WHITE PAPER – LEGISLATIVE PRIORITY NO. ___

SEEKING A LEGISLATIVE EXEMPTION

TO THE REQUIREMENTS OF THE

FEDERAL FLOOD DISASTER PROTECTION ACT OF 1973

Prepared September 21, 2017

Point of Contact – Denise Zuni, Sh’eh Wheef Law Offices, P.C.,(505) 869-3836 or Mobile (505)379-2101, , attorney for various New Mexico tribes and their Tribally Designated Housing Entities (TDHEs), including the Isleta Pueblo Housing Authority (IPHA) and Taos Pueblo Housing, who are dealing with this issue.

Background of Topic - The Federal Flood Disaster Protection Act of 1973 (the Act), 42 U.S.C. 4001-4123, prohibits the use of federal funds for construction and rehabilitation on floodplains unless a community participates in the National Flood Insurance Program (NFIP) and purchases flood insurance. This prohibition is imposed on Indian Housing Block Grant (IHBG) funds by 24 CFR 1000.38 (the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA) regulations). The prohibition also applies to Indian Community Development Block Grant (ICDBG) funds.The Act also requires regulated lenders (most banks) to impose flood insurance requirements on their borrowers.

Tribes and TDHEs typically find out that tribal lands have been flood mapped by the Federal Emergency Management Agency (FEMA) when they attempt to build in a flood zone or when prospective home mortgage borrowers come to them asking why their lender is requiring flood insurance. A tribe whose lands have been flood mapped by FEMA and have been designated as being in floodplains, cannot use IHBG or ICDBG funds, or any federal funds for housing construction or rehabilitation, unless the tribe participates in the NFIPand purchases flood insurance. The majority of tribes do not participate in the NFIP. According to a January 2013 GAO Report on Flood Insurance – Participation of Indian tribes in Federal and Private Programs[1], only 37 tribes participate in the NFIP. In New Mexico, for example, only one tribe participates. This tribe has stated that they would like to opt out; however, it is not possible to do so without financial penalty.Many tribes that are on flood plains are near rivers that have not flooded in the most recent one hundred years, the test used by FEMA to determine the risk of flooding.

Many tribes whose lands have not been flood mapped likely build on sites that would be designated as floodplains if FEMA were to map these lands. These tribes continue to use federal funds to build or rehabilitate homes on those sites upon mitigating the flood risks under either the IHBG or ICDBG environmental review process.

Some tribes have had their lands flood mapped by FEMA without realizing the consequences of flood mapping. For example, on the Pueblo of Isleta, which is located in a rural area, sometime in 2008 – 2010, FEMA flood mapped the tribe’s lands without the tribe’s written or express authorization and determined that a large part of the tribe’s residential areas were within designated floodplains.In Taos, FEMA flood mapped Taos tribal lands while flood mapping Taos County. In both cases, the flood mapping was done with a combination of aerial photography and Light Detection and Ranging Remote Sensing (LIDAR). As a result of the flood mapping, both tribes are unable to rehabilitate existing housing or build new homes in floodplains with federal funds, including IHBG and ICDBG funds.Additionally, potential borrowers who want to build on their tribal land assignments can’t use United States Department of Agriculture (USDA),Veteran’s Affairs(VA), or Section 184 loan funds to build in floodplains. While a potential borrower on tribal trust lands can use private loan funds, for example from aNative Community Development Financial Institution, to build on floodplains, a lender may require flood insurance which will have to be purchased outside the NFIP system if a tribe doesn’t participate in the NFIP. Flood insurance, both within and outside the NFIP market is expensive. In New Mexico, it costs anywhere from $600 if a site is mitigated by elevating the site above the base flood elevation, to $3,000 annually. Due to the recent hurricanes in Texas and Florida, flood insurance premiums nationwide will increase, even in the ten most arid states – Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, North Dakota, South Dakota, Utah, and Wyoming. The added cost of flood insurance disqualifies many potential borrowers for a home loan.

While tribes can and should assess and mitigate flood risks, mitigating flood risks doesn’t qualify a tribe to use federal funds under the Act without joining the NFIP. In summary, a pre-requisite to using federal funds on floodplains is to join the NFIP.

Impacts of joining the NFIP: A community (including a tribe) that participates in the NFIP is required to adopt flood standardson floodplains as established by the NFIP and enforce these standards.Adopting a flood ordinance is a burdensome and costly process. It requires a tribe to hire a certified flood plain manager, develop and enforce flood standards, require certified elevations when building or rehabilitating on flood plains, and maintain records on all new home construction/rehabilitation. A flood ordinance must require prohibition from building on a site below the Base Flood Elevation (BFE). Many tribes in New Mexico have large residential housing in areas whose sites are below the BFE. A map amendment, FEMA’s process of removing a site from a flood plain, cannot be obtained on a site that is below the BFE. This means that homes in these areas can never have federal funds spent on them even if a tribe joined the NFIP. Enforcement of a flood ordinance is mandatory and triggers federal penalties if not enforced.

In New Mexico, an arid state, borrowers in communities that have not had a flood in the most recent 100 years are forced to purchase expensive flood insurance. Many communities in New Mexico, including non-tribal communities, are of the position that they should not be paying high premiums on flood insurance as a result of claims filed in flood-prone states. These New Mexico communities have joined the NFIP to be eligible for federal assistance.

Some surveyors have suggested that the flood mapping done by FEMA (especially flood mapping done aerially) contains large errors and that many areas shown to be in floodplains are incorrectly mapped. However, amending a flood map is costly, and the amendment of more than one site requires a process that a community (including a tribe) cannot engage in unless they are an NFIP participant.

More importantly, being forced to join the NFIP and adopt national standards interferes with a tribe’s right of self-governance, including the right to adopt its own flood standards based on the Tribe’s assessments. Tribes should be allowed to assess and manage their flood risks without federal oversight.

The Specific Ask (the Proposed Remedy):

Seek, in NAHASDA (the Reauthorization Bill?) and ICDBG legislation, or other legislation, an exemption, similar to the exemption that exists for Statesreceiving public housing funds under 24 CFR §58.6(a)(3)[2] and 24 CFR §55.1(b)(1)[3]. The State exemption laws - 24 CFR 58.6(a)(3) – the HUD environmental regulations, and 24 CFR Part 55.1 (b)(1) – the HUD floodplain management regulations, exempt from the federal prohibition, housing funding to states, including HOME[4] funds and Community Development Block Grant (CDBG) funds. This means a Public Housing Authority can use affordable housing funds, HOME and CDBG funds, on floodplains even if a community isn’t a member of the NFIP. The option of seeking a similar exemption for tribes would be workable since states already apply this exemption to federal housing funds. An exemption would allow a tribe to build on flood plains upon mitigating the flood risks, even without joining the NFIP.

The legislative language would:

a)Provide an exemption similar to 24 CFR 58.6(a)(3) – HUD Environmental Regulations – which reads:

Paragraph (a) of this section does not apply to Federal formula grants made to a State; or

b)Provide an exemption similar to 24 CFR Part 55.1 (b)(1) – the HUD floodplain management regulations - which reads in relevant part:

This prohibition is not applicable to HUD financial assistance in the form of formula grants to states, including financial assistance under the State-administered CDBG Program (24 CFR part 570, subpart I) and the State-administered Rental Rehabilitation Program (24 CFR 511.51), Emergency Shelter Grant amounts allocated to States (24 CFR parts 575 and 576), and HOME funds provided to a state under Title II of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12701- 12839).

c)Alternatively, an exemption could:

i)allow tribes to build on floodplains if the tribe has its own flood assessment and management lawor if the tribe mitigates the flood risks,in lieu of the requirement to join the NFIP; and

ii)give tribes the option of deciding whether it should purchase flood insurance or self-insure; and

iii)allow tribes and tribal members to access insurance companies under the NFIP anytime they decided to purchase flood insurance.

The Preliminary Work –Congressman Steve Pearce’s Office agreed to research the state exemptions and work on draft legislation. Patrick Cuff, a staffer, stated that he would work on proposed language. All New Mexico congressional representatives are aware of the issue and stated they would support draft legislation.

Tribal Support Letters - We would have to obtain tribal support letters supporting the legislation. A Draft tribal support letter is attached.

Who Is Impacted by No Action?

Tribes whose lands have been flood mapped by FEMA and published on the FEMA website and Flood Insurance Rate Maps (FIRM) and whose residential areas are flood mapped as being in Special Flood Hazard Areas. All tribes should go to the FEMA website and determine if they have been flood mapped. Many tribes don’t know they are flood mapped until a home loan borrower informs them or until an environmental review is done on a specific site.

The direct impact is on tribal members who are unable to receive affordable housing assistance to havesubstandard homes rehabilitatedunless a tribe joins the NFIP and the tribal member purchases flood insurance. Tribes that are impacted are those in a region that isn’t historically impacted by flooding as demonstrated by historic events.

Successful Anecdote of the Program Being Successful

The legislative exemption already exists for states and is successfully implemented by states. The statessimply follow the environmental review process and mitigate the risks of flooding on any given site. We are simply asking that the same opportunities that exist for states are made available to tribes.

DRAFT TRIBAL SUPPORT LETTER

Congressman ______

Re: Support for Proposed Legislation Providing Tribes Similar Exemptions Provided to StatesRegarding the Use of Affordable Housing Funds on FloodPlains

Dear Congressman ______

I am writing to respectfully request that you support proposed legislationthat is being sponsored by Congressman Steve Pearce. This legislation will give tribes that have been flood mapped by the Federal Emergency Management Agency (FEMA) the same exemption provided to states -the ability to use federal affordable housing funds on floodplains even if a community isn’t a member of the National Flood Insurance Program (NFIP), upon mitigating any flood risks.

The Federal Flood Disaster Protection Act of 1973 (the Act), at 42 U.S.C. 4106(a), prohibits the use of federal funds for construction and rehabilitation on floodplains unless a community participates in the NFIP and purchases flood insurance. This prohibition is imposed on Indian Housing Block Grant (IHBG) funds by 24 CFR 1000.38, the regulations that implement the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA), P.L. 104-330, as amended. The prohibition also applies to Indian Community Development Block Grant (ICDBG) funds.

States are granted an exemption from the federal prohibition when using specific funding, including HOME funds and Community Development Block Grant (CDBG) funds.See 24 CFR 58.6(a)(3) – the HUD environmental regulations, and 24 CFR Part 55.1 (b)(1) – the HUD floodplain management regulations, attached. This exemption allows states to use public housing funds, HOME[5] and CDBG funds, in a floodplain even if a community doesn’t participate in the NFIP.

FEMA has flood mapped some tribal lands, sometimes without tribal authorization, and published the maps on both its website and reproduced Flood Insurance Rate Maps (FIRM). Once a tribe’s lands are flood mapped and published, a tribe can no longer use IHBG or ICDBG funds to rehabilitate homes on a floodplain even if it mitigates the flood risks, unless the tribe joins the NFIP and purchases flood insurance.

This legislation will allow tribes to continue using IHBG and ICDBG funds, which they rely on to both rehabilitate substandard housing or build new homes for low income families. It will also remove the reluctance that tribes have of FEMA flood mapping tribal lands.

Insurance under the NFIP is expensive. In some cases, it is more expensive than what is available in the non-NFIP market.

Your support on this important legislation is vital to the ability of tribes to use IHBG and ICDBG funds while mitigating the risks of flooding, and to the ability of FEMA and tribes to work together to flood map tribal lands without the risk of tribes being unable to use federal funds.

This legislation is supported by the National American Indian Housing Council, the primary housing advocate of affordable housing on Indian lands.

Respectfully,

[NAME OF INDIAN TRIBE/TRIBAL ASSOCIATION]

1

[1] The GAO Report can be accessed at

[2] 24 CFR §58.6(a)(3) reads: “Paragraph (a) of this section does not apply to Federal formula grants made to a State.” Paragraph (a) reads: “(1) Under the Flood Disaster Protection Act of 1973 as amended (42 U.S.C. 4001-4128) Federal financial assistance for acquisition and construction purposes (including rehabilitation) may not be used in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, unless: (i) The community in which the area is situated is participating in the National Flood Insurance Program (see 44 CFR parts 59 through 79) or less than one year has passed since the FEMA notification regarding such hazards; and (ii) Where the community is participating in the National Flood Insurance Program, flood insurance protection is to be obtained as a condition of the approval of financial assistance to the property owner. (2) Where the community is participating in the National Flood Insurance Program and the recipient provides financial assistance for acquisition or construction purposes (including rehabilitation) for property located in an area identified by FEMA as having special flood hazards, the responsible entity is responsible for assuring that flood insurance under the National Flood Insurance Program is obtained and maintained.”

[3] 24 CFR §55.1(b)(1) reads: Under section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), proposed HUD financial assistance (including mortgage insurance) for acquisition or construction purposes in any “area having special flood hazards” (a flood zone designated by the Federal Emergency Management Agency (FEMA)) shall not be approved in communities identified by FEMA as eligible for flood insurance but which are not participating in the National Flood Insurance Program. This prohibition only applies to proposed HUD financial assistance in a FEMA-designated area of special flood hazard one year after the community has been formally notified by FEMA of the designation of the affected area. This prohibition is not applicable to HUD financial assistance in the form of formula grants to states, including financial assistance under the State-administered CDBG Program ( 24 CFR part 570, subpart I) and the State-administered Rental Rehabilitation Program ( 24 CFR 511.51), Emergency Shelter Grant amounts allocated to States ( 24 CFR parts 575 and 576), and HOME funds provided to a state under Title II of the Cranston-Gonzalez National Affordable Housing Act ( 42 U.S.C. 12701- 12839).

[4]The HOME Investment Partnership Program authorized under Title II of the Cranston-Gonzales National Affordable Housing Act, 42 USC 12701 et seq. The HOME Program provides affordable housing funds to states annually.

[5] The HOME Investment Partnership Program authorized under Title II of the Cranston-Gonzales National Affordable Housing Act, 42 USC 12701 et seq. The HOME Program provides affordable housing funds to states annually.