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NJ’s Awash in Federal Sandy Aid, But Funds Just Trickle Out of DCA’s Spigot

NJ Spotlight, Feb. 7, 2014

By Colleen O’Dea

More than 15 months after Superstorm Sandy, New Jersey has approved awarding little more than a quarter of the money available from the largest housing assistance program it established to help those most affected by the hurricane, and has actually paid out even less.

State officials established the Rehabilitation, Reconstruction, Elevation and Mitigation program using $600 million in federal aid to help homeowners repair or rebuild a primary residence.

Lisa Ryan, a spokeswoman for the Department of Community Affairs, said the state has signed grant awards amounting to more than $137 million of that money for about 1,200 applicants.

Of that amount, the state has actually provided $25 million in reimbursements for completed work.

But Ryan said it is the amount the state has agreed to distribute that paints the more accurate picture of aid from RREM because “the $137 million in grant assistance we have obligated is money that these homeowners can absolutely count on.”

The state has given out more money from the $180 million Resettlement program (RSP), sending checks of $10,000 each to nearly 16,700 homeowners, she said, with another 700 checks being processed.

That amounts to roughly $167 million distributed through RSP and a total of $174 million that the program is obligated to pay.

The RSP money is given to homeowners who agree to return to or remain in the county in which they lived prior to the storm if it was in one of the nine most impacted counties – Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean and Union.

Like RSP and RREM, the other two major programs for home owners — the Hazard Mitigation Grant and Sandy Homebuyer Assistance programs – are closed to new applicants.

In its action plan for spending $1.5 billion in additional federal disaster aid, the state proposes spending roughly half on housing programs, including putting an additional $390 million into the RREM program.

Fair Share Housing Center on Wednesday criticized the approval process for both RREM and the RSP, saying it had been “botched” by the state and the contractor it hired to administer the programs. The group released data it received last Friday from DCA that showed more than 75 percent of those who were initially rejected by the programs won appeals of their denials.

DCA blamed “inaccurate” data it received from the Federal Emergency Management Agency for the initial improper rejection of close to 2,000 home owners. But FEMA officials yesterday said they warned New Jersey officials that their damage assessment data was not meant to be used to determine eligibility for state housing assistance funds.

FEMA’s individual assistance data is used by the agency to provide quick relief to pay for basic repairs necessary to allow a person to return to a home. It does not provide a comprehensive assessment of total damage. The limitations of the data were made very clear when the numbers were given to state officials, who had requested it, FEMA officials said.

That at least some DCA officials knew that the FEMA data underestimates actual damage appears clear because the DCA’s first action plan for spending $1.8 billion in disaster block grant funding, submitted to the federal Department of Housing and Urban Development last March, says exactly that.

In noting FEMA’s Full Verified Loss estimate of about $733 million for the state, the plan described that figure as having been “derived from cursory FEMA inspection reports” and went on to state, “Previous disasters have shown that an FVL figure substantially underestimates the actual cost of rehabilitation and reconstruction. To estimate damage to owner-occupied units, HUD has previously adjusted FVL based on the ratio of SBA loans to FVL determinations to capture a more realistic estimate of repair costs.” Adam Gordon, a staff attorney with Fair Share, said the center told DCA about the problems inherent in using the FEMA data “as early as last April,” adding, “I can’t speak for why they ignored that.”

The data release brought calls for the state to re-assess more than 2,000 applicants initially denied funding who did not appeal the rejection, and for a thorough, independent review of the state’s handling of the programs.

Ryan’s estimates of money obligated and paid are slightly higher than what the database provided to Fair Share shows. That data was current as of Jan. 20, she said. An analysis of that data shows:

• Of roughly 5,150 applicants deemed eligible, about 1,000, or less than 1 in 5, had an award amount attached. These ranged from $3,498 to the maximum of $150,000 – designated for 332 of the properties – and totaled $108 million. Less than half of those, or 447 applicants, had a “paid amount” listed. Payments ranged from $73 to $150,000 and added up to just $15.2 million. The total amount set aside for the program was $600 million, according to the program’s website. Another 7,117 applicants were designated as “wait listed” for the program. • Of 20,242 people deemed eligible for the Resettlement program, the database indicates checks had been issued to 16,659, which would mean $166.6 million had been spent.

Ryan said it was easier for the state to allocate RSP money because “it is a non-construction program and there are no federal mandates requiring high levels of documentation and historical and environmental reviews – unlike the RREM Program.”

She said awarding of money through the RREM Program has taken much longer because “HUD requires eligible homeowners to jump through numerous federally mandated hoops – much of which we and Governor Christie have felt is unnecessary and redundant given that these are existing homes that cannot be built bigger than what was there before.”

No construction-based grants can be distributed through RREM until environmental and historic reviews have been completed and until it is shown that any money spent is not duplicating amounts received from private insurance, FEMA, the US Small Business Administration or other sources.

Ryan said DCA has assigned advisors to work with each of the 5,100 homeowners approved for receive an RREM award and “immediately schedule” an agreement signing once all the reviews are completed. Then applicants can begin construction work right away.

As of Jan. 20, those people living in ZIP codes along the hard-hit Jersey Shore in Monmouth, Ocean and Atlantic counties, had received the largest amounts of aid from RREM and RSP.

The largest amount of money, nearly $19 million, had been distributed to those living in the 08753 ZIP code of Toms River, where 47 homeowners had received $1.6 million from RREM and 1,739 had each gotten $10,000 from RSP. Another 63 homeowners had been promised another $9.7 million for rebuilding and another 258 had been deemed eligible for RSP funds but had not yet received a check.

Data available for those two programs for each ZIP code is available by clicking on that area on the above map.

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