WASHINGTON — A major hurdle has been cleared toward fixing the duplication-of-benefits trap that has kept thousands of Louisiana residents affected by catastrophic floods from tapping into federal recovery dollars.
But it could still be months before checks make it into the hands of homeowners who have been restricted from Restore Louisiana grants because they sought Small Business Administration loans to help with their rebuilding.
The issue is officially being handed off from the Trump administration, where it has been bogged down in bureaucratic channels for eight months, to Gov. John Bel Edwards' administration, which must closely follow federal guidelines that require public notice periods and other processes that could take about three months, said Pat Forbes, the executive director of the state Office of Community Development that oversees the Restore Louisiana program.
Forbes said the state has spent several months preparing for the U.S. Department of Housing and Urban Development to issue formal parameters for carrying out a change that Congress approved last fall after intense lobbying from the Louisiana delegation.
HUD unveiled its 44-page guidance for the state on Friday to the relief of members of the congressional delegation who have held countless meetings with officials to get the law they championed to take effect.
“This is the major hurdle that we’ve all been pushing on for the last eight months,” said U.S. Rep. Garret Graves, a Baton Rouge Republican whose district was heavily affected by the August 2016 flooding. “It took way too long, but I do appreciate the fact this is finally out there.”
U.S. Sen. Bill Cassidy, a Baton Rouge Republican, called the news a "big win for Louisiana recovery efforts."
Louisiana received more than $1.7 billion from Congress to help the state rebuild after historic flooding damaged thousands of homes and businesses across the state. About $1.3 billion was set aside for people whose homes were damaged or destroyed.
But until Congress acted, a section of the the Stafford Act, which dictates how federal natural disaster assistance can be doled out, had barred people from receiving grant money that duplicated any Small Business Administration loan awards they received — effectively keeping an estimated 6,000 families from tapping into those funds.
That restriction was removed for people affected by the Louisiana floods, as well as other recent disasters in other states.
"The people of Louisiana deserve the disaster relief they were promised," U.S. Sen. John Kennedy said. "They shouldn’t be penalized for unprecedented flooding.”
All homeowners who fall below 120 percent of the median family income for the area, which varies from parish-to-parish but is about $81,000, will automatically qualify for the duplication-of-benefits waiver. Those who make more than that will be able to seek a waiver by application to the governor's office, a looser restriction on upper-income homeowners that Cassidy said he pressed HUD to agree to.
"HUD is allowing state officials to determine who qualifies," Cassidy said. "I urge the governor to make as many flood victims as possible able to receive the resources they need to recover.”
The state likely will have to go through the federally-required process of amending its recovery plan on file with HUD. Such changes mandate a public feedback period and printed notices in three languages. The Edwards administration has taken other steps that could be done in advance, though.
Forbes, who was poring over the exact HUD guidelines Friday evening along with legal counsel in the Edwards administration, said even before HUD released details computer coding was written for the Restore Louisiana eligibility system for several scenarios.
“We have all the pieces in place," he said.
The state also had already begun identifying individuals who may be impacted by the change and newly eligible for assistance.
As in previous disasters, affected homeowners who sought SBA loans were blocked from receiving grant dollars that duplicated whatever loan amount they were deemed eligible to receive, even if they never accepted the loan money.
For example, a homeowner with an estimated $25,000 in damage who qualified for a $20,000 SBA loan would be eligible for only $5,000 in grant money that wouldn't have to be repaid. Meanwhile, a homeowner who took on the same value of damage — $25,000 — but didn’t apply for an SBA loan could potentially receive the full $25,000 grant if all other qualifications were met. In many cases, SBA loan awards were larger than the value of total damage, leaving homeowners without an opportunity for any grant assistance.
Graves said he plans to continue to press HUD for additional updates.
“There are a few things in the guidance that we’re gonna keep working on, but we thought it was best to go ahead with the process for the majority of funds to be released,” he said.
He said he worries HUD’s emphasis on low- to moderate-income households could hurt people who earn more but were also impacted by the floods.
“It still requires that they comply with low-mod income prioritization,” he said. “I don’t have a problem of that, per se, but if you are doing it to the exclusion of higher income folks, it’s problematic and it’s against the law.”
A bright spot, Graves said, is that Louisiana residents who received a loan and are affected by the change will be able to pay back that loan with Restore dollars, as well as any loan interest.
“We were able to get interest included as possible reimbursement,” he said. “That’s really good news.”
WASHINGTON — Thousands of Louisiana homeowners who have been stuck in the duplication-of-benefits trap following the historic floods of 2016 w…
WASHINGTON — U.S. Sen. Bill Cassidy says Louisiana could finally get a long-awaited update this week from the federal government on whether, a…