44 CFR Part 206, Sub Part K

§ 206.349

44 CFR Ch. I (10–1–11 Edition)

manner. If it was not, an appropriate
extension for response will be given.
Otherwise, he or she may assume DOI
concurrence and proceed with approval
of the proposed action.
(c) For those cases in which the regional DOI representative believes that
the proposed action should not be
taken and the matter cannot be resolved at the regional level, the FEMA
Regional Administrator will submit
the issue to the Director, Office of Environmental Planning and Historic
Preservation, Mitigation Directorate.
In coordination with the Office of Chief
Counsel (OCC), consultation will be accomplished at the FEMA National Office with the DOI consultation officer.
After this consultation, the Director,
Office of Environmental Planning and
Historic Preservation, Mitigation Directorate, determines whether or not
to approve the proposed action.
§ 206.349 Consistency determinations.
Section 6(a)(6) of CBRA requires that
certain actions be consistent with the
purposes of that statute if the actions
are to be carried out on a unit of the
CBRA. The purpose of CBRA, as stated
in section 2(b) of that statute, is to
minimize the loss of human life, wasteful expenditure of Federal revenues,
and the damage to fish, wildlife, and
other natural resources associated with
the coastal barriers along with Atlantic and Gulf coasts. For those actions
where a consistency determination is
required, the FEMA Regional Administrator shall evaluate the action according to the following procedures, and
the evaluation shall be included in the
written request for consultation with
DOI.
(a) Impact identification. FEMA shall
identify impacts of the following types
that would result from the proposed action:
(1) Risks to human life;
(2) Risks of damage to the facility
being repaired or replaced;
(3) Risks of damage to other facilities;
(4) Risks of damage to fish, wildlife,
and other natural resources;
(5) Condition of existing development
served by the facility and the degree to
which its redevelopment would be encouraged; and

(6) Encouragement of new development.
(b) Mitigation. FEMA shall modify actions by means of practicable mitigation measures to minimize adverse effects of the types listed in paragraph
(a) of this section.
(c) Conservation. FEMA shall identify
practicable measures that can be incorporated into the proposed action and
will conserve natural and wildlife resources.
(d) Finding. For those actions required to be consistent with the purposes of CBRA, the above evaluation
must result in a finding of consistency
with CBRA by the Regional Administrator before funding may be approved
for that action.
§§ 206.350–206.359

[Reserved]

Subpart K—Community Disaster
Loans
SOURCE: 55 FR 2314, Jan. 23, 1990, unless
otherwise noted.

§ 206.360

Purpose.

This subpart provides policies and
procedures for local governments and
State and Federal officials concerning
the Community Disaster Loan program
under section 417 of the Stafford Act.
Sections 206.360 through 206.367 of the
subpart do not implement the Community Disaster Loan Act of 2005. (see
§ 206.370).
[70 FR 60446, Oct. 18, 2005]

§ 206.361 Loan program.
(a) General. The Assistant Administrator for the Disaster Assistance Directorate may make a Community Disaster Loan to any local government
which has suffered a substantial loss of
tax and other revenues as a result of a
major disaster and which demonstrates
a need for Federal financial assistance
in order to perform its governmental
functions.
(b) Amount of loan. The amount of the
loan is based upon need, not to exceed
25 percent of the operating budget of
the local government for the fiscal
year in which the disaster occurs, but
shall not exceed $5 million. The term
fiscal year as used in this subpart

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Federal Emergency Management Agency, DHS
means the local government’s fiscal
year.
(c) Interest rate. The interest rate is
the rate for five year maturities as determined by the Secretary of the
Treasury in effect on the date that the
Promissory Note is executed. This rate
is from the monthly Treasury schedule
of certified interest rates which takes
into consideration the current average
yields on outstanding marketable obligations of the United States, adjusted
to the nearest 1⁄8 percent.
(d) Time limitation. The Assistant Administrator for the Disaster Assistance
Directorate may approve a loan in either the fiscal year in which the disaster occurred or the fiscal year immediately following that year. Only one
loan may be approved under section
417(a) for any local government as the
result of a single disaster.
(e) Term of loan. The term of the loan
is 5 years, unless otherwise extended by
the Assistant Administrator for the
Disaster Assistance Directorate. The
Assistant Administrator for the Disaster Assistance Directorate may consider requests for an extensions of
loans based on the local government’s
financial condition. The total term of
any loan under section 417(a) normally
may not exceed 10 years from the date
the Promissory Note was executed.
However,
when
extenuating
circumstances exist and the Community
Disaster Loan recipient demonstrates
an inability to repay the loan within
the initial 10 years, but agrees to repay
such loan over an extended period of
time, additional time may be provided
for loan repayment. (See § 206.367(c).)
(f) Use of loan funds. The local government shall use the loaned funds to
carry on existing local government
functions of a municipal operation
character or to expand such functions
to meet disaster-related needs. The
funds shall not be used to finance capital improvements nor the repair or
restoration of damaged public facilities. Neither the loan nor any cancelled
portion of the loans may be used as the
nonFederal share of any Federal program, including those under the Act.
(g) Cancellation. The Assistant Administrator for the Disaster Assistance
Directorate shall cancel repayment of
all or part of a Community Disaster

§ 206.362

Loan to the extent that he/she determines that revenues of the local government during the 3 fiscal years following the disaster are insufficient to
meet the operating budget of that local
government because of disaster-related
revenue losses and additional unreimbursed disaster-related municipal operating expenses.
(h) Relation to other assistance. Any
community disaster loans including
cancellations made under this subpart
shall not reduce or otherwise affect
any commitments, grants, or other assistance under the Act or these regulations.
[55 FR 2314, Jan. 23, 1990, as amended at 66
FR 22445, May 4, 2001]

§ 206.362 Responsibilities.
(a) The local government shall submit the financial information required
by FEMA in the application for a Community Disaster Loan and in the application for loan cancellation, if submitted, and comply with the assurances on the application, the terms and
conditions of the Promissory Note, and
these regulations. The local government shall send all loan application,
loan administration, loan cancellation,
and loan settlement correspondence
through the GAR and the FEMA Regional Office to the FEMA Assistant
Administrator for the Disaster Assistance Directorate.
(b) The GAR shall certify on the loan
application that the local government
can legally assume the proposed indebtedness and that any proceeds will
be used and accounted for in compliance with the FEMA-State Agreement
for the major disaster. States are encouraged to take appropriate pre-disaster action to resolve any existing
State impediments which would preclude a local government from incurring the increased indebtedness associated with a loan in order to avoid protracted delays in processing loan application requests in major disasters or
emergencies.
(c) The Regional Administrator or
designee shall review each loan application or loan cancellation request received from a local government to ensure that it contains the required documents and transmit the application to
the Assistant Administrator for the

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§ 206.363

44 CFR Ch. I (10–1–11 Edition)

Disaster Assistance Directorate. He/she
may submit appropriate recommendations to the Assistant Administrator
for the Disaster Assistance Directorate.
(d) The Assistant Administrator for
the Disaster Assistance Directorate, or
a designee, shall execute a Promissory
Note with the local government, and
the FEMA Finance Center, shall administer the loan until repayment or
cancellation is completed and the
Promissory Note is discharged.
(e) The Assistant Administrator for
the Disaster Assistance Directorate or
designee shall approve or disapprove
each loan request, taking into consideration the information provided in the
local government’s request and the recommendations of the GAR and the Regional Administrator. The Assistant
Administrator for the Disaster Assistance Directorate or designee shall approve or disapprove a request for loan
cancellation in accordance with the
criteria for cancellation in these regulations.
(f) The Chief Financial Officer shall
establish and maintain a financial account for each outstanding loan and
disburse funds against the Promissory
Note.
§ 206.363

Eligibility criteria.

(a) Local government. (1) The local
government must be located within the
area designated by the Assistant Administrator for the Disaster Assistance
Directorate as eligible for assistance
under a major disaster declaration. In
addition, State law must not prohibit
the local government from incurring
the indebtedness resulting from a Federal loan.
(2) Criteria considered by FEMA in
determining the eligibility of a local
government for a Community Disaster
Loan include the loss of tax and other
revenues as result of a major disaster,
a demonstrated need for financial assistance in order to perform its governmental functions, the maintenance of
an annual operating budget, and the responsibility to provide essential municipal operating services to the community. Eligibility for other assistance
under the Act does not, by itself, establish entitlement to such a loan.

(b) Loan eligibility—(1) General. To be
eligible, the local government must
show that it may suffer or has suffered
a substantial loss of tax and other revenues as a result of a major disaster or
emergency, must demonstrate a need
for financial assistance in order to perform its governmental functions, and
must not be in arrears with respect to
any payments due on previous loans.
Loan eligibility is based on the financial condition of the local government
and a review of financial information
and supporting documentation accompanying the application.
(2) Substantial loss of tax and other revenues. The fiscal year of the disaster or
the succeeding fiscal year is the base
period for determining whether a local
government may suffer or has suffered
a substantial loss of revenue. Criteria
used in determining whether a local
government has or may suffer a substantial loss of tax and other revenue
include the following disaster-related
factors:
(i) Whether the disaster caused a
large enough reduction in cash receipts
from normal revenue sources, excluding borrowing, which affects significantly and adversely the level and/or
categories of essential municipal services provided prior to the disaster;
(ii) Whether the disaster caused a
revenue loss of over 5 percent of total
revenue estimated for the fiscal year in
which the disaster occurred or for the
succeeding fiscal year;
(3) Demonstrated need for financial assistance. The local government must
demonstrate a need for financial assistance in order to perform its governmental functions. The criteria used in
making this determination include the
following:
(i) Whether there are sufficient funds
to meet current fiscal year operating
requirements;
(ii) Whether there is availability of
cash or other liquid assets from the
prior fiscal year;
(iii) Current financial condition considering projected expenditures for
governmental services and availability
of other financial resources;
(iv) Ability to obtain financial assistance or needed revenue from State and
other Federal agencies for direct program expenditures;

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Federal Emergency Management Agency, DHS
(v) Debt ratio (relationship of annual
receipts to debt service);
(vi) Ability to obtain financial assistance or needed revenue from State and
other Federal agencies for direct program expenditures;
(vii) Displacement of revenue-producing business due to property destruction;
(viii) Necessity to reduce or eliminate essential municipal services; and
(ix) Danger of municipal insolvency.
[55 FR 2314, Jan. 23, 1990, as amended at 66
FR 22445, May 4, 2001]

§ 206.364 Loan application.
(a) Application. (1) The local government shall submit an application for a
Community Disaster Loan through the
GAR. The loan must be justified on the
basis of need and shall be based on the
actual and projected expenses, as a result of the disaster, for the fiscal year
in which the disaster occurred and for
the 3 succeeding fiscal years. The loan
application shall be prepared by the affected local government and be approved by the GAR. FEMA has determined that a local government, in applying for a loan as a result of having
suffered a substantial loss of tax and
other revenue as a result of a major
disaster, is not required to first seek
credit elsewhere (see § 206.367(c)).
(2) The State exercises administrative authority over the local government’s application. The State’s review
should include a determination that
the applicant is legally qualified, under
State law, to assume the proposed
debt, and may include an overall review for accuracy for the submission.
The Governor’s Authorized Representative may request the Regional Administrator to waive the requirement for a
State review if an otherwise eligible
applicant is not subject to State administration authority and the State
cannot legally participate in the loan
application process.
(b) Financial requirements. (1) The
loan application shall be developed
from financial information contained
in the local government’s annual operating budget (see § 206.364(b)(2)) and
shall include a Summary of Revenue
Loss and Unreimbursed Disaster-Related Expenses, a Statement of the Applicant’s Operating Results—Cash Posi-

§ 206.364

tion, a Debt History, Tax Assessment
Data, Financial Projections, Other Information, a Certification, and the Assurances listed on the application.
(i) Copies of the local government’s
financial reports (Revenue and Expense
and Balance Sheet) for the 3 fiscal
years immediately prior to the fiscal
year of the disaster and the applicant’s
most recent financial statement must
accompany the application. The local
government’s financial reports to be
submitted are those annual (or interim) consolidated and/or individual
official annual financial presentations
for the General Fund and all other
funds maintained by the local government.
(ii) Each application for a Community Disaster Loan must also include:
(A) A statement by the local government identifying each fund (i.e. General Fund, etc.) which is included as its
annual Operating budget, and
(B) A copy of the pertinent State
statutes, ordinance, or regulations
which prescribe the local government’s
system of budgeting, accounting and financial reporting, including a description of each fund account.
(2) Operating budget. For loan application purposes, the operating budget is
that document or documents approved
by an appropriating body, which contains an estimate of proposed expenditures, other than capital outlays for
fixed assets for a stated period of time,
and the proposed means of financing
the expenditures. For loan cancellation
purposes, FEMA interprets the term
‘‘operating budget’’ to mean actual
revenues and expenditures of the local
government as published in the official
financial statements of the local government.
(3) Operating budget increases. Budget
increases due to increases in the level
of, or additions to, municipal services
not rendered at the time of the disaster
or not directly related to the disaster
shall be identified.
(4) Revenue and assessment information. The applicant shall provide information concerning its method of tax
assessment including assessment dates
and the dates payments are due. Tax
revenues assessed but not collected, or

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§ 206.365

44 CFR Ch. I (10–1–11 Edition)

other revenues which the local government chooses to forgive, stay, or otherwise not exercise the right to collect,
are not a legitimate revenue loss for
purposes of evaluating the loan application.
(5) Estimated disaster-related expense.
Unreimbursed
disaster-related
expenses of a municipal operating character should be estimated. These are
discussed in § 206.366(b).
(c) Federal review. (1) The Assistant
Administrator for the Disaster Assistance Directorate or designee shall approve a community disaster loan to the
extent it is determined that the local
government has suffered a substantial
loss of tax and other revenues and demonstrates a need for financial assistance to perform its governmental function as the result of the disaster.
(2) Resubmission of application. If a
loan application is disapproved, in
whole or in part, by the Assistant Administrator for the Disaster Assistance
Directorate because of inadequacy of
information, a revised application may
be resubmitted by the local government within sixty days of the date of
the disapproval. Decision by the Assistant Administrator for the Disaster Assistance Directorate on the resubmission is final.
(d) Community disaster loan. (1) The
loan shall not exceed the lesser of:
(i) The amount of projected revenue
loss plus the projected unreimbursed
disaster-related expenses of a municipal operating character for the fiscal
year of the major disaster and the subsequent 3 fiscal years, or
(ii) 25 percent of the local government’s annual operating budget for the
fiscal year in which the disaster occurred.
(2) Promissory note. (i) Upon approval
of the loan by the Assistant Administrator for the Disaster Assistance Directorate or designee, he or she, or a
designated Loan Officer will execute a
Promissory Note with the applicant.
The Note must be co-signed by the
State (see § 206.364(d)(2)(ii)). The applicant should indicate its funding requirements on the Schedule of Loan Increments on the Note.
(ii) If the State cannot legally cosign
the Promissory Note, the local government must pledge collateral security,

acceptable to the Assistant Administrator for the Disaster Assistance Directorate, to cover the principal
amount of the Note. The pledge should
be in the form of a resolution by the
local governing body identifying the
collateral security.
[55 FR 2314, Jan. 23, 1990, as amended at 74
FR 15351, Apr. 3, 2009]

§ 206.365

Loan administration.

(a) Funding. (1) FEMA will disburse
funds to the local government when requested, generally in accordance with
the Schedule of Loan Increments in the
Promissory Note. As funds are disbursed, interest will accrue against
each disbursement.
(2) When each incremental disbursement is requested, the local government shall submit a copy of its most
recent financial report (if not submitted previously) for consideration by
FEMA in determining whether the
level and frequency of periodic payments continue to be justified. The
local government shall also provide the
latest available data on anticipated
and actual tax and other revenue collections. Desired adjustments in the
disbursement schedule shall be submitted in writing at least 10 days prior
to the proposed disbursement date in
order to ensure timely receipt of the
funds. A sinking fund should be established to amortize the debt.
(b) Financial management. (1) Each
local government with an approved
Community Disaster Loan shall establish necessary accounting records, consistent with local government’s financial management system, to account
for loan funds received and disbursed
and to provide an audit trail.
(2) FEMA auditors, State auditors,
the GAR, the Regional Administrator,
the Assistant Administrator for the
Disaster Assistance Directorate, and
the Comptroller General of the United
States or their duly authorized representatives shall, for the purpose of
audits and examination, have access to
any books, documents, papers, and
records that pertain to Federal funds,
equipments, and supplies received
under these regulations.
(c) Loan servicing. (1) The applicant
annually shall submit to FEMA copies

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Federal Emergency Management Agency, DHS
of its annual financial reports (operating statements, balance sheets, etc.)
for the fiscal year of the major disaster, and for each of the 3 subsequent
fiscal years.
(2) The Disaster Assistance Directorate, will review the loan periodically. The purpose of the reevaluation
is to determine whether projected revenue losses, disaster-related expenses,
operating budgets, and other factors
have changed sufficiently to warrant
adjustment of the scheduled disbursement of the loan proceeds.
(3) The Disaster Assistance Directorate, shall provide each loan recipient with a loan status report on a quarterly basis. The recipient will notify
FEMA of any changes of the responsible municipal official who executed
the Promissory Note.
(d) Inactive loans. If no funds have
been disbursed from the Treasury, and
if the local government does not anticipate a need for such funds, the note
may be cancelled at any time upon a
written request through the State and
Regional Office to FEMA. However,
since only one loan may be approved,
cancellation precludes submission of a
second loan application request by the
same local government for the same
disaster.
§ 206.366 Loan cancellation.
(a) Policies. (1) FEMA shall cancel repayment of all or part of a Community
Disaster Loan to the extent that the
Assistant Administrator for the Disaster Assistance Directorate determines that revenues of the local government during the full three fiscal
year period following the disaster are
insufficient, as a result of the disaster,
to meet the operating budget for the
local government, including additional
unreimbursed disaster-related expenses
for a municipal operating character.
For loan cancellation purposes, FEMA
interprets that term operating budget to
mean actual revenues and expenditures
of the local government as published in
the official financial statements of the
local government.
(2) If the tax and other revenues rates
or the tax assessment valuation of
property which was not damaged or destroyed by the disaster are reduced
during the 3 fiscal years subsequent to

§ 206.366

the major disaster, the tax and other
revenue rates and tax assessment valuation factors applicable to such property in effect at the time of the major
disaster shall be used without reduction for purposes of computing revenues received. This may result in decreasing the potential for loan cancellations.
(3) If the local government’s fiscal
year is changed during the ‘‘full 3 year
period following the disaster’’ the actual period will be modified so that the
required financial data submitted covers an inclusive 36-month period.
(4) If the local government transfers
funds from its operating funds accounts to its capital funds account,
utilizes operating funds for other than
routine maintenance purposes, or significantly
increases
expenditures
which are not disaster related, except
increases due to inflation, the annual
operating budget or operating statement expenditures will be reduced accordingly for purposes of evaluating
any request for loan cancellation.
(5) It is not the purpose of this loan
program to underwrite predisaster
budget or actual deficits of the local
government. Consequently, such deficits carried forward will reduce any
amounts otherwise eligible for loan
cancellation.
(b) Disaster-related expenses of a municipal operation character. (1) For purpose of this loan, unreimbursed expenses of a municipal operating character are those incurred for general
government purposes, such as police
and fire protection, trash collection,
collection of revenues, maintenance of
public facilities, flood and other hazard
insurance, and other expenses normally
budgeted for the general fund, as defined by the Municipal Finance Officers
Association.
(2) Disaster-related expenses do not
include expenditures associated with
debt service, any major repairs, rebuilding, replacement or reconstruction of public facilities or other capital
projects, intragovernmental services,
special assessments, and trust and
agency fund operations. Disaster expenses which are eligible for reimbursement under project applications
or other Federal programs are not eligible for loan cancellation.

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§ 206.366

44 CFR Ch. I (10–1–11 Edition)

(3) Each applicant shall maintain
records including documentation necessary to identify expenditures for unreimbursed disaster-related expenses.
Examples of such expenses include but
are not limited to:
(i) Interest paid on money borrowed
to pay amounts FEMA does not advance toward completion of approved
Project Applications.
(ii) Unreimbursed costs to local governments for providing usable sites
with utilities for mobile homes used to
meet disaster temporary housing requirements.
(iii) Unreimbursed costs required for
police and fire protection and other
community services for mobile home
parks established as the result of or for
use following a disaster.
(iv) The cost to the applicant of flood
insurance required under Public Law
93–234, as amended, and other hazard
insurance required under section 311,
Public Law 93–288, as amended, as a
condition of Federal disaster assistance
for the disaster under which the loan is
authorized.
(4) The following expenses are not
considered to be disaster-related for
Community Disaster Loan purposes:
(i) The local government’s share for
assistance provided under the Act including flexible funding under section
406(c)(1) of the Act.
(ii) Improvements related to the repair or restoration of disaster public
facilities approved on Project Applications.
(iii) Otherwise eligible costs for
which no Federal reimbursement is requested as a part of the applicant’s disaster response commitment, or cost
sharing as specified in the FEMA-State
Agreement for the disaster.
(iv) Expenses incurred by the local
government which are reimbursed on
the applicant’s project application.
(c) Cancellation application. A local
government which has drawn loan
funds from the Treasury may request
cancellation of the principal and related interest by submitting an Application for Loan Cancellation through
the Governor’s Authorized Representative to the Regional Administrator
prior to the expiration date of the loan.

(1) Financial information submitted
with the application shall include the
following:
(i) Annual Operating Budgets for the
fiscal year of the disaster and the 3
subsequent fiscal years;
(ii) Annual Financial Reports (Revenue and Expense and Balance Sheet)
for each of the above fiscal years. Such
financial records must include copies
of the local government’s annual financial reports, including operating statements balance sheets and related consolidated and individual presentations
for each fund account. In addition, the
local government must include an explanatory statement when figures in
the Application for Loan Cancellation
form differ from those in the supporting financial reports.
(iii) The following additional information concerning annual real estate
property taxes pertaining to the community for each of the above fiscal
years:
(A) The market value of the tax base
(dollars);
(B) The assessment ratio (percent);
(C) The assessed valuation (dollars);
(D) The tax levy rate (mils);
(E) Taxes levied and collected (dollars).
(iv) Audit reports for each of the
above fiscal years certifying to the validity of the Operating Statements.
The financial statements of the local
government shall be examined in accordance with generally accepted auditing standards by independent certified public accountants. The report
should not include recommendations
concerning loan cancellation or repayment.
(v) Other financial information specified in the Application for Loan Cancellation.
(2) Narrative justification. The application may include a narrative presentation to amplify the financial material accompanying the application and
to present any extenuating circumstances which the local government wants the Assistant Administrator for the Disaster Assistance Directorate to consider in rendering a decision on the cancellation request.

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Federal Emergency Management Agency, DHS
(d) Determination. (1) If, based on a review of the Application for Loan Cancellation and FEMA audit, when determined necessary, the Assistant Administrator for the Disaster Assistance Directorate determines that all or part of
the Community Disaster Loan funds
should be canceled, the principal
amount which is canceled will become
a grant, and the related interest will be
forgiven. The Assistant Administrator
for the Disaster Assistance Directorate’s determination concerning loan
cancellation will specify that any
uncancelled principal and related interest must be repaid immediately and
that, if immediate repayment will constitute a financial hardship, the local
government must submit for FEMA review and approval, a repayment schedule for settling the indebtedness on
timely basis. Such repayments must be
made to the Treasurer of the United
States and be sent to FEMA, Attention: Chief Financial Officer.
(2) A loan or cancellation of a loan
does not reduce or affect other disaster-related grants or other disaster
assistance. However, no cancellation
may be made that would result in a duplication of benefits to the applicant.
(3) The uncancelled portion of the
loan must be repaid in accordance with
§ 206.367.
(4) Appeals. If an Application for
Loan Cancellation is disapproved, in
whole or in part, by the Assistant Administrator for the Disaster Assistance
Directorate or designee, the local government may submit any additional information in support of the application
within 60 days of the date of disapproval. The decision by the Assistant
Administrator for the Disaster Assistance Directorate or designee on the
submission is final.
[55 FR 2314, Jan. 23, 1990, as amended at 74
FR 15351, Apr. 3, 2009]

§ 206.367

Loan repayment.

(a) Prepayments. The local government may make prepayments against
loan at any time without any prepayment penalty.
(b) Repayment. To the extent not otherwise cancelled, Community Disaster
Loan funds become due and payable in
accordance with the terms and condi-

§ 206.367

tions of the Promissory Note. The note
shall include the following provisions:
(1) The term of a loan made under
this program is 5 years, unless extended by the Assistant Administrator
for the Disaster Assistance Directorate. Interest will accrue on outstanding cash from the actual date of
its disbursement by the Treasury.
(2) The interest amount due will be
computed separately for each Treasury
disbursement as follows: I=P×R×T,
where I=the amount of simple interest,
P=the principal amount disbursed;
R=the interest rate of the loan; and,
T=the outstanding term in years from
the date of disbursement to date of repayment, with periods less than 1 year
computed on the basis of 365 days/year.
If any portion of the loan is cancelled,
the interest amount due will be computed on the remaining principal with
the shortest outstanding term.
(3) Each payment made against the
loan will be applied first to the interest
computed to the date of the payment,
and then to the principal. Prepayments
of scheduled installments, or any portion thereof, may be made at any time
and shall be applied to the installments
last to become due under the loan and
shall not affect the obligation of the
borrower to pay the remaining installments.
(4) The Assistant Administrator for
the Disaster Assistance Directorate
may defer payments of principal and
interest until FEMA makes its final
determination with respect to any Application for Loan Cancellation which
the borrower may submit. However, interest will continue to accrue.
(5) Any costs incurred by the Federal
Government in collecting the note
shall be added to the unpaid balance of
the loan, bear interest at the same rate
as the loan, and be immediately due
without demand.
(6) In the event of default on this
note by the borrower, the FEMA
claims collection officer will take action to recover the outstanding principal plus related interest under Federal debt collection authorities, including administrative offset against other
Federal funds due the borrower and/or
referral to the Department of Justice
for judicial enforcement and collection.

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§§ 206.368–206.369

44 CFR Ch. I (10–1–11 Edition)

(c) Additional time. In unusual circumstances involving financial hardship, the local government may request
an additional period of time beyond the
original 10 year term to repay the indebtedness. Such request may be approved by the Assistant Administrator
for the Disaster Assistance Directorate
subject to the following conditions:
(1) The local government must submit documented evidence that it has
applied for the same credit elsewhere
and that such credit is not available at
a rate equivalent to the current Treasury rate.
(2) The principal amount shall be the
original uncancelled principal plus related interest.
(3) The interest rate shall be the
Treasury rate in effect at the time the
new Promissory Note is executed but
in no case less than the original interest rate.
(4) The term of the new Promissory
Note shall be for the settlement period
requested by the local government but
not greater than 10 years from the date
the new note is executed.
§§ 206.368–206.369

[Reserved]

§ 206.370 Purpose and scope.
(a) Purpose. Sections 206.370 through
206.377 provide procedures for local governments and State and Federal officials concerning the Special Community Disaster Loans program under section 417 of the Stafford Act (42 U.S.C.
5184), the Community Disaster Loan
Act of 2005, Public Law 109–88, and the
Emergency Supplemental Appropriations Act for Defense, the Global War
on Terror, and Hurricane Recovery,
2006, Public Law 109–234.
(b) Scope. Sections 206.370 through
206.377 apply only to Special Community Disaster Loans issued under the
Community Disaster Loan Act of 2005,
Public Law 109–88, and the Emergency
Supplemental Appropriations Act for
Defense, the Global War on Terror, and
Hurricane Recovery, 2006, Public Law
109–234.
[70 FR 60446, Oct. 18, 2005, as amended at 75
FR 2817, Jan. 19, 2010]

§ 206.371 Loan program.
(a) General. The Assistant Administrator for the Disaster Assistance Di-

rectorate may make a Special Community Disaster Loan to any local government which has suffered a substantial
loss of tax and other revenues as a result of a major disaster and which demonstrates a need for Federal financial
assistance in order to provide essential
services.
(b) Amount of loan. The amount of the
loan is based upon need, not to exceed
25 percent of the operating budget of
the local government for the fiscal
year in which the disaster occurs. The
term fiscal year as used in this subpart
means the local government’s fiscal
year.
(c) Interest rate. The interest rate is
the rate for five year maturities as determined by the Secretary of the
Treasury in effect on the date that the
Promissory Note is executed. This rate
is from the monthly Treasury schedule
of certified interest rates which takes
into consideration the current average
yields on outstanding marketable obligations of the United States. If an applicant can demonstrate unusual circumstances involving financial hardship,
the Assistant Administrator for the
Disaster Assistance Directorate may
approve a rate equal to the five year
maturity rate plus 1 per centum, adjusted to the nearest 1⁄8 percent, and
further reduced by one-half.
(d) Time limitation. The Assistant Administrator for the Disaster Assistance
Directorate may approve a loan in either the fiscal year in which the disaster occurred or the fiscal year immediately following that year.
(e) Term of loan. The term of the loan
is 5 years, unless otherwise extended by
the Assistant Administrator for the
Disaster Assistance Directorate. The
Assistant Administrator for the Disaster Assistance Directorate may consider a request for an extension of a
loan based on the local government’s
financial condition. The total term of
any loan under section 417(a) of the
Stafford Act normally may not exceed
10 years from the date the Promissory
Note was executed. However, when extenuating circumstances exist and the
recipient demonstrates an inability to
repay the loan within the initial 10
years, but agrees to repay such loan

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Federal Emergency Management Agency, DHS
over an extended period of time, additional time may be provided for loan
repayment (see § 206.377(c)).
(f) Use of loan funds. The local government shall use the loaned funds to
assist in providing essential services.
The funds shall not be used to finance
capital improvements nor the repair or
restoration of damaged public facilities. Neither the loan nor any cancelled
portion of the loans may be used as the
non-Federal share of any Federal program, including those under the Stafford Act.
(g) Relation to other assistance. Any
Special Community Disaster Loans including cancellations of loans made
under this subpart shall not reduce or
otherwise affect any commitments,
grants, or other assistance provided
under the authority of the Stafford Act
or this part.
(h) Cancellation. The Director of the
Public Assistance Division shall cancel
repayment of all or part of a Special
Community Disaster Loan to the extent that he/she determines that revenues of the local government during
the three full fiscal years following the
disaster are insufficient to meet the
operating budget of that local government because of disaster-related revenue losses and additional unreimbursed disaster-related municipal operating expenses.
[70 FR 60446, Oct. 18, 2005, as amended at 75
FR 2817, Jan. 19, 2010]

§ 206.372 Responsibilities.
(a) The local government shall submit the financial information required
by FEMA in the application for a Community Disaster Loan or other format
specified by FEMA and comply with
the assurances on the application, the
terms and conditions of the Promissory
Note, the application for loan cancellation, if submitted, and §§ 206.370
through 206.377. The local government
shall send all loan application, loan administration, loan cancellation, and
loan
settlement
correspondence
through the Governor’s Authorized
Representative (GAR) and the FEMA
Regional Office to the Director of the
Public Assistance Division.
(b) The GAR shall certify on the loan
application that the local government
can legally assume the proposed in-

§ 206.373

debtedness and that any proceeds will
be used and accounted for in compliance with the FEMA-State Agreement
for the major disaster. States are encouraged to take appropriate pre-disaster action to resolve any existing
State impediments which would preclude a local government from incurring the increased indebtedness associated with a loan in order to avoid protracted delays in processing loan application requests resulting from major
disasters.
(c) The Regional Administrator or
designee shall review each loan application or loan cancellation request received from a local government to ensure that it contains the required documents and transmit the application to
the Director of the Public Assistance
Division. He/she may also submit appropriate recommendations to the Director of the Public Assistance Division.
(d) The Director of the Public Assistance Division or a designee, shall execute a Promissory Note with the local
government and shall administer the
loan until repayment or cancellation is
completed and the Promissory Note is
discharged.
(e) The Director of the Public Assistance Division shall approve or disapprove each loan request, taking into
consideration the information provided
in the local government’s request and
the recommendations of the GAR and
the Regional Administrator. The Director of the Public Assistance Division
shall approve or disapprove a request
for loan cancellation in accordance
with the criteria for cancellation in
these regulations.
(f) The FEMA Chief Financial Officer
shall establish and maintain a financial account for each outstanding loan
and disburse funds against the Promissory Note.
[70 FR 60446, Oct. 18, 2005, as amended at 75
FR 2818, Jan. 19, 2010]

§ 206.373 Eligibility criteria.
(a) Local government. (1) The local
government must be located within the
area eligible for assistance under a
major disaster declaration. In addition,
State law must not prohibit the local
government from incurring the indebtedness resulting from a Federal loan.

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§ 206.374

44 CFR Ch. I (10–1–11 Edition)

(2) Criteria considered by FEMA in
determining the eligibility of a local
government for a Special Community
Disaster Loan include the loss of tax
and other revenues as result of a major
disaster, a demonstrated need for financial assistance in order to perform
essential governmental functions, the
maintenance of an annual operating
budget, and the responsibility to provide essential services to the community. Eligibility for other assistance
under the Stafford Act does not, by
itself, establish entitlement to such a
loan.
(b) Loan eligibility—(1) General. To be
eligible, the local government must
show that it may suffer or has suffered
a substantial loss of tax and other revenues as a result of a major disaster or
emergency, and it must demonstrate a
need for financial assistance in order to
provide essential municipal services.
Loan eligibility is based on the financial condition of the local government
and a review of financial information
and supporting documentation accompanying the application.
(2) Substantial loss of tax and other revenues. The fiscal year of the disaster or
the succeeding fiscal year is the base
period for determining whether a local
government may suffer or has suffered
a substantial loss of revenue. Criteria
used in determining whether a local
government has or may suffer a substantial loss of tax and other revenue
include the following disaster-related
factors:
(i) Whether the disaster caused a
large enough reduction in cash receipts
from normal revenue sources, excluding borrowing, which affects significantly and adversely the level and/or
categories of essential services provided prior to the disaster;
(ii) Whether the disaster caused a
revenue loss of over 5 percent of total
revenue estimated for the fiscal year in
which the disaster occurred or for the
succeeding fiscal year.
(3) Demonstrated need for financial assistance. The local government must
demonstrate a need for financial assistance in order to perform essential governmental functions. The criteria used
in making this determination may include some or all of the following factors:

(i) Whether there are sufficient funds
to meet current fiscal year operating
requirements;
(ii) Whether there is availability of
cash or other liquid assets from the
prior fiscal year;
(iii) Current financial condition considering projected expenditures for
governmental services and availability
of other financial resources;
(iv) Ability to obtain financial assistance or needed revenue from State and
other Federal agencies for direct program expenditures;
(v) Debt ratio (relationship of annual
receipts to debt service);
(vi) Displacement of revenue-producing business due to property destruction;
(vii) Necessity to reduce or eliminate
essential services; and
(viii) Danger of municipal insolvency.
[70 FR 60446, Oct. 18, 2005]

§ 206.374

Loan application.

(a) Application. (1) The local government shall submit an application for a
Special Community Disaster Loan
through the GAR. The loan must be
justified on the basis of need and shall
be based on the actual and projected
expenses, as a result of the disaster, for
the fiscal year in which the disaster occurred and for the 3 succeeding fiscal
years. The loan application shall be
prepared by the affected local government and be approved by the GAR.
FEMA has determined that a local government, in applying for a loan as a result of having suffered a substantial
loss of tax and other revenue as a result of a major disaster, is not required
to first seek credit elsewhere (see
§ 206.377(c)).
(2) The State exercises administrative authority over the local government’s application. The State’s review
should include a determination that
the applicant is legally qualified, under
State law, to assume the proposed
debt, and may include an overall review for accuracy of the submission.
The GAR may request the Regional Administrator to waive the requirement
for a State review if an otherwise eligible applicant is not subject to State administration authority and the State

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Federal Emergency Management Agency, DHS
cannot legally participate in the loan
application process.
(b) Financial requirements. (1) The
loan application shall be developed
from financial information contained
in the local government’s annual operating budget (see paragraph (b)(2) of
this section) and shall include a Summary of Revenue Loss and Unreimbursed Disaster-Related Expenses, a
Statement of the Applicant’s Operating
Results—Cash Position, and certification and assurances requested by the
Assistant Administrator for the Disaster Assistance Directorate.
(i) Copies of the local government’s
financial reports (Revenue and Expense
and Balance Sheet) for the 3 fiscal
years immediately prior to the fiscal
year of the disaster and the applicant’s
most recent financial statement must,
unless impracticable, accompany the
application. The local government’s financial reports to be submitted are
those annual (or interim) consolidated
and/or individual official annual financial presentations for the General Fund
and all other funds maintained by the
local government.
(ii) Each application for a Special
Community Disaster Loan must also
include:
(A) A statement by the local government identifying each fund (i.e. General Fund, etc.) which is included as its
annual Operating budget, and
(B) A copy of the pertinent State
statutes, ordinances, or regulations
which prescribe the local government’s
system of budgeting, accounting and financial reporting, including a description of each fund account.
(2) Operating budget. For loan application purposes, the operating budget is
that document or documents approved
by an appropriating body, which contains an estimate of proposed expenditures, other than capital outlays for
fixed assets for a stated period of time,
and the proposed means of financing
the expenditures. For loan cancellation
purposes, FEMA interprets the term
‘‘operating budget’’ to mean actual
revenues and expenditures of the local
government as published in the official
financial statements of the local government.
(3) Operating budget increases. Budget
increases due to increases in the level

§ 206.374

of, or additions to, municipal services
not rendered at the time of the disaster
or not directly related to the disaster
shall be identified.
(4) Revenue and assessment information. The applicant shall provide information concerning its method of tax
assessment including assessment dates
and the dates payments are due.
(5) Estimated disaster-related expense.
Unreimbursed
disaster-related
expenses of a municipal operating character should be estimated.
(c) Federal review. (1) The Assistant
Administrator for the Disaster Assistance Directorate or designee shall approve a Special Community Disaster
Loan to the extent it is determined
that the local government has suffered
a substantial loss of tax and other revenues and demonstrates a need for financial assistance as the result of the
disaster to provide essential municipal
services.
(2) Resubmission of application. If a
loan application is disapproved, in
whole or in part, by the Assistant Administrator for the Disaster Assistance
Directorate because of inadequacy of
information, a revised application may
be submitted by the local government
within sixty days of the date of the disapproval. Decision by the Assistant Administrator for the Disaster Assistance
Directorate on the resubmission is
final.
(d) Special Community Disaster Loan.
(1) The loan shall not exceed the lesser
of:
(i) The amount of projected revenue
loss plus the projected unreimbursed
disaster-related expenses of a municipal operating character for the fiscal
year of the major disaster and the subsequent 3 fiscal years, or
(ii) 25 percent of the local government’s annual operating budget for the
fiscal year in which the disaster occurred.
(2) Promissory note. (i) Upon approval
of the loan by the Assistant Administrator for the Disaster Assistance Directorate or designee, he or she, or a
designated Loan Officer will execute a
Promissory Note with the applicant.
The Note must be co-signed by the
State (see paragraph (d)(2)(ii) of this
section). The applicant should indicate

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§ 206.375

44 CFR Ch. I (10–1–11 Edition)

its funding requirements on the Schedule of Loan Increments on the Note.
(ii) If the State cannot legally cosign
the Promissory Note, the local government must pledge collateral security,
acceptable to the Assistant Administrator for the Disaster Assistance Directorate, to cover the principal
amount of the Note. The pledge should
be in the form of a resolution by the
local governing body identifying the
collateral security.
(e) Waiver of requirements. Notwithstanding any other provision of this or
other sections promulgated pursuant
to Public Law 109–88, the Assistant Administrator for the Disaster Assistance
Directorate may, upon the request of
an applicant or loan recipient, waive
any specific application requirement or
financial reporting requirement (see,
e.g., § 206.375(a)(2)) upon a finding by
the Assistant Administrator for the
Disaster Assistance Directorate that
the effects of the major disaster prevent the applicant from fulfilling the
application requirement and that
waiving the requirements would be
consistent with the purposes of the
Community Disaster Loan Act of 2005.
[70 FR 60446, Oct. 18, 2005, as amended at 75
FR 2818, Jan. 19, 2010]

§ 206.375

Loan administration.

(a) Funding. (1) FEMA will disburse
funds to the local government when requested, generally in accordance with
the Schedule of Loan Increments in the
Promissory Note. As funds are disbursed, interest will accrue against
each disbursement.
(2) When each incremental disbursement is requested, the local government shall submit a copy of its most
recent financial report (if not submitted previously) for consideration by
FEMA in determining whether the
level and frequency of periodic payments continue to be justified. The
local government shall also provide the
latest available data on anticipated
and actual tax and other revenue collections. Desired adjustments in the
disbursement schedule shall be submitted in writing at least 10 days prior
to the proposed disbursement date in
order to ensure timely receipt of the
funds.

(b) Financial management. (1) Each
local government with an approved
Special Community Disaster Loan
shall establish necessary accounting
records, consistent with local government’s financial management system,
to account for loan funds received and
disbursed and to provide an audit trail.
(2) FEMA auditors, State auditors,
the GAR, the Regional Administrator,
the Assistant Administrator for the
Disaster Assistance Directorate, the
Department of Homeland Security Inspector General, and the Comptroller
General of the United States or their
duly authorized representatives shall,
for the purpose of audits and examination, have access to any books, documents, papers, and records that pertain
to Federal funds, equipments, and supplies received under §§ 206.370 through
206.377.
(c) Loan servicing. (1) The applicant
annually shall submit to FEMA copies
of its annual financial reports (operating statements, balance sheets, etc.)
for the fiscal year of the major disaster, and for each of the 3 subsequent
fiscal years.
(2) FEMA will review the loan periodically. The purpose of the reevaluation is to determine whether projected
revenue losses, disaster-related expenses, operating budgets, and other
factors have changed sufficiently to
warrant adjustment of the scheduled
disbursement of the loan proceeds.
(3) FEMA shall provide each loan recipient with a loan status report on a
quarterly basis. The recipient will notify FEMA of any changes of the responsible municipal official who executed the Promissory Note.
(d) Inactive loans. If no funds have
been disbursed from the loan program,
and if the local government does not
anticipate a need for such funds, the
note may be cancelled at any time
upon a written request through the
State and Regional Office to FEMA.
[70 FR 60446, Oct. 18, 2005]

§ 206.376 Loan cancellation.
(a) FEMA shall cancel repayment of
all or part of a Special Community Disaster Loan to the extent that the Director of the Public Assistance Division determines that revenues of the
local government during the three-full-

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Federal Emergency Management Agency, DHS
fiscal-year period following the disaster are insufficient, as a result of the
disaster, to meet the operating budget
for the local government, including additional unreimbursed disaster-related
expenses of a municipal operating
character.
(b) Definitions. For loan cancellation
purposes,
(1) ‘‘Operating budget’’ means actual
revenues and expenditures of the local
government as published in the official
financial statements of the local government.
(2) ‘‘Revenue’’ means any source of
income from taxes, fees, fines, and
other sources of income, and will be
recognized only as they become susceptible to accrual (measurable and available).
(3) ‘‘Three-full-fiscal-year period following the disaster’’ means either a 36month period beginning on September
1, 2005, or the 36 months of the applicant’s fiscal year as established before
the disaster, at the applicant’s discretion.
(4) ‘‘Operating expenses’’ means those
expenses and expenditures incurred as
a result of performing services, including salaries and benefits, contractual
services, and commodities. Capital expenditures and debt service payments
and capital leases are not considered
operating expenses. Under accrual accounting, expenses are recognized as
soon as a liability is incurred, regardless of the timing of related cash flows.
(c) Revenue Calculation procedures. (1)
If the tax rates and other revenues or
the tax assessment valuation of property which was not damaged or destroyed by the disaster are reduced
during the three full fiscal years subsequent to the major disaster, the tax
rates and other revenues and tax assessment valuation factors applicable
to such property in effect at the time
of the major disaster shall be used
without reduction for purposes of computing revenues received.
(2) At the applicant’s discretion, the
three-full-fiscal-year period following
the disaster is either a 36-month period
beginning on September 1, 2005 or the
36 months of the applicant’s fiscal year
as established before the disaster. If
the applicant’s fiscal year is changed
within the 36 months immediately fol-

§ 206.376

lowing the disaster, the actual period
will be modified so that the required financial data submitted covers an inclusive 36-month period. Should the applicant elect the 36-month period beginning September 1, 2005, FEMA will prorate the revenues and expenses for the
partial years based on the applicant’s
annual financial statements.
(3) If the local government transfers
funds from its operating funds accounts to its capital funds account,
utilizes operating funds for other than
routine maintenance purposes, or significantly
increases
expenditures
which are not disaster related, except
increases due to inflation, the annual
operating budget or operating statement expenditures will be reduced accordingly for purposes of evaluating
any request for loan cancellation.
(4) Notwithstanding paragraph (c)(3)
of this section, the amount of property
taxes that are transferred to other
funds for Debt Service or Pension Obligations funding will not be excluded
from the calculation of the operating
budget or from expenditures in calculation of the operating deficit, to the extent that the property tax revenues in
the General Fund are less than they
were pre-disaster. FEMA will consider
the impact of the loss of property tax
revenue in Debt Service or Pension
Funds (non-operating funds) if all of
the following conditions are met:
(i) The entity experienced a loss of
property tax revenue as a result of the
disaster and the assessed value during
the three years following the disaster,
in the aggregate, is less than the predisaster assessed value;
(ii) the entity has a property tax cap
limitation on the ability to raise property taxes post-disaster; and
(iii) the property taxes are levied
through the General Operating Fund
and transfers for obligations mandated
by law are made to fund Debt Service
or Pension Obligations which result in
the entity experiencing a reduction of
property tax revenues in the General
Fund.
(5) It is not the purpose of this loan
program to underwrite pre-disaster
budget or actual deficits of the local
government. Consequently, such deficits carried forward will reduce any

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§ 206.376

44 CFR Ch. I (10–1–11 Edition)

amounts otherwise eligible for loan
cancellation.
(6) The provisions of this section
apply to all Special Community Disaster loans issued from the dates of enactment of Public Law 109–88 and Public Law 109–234.
(d) Disaster-related expenses of a municipal operation character. (1) For purposes of this loan, unreimbursed expenses of a municipal operating character are those incurred for general
government purposes, including but
not limited to police and fire protection, trash collection, collection of revenues, maintenance of public facilities,
flood and other hazard insurance.
(2) Disaster-related expenses do not
include expenditures associated with
debt service, any major repairs, rebuilding, replacement or reconstruction of public facilities or other capital
projects, intragovernmental services,
special assessments, and trust and
agency fund operations. Disaster expenses which are eligible for reimbursement under project applications
or other Federal programs are not eligible for loan cancellation.
(3) Each applicant shall maintain
records including documentation necessary to identify expenditures for unreimbursed disaster-related expenses.
Examples of such expenses include but
are not limited to:
(i) Interest paid on money borrowed
to pay amounts FEMA does not advance toward completion of approved
Project Applications.
(ii) Unreimbursed costs to local governments for providing usable sites
with utilities for mobile homes used to
meet disaster temporary housing requirements.
(iii) Unreimbursed costs required for
police and fire protection and other
community services for mobile home
parks established as the result of or for
use following a disaster.
(iv) The cost to the applicant of flood
insurance required under Public Law
93–234, as amended, and other hazard
insurance required under section 311,
Public Law 93–288, as amended, as a
condition of Federal disaster assistance
for the disaster under which the loan is
authorized.
(4) The following expenses are not
considered to be disaster-related for

Special Community Disaster Loan purposes:
(i) The local government’s share for
assistance provided under the Stafford
Act including flexible funding under
section 406(c)(1) of the Act (42 U.S.C.
5172).
(ii) Improvements related to the repair or restoration of disaster public
facilities approved on Project Applications.
(iii) Otherwise eligible costs for
which no Federal reimbursement is requested as a part of the applicant’s disaster response commitment, or cost
sharing as specified in the FEMA–State
Agreement for the disaster.
(iv) Expenses incurred by the local
government which are reimbursed on
the applicant’s Project Application.
(e) Cancellation application. A local
government which has drawn loan
funds from the U.S. Treasury may request cancellation of the principal and
related interest by submitting an Application
for
Loan
Cancellation
through the Governor’s Authorized
Representative to the Regional Administrator prior to the expiration date of
the loan.
(1) Financial information submitted
with the application shall include the
following:
(i) Annual Operating Budgets for the
fiscal year of the disaster and the three
subsequent fiscal years;
(ii) Annual Financial Reports (Revenue and Expense and Balance Sheet)
for each of the above fiscal years. Such
financial records must include copies
of the local government’s annual financial reports, including operating statements and balance sheets and related
consolidated and individual presentations for each fund account. In addition, the local government must include an explanatory statement when
figures in the Application for Loan
Cancellation form differ from those in
the supporting financial reports.
(iii) The following additional information concerning annual real estate
property taxes pertaining to the community for each of the above fiscal
years:
(A) The market value of the tax base
(dollars);
(B) The assessment ratio (percent);
(C) The assessed valuation (dollars);

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Federal Emergency Management Agency, DHS
(D) The tax levy rate (mils);
(E) Taxes levied and collected (dollars).
(iv) Audit reports for each of the
above fiscal years certifying to the validity of the Operating Statements.
The financial statements of the local
government shall be examined in accordance with generally accepted auditing standards by independent certified public accountants. The report
should not include recommendations
concerning loan cancellation or repayment.
(v) Other financial information specified in the Application for Loan Cancellation.
(2) Narrative justification. The application may include a narrative presentation to supplement the financial material accompanying the application
and to present any extenuating circumstances which the local government wants the Director of the Public
Assistance Division to consider in rendering a decision on the cancellation
request.
(f) Determination. (1) The Director of
the Public Assistance Division will
make a cancellation determination
within 60 days of the date the applicant
submits all required and requested information, including documentation in
support of un-reimbursed disaster related expenses.
(2) If, based on a review of the Application for Loan Cancellation and
FEMA audit, the Director of the Public
Assistance Division determines that all
or part of the Special Community Disaster Loan funds should be canceled,
the amount of principal canceled and
the related interest will be forgiven.
The Director of the Public Assistance
Division’s determination concerning
loan cancellation will specify that any
uncancelled principal and related interest must be repaid in accordance
with the terms and conditions of the
Promissory Note, and that, if repayment will constitute a financial hardship, the local government must submit for FEMA review and approval, a
repayment schedule for settling the indebtedness on a timely basis. Such repayments must be made to the Treasurer of the United States and be sent
to FEMA, Attention: Office of the Chief
Financial Officer.

§ 206.377

(3) A loan or cancellation of a loan
does not reduce or affect other disaster-related grants or other disaster
assistance. However, no cancellation
may be made that would result in a duplication of benefits to the applicant.
(4) The uncancelled portion of the
loan must be repaid in accordance with
§ 206.377.
(5) Appeals. If an Application for
Loan Cancellation is disapproved, in
whole or in part, by the Director of the
Public Assistance Division, the local
government may submit any additional
information in support of the application within 60 days of the date of disapproval. The decision by the Assistant
Administrator for the Disaster Assistance Directorate on the additional information is final.
[75 FR 2818, Jan. 19, 2010]

§ 206.377 Loan repayment.
(a) Prepayments. The local government may make prepayments against
loan at any time without any prepayment penalty.
(b) Repayment. To the extent not otherwise cancelled, loan funds become
due and payable in accordance with the
terms and conditions of the Promissory
Note. The note shall include the following provisions:
(1) The term of a loan made under
this program is 5 years, unless extended by the Assistant Administrator
for the Disaster Assistance Directorate. Interest will accrue on outstanding cash from the actual date of
its disbursement by FEMA or FEMA’s
designated Disbursing Agency.
(2) The interest amount due will be
computed separately for each Treasury
disbursement as follows: I = P X R X
T, where I = the amount of simple interest, P = the principal amount disbursed; R = the interest rate of the
loan; and, T = the outstanding term in
years from the date of disbursement to
date of repayment, with periods less
than 1 year computed on the basis of
365 days/year. If any portion of the loan
is cancelled, the interest amount due
will be computed on the remaining
principal with the shortest outstanding
term.
(3) Each payment made against the
loan will be applied first to the interest
computed to the date of the payment,

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§§ 206.378–206.389

44 CFR Ch. I (10–1–11 Edition)

and then to the principal. Prepayments
of scheduled installments, or any portion thereof, may be made at any time
and shall be applied to the installments
last to become due under the loan and
shall not affect the obligation of the
borrower to pay the remaining installments.
(4) The Assistant Administrator for
the Disaster Assistance Directorate
may defer payments of principal and
interest until FEMA makes its final
determination with respect to any Application for Loan Cancellation which
the borrower may submit. However, interest will continue to accrue.
(5) Any costs incurred by the Federal
Government in collecting the note
shall be added to the unpaid balance of
the loan, bear interest at the same rate
as the loan, and be immediately due
without demand.
(6) In the event of default on this
note by the borrower, the FEMA
claims collection officer will take action to recover the outstanding principal plus related interest under Federal debt collection authorities, including administrative offset against other
Federal funds due the borrower and/or
referral to the Department of Justice
for judicial enforcement and collection.
(c) Additional time. In unusual circumstances involving financial hardship, the local government may request
an additional period of time beyond the
original 10 year term to repay the indebtedness. Such request may be approved by the Assistant Administrator
for the Disaster Assistance Directorate
subject to the following conditions:
(1) The local government must submit documented evidence that it has
applied for the same credit elsewhere
and that such credit is not available at
a rate equivalent to the current Treasury rate.
(2) The principal amount shall be the
original uncancelled principal plus related interest less any payments made.
(3) The interest rate shall be the
Treasury rate in effect at the time the
new Promissory Note is executed but
in no case less than the original interest rate. A reduced rate may not be applied if was it was not previously applied to the loan.
(4) The term of the new Promissory
Note shall be for the settlement period

requested by the local government but
not greater than 10 years from the date
the new note is executed.
[70 FR 60446, Oct. 18, 2005, as amended at 75
FR 2820, Jan. 19, 2010]

§§ 206.378–206.389

[Reserved]

Subpart L—Fire Suppression
Assistance
SOURCE: 55 FR 2318, Jan. 23, 1990, unless
otherwise noted.

§ 206.390

General.

When the Assistant Administrator
for the Disaster Assistance Directorate
determines that a fire or fires threaten
such destruction as would constitute a
major disaster, assistance may be authorized, including grants, equipment,
supplies, and personnel, to any State
for the suppression of any fire on publicly or privately owned forest or grassland.
§ 206.391

FEMA-State Agreement.

Federal assistance under section 420
of the Act is provided in accordance
with a continuing FEMA-State Agreement for Fire Suppression Assistance
(the Agreement) signed by the Governor and the Regional Administrator.
The Agreement contains the necessary
terms and conditions, consistent with
the provisions of applicable laws, Executive Orders, and regulations, as the
Assistant Administrator for the Disaster Assistance Directorate may require and specifies the type and extent
of Federal assistance. The Governor
may designate authorized representatives to execute requests and certifications and otherwise act for the State
during fire emergencies. Supplemental
agreements shall be executed as required to update the continuing Agreement.
§ 206.392

Request for assistance.

When a Governor determines that
fire suppression assistance is warranted, a request for assistance may be
initiated. Such request shall specify in
detail the factors supporting the request for assistance. In order that all
actions in processing a State request
are executed as rapidly as possible, the

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