Louisiana could need as much as $400 million injected into its $1.3 billion post-flood homeowner recovery program if Congress eliminates a regulatory roadblock that restricts grant funding to flood victims who were awarded SBA recovery loans.
Pat Forbes, who leads the state office managing the Restore Louisiana recovery program, provided the early estimate this week after the U.S. House of Representatives recently passed a regulatory fix in a bill to channel disaster funding to states and territories affected by devastating hurricanes and wildfires this year.
WASHINGTON — The U.S. House of Representatives passed an $81 billion disaster recovery bill aimed largely at hurricane and wildfire victims in…
The House adopted on Dec. 21 the $81 billion disaster recovery bill that contains the U.S. Small Business Administration loan provisions. In addition to the regulatory change, the bill includes other policy shifts pushed by Louisiana's congressional delegation designed to ease recovery efforts, plus $600 million in post-flood infrastructure funding. The bill is expected to be taken up by the Senate in the new year.
Forbes, whose comments came in response to questions from The Advocate about possible funding effects from the House legislation, said Wednesday that the current program would likely have enough money for some applicants now effectively stymied by the SBA rules. But he doesn't believe there is enough money in the federally funded program for all of them.
Officials in the state Office of Community Development, which Forbes leads, also believe that if the proposed provisions are approved, they will spur additional flood victims to apply for Restore Louisiana grants. Forbes said that his office knows of at least 6,700 households that received SBA loans and would likely be eligible for recovery grants but have not yet filled out the program's initial preliminary survey.
WASHINGTON — A massive disaster-relief package awaiting U.S. senators when they return to work in January would offer states far more flexibil…
"A lot of people just didn't fill out the survey because they assumed, probably rightfully so, that they were not going to get any money, and so they didn't want to go through the trouble of filling it out," he said.
Around 18,000 businesses, private nonprofits, homeowners and renters affected by the 2016 floods have received more than $1.2 billion in SBA loans, according to tallies from this fall.
Under the duplication-of-benefits rules, the amount of SBA funding homeowners received, or even just were deemed eligible to receive, is counted against the amount they could get from the state recovery program. Often, this process results in homeowners being blocked from free grant money and stuck with long-term loans with tens of thousands in debt to pay back.
Delvin Coston has his receipts ready.
For more than a year, Gov. John Bel Edwards, a Democrat, has pressed the state's congressional delegation to push legislation to change those rules as flooded homeowners complained they would prevent them from accessing the grant program dollars. Forbes added that Edwards has told legislators that the state would need additional federal money if the SBA provisions are adopted.
"The governor has repeatedly emphasized that the treatment of SBA funds as a duplication of benefits should be changed, and when it is fixed, the Restore homeowner program will require additional funding to fully address remaining unmet needs," Forbes said.
Overall, Restore Louisiana is a $1.7 billion program designed to help not only homeowners but also small businesses and renters. Even before the latest funding needs prompted by the SBA provisions, Edwards and his administration have claimed the overall need will end up being far higher than $1.3 billion, though grant applications so far have been fewer than initially expected.
While U.S. Rep. Garret Graves, R-Baton Rouge, credited Edwards Thursday for reaching out to Democratic lawmakers to aid passage of the House bill, the congressman offered little sympathy for the latest funding estimate.
Graves said that with the House bill, the state is on track for $2.6 billion in recovery funding and on a trajectory to have enough money to fully fund all flood victims, including those who applied or received SBA loans.
"If the Restore Louisiana program does in fact run out of federal money, we would encourage the state to put some skin in the game since the entire flood recovery has been on the federal nickel to date," Graves said in a statement.
Graves added his current concern is ensuring flood victims get the aid in a timely fashion.
"The program is averaging payments of less than 1 percent of the funds per month," he said. "At this rate, the last tier of flood victims may not see their recovery funds until 2024 or beyond — for a 2016 flood. The victims need to be the focus of the program.”
The program has drawn fire previously from Graves, as well as some state legislators, over what they say is the slow pace of recovery money rolling out to households. State officials say the program is moving faster than past recovery programs and has been gradually picking up steam.
Earlier this month, state officials announced invitations to qualify for the Restore Louisiana grant dollars have been opened to all the remaining homeowners who filled out preliminary surveys and also had made the first cut of review.
Of the more than 46,460 applicants who had filled out surveys, there are 38,700 households across all six phases of the program that have been invited to apply, according to state officials and program tallies through Dec. 22.
More than 4,400 households affected by the floods in March and August 2016 have been awarded grants so far worth a total of $128.4 million, the Dec. 22 tallies say.
Along with Federal Emergency Management Agency grants, SBA loans are considered part of the nation's standard front-line emergency response aid, some experts have said. In contrast, flood recovery grant programs routed through the federal Community Development Block Grant program are one-off efforts individually approved by Congress, usually well after SBA and FEMA aid has been offered, these experts noted.
The U.S. Department of Housing and Urban Development oversees the CDBG recovery program. HUD has been scolded in past audits of previous post-hurricane recovery efforts in which SBA recipients were allowed to pay off loans with recovery grants. HUD essentially considers the practice double-dipping on the federal taxpayers' dime.