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More Than $1 Billion in Superstorm Sandy Aid Could Leave Region

New York, New Jersey Lawmakers Call for Disaster Relief to Remain in Area

By Laura Kusisto and Josh Dawsey
April 20, 2014

Federal officials are considering spending more than $1 billion of the remaining $3.6 billion of rebuilding aid on disasters other than superstorm Sandy, money that New York and New Jersey are banking on to finish repairs to thousands of homes and complete major infrastructure projects.

The U.S. Department of Housing and Urban Development, which is in charge of distributing the aid, believes that spreading the funds around to disasters other than Sandy is required by federal law, according to people familiar with the matter. New York officials dispute that interpretation.

HUD officials recently briefed members of Congress on a proposal that would create a national resiliency competition to more widely distribute about $1 billion to $2 billion of the remaining Sandy aid to areas that have recently suffered disasters. It would be the first time HUD held a national competition for federal disaster money. The contest would reward projects that make communities more resilient against future disasters, according to people familiar with the plans.

Federal officials said they hope to have a decision by early May. “Our number one priority is to continue working with state and local officials to address the remaining unmet needs of those affected by natural disasters. In regards to any disaster funding, no determination has been made on programming or allocations of remaining funds,” a HUD spokeswoman said.

The idea sets up the possibility that New York City, New York and New Jersey would have to compete with other states for the money. Other states are scrambling to make a case that they should receive a large share, said Staten Island Rep. Michael Grimm, a Republican whose district was hit hard by Sandy.

“I’m competing against other members who are aggressively advocating for their state,” he said.

Congress set aside about $60 billion in 2013 for Sandy aid after a contentious debate. The largest portion—more than $15 billion—went to HUD for distribution to the local level. HUD has dished out about $10.5 billion so far, primarily to New York City, New York state and New Jersey, officials said.

The legislation specified that the HUD money be distributed to disasters other than Sandy that happened in 2011, 2012 or 2013. To HUD officials in Washington, that is a requirement of the law, but New York area officials disagree. They said the bill allows for other regions to receive aid if a major disaster occurs, but the bill didn’t require it, unless New York and New Jersey had received the recovery aid that they needed.

“When Congress passed the Sandy relief bill, that was the number one priority, and it remains so. Once those priorities are met, we will look at other proposals,” said Sen. Charles Schumer (D, N.Y.)

The competition proposal emerges as the New York City region’s post-Sandy needs are coming into sharp focus.

In the city, Mayor Bill de Blasio’s administration has set an ambitious goal of getting 500 Sandy-damaged homes rebuilt by the end of the summer; currently only nine homes have started construction. City officials have said they need $1 billion in additional federal money for the Sandy recovery, and even more to complete a city resiliency plan.

“We’re working closely with HUD and our federal partners to ensure that we have the resources to fully recover and rebuild. It’s vital that funds get to the NYC homeowners and public housing residents who need them,” a city spokeswoman said in an email.

Federal officials said the city and states have overestimated their remaining needs. They said local representatives shouldn’t have expected the third round of funding to provide a significant infusion of new funds based on how the $60 billion Hurricane Sandy Relief Bill passed in 2013 was written.

In the three years covered by the Sandy aid bill, 208 major disasters have been declared by the federal government. A person familiar with the proposal said 48 states would be eligible for the national competition, along with Puerto Rico, District of Columbia and 18 other areas including New York City and Joplin, Mo., which was hit by a tornado in May 2011.

A portion of the third round of funding would also likely go to Rebuild by Design, a regional resiliency competition that HUD launched with much fanfare. Secretary Shaun Donovan, a former New York City Department of Housing Preservation and Development commissioner, is said to have been inspired by his work under Mayor Michael Bloomberg, who had a propensity for holding competitions to generate excitement around government work.

Community advocates said the city can’t afford to lose money, given the already hobbled state of the recovery. Thousands of Sandy victims are currently in limbo because the city doesn’t know if it has enough money to help them repair or elevate their homes.

“We have an opportunity here to get it right,” said Susannah Dyen, coordinator for the Alliance for a Just Rebuilding. “We can’t lose some of the money that could help us do that.”

To read the full article, visit The Wall Street Journal.