STRATEGY FRAMEWORK
Layering Funding Sources
A best practice for funding is to identify sources of revenue that can comprise a layered, or patchwork, funding approach. Layering happens through identifying a diversity of funding sources, including local, state, federal, and non-governmental opportunities that align with the project goals, benefits, and outcomes. In the layered approach, local funding sources can provide a match for a larger grant and support ongoing program administration or project maintenance after a large project is completed. Larger-scale projects or actions will likely require state or federal-level grant sources for implementation.
Layering also applies to expanding the benefits of hazard mitigation projects, such as linking project benefits to local economic development, solving other infrastructure needs, facilitating transportation of goods and people, matching project cost timelines, to availability of funds, and lowering insurance costs. Solidifying consensus on priority projects and their benefits will tend to result in better funding opportunities. A project champion, or local advocate, could prove invaluable in these efforts to secure hazard mitigation funding.
The Bee Branch Watershed Flood Mitigation Project in the City of Dubuque, Iowa, is an excellent example of the city layering several revenue streams to help finance the $232 million infrastructure project. The City of Dubuque website describes the numerous mechanisms, including $55.5 million in federal and state contributions, $98.5 million in the form of state sales tax increment financing, $9.4 million from the Clean Water State Revolving Fund's Sponsored Projects Program, and $165,000 in private donations were raised through America’s River III campaign. Increments in the city’s stormwater utility fees are also contributing to funding additional project costs.
For additional case studies, please refer to the Where It’s Been Done section below.
Sustained Local Funding for Ongoing Strategy Implementation
To sustain funds for hazard mitigation and resilience at the local level, the community needs to identify an existing or new funding source. The general or discretionary funds in a community may be available to support mitigation and resilience efforts; however, they are often internally competitive and are not a guaranteed funding stream. Identifying or creating a revenue source that is specific to the goals of hazard mitigation or resilience ensures that emergency managers and planners can create a long-term strategy to build toward larger and more ambitious projects. These funds can be used as a match for a larger grant request or to support adding technical capacity with staff or consulting support to develop plans, designs, or programs more fully.
Implementation tools for a dedicated and sustained local funding source include:
-
Embedding mitigation budgeting into the community’s fiscal planning.
-
Integrating hazard mitigation into the Capital Improvement Plan. Ongoing or new civic improvements can include prioritized hazard mitigation projects, or mitigation can be included as an aspect of a larger project. For example, providing grassy swales along roadsides during routine road maintenance to improve stormwater drainage capacity or strengthening foundations during the renovation of a hospital to reduce damage from future seismic events are examples of integrated projects.
-
Creating a consistent funding source through fees, taxes, or special assessments.
A consistent funding source offers predictability for the capacity to fund mitigation activities and allows communities to set up a long-term strategy to leverage those dollars for larger investments as a match for grants and by increasing community capacity with dedicated staff focused on resilience and mitigation. Programs such as ongoing wildfire mitigation programs often are sustained and require predictable, annual funding. Leveraging a tax, fee, or another local revenue source provides funds to sustain such a program.
Developing a local funding strategy is imperative to acquiring additional funds to fill revenue gaps. This tool identifies many local funding sources, such as grants and loans, taxes and fees, and debt and pay-as-you-go revenues that align with the costs for the project. Each funding method has its strengths and weaknesses, but each provides a variety of possible tools in the municipality’s funding toolbox.
External Funding for Capital Infusions for Larger Investments
Larger mitigation actions often require a layered funding approach that uses local funding and at least one larger state or federal source for implementation. A sustained, local source will act as the match and ensure that investments can be adequately maintained in the future. A large state or federal source, generally a grant, will allow for capital investment to implement a larger mitigation action. The following describes the necessary components to competitively position funds to implement larger investment strategies.
BEST PRACTICES FOR SCOPING AND FUNDING PROJECTS
This section describes best practices to position a project or action to be successfully implemented through either a local or larger funding source. This includes identifying priorities, conducting relevant studies, preparing cost estimates and engineering to fully understand the project scope and benefits and identifying key partnerships and project champions.
Identify Mitigation Priorities and Potential Funding Sources
The initial step in determining what projects to pursue and fund is to identify the priorities for the community around hazard reduction, including what hazards the community will focus on mitigating, where property and lives are in harm's way and what projects and programs should be pursued in the immediate, mid-term and long-term strategy.
Proactive participation in and adoption of a FEMA-approved Multi-Hazard Mitigation Plan is a critical step for identifying the priorities and mitigation actions that a community wants to pursue. It is also critical to receiving Hazard Mitigation Assistance funds through FEMA as well as a first step to position a community for successful implementation of its priority hazard mitigation projects.
Once a local jurisdiction identifies the priority mitigation project(s), it will be important to document each project in sufficient detail for inclusion in the hazard mitigation plan. For each project identified, it should be known who will implement the effort, how the initiative will be funded, and when the action is to be completed. The more detail that can be provided, the better position your community will be in to acquire funding and see the project through to fruition.
As part of identifying project concepts, you should also consider what potential funding sources align well with the projects. This will be beneficial for then scoping out the project and knowing the specific needs of future studies so that they align well with the requirements of the funding source.
For example, for FY2023, the BRIC program prioritizes projects that:
-
Build and support public infrastructure resilience.
-
Mitigate risk to one or more lifelines.
-
Incorporate nature-based solutions.
-
Provide funding to applicants to facilitate the adoption and enforcement of the latest published editions of building codes.
Understanding these requirements and ensuring that future studies and risk reduction activities are adequately meeting these requirements will better position a project for this funding source. The scoping effort is also designed to determine the additional planning and engineering efforts that may be required to fully position the project for successful implementation.
Conduct planning and engineering to define project requirements for funding
Identified projects often require technical experts such as planners and engineers to assist with conceptual planning and engineering to identify the scope of the project and prepare preliminary cost estimates for its full engineering and design, construction, and post-construction inspection. In addition, the analysis will help define the project’s anticipated implementation schedule and potential phasing elements. Collectively, this information provides the necessary foundation to begin identifying a comprehensive funding strategy for the project’s successful implementation.
Local governments should anticipate budgeting and allocating resources to conduct the necessary due diligence analysis. Doing so is critical to assessing the project’s feasibility, including its cost-effectiveness and positioning it for possible funding consideration under FEMA’s BRIC pre-disaster hazard mitigation program.
Assess project cost-effectiveness using a Benefit-Cost Analysis
The due diligence analysis may be used to assess the project’s cost-effectiveness using FEMA’s Benefit-Cost Analysis (BCA) methodology. The BCA methodology determines the future risk reduction benefits of a hazard mitigation project and compares those benefits to its costs. The result is a Benefit-Cost Ratio (BCR). A project is considered cost-effective when the BCR is 1.0 or greater. If the BCA is less than 1.0, it may be advantageous to look at alternatives to increase benefits or reduce costs. Applicants for BRIC and HMA funding must use FEMA-approved methodologies and tools—such as the BCA Toolkit—to demonstrate the cost-effectiveness of their projects.
Build Local Support
Because Hazard Mitigation Plans and projects meet certain regulatory requirements, are generally widely applied, and benefit entire jurisdictions and neighborhoods, there can be a wider range of potential funding alternatives. Interest from regional, state and federal partners in hazard mitigation enables a municipality to work towards forming partnerships and agreements with these potential external funding agencies. Private sector partners, such as nonprofit organizations, philanthropy, and other non-governmental organizations, might also express interest in hazard mitigation that furthers their organization’s mission or vision.
Build State and Federal Partner Support
Following local consensus and a local funding strategy, further buy-in is needed from agency funding partners at the state and federal levels to prepare for a grant application. Project champions at the state and federal levels that understand and can advocate for the project will help push the project along the funding pipeline. Communication materials that provide information on the project’s benefits and details, such as construction phases, are useful so that the advocates can communicate the project value. Press releases are useful to give partners and the community a quick snapshot of the project description and value. The strategy might show infographics and other visual depictions of why the project is needed in the community and what are the funding needs and benefits. Building partnerships with these agencies and other organizations will also contribute to getting to the funding finish line.
Example: Press Release for fire mitigation Boulder
Grant Administration
Once a grant or other funding mechanism such as a revolving loan is awarded/approved, the execution of the total funding strategy becomes significant. This includes grant award administration and project monitoring. Grant funding administration and project monitoring are just as important as obtaining the funds because the grantor agency will determine whether the municipality can deliver the project using the revenue as promised in the grant funding application. The grant or funding agreement contains terms and conditions, and complying with the provisions demonstrates the local jurisdiction’s ability to manage and be successful when awarded funds. Terms and conditions may include reporting, timelines for completion, and contracting and subcontracting requirements. An added benefit is setting precedent for future funding with the same funding agency and other grantors.
