Following a major disaster, the financial capacity of a local government may be severely undermined by a decrease in local revenues. The reduction in tax or other revenue can limit the local government's ability to maintain public services or afford many extraordinary but necessary expenditures. Revenue shortfalls can also impact the size of a local government and the jobs of government employees, as exemplified by the decrease in the size of New Orleans city government since Hurricane Katrina. Revenue loss frequently occurs when significant portions of the population are displaced for extended periods of time, or key sources of economic activity, like tourism, are heavily disrupted by a disaster. In addition, many local governments are restricted by state or local laws, constitutions, or codes of practice from borrowing to fund operational expenses. Often with few options available to make up for lost revenue, local governments may need to reappropriate funds from other portions of their budget or scale back their operations. The shortage of revenues, and the resulting limitation on financial capacity, has been cited as one of the most significant and consistent hurdles to long-term disaster recovery. The Community Disaster Loan (CDL) Program, managed by the Federal Emergency Management Agency (FEMA), provides loan assistance to local governments to help them overcome a loss in revenues. Though there are many disaster assistance programs available to communities, the CDL program is the only program that specifically provides assistance to local governments to help compensate for revenue shortfalls. The core purpose of these community disasters loans, as detailed in the original Senate committee report authorizing the program, is "to permit the local governments to continue to provide municipal services, such as the protection of public health and safety and the operation of the public school system." Consistent with this stated purpose, the local governments that are eligible for loans include entities such as special districts and school boards that provide a wide array of local government services. The CDL program was first authorized by the Disaster Relief Act of 1974, which was later renamed the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act). As codified in Section 417 of the Stafford Act, the program allows the President to make loans to any local government which may suffer a substantial loss of tax and other revenues as a result of a major disaster, and has demonstrated a need for financial assistance in order to perform its governmental functions. As with most other authorities in the Stafford Act, this authority has been delegated from the President to the Administrator of FEMA. After severe disasters, the revenue base of a local government may take years to fully recover, if ever. Some key sources of revenue may never return to pre-disaster levels, such as property taxes from areas severely damaged by a disaster. To account for the local government's continuing need for financial assistance in these circumstances, FEMA also has the authority to cancel the repayment on all or part of the loan. FEMA may cancel a loan up to the amount that the local government's tax and other revenues are insufficient to meet its cumulative operating budget over a period of three full fiscal years following a major disaster, in addition to any unreimbursed disaster-related expenses made in that time period. The fundamental purpose of the program has been relatively unchanged since inception. However, some statutory and regulatory provisions have varied through the history of the program, notably those that govern elements such as loan eligibility and the size of the loans. The loan program that began in 1974 was essentially unaltered in statute until 2000, when the 106 th Congress revised the core polices of the program for the first time by placing a $5 million cap on the size of the loans. Loans administered before 2005, and recent loans not governed by the exemptions discussed immediately below, are known as "traditional" community disaster loans (TCDLs). Following Hurricane Katrina and the 2005 hurricane season, the 109 th and 110 th Congresses created unique statutory guidelines for the loan program applicable exclusively to local governments impacted by those disasters. Collectively, these loans are referred to as "special" community disaster loans (SCDLs). FEMA promulgated regulations to govern the implementation of SCDLs that were very similar to those for the TCDLs, but with several notable distinctions. These new statutory and regulatory guidelines altered some of the eligibility, size, and forgiveness criteria applicable to the SCDLs. A similar pattern of special legislation was again passed in the 110 th and 111 th Congresses for community disaster loans applicable to local governments impacted by disasters in the calendar year 2008. These loans also had some different provisions for eligibility and size, as will be discussed, and will be referred to as the 2008 CDLs for the purposes of distinguishing them in this report. The majority of the statutory and regulatory provisions of the Community Disaster Loan Program are consistent across each set of loans. While this report will explain the consistent provisions of the loan program, it is intended also to highlight the unique provisions through a comparative analysis of traditional CDLs, special CDLs, and 2008 CDLs. In particular, since the issue of loan forgiveness has been a flash point of policy debate throughout the program's history, this report also highlights the statutory and regulatory provisions for loan forgiveness and discusses some of the debate on the issue. In doing so, the report offers some empirical analysis of data from each set of loans to identify the distribution and forgiveness of CDLs by the types of governments receiving a loan. It is important to note that this report is not intended to comprehensively audit FEMA's administration or forgiveness of any particular loan or set of loans. The CDL Program may be of interest to Congress because of the ongoing debate over the cost and amount of disaster assistance provided to communities. Moreover, as will be discussed in this report, recent program management decisions by FEMA have drawn the attention and criticism of some in the general public and of Members of Congress. Congress may be interested in expanding, eliminating, or amending the CDL program before additional loans are issued. The historical use of the program is summarized in Table 1 and Table 2 . An approximate total of $1,615 million in principal was offered to local governments through the program, with roughly $1,326 million borrowed. FEMA has cancelled approximately of $896 million of the $1,326 million of principal advanced to the local governments since program inception. Historically, the Community Disaster Loan Program has been used infrequently by local governments, relative to other disaster assistance programs authorized by the Stafford Act. In sum, 249 loans were issued to 200 local governments under 26 different disaster declarations from 1974 to 2010. In that same period, there were 1,542 disaster declarations leading to an incalculable number of local governments conceivably eligible for loans. From August 1976 through September 30, 2005, a period of 29 years, FEMA approved 64 traditional loans for different local governments related to 21 separately declared disasters. Following Hurricanes Katrina and Rita in 2005, FEMA issued 157 special loans to 109 local governments. In response to the 2008 disasters, FEMA issued 24 loans to 23 different local governments. Program use is generally confined to a large number of loans being issued following specific disasters. For instance, FEMA issued 28 loans after floods in Illinois in 1993, 157 loans after Hurricanes Katrina and Rita, and 14 loans after Hurricane Ike in 2008. But no loans were issued after the 9/11 terrorist attacks, after any earthquakes (including the Northridge earthquake in 1994), or after several major hurricanes like Floyd in 1999, Isabel in 2003, or the series of four Florida hurricanes in 2004. No community disaster loans were issued from FY1999 through FY2005. The limited use of the program may be attributable to a number of reasons, including, but not limited to: A general lack of awareness of the program among local governments impacted by disasters, or limited advertisement of the program by FEMA to those governments; The eligibility provisions of the loan program may exclude many potential applicants; The size, interest rate, or others terms of the loan may be unattractive to local governments; The procedures for applying and managing the loan may be considered too cumbersome or intrusive by local or state governments following a disaster; There is relatively little need for the program overall, except in particular disaster situations, in comparison to other programs. This may be caused, in part, by circumstantial immediate increases in local revenues produced by the often high level of economic activity involved with the disaster response and recovery efforts. An accurate accounting of the number and type of potential applicants to the program, and their reasons for not applying, is not available. Therefore, it is difficult to assess the relatively limited demand for the CDL program. It is beyond the scope of this report to fully discuss each iteration of the regulations governing the CDL program since 1974. However, a summary of rulemakings is provided in Table 3 . The core policies of the program were initially established in a program manual, and then promulgated in a rulemaking in 1979. The CDL program rules did not undergo dramatic policy change between 1979 and 2005, though considerable clarification and specificity has been added over various rulemakings, most prominently in the 1988 rulemaking. As warranted, notable changes in regulations are remarked upon further throughout the report. Unlike most other Stafford Act programs, the Community Disaster Loan program is not funded through the Disaster Relief Fund. The program is instead funded through the Disaster Assistance Direct Loan Program (DADLP) account. The account also funds activities under Section 319 of the Stafford Act, which provides advances or loans for the portion of assistance applicants are responsible for under the different cost-sharing provisions of the Stafford Act (commonly referred to as the applicant/state "match" for assistance). Generally, funds have been annually appropriated to the DALDP account for the purposes of Section 319 of the Stafford Act. However, funds for the purposes of the Community Disaster Loan program have often been appropriated through emergency supplemental appropriation bills in response to a particular set of disasters.