TO: Mayor and City Council
THROUGH: Keith Stahley, City Manager
FROM: Kristin Retherford, Community Planning and Development Director
SUBJECT:
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Federal Emergency Management Agency (FEMA) National Flood Insurance Program (NFIP) - Endangered Species Act (ESA) Integration in Oregon
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
Result Area(s): Natural Environment Stewardship; Safe and Healthy Community
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SUMMARY:
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City Council is asked to authorize staff to notify FEMA that Salem will proceed with NFIP Pre-Implementation Measure Option 3, which involves a permit-by-permit approach for floodplain development. This option requires developers to complete habitat assessments for floodplain projects, ensuring "no net loss" of flood storage, water quality, or vegetation. By selecting Option 3, Salem will comply with NFIP and ESA mandates while maintaining flexibility in regulating floodplain development. Adopting this option prevents potential FEMA audits or NFIP suspension, thus preserving eligibility for federally-backed flood insurance in Salem and federal disaster relief.
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ISSUE:
Shall City Council authorize staff to notify FEMA that City of Salem is proceeding with NFIP Pre-Implementation Measure Option 3, Permit-by-Permit approach?
RECOMMENDATION:
recommendation
Direct staff to notify FEMA that City of Salem is proceeding with NFIP Pre-Implementation Measure Option 3, Permit-by-Permit approach.
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FACTS AND FINDINGS:
The Salem Comprehensive Plan (SACP) and Statewide Planning Goals adopted by the Department of Land Conservation and Development (DLCD) include goals and policies for the protection and regulation of floodplain areas in Salem. The following goals and policies relate to the proposed integration of ESA protections for floodplain areas identified by the NFIP:
SACP Environmental Protection Goal: Protect and enhance the quality and function of Salem’s natural resources, ecosystems, and environment.
Policy N 1.1 Natural resource protection:
The quality and function of natural resources in the Salem Urban Area shall be protected, including wetlands, waterways, floodplains, and critical habitat.
Policy N 1.2 Water quality:
The City shall facilitate and support efforts to protect and improve water quality in the Willamette River, streams, floodplains, wetlands, and groundwater to benefit ecological health as well as the health and safety of the community.
SACP Climate Change and Natural Hazards Goal: Prepare and protect the community from the impacts of natural hazards, climate change, and other disasters.
Policy CC 2.3 Flood prevention and mitigation:
The City shall pursue a variety of flood prevention and mitigation strategies, including incentivizing property owners to make improvements that incorporate green infrastructure.
Policy CC 2.4 Development in floodplains: Development in floodplains shall be regulated to minimize negative impacts on natural resources and potential danger to life and
property.
Statewide Land Use Planning Goal 7 - Areas Subject to Natural Disasters and Hazards: Goal 7(C)(7) Local governments will be deemed to comply with Goal 7 for coastal and riverine flood hazards by adopting and implementing local floodplain regulations that meet the minimum National Flood Insurance Program (NFIP) requirements.
The proposed implementation conforms to these goals and policies because it implements the recommendations approved by DLCD and FEMA.
FEMA Pre-Implementation Compliance Measures (PICM) OPTIONS
FEMA has provided three options for communities to comply with the new NFIP requirements, also referred to as Pre-Implementation Compliance Measures (PICM). These measures are considered short-term measures that communities are required to adopt to comply with the Endangered Species Act (ESA) requirements under the NFIP. FEMA has developed these measures to address Reasonable and Prudent Alternative (RPA) Element 2 (Interim Measures) in the 2016 National Fisheries and Marine Service (NMFS) Biological Opinion (BiOp), a result of several lawsuits related to ESA protections.
Under PICM, communities may select one of three compliance measures:
1. Prohibit all new development in the floodplain.
This option may lead to a regulatory taking, in which restrictions on private property usage in the floodplain are so severe that property owners are effectively unable to utilize their land. Consequently, this situation could expose the City to potential legal action from floodplain property owners.
2. Incorporate the ESA performance standards into local floodplain ordinances through a model ordinance provided by FEMA. The model ordinance includes performance standards regarding “no net loss” to flood storage, water quality, and vegetation. These standards would apply to all new development activity in the Special Flood Hazard Area.
This option requires City staff incorporate a state model ordinance that has not been approved by DLCD and contains standards that are not clear and objective. Definitions, criteria and implementation of the standards are unclear, and FEMA has indicated only minimal changes will be accepted if a community chooses Option 2 to meet the Pre-Implementation Compliance Measures. The FEMA model ordinance is provided in Attachment 1.
3. Require a “permit-by-permit” approach where applicants must provide a Floodplain Habitat Assessment documenting that their proposed development in the Special Flood Hazard Area will achieve “no net loss.” Each floodplain development permit must be reviewed for potential impacts to species, habitat and essential floodplain functions.
This option requires the applicant to prepare a habitat assessment based on a recently released Floodplain Habitat Assessment and Mitigation regional guidance document prepared for Oregon. The City must review the assessment and confirm the project demonstrates a “no net loss” standard through development techniques and mitigation. Based on technical guidance workshops with FEMA, this option allows for varied levels of assessment that are proportional to the size and type of project. Staff anticipates small residential projects will have the option to complete a standard assessment form using mitigation ratios provided in an upcoming draft of the Floodplain Habitat Assessment and Mitigation guide. Larger development projects with a potential for greater impacts will have the option to retain a consultant to use the guidance materials while preparing their assessment.
PICM Option 3, “permit-by-permit” approach is the staff recommended option. Staff believe Option 3 will provide more flexibility during the interim period while long term implementation measures are determined, compared to Option 2. Staff finds that the guidance within the Floodplain Habitat Assessment and Mitigation guide will provide clearer implementation of the ESA requirements compared to the model ordinance, which may be difficult to implement. Additionally, long term measures may require an additional ordinance update. Utilizing PICM Option 3 in the interim will allow staff to prepare for subsequent ordinance updates and options for implementing ESA protections within the City of Salem.
PRE-IMPLEMENTATION COMPLIANCE MEASURE TIMELINE
FEMA is requiring communities adopt and implement a PICM option by December 1, 2024. If we do not choose an option by that date, we will default to the permit-by-permit approach (Option 3). Although the default option is the option staff recommends, it will be beneficial for staff to formally notify FEMA of this approach to demonstrate the City’s proactive role in choosing a path.
Data collection must commence by January 31, 2025. The data to be gathered from each new development will demonstrate how the community is ensuring “no-net loss” standards are met.
FEMA has indicated communities have until July 31, 2025, to adopt PICM option performance standards into local floodplain ordinances. However, the community must still implement measures in the interim to ensure ESA compliance. For this reason and to ensure the required data collection can be enforced, an ordinance update will be necessary as soon as practical.
PICM is intended to address ESA compliance as an interim measure while FEMA undertakes a NEPA review of FEMA’s proposed long term integration measures. PICM will be required through the remainder of the Environmental Impact Statement process, which is expected to end in 2026. At that time, long term implementation measures will need to be considered and adopted in a majority of developed Oregon communities. This will likely include a new model ordinance to be adopted by local communities.
ALTERNATIVES
The City could choose not to comply with any of the three PICM options, which would place Salem out of compliance with the National Flood Insurance Program (NFIP). As a result, FEMA has indicated they will prioritize an audit of floodplain development activities occurring in the community and review for compliance. Salem risks suspension from the NFIP and property owners would no longer be eligible for new flood insurance policies or renewal of existing policies under the program. Property owners would still have access to private flood insurance. Additionally, federal disaster relief is only eligible for NFIP participating communities that are not sanctioned.
The City would also need to demonstrate compliance with Statewide Planning Goal 7, Areas Subject to Natural Hazards if a PICM is not selected. A locality can be considered compliant with Goal 7 if they follow all NFIP requirements, but if they are not compliant with the NFIP they can demonstrate compliance with Goal 7 using additional standards listed in the regulations.
LAND DEVELOPMENT IMPACTS
Salem has nearly 4,000 acres within its city limits identified as Special Flood Hazard Area (SFHA), with approximately 3,000 existing structures located in these areas. Based on permit data from the last five years, an average of six new structures are built in the SFHA annually, indicating ongoing but limited development within the regulated SFHA.
Most undeveloped SFHA land is designated for public use as parks or open spaces, which limits development. However, around 800 acres remain zoned as residential, mixed-use, industrial, and commercial in the Salem Comprehensive Plan. This undeveloped acreage represents future development potential within the SFHA, where compliance with NFIP requirements, including floodplain assessments and “no net loss” standards, will be challenging but regulated to ensure ecological protection and community safety.
FISCAL IMPACT
There is no immediate fiscal impact to the City in deciding which Option to pursue, with future costs contingent on implementation. Fiscal Impacts will need to be evaluated for future performance standard updates and long-term implementation measures. If the Council elects to proceed with Option 2 or 3, Staff may need to consider additional floodplain development fees to account for time needed to review assessments and compliance with the “no net loss” standards.
BACKGROUND:
NFIP AND THE ENDANGERED SPECIES ACT
FEMA is mandated to evaluate whether National Flood Insurance Program (NFIP) activities impact listed threatened or endangered species protected under the Endangered Species Act (ESA). The agency must consult with the National Marine Fisheries Service (NMFS) whenever its actions, funding, or authorizations may affect a listed endangered or threatened species or adversely impact their habitats.
In 2009, the Portland Audubon Society filed a lawsuit against FEMA, claiming that the agency failed to consult with NMFS regarding the effects of implementing the NFIP in Oregon on the designated species within the state's watersheds. A settlement was reached in 2010, and informal consultations with NMFS began shortly thereafter. On April 4, 2016, NMFS provided a Biological Opinion (BiOp) stating that the NFIP in Oregon was likely to jeopardize the critical habitat and continued existence of 16 anadromous fish species and the Southern Resident Killer Whale, all of which are listed as threatened or endangered under the ESA. A Reasonable and Prudent Alternative (RPA) included within the Biological Opinion proposed measures to avoid jeopardizing listed species and avoid adversely modifying critical habitat, which requires FEMA to change the minimum requirements for NFIP participation for communities in Oregon.
Additional information on the NFIP - Endangered Special Act Integration in Oregon can be found on FEMAs website: <https://www.fema.gov/about/organization/region-10/oregon/nfip-esa-integration>
2024 NFIP ESA OREGON IMPLEMENTATION PLAN
Recent changes to the NFIP are driven by the need to comply with the ESA. The aim of these changes is for applicants to demonstrate that their development within the floodplain will not result in a net loss of habitat for endangered species in Oregon through habitat assessments. The primary principle governing these changes is "no net loss," which means that through modifications to construction plans or mitigation measures, the final outcome of the project must not lead to any loss of habitat for critically endangered species.
Robin Dalke, CFM
Development Services Division Manager
Attachments:
1. NFIP Oregon Model Floodplain Management Ordinance