Disaster Resilience: FEMA Should Improve Guidance and Assessment of Its Revolving Loan Fund Program

What GAO Found

The Safeguarding Tomorrow through Ongoing Risk Mitigation Act (STORM Act), enacted in 2021, authorized the Federal Emergency Management Agency (FEMA) to award capitalization grants for eligible states, territories, tribes, and the District of Columbia to establish revolving loan funds for hazard mitigation assistance. In the fall of 2022, FEMA started the Safeguarding Tomorrow Revolving Loan Fund (RLF) program to provide these capitalization grants—or seed money—to these entities, which then issue loans to localities to implement hazard mitigation projects. The program was appropriated $500 million for a five-year period through fiscal year 2026.

In September 2023, FEMA announced the first eight awardees selected to receive a combined $50 million from the RLF grant program. Awardees submit potential projects to FEMA as part of the application process and determine what projects will receive loans based on the hazard mitigation needs of their communities. Fiscal year 2023 awardees selected projects that will mitigate the impacts of hazards such as flooding, severe storms, and high winds.

RLF grant recipients provide loans to local governments or a sub-component of a local government for hazard mitigation projects that reduce community risks from natural disasters. The loans are then repaid to the RLF to fund additional hazard mitigation projects.

FEMA’s Definition of a Revolving Loan Fund

The RLF grant program has the potential to help communities, particularly vulnerable populations, invest more in hazard mitigation projects. For instance, the RLF program can provide access to additional funding to communities with less financial capacity to help meet the non-federal cost share requirement for other FEMA Hazard Mitigation Assistance programs.

FEMA has developed some RLF program and policy guidance and technical assistance for program participants. For example, FEMA officials and program participants used the fiscal years 2023 and 2024 Notices of Funding Opportunity as the program's primary source of guidance for those award cycles. While this guidance and technical assistance covers various aspects of the RLF program, awardees noted, and GAO confirmed through GAO's review that the guidance was incomplete, unclear, and inconsistent. For example, three awardees told us FEMA guidance was ambiguous and unclear about what responsibilities awardees have for managing and reporting on aspects of their revolving loan fund. Further, one awardee told GAO that they decided to decline their award in part due to incomplete guidance regarding FEMA's close-out reporting requirements for the program. In addition, when program guidance is incomplete, unclear, or inconsistent it can contribute to the administrative burden of the program. Some awardees told GAO that administering the program required additional staff or expertise. By developing complete, clear, and consistent guidance for the RLF program, FEMA could better communicate program information to FEMA staff and program participants. Doing so would help program participants navigate the challenges that come with administering this type of program.

FEMA has identified some tools to collect information on the RLF program; however, FEMA does not have a process for systematically collecting and evaluating the information to assess program effectiveness across all phases of the program. Documenting and implementing a process to regularly assess RLF program effectiveness could help FEMA ensure that the program goals are met both in the short-and long-term. Without better guidance, the program risks not achieving its goal of helping local government carry out hazard mitigation projects that reduce disaster risk for communities.

Why GAO Did This Study

With natural disasters affecting hundreds of communities each year, investing in hazard mitigation projects to prevent damage from these disasters is increasingly important. The STORM Act includes a provision that GAO review FEMA's implementation of the RLF program. This report includes information on how the revolving loan fund program works, the number of grants FEMA has awarded to-date, the guidance FEMA has developed for the program and whether program participants find it useful, how applicants select projects, and FEMA's efforts to develop program performance measures. To conduct this work, GAO reviewed and analyzed relevant agency documents such as FEMA's Notices of Funding Opportunity for fiscal years 2023 and 2024. GAO also interviewed officials from FEMA and all eight fiscal year 2023 RLF program awardees.

For more information, contact Chris Currie at (404) 679-1875 or CurrieC@gao.gov.