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Rep. Grimm, NYC Delegation Urge HUD to Reform Sandy Aid Regulations, so City May Aid Residents and Business Owners Currently Deemed Ineligible
STATEN ISLAND, NY – Today, Rep. Michael G. Grimm (R,C-SI/Brooklyn) joined the entire NYC delegation in urging Housing and Urban Development (HUD) Secretary Shaun Donovan to cut bureaucratic tape within the Community Development Block Grant (CDBG) program that hinders the City from providing Sandy recovery aid to businesses, homeowners, and displaced residents who desperately need relief but are currently ruled ineligible for aid.
The bipartisan, bicameral group of New York City’s Congressional members called for three key HUD reforms in an effort to lift unnecessary barriers to the CDBG-Disaster Recovery program:
- Allow New York City homeowners who were approved for, but did not accept, Small Business Administration (SBA) loans to become eligible for CDBG grants to meet their recovery needs.
- Eliminate the need for environmental reviews for homeowners eligible for CDBG funds to expedite home repairs and rehabilitation.
- Relax strict requirements under the FEMA Disaster Housing Assistance Program (DHAP) in order to meet the needs of the city’s most vulnerable families.
“Current federal regulations have tied the City’s hands when it comes to helping local homeowners and small businesses recover from Sandy,” said Rep. Grimm. “For almost two months, I have been urging HUD to change the restrictions on SBA loans, which have left some residents ineligible for funds distributed through NYC Build it Back. I am proud to be joined by the New York City delegation in calling on HUD to remove this obstacle and others in order to facilitate a full and speedy recovery.”
The New York City congressional delegation wrote in a letter to Secretary Donovan, “We have heard from our constituents that there are regulatory requirements that are impeding the City’s ability to repair homes and provide shelter for those in need. This includes a denial of benefits for those who have been approved for U.S. Small Business Administration (SBA) loans, and a requirement for individuals to comply with State environmental standards in order to get reimbursed for repairs. In addition, the eligibility requirements for the Federal Emergency Management Agency (FEMA) Disaster Housing Assistance Program (DHAP), which was created to help those who do not qualify for traditional housing assistance programs, are so restrictive that they have resulted in less than one percent of applicants being approved. We ask that you review these regulatory requirements and waive or alter them as needed to ensure that homeowners are receiving consistent and effective assistance during this recovery.”
The letter was signed by Senators Kirsten Gillibrand, Charles E. Schumer, and Representatives Charles Rangel, Jerrold Nadler, Joseph Crowley, Yvette Clarke, Carolyn Maloney, Nydia Velázquez, José E. Serrano, Gregory Meeks, Michael Grimm, Hakeem Jeffries, Grace Meng, and Eliot Engel.
Last month, New York City launched “NYC Build it Back,” a CDBG program that assists homeowners, landlords and tenants across the five boroughs whose homes were impacted by Superstorm Sandy. “NYC Build it Back” is funded with approximately $720 million in Federal disaster recovery funds passed by Congress earlier this year, which included an initial $1.77 billion CDBG-Disaster Recovery allocation through HUD.
Under current federal rules, city homeowners who were approved for Sandy-related SBA loans, but then decided not to take them, are now ineligible for funding under the “NYC Build it Back” program. Additionally, homeowners who experienced damage to their homes that resulted in losses greater than half the value of the home must undergo an environmental review. Under HUD rules, however, “NYC Build it Back” can only conduct retroactive environmental reviews for repairs if the cost is less than 50 percent of the value of the home, leaving many homeowners ineligible for federal aid and paying out-of-pocket for repairs.
The bipartisan group also pointed out that eligibility requirements under the DHAP program are too strict and not aiding the residents that the program intended to help. According to statistics provided by the City, only an estimated 25 out of the 7,000 applicants to date are currently eligible. These residents have already shown that they do not qualify for traditional FEMA Rental Assistance – either due to extremely low income, long-term housing need, or lack of long term housing options, but still have to meet the same requirements under the DHAP program.
The city's Congressional members urged the federal agency to swiftly review these regulations that have caused denied critical benefits to Superstorm Sandy victims and to change or waive the policies as needed in order to continue the effort to rebuild and revitalize communities hit hardest by the storm.
Full text of the letter is below and attached:
Dear Secretary Donovan,
We are writing to express our concerns with current HUD regulations that we believe are creating unintentional and unnecessary barriers to New York City’s recovery from Hurricane Sandy. We have heard from our constituents that there are regulatory requirements that are impeding the City’s ability to repair homes and provide shelter for those in need. This includes a denial of benefits for those who have been approved for U.S. Small Business Administration (SBA) loans, and a requirement for individuals to comply with State environmental standards in order to get reimbursed for repairs. In addition, the eligibility requirements for the Federal Emergency Management Agency (FEMA) Disaster Housing Assistance Program (DHAP), which was created to help those who do not qualify for traditional housing assistance programs, are so restrictive that they have resulted in less than one percent of applicants being approved. We ask that you review these regulatory requirements and waive or alter them as needed to ensure that homeowners are receiving consistent and effective assistance during this recovery.
After Hurricane Sandy, homeowners whose homes were damaged by the storm were advised to apply for a loan from the SBA to repair their homes. This loan constitutes a benefit and under the federal Duplication of Benefit rules, residents who were approved for SBA loans are ineligible to receive grants through the New York City administered Community Development Block Grant (CDBG) program, NYC Build it Back, in that loan amount. This prohibition is regardless of whether the homeowner ended up taking the loan or not. For example: A homeowner who has already been approved for a $150,000 loan from the SBA, but did not actually take it, will not be eligible for $150,000 worth of assistance from NYC Build it Back. Should NYC Build it Back determine that this homeowner, for example, needs additional repair assistance beyond the $150,000, SBA retains the right of first refusal and can determine whether or not a homeowner will receive this additional assistance. We believe that this policy is unintentionally burdensome and will prevent many homeowners from receiving the assistance they need. It also penalizes homeowners who did what they were told to do and applied for SBA loans after the storm. We ask that HUD work with SBA to reduce the regulatory red tape for homeowners who have qualified for a SBA loan, so they are not unnecessarily burdened by more debt and can make a full, sustainable recovery.
NYC Build it Back also administers a homeowner reimbursement program. However, this reimbursement program will not be able to help all of the homeowners in need, due to the requirement that homes that receive federal assistance greater than 50% than the value of their home must undergo an environmental review in order to be in compliance with the National Environmental Policy Act (NEPA). According to HUD guidance, in order to reimburse homeowners for out-of-pocket expenses, NYC Build it Back can conduct retroactive environmental reviews for repairs that have already been completed – but only if the home has not been “substantially damaged.” The substantially damaged definition is triggered when the cost to repair a home to its pre-storm condition is 50 percent or greater than the fair market value of the structure itself.
This creates an inequitable system that is not based on the actual cost of repairs or the potential impact to the environment, but rather on the value of the home. For example: Two homeowners complete the exact same repairs to the interior of their homes. The repairs amount to $70,000 for each home. One home is valued at $120,000 and the other at $150,000. NYC Build it Back can only reimburse the homeowner with the more valuable home, despite the fact that they did the exact same work.
We ask that you eliminate the need for an environmental review on home repairs that have already been completed, and can be reimbursed through the NYC Build it Back program. Eligible homeowners should not penalized because of the environmental review and we do not believe it is necessary in post-disaster recovery. This will enable New York City to reimburse homeowners with structures that are substantially damaged and will also expedite the process for repairing and rehabilitating these homes.
Lastly, the FEMA Disaster Housing Assistance Program (DHAP) is not helping the people it is intended to assist. DHAP was targeted for residents who have already demonstrated that they do not qualify for traditional FEMA Rental Assistance – either due to extremely low income, long-term housing need, or lack of long term housing options. Yet DHAP has some of the same restrictive requirements as FEMA Rental Assistance, which has resulted in an extremely low eligibility rate. To date, of the 7,000 families screened for DHAP eligibility, only 25 have qualified. We ask that you relax the eligibility requirements for the DHAP program so that it may meet the needs of the most vulnerable residents in the community.
Thank you for your consideration of these requests. We appreciate your leadership in the recovery since Hurricane Sandy damaged our shores over seven months ago and we look forward to working with you to refine these issues and ensure that the rebuilding process continues effectively and efficiently.