HUD Crowdsources Disaster Cash Split—Comment by September!
Published Date: 8/13/2026
Notice
Summary
HUD is asking for your thoughts on how it decides disaster recovery money for communities hit by disasters in 2023 and 2024. Until new rules are set, they’ll keep using the 2025 formula to split the funds. If you want to help shape the future of disaster aid, send your comments by September 14, 2026!
Analyzed Economic Effects
10 provisions identified: 1 benefits, 2 costs, 7 mixed.
Possible Change to Housing Need Multipliers
HUD is considering changing how it converts damaged housing counts into dollars by adding a separate "destroyed" category, using housing multipliers based on historic disaster experience and private construction cost data instead of matching to SBA loan data, and using different multipliers for rental versus owner units. These changes would change how much CDBG-DR money is estimated for housing unmet needs and could affect homeowners and renters in disaster areas.
Explore Narrower "Catastrophic" Eligibility Standard
HUD is considering what standard should define a "catastrophic" disaster for CDBG‑DR eligibility and is exploring limiting eligible disasters to those with large numbers or high concentrations of homes with major-high or severe damage. Such a limit would affect which disasters and grantees can receive CDBG‑DR funds.
Mitigation Set‑Aside Up to 18%
HUD is seeking research and comment on whether to include an additional amount for mitigation in allocations by disaster type, not to exceed 18 percent of the total estimate of unmet needs. If adopted, this would increase the portion of funds set aside for mitigation work.
2025 Formula Used for 2023–24 Disasters
HUD will use the allocation formula published in the January 2025 notice to split Community Development Block Grant Disaster Recovery funds for disasters in 2023 and 2024 until HUD issues an updated formula or completes rulemaking. HUD is asking for public comments by September 14, 2026 if you want to weigh in on future changes.
Economic Revitalization as Share of Housing Need
HUD may stop using SBA business loan data and instead assume economic revitalization unmet need equals a percentage of calculated housing unmet need. HUD notes past grantee plans show economic development shares ranged from 0% to 7% with a median of 2%, and is seeking comment on using a flat share such as 2% or adjusted percentages by disaster type.
Infrastructure Need May Be Tied to Housing Share
HUD is considering not using FEMA Public Assistance Category C–G estimates and instead setting infrastructure unmet need as a percentage of housing unmet need. HUD notes grantee plans historically show planned infrastructure shares ranging from 9% to 31% with a median of 22%.
Separate Metro, Rural, and Tribal Thresholds
HUD is seeking comment on revising its definition of most impacted and distressed areas to use separate thresholds for metropolitan, non‑metropolitan (a proxy for rural) areas, and tribal areas to better measure impacts in different geographies.
State Preference and Grantee Capacity Review
HUD is proposing a policy that generally prefers awarding CDBG‑DR grants to states because states typically have more capacity, unless HUD's review of capacity and damage concentration supports awarding direct grants to local governments or Indian tribes. For tribes, HUD suggests the Office of Native American Programs would determine tribal capacity if the disaster meets the catastrophic definition.
Consider Repetitive Loss and Critical Infrastructure
HUD is asking how repetitive loss data (properties damaged by multiple disasters) and damage to critical infrastructure should be used in the allocation formula. Using these data could shift funds toward repeatedly affected properties or toward repairing critical infrastructure.
Reserve for Extraordinary Circumstances
HUD is proposing the formula could include an element that allows the Secretary to use alternative data or methods for "extraordinary circumstances" to account for unusual unmet needs (for example, lava flows making undamaged homes inaccessible).
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Key Dates
Department and Agencies
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