NYS is First State or Local Government to Release Action Plan for Initial $1.7B in Federal CDBG Funding for Disaster Recovery
Albany, NY (March 12, 2013)
Governor Andrew M. Cuomo today submitted New York State's proposal for housing and business recovery programs to help New Yorkers devastated by Superstorm Sandy, as well as Hurricane Irene and Tropical Storm Lee. These programs will provide billions of dollars in direct aid to individuals, homeowners, and small businesses using funding from the $60 billion Sandy Aid approved by Congress and signed in to law by President Obama in January. The State designed the diverse array of programs to specifically target federal aid to New Yorkers most in need and ensure the affected communities, and the entire region, builds back smarter and stronger than before. New York State is the first affected government entity to submit its action plan for approval by the U.S. Department of Housing and Urban Development, the agency designated to coordinate the federal government's response to Superstorm Sandy.
"Superstorm Sandy was the worst storm to hit New York State and our region in recorded history, and its impact devastated homes and businesses across Long Island and the metro area," Governor Cuomo said. "Thanks to the hard work and leadership of our state's Congressional Delegation, New York will receive billions of dollars in federal assistance to help homeowners and businesses undertake repairs and rebuild after the damage caused by Superstorm Sandy, as well as Hurricane Irene and Tropical Storm Lee. This plan was put together with the input of homeowners and small businesses in affected communities, and it will serve as a blueprint to guide our housing and private sector recovery."
In January, Congress passed approximately $60 billion in supplemental appropriations to cover damage caused by storms affecting the United States, of which more than $30 billion is expected to be directed to New York State. Last week, HUD issued rules and regulations governing the use of the first $1.7 billion allocated to New York, and formally invited New York to apply for funds to assist homeowners, small businesses, and communities impacted by Sandy, Irene and Lee with their ongoing recovery efforts. HUD is required to formally approve the State's proposed programs under the Community Development Block Grant Disaster Recovery (CDBG-DR) program before they can release any of these funds to the State. The programs outlined today will be offered outside New York City, as New York City will administer similar programs to meet the same needs within the City using their own CDBG-DR allocation of $1.7 billion.
The State's Action Plan is available for public review at http://www.nyshcr.org/Publications/. The Action Plan represents the spending plan only for this initial allocation of CDBG-DR funds and does not reflect the full scope of recovery activities being undertaken by the State through other state and federal programs.
Housing and Urban Development Secretary Shaun Donovan, who also serves as Chair of the Hurricane Rebuilding Sandy Task Force, said, "We have worked closely with the State of New York to identify areas of unmet need and ensure that this first round of CDBG-DR funding helps families and small businesses get back on their feet. Based on our conversations we are confident the state is moving in the right direction, though we will review the final action plans and ensure they are aligned with the criteria for use that were published last week. I look forward to building on the partnership we have created with Governor Cuomo to help communities in New York rebuild in a way that makes them stronger, more economically competitive and better able to withstand the next storm."
In order for the state to be able to distribute the funds to New Yorkers eligible for aid, HUD must formally approve the State's proposed programs. The release of the plan commences a federally required seven day period for public comment prior to HUD's final review.
"We have been working hand in hand with our federal partners since the day Sandy struck and every day since. The state will provide whatever assistance and collaboration necessary to see that HUD approves these plans as quickly as possible so we can get this aid to the New Yorkers who need and deserve it," Governor Cuomo added.
Nassau County Executive Edward P. Mangano said, "These Federal funds are critical in helping our residents recover from the damage of Hurricane Sandy. With these programs, we will help meet the immediate needs of homeowners, assist businesses in recovery so that our economy can continue to grow, and begin to build back our communities stronger. I commend Governor Cuomo for his leadership and commitment to helping Nassau residents recover."
Suffolk County Executive Steve Bellone said, "Suffolk County looks forward to working with the New York State to administer CDBG funds to those affected by Hurricane Sandy. Rebuilding is a priority for our residents and we applaud Governor Cuomo for creating vital programs to address the needs of Suffolk County residents."
The following program allocations are based on the initial $1.7B made available to the State. Additional funding in later allocations will continue to address these areas of need.
As many as 300,000 homes across the state were damaged in some way by Superstorm Sandy alone, and approximately two-thirds of all properties flooded by Sandy were not covered by flood insurance. Even where property owners have insurance, in many instances it has not reimbursed the full amount needed to repair damage, leaving families with a substantial repair and recovery burden. Furthermore, many families cannot afford to invest in disaster mitigation measures to reduce the risk of future damage, even though these investments are cost effective and save lives in the long term. To help homeowners impacted by these three storms recover, New York State is asking HUD to approve a series of housing programs to help families rebuild their homes better and smarter.
Single Family Housing: $663 Million:
- Recreate NY Smart Home Repair and Reconstruction Grants - $233 million: Homeowners located in the counties affected by Superstorm Sandy, Hurricane Irene and Tropical Storm Lee, whose cost to repair or replace their home exceeds the funding they received from other sources may be eligible for Recreate NY Smart Home Repair and Reconstruction Grants. These Grants would cover the difference between reimbursements received and the amount of loss suffered by the homeowner. For example, if a homeowner that suffered $110,000 of damage has already received $50,000 from FEMA and her insurance company, she may be eligible for an additional $60,000 grant for qualified repairs under this program. Repair and rehabilitation may be required to meet green building standards and to improve energy efficiency, where applicable.
- Recreate NY Smart Home Resilience Grants - $259 million: A homeowner whose partially damaged property is located in the 100-year flood plain or whose property located outside of the floodplain was substantially damaged may be eligible for funding to support mitigation projects that reduce the risk of future damage to their homes. Projects supported by the grants will make these homes significantly less vulnerable to future storm damage, and will save owners substantially through lower floodinsurance premiums. In most cases, the grants will cover the full cost of such mitigation that has not been covered by other assistance. Building mitigation may be required to meet green building standards and to improve energy efficiency, where applicable.
- Recreate NY Smart Home Buyout Program - $171 million: Certain areas are at high risk for repeated flooding, causing damage to homes and risking the lives of residents and emergency responders. To reduce those risks and provide residents with an opportunity to leave their properties, New York State will offer voluntary Buyouts for homes that were:
- substantially damaged inside the 500-year flood plain, or
- located within designated buyout areas where damage occurred and where property may be susceptible to future damage due to sea level rise and other factors. These enhanced buyout areas will be selected in consultation with county and local government officials.
- In very high risk areas, there will be a prohibition on rebuilding and these areas will be used as buffer zones. Under the States proposal, and subject to approval by HUD, re-development of property outside of the100-year floodplain that is acquired through a buyout would be permitted, so long as the new structure is built to mitigate future flood impact. Homeowners will be notified if they are eligible for a buyout after HUD has approved this plan.
Homeowners eligible for a buyout will receive the full pre-storm fair market value for their home up to the FHA loan limit. An incentive of up to 5% will also be offered to families that relocate within their home county or borough.
Multi-family Housing: $124 Million:
- Small Multi-Family Repair and Reconstruction Grants - $31 million: Grants will be available to help repair rehabilitate and/or reconstruct 3 -7 unit properties that have suffered storm damage. In all cases, such grants will cover those losses that are not compensated by other sources. Repair and rehabilitation may be required to meet green building standards and to improve energy efficiency, where applicable.
- Small Multi-Family Mitigation Grants - $62 million: Grants will be available for 3 -7 unit properties located in the 100-year flood plain to support mitigation projects that reduce the risk of future damage. To receive grants under this program, property owners for rental properties will be required to rent a minimum of 51% of the units in the property to New Yorkers with low- and moderate-incomes. In all cases, such grants will cover the costs of such mitigation that are not compensated by other sources. Building mitigation may be required to meet green building standards and to improve energy efficiency, where applicable.
- Large Multi-family Mitigation Grants - $31 million: Multifamily housing property owners, with property containing 8 or more units, are expected to maintain appropriate insurance coverage that will compensate them for storm-related damages. Recognizing that such owners may not invest in mitigation-related projects on their own due to the up-front costs involved, New York State proposes to provide incentives to encourage them to take measures that reduce risks for New Yorkers living in their properties. Mitigation grants may be made available for select projects that demonstrably improve the building's resilience against future storms, such as moving electrical systems from basements to higher levels inside the building. Eligibility is limited to buildings that have incurred damage from Sandy and are located within the 100-year floodplain. Individual building grants will be subject to a cap for each building. Building mitigation may be required to meet green building standards and to improve energy efficiency, where applicable.
Superstorm Sandy had a profoundly adverse effect on the New York State economy, and has harmed thousands of small businesses. In addition, small businesses impacted by both Hurricane Irene and Tropical Storm Lee continue to face needs resulting from these storms. The State proposes to use $415 million to help businesses replace or repair lost or damaged inventory and equipment, repair and mitigate damaged facilities, and cover working capital needs.
Bringing Back Business: $415 million
- Small Business Grants – $233 million: New York State will direct grant funds to help businesses, including farming and agricultural operations, and non-profits that suffered physical damage or inventory loss, as a result of Superstorm Sandy, Hurricane Irene, or Tropical Storm Lee. Grants of up to $50,000 to cover eligible, uncompensated losses are proposed to enable an affected business to purchase or repair needed equipment, repair or rebuild facilities that were damaged or destroyed in the storm, and/or provide the working capital necessary to sustain and grow the business. The State may extend grants up to a total grant amount of $100,000 to businesses that suffered physical damage and are at risk of closure or significant employment loss without an increase in grant size. Special Business Mitigation Grants of up to $100,000 are also proposed to cover expenses such as installing back-up generators or elevating key equipment, to help prevent damage to these businesses in future disasters.
- Small Business Loans - $130 million: New York State will create a low-interest loan program to help small businesses, including farming and agricultural operations, and non-profits that are at risk because they suffered losses of inventory, or physical assets as a result of the storm. Loans of up to $1 million may be available to help these businesses purchase or repair needed equipment, repair and rebuild facilities that were damaged or destroyed in the storm, and/or provide the working capital necessary to sustain and grow the business. Loans of higher amounts may be offered to eligible businesses that are at risk of closure or significant employment loss. Terms will be flexible, with interest rates held below 2% for borrowers.
- Business Consulting, Mentoring, & Other Services – $3 million: New York State will create an online network to facilitate connections between consultants and business practitioners who are willing to provide consulting and mentoring services to small businesses hit hard by the storm. Up to $3 million will be used to build the network and support the providers of the consulting and mentoring services. Such services may include financial management, real estate, marketing, legal, and industry-specific assistance.
- Coastal Fishing Industry Recovery Program –$20 million: Coastal fishing supports thousands of jobs in New York State. Superstorm Sandy caused significant damage to the fisheries along New York's coastline, and while these fisheries will also be eligible to participate in the other small business assistance programs announced today, the industry is subject to unique considerations. To help this vital industry recover, New York State will create a targeted program to support grants of up to $50,000 available to affected businesses. These grants would cover otherwise eligible, uncompensated losses and help the industry prepare now for the upcoming fishing season.
- Seasonal Tourism Industry Recovery Program— $30 million: While these seasonal tourism businesses will also be eligible to participate in the other small business assistance programs announced today, seasonal small businesses in coastal and riverine communities require an immediate injection of support to ensure that they can reopen and operate in time for the upcoming summer season. Accordingly, the State seeks to provide grants of up to $50,000 to eligible businesses in this industry. The grants will cover otherwise eligible, uncompensated losses and working capital needs to help them prepare for the coming season.
New York State will create a dedicated infrastructure bank to help coordinate infrastructure development and investment across the disaster region. An initial capitalization of $20 million from the first allocation of CDBG-DR funds will be combined with State funds and committed to financing eligible infrastructure projects that apply for assistance through the Bank. The Bank will benefit New York by introducing a centralized approach to infrastructure related decision making rather than a project-by-project, agency specific process. The focus of the Bank's investments will be on projects that increase the resiliency of the area's infrastructure to withstand future threats or provide redundancy of critical systems. It is expected that the Bank will be funded with up to $200 million dollars through subsequent allocation rounds or such other amount to be jointly determined with HUD.
The Bank will take several steps to carry out these goals, including developing a system for prioritizing infrastructure projects and initiatives, providing a centralized approach to the State's infrastructure planning process, managing State recovery funds for infrastructure and other sources of capital, negotiating opportunities for private sector investment in infrastructure and financing approved projects. The planning processes and expertise of the New York Works Task Force will be embedded into the Bank's functions.
The Bank may make use of funds from several sources, including federally allocated recovery funds, diverted or created revenue, proceeds from the sale of long-term debt and credit enhancements with other state entities. In addition, the Bank will work with both public and private investors to raise funds to finance infrastructure developments. An advantage that the Bank will have is the ability to combine several sources of funds (e.g., Federal funds with private funds) to finance projects as effectively as possible. The Bank will showcase potential projects to engage the private sector in opportunities for investment in infrastructure.
COMMUNITY RECONSTRUCTION ZONES PROGRAM
New York State will establish the Community Reconstruction Zone (CRZ) program to facilitate community-driven planning to rebuild and revitalize severely damaged communities. The State anticipates allocating approximately $25 million from this first allocation to provide planning grants to communities that suffered community-wide impacts. Later allocations will be used to implement final CRZ plans. The planning grants will facilitate the retention of outside experts as consultants to a participating community's planning committee, as well as the completion of critical studies to determine the key vulnerabilities and needs of the community. The State will provide information and guidance to the committees to assist them in identifying and using such outside resources effectively and efficiently. It is anticipated that the CRZ program will be funded up to $500 million or such amount to be jointly determined with HUD.
RESILIENCE RETROFIT FUND FOR CRITICAL FACILITIES
Energy-related mitigation is critical for essential services facilities including, in particular, hospitals, nursing homes, and other facilities for vulnerable populations. Many essential services facilities did not have backup power systems or had ineffective backup systems that failed during the storm. As a result of this, numerous facilities had to evacuate patients which posed a greater risk to those patients than allowing them to remain in place during the storm.
To address this critical need, New York State will establish the Resilience and Retrofit Fund. The State anticipates allocating approximately $30 million from this first allocation of CDBG-DR funding to provide credit enhancement or leverage for private-sector financing of energy-related mitigation projects.