Don’t make Sandy victims repay federal disaster funds: NJ lawmakers

opens in a new windowDon’t make Sandy victims repay federal disaster funds: NJ lawmakers / Asbury Park Press / 5/3/21

New Jersey’s entire House delegation has signed a letter asking the federal government to grant financial relief to families and towns still recovering from 2012’s superstorm Sandy.

The letter, written by U.S. Rep. Frank Pallone Jr., asks leaders of the House appropriation committees to grant Housing and Urban Development Secretary Marcia Fudge the ability to waive the recoupment of federal funds owed by New Jersey homeowners who participated in Sandy rebuilding programs.

U.S. Rep. Frank Pallone Jr. D-N.J.  speaks Tuesday about the federal effort to provide COVID-19 vaccines in front of the Community Health Center of Asbury Park.

The Murphy administration announced a freeze on the recoupment process, also known as “clawbacks,” in 2018, saying the state Department of Community Affairs would no longer be attempting to collect repayment of grant funds. opens in a new window But while the freeze was welcomed by Sandy victims, it has also left them in limbo, unsure if they will be asked to repay some of the grant funds they received. 

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“Many of the families and municipalities impacted by the storm are still struggling to rebuild, a matter that has only been exacerbated by the unprecedented economic and public health crisis our country is currently facing,” the representatives wrote. “During this difficult time of economic uncertainty and record unemployment, federal agencies are unfairly asking for repayment on tens of millions of dollars in loans and grants from Sandy.”

The letter also requests that the feds forgive collection of Community Disaster Loans given to municipalities to assist recovery following the storm. Toms River, Little Egg Harbor and Berkeley are among the towns that have struggled to repay disaster loans.

It’s signed by Pallone and U.S. Reps. Andy Kim, Bonnie Watson Coleman, Bill Pascrell Jr., Albio Sires, Donald M. Payne Jr., Donald Norcross, Mikie Sherill, Tom Malinowski and Josh Gottheimer, all Democrats, and U.S. Reps. Christopher Smith and Jeff Van Drew, both Republicans.Your stories live here.Fuel your hometown passion and plug into the stories that define it.Create Account

opens in a new windowIt marks the latest effort by New Jersey’s congressional representatives to cancel clawbacks and disaster loans.

opens in a new windowSandy advocacy groups, including the New Jersey Organizing Project, have been lobbying for repayments to be canceled, saying the process was unwieldy, confusing and filled with errors. Sandy advocates say in many cases the clawback happens because paperwork is missing or forms have not been filled out correctly.

Homeowners who participated in the state’s largest rebuilding program, the Reconstruction, Rehabilitation, Elevation and Mitigation program (RREM), as well the initiative for lower-income homeowners, the Low-to-Moderate-Income Homeowners Rebuilding program (LMI), have received clawback letters. 

Since the programs were funded with federal block grants distributed by the Department of Housing and Urban Development, the RREM and LMI programs operate under the auspices of the federal Stafford Act, which bars homeowners from receiving more funds than necessary to repair damaged houses.

The law also bans  so-called “duplication of benefits,” which means other sources of aid, including Small Business Administration Loans, insurance proceeds and money intended to be used to elevate homes, are included in the calculation of the amount of money a Sandy homeowner should receive to rebuild.

Joe Mangino is one of hundreds of Sandy victims who has received a so-called "clawback" letter from the state, which claims that he was overpaid thousands of dollars rebuilding his house. In many cases, victims did not realize that there was a so-called "duplication of benefits" when they got both RREM grants and SBA loans.  Stafford Township, NJ Wednesday, October 23, 2019

Even though the repayments have been frozen, they have prevented RREM from closing homeowners out of the program. That means a deed restriction — or covenant, in the state’s parlance — prevents the homeowner from selling the house, or even refinancing the mortgage, unless the clawback is repaid.

“During the recovery from Superstorm Sandy, we complied with everything that was required of us to receive funding to rebuild our home. Then we were blamed for errors in the paperwork that were not our fault and asked us to return $7,000,” said Little Egg Harbor resident Chuck Griffin. “All I want is to put closure on the storm. We shouldn’t be held accountable for mistakes we didn’t make.”

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Jody Stewart, organizer for the New Jersey Organizing Project, praised Pallone’s office and the entire House delegation for supporting the cancelation of clawbacks and Community Disaster loan repayments.

“We are grateful for the lead Congressman Pallone has taken on this. We have been working with his office on this the past few weeks,” Stewart wrote in an email. “Sandy families are hopeful that this will bring us one step closer to clawback and Community Disaster Loan forgiveness. Over eight years and we continue to struggle, nine years will just be unexceptable.”

It’s not clear exactly how many homeowners received clawback letters and are affected by the freeze on repayments. In “The Long Road Home,” a report issued on the fifth anniversary of Sandy by the New Jersey Resource Project, 20% of the families surveyed in the RREM and LMI programs said they had been asked to repay money.

The average amount the families had been asked to pay was about $30,000, and most said they could not afford to repay the funds. The report surveyed more than 500 families impacted by Sandy.

Toms River Mayor Maurice B. “Mo” Hill Jr. said he would welcome cancelation of payments on a $5 million disaster loan that the township began repaying last year. 

Toms River must include $1.5 million in the budget each year to repay the loan, which is equivalent to a penny on the tax rate. Toms River lost $2.1 billion in ratables when Sandy struck — the most in the state — with nearly 10,000 homes damaged or destroyed.

“If we could get that $1.5 million back, and not have to pay it every year, it would be a big help,” Hill said. “It would give us a buffer.”

Ventnor resident Fran Baronowitz received a clawback letter saying she owes more than $35,000, money she said she doesn’t have.

“In August of 2016, I received a letter demanding that I pay back over $35,000 by August 2019. When I opened that letter, I was at a loss for words,” Baronowitz said. “How could this be? I followed the rules and did I was instructed to do. I have received a notice every month since then. I am on a fixed income, so I don’t have $35,000 laying around to give back to the federal government.”https://www.usatodaynetworkservice.com/tangstatic/html/papp/sf-q1a2z3be0d353f.min.html

Jean Mikle covers Toms River and several other Ocean County towns, and has been writing about local government and politics at the Jersey Shore for nearly 37 years. She’s also passionate about the Shore’s storied music scene. Contact her: @jeanmikle,  jmikle@gannettnj.com.

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