As Houston can attest, a disaster can take a devastating toll on the budget of local governments. Cities incurs significant spikes in overtime pay to police, firefighters and other first responders, the cost of paying workers to clean up debris, costs for new insurance policies when limits on existing policies are exhausted mid-year, and other major expenses. FEMA provides Community Disaster Loan, which are available to local governments after a disaster to assist in meeting these operational expenses.
However, the loans have a cap of $5 million. The City of Houston’s annual budget is approximately $5 billion. A loan of $5 million represents one-tenth of one percent of that annual budget, which is wholly inadequate to fulfill the stated purpose of this program for America’s fourth largest city and the worst natural disaster in its history.
The third supplemental bill, passed by the House in December, includes $4 billion for community disaster loans and removes the cap. However, it only appropriates them for territories struck by disasters – Puerto Rico and the U.S. Virgin Island. The City of Houston is therefore not even eligible for these funds.
The City of Houston is asking Congress to permit local governments in states to access Community Development Loans, and to waive the $5 million cap for these governments.
The City of Houston sustained tremendous operational expenses due to Hurricane Harvey. The third supplemental appropriations bill appears to acknowledge this. However, it replicates language from the second supplemental appropriations bill on CDLs. Interpretations of that language have led to Texas communities being excluded from CDL funds.
The waiver is normal course of business for hurricane response. Congress waived the $5 million cap on Community Disaster Loans in the 2nd Supplemental for Puerto Rico, the U.S. Virgin Islands, and local jurisdictions thereof. Mainland communities devastated by hurricanes deserve equitable treatment with the islands, and particularly Houston, which experienced more homes damaged than New Orleans did after Katrina or New York City did after Sandy. Congress also waived the $5 million cap on CDLs after Katrina and Rita for communities in Louisiana and Mississippi, so there is ample precedent for this legislative request.
CDLs are already capped under Section 417 of the Stafford Act at total unreimbursed disaster-related expenses or 25% of a community’s annual budget, whichever is less. The $5 million cap is unnecessary and particularly inadequate for hurricane response, as demonstrated by Congress in prior responses.
Public Law 115-72 is amended by striking the highlighted portion below under Division A, Title I.
“Provided further, That notwithstanding section 417(b) of the Stafford Act, the amount of any such loan issued to a territory or possession, and instrumentalities and local governments thereof, may be based on the projected loss of tax and other revenues and on projected cash outlays not previously budgeted for a period not to exceed 180 days from the date of the major disaster, and may exceed $5,000,000;"
and inserting in its place,
“Provided further, That notwithstanding section 417(b) of the Stafford Act, the amount of any such loan may be based on the projected loss of tax and other revenues and on projected cash outlays not previously budgeted for a period not to exceed 180 days from the date of the major disaster, and may exceed $5,000,000;"