice (AAN) (90 FR 4759), allocating the $12 billion of CDBG-DR funding authorized in the 2025 Appropriations Act to eligible grantees based on a  calculation of unmet recovery needs.  The State of North Carolina was awarded approximately $1.4 billion in CDBG-DR funds to address the impacts of the Hurricane Helene disaster.  Of this amount, HUD requires at least 80 percent (approximately $1.1 billion) to be spent in the “most impacted” counties.

According to HUD, the most impacted counties include: Ashe, Avery, Buncombe, Burke, Caldwell (Zip code 28645); Cleveland (ZIP code 28150); Haywood; Henderson; Madison (ZIP code 28753); McDowell; Mecklenburg (ZIP code 28214); Mitchell; Polk (ZIP code 28782); Rutherford; Transylvania; Watauga; and Yancey.

 In addition, the City of Asheville was awarded $225 million in CDBG-DR funds to be administered separately by the City.

State Administration of CDBG-DR Funds & the Action Plan

In January 2025, pursuant to Governor Josh Stein’s Executive Order No. 3, the state’s Department of Commerce established a new Division of Community Revitalization (“the Division”) to help spearhead and coordinate efforts to revitalize the economy in western North Carolina. As part of this charge, the Division will be administering the $1.4 billion in CDBG-DR funds for the Helene disaster.

The Action Plan: Before the state may receive the CDBG-DR funds, the Division must draft an Action Plan outlining the Helene disaster impacts and identifying how the CDBG-DR funds will be spent. The Action Plan must be submitted to HUD for approval by April 15, 2025 (90 days after the publication of the AAN on January 16, 2025). The specific requirements for the Action Plan, as well as other administrative requirements and waivers, are included in the Federal Registrar notice (90 FR 1754) Common Application, Waivers, and Alternative Requirements for CDBG-DR Grantees: The Universal Notice (“Universal Notice”).

Part of the Action Plan process requires the Division to conduct an unmet needs assessment. The assessment will help determine the remaining disaster recovery needs after accounting for other sources of recovery funding, such as FEMA Public Assistance, insurance payouts, and Small Business Administration loans. The assessment will focus on unmet housing, infrastructure, and economic development projects, keeping in mind that a minimum of 80 percent of the CDBG-DR funds must support eligible recovery projects in the “most impacted” counties. In addition, at least 70 percent of the CDBG-DR funds must support recovery projects that benefit low- and moderate-income populations. See HUD’s Universal Notice.

In the Action Plan, the Division will identify whether the state will directly implement a specific project or program, or if the funds will be distributed to local governments to allow them to carry out a project (a combination of both direct implementation and distribution to local governments is possible). See HUD’s Universal Notice.

A Call for Local Government and Citizen Participation

Local governments with unmet disaster-recovery needs should take this opportunity to begin (or continue) evaluating unmet needs and identify projects or programs that might be eligible for CDBG-DR funding. Local officials can work with the Division of Community Revitalization to ensure that their needs are represented as part of the unmet needs assessment.

Community engagement is both required and encouraged as part of the Action Plan process. There are two avenues for citizen engagement. First, citizens may participate in public hearings in which they will have the opportunity to share their vision and priorities for long-term disaster recovery. Second, the public will have the opportunity to provide feedback on the proposed Action Plan during the required 30-day public comment period.

The public hearings for the state will begin next week, with the Division of Community Revitalization will be hosting “listening sessions” in various locations in disaster-impacted areas. More information, including the times and locations for the listening sessions, is available on the NCDOR Disaster Recovery webpage. At this time, the schedule is as follows:

• Tuesday, February 18, Spindale
• Friday, February 21, Waynesville
• Monday, February 24, Asheville
• Tuesday, February 25, Boone
• Thursday, February 27, Hickory
• Friday, February 28, Charlotte

The City of Asheville’s public hearing dates for the CDBG-DR funding are posted on the City of Asheville website.

CDBG-DR Eligible Projects

The 2025 Disaster Relief Act requires that this appropriation of CDBG-DR funds be used for necessary expenses for activities related to disaster relief, long-term recovery, restoration of infrastructure and housing, economic revitalization, and mitigation, in the most impacted and distressed areas resulting from the disaster. (AAN, 90 FR 4759. Appendix A)

In addition, all CDBG-DR projects and programs must satisfy three key criteria: (1) address a direct or indirect impact of the disaster, (2) meet a CDBG national objective, and (3) be a CDBG eligible activity. To meet a CDBG national objective, the project must either benefit low- and moderate-income people, aid in the prevention of slums and blight, or meet an urgent need.  As mentioned above, 70 percent of the CDBG-DR funds appropriated in the 2025 Disaster Recovery Act must be used to benefit MIL people. Therefore, the state will prioritize programs and projects that benefit low- and moderate-income populations in the most impacted areas. (Universal Notice, 90 FR 1754).

In general, projects that are eligible under the traditional CDBG block grant program are likely eligible for CDBG-DR funding, if the project addresses an unmet need created by the declared disaster in a designated area. Unlike the traditional CDBG block grant, CDBG-DR funds may be used for the construction of new housing. Accordingly, activities like housing rehabilitation, new construction, infrastructure repair, business assistance, public facility improvements, and mitigation strategies can be funded under CDBG-DR when tied to the Helene disaster. For more information on the CDBG-DR program’s eligible projects, consider viewing HUD’s 2024 CDBG-DR Clinic: Navigating Eligible Activities and Objectives (available on YouTube).