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1 1 (April 24, 2019)

handle is hein.crs/govzlg0001 and id is 1 raw text is: Congressional ~ Research Service Community Disaster Loans: Policy Issues and Potential Options for the 116th Congress April 24, 2019 The Community Disaster Loan (CDL) program was developed to help local governments manage tax and other revenue shortages following a disaster. Administered by the Federal Emergency Management Agency (FEMA), CDLs provide financial liquidity to local governments through a structured loan that may be converted to grants when certain financial conditions are met. CDLs are codified in Section 417 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. §5184, as amended). Modified non-traditional CDL programs were developed in response to Hurricanes Rita and Katrina in 2005, and CDL-type programs for Puerto Rico and the U.S. Virgin Islands (USVI) were developed following 2017's Hurricanes Harvey, Irma, and Maria. This Insight provides an overview of traditional and non-traditional CDLs and the policy issues they may raise in the 116th Congress, particularly with regard to CDL-type instruments developed for Puerto Rico and USVI. The CDL program may be of interest to Congress given observed increases in frequency and severity of disaster events and apparent congressional interest in oversight issues related to federal disaster response in Puerto Rico and USVI. Overview of Traditional CDLs CDLs were first authorized in the Disaster Relief Act of 1974 (P.L. 93-288) but are defined and established in the Stafford Act (which amended the Disaster Relief Act) to help local governments manage acute tax and other revenue loss after a disaster, which could inhibit their ability to adequately serve their communities during recovery. To qualify for a traditional CDL, an applicant must be located in a presidentially declared disaster area; show substantial loss (greater than 50%) of tax and other revenues; not be in arrears on any other previous CDL loans; and be permitted to take federal loans under their respective state law. CDLs are statutorily capped at $5 million (P.L. 106-390); and are structured around underwriting criteria that account for estimated revenue losses, the local government's annual operating budget, and a disaster's economic effects. CDLs are five-year loans, extendable to 10 years at FEMA's discretion (44 C.F.R §206.367(c)), with interest rates determined by the Treasury Secretary. FEMA also issues guidance on how a CDL can be canceled, which involves submitting evidence of disaster-related operating deficits and associated revenue analyses to FEMA. Congressional Research Service https://crsreports.congress.gov IN11106 CRS INSIGHT Prepared for Members and Committees of Congress

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