Community Disaster Loan Applications and Cancellation

Project Overview

Hagerty was engaged by Nationwide Infrastructure Support Technical Assistance Consultants (NISTAC) to analyze 152 Special Community Disaster Loans (SCDL). These loans, valued at $1.4 billion, were awarded by the Federal Emergency Management Agency (FEMA) following a special legislation passed by Congress. The legislation aimed to assist local governments in Louisiana and Mississippi impacted by significant revenue losses after Hurricane Katrina.

Understanding the Mission

Under the loan regulations, applicants were eligible for full or partial loan forgiveness if they had a three-year operating deficit caused by revenue loss or increased Unreimbursed Disaster-Related Expenditures (UDRE). Our role was to analyze the data to determine if local and state governments qualified for forgiveness.

The Hagerty Approach

Before conducting the analysis, our experts in government accounting collaborated with FEMA to streamline the community disaster loan cancellation process. This included updating the cancellation regulations and addressing issues raised during the public comment period. We also drafted standard operating procedures and prepared training materials for the process. Hagerty also briefed key senior officials, including those at the Department of Homeland Security (DHS), the Office of Management and Budget (OMB), the Vice President’s Office, and the senior staffs of Senators Vitter and Landrieu, along with several members of Congress.

To complete the analysis, Hagerty assigned twelve accountants, including Certified Public Accountants (CPAs), to review audited financial reports from local governments. Our team also worked with Chief Financial Officers (CFOs) to compare actual post-disaster revenue with projected baseline revenues. Additionally, we reviewed UDRE documentation to determine if expenses were disaster-related, uncovered by other programs, and incurred within the three-year period after the disaster.

Achieving Results

Hagerty’s comprehensive analysis determined that over 60 percent of the total loan value was eligible for cancellation. FEMA accepted Hagerty’s findings and moved forward with the approval process. Once the program was ready for implementation, we briefed applicants and senior officials in each state to ensure a smooth rollout of the loan forgiveness process.