FEMA Is Not Effectively
Administering a Program to
Reduce or Eliminate Damage
to Severe Repetitive Loss
Properties

September 8, 2020
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OFFICE OF INSPECTOR GENERAL
Department of Homeland Security
Consistent with our responsibility under the Inspector General Act, we will
provide copies of our report to congressional committees with oversight andappropriation responsibility over the Department of Homeland Security. We
will post the report on our website for public dissemination.
Please call me with any questions, or your staff may contact Sondra McCauley,
Assistant Inspector General for Audits, at (202) 981-6000.
Attachment
cc:David Maurstad, Deputy Associate Administrator for Insurance and Mitigation,
FEMA

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DHS OIG HIGHLIGHTS
FEMA Is Not Effectively Administering a
Program to Reduce or Eliminate Damage to
Severe Repetitive Loss Properties
September 8, 2020

What We Found

Why We Did
This Audit

FEMA is not adequately managing SRL properties covered by
NFIP. FEMA has not established an effective program to
reduce or eliminate damage to SRL properties and disruption
to life caused by repeated flooding.

Severe repetitive loss (SRL)
properties are those thatflood repeatedly, causing
significant difficulties forproperty owners. The
objective of this audit was todetermine to what extent theFederal Emergency
Management Agency (FEMA)
is managing SRL properties
covered by the National
Flood Insurance Program(NFIP).

What We
Recommend
We made threerecommendations to FEMA
to ensure accuracy of the
SRL list, as well as timely
and equitable distribution of
mitigation funding, and topromote the use of NFIP
Increased Cost ofCompliance coverage.
For Further Information:

Contact our Office of Public Affairs at(202) 981-6000, or email us at
DHS-OIG.OfficePublicAffairs@oig.dhs.gov

www.oig.dhs.gov

First, FEMA does not have reliable, accurate information
about SRL properties. This deficiency occurred because of
ambiguous FEMA forms to request removal of SRL
designation, poor organizational structure, and unassigned
roles for ensuring SRL data integrity. As a result, FEMA isusing inaccurate information to make funding-related
decisions, including requesting appropriations from
Congress, deciding where to implement large-scale
mitigation projects, and determining which residential
mitigation projects to fund through its Flood Mitigation
Assistance grant program (FMA). Additionally, not all NFIP
policyholders who have mitigated their SRL property havebenefited from reduced policy premiums.
Second, FEMA’s FMA, which aims to mitigate flood damage
for NFIP policyholders, provides neither equitable nor timely
relief to SRL applicants. We attribute this inefficiency todecentralized FMA grant application requirements andinadequate enforcement of grant requirements. FEMA could
strengthen its approach to mitigating risk to SRL properties
by promoting the use of Increased Cost of Compliancecoverage, which is included in NFIP flood policies to assist
with mitigation, and could make mitigation relief funding
more timely and equitable.

FEMA Response
FEMA concurred with all three of our recommendations. We
included a copy of FEMA’s response in its entirety inappendix B.

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Table of Contents
Background .................................................................................................... 1
Results of Audit .............................................................................................. 6
FEMA Does Not Have Reliable, Accurate Information on SRL Properties ....... 6
FEMA Could Improve the FMA Grant Program to Make Participation More
Equitable and Timely ................................................................................. 11
Recommendations......................................................................................... 15
Management Comments and OIG Analysis .................................................... 16

Appendixes
Appendix A: Objective, Scope, and Methodology ......................................... 20
Appendix B: FEMA Comments to the Draft Report...................................... 22
Appendix C: Office of Audits Major Contributors to This Report .................. 27
Appendix D: Report Distribution ................................................................ 28

Abbreviations
CFR
FEMA
FMA
HMGP
ICC
NFIP
OIG
SRL
U.S.C.

www.oig.dhs.gov

Code of Federal Regulations
Federal Emergency Management Agency
Flood Mitigation Assistance
Hazard Mitigation Grant Program
Increased Cost of Compliance
National Flood Insurance Program
Office of Inspector General
Severe Repetitive Loss
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Background
The Federal Emergency Management Agency’s (FEMA) mission is to reduce lossof life and property and protect communities nationwide from all hazards,
including natural disasters, acts of terrorism, and other manmade disasters.
To help accomplish this mission, FEMA manages the National Flood Insurance
Program (NFIP).
NFIP provides flood insurance for property owners to protect against losses
resulting from floods occurring in the United States.1 Property owners maypurchase an NFIP flood insurance policy, also known as a Standard Flood
Insurance Policy, from a Write Your Own insurance provider or directly from
FEMA through a servicing agent (NFIP Direct). From 1978 to 2018, NFIP
helped policyholders recover from 1.8 million flood losses, resulting in $66.5
billion in NFIP claims. Figure 1 shows the number of losses NFIP paid from1978 through 2018.
Figure 1. Number of NFIP Losses Paid by Year, 1978–2018

Source: Office of Inspector General (OIG) analysis of FEMA NFIP losses
1 The United States comprises the 50 states, District of Columbia, territories and possessions,

Commonwealth of Puerto Rico, and Trust Territory of the Pacific Islands.
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Since 1968,2 Congress has enacted several laws to strengthen NFIP andotherwise help policyholders reduce their risks of flooding. In the Flood
Insurance Reform Act of 2004, Congress identified a subset of residential
properties subject to severe repetitive losses and established the Severe
Repetitive Loss (SRL) pilot program to address them. The goal of this 5-year
pilot program was for FEMA to provide funding to reduce or eliminate thelong-term risk of flood damage and associated claims under NFIP. By funding
mitigation activities, the SRL pilot program sought to achieve maximum claims
savings in the shortest time.
Central to the SRL pilot program was creation of an SRL list identifying which
residential properties, having satisfied the SRL definition, were eligible forprioritized mitigation funding. The Flood Insurance Reform Act of 2004 definesan SRL property as an NFIP-insured or previously insured property that has
met at least one of the following paid flood loss criteria since 1978:a) four or more NFIP claims payments (including building and contents)
exceeding $5,000 each, in which the cumulative amount of such claims
payments exceeds $20,000; orb) at least two separate claims payments (building payments only), in which
the cumulative amount of the building portions of such claims exceeds
the market value of the building.
For both (a) and (b), at least two of the referenced claims must have occurred
within a 10-year period and must be greater than 10 days apart.3,4 As of
March 31, 2019, the SRL list had 37,786 properties identified as meeting the
SRL definition. According to the list, 27,415 (73 percent) properties had not yet
completed mitigation activities and were at an elevated risk of future flooding.
Figure 2 shows the distribution of the SRL properties throughout the UnitedStates, as of March 31, 2019.

2 NFIP was established with the passage of the National Flood Insurance Act of 1968. The
Reorganization Plan No. 3 of 1978 established FEMA and included transferring NFIP
responsibility to FEMA. The reorganization plan became effective on April 1, 1979.
3 This definition only applies to single-family properties. See also NFIP Flood Insurance Manual,as updated.
4 FEMA uses a modified version of the SRL definition for Flood Mitigation Assistance grant
program (FMA) purposes. Specifically, the FMA SRL definition does not include limits on thetime between qualifying claims.

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Figure 2. Distribution of 37,786 SRL Properties, as of March 31, 2019

Source: OIG analysis of FEMA’s March 31, 2019 SRL list
Note: As discussed in this report, we found the SRL information to be unreliable. Therefore,
this graphic is included for illustrative purposes only.

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Since Congress’ creation of NFIP in 1968, flood risks have continued and thecosts and consequences of flooding have increased dramatically. In an effort tomake NFIP more sustainable and financially sound, Congress passed theBiggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters). As part ofBiggert-Waters, the SRL Pilot Program and FEMA’s Repetitive Flood Claims
Grant Program5 were consolidated and related funding and activities weredirected to the Flood Mitigation Assistance grant program (FMA).
For decades, FMA has provided funding to states, territories, federally
recognized tribes, and local communities for projects and planning that reduceor eliminate the long-term risk of flood damage to NFIP-insured structures.
Congress appropriates funding for FMA annually. Because of Biggert-Waters,
FMA became the primary assistance available to mitigate repetitive loss6 and
SRL properties. FEMA uses the SRL list as its primary source of eligibility
information to guide distribution of funds under FMA. FMA provides grants to
NFIP-insured property owners to:•••acquire or relocate at-risk structures and convert acquired land toopen space;elevate existing structures; anddry flood-proof7 historic properties.

From 2013 through 2019, following the enactment of Biggert-Waters, $1.09
billion has been available in FMA grants. Because demand for FMA grants has
exceeded available funds, FEMA funds only those projects with the potential tomaximize the greatest savings to NFIP. Figure 3 shows the amount of FMA
applications and funds available since Biggert-Waters was enacted.

5 The Repetitive Flood Claims Program was authorized by the Flood Insurance Reform Act of

2004, with the goal of reducing flood damages to individual properties for which one or moreclaim payments for losses have been made under flood insurance coverage, resulting in thegreatest savings to the National Flood Insurance Fund in the shortest time.
6 A repetitive loss property is an NFIP-insured structure that has incurred flood-related damageon two occasions, in which the cost of the repair, on average, equaled or exceeded 25 percent of
the structure’s market value at the time of each flood event, and at the time of the second
flood, the property had Increased Cost of Compliance coverage.
7 Dry flood-proofing refers to techniques applied to keep structures dry by sealing them to keepout floodwaters.
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Figure 3. FMA Applications and Available Funding since Enactment ofBiggert-Waters

Source: OIG analysis of FEMA’s FMA grant data

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Results of Audit
FEMA is not adequately managing SRL properties covered by NFIP. FEMA has
not established an effective program to reduce or eliminate damage to SRL
properties and disruption to life caused by the repeated flooding.
First, FEMA does not have reliable, accurate information about SRL properties.
This deficiency occurred because of ambiguous FEMA forms to request removalof SRL designation, poor organizational structure, and unassigned roles for
ensuring data integrity. As a result, FEMA is using inaccurate information to
make funding-related decisions, including requesting appropriations from
Congress, deciding where to implement large-scale mitigation projects, anddetermining which residential mitigation projects to fund through FMA.
Additionally, not all NFIP policyholders who have mitigated their SRL property
have benefited from reduced policy premiums.
Second, FMA, which aims to mitigate flood damage for NFIP policyholders,provides neither equitable nor timely relief for SRL applicants. We attribute
this inefficiency to decentralized FMA grant application requirements andinadequate enforcement of grant requirements. FEMA could strengthen its
approach to mitigating SRL properties by promoting the use of Increased Costof Compliance (ICC) coverage, which is included in NFIP flood policies to assist
with mitigation, and could make mitigation relief funding more timely andequitable.

FEMA Does Not Have Reliable, Accurate Information on SRL
Properties
When an NFIP policyholder files a flood claim, FEMA determines whether the
NFIP-insured residential property qualifies for placement on the SRL list. For
inclusion on the SRL list, the property must have had either four or moreclaims of $5,000 each, or at least two claims exceeding the market value of thebuilding. At least two of the referenced claims must have occurred within a 10year period. Once FEMA places a property on the SRL list, FEMA transfers thepolicyholder’s flood insurance policy from the policyholder’s insurance provider
to FEMA’s Special Direct Facility, operated by NFIP Direct,8 upon policy
renewal. NFIP representatives monitor all Special Direct Facility policies fortargeted mitigation actions.
8 NFIP Direct is a FEMA program that assists in issuing flood insurance policies under NFIP incommunities designated by FEMA and delivers policies and payment of claims for losses, asprescribed by and at the discretion of FEMA.

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If a property on the SRL list is mitigated, either with Federal assistance9 orproperty owner funding, the property remains on the list, but is reported as
mitigated. Therefore, the SRL list includes both non-mitigated and mitigated
SRL properties. FEMA uses information from the SRL list to make fundingrelated decisions, including requesting appropriations from Congress, deciding
where to implement large-scale mitigation projects, such as those under the
Hazard Mitigation Grant Program (HMGP),10 and determining which residential
mitigation projects to fund through FMA.
Figure 4 shows the lifecycle of an SRL property on the SRL list.
Figure 4. Lifecycle of SRL-Designated Property

Flood policy with
Write Your Own or
NFIP Direct at
subsidized rates.

Flood
claim
paid.

Flood claim history
reviewed to identify
current SRL
properties.

Mitigate with help of an
FEMA grant.

Mitigate substantial or
repetitive damaged property
with NFIP Increased Cost ofCompliance coverage.

Obtain and provide
new elevation certificate or
accept purchase offer.

Obtain and provide
new elevation certificate,
proof of demolition, or proofof relocation.

Pay actuarial rates
until property
is mitigated.

Newly identified SRL policies(properties) transferred to
the Special Direct Facility atpolicy renewal. Subsidized
premiums no longer
allowed.

Community

FEMA

Policyholder

Mitigation Efforts

Mitigation statuschanged to“mitigated” on
the SRL list.

Ensure deed
restriction placed on
property.

Complete and submit request
for mitigation status change
from non-mitigated tomitigated.

Mitigate without any
Federal assistance.

Flood policy with
Write Your Own or
NFIP Direct at alower non-SRL
premium rate.

Enforce deed
restriction
requiring flood
insurance.
(FEMA Grant).

Enforce deed
restriction forland use.
(FEMA Grant).

Source: OIG analysis of NFIP guidance

As of March 31, 2019, FEMA’s SRL list comprised 37,786 properties, of which
27,415 (73 percent) were reportedly not mitigated and 10,371 (27 percent) werereportedly mitigated. Figure 5 illustrates the distribution of non-mitigated and9 In addition to FEMA’s FMA, other Federal agencies have programs aimed at helping
homeowners mitigate their flood-prone properties. These include the Road Home Programadministered by the U.S. Department of Housing and Urban Development.
10 Following a Presidential Major Disaster Declaration, HMGP helps communities implement
hazard mitigation measures requested by governors or tribal executives in states, territories,
and tribal areas. HMGP’s key purpose is to fund mitigation measures that reduce the risk ofloss of life and property from future disasters.

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mitigated SRL properties in the 10 states with the largest number of SRL
properties.
Figure 5. Non-mitigated and Mitigated Properties on SRL List, as ofMarch 31, 2019

Source: OIG analysis of SRL list as of March 31, 2019

To verify the accuracy of the SRL list, we visited 837 properties in 4 of FEMA’s
10 regions. We determined the list contained incorrect information.
Specifically, 140 (17 percent) of the 837 properties had been mitigated, butwere incorrectly classified as non-mitigated on the March 31, 2019 SRL list. Of
these, 29 were vacant lots and 111 were elevated structures. In one example,
FEMA had acquired and demolished an SRL property in 1993 to protect it fromfuture flood losses, but it remained classified as non-mitigated on the SRL list.
During our site visit to the property address, we confirmed the SRL property
had been demolished and the previous location of the property was partiallycovered by the Atlantic Ocean. Figure 6 shows both a ground and aerial viewof the previous location of the property.

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Ground level view of FEMA acquired and demolishedSRL Property (see blue line)
Source: OIG photo

Aerial View

Ground Level View

Figure 6. FEMA Acquired and Demolished SRL Property

Aerial View of FEMA acquired and demolished SRL
Property (see blue outline)
Source: MassGIS (Bureau of Geographic Information)

Properties that have been mitigated but remain designated as non-mitigated on
the SRL list can have significant financial implications for property owners.
Specifically, once a property is placed on the SRL list, Biggert-Waters requires
its annual NFIP premium be increased 25 percent until the premium matches
the property’s true flood risk. The 25 percent penalty rate is designed topersuade SRL property owners to mitigate against future flooding. Once a
property is deemed mitigated, policyholders can choose their own flood
insurance provider and qualify for lower premiums.
Because a property’s mitigation status directly affects its insurance premium,
we also reviewed 73 SRL properties that were elevated using FMA grant funding
to determine whether their premiums properly reflected mitigation. Our
sample included 59 correctly classified mitigated and 14 incorrectly classified
non-mitigated SRL properties as of March 31, 2019. We determined that,
despite 59 FMA-funded properties having the correct mitigation status on the
SRL list, 17 (29 percent) did not properly receive reductions to their insurance
premiums. For example, one policyholder completed elevation 10 months after
the NFIP policy renewal of $1,000.11 This policyholder did not benefit fromreduced premiums until the next policy renewal 2 months later. If theelevation certificate had been properly recorded, this policyholder’s premiums
would have been reduced by $160 in the first year of mitigation. In anotherexample, one policyholder incurred increasing premiums for 4 years after
elevating, resulting in an overpayment of $5,600 in premiums. Additionally, we
11 Dollar amounts in all examples in this report are approximate.

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determined that, for 10 (71 percent) of the 14 incorrectly classified properties,
the policyholders’ insurance premiums did properly reflect mitigation eventhough the March 31, 2019 SRL list shows these properties as non-mitigated.
Issues with the form used to request removal of the SRL designation may
explain why some properties that had been mitigated continued to appear on
the list as non-mitigated. As previously shown in Figure 4, before a property
can be designated on the SRL list as mitigated and, therefore, eligible for
reduced insurance premiums, a community official must submit a completed
NFIP Repetitive Loss Update Worksheet (Form AW-501). FEMA officials
confirmed submission of the Form AW-501 was the only way to update aproperty’s mitigation status on the SRL list.
However, we found Form AW-501 and its instructions ambiguous and,
therefore, unhelpful. For instance, neither the form nor the instructions makeclear that the form’s main purpose is to facilitate the removal of a property’s
SRL designation. During our visits to 16 communities, we identified a generallack of awareness and broad confusion among community and state officials
about the significance of Form AW-501.
FEMA’s data indicated that, from fiscal year 2014 through FY 2017, FEMA
changed the mitigation status of 1,001 SRL properties, 54 percent of which are
in Louisiana. However, FEMA was unable to provide evidence that clearly
identified how many Form AW-501s had been received and processed during
this same period
We further attribute unreliability of the SRL list and associated problems to theabsence of SRL-specific roles and responsibilities within FEMA. During our
audit, we identified three FEMA divisions that rely on the SRL list to renderfunding decisions on activities such as requesting appropriations from
Congress and implementing and funding large-scale and residential mitigation
projects. Although FEMA distributes billions of dollars based on informationfrom the SRL list, FEMA could not identify any specific official or division
directly responsible for ensuring the integrity of the SRL list.
As a result, FEMA is using inaccurate information to make FMA funding
decisions. Additionally, not all NFIP policyholders who have mitigated their
SRL property have benefited from reduced policy premiums or been afforded
the opportunity to choose their own insurance provider.

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FEMA Could Improve the FMA Grant Program to Make
Participation More Equitable and Timely
For decades, FMA has provided funding to states, territories, federally
recognized tribes, and local communities for projects and planning that reduceor eliminate long-term risk of flood damage to structures insured under NFIP.
FMA also provides homeowners with the opportunity to obtain assistance forup to 100 percent of the cost of mitigation.
According to FEMA’s FMA application process outlined in Figure 7, individual
homeowners cannot apply to FEMA directly, but must work in conjunction
with sub-applicants and applicants to apply for FMA funding. Additionally,
FMA funds are only available to NFIP-insured homeowners. FEMA announces
the availability of FMA funding through a Notice of Funding Opportunity.
Figure 7. FEMA’s Application Process for FMA Funding

Source: FEMA

FEMA could improve FMA by making participation in the program more
equitable and timely. Our audit revealed that FMA recipients depend on thewillingness of state and local officials to participate in the FMA program, may
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be subject to upfront or out of pocket costs, and must wait years for mitigation
to be completed. Additionally, FEMA does not distinguish or prioritize relief for
primary versus secondary residences and allows FMA recipients to avoid
maintaining proper flood insurance. We attribute these inconsistent practices,
requirements, and results to FEMA regions, states, and communities having
their own specific FMA grant application requirements as well as FEMA not
having a formalized process to enforce grant requirements. As a result, FEMA
may not be accomplishing FMA’s goal to reduce or eliminate claims under
NFIP.
In the current process, NFIP policyholders depend on the willingness of stateand local officials to participate in FMA. Without the participation of thesestate and local officials, policyholders are unable to apply for FMA funding for
mitigation. Eight eligible applicants (District of Columbia, Hawaii, Maine,
Minnesota, Mississippi,12 New Mexico, South Dakota, and the U.S. Virgin
Islands) did not apply for FMA funding during the FY 2013 through FY 2018
grant cycles. For this reason, 1,608 SRL policyholders also were unable toapply for FMA funding.13
Another disincentive to policyholders’ participation in FMA is the imposition of
upfront and out-of-pocket costs. For example, one community required
homeowners to pay a $250 grant application fee as well as a $5,000 retainer toleverage awarded funds. A different community made homeowners pay the
initial costs to begin elevation of their properties, including the first progress
payment to the elevation contractor. In yet another setting, homeowners
incurred upfront expenses for engineering plans and elevation certificatesnecessary to satisfy FEMA regional requirements. Despite the assurance of
future reimbursement from FEMA, officials said these upfront and out-ofpocket costs created an insurmountable barrier for homeowners seeking
mitigation assistance through FMA.
Officials also said that lengthy waiting periods for funding prompts many
policyholders to avoid or abandon participation in FMA. Even if a policyholder
is able to apply for and receive FMA funding, the time between FEMA’s
issuance of the Notice of Funding Opportunity and mitigation of their property
can take several years. Our sample included 120 homeowners who received
FMA funds and completed mitigation activities that took, on average, 2.7 years.
Of these homeowners, 25 (23 percent) sustained intervening, pre-mitigation
flood damage, for which FEMA reimbursed them $4.7 million. Extended delays

12 Mississippi is one of the top 10 SRL states depicted in Figure 5.
13 This figure is based on the SRL list dated March 31, 2019.

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in mitigation procedures can exacerbate property damage and disruption tohomeowners’ lives.
FEMA also does not distinguish or prioritize relief for primary versus secondary
residences and allows FMA recipients to avoid maintaining proper flood
insurance. Among our sample of 211 FMA property owners approved for FMA
funding, we found 53 (25 percent) who were categorized as other than primaryresidences (e.g., secondary or income properties). We identified homeowners
displaced from their primary residences pending mitigation; yet others, whowere not displaced, received grants to repair secondary or income properties.
Even though both homeowner groups are equally eligible for FMA funding, notprioritizing relief for those displaced is inconsistent with the primary objectiveof the SRL properties strategy, “to eliminate or reduce the damage to property
and the disruption to life caused by repeated flooding.”14 Additionally, 10 FMA
recipients in our sample have avoided paying flood insurance, contrary to theconditions for receiving FMA funding.15 In one instance, a property owner used
FMA funding to mitigate a property that had not had an NFIP policy since 2007
and was not the policyholder’s primary residence. FEMA’s failure to enforce its
flood insurance requirement has led to FMA recipients discontinuing their
participation in NFIP, as well as FMA continuing to rely on borrowing from
taxpayer funds to cover NFIP flood claims.16
In addition to improving FMA, FEMA could strengthen its approach for
mitigating SRL properties by promoting communities’ use of the ICC “repetitiveloss” provision available under NFIP. ICC coverage of up to $30,000,17 which isincluded in NFIP flood policies, may be available to help policyholders pay toelevate, demolish, relocate, or flood-proof non-residential structures, according
to local codes and floodplain ordinances. A policyholder may be eligible to filea claim for ICC coverage in two instances:

14 NFIP Flood Insurance Manual, as updated.
15 FEMA requires FMA recipients to have insurance at the time of application for a grant.

Additionally, flood insurance must be maintained for the life of the structure.

16 NFIP’s primary source of revenue comes from premiums collected to insure policyholders’property. These resources are inflows to the Government and are not the result of
intragovernmental flows. When claims exceed revenue, FEMA has borrowing authority thatcan be accessed to satisfy outstanding claims. In FY 2018, the Additional Supplemental
Appropriations for Disaster Relief Requirements Act (P.L. 115-72) canceled $16 billion of NFIP’s
debt to Treasury. As of September 30, 2019, FEMA owes Treasury $20.5 billion to cover claims
and related expenses.
17 ICC coverage is in addition to coverage for the repair of the building's actual physical damage
caused by flooding. ICC coverage, first available in 1997, was initially limited to $15,000. ICC
coverage increased to $20,000 in 2000 and $30,000 in 2003.
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1. When a community determines that a building is “substantiallydamaged” and the cost to repair or improve the structure
exceeds its market value by a threshold amount adopted by law
or ordinance. Community building officials are responsible for
issuing substantial damage declarations.
2. When a community has a repetitive loss provision in its
floodplain management ordinance and determines that abuilding was damaged by a flood two times in the past 10 years,
where the cost of repairing the flood damage, on average,
equaled or exceeded 25 percent of its market value at the timeof each flood.
Currently, many policyholders cannot make an ICC claim because theircommunities have not adopted the repetitive loss provision in their floodplain
management laws or ordinances. Although ICC funding may not cover the fullcost of mitigation, making it available for repetitive loss properties could give
policyholders more equitable and timely relief not currently available through
FMA. As of March 31, 2019, approximately 2,800 non-mitigated single-family
properties18 on the SRL list had experienced two or more losses within 10 years
totaling more than 50 percent of the value of their homes.
In our sample of 16 communities, 10 had not adopted a repetitive loss
provision in their flood plain management laws or ordinances. If thesecommunities had the repetitive loss provision, an estimated 600 (17 percent) of
the 3,557 non-mitigated single family properties listed on the March 31, 2019
SRL list may have qualified for ICC coverage because they met the ICC
repetitive loss definition. In one instance, we visited a home valued at$543,000 that had sustained four flood losses, resulting in NFIP claim
payments totaling $1,243,000 ($943,000 for the building and $300,000 for thecontents). Despite these repetitive losses, the property had not been declared
substantially damaged after any flood. Some losses might have been avoided if
ICC funding had been available to promote mitigation.
Congress has identified a need for ICC reform. Proposed legislation would
increase ICC coverage up to $100,000 and expand eligible mitigation
activities.19

18 Market values were not available for these properties. As an estimate, we used the building’svalue at the time of the most recent loss.
19 Proposed legislation includes the 21st Century Flood Reform Act (H.R. 2874), Flood Insurance
Affordability and Sustainability Act of 2017 (S. 1313), and the Sustainable, Affordable, Fair, andEfficient (SAFE) National Flood Insurance Program Reauthorization Act of 2017 (S. 1368).

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Recommendations
Recommendation 1: We recommend the Administrator for the Federal
Emergency Management Agency devise a plan to strengthen its management of
SRL properties and ensure the accuracy of the SRL list. The plan should:xxx

assign specific roles and responsibilities to ensure cross-division
integration, implementation, and monitoring of FEMA’s SRL strategy;
improve its workflow tracking system to monitor all requested changes
to the SRL list and capture resulting outcomes; andevaluate alternatives for updating the SRL list apart from Form AW-501,
such as permitting updates to a property’s mitigation status based on
submission of a proper elevation certificate.

Recommendation 2: We recommend the Administrator for the Federal
Emergency Management Agency revise FEMA’s approach to ensure equitable
and timely distribution of mitigation funding. At a minimum, FEMA should:xxx

devise a plan and conduct outreach to communities with a large numberof SRL properties to identify and address barriers to their participation in
the Flood Mitigation Assistance (FMA) grant program;
update regional, state, and community training to address inconsistentpractices and requirements that hinder NFIP-insured participation in the
FMA grant program; anddevelop and implement policies and procedures to monitor and enforce
grant requirements.

Recommendation 3: We recommend the Administrator for the Federal
Emergency Management Agency strengthen its approach for mitigating SRL
properties by promoting communities’ use of the Increased Cost of Compliance
repetitive loss provision available under NFIP.

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Management Comments and OIG Analysis
FEMA concurred with all three of our recommendations. A copy of FEMA’s
response in its entirety is included in appendix B. FEMA also provided
technical comments and suggested revisions to our report in a separate
document. We reviewed the technical comments and made changes to thereport where appropriate. A summary of FEMA’s response and our analysis
follows.
FEMA’s Comments to Recommendation 1: Concur. FEMA will devise a plan
to assign specific roles and responsibilities, improve workflow tracking, andevaluate alternatives for updating the SRL strategy. Estimated Completion
Date: December 31, 2021.
OIG Analysis of FEMA’s Comments: FEMA’s planned corrective action is
responsive to the recommendation. The recommendation will remain open andresolved until we have reviewed FEMA’s plan to strengthen its management of
SRL properties and ensure the accuracy of the SRL list.
FEMA’s Comments to Recommendation 2: Concur. FEMA will develop aplan and conduct outreach to communities identified as having high numbersof SRL properties, according to the FMA definition of SRL. During thisoutreach, FEMA will identify barriers to participation, as well as potential
solutions, such as project scoping funding, technical assistance, and othercapability building methods to enhance these communities’ participation.
Further, FEMA will initiate scoping efforts by the end of 2020 and develop an
engagement plan by the end of 2021.
Officials said FEMA already administers a robust training and outreachprogram to ensure all FEMA regional staff understand grant application
requirements and expectations and to maintain program consistency
nationwide. However, OIG’s draft report and FEMA’s discussions with OIG
auditors brought to light inconsistencies pertaining to documentation on
feasibility and effectiveness of project eligibility review. In particular, we
identified inconsistencies in requiring final stamped engineering and design
documents, which are a major cost for sub-applicants who are not guaranteed
funding. To address these inconsistencies, FEMA will take the following
corrective actions:
1.

Evaluate observations in OIG’s draft report and develop training andoutreach to address inconsistencies noted during both FEMA Region
Notice of Funding Opportunity webinars in summer/fall 2020.

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2.

Clarify feasibility documentation requirements and verify distributionof corrective messaging to state hazard mitigation and floodplain
management offices by fall 2020.
Update Business Rules materials and webinars with report findings
and highlight these materials for regional review staff, prior to the
Eligibility and Completeness Review in February 2021.
Collect and evaluate information about projects that regions marked
ineligible during Eligibility and Completeness Review in the FY 2020
FMA review process.

3.
4.

FEMA has developed and implemented several policies and procedures tomonitor and enforce grant requirements, according to the Code of Federal
Regulations (CFR).20 To monitor and enforce NFIP requirements, FEMA will notfund future mitigation projects where applicants have failed to obtain andmaintain flood insurance, as this requirement is part of FEMA’s national
closeout checklist. Although FEMA is not authorized to monitor and enforce
this requirement after grant closeout, consistent with the United States Code
(U.S.C.),21 it requires placing deed restrictions on structures to notify future
property owners, lenders, or other interested parties about the requirement tomaintain flood insurance. However, although it has authority to enforce theterms of Federal grants, after grant closeout (except for acquisitions under 44
CFR Part 80), FEMA said its options to enforce maintenance of flood insurance
are limited. FEMA cannot recoup funds because:x
x
x

it would undermine the purpose of the grant (to assist with mitigation);
the funds were properly spent, as verified during grant closeout; andthe recoupment process would be unwieldy.

According to FEMA, tracking owners when property changes hands andregularly checking on homeowners’ compliance for all FEMA projects, property
by property, would be extremely challenging. FEMA also has no enforcement
mechanism or authority to compel homeowners to comply.
The deed restriction FEMA requires for mitigated properties also ensures any
future purchasers, including lenders, are notified of the requirement topurchase flood insurance. Noncompliance may result in denial of federallybacked mortgages and ineligibility for other Federal aid.

20 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit

Requirements for Federal Awards; and 44 CFR Subchapter B, Insurance and Hazard Mitigation
21 42 U.S.C. 4012a, Flood Insurance Purchase and Compliance Requirements and Escrow

Accounts
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For its outreach to communities with high numbers of SRL properties andupdate training to address inconsistencies, FEMA gave an EstimatedCompletion Date of December 31, 2021.
OIG Analysis of FEMA’s Comments: FEMA’s planned corrective actions are
partially responsive to the recommendation. Specifically, FEMA said it would:xxdevise a plan and conduct outreach to communities with a large numberof SRL properties to identify and address barriers to their participation in
FMA; andupdate training to FEMA region, state, and community staff to addressinconsistent practices and requirements that hinder NFIP-insured
participation in the FMA grant program.

However, FEMA’s corrective actions do not include developing andimplementing policies and procedures to monitor and enforce grantrequirements. We acknowledge FEMA’s existing mechanisms to monitor grantrequirements, but despite these mechanisms, 10 FMA recipients in our sample
did not maintain flood insurance before, during, or after grant closeout. Uponbeing selected to receive federally-funded hazard mitigation assistance, every
property owner in a Special Flood Hazard Area22 is expected to sign a “Model
Acknowledgement of Conditions for Mitigation of Property in a Special Flood
Hazard Area With FEMA Grant Funds.” Upon signing this acknowledgement,
the property owner agrees:That the Property Owner has insured all structures that will
not be demolished or relocated out of the Special Flood Hazard
Area for the above-mentioned property to an amount at least
equal to the project cost or to the maximum limit of coverage
made available with respect to the particular property,
whichever is less, through the National Flood Insurance
Program (NFIP), as authorized by 42 U.S.C. §4001 et seq., aslong as the Property Owner holds title to the property as
required by 42 U.S.C. §4012a…
The above conditions are binding for the life of the property…

22 Flood hazard areas identified on the Flood Insurance Rate Map are classified as a Special
Flood Hazard Area. Special Flood Hazard Area are defined as the area that will be inundated
by the flood event having a 1-percent chance of being equaled or exceeded in any given year.
The 1-percent annual chance flood is also referred to as the base flood or 100-year flood.

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Failure to abide by the above conditions may prohibit theProperty Owner and/or any subsequent purchasers fromreceiving Federal disaster assistance with respect to thisproperty in the event of any future flood disasters. If the above
conditions are not met, FEMA may recoup the amount of the
grant award with respect to the subject property, and theProperty Owner may be liable to repay such amounts.
Aspects of this acknowledgement are placed as deed restrictions on theproperty. Specifically, the flood insurance coverage on the property must be
maintained during the life of the property, regardless of transfer of ownershipof such property. We agree that full recoupment of the funds may undermine
the purpose of the grant. However, recoupment of flood insurance premiums
due is enforceable, as agreed to in the acknowledgement and deed restriction.
This recommendation will remain open and unresolved until FEMA provides us
corrective actions plans to develop and implement policies and procedures tomonitor and enforce grant requirements.
FEMA’s Comments to Recommendation 3: Concur. FEMA will strengthen
its approach to mitigating SRL properties by promoting communities’ use of the
ICC repetitive loss provision available under NFIP. Estimated Completion Date:
December 31, 2021.
OIG Analysis of FEMA’s Comments: FEMA’s planned corrective action is
responsive to the recommendation. The recommendation will remain open andresolved until we have reviewed FEMA’s outreach material promoting
communities’ use of the ICC repetitive loss provision.

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Appendix A
Objective, Scope, and Methodology
The Department of Homeland Security Office of Inspector General wasestablished by the Homeland Security Act of 2002 (Public Law 107−296) byamendment to the Inspector General Act of 1978.
The objective of this audit was to determine to what extent FEMA is managing
SRL properties covered by NFIP.
To understand FEMA’s oversight role for the program, we obtained andreviewed relevant authorities, policies, and procedures including:
x
x
x
x
x
x
x

Flood Insurance Reform Act of 2004;
Biggert-Waters Flood Insurance Reform Act of 2012;
FEMA SRL Pilot Program Guidance;
FEMA Hazard Mitigation Assistance Guidance;
NFIP Flood Insurance Manual;
NFIP: Community Rating System Coordinator’s Manual; andNFIP: Increased Cost of Compliance Coverage.

We also interviewed officials from FEMA’s Federal Insurance and Mitigation
Administration and Regional Offices to identify staff directly responsible for the
management, oversight, and execution of the SRL program at FEMA, NFIP
contractors, and selected states and localities.
We judgmentally selected 16 NFIP communities that had SRL properties as ofMarch 31, 2018, and received FMA funding from FY 2013 through 2016.
Within these communities, we visited 884 properties (837 SRL and 47 nonSRL). We examined the 837 SRL properties to determine whether their
mitigation status on the March 31, 2019 SRL list was correct. We determined
the SRL list was not sufficiently reliable because it did not always reflect thecorrect mitigation status of the SRL properties.
Additionally, we examined 211 FMA properties (164 SRL and 47 non-SRL) toassess the effectiveness of FEMA’s FMA grant program. We determined
whether these properties complied with the conditions for receiving FMA
funding, including maintaining flood insurance in perpetuity. We also
calculated the time it took a homeowner who had received FMA funding toapply for and complete mitigation. The following table identifies NFIP
communities we visited.
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NFIP Communities Visited
Number of Properties Observed

FEMA
Region

I
III

IV

VI

State

NFIP Community

Town of Marshfield
Town of ScituateWest Whiteland Township
Pennsylvania
Yardley BoroughFloridaSanta Rosa County
Pensacola Beach-Santa
Rosa Island Authority
Escambia County
North Carolina Beaufort County
Craven County
Town of Carolina BeachLouisiana
City of New Orleans
Jefferson Parish
St. Tammany Parish
Texas
Galveston County
City of Nassau Bay
City of Houston
Massachusetts

Total

SRL

SRL

FMA

(Only)

w/FMA(Only)

Total

10
52
1
26
55

1
8
3
11
3

3

11
60
4
37
61

131

12

1

144

23
27
9
26
106
59
43
35
19
51

1
4
9
7
8
42
15
5
7
28

7
4
3
4
1
1
20
3

31
31
22
36
114
105
59
41
46
82

673

164

47

884

Source: OIG analysis of March 31, 2018, and FMA

In addition to visiting 884 properties, we conducted in-person and telephonicinterviews with FEMA regional and state personnel responsible for overseeing
mitigation activities in the 16 SRL communities. We also interviewed
community officials to gain an understanding of their SRL mitigation efforts.
We conducted this performance audit between August 2018 and December
2019 pursuant to the Inspector General Act of 1978, as amended, andaccording to generally accepted government auditing standards. Thosestandards require we plan and perform the audit to obtain sufficient,appropriate evidence to provide a reasonable basis for our findings andconclusions based upon our audit objectives. We believe the evidence obtained
provides a reasonable basis for our findings and conclusions based upon our
audit objectives.

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Appendix B
FEMA Comments to the Draft Reportwww.oig.dhs.gov

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Appendix C
Office of Audits Major Contributors to This Report
Sandra John, Audit Director
Devon Padula, Audit Manager
Jamie Clark, Auditor in Charge
Kevin Donahue, Auditor
Bethany Russell, Auditor
Ellen McSweeney, Communications Analyst
Kelly Herberger, Communications Analyst
Audrey Van, Independent Referencer

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Appendix D
Report Distribution
Department of Homeland Security
Secretary
Deputy Secretary
Chief of Staff
Deputy Chiefs of Staff
General Counsel
Executive Secretary
Director, GAO/OIG Liaison Office
Under Secretary, Office of Strategy, Policy, and Plans
Assistant Secretary for Office of Public Affairs
Assistant Secretary for Office of Legislative Affairs
FEMA Administrator
FEMA Audit Liaison
Office of Management and Budget
Chief, Homeland Security Branch
DHS OIG Budget Examiner
Congress
Congressional Oversight and Appropriations Committees

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Additional Information and Copies
To view this and any of our other reports, please visit our website at:www.oig.dhs.gov.
For further information or questions, please contact Office of Inspector General
Public Affairs at: DHS-OIG.OfficePublicAffairs@oig.dhs.gov.
Follow us on Twitter at: @dhsoig.

OIG Hotline
To report fraud, waste, or abuse, visit our website at www.oig.dhs.gov and clickon the red "Hotline" tab. If you cannot access our website, call our hotline at(800) 323-8603, fax our hotline at (202) 254-4297, or write to us at:
Department of Homeland Security
Office of Inspector General, Mail Stop 0305
Attention: Hotline
245 Murray Drive, SW
Washington, DC 20528-0305