The FEMA PA Mandatory Flood Insurance Reduction rule applies a reduction to FEMA Public Assistance (PA) grant funding for certain facilities located in Special Flood Hazard Areas (SFHAs). Here's a breakdown of the key points:

What it is:

• This rule aims to incentivize communities to manage flood risks by requiring flood insurance for certain facilities.
• When a facility located in an SFHA is damaged by a disaster, and the facility owner doesn't have adequate flood insurance, FEMA reduces the amount of PA grant funding they receive.

How it applies:

• The reduction amount is typically equal to the maximum amount of insurance proceeds the facility could have received under a standard National Flood Insurance Program (NFIP) policy.
• This essentially means FEMA reimburses the applicant for the repairs minus the amount they could have recovered through flood insurance.

Justification:

• FEMA argues that communities that don't carry flood insurance on at-risk facilities are creating a burden on the federal government to repeatedly cover disaster recovery costs.
• The reduction is intended to encourage communities to take responsibility for flood risk mitigation by purchasing and maintaining flood insurance.

Exceptions:

• There might be exceptions to the Mandatory Flood Insurance Reduction rule in specific situations, such as:
  • If the facility is not insurable under the NFIP program due to program limitations.
  • If the applicant demonstrates they were actively pursuing flood insurance coverage at the time of the disaster.

Impact on Applicants:

• Applicants with facilities in SFHAs that lack flood insurance face a significant reduction in their PA grant funding if their project is deemed eligible for the reduction.
• This can create a financial burden for communities struggling to recover from disasters.

Important Considerations:

• FEMA regulations regarding the Mandatory Flood Insurance Reduction rule can be complex. It's crucial for applicants to understand their specific situation and potential impact on their PA grant funding.
• Applicants should consult with FEMA program specialists to determine if the reduction applies to their project and explore potential exceptions.

Resources:

• FEMA Public Assistance Policy Digest: Briefly mentions the Mandatory Flood Insurance Reduction  ([invalid URL removed])
• FEMA Appeal Letters on NFIP Mandatory Reduction: These case studies illustrate how FEMA applies the reduction in specific situations. Search online using terms like "FEMA appeals NFIP mandatory reduction"

By understanding this rule and its implications, applicants can make informed decisions about flood insurance for their facilities and potentially minimize the impact of the reduction on their PA grant funding.

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