Sen. Kirsten Gillibrand introduced legislation Tuesday that would bar federal officials from recouping state-administered grants given to victims of superstorm Sandy who also received federal loans to rebuild their homes.
The bill addresses a “duplication of benefits” that arose after hundreds of Sandy victims who got Small Business Administration loans, mainly before the installation of NY Rising’s homeowner programs, then received more funds through the state-run federal relief program.
Federal law generally prevents aid recipients from double-dipping — or receiving money from two funds to pay for the same item or service. Federal officials then go after recipients, a process dubbed "clawbacks," to get the money returned.
Gillibrand (D-N.Y.) said the bill, the Sandy Duplication of Benefits Fairness Act, would authorize the federal Department of Housing and Urban Development to waive the law's requirements for Long Islanders. If the bill passes, it would help about 200 homeowners and block federal officials from collecting the debt, which Gillibrand said was unfairly accrued.
“Many homeowners on Long Island were advised by the federal government that they needed to apply for SBA loans in order to receive any disaster assistance and are now learning that if they received additional grants, they have to pay that money back because of a technicality they were not warned about,” Gillibrand said in a news release. “This has blindsided many families, and homeowners caught under the ‘duplication of benefits’ rule are being forced to pay back the grant money they were depending on to recover from the storm.”
The legislation provides relief that is similar to aid designed to protect homeowners who were devastated by the 2016 Louisiana floods. A new law, passed last year, allows SBA loan recipients to also receive federally funded recovery grants. Gillibrand’s bill would turn back the clock to Oct. 1, 2012, and grandfather in hundreds of Sandy victims.
Gillibrand's bill does for these families what Sen. Chuck Schumer's advocacy did a few years ago on behalf of thousands of families who were subject to clawbacks because they received larger flood insurance settlements after a review of disputed claims, said Angelo Roefaro, a spokesman for Schumer (D-N.Y.).
HUD officials then allowed storm victims to keep up to $20,000 in rebuilding grants even if they received additional insurance proceeds.
“The thought of having to ‘pay back’ federal aid proven to be spent rebuilding a home or cleaning up a mess only adds insult to injury, and any obligation to claw back those funds should be waived," Roefaro said. "The senator has successfully made this case before and will continue to partner with Senator Gillibrand and others to fight for the interests of Sandy victims.”