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Houses and businesses take on water on Range Avenue looking south toward I-12 in the Denham Springs area during severe flooding in Livingston Parish on Aug. 14, 2016. 

State officials are trying to finalize a plan that could bring relief to nearly 6,600 homeowners blocked from access to state recovery grants for the 2016 floods due to federal restrictions on duplicated government benefits.

The restrictions affected homeowners who received or applied for and did not get U.S. Small Business Administration loans and then later had their chance negated for money from the Restore Louisiana program.

According to a proposed state plan, the homeowners could be eligible for up to $173.3 million from the $1.2 billion set aside in the homeowner recovery program.

The changes in the plan will allow the state to adjust Restore awards for thousands of homeowners, who will either see an additional influx of cash for repairs or for help to pay off their SBA loans. 

But 51% of those affected — homeowners who exceed income limits and also accepted SBA loans — would have to meet hardship requirements first and, if they did, receive Restore money totaling half of the SBA loan dollars they accepted, state recovery officials said Thursday.

Other homeowners who fall under the income threshold criteria and took SBA money, or — no matter the income — didn't take an SBA loan won't face the hardship requirement. They will see the full loan values wiped out as a duplication of benefits and have their Restore award recalculated, state officials said.

"In every case, or almost every single case, that would result in a positive grant from the program," said Pat Forbes, director of the Office of Community Development. 

Of those who didn't take SBA loans, the Restore program had already sent checks to 203 households by July 8. Another 1,620 households were informed they are going to receive some kind of funding from Restore.

Forbes' office is seeking public comment on the plan that lays out the hardship procedure and other ways homeowners could receive Restore money under the revised rules tied to SBA loans and duplication of benefits. The comment period for the plan began Wednesday and ends 5 p.m. Aug. 6.

Duplication-of-benefits fix clears 'major hurdle' -- but funds might still be a few months away

The U.S. Department of Housing and Urban Development is requiring the state to develop the plan after the agency recently put out guidelines on the duplication of benefits fix following months of pressure from Gov. John Bel Edwards, other state officials and the state's congressional delegation.

Legislation brought by the delegation last year forced action from HUD, through which the Restore dollars are routed to the state.

The duplication of benefits restriction sparked criticism from many homeowners who had some kind of involvement with the SBA program after the floods of 2016.

For those who took loan money, they argued that the government was unfairly saying free grant money was the same kind of government benefit as a long-term loan that must be paid back with interest. They wanted Restore money to help pay off those loans.

Others may have been eligible for SBA loans and didn't take them but still had the full amount for which they were eligible counted against any Restore award, often eliminating any chance for the grant. 

Some of the hardship criteria under the new plan includes homeowners who were 50 or older at the time of the flood, who are paying more than 15% of their discretionary income on SBA loans or more than 30% of gross household income on housing expenses, or those with dependents in the home. 

The household income level that triggers the hardship requirement is greater than 120% of the area median income. 

Forbes said the Restore program has enough money not to have to limit payouts to higher-income families but HUD requires that at least 55% of the Restore program's money be spent on households with low to moderate incomes.

He said offering full awards to households with greater than 120 percent of the area median income could have pushed the Restore program's spending below the 55% mark.

In one consolation for the wealthier households that face hardship requirements, they'll face no similar requirements on any portion of a SBA loan award they didn't accept. Forbes said that amount will be removed at 100% of its value before the Restore award is recalculated.

In Ascension, East Baton Rouge and Livingston parishes, 120% of area median income for a family of four is $96,958, according to a HUD list. In Lafayette Parish, that figure is $77,940.

A copy of the plan is available at Action Plan Amendment 12.

Email David J. Mitchell at dmitchell@theadvocate.com

Follow David J. Mitchell on Twitter, @NewsieDave.