CDBG-DR Rules Are More Flexible Than You Think

The most common mistake I see in disaster recovery isn’t a bad program design or a missed deadline. It’s states and grantees assuming they can’t do something because they think federal guidelines won’t allow it.

That assumption costs communities time, money, and better outcomes. And most of the time, it’s wrong.

The Shoehorning Problem

Here’s what typically happens. A state receives a CDBG-DR allocation and starts designing programs. The team pulls up HUD’s Federal Register notice, reads through the requirements, and begins building programs around what they interpret as allowable activities. They see the rules and design within those boundaries.

The problem? They’re often drawing the boundaries too tight.

I’ve worked with states that spent months designing a housing program around what they believed the federal requirements demanded — only to discover later that an approach they dismissed early on was perfectly allowable. They’d eliminated better options because someone read a regulation and assumed it meant something more restrictive than it actually did.

Federal guidelines, particularly for CDBG-DR, involve a significant amount of interpretation. The language is often broad precisely because HUD recognizes that disasters are different and communities have different needs. There’s intentional room built into the framework for grantees to design programs that fit their situations.

But you have to know the room exists to use it.

Start with the Need, Not the Rule

The states that get this right flip the process. Instead of reading the regulations first and designing programs to fit, they start by identifying what their communities need. What did the disaster do? Where are the gaps? What would actually solve the problem?

Then they go to the regulations and ask: how do we make this work within the framework?

That’s a fundamentally different question than “what does the framework allow us to do?” The first approach puts the community’s recovery first and uses the regulations as a tool to get there. The second puts the regulations first and hopes the community’s needs happen to fit.

When needs and regulations don’t align perfectly — and they often don’t — proactive grantees engage HUD directly. They request waivers. They propose alternative requirements. They make the case for why their approach serves the statutory purpose of the funding even if it doesn’t follow the standard playbook.

And here’s what surprises a lot of people: HUD grants these requests regularly. Not always, and not without justification, but far more often than grantees assume. The flexibility is there. You just have to ask for it, and you have to ask well — with data, with a clear rationale, and with an explanation of why the standard approach doesn’t fit your disaster.

What Good Justification Looks Like

Asking for flexibility isn’t the same as asking for an exception to be sloppy. HUD wants to see that you’ve thought it through.

A strong request explains the specific challenge — what about your disaster or community makes the standard approach inadequate. It presents the alternative you’re proposing and explains how it meets the same statutory objectives. It includes data supporting your case. And it addresses the compliance concerns HUD would naturally have.

States that do this well treat the conversation with HUD as a partnership, not a transaction. They’re not just asking for permission — they’re demonstrating that they understand the purpose behind the regulations and proposing a better way to achieve that purpose in their specific context.

The states that struggle are the ones that either never ask or ask without doing the homework. A vague request to “be flexible” with no specifics goes nowhere. A well-documented request explaining exactly why you need a different approach and how you’ll maintain accountability? That gets results.

The Cost of Playing It Safe

There’s an irony in disaster recovery: the conservative approach — strictly following the most restrictive interpretation of every guideline — often produces worse outcomes than a more creative approach would.

Programs designed to minimize compliance risk tend to be rigid, slow, and poorly suited to the actual needs of the community. They check every regulatory box but leave families waiting longer for help that doesn’t quite address their situation.

Meanwhile, the grantees willing to explore their options and engage HUD on flexibility end up with programs that move faster, serve more people effectively, and still maintain compliance — because HUD agreed to the approach.

The safest path isn’t always the narrowest one. Sometimes the responsible thing is to push for the approach that actually works and make the case for why it should be allowed.

Know Your Options Before You Decide

If you’re working with CDBG-DR or other federal disaster recovery funding, take the time to understand the full range of what’s possible before you lock in your program designs. Read the regulations carefully — but read them as a starting point, not a ceiling. Talk to HUD. Talk to other grantees who’ve navigated similar issues.

The guidelines are there to ensure accountability and effective use of public funds. They’re not there to force a one-size-fits-all recovery. Know the difference, and your programs will be better for it.