Section 206.374 - Loan application(a)Application.(1) The local government shall submit an application for a Special Community Disaster Loan through the GAR. The loan must be justified on the basis of need and shall be based on the actual and projected expenses, as a result of the disaster, for the fiscal year in which the disaster occurred and for the 3 succeeding fiscal years. The loan application shall be prepared by the affected local government and be approved by the GAR. FEMA has determined that a local government, in applying for a loan as a result of having suffered a substantial loss of tax and other revenue as a result of a major disaster, is not required to first seek credit elsewhere (see § 206.377(c) ).(2) The State exercises administrative authority over the local government's application. The State's review should include a determination that the applicant is legally qualified, under State law, to assume the proposed debt, and may include an overall review for accuracy of the submission. The GAR may request the Regional Administrator to waive the requirement for a State review if an otherwise eligible applicant is not subject to State administration authority and the State cannot legally participate in the loan application process.(b)Financial requirements.(1) The loan application shall be developed from financial information contained in the local government's annual operating budget (see paragraph (b)(2) of this section) and shall include a Summary of Revenue Loss and Unreimbursed Disaster-Related Expenses, a Statement of the Applicant's Operating Results-Cash Position, and certification and assurances requested by the Assistant Administrator for the Disaster Assistance Directorate.(i) Copies of the local government's financial reports (Revenue and Expense and Balance Sheet) for the 3 fiscal years immediately prior to the fiscal year of the disaster and the applicant's most recent financial statement must, unless impracticable, accompany the application. The local government's financial reports to be submitted are those annual (or interim) consolidated and/or individual official annual financial presentations for the General Fund and all other funds maintained by the local government.(ii) Each application for a Special Community Disaster Loan must also include:(A) A statement by the local government identifying each fund (i.e. General Fund, etc.) which is included as its annual Operating budget, and(B) A copy of the pertinent State statutes, ordinances, or regulations which prescribe the local government's system of budgeting, accounting and financial reporting, including a description of each fund account.(2)Operating budget. For loan application purposes, the operating budget is that document or documents approved by an appropriating body, which contains an estimate of proposed expenditures, other than capital outlays for fixed assets for a stated period of time, and the proposed means of financing the expenditures. For loan cancellation purposes, FEMA interprets the term "operating budget" to mean actual revenues and expenditures of the local government as published in the official financial statements of the local government.(3)Operating budget increases. Budget increases due to increases in the level of, or additions to, municipal services not rendered at the time of the disaster or not directly related to the disaster shall be identified.(4)Revenue and assessment information. The applicant shall provide information concerning its method of tax assessment including assessment dates and the dates payments are due.(5)Estimated disaster-related expense. Unreimbursed disaster-related expenses of a municipal operating character should be estimated.(c)Federal review.(1) The Assistant Administrator for the Disaster Assistance Directorate or designee shall approve a Special Community Disaster Loan to the extent it is determined that the local government has suffered a substantial loss of tax and other revenues and demonstrates a need for financial assistance as the result of the disaster to provide essential municipal services.(2)Resubmission of application. If a loan application is disapproved, in whole or in part, by the Assistant Administrator for the Disaster Assistance Directorate because of inadequacy of information, a revised application may be submitted by the local government within sixty days of the date of the disapproval. Decision by the Assistant Administrator for the Disaster Assistance Directorate on the resubmission is final.(d)Special Community Disaster Loan.(1) The loan shall not exceed the lesser of:(i) The amount of projected revenue loss plus the projected unreimbursed disaster-related expenses of a municipal operating character for the fiscal year of the major disaster and the subsequent 3 fiscal years, or(ii) 25 percent of the local government's annual operating budget for the fiscal year in which the disaster occurred.(2)Promissory note.(i) Upon approval of the loan by the Assistant Administrator for the Disaster Assistance Directorate or designee, he or she, or a designated Loan Officer will execute a Promissory Note with the applicant. The Note must be co-signed by the State (see paragraph (d)(2)(ii) of this section). The applicant should indicate its funding requirements on the Schedule of Loan Increments on the Note.(ii) If the State cannot legally cosign the Promissory Note, the local government must pledge collateral security, acceptable to the Assistant Administrator for the Disaster Assistance Directorate, to cover the principal amount of the Note. The pledge should be in the form of a resolution by the local governing body identifying the collateral security.(e)Waiver of requirements. Notwithstanding any other provision of this or other sections promulgated pursuant to Public Law 109-88 , the Assistant Administrator for the Disaster Assistance Directorate may, upon the request of an applicant or loan recipient, waive any specific application requirement or financial reporting requirement (see, e.g., § 206.375(a)(2) ) upon a finding by the Assistant Administrator for the Disaster Assistance Directorate that the effects of the major disaster prevent the applicant from fulfilling the application requirement and that waiving the requirements would be consistent with the purposes of the Community Disaster Loan Act of 2005. 70 FR 60446 , Oct. 18, 2005, as amended at 75 FR 2818 , Jan. 19, 2010