What funding sources are available to municipalities for the purpose of addressing repairs for flooding?

There are multiple funding sources available related to flooding and infrastructure improvements, including programs administered under the Infrastructure Investment and Jobs Act and American Rescue Plan Act of 2021, among other acts:

Infrastructure Investment and Jobs Act (“IIJA”) Funding Opportunities:

1. The Building Resilient Infrastructure and Communities (“BRIC”) Program

The Federal Emergency Management Agency (“FEMA”) administers the BRIC program. The IIJA provides $1 billion to FEMA in support of the BRIC program. The BRIC program supports communities undertaking hazard mitigation projects for disaster risk reduction. BRIC funds may be used for:

• Capability and capacity building activities;
• Mitigation projects; and
• Management costs.[1]  

Projects must:

• Be cost-effective;
• Reduce or eliminate risk and damage from future natural hazards;
• Meet either of the two latest published editions of consensus-based codes, specifications, and standards;
• Align with the applicable hazard mitigation plan; and
• Meet all environmental and historic preservation requirements.[2]

States, territories, and Tribal governments may apply to FEMA for BRIC funding. Municipalities and local governments may apply for BRIC funding through a sub-application, which must be submitted through their state, territory, or Tribal government. 

Applications for fiscal year 2022 are expected to open no later than September 30, 2022. Municipalities may consult FEMA’s Mitigation Action Portfolio for further information on eligible hazard mitigation activities.[3]

2. The Flood Mitigation Assistance (“FMA”) Program

FEMA administers the FMA program. The IIJA provides $3.5 billion to FEMA in support of the FMA program. The FMA program provides funds to states, local communities, and federally recognized Tribes to invest in projects that reduce or eliminate the risk of repetitive flood damage to buildings insured by the National Flood Insurance Program (“NFIP”).[4] Additional details, including resources related to project requirements and types, can be found on the FMA homepage.[5] Applications for fiscal year 2022 are expected to open no later than September 30, 2022.

As part of the IIJA funding for FMA, FEMA has launched the Swift Current Initiative, a funding opportunity available within the states of Louisiana, Mississippi, New Jersey, and Pennsylvania.[6] The initiative seeks to distribute FMA funding to disaster recovery areas in advance of the normal grant process.[7]

3. Rebuilding American Infrastructure Sustainably and Equitably (“RAISE”) Grants

Rebuilding American Infrastructure Sustainably and Equitably (“RAISE”) grants are available through the U.S. Department of Transportation “for capital investments in surface transportation that will have a significant local or regional impact.”[8] RAISE 2022 applications were due on April 14, 2022; however, municipalities may consider submitting applications for future deadlines.

4. Safeguarding Tomorrow Through Ongoing Risk Mitigation (“STORM”) Act

FEMA administers STORM. The IIJA provides $500 million in initial funding to STORM.[9] The STORM Act authorizes FEMA to provide states with capitalization to establish hazard mitigation revolving loan funds. Details regarding the program are pending.

Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Funding Opportunities:

In addition to IIJA and infrastructure-focused grants, municipalities may consider whether projects are eligible under the American Rescue Plan Act of 2021’s (“ARP”) CSLFRF. Necessary investments in water and sewer infrastructure are an eligible use of CSLFRF. Under the U.S. Department of the Treasury’s (“Treasury”) Final Rule on CSLFRF, “[w]ater and sewer services provided broadly to the public as essential services include the provision of drinking water and the removal, management, and treatment of wastewater and stormwater.”[10]

Although the meaning of water and sewer infrastructure for purposes of sections 602(c)(1)(D) and 603(c)(1)(D) of the Social Security Act does not include all water-related uses, Treasury has made clear in this final rule that investments to infrastructure include a wide variety of projects. Treasury interprets the word “infrastructure” in this context broadly to mean the underlying framework or system for achieving the given public purpose, whether it be provision of drinking water or management of wastewater or stormwater.[11]

Treasury acknowledges that “[m]any of the types of projects eligible under either the [Drinking Water State Revolving Fund (“DWSRF”)] or [Clean Water State Revolving Fund (“CWSRF”)] also support efforts to address climate change”[12] and encourages recipients to “consider green infrastructure investments and projects to improve resilience to the effects of climate change.” The Final Rule provides further clarification including eligible and ineligible uses.[13] While Treasury clarifies that general floodplain management and flood mitigation projects were not included in the Final Rule, the Final Rule recognizes that several projects providing mitigation of flood risk are eligible under state revolving fund guidelines and thus are eligible activities for CSLFRF recipients.[14]

Additionally, the Final Rule provides that funds available under the revenue loss provision may satisfy non-federal match requirements unless specifically prohibited by statute (as in the case of Medicaid or CHIP).[15] The availability of revenue loss funds to satisfy non-federal match requirements for mitigation grants may make these funding programs accessible to municipalities that otherwise lack the local match required to leverage federal mitigation funding.

Other Funding Opportunities:

1. Hazard Mitigation Grant (“HMG”) Program

FEMA administers the HMG program. The HMG program is a multi-hazard mitigation grant program that provides funding to state, local, Tribal, and territorial governments for hazard mitigation planning and mitigation activities in areas affected by a federally declared disaster, such as COVID-19.[16]

Hazard mitigation includes long-term efforts to reduce risk and the potential impact of future disasters, such as flood protection projects designed to:

• Protect homes and businesses with permanent barriers to prevent floodwater from entering;
• Elevate structures above known flood levels to prevent and reduce losses;
• Reconstruct a damaged dwelling on an elevated foundation to prevent and reduce future flood losses; and
• Reduce flooding through drainage improvement.

Information on the next round of HMG funding is pending.

2. Community Development Block Grant – Disaster Recovery and Mitigation (“CDBG-DR” and “CDBG-MIT”)

The U.S. Department of Housing and Urban Development (“HUD”) administers CDBG-DR and CDBG-MIT. Following a disaster, Congress may appropriate CDBG-DR funds for affected areas. CDBG-DR funding assists affected areas with housing, infrastructure, and economic revitalization. Municipalities in affected areas that receive a CDBG-DR allocation may develop recovery plans that include flood risk mitigation projects. CDBG-MIT provides additional funding opportunities for impacted communities to increase resilience, including flood remediation.[17]

Municipalities may consult the HUD Exchange program website for further information on CDBG-DR and CDBG-MIT.[18]