SBA loans keep Sandy recipients from NY Rising aid

Several thousand Long Island residents whose homes were devastated by superstorm Sandy can't get full assistance from the state's NY Rising Housing Recovery Program because they already took out low-interest federal loans -- an unjust situation, a state legislator said Friday.

State Sen. Phil Boyle, flanked by a half-dozen Sandy victims at a news conference in Babylon, called on federal authorities to rectify the problem, which he said is preventing many residents from rebuilding or is saddling them with heavy debt.

"This is a serious problem and is going to cost tens of thousands, and in some cases hundreds of thousands, of dollars to New York State homeowners," said Boyle (R-Bay Shore). "I've never seen anything more unfair. Every Sandy victim should be treated equally, and that's not the case."

Babylon Village resident Lauren Norinder, 31, who said her home took on 2 1/2 feet of water during the storm, said, "It infuriates me. I think it is obscene they can get away with that."

At issue are Small Business Administration loans that homeowners say they were urged to take out to cover the difference between what their homeowners insurance would pay and what it would cost to repair or rebuild their homes. In many cases, the difference was $100,000 or more, the residents said.

In the weeks after Sandy, many local or Federal Emergency Management Agency officials advised property owners to pursue the SBA loans, Boyle said.

They later discovered that taking the SBA loans meant they were only eligible for minimal or no assistance from the NY Rising program, he said. The state program is using $485 million in U.S. Housing and Urban Development community block grants to help residents whose homes were damaged by Sandy and by tropical storms Irene and Lee in 2011, Boyle said.

The federal Stafford Act, which prohibits "duplication of benefits," prevents residents from receiving overlapping assistance from multiple sources for a single disaster, he said.

In contrast, most homeowners who did not take out SBA loans are fully eligible for NY Rising grants, Boyle said. Nearly 4,000 Long Island homeowners are expected to benefit, receiving an average of more than $110,000 each, state officials have said.

Barbara Brancaccio, a spokeswoman for the state Office of Storm Recovery, said homeowners who had a valid reason for refusing an SBA loan can be included in the state program. For those who received SBA loans, she said, federal rules require that the loan offset -- that is, be subtracted from -- any award from NY Rising.

She added, however, that receiving an SBA loan does not totally preclude homeowners from getting help from NY Rising, and the program is encouraging people to apply.

Sen. Charles Schumer (D-N.Y.) said there is a problem with the system and he is trying to fix it.

"It's simply not fair that residents who did the responsible thing, followed directions, and quickly took out loans to rebuild now have access to fewer grants," Schumer said Friday. "I've urged HUD to revise their policy and will continue to push them to do so."

The news conference was held outside the storm-damaged Babylon home of John Giebel, 64, a semiretired meat deliveryman.

He said there was a shortfall of about $100,000 between his insurance payout and what it is costing to rebuild and elevate his house, so he took out an SBA loan in that amount. When he later applied to NY Rising, the loan effectively canceled out the grant that he could have received, he said.

"The people that played by the rules get shortchanged," he said. "We're not being treated as fairly as everyone else."Another homeowner, Debbie Lemaire, 52, of Lindenhurst, said her house is still a wreck and she is living with relatives in Wantagh. She has applied for funds from NY Rising, but hasn't seen any money yet.

"I had a full sense of security by having insurance," Lemaire said, her eyes welling with tears. "I never dreamed a year later . . . I'd still be homeless."