HR2836-119

What This Bill Does

The FEMA Loan Interest Payment Relief Act adds section 431 to the Stafford Act. FEMA must reimburse a local government or electric cooperative for qualifying interest on qualifying loans. A qualifying loan is one obtained by a local government or electric cooperative where at least 90 percent of proceeds fund activities that receive Stafford Act assistance after disbursement. Reimbursable interest is capped at the lesser of actual interest paid or the interest that would have been paid at the most recently published prime rate. The bill treats qualifying interest incurred during the nine years before enactment as eligible, but only funds appropriated after enactment can be used. FEMA must publish alternative procedures in the Federal Register within 30 days for States to seek reimbursement for projects pending obligation, States must apply within 60 days after procedures are published, and FEMA must reimburse requesting States within one year after enactment.

Who Benefits and How

Local governments benefit because FEMA would reimburse qualifying bridge-loan interest tied to public-assistance projects. Electric cooperatives benefit because disaster-recovery loans used for eligible public-assistance work can have interest reimbursed. States with pending FEMA obligations benefit from alternative procedures for outstanding qualifying interest reimbursement. Disaster-affected residents benefit indirectly if local governments and cooperatives face less debt-service pressure while waiting for FEMA obligations.

Who Bears the Burden and How

FEMA Public Assistance staff must create alternative procedures, process State applications, and reimburse qualifying interest within the statutory deadlines. Federal taxpayers bear the cost of retroactive and prospective interest reimbursements. States seeking reimbursement must apply within 60 days after FEMA publishes procedures and document outstanding qualifying interest. Lenders do not lose interest revenue, but their local-government and cooperative borrowers may shift eligible interest cost to FEMA.

Key Provisions

• Requires FEMA reimbursement of qualifying interest on loans used at least 90 percent for Stafford Act public-assistance activities.
• Caps reimbursable interest at the lesser of actual interest paid or prime-rate-equivalent interest.
• Treats qualifying interest from the nine years before enactment as eligible for assistance.
• Requires FEMA alternative procedures within 30 days and State applications within 60 days after publication.
• Directs FEMA to reimburse requesting States within one year after enactment for covered pending-obligation projects.