Revolving loan funds

(a) In general Chapter I of the National Flood Insurance Act of 1968 (42 U.S.C. 4011 et seq.) is amended by adding at the end the following: 1326. State or Tribal government revolving loan funds for flood mitigation (a) Definitions In this section: (1) Community rating system The term Community Rating System means the community rating system program carried out under section 1315(b). (2) Intended use plan The term intended use plan means a plan prepared under subsection (d)(1). (3) Low-income geographic area The term low-income geographic area means an area described in paragraph (1) or (2) of section 301(a) of the Public Works and Economic Development Act of 1965 (42 U.S.C. 3161(a)). (4) Low-income homeowner The term low-income homeowner means the owner of a primary residence, the household income of which in a taxable year is not more than 80 percent of the median income for the area in which the residence is located. (5) Participating entity The term participating entity means a State or Tribal government that— (A) has entered into an agreement under subsection (b)(1); and (B) agrees to comply with the requirements of this section. (6) Pre-FIRM building The term pre-FIRM building means a building for which construction or substantial improvement occurred before the later of— (A) December 31, 1974; or (B) the effective date of the rate map published by the Administrator under section 1360 for the area in which the building is located. (7) State or Tribal government loan fund The term State or Tribal government loan fund means a flood mitigation assistance revolving loan fund established by a State or Tribal government under this section. (8) Tribal government The term Tribal government means the recognized government of an Indian tribe, or the governing body of an Alaska Native regional or village corporation, that has been determined eligible to receive services from the Bureau of Indian Affairs. (b) General authority (1) In general The Administrator may enter into an agreement with a State or Tribal government to provide a capitalization grant for the State or Tribal government to establish a revolving fund that will provide funding assistance to help homeowners, businesses, nonprofit organizations, and communities reduce flood risk in order to decrease— (A) the loss of life and property; (B) the cost of flood insurance; and (C) Federal disaster payments. (2) Timing of deposit and agreements for distribution of funds (A) In general Not later than the last day of the fiscal year following the fiscal year in which a capitalization grant is made to a participating entity under paragraph (1), the participating entity shall— (i) deposit the grant in the State or Tribal government loan fund of the participating entity; and (ii) enter into 1 or more binding agreements that provide for the participating entity to distribute the grant funds for purposes authorized under subsection (c) such that— (I) in the case of the initial grant made to a participating entity under this section, not less than 75 percent of the amount of the grant shall be distributed before the end of the 2-year period beginning on the date on which the funds are deposited in the State or Tribal government loan fund of the participating entity; and (II) in the case of any subsequent grant made to a participating entity under this section, not less than 90 percent of the amount of the grant shall be distributed before the end of the 1-year period beginning on the date on which the funds are deposited in the State or Tribal government loan fund of the participating entity. (B) Noncompliance Except as provided in subparagraph (C), if a participating entity does not comply with subparagraph (A) with respect to a grant, the Administrator shall reallocate the grant in accordance with paragraph (3)(B). (C) Exception The Administrator may not reallocate any funds under subparagraph (B) to a participating entity that violated subparagraph (A) with respect to a grant made during the same fiscal year in which the funds to be reallocated were originally made available. (3) Allocation (A) In general The Administrator shall allocate amounts made available to carry out this section to participating entities— (i) for the participating entities to deposit in the State or Tribal government loan fund established by the participating entity; and (ii) except as provided in paragraph (6), in accordance with the requirements described in subparagraph (B). (B) Requirements The requirements described in this subparagraph are as follows: (i) Fifty percent of the total amount made available under subparagraph (A) shall be allocated so that each participating entity receives the percentage amount that is obtained by dividing the number of properties that were insured under the national flood insurance program in that State or Tribal government jurisdiction, as applicable, in the fiscal year preceding the fiscal year in which the amount is allocated by the total number of properties that were insured under the national flood insurance program in the fiscal year preceding the fiscal year in which the amount is allocated. (ii) Fifty percent of the total amount made available under subparagraph (A) shall be allocated so that each participating entity receives a percentage of funds that is equal to the product obtained under clause (iii)(IV) with respect to that participating entity after following the procedures described in clause (iii). (iii) The procedures described in this clause are as follows: (I) Divide the total amount collected in premiums for properties insured under the national flood insurance program in each participating entity during the previous fiscal year by the number of properties insured under the national flood insurance program in that State or Tribal government jurisdiction, as applicable, for that fiscal year. (II) Add together each quotient obtained under subclause (I). (III) For each participating entity, divide the quotient obtained under subclause (I) with respect to that State or Tribal government jurisdiction, as applicable, by the sum obtained under subclause (II). (IV) For each participating entity, multiply the amount that is 50 percent of the total amount made available under subparagraph (A) by the quotient obtained under subclause (III). (iv) Except as provided in paragraph (5), in a fiscal year— (I) a participating entity may not receive more than 15 percent of the total amount that is made available under subparagraph (A) in that fiscal year; and (II) if a participating entity, based on the requirements under clauses (i) through (iii), would, but for the limitation under subclause (I) of this clause, receive an amount that is greater than the amount that the State or Tribal government jurisdiction, as applicable, is authorized to receive under that subclause, the difference between the authorized amount and the amount otherwise due to the State or Tribal government jurisdiction, as applicable, under clauses (i) through (iii) shall be allocated to other participating entities— (aa) that, in that fiscal year, have not received an amount under subparagraph (A) that is more than the authorized amount under subclause (I) of this clause; and (bb) by using the requirements under clauses (i) through (iii), except that a participating entity may receive an allocation under this subclause only if the allocation does not result in the State or Tribal government jurisdiction, as applicable, receiving a total amount for the fiscal year under subparagraph (A) that is greater than the authorized amount under subclause (I). (4) No revolving fund required (A) In general Notwithstanding any other provision of this section, and subject to subparagraph (B), a participating entity that receives less than $4,000,000 under paragraph (3)(B) in a fiscal year may distribute the funds directly in the form of grants or technical assistance for a purpose described in subsection (c)(2), without regard to whether the participating entity has established a State or Tribal government loan fund. (B) Matching A participating entity that exercises the authority under subparagraph (A) in a fiscal year shall provide matching funds from non-Federal sources in an amount that is equal to 25 percent of the amount that the participating entity receives under paragraph (3)(B) in that fiscal year for purposes described in subparagraph (A). (5) Allocation of remaining funds After allocating amounts made available to carry out this section for a fiscal year in accordance with paragraph (3), the Administrator shall allocate any remaining amounts made available for that fiscal year to participating entities, using the procedures described in clauses (i) through (iii) of paragraph (3)(B). (6) Reservation of funds The Administrator shall reserve not more than 1.5 percent of the amount made available to carry out this section in a fiscal year— (A) for administrative costs incurred by the Federal Emergency Management Agency in carrying out this section; (B) to provide technical assistance to recipients of grants under this section; and (C) to enter into grant agreements with insular areas, with the grant funds to be distributed— (i) according to criteria established by the Administrator; and (ii) for a purpose described in subsection (c)(2). (c) Use of funds (1) In general Amounts deposited in a State or Tribal government loan fund, including repayments of loans made from the fund and interest earned on the amounts in the fund, shall be used— (A) consistent with paragraph (2) and subsection (g), to provide financial assistance for— (i) homeowners, businesses, and nonprofit organizations that are eligible to participate in the national flood insurance program; and (ii) any local government that participates in the national flood insurance program; (B) as a source of revenue and security for leveraged loans, the proceeds of which shall be deposited in the State or Tribal government loan fund; or (C) for the sale of bonds as security for payment of the principal and interest on revenue or general obligation bonds issued by the participating entity to provide matching funds under subsection (f), if the proceeds from the sale of the bonds are deposited in the State or Tribal government loan fund. (2) Purposes A recipient of financial assistance provided through amounts from a State or Tribal government loan fund— (A) shall use the amounts to reduce— (i) flood risk; or (ii) potential claims for losses covered under the national flood insurance program; (B) shall use the amounts in a cost-effective manner under requirements established by the participating entity, which may require an applicant for financial assistance to submit any information that the participating entity considers relevant or necessary before the date on which the applicant receives the assistance; (C) shall use the amounts for projects that— (i) meet design and construction standards established by the Administrator; (ii) are located in communities that— (I) participate in the national flood insurance program; and (II) have developed a community flood risk mitigation plan that has been approved by the Administrator under section 1366; (iii) address— (I) a repetitive loss structure or a severe repetitive loss property; or (II) flood risk in the 500-year floodplain, areas of residual flood risk, or other areas of potential flood risk, as identified by the Administrator; and (iv) address current risk and anticipate future risk, such as sea-level rise, and flood risk resulting from wildfire; (D) may use the amounts— (i) for projects relating to— (I) structural elevation; (II) floodproofing; (III) the relocation or removal of buildings from the 100-year floodplain or other areas of flood risk, including the acquisition of properties for such a purpose; (IV) environmental restoration activities that directly reduce flood risk, including green infrastructure; (V) any eligible activity described in subparagraphs (A) through (G) of section 1366(c)(3); or (VI) other activities determined appropriate by the Administrator; (ii) with respect to a project described in clause (i), only for expenditures directly related to a project described in that clause, including expenditures for planning, design, and associated pre-construction activities; (iii) to acquire, for the purposes of permanent protection, land, buildings, or a conservation easement from a willing seller or grantor, provided that— (I) the use of the land will be committed in perpetuity, with assurances from the recipient, that the land will only be used for open spaces, recreational use, or wetland management practices; and (II) no new structure will be erected on the property acquired other than— (aa) a public facility that is open on all sides and functionally related to a designated open space; (bb) a restroom; or (cc) a structure that the Administrator approves in writing before the commencement of a construction of the structure; and (iv) the recipient may make no subsequent application for disaster assistance for any purpose and no such assistance will be provided to the applicant from any Federal source; (E) may not use the amounts— (i) to construct buildings or expand existing buildings, unless the activity is for the purpose of flood mitigation; (ii) to improve any structure, unless the recipient has obtained flood insurance coverage, which shall be maintained for the useful life of the structure, in an amount that is not less than the lesser of— (I) the eligible project costs with respect to the structure; and (II) the maximum insurable limit for the structure under the national flood insurance program coverage for the structure; (iii) to improve a residential property with an appraised value that is not less than 125 percent of the limitation on the maximum original principal obligation of a conventional mortgage that may be purchased by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation in the area in which the property is located, as established under section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) and section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)); (iv) for the direct benefit of a homeowner if the annual household adjusted gross income of the homeowner during the previous fiscal year was not less than $200,000, as annually adjusted by the Administrator to reflect changes in the Consumer Price Index for All Urban Consumers, as published by the Bureau of Labor Statistics of the Department of Labor and rounded to the nearest $25; or (v) to acquire real property or an interest in real property unless the property is purchased from a willing seller; and (F) to the maximum extent practicable, shall, in using those amounts, give priority to projects that assist low-income homeowners and low-income geographical areas. (d) Intended use plans (1) In general After providing the opportunity for public review and comment, each participating entity shall annually prepare a plan that identifies, for the year following the date of issuance of the intended use plan, the intended uses of the amounts available in the State or Tribal government loan fund of the participating entity. (2) Consultation during preparation Each participating entity, in preparing an intended use plan, shall ensure that the State or Tribal government agency with primary responsibility for floodplain management— (A) provides oversight with respect to the preparation of the intended use plan; and (B) consults with any other appropriate State or Tribal government agency, including agencies responsible for coastal and environmental management. (3) Contents A participating entity shall, in each intended use plan— (A) include— (i) an explanation of the mitigation and resiliency benefits the participating entity intends to achieve, including by— (I) reducing future damage and loss associated with flooding; (II) reducing the number of severe repetitive loss properties and repetitive loss structures in the State or Tribal government jurisdiction, as applicable; (III) decreasing the number of flood insurance claims in the State or Tribal government jurisdiction, as applicable; and (IV) increasing the rating under the Community Rating System for communities in the State or Tribal government jurisdiction, as applicable; (ii) information with respect to the availability of, and the application process for receiving, financial assistance from the State or Tribal government loan fund of the participating entity; (iii) the criteria and methods established for the distribution of amounts from the State or Tribal government loan fund of the participating entity; (iv) the amount of financial assistance that the participating entity anticipates providing to— (I) local government projects; and (II) projects for homeowners, business, or nonprofit organizations; (v) the expected terms of the assistance provided under clause (iv); and (vi) a description of the financial status of the State or Tribal government loan fund and the short-term and long-term goals of the State or Tribal government loan fund; and (B) provide, to the maximum extent practicable, that priority for the use of amounts from the State or Tribal government loan fund shall be given to projects that— (i) address severe repetitive loss properties and repetitive loss structures; (ii) assist low-income homeowners and low-income geographic areas; and (iii) address flood risk for pre-FIRM buildings. (4) Publication Each participating entity shall publish and periodically update a list of all projects receiving funding from the State or Tribal government loan fund of the participating entity, which shall include identification of— (A) the community in which the project is located; (B) the type and amount of assistance provided for each project; and (C) the expected funding schedule and date of completion of each project. (e) Fund management Amounts in a State or Tribal government loan fund shall— (1) remain available for providing financial assistance under this section until distributed; (2) if the amounts are not required for immediate distribution or expenditure, be invested in interest-bearing obligations; and (3) except as provided in subsection (i), include only— (A) amounts received from capitalization grants made under this section; (B) repayments of loans made from the fund; and (C) interest earned on amounts in the fund. (f) Matching funds (1) Full grant On or before the date on which a participating entity receives a capitalization grant, the participating shall deposit into the State or Tribal government loan fund of the participating entity, in addition to the amount of the capitalization grant, an amount from non-Federal sources that is not less than 20 percent of the total amount of the capitalization grant. (2) Reduced grant If, with respect to a capitalization grant, a participating entity deposits in the State or Tribal government loan fund of the participating entity an amount from non-Federal sources that is less than 20 percent of the total amount of the capitalization grant that the participating entity would otherwise receive, the Administrator shall— (A) reduce the amount of the capitalization grant received by the participating entity to the amount that is 5 times the amount so deposited; and (B) in accordance with subsection (b)(5), allocate the difference between the amount that the participating entity would have received if the participating entity had complied with paragraph (1) and the amount of the reduced grant that the participating entity receives under subparagraph (A). (g) Types of assistance Unless otherwise prohibited by law of a participating entity, the participating entity may use the amounts deposited into a State or Tribal government loan fund under this section only— (1) to make a loan, on the condition that— (A) the interest rate for the loan is not more than the market interest rate; (B) the recipient of the loan will begin making principal and interest payments on the loan not later than 1 year after the date on which the project for which the loan was made is completed; (C) the loan will be fully amortized not later than 20 years after the date on which the project for which the loan was made is completed, except that, in the case of a loan made for a project in a low-income geographic area or to a low-income homeowner, the State may provide a longer amortization period for the loan if that longer period— (i) ends on a date that is not later than 30 years after the date on which the project is completed; and (ii) is not longer than the expected design life of the project; (D) the recipient of the loan demonstrates, based on verified and documented information that, as of the date on which the loan is made, the recipient has a reasonable ability to repay the loan, according to the terms of the loan, except that this subparagraph may not be construed to authorize any reduction or limitation in efforts to comply with the requirements of subsection (c)(2)(F); and (E) payments of principal and interest with respect to the loan will be deposited into the State or Tribal government loan fund; (2) to buy or refinance the debt obligation of a local government at an interest rate that is not more than the market interest rate; (3) to guarantee, or purchase insurance for, a local obligation, the proceeds of which finance a project eligible for assistance under this section, if the guarantee or purchase, as applicable, would— (A) improve credit market access; or (B) reduce the interest rate with respect to the obligation; (4) as a source of revenue or as security for the payment of principal and interest on revenue or general obligation bonds issued by the participating entity if the proceeds of the sale of the bonds will be deposited into the State or Tribal government loan fund; or (5) to earn interest on those amounts. (h) Assistance for low-Income homeowners and low-Income geographic areas (1) In general Notwithstanding any other provision of this section, if a participating entity uses amounts from a State or Tribal government loan fund to provide financial assistance under subsection (c) in a low-income geographic area or to a low-income homeowner, the participating entity may provide additional subsidization to the recipient of the assistance, including forgiveness of the principal of a loan. (2) Limitation For each fiscal year, the total amount of additional subsidization provided by a participating entity under paragraph (1) may not exceed 30 percent of the amount of the capitalization grant allocated to the participating entity for that fiscal year. (i) Administration of fund (1) In general A participating entity may combine the financial administration of a State or Tribal government loan fund with the financial administration of any other revolving fund established by the participating entity if— (A) combining the administration of the funds would— (i) be convenient and avoid administrative costs; and (ii) not violate the law of the participating entity; and (B) the Administrator determines that— (i) amounts obtained from a grant made under this section, amounts obtained from the repayment of a loan made from a State or Tribal government loan fund, and interest earned on amounts in a State or Tribal government loan fund will be— (I) accounted for separately from amounts from other revolving funds; and (II) used only for purposes authorized under this section; and (ii) after consulting with the appropriate State or Tribal government agencies, the authority to establish assistance priorities and carry out oversight and related activities, other than financial administration, with respect to flood assistance remains with the State or Tribal government agency with primary responsibility for floodplain management. (2) Administrative and technical costs (A) In general For each fiscal year, a participating entity may use the amount described in subparagraph (B) to— (i) pay the reasonable costs of administration of the programs under this section, including the recovery of reasonable costs incurred in establishing a State or Tribal government loan fund; (ii) provide appropriate oversight of projects authorized under this section; and (iii) provide technical assistance and outreach to recipients in the State or Tribal government jurisdiction of amounts under this section, including with respect to updating hazard mitigation plans and participating in the Community Rating System, in an amount that is not more than 4 percent of the funds made available to the State or Tribal government jurisdiction under this section. (B) Description The amount described in this subparagraph is an amount equal to the sum of— (i) any fees collected by a participating entity to recover the costs described in subparagraph (A)(i), regardless of the source; and (ii) the greatest of— (I) $400,000; (II) 0.2 percent of the value of the State or Tribal government loan fund of a participating entity, as of the date on which the valuation is made; and (III) an amount equal to 7 percent of all grant awards made to a participating entity for the State or Tribal government loan fund of the participating entity under this section for the fiscal year. (3) Audit and report (A) Audit requirement Not less frequently than biennially, each participating entity shall conduct an audit of the State or Tribal government loan fund of the participating entity. (B) Report Each participating entity shall submit to the Administrator a biennial report regarding the activities of the participating entity under this section during the period covered by the report, including— (i) the result of any audit conducted by the participating entity under subparagraph (A); and (ii) a review of the effectiveness of the State or Tribal government loan fund of the participating entity with respect to— (I) the intended use plans of the participating entity; and (II) meeting the objectives described in subsection (b)(1). (4) Oversight In conducting oversight with respect to State or Tribal government loan funds established under this section, the Administrator— (A) shall— (i) periodically audit the funds in accordance with procedures established by the Comptroller General of the United States; and (ii) not less frequently than once every 4 years, review each State or Tribal government loan fund to determine the effectiveness of the fund in reducing flood risk; and (B) may, at any time— (i) make recommendations to a participating entity with respect to the administration of the State or Tribal government loan fund of the participating entity; or (ii) require specific changes with respect to a State or Tribal government loan fund of the participating entity in order to improve the effectiveness of the fund. (j) Liability protections The Federal Emergency Management Agency shall not be liable for any claim based on the exercise or performance of, or the failure to exercise or perform, a discretionary function or duty by the Agency, or an employee of the Agency, in carrying out this section. (k) Regulations The Administrator shall promulgate such guidance or regulations as may be necessary to carry out this section, including guidance or regulations that— (1) ensure that each participating entity to which funds are allocated under this section uses the funds as efficiently as possible; (2) reduce, to the maximum extent practicable, waste, fraud, and abuse with respect to the implementation of this section; and (3) require any party that receives funds directly or indirectly under this section, including a participating entity and a recipient of amounts from a State or Tribal government loan fund, to use procedures with respect to the management of the funds that conform to generally accepted accounting standards. (l) Authorization of appropriations There are authorized to be appropriated such sums as may be necessary to carry out this section for fiscal years 2024 through 2033.. (b) Consideration of mitigation measures funded by State loan funds in flood insurance premium rates (1) Estimated rates Section 1307(a)(1)(A)(ii) of the National Flood Insurance Act of 1968 (42 U.S.C. 4014(a)(1)(A)(ii)) is amended by striking and similar measures and inserting similar measures, any activities funded through amounts from a State or Tribal government loan fund established under section 1327. (2) Chargeable rates Section 1308(b)(1) of the National Flood Insurance Act of 1968 (42 U.S.C. 4015(b)(1)) is amended by striking and similar measures and inserting similar measures, any activities funded through amounts from a State or Tribal government loan fund established under section 1327.