Distribution of checks begins after end of DOB stalemate

John Dupont
A flooded home in St. Amant, La.

The first round of checks went out earlier this week for homeowners in 56 of the state's 64 parishes who were impacted by flood event in 2016.

The first disbursement of grant funds were set to go to approximately 230 homeowners who were approved for an SBA loan, but declined or canceled the loan in its entirety and executed a grant agreement through the program.

It also covers roughly 800 homeowners who were declined or canceled their approved SBA loan in its entirety and received a grant determination but have not executed their grant agreement. Those homeowners will receive notice of the increased award, adjusted to remove the entire SBA loan amount from their DOB calculation.

The distribution began nine months after Congress approved an end to the Duplication of Benefits provision that considered a FEMA grant and SBA loan duplicative.

For homeowners who drew down at least some of the SBA loan amount they were approved for, HUD's guidance stipulates that the State of Louisiana must submit a substantial Action Plan Amendment (APA) to HUD for approval before Restore Louisiana can begin providing funds for repayment of SBA loan funds disbursed to homeowners. The Office of Community Development (OCD) is writing the required APA based on the recent HUD guidance and plans to publish it within a week.

Once the APA is approved, which is estimated to take up to three months, the Program expects to be able to provide funds for repayment of the drawn down amounts of SBA loans for all households at or below 120 percent AMI.

Congress overwhelmingly approved the legislation in September 2018, but holdups with the Office of Budget Management led to a battle that ended when President Donald Trump ordered release of the funds last month.

In a phone statement Friday, Congressman Garret Graves expressed frustration over the bureaucratic holdups.

"While I still believe that this ridiculous exercise of writing rules for a perfectly clear law is nonsense, and that any second of delay only compounds the suffering of flood victims, the news today is positive for more than 1,000 homeowners," he said. "More than 200 will receive checks immediately.

"The more than 800 flood victims who did not close on their Restore Louisiana application because of the 'DOB trap' will now be able to close and hopefully receive checks very soon," Graves said. "Until then, we urge HUD to stop pondering its navel and get out of the way. At this pace, recovery for 6,000 more Louisianans will have been delayed for three years since the floods. And for what?"

For those households with income above 120 percent AMI, HUD's guidance requires that they demonstrate a "hardship" to be eligible for the reimbursement portion. In addition, HUD's guidance stipulates that the Program must ensure that at least 55 percent of all grant funds go to the benefit of low to moderate income (LMI) households. This federal requirement may result in only partial reimbursements of SBA loan funds that were drawn down for those households with income above 120 percent of AMI.

In the coming weeks, Restore Louisiana will send a survey to homeowners that will assist OCD in developing a broad and inclusive set of criteria for the hardship exception.