U.S. Sens. Chuck Schumer and Kirsten Gillibrand are pushing federal officials to waive requirements for superstorm Sandy victims to return grants to rebuild their homes if they now negotiate larger flood insurance settlements.
In a letter Monday to the U.S. Department of Housing and Urban Development and the Federal Emergency Management Agency, the New York Democrats said Sandy victims have struggled long enough and should not be forced to repay grants they have already spent.
"Once again, the feds are penalizing our cash-strapped Sandy victims, who have already endured years of aggravation," Schumer said. "We should be maximizing the support homeowners receive."
HUD said it was reviewing the request. In March, the agency's regional administrator for New York and New Jersey said federal law appeared to required HUD to claw back grants if storm victims receive additional insurance proceeds.
Yet Schumer and Gillibrand say that HUD Secretary Julián Castro has the power to waive that requirement.
Their request comes as FEMA is reviewing flood insurance claims for more than 7,000 Sandy victims who say they were underpaid after the 2012 storm. Another 2,200 are awaiting settlements from lawsuits.
The grants Sandy victims may be forced to return were part of the $50.5 billion Sandy relief package signed by President Barack Obama in 2013. They were distributed through the state recovery program, New York Rising, and provided up to $400,000 for homeowners to rebuild and protect homes from future storms.
Yet the funding is subject to a federal law called the Stafford Act. It prohibits disaster victims from receiving government assistance for expenses already covered by insurance, loans or other sources.
So if a homeowner receives a $10,000 grant to rebuild a storm-ravaged foundation -- but later receives insurance proceeds to pay for the job -- the grant must be returned.
Grants were calculated based on homeowners' insurance settlements. So if those settlements change, HUD may ask for money back.
"HUD should absolutely waive its policy," Gillibrand said.