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Secretary Napolitano Announces Proposed Loan Forgiveness for Hurricanes Katrina and Rita Special Community Disaster Loans

Release Date: 
March 30, 2009

For Immediate Release
Office of the Press Secretary
Contact: 202-282-8010

NPRM: Special Community Disaster Loans Program (PDF, 35 pages - 136 KB )

U.S. Department of Homeland Security Secretary Janet Napolitano today announced that the Federal Emergency Management Agency (FEMA) has proposed an amendment to its Special Community Disaster Loan (CDL) regulations to include loan forgiveness procedures and requirements. The proposed regulation, submitted today to the Federal Register, proposes procedures and requirements for governments who received Special Community Disaster Loans to apply for cancellation of loan obligations. The decision to proceed on this rulemaking now comes as a result of Secretary Napolitano's trip to the Gulf Coast earlier this month, and is part of a series of new initiatives put forth by the Department of Homeland Security to address the challenges facing the region.

Following Hurricanes Katrina and Rita, Congress provided additional loan authority to FEMA to assist communities impacted by the hurricanes. FEMA provided over $1.27 billion in Special CDLs to communities in Mississippi and Louisiana. At the time the loans were granted, Congress prohibited FEMA from forgiving any Special CDLs. The proposed regulation allows for the forgiveness of all or part of a community's Special CDL if local government revenues following a disaster are insufficient to meet the operating budget for the local government. 

"Tremendous progress has been made to help the Gulf Coast region recover, but it is abundantly clear that communities are struggling to meet the challenges faced by the economy and the remaining challenges posed by Hurricanes Rita and Katrina," said Secretary Napolitano. "We look forward to hearing feedback on this proposal in order to maintain essential municipal services following hurricanes Katrina and Rita. With this effort, we are closer to helping our Gulf Coast communities rebuild, recover and get back on their feet."

FEMA is seeking comments from state and local officials, as well as the public, on the proposed forgiveness procedures. Comments should be submitted under docket ID FEMA-2005-0051 at www.regulations.gov. Comments may also be submitted to FEMA-RULES@dhs.gov or by mail to FEMA’s Office of Chief Counsel, Room 835, 500 C Street, SW, Washington, D.C. 20472. Please note that comments submitted via mail typically experience a two-week delay. Please reference Docket ID FEMA-2005-0051 when submitting comments. Comments can be submitted for 60 days after the rule is published. More information regarding the proposed rule is available in the docket at http://www.regulations.gov

Once comments are adjudicated, FEMA will issue a final regulation establishing the Special CDLs forgiveness procedures. FEMA cannot begin accepting forgiveness applications or begin forgiving loans until that final rule goes into effect. 

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