SEC. 2. STATE REVOLVING LOAN FUNDS FOR FLOOD MITI-
GATION. 
Chapter I of the National Flood Insurance Act of 
1968 (42 U.S.C. 4011 et seq.) is amended by adding at 
the end the following: 
‘‘SEC. 1326. STATE REVOLVING LOAN FUNDS FOR FLOOD 
MITIGATION. 
‘‘(a) DEFINITIONS.—In this section— 
‘‘(1) the term ‘Community Rating System’ 
means the community rating system carried out 
under section 1315(b); 
‘‘(2) the term ‘eligible State’ means a State, the 
District of Columbia, and the Commonwealth of 
Puerto Rico; 
‘‘(3) the term ‘insular area’ means— 
‘‘(A) Guam; 
‘‘(B) American Samoa; 
‘‘(C) the Commonwealth of the Northern 
Mariana Islands; 
‘‘(D) the Federated States of Micronesia; 
‘‘(E) the Republic of the Marshall Islands; 
‘‘(F) the Republic of Palau; and 
‘‘(G) the United States Virgin Islands; 
‘‘(4) the term ‘intended use plan’ means a plan 
prepared under subsection (d)(1); 
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‘‘(5) the term ‘low-income geographic area’ 
means an area described in paragraph (1) or (2) of 
section 301(a) of the Public Works and Economic 
Development Act of 1965 (42 U.S.C. 3161(a)); 
‘‘(6) the term ‘low-income homeowner’ means 
the owner of a primary residence, the household in-
come of which in a taxable year is not more than 80 
percent of the median income for the area in which 
the residence is located; 
‘‘(7) the term ‘participating State’ means an el-
igible State that— 
‘‘(A) has entered into an agreement under 
subsection (b)(1); and 
‘‘(B) agrees to comply with the require-
ments of this section; 
‘‘(8) the term ‘pre-FIRM building’ means a 
building for which construction or substantial im-
provement occurred before the effective date of the 
initial Flood Insurance Rate Map published by the 
Administrator under section 1360 for the area in 
which the building is located; 
‘‘(9) the term ‘repetitive loss structure’ has the 
meaning given the term in section 1370(a); 
‘‘(10) the term ‘severe repetitive loss property’ 
has the meaning given the term in section 1307(h); 
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‘‘(11) the term ‘State loan fund’ means a flood 
mitigation assistance revolving loan fund established 
by an eligible State under this section; and 
‘‘(12) the term ‘tribal government’ means the 
recognized government of an Indian tribe, or the 
governing body of an Alaska Native regional or vil-
lage corporation, that has been determined eligible 
to receive services from the Bureau of Indian Af-
fairs. 
‘‘(b) GENERAL AUTHORITY.— 
‘‘(1) IN
GENERAL.—The Administrator may 
enter into an agreement with an eligible State to 
provide a capitalization grant for the eligible State 
to establish a revolving fund that will provide fund-
ing assistance to help homeowners, businesses, non-
profit organizations, and communities reduce flood 
risk in order to decrease— 
‘‘(A) the loss of life and property; 
‘‘(B) the cost of flood insurance; and 
‘‘(C) Federal disaster payments. 
‘‘(2) TIMING
OF
DEPOSIT
AND
AGREEMENTS 
FOR DISTRIBUTION OF FUNDS.— 
‘‘(A) IN
GENERAL.—Not later than the 
last day of the fiscal year following the fiscal 
year in which a capitalization grant is made to 
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a participating State under paragraph (1), the 
participating State shall— 
‘‘(i) deposit the grant in the State 
loan fund of the State; and 
‘‘(ii) enter into one or more binding 
agreements that provide for the State to 
distribute the grant funds for purposes au-
thorized under subsection (c) such that— 
‘‘(I) in the case of the initial 
grant made under this section to a 
State, not less than 75 percent of the 
amount of the grant funds shall be 
distributed before the expiration of 
the 24-month period beginning upon 
deposit of such funds in the State 
loan fund of the State; and 
‘‘(II) in the case of any subse-
quent grant made under this section 
to a State, not less than 90 percent of 
the amount of the grant funds made 
under the capitalization grant shall be 
distributed before the expiration of 
the 12-month period beginning upon 
deposit of such funds in the State 
loan fund of the State. 
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‘‘(B) NONCOMPLIANCE.—Except as pro-
vided in subparagraph (C), if a participating 
State does not comply with subparagraph (A) 
with respect to a grant, the Administrator shall 
reallocate the grant in accordance with para-
graph (3)(B). 
‘‘(C) 
EXCEPTION.—The 
Administrator 
may not reallocate any funds under subpara-
graph (B) to a participating State that violated 
subparagraph (A) with respect to a grant made 
during the same fiscal year in which the funds 
to be reallocated were originally made available. 
‘‘(3) ALLOCATION.— 
‘‘(A) IN
GENERAL.—The Administrator 
shall allocate amounts made available to carry 
out this section to participating States— 
‘‘(i) for the participating States to de-
posit in the State loan funds established by 
the participating States; and 
‘‘(ii) except as provided in paragraph 
(6), in accordance with the requirements 
described in subparagraph (B). 
‘‘(B) REQUIREMENTS.—The requirements 
described in this subparagraph are as follows: 
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‘‘(i) Fifty percent of the total amount 
made available under subparagraph (A) 
shall be allocated so that each partici-
pating 
State 
receives 
the 
percentage 
amount that is obtained by dividing the 
number of properties that were insured 
under the national flood insurance pro-
gram in that State in the fiscal year pre-
ceding the fiscal year in which the amount 
is allocated by the total number of prop-
erties that were insured under the national 
flood insurance program in the fiscal year 
preceding the fiscal year in which the 
amount is allocated. 
‘‘(ii) Fifty percent of the total amount 
made available under subparagraph (A) 
shall be allocated so that each partici-
pating State receives a percentage of funds 
that is equal to the product obtained under 
clause (iii)(IV) with respect to that partici-
pating State after following the procedures 
described in clause (iii). 
‘‘(iii) The procedures described in this 
clause are as follows: 
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subparagraph (B), a participating State that 
receives less than $4,000,000 under paragraph 
(3)(B) in a fiscal year may distribute the funds 
directly in the form of grants or technical as-
sistance for a purpose described in subsection 
(c)(2), without regard to whether the State has 
established a State loan fund. 
‘‘(B) STATE MATCHING.—A participating 
State that exercises the authority under sub-
paragraph (A) in a fiscal year shall provide 
matching funds from non-Federal sources in an 
amount that is equal to 15 percent of the 
amount that the State receives under paragraph 
(3)(B) in that fiscal year for purposes described 
in subparagraph (A). 
‘‘(5) ALLOCATION
OF
REMAINING
FUNDS.— 
After allocating amounts made available to carry out 
this section for a fiscal year in accordance with 
paragraph (3), the Administrator shall allocate any 
remaining amounts made available for that fiscal 
year to participating States, using the procedures 
described in clauses (i) through (iii) of paragraph 
(3)(B). 
‘‘(6) ALLOCATION FOR TRIBAL GOVERNMENTS 
AND INSULAR AREAS.—The Administrator shall re-
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serve not less than 5.0 percent of the amount made 
available to carry out this section in a fiscal year to 
enter into grant agreements with tribal governments 
and insular areas, with the grant funds to be distrib-
uted— 
‘‘(A) according to criteria established by 
the Administrator; and 
‘‘(B) for a purpose described in subsection 
(c)(2). 
‘‘(7) ADMINISTRATIVE COSTS; TECHNICAL AS-
SISTANCE.—The Administrator shall reserve not 
more than 2.5 percent of the amount made available 
to carry out this section in a fiscal year— 
‘‘(A) for administrative costs incurred in 
carrying out this section; and 
‘‘(B) to provide technical assistance to re-
cipients of grants under this section. 
‘‘(c) USE OF FUNDS.— 
‘‘(1) IN
GENERAL.—Amounts deposited in a 
State loan fund, including repayments of loans made 
from the fund and interest earned on the amounts 
in the fund, shall be used— 
‘‘(A) consistent with paragraphs (2) and 
(3) and subsection (g), to provide financial as-
sistance for— 
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‘‘(i) homeowners, businesses, and non-
profit organizations that are eligible to 
participate in the national flood insurance 
program; and 
‘‘(ii) any local government that par-
ticipates in the national flood insurance 
program; 
‘‘(B) as a source of revenue and security 
for leveraged loans, the proceeds of which shall 
be deposited in the State loan fund; or 
‘‘(C) for the sale of bonds as security for 
payment of the principal and interest on rev-
enue or general obligation bonds issued by the 
participating State to provide matching funds 
under subsection (g), if the proceeds from the 
sale of the bonds are deposited in the State 
loan fund. 
‘‘(2) PURPOSES.—A recipient of financial as-
sistance provided through amounts from a State 
loan fund— 
‘‘(A) shall use the amounts to reduce— 
‘‘(i) flood risk; or 
‘‘(ii) potential flood claims submitted 
under the national flood insurance pro-
gram; 
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‘‘(B) shall use the amounts in a cost-effec-
tive manner under requirements established by 
the State, which may require an applicant for 
financial assistance to submit any information 
that the State considers relevant or necessary 
before the date on which the applicant receives 
the assistance; 
‘‘(C) shall use the amounts for projects 
that— 
‘‘(i) meet design and construction 
standards established by the Adminis-
trator; 
‘‘(ii) are located in communities 
that— 
‘‘(I) participate in the national 
flood insurance program; and 
‘‘(II) have developed a State, 
local, or tribal government hazard 
mitigation plan that has been ap-
proved by the Administrator under 
section 1366; 
‘‘(iii)(I) address a repetitive loss 
structure or a severe repetitive loss prop-
erty; or 
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‘‘(II) address flood risk in the 500- 
year floodplain, areas of residual flood risk, 
or other areas of potential flood risk, as 
identified by the Administrator; and 
‘‘(iv) address current risk and antici-
pate future risk, such as sea-level rise; 
‘‘(D) may use the amounts— 
‘‘(i) for projects relating to— 
‘‘(I) structural elevation; 
‘‘(II) floodproofing; 
‘‘(III) the relocation or removal 
of buildings from the 100-year flood-
plain or other areas of flood risk, in-
cluding the acquisition of properties 
for such a purpose; 
‘‘(IV) environmental restoration 
activities that directly reduce flood 
risk; 
‘‘(V) any eligible activity de-
scribed in subparagraphs (A) through 
(G) of section 1366(c)(3); or 
‘‘(VI) other activities determined 
appropriate by the Administrator; 
‘‘(ii) with respect to a project de-
scribed in clause (i), only for expenditures 
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directly related to a project described in 
that clause, including expenditures for 
planning, design, and associated pre-con-
struction activities; and 
‘‘(iii) to acquire, for the purposes of 
permanent protection, land, buildings, or a 
conservation easement from a willing seller 
or grantor; 
‘‘(E) may not use the amounts— 
‘‘(i) to construct buildings or expand 
existing buildings unless the activity is for 
the purpose of flood mitigation; 
‘‘(ii) to improve any structure, unless 
the recipient has obtained flood insurance 
coverage in an amount at least equal to the 
lesser of the eligible project costs or the 
maximum insurable limit for the structure 
under the national flood insurance pro-
gram coverage for the structure, which 
coverage shall be maintained for the useful 
life of the structure; 
‘‘(iii) to improve a residential property 
with an appraised value that is not less 
than 125 percent of the limitation on the 
maximum original principal obligation of a 
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conventional mortgage that may be pur-
chased by the Federal National Mortgage 
Association or the Federal Home Loan 
Mortgage Corporation in the area in which 
the property is located, as established 
under section 302(b)(2) of the Federal Na-
tional Mortgage Association Charter Act 
(12 
U.S.C. 
1717(b)(2)) 
and 
section 
305(a)(2) of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 
1454(a)(2)); 
‘‘(iv) for the direct benefit of a home-
owner if the annual household adjusted 
gross income of the homeowner during the 
previous fiscal year was not less than 
$200,000, as annually adjusted by the Ad-
ministrator to reflect changes in the Con-
sumer Price Index for All Urban Con-
sumers, as published by the Bureau of 
Labor Statistics of the Department of 
Labor and rounded to the nearest $25; or 
‘‘(v) to acquire real property or an in-
terest in real property unless the property 
is purchased from a willing seller; and 
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‘‘(F) shall, in the use of such amounts, 
give priority to the maximum extent practicable 
to projects that assist low-income homeowners 
and low-income geographical areas. 
‘‘(d) INTENDED USE PLANS.— 
‘‘(1) IN GENERAL.—After providing the oppor-
tunity for public review and comment, each partici-
pating State shall annually prepare a plan that iden-
tifies, for the year following the date of issuance of 
the intended use plan, the intended uses of the 
amounts available in the State loan fund of the par-
ticipating State. 
‘‘(2) CONSULTATION DURING PREPARATION.— 
Each participating State, in preparing an intended 
use plan, shall ensure that the State agency with 
primary responsibility for floodplain management— 
‘‘(A) provides oversight with respect to the 
preparation of the intended use plan; and 
‘‘(B) consults with any other appropriate 
State agency, including agencies responsible for 
coastal and environmental management. 
‘‘(3) CONTENTS.—A participating State shall, 
in each intended use plan— 
‘‘(A) include— 
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‘‘(i) an explanation of the mitigation 
and resiliency benefits the State intends to 
achieve, including by— 
‘‘(I) reducing future damage and 
loss associated with flooding; 
‘‘(II) reducing the number of se-
vere repetitive loss properties and re-
petitive loss structures in the State; 
‘‘(III) decreasing the number of 
flood insurance claims in the State; 
and 
‘‘(IV) increasing the rating under 
the Community Rating System for 
communities in the State; 
‘‘(ii) information with respect to the 
availability of, and the application process 
for receiving, financial assistance from the 
State loan fund of the State; 
‘‘(iii) the criteria and methods estab-
lished for the distribution of amounts from 
the State loan fund of the State; 
‘‘(iv) the amount of financial assist-
ance that the State anticipates allocating 
to— 
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‘‘(I) local government projects; 
and 
‘‘(II) projects for homeowners, 
business, or nonprofit organizations; 
‘‘(v) the expected terms of the assist-
ance provided under clause (iv); and 
‘‘(vi) a description of the financial sta-
tus of the State loan fund and the short- 
term and long-term goals of the State loan 
fund; and 
‘‘(B) provide, to the maximum extent prac-
ticable, that priority for the use of amounts 
from the State loan fund shall be given to 
projects that— 
‘‘(i) address severe repetitive loss 
properties and repetitive loss structures; 
‘‘(ii) assist low-income homeowners 
and low-income geographic areas; and 
‘‘(iii) address flood risk for pre-FIRM 
buildings. 
‘‘(4) PUBLICATION.—Each participating State 
shall publish and periodically update a list of all 
projects receiving funding from the State loan fund 
of the State, which shall include identification of— 
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‘‘(A) the community in which the project is 
located; 
‘‘(B) the type and amount of assistance 
provided for each project; and 
‘‘(C) the expected funding schedule and 
date of completion of each project. 
‘‘(e) FUND MANAGEMENT.—Amounts in a State loan 
fund shall— 
‘‘(1) remain available for providing financial as-
sistance under this section until distributed; 
‘‘(2) if the amounts are not required for imme-
diate distribution or expenditure, be invested in in-
terest-bearing obligations; and 
‘‘(3) except as provided in subsection (i), in-
clude only— 
‘‘(A) amounts received from capitalization 
grants made under this section; 
‘‘(B) repayments of loans made from the 
fund; and 
‘‘(C) interest earned on amounts in the 
fund. 
‘‘(f) MATCHING FUNDS.— 
‘‘(1) FULL GRANT.—On or before the date on 
which a participating State receives a capitalization 
grant, the State shall deposit into the State loan 
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fund of the State, in addition to the amount of the 
capitalization grant, an amount from non-Federal 
sources that is not less than 10 percent of the total 
amount of the capitalization grant. 
‘‘(2) REDUCED GRANT.—Notwithstanding para-
graph (1), if a State deposits in the State loan fund 
of the State in connection a capitalization grant an 
amount from non-Federal sources that is less than 
10 percent of the total amount of the capitalization 
grant that would otherwise be received by the State, 
the Administrator shall reduce the amount of the 
capitalization grant received by the State to the 
amount that is 10 times the amount so deposited 
and shall allocate such remaining grant amounts 
under subsection (b)(5) together with the amounts 
allocated under such subsection. 
‘‘(g) TYPES OF ASSISTANCE.—Unless otherwise pro-
hibited by State law, a participating State may use the 
amounts deposited into a State loan fund under this sec-
tion only— 
‘‘(1) to make a loan, on the condition that— 
‘‘(A) the interest rate for the loan is not 
more than the market interest rate; 
‘‘(B) the recipient of the loan will begin 
making principal and interest payments on the 
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from the repayment of a loan made from 
a State loan fund, and interest earned on 
amounts in a State loan fund will be— 
‘‘(I) accounted for separately 
from amounts from other revolving 
funds; and 
‘‘(II) used only for purposes au-
thorized under this section; and 
‘‘(ii) after consulting with the appro-
priate State agencies, the authority to es-
tablish assistance priorities and carry out 
oversight and related activities, other than 
financial administration, with respect to 
flood assistance remains with the State 
agency with primary responsibility for 
floodplain management. 
‘‘(2) 
ADMINISTRATIVE
AND
TECHNICAL 
COSTS.— 
‘‘(A) IN GENERAL.—For each fiscal year, a 
participating State may use the amount de-
scribed in subparagraph (B) to— 
‘‘(i) pay the reasonable costs of ad-
ministration of the programs under this 
section, including the recovery of reason-
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able costs incurred in establishing a State 
loan fund; 
‘‘(ii) provide appropriate oversight of 
projects authorized under this section; and 
‘‘(iii) provide technical assistance and 
outreach to recipients in the State of 
amounts under this section, including with 
respect to updating hazard mitigation 
plans and participating in the Community 
Rating System, in an amount that is not 
more than 4 percent of the funds made 
available to the State under this section. 
‘‘(B) 
DESCRIPTION.—The 
amount 
de-
scribed in this subparagraph is an amount 
equal to the sum of— 
‘‘(i) any fees collected by a partici-
pating State to recover the costs described 
in subparagraph (A)(i), regardless of the 
source; and 
‘‘(ii) the greatest of— 
‘‘(I) $400,000; 
‘‘(II) 0.2 percent of the value of 
the State loan fund of a State, as of 
the date on which the valuation is 
made; and 
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‘‘(III) an amount equal to 7 per-
cent of all grant awards made to a 
participating State for the State loan 
fund of the State under this section 
for the fiscal year. 
‘‘(3) AUDIT AND REPORT.— 
‘‘(A) AUDIT REQUIREMENT.—Not less fre-
quently than biennially, each participating State 
shall conduct an audit of the State loan fund of 
the State. 
‘‘(B) REPORT.—Each participating State 
shall submit to the Administrator a biennial re-
port regarding the activities of the State under 
this section during the period covered by the re-
port, including— 
‘‘(i) the result of any audit conducted 
by the State under subparagraph (A); and 
‘‘(ii) a review of the effectiveness of 
the State loan fund of the State with re-
spect to— 
‘‘(I) the intended use plans of the 
State; and 
‘‘(II) meeting the objectives de-
scribed in subsection (b)(1). 
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‘‘(4) OVERSIGHT.—In conducting oversight with 
respect to State loan funds established under this 
section, the Administrator— 
‘‘(A) shall— 
‘‘(i) periodically audit the funds in ac-
cordance with procedures established by 
the Comptroller General of the United 
States; and 
‘‘(ii) not less frequently than once 
every 4 years, review each State loan fund 
to determine the effectiveness of the fund 
in reducing flood risk; and 
‘‘(B) may, at any time— 
‘‘(i) make recommendations to a par-
ticipating State with respect to the admin-
istration of the State loan fund of the 
State; or 
‘‘(ii) require specific changes with re-
spect to a State loan fund in order to im-
prove the effectiveness of the fund. 
‘‘(j) LIABILITY PROTECTIONS.—The Federal Govern-
ment shall not be liable for any claim based upon the exer-
cise or performance of, or the failure to exercise or per-
form, a discretionary function or duty on the part of the 
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Federal agency, or an employee of the Federal Govern-
ment, in carrying out the provision of this section. 
‘‘(k) REGULATIONS.—The Administrator shall pro-
mulgate such guidance or regulations as may be necessary 
to carry out this section, including guidance or regulations 
that— 
‘‘(1) ensure that each participating State to 
which funds are allocated under this section uses the 
funds as efficiently as possible; 
‘‘(2) reduce, to the maximum extent prac-
ticable, waste, fraud, and abuse with respect to the 
implementation of this section; and 
‘‘(3) require any party that receives funds di-
rectly or indirectly under this section, including a 
participating State and a recipient of amounts from 
a State loan fund, to use procedures with respect to 
the management of the funds that conform to gen-
erally accepted accounting standards. 
‘‘(l) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as may be 
necessary to carry out this section for fiscal years 2019 
through 2028.’’. 
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SEC. 3. CONSIDERATION OF MITIGATION MEASURES FUND-
ED BY STATE LOAN FUNDS IN FLOOD INSUR-
ANCE PREMIUM RATES. 
(a) ESTIMATED
RATES.—Clause (ii) of section 
1307(a)(1)(A) of the National Flood Insurance Act of 
1968 (42 U.S.C. 4014(a)(1)(A)(ii)) is amended by insert-
ing ‘‘and any activities assisted through amounts from a 
State loan fund established pursuant to section 1326,’’ 
after ‘‘similar measures,’’. 
(b) CHARGEABLE RATES.—Paragraph (1) of section 
1308(b) of the National Flood Insurance Act of 1968 (42 
U.S.C. 4015(b)(1)) is amended by striking ‘‘and similar 
measures’’ and inserting ‘‘similar measures, and any ac-
tivities assisted through amounts from a State loan fund 
established pursuant to section 1326’’. 
Æ 
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