Louisiana officials hoping for word this week on ‘duplication of benefits’ issue affecting flood victims

Advocate, The (Baton Rouge, LA)

April 30-- Apr. 30--WASHINGTON -- U.S. Sen. Bill Cassidy says Louisiana could finally get a long-awaited update this week from the federal government on whether, and perhaps how soon, thousands of homeowners affected by catastrophic flooding in 2016 will be able to tap into recovery aid.

It's not clear whether the Office of Management and Budget will agree to fix the "duplication of benefits" trap that has kept people who applied for Small Business Administration loans from receiving grant dollars to help rebuild their homes, but Cassidy said he feels there have been "optimistic signals."

Officials repeatedly have said that they expected an update from OMB soon. Cassidy cautioned that, while he expects word this week, there have been delays in the past.

Louisiana received more than $1.7 billion from Congress for 2016 flood relief. About $1.3 billion was designated for homeowner rebuilding assistance, but a federal rule initially prevented those who received SBA loans from reaping the full benefits of the program.

Louisiana's congressional delegation, spearheaded by U.S. Rep. Garret Graves, a Republican whose Baton Rouge-based district was heavily affected by the floods, backed an effort to eliminate that rule, but the Trump administration's OMB has not yet agreed to the change.

The "duplication of benefits" issue already has prompted a lawsuit against the federal government.

As in previous disasters, affected homeowners who sought SBA loans have been unable to tap into 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 for 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.

U.S. Sen. John Kennedy brought the issue to Trump in early April during a private lunch meeting. He wouldn't say at the time where Trump stood on the issue, but strongly hinted that the president could be willing to intervene on Louisiana's behalf, opening up the Restore Louisiana program to people who have been denied because they previously applied for SBA loans.

Kennedy and Cassidy, both of whom are Republicans, held several meetings with key members of the Trump administration to try to loosen the bureaucratic chokehold.

Cassidy has described OMB's reservations as being over whether the change could drive up future disaster recovery costs if people wait for grants, instead of seeking loans that they will repay.

"The Office of Management and Budget is very concerned that we will create a moral hazard," Cassidy said Tuesday.

But he said the old system has kept an estimated 6,000 flood victims from benefiting from the federal grant aid and is unfair.

"That's the case we've been making," he said.

Officials have repeatedly said the "duplication of benefits" issue has created the biggest problems for homeowners and spawned the most complaints about the state's efforts to rebuild from the August 2016 floods in the Baton Rouge area and other parts of southern Louisiana and the March 2016 floods in northern Louisiana.

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