Louisiana flood victims ‘re-victimized by bureaucracy’; federal shutdown delays work on SBA issue

Feb. 16--A month-long shutdown of the federal government likely further delayed recovery grants to homeowners trying to get back on track after the 2016 Louisiana floods.

As many as 6,000 Louisianans who took out loans from the U.S. Small Business Administration have been waiting to see if federal rules might change so they could access Restore Louisiana recovery grants.

Congress, pressed by Louisiana's congressional delegation, changed the law in October to specifically allow disaster victims who'd applied for SBA loans to not have those count against the Restore grants.

But state officials and impacted homeowners have continued to wait for the U.S. Department of Housing and Urban Development to issue new legal guidance and give Restore Louisiana the green light.

Guidance from HUD was expected by the end of March but could be delayed another month due to the shutdown, Pat Forbes, director of the Louisiana Office of Community Development, told the Restore Louisiana Task Force on Friday morning.

"The 35 days of shutdown probably adds at least 35 days to that timeline because those were days people were going to be writing this guidance," Forbes said.

Prior to October, there was a policy in place that said any loans approved by the SBA had to be deducted from potential grant assistance.

That policy was widely criticized by homeowners and state officials because it left flood-impacted homeowners who otherwise could have qualified for Restore Louisiana grants on the hook for years of loan repayments.

Brian Sullivan, a spokesman for HUD, said the agency has been "gigantically busy" working on recovery plans for other recent disasters and saw 97 percent of its workforce furloughed during the 35-day shutdown. Sullivan said HUD still hopes to issue its new rules on SBA loans within the first quarter of the year.

Sullivan said he couldn't comment on whether HUD will give Louisiana the go-ahead to cut checks to pay off SBA disaster loans. But the spokesman did note that Congress' law change -- which was written by Rep. Garret Graves, R-Baton Rouge -- "says SBA loans can never be considered a duplication of benefits."

Graves, in a phone interview with The Advocate on Friday, said that the law change he helped push into law months ago is clear and that federal officials agree. Graves said the holdup is the frustrating result of a slow-moving bureaucracy that's kept affected Louisiana homeowners in limbo for too long.

"I've spoken to attorneys from four different federal agencies that are all involved in this debacle that all agree the law fixes this problem," Graves said.

Graves has sharply criticized officials from the agencies involved -- HUD, the White House budget office, SBA and FEMA -- at committee hearings and said Friday that flood victims have been "re-victimized by the bureaucracy."

Graves said he's scheduled to speak with HUD Secretary Ben Carson about the SBA loan issue on Monday.

"Regardless of the shutdown, HUD's delay is simply unacceptable," Sen. Bill Cassidy, R-Louisiana, said in a statement Friday. "As long as they keep dragging their feet, we're going to keep bugging them about this. The law we passed and President Trump signed couldn't be more clear, and the bureaucrats slow-walking its implementation need to comply."

Rep. Steve Scalise, R-Jefferson, has pressed HUD and the White House budget office to issue "a swift guidance process since the intent was clear" when Congress passed the change, a spokesperson for the congressman said.

Though the SBA issue remains outstanding, Restore Louisiana has otherwise nearly completed its grant-making process related to the March and August 2016 floods.

Forbes announced Friday that the state program distributing $1.3 billion in federal disaster aid had made determinations for more than 99 percent of applicants to the homeowner assistance program. A program to buyout homes in floodways is not included in that figure.

The program has nearly finished distributing money to people seeking reimbursements or using a state contractor to fix their homes. But only 37 percent of the people who are fixing their own homes with a federal grant have completed their projects, according to information provided at the meeting.

In total, about 16,000 people have been offered $561 million in assistance.

Officials on the task force largely applauded Forbes and Gov. John Bel Edwards for their stewardship of the complex program. But they expressed frustration about the long delays in a decision on the issue relating to the SBA loans.

The task force agreed to write an urgent request to HUD asking for a timely response.

"To me, it's just unacceptable that we don't have these regulations to know how these dollars will be spent," said task force member Chip Kline, chairman of the Coastal Protection and Restoration Authority and executive assistant to the governor for coastal activities.

Forbes said the state is holding enough money in its homeowner assistance program to accommodate a reading of the federal law that would allow the state to distribute the maximum amount of money to SBA loan holders, about $225 million.

But there will be money left over in the Restore Louisiana program, especially from the homeowner assistance program that drew fewer successful applicants than state officials anticipated.

The Restore Louisiana Task Force board voted to redistribute about $173 million of those funds to other programs.

About $100 million of that money will be used for a variety of programs that help landlords and developers add apartments that must be kept at lower rents for given periods of time.

Another $41 million will be used for programs meant to help people having trouble accessing Restore Louisiana grants because they need help with rent or flood insurance payments.

"These are all things we're tweaking at the end here to address those last folks who are having trouble getting across the finish line," Forbes said.

The remainder of the $173 million will be used to help farmers, to jump start the state's watershed initiative and to help local governments and nonprofits cover their cost-shares for federal assistance.

Also on Friday, the task force received an update on the Federal Emergency Management Agency manufactured housing unit program.

There remain 323 households living in FEMA trailers to date, said Casey Tingle, deputy director of the Governor's Office of Homeland Security and Emergency Preparedness.

Tingle said the state is holding daily calls with nonprofits and federal agencies to review the remaining cases and how to move people out before a final April 30 deadline.

About 190 of those families are working with the Restore Louisiana program to get back into their homes, while 40 more are negotiating with FEMA to purchase their MHU's, Tingle said. The state is working to move others into temporarily subsidized rental units.

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